SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended
			~~December 31, 2019~~ June 30, 2020
☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _____to _____


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

(Address of principal executive offices, including zip code)

(Registrant’s telephone number, including area code)

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

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).

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 ~~January~~July 31, 2020	~~2,912,599~~	2,881,868

AIR T, INC. AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

Item 1. Financial Statements

AIR T, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME ~~(LOSS)~~

See notes to condensed consolidated financial statements.

AIR T, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~

Three Months Ended
December 31, Nine Months Ended
December 31,
(In Thousands) 2019 2018 2019 2018
Net income (loss) $ 359 $ (2,317) $ 10,517 $ (462)
Other comprehensive income (loss):
Foreign currency translation gain (loss) (53) 121 (29) 201
Unrealized gain (loss) on interest rate swaps, net of tax 94 (163) (170) (134)
Total Other Comprehensive Income (loss) 41 (42) (199) 67
Total Comprehensive Income (Loss) 400 (2,359) 10,318 (395)
Comprehensive Income Attributable to Non-controlling Interests (789) (405) (3,464) (777)
Comprehensive Income (Loss) Attributable to Air T, Inc. Stockholders $ (389) $ (2,764) $ 6,854 $ (1,172)


(in thousands)	Three Months Ended June 30,
	2020		2019

Net (loss) income	$	(956)	$	4,156

Other comprehensive loss:

Foreign currency translation loss	(67)		(18)

Unrealized loss on interest rate swaps, net of tax of $7 and $52 respectively	(26)		(176)

Total Other Comprehensive Loss	(93)		(194)

Total Comprehensive (Loss) Income	(1,049)		3,962

Comprehensive Loss (Income) Attributable to Non-controlling Interests	115		(2,386)

Comprehensive (Loss) Income Attributable to Air T, Inc. Stockholders	$	(934)	$	1,576

See notes to condensed consolidated financial statements.

AIR T, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

~~(UNAUDITED)~~


(in thousands, except shares number)	June 30, 2020		March 31, 2020
ASSETS
Current Assets:
Cash and cash equivalents	$	7,095	$	5,952
Marketable securities	2,845		1,677
Restricted cash	9,561		9,619
Restricted investments	1,042		1,085
Accounts receivable, net of allowance for doubtful accounts of $913 and $680	10,274		13,077
Income tax receivable	1,471		1,174
Inventories, net	63,879		60,623
Other current assets	7,453		5,279
Total Current Assets	103,620		98,486

Asset on lease or held for lease, net of accumulated depreciation of $6,102 and $6,526	25,325		27,945
Property and equipment, net of accumulated depreciation of $4,454 and $4,319	5,190		5,272
Right-of-use assets	7,851		8,116

Investments in securities	783		815
Equity method investments	4,650		5,208
Intangible assets, net of accumulated amortization of $2,245 and $2,380	878		749
Goodwill	4,227		4,227
Other assets	626		609
Total Assets	$	153,150	$	151,427

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	7,722		$	10,864

Accrued expenses and other (Note 4)	13,995		13,024
Current portion of long-term debt	37,249		42,684
Short-term lease liability	1,192		1,174
Total Current Liabilities	60,158		67,746

Long-term debt	53,703		43,136
Deferred income tax liabilities, net	572		579
Long-term lease liability	7,241		7,473
Other non-current liabilities	1,435		1,402
Total Liabilities	123,109		120,336

Redeemable non-controlling interest	5,540		6,080

Commitments and contingencies (Note 15)

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	3,065		2,636
Retained earnings	22,927		23,768
Accumulated other comprehensive loss	(630)		(537)
Total Air T, Inc. Stockholders' Equity	23,501		24,006
Non-controlling Interests	1,000		1,005
Total Equity	24,501		25,011
Total Liabilities and Equity	$	153,150	$	151,427

(In thousands, except share amounts) December 31, 2019 March 31, 2019
ASSETS
Current Assets:
Cash and cash equivalents $ 11,536 $ 12,417
Marketable securities 1,845 1,760
Restricted cash 10,069 123
Restricted investments 1,008 831
Accounts receivable, net of allowance for doubtful accounts of $394 and $408 15,828 10,881
Income tax receivable 1,504 142
Inventories, net 68,116 27,455
Other current assets 7,302 6,138
Current assets of discontinued operations — 11,601
Total Current Assets 117,208 71,348
Assets on lease, net of accumulated depreciation of $5,780 and $6,689 15,825 25,164
Property and equipment, net of accumulated depreciation of $4,104 and $3,470 4,172 4,264
Right-of-use assets 8,458 —
Cash surrender value of life insurance policies, net of policy loans 163 122
Other tax receivables-long-term — 311
Deferred income tax assets 261 548
Investments in securities 1,438 1,086
Equity method investments 5,481 5,611
Other assets 316 200
Intangible assets, net of accumulated amortization of $2,303 and $2,097 826 998
Goodwill 4,227 4,227
Non-current assets of discontinued operations — 1,264
Total Assets $ 158,375 $ 115,143
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 11,105 11,409
Income tax payable — 888
Accrued expenses and other 12,624 14,175
Current portion of long-term debt 51,504 24,735
Short-term lease liability 1,134 —
Current liabilities of discontinued operations — 1,587
Total Current Liabilities 76,367 52,794
Long-term debt 39,995 32,918
Deferred income tax liabilities 1,604 —
Long-term lease liability 7,779 —
Other non-current liabilities 1,039 597
Total Liabilities 126,784 86,309
Redeemable non-controlling interest 8,190 5,476
Commitments and contingencies (Note 15)
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, 3,023,085 and 2,022,637 shares issued, 2,912,599 and 2,022,637 shares outstanding 756 506
Treasury stock, 110,146 shares at $19.58 (2,157) —
Additional paid-in capital 1,029 2,866
Retained earnings 23,180 21,191
Accumulated other comprehensive loss (420) (205)
Total Air T, Inc. Stockholders' Equity 22,388 24,358
Non-controlling Interests 1,013 (1,000)
Total Equity 23,401 23,358
Total Liabilities and Equity $ 158,375 $ 115,143

See notes to condensed consolidated financial statements.

AIR T, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

See notes to condensed consolidated financial statements.

AIR T, INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Equity
Air T, Inc. Stockholders' Equity
(In Thousands) Common Stock Additional
Paid-In
Capital Retained
Earnings Accumulated Other Comprehensive Income (Loss) Non-controlling
Interests Total
Equity
Shares Amount
Balance, March 31, 2018 2,044 $ 511 $ 4,172 $ 20,696 $ (261) $ (875) $ 24,243
Net income* — — — 2,829 — (46) 2,783
Reclassification of unrealized loss on marketable securities, net of tax — — — (106) 106 — —
Foreign currency translation gain — — — — 31 17 48
Balance, June 30, 2018 2,044 $ 511 $ 4,172 $ 23,419 $ (124) $ (904) $ 27,074
Net loss* — — — (1,321) — (42) (1,363)
Exercise of stock options 2 — 18 — — — 18
Repurchase of common stock (1) — (2) (21) — — (23)
Foreign currency translation gain — — — — 24 8 32
Unrealized gain on interest rate swaps, net of tax — — — — 29 — 29
Balance, September 30, 2018 2,045 $ 511 $ 4,188 $ 22,077 $ (71) $ (938) $ 25,767
Net loss* — — — (2,715) — (27) (2,742)
Repurchase of common stock (20) (5) 1 (667) — — (671)
Equity-based compensation — — 6 — — — 6
Foreign currency translation gain — — — — 114 7 121
Unrealized loss on interest rate swaps, net of tax — — — — (163) — (163)
Balance, December 31, 2018 2,025 $ 506 $ 4,195 $ 18,695 $ (120) $ (958) $ 22,318


(in thousands)	Common Stock					Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non-controlling Interests		Total Equity
	Shares	Amount
Balance, March 31, 2019	2,022	$	506	$	2,866	$	21,191	$	(205)	$	(1,000)	$	23,358

Net income*	—	—		—		1,783		—		2,034		3,817

Repurchase of Common Stock	(17)	(4)		—		(122)		—		—		(126)

Stock Split	1,010	252		(252)		—		—		—		—

Issuance of Debt - Trust Preferred Securities	—	—		—		(4,000)		—		—		(4,000)

Issuance of Warrants	—	—		—		(840)		—		—		(840)

Adoption of ASC 842 - Leasing	—	—		—		(41)		—		—		(41)

Unrealized loss on interest rate swaps, net of tax	—	—		—		—		(176)		—		(176)

Foreign currency translation gain (loss)	—	—		—		—		(30)		12		(18)

Adjustment to fair value of redeemable non-controlling interest	—	—		(985)		—		—		—		(985)

Balance, June 30, 2019	3,015	$	754	$	1,629	$	17,971	$	(411)	$	1,046	$	20,989


(in thousands)	Common Stock					Treasury Stock						Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non-controlling Interests	Total Equity
	Share	Amount		Share		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 interest	—	—		—		—		429		—		—		—		429

Balance, June 30, 2020	3,023	756		141		(2,617)		3,065		22,927		(630)		1,000		24,501

*Excludes amount attributable to redeemable non-controlling interest in ~~Contrail Aviation.~~

Equity
Air T, Inc. Stockholders' Equity
(In Thousands) Common Stock Treasury Stock Additional
Paid-In
Capital Retained
Earnings Accumulated Other Comprehensive Income (Loss) Non-controlling
Interests Total
Equity
Shares Amount Share Amount
Balance, March 31, 2019 2,022 $ 506 $ — $ — $ 2,866 $ 21,191 $ (205) $ (1,000) $ 23,358
Net income* — — — — — 1,782 — 2,034 3,816
Repurchase of Common Stock (17) (4) — — — (122) — — (126)
Stock Split 1,010 252 (252) — — — —
Issuance of Debt - Trust Preferred Securities — — — — — (4,000) — — (4,000)
Issuance of Warrants — — — — — (840) — — (840)
Adoption of ASC 842 - Leasing — — — — — (41) — — (41)
Unrealized loss on interest rate swaps, net of tax — — — — — — (176) — (176)
Foreign currency translation gain (loss) — — — — — — (30) 12 (18)
Adjustment to fair value of redeemable non-controlling interest — — — — (985) — — — (985)
Balance, June 30, 2019 3,015 $ 754 $ — $ — $ 1,629 $ 17,970 $ (411) $ 1,046 $ 20,988
Net income* — — — — — 5,715 — (17) 5,698
Repurchase of common stock 8 2 — — — (75) — — (73)
Foreign currency translation gain — — — — — — 38 3 41
Adjustment to fair value of redeemable non-controlling interest — — — — 781 — — — 781
Unrealized loss on interest rate swaps, net of tax — — — — — — (88) — (88)
Balance, September 30, 2019 3,023 $ 756 $ — $ — $ 2,410 $ 23,610 $ (461) $ 1,032 $ 27,347
Net loss* — — — — — (430) — (19) (449)
Repurchase of common stock — — 110 (2,157) — — — — (2,157)
Foreign currency translation loss — — — — — — (53) — (53)
Adjustment to fair value of redeemable non-controlling interest — — — — (1,381) — — — (1,381)
Unrealized gain on interest rate swaps, net of tax — — — — — — 94 — 94
Balance, December 31, 2019 3,023 $ 756 $ 110 $ (2,157) $ 1,029 $ 23,180 $ (420) $ 1,013 $ 23,401

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

See notes to condensed consolidated financial statements.

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, ~~2019.~~2020. The results of operations for the period ended ~~December 31, 2019~~June 30, 2020 are not necessarily indicative of the operating results for the full year.

On September 30, 2019, we completed the sale of 100% of the equity ownership in the Company's wholly-owned subsidiary, Global Aviation Services, LLC ("GAS"), which previously constituted the ground support services segment. See Note 3, Discontinued Operations. The Company's results of operations related to GAS have been reclassified as discontinued operations on a retrospective basis for all periods presented. Unless otherwise indicated, the disclosures accompanying the condensed consolidated financial statements reflect the Company's continuing operations.

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

~~Discontinued Operations~~

OnLiquidity – Contrail Aviation Support, LLC ("Contrail") is a subsidiary of the Company in the Commercial Jet Engines and Parts segment. The Contrail Credit Agreement contains affirmative and negative covenants, including covenants that restrict the ability of Contrail and its subsidiaries to, among other things, incur or guarantee indebtedness, incur liens, dispose of assets, engage in mergers and consolidations, make acquisitions or other investments, make changes in the nature of its business, and engage in transactions with affiliates. The Contrail Credit Agreement also contains quarterly financial covenants applicable to Contrail and its subsidiaries, including a minimum debt service coverage ratio of 1.25 to 1.0 and a minimum tangible net worth of $15 million. As of June 30, 2020, Contrail's management believes based on forecasted results for the fiscal year ended March 31, 2021, it is probable that it will not be in compliance with the debt service coverage ratio for the quarter ended September 30, ~~2019,~~2020. Non-compliance with a debt covenant that is not subsequently cured gives Old National Bank ("ONB") the right to declare the entire amount of Contrail’s outstanding debt at the time of non-compliance immediately due and payable and exercise its remedies with respect to the collateral that secures the debt as described in Note 11. Additionally, the Contrail Credit Agreement contains a provision whereby Contrail is required to pay down the total outstanding principal balance of the Contrail revolving credit facility to zero for at least thirty consecutive days during each fiscal year. With the next paydown requirement date on March 31, 2021, it is probable that Contrail will not be in compliance with this provision.

Contrail management is currently in discussion with ONB to obtain a waiver to its financial covenants and applicable paydown provision mentioned above, to seek to revise the financing documents and/or to secure alternative financing to avoid an event of non-compliance. With respect to alternative financing, Contrail intends to access debt financing under the Main Street Lending Program ("Main Street loan"), established by the Federal Reserve in response to economic uncertainty caused by the COVID-19 pandemic. Main Street loans are intended to provide additional credit to companies that were in sound condition prior to the onset of the

COVID-19 pandemic. While Contrail believes that they qualify under the criteria set forth under the Main Street Lending Program, there is no assurance that Contrail will obtain funding under the Main Street Lending Program or if such credit is obtained that it would be sufficient.

The obligations of Contrail under the Contrail Credit Agreement are also guaranteed by the Company, ~~completed~~up to a maximum of $1.6 million, plus costs of collection. The Company is not liable for any other assets or liabilities of Contrail and there are no cross-default provisions with respect to Contrail’s debt in any of the ~~sale~~Company’s debt agreements with other lenders. If Contrail were to cease operations, the Company believes it, along with the rest of ~~Global Aviation Services, LLC~~its businesses, will continue to operate, given the maximum guarantee of Contrail’s obligations of $1.6 million, plus costs of collection.

In April 2020, the Company obtained loans under the PPP, as authorized by the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), of $8.2 million to help pay for payroll costs, mortgage interest, rent and utility costs. The Company may apply to Minnesota Bank & Trust ("~~GAS"~~MBT"). for forgiveness of the PPP Loan, however, forgiveness is not fully assured. The ~~results~~Company believes it is probable that the cash on hand (including that obtained from the PPP), net cash provided by operations from its remaining operating segments, together with its current revolving lines of ~~operations of GAS are reported~~credit, as ~~discontinued operations~~amended or replaced, will be sufficient to meet its obligations as they become due in the ~~condensed consolidated statements~~ordinary course of ~~operations~~business for at least 12 months following the ~~three and nine months ended December 31, 2019 and 2018. Refer to~~ ~~Footnote 4 - "Discontinued Operations"~~ ~~for additional information. Unless otherwise indicated, the disclosures accompanying the condensed consolidated~~date these financial statements ~~reflect~~are issued.

COVID-19 Pandemic - The Company is closely monitoring the ~~Company's continuing operations.~~impact of the COVID-19 pandemic on all aspects of its business. As a result of the COVID-19 pandemic and measures taken to limit the pandemic and its impact, the Company continued to experience decreases in revenues during the month of July. The extent to which the COVID-19 pandemic continues to impact the Company’s operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others.

Recently Adopted Accounting Pronouncements

In ~~February~~June 2016, the FASB issued ASU ~~2016-02, Leases~~2016-13, Financial Instruments—Credit Losses (Topic ~~842)~~ ~~as amended by multiple standards updates. The new~~326): Measurement of Credit Losses on Financial Instruments. This standard ~~provides that a lessee should recognize the~~significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income, including trade receivables. The standard requires an entity to estimate its lifetime “expected credit loss” for such assets at inception, and record an allowance that, when deducted from the ~~liabilities that arise from leases, including operating leases. Under~~amortized cost basis of the ~~new requirements, a lessee will recognize in~~financial asset, presents the ~~statement of~~net amount expected to be collected on the financial position a liability to make lease payments (the lease liability) and the right-of-use asset representing the right to the underlying asset for the lease term. For leases with a term of twelve months or less, the lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities.

asset. The Company adopted this standard on April 1, 2020. As of June 30, 2020, the standard indid not have a material impact on the fiscal year beginning April 1, 2019 using the modified retrospective transition method that does not require retrospective adjustment of the comparative periods. The Company reviewed existing leases to determine the impact of the adoption of the standard on itsCompany's condensed consolidated financial ~~statements. Implementation had an immaterial cumulative effect on retained earnings. Adoption resulted in the recognition of right-of-use assets of approximately $10.7 million,~~statements and ~~lease liabilities of approximately $11.2 million.~~

Upon adoption, the Company elected practical expedients related to a) short term lease exemption b) not separate lease and non-lease components c) not reassess whether expired or existing contracts contain leases, d) not reassess lease classification for existing or expired leases and e) not consider whether previously capitalized initial direct costs would be appropriate under the new standard.disclosures.

~~Recently Issued Accounting Pronouncements~~In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU simplifies how an entity is required to test goodwill for impairment by eliminating Step Two from the goodwill impairment test. Step Two measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under this standard, an entity will recognize an impairment charge for the amount by which the carrying value of a reporting unit exceeds its fair value. The Company adopted this amendment on April 1, 2020. As of June 30, 2020, the amendment did not have a material impact on the Company's condensed consolidated financial statements and disclosures.

In October 2018, the FASB updated the Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities of the Accounting Standards Codification. The amendments in this update affect reporting entities that are required to determine whether they should consolidate a legal entity under the guidance within the Variable Interest Entities Subsections of Subtopic 810-10, Consolidation—Overall. Indirect interests held through related parties in common control arrangements should be

considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. The ~~amendments in this update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The~~ Company ~~is currently evaluating the impact of~~adopted this amendment on ~~its~~April 1, 2020. As of June 30, 2020, the amendment did not have a material impact on the Company's condensed consolidated financial statements and disclosures.

In December 2019, the FASB updated the Income Taxes (Topic 740): Simplifying the Accounting for Income Taxesof the Accounting Standards Codification. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The amendments in this Update simplify the accounting for income taxes by removing thethe exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items (for example, discontinued operations or other comprehensive income), among other changes. The Company ~~is currently evaluating the impact of~~early adopted this amendment onas of April 1, 2020. The amendment resulted in an immaterial impact to its condensed consolidated financial statements and disclosures.

Recently Issued Accounting Pronouncements

In January 2020, the FASB updated the Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The Company is currently evaluating the impact of this amendment on its condensed consolidated financial statements and disclosures.

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. Further, in accordance with the amendments in this Update, an entity may make a one-time election to sell, transfer, or both sell and transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform and that are classified as held to maturity before January 1, 2020. 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.

2. Revenue Recognition

Substantially all of the Company’s revenue is derived from contracts with an initial expected duration of one year or less, as a result, the Company has applied the practical expedient to exclude consideration of significant financing components from the determination of transaction price, to expense costs incurred to obtain a contract, and to not disclose the value of unsatisfied performance obligations.

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 enhancing an asset that the customer controls as repair work, such as labor hours are incurred, and parts installed, is being performed. 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.

1113

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

Three Months Ended December 31, Nine Months Ended December 31,
2019 2018 2019 2018
Product Sales
Air Cargo $ 6,014 $ 5,694 $ 18,108 $ 16,217
Ground equipment sales 15,640 15,902 40,132 34,519
Commercial jet engines and parts 35,463 15,957 59,851 48,366
Printing equipment and maintenance 3 88 72 497
Corporate and other — — — —
Support Services
Air Cargo 12,644 12,164 38,572 36,245
Ground equipment sales 161 260 370 509
Commercial jet engines and parts 797 1,309 3,804 3,602
Printing equipment and maintenance 79 13 314 33
Corporate and other 37 45 69 61
Leasing Revenue
Air Cargo — — — —
Ground equipment sales 58 16 111 62
Commercial jet engines and parts 2,245 3,663 8,901 6,691
Printing equipment and maintenance — — — —
Corporate and other 36 49 117 121
Other
Air Cargo 48 10 91 111
Ground equipment sales 90 100 326 412
Commercial jet engines and parts 31 61 109 294
Printing equipment and maintenance — 4 10 14
Corporate and other (46) 151 224 419
Total $ 73,300 $ 55,486 $ 171,181 $ 148,173

~~The following table summarizes total revenues by segment (in thousands):~~

Three Months Ended December 31, Nine Months Ended December 31,
2019 2018 2019 2018
Air cargo $ 18,706 $ 17,868 $ 56,771 $ 52,573
Ground equipment sales 15,949 16,278 40,939 35,502
Commercial jet engines and parts 38,536 20,990 72,665 58,953
Printing equipment and maintenance 82 105 396 544
Corporate and other 27 245 410 601
Total $ 73,300 $ 55,486 $ 171,181 $ 148,173


	Three Months Ended June 30, 2020		Three Months Ended June 30, 2019
Product Sales
Air Cargo	$	4,315	$	5,414
Ground equipment sales	15,738		12,002
Commercial jet engines and parts	2,695		11,171
Printing equipment and maintenance	28		48
Corporate and other	5		—
Support Services
Air Cargo	11,850		12,894
Ground equipment sales	18		105
Commercial jet engines and parts	1,625		1,410
Printing equipment and maintenance	5		11
Corporate and other	13		41
Leasing Revenue
Air Cargo	—		—
Ground equipment sales	48		20
Commercial jet engines and parts	373		3,714
Printing equipment and maintenance	—		—
Corporate and other	34		45
Other
Air Cargo	6		12
Ground equipment sales	24		122
Commercial jet engines and parts	—		32
Printing equipment and maintenance	55		5
Corporate and other	138		142

Total	$	36,970	$	47,188

See Note 13 for the Company's disaggregated revenues by geographic region and Note 1 414 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, 2019 and December 31, 2019~~ and the amount of outstanding April 1, 2020 contract liabilities that were recognized as revenue during the ~~nine months ended December 31, 2019~~quarter June 30, 2020 (in thousands):

Outstanding contract liabilities

Outstanding contract liabilities as of April 1, ~~2019~~2020
Recognized as Revenue

As of ~~December 31, 2019~~June 30, 2020

~~2,741~~1,790

As of April 1, ~~2019~~2020

~~1,867~~1,853

For the ~~nine months~~quarter ended ~~December 31, 2019~~June 30, 2020

~~1,744~~49

~~Contract assets primarily relate to deposits paid to vendors. The following table presents the amount of contract assets as of April 1, 2019 and December 31, 2019 (in thousands):~~


			~~Contract assets~~
~~As of December 31, 2019~~			~~$3,155~~
~~As of April 1, 2019~~			~~1,743~~

3. ~~BusinessCombinations~~

~~Acquisition of Worthington Aviation Parts, Inc.~~

On May 4, 2018, Air T, Inc. completed the acquisition (the “Transaction”) of substantially all of the assets and assumed certain liabilities of Worthington Aviation Parts, Inc. (“Worthington”), pursuant to the Asset Purchase Agreement (the “Purchase Agreement”), dated as of April 6, 2018, by and among the Company, Worthington, and Churchill Industries, Inc., as guarantor of Worthington’s obligations as disclosed in the Purchase Agreement.

Worthington is primarily engaged in the business of operating, distributing and selling airplane and aviation parts along with repair services. The Company agreed to acquire the assets and liabilities in exchange for payment to Worthington of $50,000 as earnest money upon execution of the Agreement and a cash payment of $3,300,000 upon closing. Total consideration is summarized in the table below (in thousands):


~~Earnest money~~	$	50
~~Cash consideration~~	~~3,300~~
~~Cash acquired~~	~~(24)~~
~~Total consideration~~	$	~~3,326~~

The Transaction was accounted for as a business combination in accordance with ASC Topic 805 "Business Combinations." Assets acquired and liabilities assumed were recorded in the accompanying consolidated balance sheet at their estimated fair values as of May 4, 2018, with the excess of fair value of net assets acquired recorded as a bargain purchase gain. The most significant asset acquired was Worthington’s inventory. The following table outlines the consideration transferred and purchase price allocation at the respective estimated fair values as of May 4, 2018 (in thousands):


	~~May 4, 2018~~

~~ASSETS~~
~~Accounts receivable~~	$	~~1,929~~
~~Inventories~~	~~4,564~~
~~Other current assets~~	~~150~~
~~Property and equipment~~	~~392~~
~~Other assets~~	~~189~~
~~Intangible assets - tradename~~	~~138~~
~~Total assets~~	~~7,362~~

~~LIABILITIES~~
~~Accounts payable~~	~~1,289~~
~~Accrued expenses~~	~~175~~
~~Deferred tax liability~~	~~589~~
~~Total liabilities~~	~~2,053~~


~~Net assets acquired~~	~~5,309~~

~~Consideration paid~~	~~3,350~~
~~Less: Cash acquired~~	~~(24)~~
~~Bargain purchase gain~~	$	~~1,983~~

The transaction resulted in a bargain purchase gain because Worthington was a non-marketed transaction and in financial distress at the time of the acquisition. The seller engaged in a formal bidding process and determined Air T was the best option for Worthington. The tax impact related to the bargain purchase gain was to record a deferred tax liability and record tax expense against the bargain purchase gain of approximately $589,000. The resulting net bargain purchase gain after taxes was approximately $1,983,000. Total transaction costs incurred in connection with this acquisition were approximately $83,000.

~~Pro forma financial information is not presented as the results are not material to the Company’s consolidated financial statements.~~

4.3. Discontinued Operations

On September 30, 2019, the Company completed the sale of 100% of the equity ownership in ~~the Company’s wholly-owned subsidiary, Global Aviation Services, LLC ("GAS")~~GAS to PrimeFlight Aviation Services, Inc., a Delaware corporation. The agreement ~~includes~~included a purchase price of ~~$21~~$21.0 million as well as an earn-out provision of $4$4.0 million if certain performance metrics ~~are~~were achieved by March 31, 2020. The Company received approximately $20.5 million of total proceeds at closing after the initial net working capital ~~adjustment.~~ adjustment, and has concluded that the performance metrics with regard to the earn-out provision have not been met. The Company recognized a pre-tax gain on the sale of GAS of approximately $10.5 million with tax impact of ~~$2.4~~$2.3 million for a net of tax gain of ~~$8.1~~$8.2 million during the ~~nine months~~fiscal year ended ~~December~~March 31, ~~2019.~~2020. The gain is subject to change pending final ~~settlement statement, final~~ transaction costs and net working capital adjustments. As of June 30, 2020, the settlement statement has not been finalized.

Summarized results of operations of GAS for the three ~~and nine~~ months ended ~~December 31,~~June 30, 2020 and 2019 ~~and 2018 through the date of disposition~~ are as follows (in thousands):

Three Months Ended December 31, Nine Months Ended December 31,
2019 2018 2019 2018
Net sales $ — $ 8,137 $ 16,637 $ 25,658
Operating Expense — (8,537) (17,319) (26,887)
Loss from discontinued operations before income taxes — (400) (682) (1,229)
Income tax benefit — (24) (612) (73)
Loss from discontinued operations, net of tax $ — $ (376) $ (70) $ (1,156)


	Three Months Ended June 30,
	2020		2019
Net sales	$	—	$	8,517
Operating Expense	—		(8,303)
Income from discontinued operations before income taxes	—		214
Income tax expense	—		(53)
Income from discontinued operations, net of tax	$	—	$	161

~~The following table presents summary balance sheet information of GAS that is presented as discontinued operations as of March 31, 2019 (in thousands):~~


~~Assets:~~	~~March 31, 2019~~
~~Cash and cash equivalents~~	$	~~107~~
~~Accounts receivable, net~~	~~8,197~~
~~Income tax receivable~~	16
~~Inventories, net~~	~~2,512~~
~~Other current assets~~	~~769~~
~~Current assets of discontinued operations~~	~~11,601~~
~~Property and equipment, net~~	~~554~~
~~Intangible assets, net~~	~~228~~
~~Goodwill~~	~~190~~
~~Other non-current assets~~	~~292~~
~~Non-current assets of discontinued operations~~	~~1,264~~
~~Liabilities:~~
~~Accounts payable~~	~~1,144~~
~~Income tax payable~~	~~(226)~~
~~Accrued expenses~~	~~669~~
~~Current liabilities of discontinued operations~~	$	~~1,587~~

Accrued Expenses


(in thousands)	June 30, 2020		March 31, 2020

Salaries, wages and related items	$	3,532	$	3,616
Profit sharing and bonus	2,408		3,349
Other deposits	2,009		1,722
Other	6,046		4,337
Total	$	13,995	$	13,024

5. Income Taxes

During the ~~three-month period~~three months ended ~~December 31, 2019,~~June 30, 2020, the Company recorded ~~$616,000 in~~$0.3 million income tax ~~expense from continuing operations~~benefit at an effective rate ~~("ETR")~~ of ~~51.5%~~23.89%. The Company records income taxes using ~~a discrete, year-to-date~~an estimated annual effective tax ~~expense calculation~~rate for interim reporting. The primary factors contributing to the difference between the federal statutory rate of ~~21.0%~~21% and the Company's effective tax rate for the ~~three-month period~~three months ended ~~December 31, 2019~~June 30, 2020 were the change in valuation allowance related to Delphax, the estimated ~~expense~~benefit for the exclusion of ~~loss~~income for the Company's captive insurance company subsidiary under Section 831(b)~~, the estimated deduction for Foreign-Derived Intangible Income,~~ and the exclusion from the tax provision of the minority owned portion of the pretax income of Contrail Aviation Support, LLC.

During the three ~~month period~~months ended ~~December 31, 2018,~~June 30, 2019, the Company recorded ~~$198,000 in~~$0.4 million income tax ~~expense from continuing operations at~~benefit which resulted in an ~~ETR~~effective tax rate of ~~(11.4)~~(10.42)%. The primary factors contributing to the difference between the federal statutory rate and the Company's effective tax rate for the ~~three-month period~~three months ended ~~December 31, 2018~~June 30, 2019 were the change in valuation allowance related to Delphax, the estimated benefit for the exclusion of income for the Company's captive insurance company subsidiary under Section 831(b), the ~~presentation~~liquidation of ~~the tax impact of the bargain purchase gain~~Delphax UK and ~~state income tax expense.~~

~~During the nine-month period ended December 31, 2019, the Company recorded $52,000~~Delphax Canada as mentioned in income tax benefit from continuing operations at an ETR of (2.2)%. The Company records income taxes using a discrete, year-to-date tax expense calculation 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 nine-month period ended December 31, 2019 were the change in valuation allowance related to Delphax, the estimated expense for the exclusion of loss for the Company's captive insurance company subsidiary under Section 831(b), the estimated deduction for Foreign-Derived Intangible Income,Note 12 and the exclusion from the tax provision of the minority owned portion of the pretax income of Contrail Aviation Support, LLC. During the nine-month period ended December 31, 2018, the Company recorded $241,000 in income tax expense from continuing operations at an ETR of 25.8%. 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 December 31, 2018 were related to the estimated benefit for the exclusion of income for the Company's captive insurance company subsidiary afforded under Section 831(b), the change in valuation allowance and the presentation of the tax impact of the bargain purchase gain.

For the three and nine months ended December 31, 2019, the ETR in discontinued operations is 0.0% and 89.7%, respectively. The ETR is impacted by the effect of the release of the valuation allowance recorded in fiscal year 2019 against the $2 million impaired reinsurance contracts. For the three and nine months ended December 31, 2018, the ETR in discontinued operations is 6.0% and 5.9%, respectively. The ETR is impacted by permanent, non-deductible items for tax.

6. Net Earnings 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 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. ~~There were 3,824 anti-dilutive securities as of December 31, 2019.~~ The computation of basic and diluted earnings per common share is as follows (in ~~thousands)~~thousands, except for per share figures):


		Three Months Ended December 31,						Nine Months Ended December 31,							Three Months Ended June 30,
		2019		2018		2019		2018			2020		2019
Net income (loss) from continuing operations		$	581	$	(1,941)	$	2,450	$	694
Net income from continuing operations attributable to non-controlling interests		(789)		(398)		(3,449)		(745)
Net loss from continuing operations attributable to Air T, Inc. stockholders		(208)		(2,339)		(999)		(51)
Loss from continuing operations per share:
Net loss from continuing operations										Net loss from continuing operations	$	(956)	$	3,995
Net loss (income) from continuing operations attributable to non-controlling interests										Net loss (income) from continuing operations attributable to non-controlling interests	115		(2,373)
Net (loss) income from continuing operations attributable to Air T, Inc. Stockholders										Net (loss) income from continuing operations attributable to Air T, Inc. Stockholders	$	(841)	$	1,622

(Loss) income from continuing operations per share:										(Loss) income from continuing operations per share:
Basic										Basic	(0.29)		0.72
Diluted										Diluted	(0.29)		0.72
Antidilutive shares excluded from computation of (loss) income per share from continuing operations (in shares)										Antidilutive shares excluded from computation of (loss) income per share from continuing operations (in shares)	5		—

Income from discontinued operations attributable to Air T, Inc. stockholders										Income from discontinued operations attributable to Air T, Inc. stockholders	—		161

Income from discontinued operations per share:										Income from discontinued operations per share:
Basic	Basic	$	(0.07)	$	(0.77)	$	(0.36)	$	(0.02)	Basic	—		0.07
Diluted	Diluted	$	(0.07)	$	(0.77)	$	(0.36)	$	(0.02)	Diluted	—		0.07

Loss from discontinued operations, net of tax		$	—	$	(376)	$	(70)	$	(1,156)
Gain (loss) on sale of discontinued operations, net of tax		(222)		—		8,137		—

Gain (loss) from discontinued operations attributable to Air T, Inc. stockholders		(222)		(376)		8,067		(1,156)

Income (loss) from discontinued operations per share:
(Loss) income per share:										(Loss) income per share:
Basic	Basic	$	(0.07)	$	(0.12)	$	2.93	$	(0.38)	Basic	(0.29)		0.79
Diluted	Diluted	$	(0.07)	$	(0.12)	$	2.93	$	(0.38)	Diluted	(0.29)		0.79

Income (Loss) per share:
Basic		$	(0.14)	$	(0.89)	$	2.57	$	(0.40)
Diluted		$	(0.14)	$	(0.89)	$	2.57	$	(0.40)
Antidilutive shares excluded from computation of (loss) income per share (in shares)										Antidilutive shares excluded from computation of (loss) income per share (in shares)	5		—

Weighted Average Shares Outstanding:	Weighted Average Shares Outstanding:									Weighted Average Shares Outstanding:
Basic	Basic	2,973		3,042		2,752		3,058		Basic	2,882		2,253
Diluted	Diluted	2,973		3,042		2,756		3,058		Diluted	2,882		2,257

On June 10, 2019, the Company effected a three-for-two stock split of its common stock in the form of a 50% stock dividend to shareholders of record as of June 4, 2019. All share and earnings per share information have been retroactively adjusted to reflect the stock split and the incremental par value of the newly-issued shares was recorded with the offset to additional paid-in capital.

With respect to our ~~December 31,~~June 30, 2019 Quarterly Report on Form 10-Q, the effect of the stock split was recognized retroactively in the stockholders’ equity accounts in the Condensed Consolidated Balance Sheets, and in all share data in the Condensed Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations.

7. Investments in Securities

The Company may, from time to time, employ trading strategies designed to profit from market anomalies and opportunities it identifies. Those strategies may include purchasing or selling exchange-traded equity securities, options, and futures contracts, and selling certain equity securities short. All investments in marketable securities are priced using publicly quoted market prices and are considered Level 1 fair value measurements.

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 June 30, 2020 and 2019, the Company had outstanding borrowings of $2.4 million and $0 under its margin account, respectively, which is reflected in accrued expenses and other on the condensed consolidated balance sheets. As of June 30, 2020 and 2019, the Company had cash margin balances related to exchange-traded equity securities and securities sold short of $3.0 million and $0, respectively, which is reflected in other current assets on the condensed consolidated balance sheets. The interest rate on margin account borrowings was 2.08% as of June 30, 2020.

As of June 30, 2020, the Company had gross unrealized gains aggregating to $0.6 million and gross unrealized losses aggregating to $0.4 million, which are included in the condensed consolidated statements of income.

8. Equity Method Investments

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. At ~~December 31, 2019,~~June 30, 2020, the Company held approximately 3.5 million shares of Insignia’s common stock representing approximately ~~29%~~30% of ~~the~~Insignia's outstanding shares. For the quarter ended ~~December 31, 2019,~~June 30, 2020, the Company recorded ~~a loss of $284,975~~approximately $0.3 million as its share of Insignia’s net loss for the three months ended ~~September 30, 2019~~March 31, 2020 along with a basis difference adjustment of $24,032. In addition, due to the adverse financial results as reported in Insignia's Form 10-Qs for the quarters ended June 30 and September 30, 2019 in addition to consideration of analyst reports and other qualitative factors, the Company determined that it has suffered from an other-than-temporary impairment in its investment in Insignia. As such, the Company recorded an impairment charge of $1,094,890 during the quarter ended December 31, 2019, totaling impairment charges of 2,304,779 for the nine months ended December 31, 2019. After the impairment, theapproximately $24,000. The Company's net investment basis in Insignia is ~~$2,035,650~~$1.0 million as of ~~December 31, 2019.~~

~~Summarized unaudited financial information for Insignia for the nine months ended September~~June 30, ~~2019 and 2018 is as follows (in thousands):~~

Nine Months Ended
September 30, 2019 Nine Months Ended
September 30, 2018
Revenue $ 15,636 $ 25,119
Gross Profit 3,165 9,314
Operating income (loss) (3,091) 1,331
Net income (loss) (2,562) 993
Net income (loss) attributable to Air T, Inc. stockholders $ (749) $ 203

On November 8, 2019, the Company made an investment of $2.8 million to purchase a ~~19.9%~~19.90% ownership stake in Cadillac ~~Casting~~Castings, Inc.("CCI"). The Company determined that CCI is a variable interest entity and that the Company is not the primary beneficiary. This is primarily the result of the Company's conclusion that it does not have the power to direct the activities that most significantly impact the economic performance of CCI. Accordingly, the Company does not consolidate CCI and has determined to accountaccounts for this investment ~~using~~under the equity method of accounting.

Summarized unaudited financial information for the ~~period ended December 31, 2019. In subsequent periods, Air T will depreciate the basis difference straight-line into~~Company's equity method ~~earnings.~~investees for the three months ended March 31, 2020 and March 31, 2019 is as follows (in thousands):


	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Revenue	$	21,936	$	30,337
Gross Profit	805		1,059
Operating loss	(2,378)		(2,326)
Net loss	(2,286)		(2,849)
Net loss attributable to Air T, Inc. stockholders	$	(570)	$	(322)

Inventories consisted of the following (in thousands):

The components of lease cost for the ~~three and nine months~~quarters ended ~~December 31, 2019~~ are as follows (in thousands):

Amounts reported in the condensed consolidated balance sheets for leases where we are the lessee as of ~~the quarter ended December~~June 30, 2020 and March 31, ~~2019~~2020 were as follows (in thousands):


	~~December 31, 2019~~
~~Operating leases~~
~~Operating lease right-of-use assets~~	$	~~8,458~~
~~Operating lease liabilities~~	$	~~8,913~~

~~Weighted-average remaining lease term~~	~~14 years, 3 months~~
~~Operating leases~~

~~Weighted-average discount rate~~	~~4.51~~		%
~~Operating leases~~


	June 30, 2020			March 31, 2020
Operating leases
Operating lease right-of-use assets	$	7,851		$	8,116
Operating lease liabilities	8,433			8,647

Weighted-average remaining lease term
Operating leases	14 years, 5 months			14 years, 4 months

Weighted-average discount rate
Operating leases	4.30		%	4.50		%

Maturities of lease liabilities under non-cancellable leases where we are the lessee as of the quarter ended ~~December 31, 2019~~June 30, 2020 are as follows (in thousands):

~~10.~~11. Financing Arrangements

On April 10, 2020, the Company entered into a loan with MBT in a principal amount of $8.2 million pursuant to the PPP Loan under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP Loan is evidenced by a promissory note (“Note”). The PPP Loan bears interest at a fixed annual rate of one percent (1%), with the first six months of interest deferred. Beginning on November 10, 2020, the Company will make seventeen (17) equal monthly installments of principal and interest payments with the final payment due on April 10, 2022. The Note provides for customary events of default including, among other things, cross-defaults on any other loan with MBT. The PPP Loan may be accelerated upon the occurrence of an event of default.

The PPP Loan is unsecured and guaranteed by the United States Small Business Administration. The Company may apply to MBT for forgiveness of the PPP Loan, with the amount which may be forgiven equal to the sum of payroll costs, covered rent and mortgage obligations, and covered utility payments incurred by the Company during the 24-week period beginning on April 10, 2020, calculated in accordance with the terms of the CARES Act. As of June 30, 2020, the Company has used the funds received from the PPP loan on eligible expenses as outlined in the CARES Act.

On June 26, 2020, the Company entered into a Second Amended and Restated Credit Agreement with MBT, together with certain related documents. Pursuant to the Amended Credit Agreement, MBT agreed to convert outstanding revolving credit advances in an amount equal to $9.5 million to a Term Loan. The new Term Loan ("Term Note E") has a maturity date of June 25, 2025. The new Term Loan, together with the existing Air T Revolving Credit Facility and other existing Term Loans are and continue to be guaranteed by certain subsidiaries of the Company and secured under the existing Security Agreement executed by the Company and the guarantors, certain real property and by certain pledged collateral accounts.

In connection with the execution and delivery of the Amended Credit Agreement, certain subsidiaries of the Company entered into new collateral account pledge agreements. In connection with the Amended Credit Agreement, MBT further agreed to reduce the interest rate floor applicable to the existing Revolving Credit Facility from 4.00% to 2.50%.

Borrowings of the Company and its subsidiaries are summarized below ~~(in thousands)~~ at ~~December 31, 2019~~June 30, 2020 and March 31, ~~2019,~~2020, respectively. AirCo and Contrail ~~Aviation Support, LLC, Contrail Aviation Leasing, LLC, and Contrail Aviation Leasing Ireland DAC, CRO No. 662616 (“Contrail”)~~ are subsidiaries of the Company in the commercial jet engines and parts segment.

On October 30, 2019, Contrail entered into Supplement #5 to Master Loan Agreement with Old National Bank (“Supplement #5”). In connection therewith, Contrail entered into the Promissory Note Term Note D in the principal amount of $7,553,165 to ONB (“Term Note D”). The Term Note D has a maturity date of October 30, 2021, with a variable interest rate equal to the LIBOR rate plus 3.75% per year. There are additional affirmative covenants regarding quarterly cash flow coverage and tangible net worth. Term Note D was fully paid off in the current quarter.


	June 30, 2020		March 31, 2020		Maturity Date	Interest Rate	Unused commitments
Air T Debt
Revolver - MBT	$	—	$	—	August 31, 2021	Greater of 2.5% or Prime - 1%	$	17,000
Supplemental Revolver - MBT	—		9,550		June 30, 2020	Greater of 1-month LIBOR + 1.25% and 3%
Term Note A - MBT	7,500		7,750		January 1, 2028	1-month LIBOR + 2%
Term Note B - MBT	3,750		3,875		January 1, 2028	4.50%
Term Note D - MBT	1,523		1,540		January 1, 2028	1-month LIBOR + 2%
Term Note E - MBT	9,449		—		June 25, 2025	Greater of LIBOR + 1.5% or 2.5%
Debt - Trust Preferred Securities	12,877		12,877		June 7, 2049	8.00%
PPP Loan	8,215		—		April 10, 2022	1.00%
Total	43,314		35,592

AirCo Debt
Revolver - MBT	7,500		8,335		August 31, 2021	Greater of 6.5% or Prime + 2%	2,500
Total	7,500		8,335

Contrail Debt
Revolver - ONB	20,634		21,284		September 5, 2021¹	1-month LIBOR + 3.45%	19,366
Term Loan A - ONB	5,793		6,285		January 26, 2021	1-month LIBOR + 3.75%
Term Loan E - ONB	5,746		6,320		December 1, 2022	1-month LIBOR + 3.75%
Term Loan F - ONB	8,217		8,358		May 1, 2025²	1-month LIBOR + 3.75%
Total	40,390		42,247

Delphax Solutions Debt
Canadian Emergency Business Account Loan	29		—		December 31, 2025	5.00%
Total	29		—

Total Debt	$	91,233	$	86,174

Less: Unamortized Debt Issuance Costs	$	(281)	$	(354)
Total Debt, net	$	90,952	$	85,820

On December 19, 2019, Contrail entered into Supplement #6 to that certain Master Loan Agreement with ONB. In connection therewith, Contrail entered into that certain Promissory Note Term Note E in the principal amount of $6,894,790 to ONB (“Term Note E”). The Term Note E has a maturity date of December 1, 2022, with a variable interest rate equal to the LIBOR rate plus 3.75% per year. There are additional affirmative covenants regarding quarterly cash flow coverage and tangible net worth.

On December 31, 2019, the Company and Minnesota Bank & Trust, a Minnesota state banking corporation (“MBT”, "the bank"), entered into Amendment No. 2 to that certain Amended and Restated Credit Agreement (the “Second Amendment”). In connection with the Second Amendment, the Company entered into that certain Supplemental Revolving Credit Note in the principal amount of $10,000,000 to MBT (the “Note”). The Note has a maturity date ofAt June 30, 2020, with a fluctuating annual rate of interest equal to the greater of (a) the sum of (i) the LIBOR Rate, and as the same may adjust monthly, plus (ii) 1.25%; or (b) 3.00%; provided, that, upon the occurrence and during the continuance of any Event of Default as defined therein, the rate of interest thereunder shall be increased by 3.00% above the rate of interest that would otherwise be in effect thereunder. The loan is secured by a pledge of a continuing security interest in the demand deposit cash collateral accounts of 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, with an aggregate account cash balance of $10,000,000 under the sole control by MBT. Twelve of the Company’s subsidiaries continue to, jointly and severally, guaranty the full and prompt payment and performance of all debts and obligations of the Company to MBT.

(In Thousands) December 31,
2019 March 31,
2019 Maturity Date Interest Rate Unused commitments
  Revolver - MB&T $ 13,608 $ 12,403 February 28, 2020 Prime - 1% $ 3,392
  Term Note A - MB&T 8,000 8,750 January 1, 2028 1-month LIBOR + 2%
  Term Note B - MB&T 4,000 4,375 January 1, 2028 4.5%
  Term Note D - MB&T 1,557 1,607 January 1, 2028 1-month LIBOR + 2%
Debt - Trust Preferred Securities 10,292 — June 7, 2049 8%
Note - MB&T 10,000 — June 30, 2020 1-month LIBOR + 1.25% or 3% —
Air T Debt 47,457 27,135
Revolver - MB&T — 3,820 May 21, 2019 7.5%
Revolver - MB&T 9,327 — February 28, 2020 greater of 6.50% or Prime + 2% 673
Term Loan - MB&T — 450 December 17, 2019 7.50%
Term Loan - MB&T — 400 June 17, 2020 7.25%
Term Loan - Park State — 2,100 June 17, 2020 8.50%
AirCo Debt 9,327 6,770
Revolver 11,652 — September 5, 2021 1-month LIBOR + 3% 8,348
Term Loan A 6,808 8,617 January 26, 2021 1-month LIBOR + 3.75%
Term Loan B — 15,500 September 14, 2021 1-month LIBOR + 3.75%
Term Loan C 9,621 — August 1, 2024 1-month LIBOR + 3.75%
Term Loan D — — October 30, 2021 1-month LIBOR + 3.75%
Term Loan E 6,895 — December 1, 2022 1-month LIBOR + 3.75%
Contrail Debt - Old National 34,976 24,117
Total Debt 91,760 58,022
Less: Unamortized Debt Issuance Costs (261) (369)
Total Debt, net $ 91,499 $ 57,653

~~Maturities~~ ~~- At December 31, 2019,~~ our contractual financing obligations, including payments due by period, are as follows (in thousands):

¹ The Contrail revolving credit facility contains a provision where Contrail is required to pay down the total outstanding principal balance of its revolver to zero for at least thirty consecutive days during each annual period ending on the revolver's anniversary. Due to this requirement, the entire outstanding balance of the revolver as of March 31, 2020 was classified as "Current portion of long-term debt" on the Consolidated Balance Sheets, and included in the contractual financing obligations due by fiscal year ended March 31, 2021 below.

² On April 17, 2020, Contrail entered into an agreement with ONB to defer monthly principal payments on Term Note F for 90 days ("the deferral period"), starting with the May 2020 payments. Further, the loan's maturity date was extended by a period of time equal to the deferral period.


Due by	Amount
~~December 31, 2020~~June 30, 2021	$	~~51,504~~37,249
~~December 31, 2021~~June 30, 2022	~~12,795~~19,512
~~December 31, 2022~~June 30, 2023	~~6,601~~6,308
~~December 31, 2023~~June 30, 2024	~~3,279~~5,206
~~December 31, 2024~~June 30, 2025	~~1,567~~5,143
Thereafter	~~16,014~~17,815
	~~91,760~~91,233
Less: Unamortized Debt Issuance Costs	~~(261)~~(281)
	$	~~91,499~~90,952

~~Liquidity and Financial Condition~~ - The Company's condensed consolidated financial statements as of December 31, 2019 have been prepared assuming that the Company will continue its operations as a going concern. The Company believes cash on hand, net cash provided by operations, together with its current revolving lines of credit, as amended or replaced, 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. However, this evaluation assumes continued positive cash flows and the ability to extend the maturity of or refinance the Air T and AirCo revolvers ("revolvers") maturing February 28, 2020. Based on our discussions to date with MBT, as well as our history of refinancing with MBT and the receipt of written confirmation from MBT indicating their intention to refinance the revolvers, at substantially the same terms, with maturity dates extending beyond February 28, 2021, the Company believes the plan to refinance these revolvers is probable of occurring.

~~Other~~ - 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~~the 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). See ~~Footnote~~Note 6 ~~for discussion.~~.

•The Company issued and distributed to existing common shareholders, via a non-cash transaction from equity, an aggregate of 1.6 million trust preferred capital security shares ("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). ~~The~~

Debt Preferred Securities and Warrants ~~are exercisable~~ - 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 ~~one year from issuance.~~$2.40, representing a 4% discount to the new stated value of $2.50 for one-tenth of a share.

As of ~~December 31, 2019, 2,516,916~~June 30, 2020, 3.6 million Warrants to purchase TruPs have been exercised. As a result, the amount outstanding on the Company's Debt - Trust Preferred Securities is ~~$10,292,000 as of December 31, 2019.~~$12.9 million.

At ~~December 31, 2019,~~June 30, 2020, the Company had 4.8 million Warrants to purchase TruPs outstanding and exercisable to purchase ~~5,883,084 shares of~~ its TruPs at an exercise price of $2.40 per ~~share, which represents~~one-tenth of a ~~discount~~share.

On June 9, 2020, the Company announced the extension of the expiration date of the Warrants. The Warrants, previously scheduled to ~~the $2.50 face value of each Trust Preferred Security. The Warrants~~expire on June 10, 2020, are extended and now will expire on ~~June 7,~~September 8, 2020 or earlier upon redemption or liquidation.


(in thousands)	Fair Value Measurement as of ~~December 31, 2019~~June 30, 2020
Warrant liability (Level 2)	$	~~588,308~~485

As of ~~December 31, 2019,~~June 30, 2020, the Warrants are recorded within "Other non-current liabilities" on our condensed consolidated balance sheets. Fair value measurement was based on market activity and trading volume as observed on the NASDAQ Global Market. The liability is classified as Level 2 in the hierarchy (Level 2 is defined as quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability).

~~The Company assumes various financial obligations~~Derivatives and commitments in the normal course of its operations and financing activities. Financial obligations are considered to represent known future cash payments that the Company is required to make under existing contractual arrangements such as debt and lease agreements.

Hedging Activities - 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 of August 1, 2018, these swap contracts were designated as cash flow hedging instruments and qualified as effective hedges in accordance with ASC 815-30. The effective portion of changes in the fair value on these instruments is recorded in other comprehensive income and is reclassified into the condensed consolidated statement of income as interest expense in the same period in which the underlying hedge transaction affects earnings. As of ~~December 31, 2019~~June 30, 2020 and March 31, ~~2019,~~2020, the fair value of the interest-rate swap contracts was a liability of ~~$448,000 and $227,000, respectively,~~$0.9 million, which is included within other non-current liabilities in the condensed consolidated balance sheets. During the three months ended ~~December 31, 2019,~~June 30, 2020, the Company recorded a ~~gain~~loss of approximately ~~$94,000,~~$26.0 thousand, net of tax, in the condensed consolidated statement of comprehensive income ~~(loss)~~ for changes in the fair value of the instruments.

~~11.~~12. Variable Interest Entities

A variable interest entity ("VIE") is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support, or (ii) has equity investors who lack the characteristics of a controlling financial interest. Under ASC 810 - Consolidation, an entity that holds a variable interest in a VIE and meets certain requirements would be considered to be the primary beneficiary of the VIE and required to consolidate the VIE in its condensed consolidated financial statements. In order to be considered the primary beneficiary of a VIE, an entity must hold a variable interest in the VIE and have both:

•the power to direct the activities that most significantly impact the economic performance of the VIE; and

•the right to receive benefits from, or the obligation to absorb losses of, the VIE that could be potentially significant to the VIE.

The Company concluded that its investments in Delphax’s equity and debt, and its investment in the Delphax warrant, each constituted a variable interest. In addition, the Company concluded that it became the primary beneficiary of Delphax on November 24, 2015. The Company consolidated Delphax in its condensed consolidated financial statements beginning on that date.

~~The following table sets forth the carrying values of Delphax’s assets and liabilities as of December 31, 2019 and March 31, 2019 (in thousands):~~

December 31, 2019 March 31, 2019
ASSETS
Current assets:
Cash and cash equivalents $ 3 $ 12
Accounts receivable, net 50 47
Other current assets 9 59
Total current assets 62 118
Other tax receivables-long-term — 311
Total assets 62 429
LIABILITIES
Current liabilities:
Accounts payable 96 2,151
Accrued expenses 392 3,158
Short-term debt — 1,750
Total current liabilities 488 7,059
Total liabilities 488 7,059
Net Liabilities $ (426) $ (6,630)

Upon petition by the Company, on August 8, 2017 the Ontario Superior Court of Justice in Bankruptcy and Insolvency adjudged Delphax Canada to be bankrupt. As a result, Delphax Canada ceased to have capacity to deal with its property, which then vested in the trustee in bankruptcy of Delphax Canada subject to the rights of secured creditors. As of June 30, 2019, the bankruptcy proceedings were finalized in accordance with Canadian law and, therefore, Delphax Canada was legally discharged of its liabilities. The conclusion of the bankruptcy proceedings also resulted in the dissolution of Delphax Canada. In addition, on June 11, 2019, the Company ~~has~~ also fully dissolved Delphax UK. As such, the only Delphax entity that remains in existence as of ~~December~~March 31, ~~2019~~2020 is Delphax France. The Company extinguished the assets and liabilities of Delphax Canada and Delphax UK during the quarter ended June 30, 2019 and recognized a gain on dissolution of entities of $4.5 million.

Delphax had total assets and liabilities with carrying values of $19.0 thousand and $0.5 million, as of June 30, 2020 and $11.0 thousand and $0.5 million, as of March 31, 2020.

Delphax’s components of net income (loss) are included in our condensed consolidated statements of income and comprehensive income herein. For the three months ended June 30, 2020 and June 30, 2019, Delphax did not recognize any revenue. For the three months ended June 30, 2020, Delphax recorded net loss of $16.0 thousand, broken out between an operating loss of $19.0 thousand and non-operating income of $3.0 thousand.

24For the three months ended June 30, 2019, Delphax recorded net income of $6.2 million, broken out between an operating loss of $73.0 thousand and non-operating income of $6.2 million, the majority of which was the result of the gain on dissolution of entities of $4.5 million.

Delphax’s revenues and expenses are included in our consolidated financial statements beginning November 24, 2015 through December 31, 2019. Revenues and expenses prior to the date of initial consolidation were excluded. We have determined that the attribution of Delphax net income or loss should be based on consideration of all of Air T’s investments in Delphax and Delphax Canada. The Delphax warrant ("Delphax warrant") provides that in the event that dividends are paid on the common stock of Delphax, the holder of the Delphax warrant is entitled to participate in such dividends on a ratable basis as if the Delphax warrant had been fully exercised and the shares of Series B Preferred Stock acquired upon such exercise had been converted into shares of Delphax common stock. This provision would have entitled Air T, Inc. to approximately 67% of any Delphax dividends paid, with the remaining 33% paid to the non-controlling interests. We concluded that this was a substantive distribution right which should be considered in the attribution of Delphax net income or loss to non-controlling interests. We furthermore concluded that our investment in the debt of Delphax should be considered in attribution. Specifically, Delphax’s net losses are attributed first to our Series B Preferred Stock and Delphax warrant investments and to the non-controlling interest (67%/33%) until such amounts are reduced to zero. Additional losses are then fully attributed to our debt investments until they too are reduced to 0. This sequencing reflects the relative priority of debt to equity. Any further losses are then attributed to Air T and the non-controlling interests based on the initial 67%/33% share. Delphax net income is attributed using a backwards-tracing approach with respect to previous losses.

As a result of the application of the above-described attribution methodology, for the quarters ended December 31, 2019 and December 31, 2018 the attribution of Delphax losses to non-controlling interests was 33% and 33%, respectively.

The following table sets forth the revenue and expenses of Delphax prior to intercompany eliminations that are included in the Company’s condensed consolidated statement of income for the three months ended December 31, 2019 and 2018 (in thousands):

Nine Months Ended December 31,
2019 2018
Operating Revenues $ — $ —
Operating Expenses:
Cost of sales — —
General and administrative 182 216
182 216
Operating Loss (182) (216)
Non-operating Income (Expenses), net 6,237 (133)
Income (Loss) Before Income Taxes 6,055 (349)
Income Taxes — —
Net Income (Loss) $ 6,055 $ (349)

~~12.~~ ~~ShareRepurchase~~

On May 14, 2014, the Company announced that its Board of Directors had authorized a program to repurchase up to 750,000 (retrospectively adjusted to 1,125,000 after the stock split in June 2019) shares of the Company’s common stock from time to time on the open market or in privately negotiated transactions, in compliance with SEC Rule 10b-18, over an indefinite period.

During the three months ended December 31, 2019, the Company repurchased 110,146 shares at an aggregate cost of $2,157,200. Historically, the Company retired all shares repurchased; however, this quarter, the Company changed its intention in order to hold shares repurchased. As such, these shares are reflected as treasury shares as of December 31, 2019.

13. Geographical information

Total ~~property and equipment, including~~tangible long-lived assets, ~~on lease,~~ net of accumulated depreciation, located in the United States, the Company's country of domicile, and held outside the United States are summarized in the following table as of ~~December 31, 2019~~June 30, 2020 and March 31, ~~2019, in thousands:~~2020 (in thousands):


		December 31, 2019		March 31, 2019			June 30, 2020		March 31, 2020
United States	United States	$	5,197	$	4,393	United States	$	23,968	$	19,086
Foreign	Foreign	14,800		25,035		Foreign	6,547		14,131
Total property and equipment, net		$	19,997	$	29,428
Total tangible long-lived assets, net						Total tangible long-lived assets, net	$	30,515	$	33,217

The Company's tangible long-lived assets, net of accumulated depreciation, held outside of the United States represent primarily engines and aircraft on lease or held for lease at ~~December 31, 2019.~~June 30, 2020. The net book value located within each individual country at ~~December 31, 2019~~June 30, 2020 and March 31, ~~2019~~2020 is listed below ~~in thousands:~~(in thousands):

December 31, 2019 March 31, 2019
Australia $ 5 $ 5
Canada 51 —
Estonia 7,930 —
Mexico 1,845 2,681
Netherlands 4,969 5,541
China — 16,808
Total property and equipment, net $ 14,800 $ 25,035


	June 30, 2020		March 31, 2020
Mexico	$	1,857	$	1,845
Netherlands	4,588		4,778
Estonia	—		7,408
Other	102		100
Total tangible long-lived assets, net	$	6,547	$	14,131

Total revenue, ~~from continuing operations,~~ in and outside the United States is summarized in the following table for the ~~nine~~three months ended ~~December 31,~~June 30, 2020 and June 30, 2019 ~~and December 31, 2018, in thousands:~~(in thousands):


	June 30, 2020		June 30, 2019
United States	$	34,649	$	37,611
Foreign	2,321		9,577
Total revenue	$	36,970	$	47,188

December 31, 2019 December 31, 2018
United States $ 127,115 $ 134,753
Foreign 44,066 13,420
Total revenue from continuing operations $ 171,181 $ 148,173

14. Segment Information

The Company has 5 business segments: overnight air cargo, ground equipment sales, commercial jet engine and parts segment, printing equipment and maintenance and corporate and other. Segment data is summarized as ~~follows (in thousands):~~follows:

(In Thousands) Three Months Ended
December 31, Nine Months Ended
December 31,
2019 2018 2019 2018
Operating Revenues by Segment:
Overnight Air Cargo $ 18,706 $ 17,868 $ 56,771 $ 52,573
Ground Equipment Sales:
Domestic 13,505 13,022 36,466 29,384
International 2,444 3,247 4,473 6,118
Total Ground Equipment Sales 15,949 16,269 40,939 35,502
Printing Equipment and Maintenance:
Domestic 5 80 202 274
International 77 25 197 270
Total Printing Equipment and Maintenance 82 105 399 544
Commercial Jet Engines and Parts:
Domestic 22,436 9,904 37,068 37,563
International 18,885 11,086 38,724 21,390
Total Commercial Jet Engines and Parts 41,321 20,990 75,792 58,953
Corporate and other 415 236 1,556 601
Intercompany (3,173) 18 (4,276) —
Total 73,300 55,486 171,181 148,173
Operating Income (Loss):
Overnight Air Cargo 610 69 874 1,324
Ground Equipment Sales 1,644 1,173 4,213 2,264
Printing Equipment and Maintenance (425) (352) (1,262) (1,007)
Commercial Jet Engines and Parts 3,807 2,449 6,997 6,237
Corporate and other (1,558) (1,479) (5,418) (5,145)
Intercompany (358) 5 (219) 4
Total 3,720 1,865 5,185 3,677
Capital Expenditures:
Overnight Air Cargo 140 (3) 196 31
Ground Equipment Sales 834 22 844 318
Printing Equipment and Maintenance — — — —
Commercial Jet Engines and Parts 16,595 84 34,251 19,555
Corporate and other 213 30 285 142
Total 17,782 133 35,576 20,046
Depreciation, Amortization and Impairment:
Overnight Air Cargo 18 19 55 63
Ground Equipment Sales 80 57 195 213
Printing Equipment and Maintenance 2 (23) 32 7
Commercial Jet Engines and Parts 753 1,916 3,946 4,470
Corporate and other 127 149 404 445
Intercompany (1) 36 (4) 34
Total $ 979 $ 2,154 $ 4,628 $ 5,232


	Three Months Ended June 30,
	2020		2019
Operating Revenues by Segment:
Overnight Air Cargo	$	16,171	$	18,320
Ground Equipment Sales:
Domestic	15,811		10,859
International	17		1,390
Total Ground Equipment Sales	15,828		12,249
Printing Equipment and Maintenance:
Domestic	7		18
International	81		46
Total Printing Equipment and Maintenance	88		64
Commercial Jet Engines and Parts:
Domestic	2,470		8,186
International	2,223		8,141
Total Commercial Jet Engines and Parts	4,693		16,327
Corporate and other	190		228
Total	$	36,970	$	47,188

Operating Income (Loss):
Overnight Air Cargo	$	555	$	17
Ground Equipment Sales	2,216		1,347
Printing Equipment and Maintenance	(223)		(382)
Commercial Jet Engines and Parts	(902)		1,888
Corporate and other	(1,912)		(1,872)
Total	$	(266)	$	998

Capital Expenditures:
Overnight Air Cargo	$	51	$	8
Ground Equipment Sales	111		10
Printing Equipment and Maintenance	—		—
Commercial Jet Engines and Parts	457		3,465
Corporate and other	27		65
Total	$	646	$	3,548

Depreciation and Amortization:
Overnight Air Cargo	16		$	18
Ground Equipment Sales	68		46
Printing Equipment and Maintenance	2		2
Commercial Jet Engines and Parts	382		1,735
Corporate and other	141		140
Total	$	609	$	1,941

15. Commitments and Contingencies

~~In 2016,~~ Contrail ~~Aviation~~ entered into an Operating Agreement (the “Operating Agreement”) with the Seller providing for the governance of and the terms of membership interests in Contrail Aviation and including put and call options (“Put/Call Option”). 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 is on July 18, 2021. The Company has presented this redeemable non-controlling interest in Contrail Aviation between the liabilities and equity sections of the accompanying condensed consolidated balance sheets. In addition, the ~~Company~~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 ~~$8,190,000.~~$5.5 million. The ~~net~~ change in the redemption value ~~compared to March 31, 2019~~for the three months ended June 30, 2020 is ~~an increase of $2,714,000,~~

$0.5 million, of which ~~$1,585,000 was~~$0.4 million related to the ~~net~~ change in fair value, ~~during the nine months ended December 31, 2019,~~ which is reflected on our condensed consolidated statements of equity.

16. Subsequent Events

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

On January 7, 2020, Air T announced that a one-for-ten reverse split of its Alpha Income Preferred (AIP) securities (AIRTP) will be completed effective January 14, 2020. The record date for the reverse split will be January 14, 2020.

AsOn August 11, 2020, AirCo 1, LLC (“AirCo 1”), a result of the reverse split, effective January 14, 2020, the stated value of the AIP will be $25.00 per share. Future cash distributions on the AIP will be in the amount of $0.50 per share (remaining at a rate of 8.0% per annum) commencing with the next distribution payment date of February 17, 2020.

Warrants to purchase AIP ("Warrants") (NASDAQ:AIRTW) will remain outstanding, with the number of shares of AIP that can be purchased and the exercise price per share to be adjusted for the reverse split. As a result, effective January 14, 2020, each Warrant will confer upon its holder the right to purchase one-tenth of a share of AIP for $2.40, representing a 4% discount to the new stated value of $2.50 for one-tenth of a share.

~~The common stock~~wholly-owned subsidiary of Air T Inc. ~~(AIRT) is not affected by~~and subsidiaries, and MBT, entered into Amendment No.2 to the ~~January 2020 reverse split.~~

Amended and Restated Loan Agreement (the "Second Amendment”). The Second Amendment reduces the total amount of credit available under the revolving line of credit from $10.0 million to $7.5 million.

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

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

Certain statements contained in this section and elsewhere in this Form 10-Q constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include but are not limited to: (i) trends affecting our financial condition or results of operations; (ii) our business and growth strategies; (iii) risks related to our operating units industries and the COVID-19 pandemic; (iv) our financing plans; and (v) other risks detailed in the Company’s periodic reports filed with the Securities and Exchange Commission. The words “believe”, “expect”, “anticipate”, “may”, “plan”, “should”, and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statements were made and are not guarantees of future performance.

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 five 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,~~jet 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;

•Printing equipment and maintenance, which designs, manufactures and sells advanced digital print production equipment and provides maintenance services to commercial customers; and commercial aircraft companies and,

•Corporate and other, which acts as the capital allocator and resource for other segments.

The Company also has ownership interests in Insignia and CCI. The operations of these companies are not consolidated into the operations of the Company. See Note 8 of Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this report.

On September 30, 2019, we completed the sale of 100% of the equity ownership in the Company's wholly-owned subsidiary, Global Aviation Services, LLC ("GAS"), which previously constituted the ground support services segment. See Note 43, Discontinued Operations, of Notes to ~~the consolidated financial statements.~~Condensed Consolidated Financial Statements included under Part I, Item 1 of this report.

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.~~income and Adjusted EBITDA.

~~All discussions~~Results of Operations

Outlook

The outbreak of COVID-19 and ~~disclosures below~~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 remain open. However, as a result of measures taken to limit the impact of COVID-19, self-quarantines or actual viral health issues, we initially experienced a substantial number of disruptions, and have experienced and continue to experience a reduction in demand for commercial aircraft, jet engines and parts compared to historical periods. Furthermore, while operating expenses at our businesses are ~~in thousands, unless stated otherwise.~~likely to decrease, we expect that many of our businesses will generate substantially reduced operating cash flow. We expect that these impacts are likely to continue to some extent as the outbreak persists and potentially lasts even longer. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions, and, as a result, present material uncertainty and risk with respect to us and our results of operations.

~~RESULTS OF OPERATIONS~~

~~Third~~

First Quarter Fiscal 2020 Compared to ~~Third~~First Quarter Fiscal 2019

Consolidated revenue ~~increased~~decreased by ~~$17,814 or 32%~~$10.2 million (22%) to ~~$73,300~~$37.0 million for the three-month period ended ~~December 31, 2019~~June 30, 2020 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 ~~December 31, 2019~~June 30, 2020 compared to the same quarter in the prior fiscal ~~year (in thousands):~~year:

Three Months Ended
December 31, Change
2019 2018
Overnight Air Cargo $ 18,706 $ 17,868 $ 838 5 %
Ground Equipment Sales 15,949 16,278 (329) (2) %
Commercial Jet Engines and Parts 38,536 20,990 17,546 84 %
Printing Equipment and Maintenance 82 105 (23) (22) %
Corporate and other 27 245 (218) (89) %
$ 73,300 $ 55,486 $ 17,814 32 %


	Three Months Ended June 30,						Change
	2020		2019
Overnight Air Cargo Segment	$	16,171	$	18,320	$	(2,149)	(12)	%
Ground Equipment Sales Segment	15,828		12,249		$	3,579	29	%
Commercial Jet Engines and Parts	4,693		16,327		$	(11,634)	(71)	%
Printing Equipment and Maintenance	88		64		$	24	38	%
Corporate and other	190		228		$	(38)	(17)	%
	$	36,970	$	47,188	$	(10,218)	(22)	%

Revenues from the air cargo segment ~~increased~~decreased by ~~$838 (5%~~$2.1 million (12%) compared to the ~~third~~first quarter of the prior fiscal year. The ~~increase~~decrease was principally attributable to ~~higher~~lower maintenance revenue from ~~outside~~ customers ~~and an increase in pass-through parts costs, offset by lower admin fees and pass-through costs related~~due to ~~flight operations.~~COVID-19.

The ground equipment sales segment contributed approximately ~~$15,949~~$15.8 million and ~~$16,278~~$12.2 million to the Company’s revenues for the three-month periods ended ~~December 31,~~June 30, 2020 and 2019 ~~and 2018~~ respectively, representing a ~~$329 (2)% decrease~~$3.6 million (29%) increase in the current ~~quarter.~~quarter primarily driven by strong sales of catering trucks (compared to no catering truck sales in the prior year comparable quarter). At ~~December 31, 2019,~~June 30, 2020, the ground equipment sales segment’s order backlog was ~~$29.1~~$48.7 million compared to ~~$18.3~~$31.8 million at ~~December 31, 2018.~~

June 30, 2019.

The commercial jet engines and parts segment contributed ~~$38,536~~$4.7 million of revenues in the quarter ended ~~December 31, 2019~~June 30, 2020 compared to ~~$20,990~~$16.3 million in the comparable prior year quarter which is ~~an increase~~a decrease of ~~$17,546~~$11.6 million or ~~84%~~71%. The ~~increase was~~decrease is primarily ~~driven by Contrail's sale~~attributable to the fact that all the companies within this segment had lower component sales and lease income due to the impact of ~~7 assets in the current quarter, compared to 2 assets sold in prior comparable quarter.~~

COVID-19.

Following is a table detailing operating (loss) income ~~(loss)~~ by segment during the three months ended ~~December 31, 2019~~June 30, 2020 compared to the same quarter in the prior fiscal ~~year (in thousands):~~year:

Three Months Ended December 31, 2019 Change
2019 2018
Overnight Air Cargo $ 638 $ 73 $ 565 774 %
Ground Equipment Sales 1,644 1,175 469 40 %
Commercial Jet Engines and Parts 3,440 2,449 991 40 %
Printing Equipment and Maintenance (425) (353) (72) (20) %
Corporate and other (1,577) (1,479) (98) (7) %
$ 3,720 $ 1,865 $ 1,855 99 %


	Three Months Ended June 30, 2020						Change
	2020		2019
Overnight Air Cargo Segment	$	555	$	17	$	538
Ground Equipment Sales Segment	2,216		1,347		$	869
Commercial Jet Engines and Parts	(902)		1,888		$	(2,790)
Printing Equipment and Maintenance	(223)		(383)		$	160
Corporate and other	(1,912)		(1,872)		$	(40)
	(266)		998		$	(1,264)

Consolidated operating ~~income~~loss for the quarter ended ~~December 31, 2019~~June 30, 2020 was ~~$3,720, an increase~~$0.3 million, a decrease of ~~$1,855~~$1.3 million from ~~the~~ operating income of ~~$1,865 in~~$1.0 million for the comparable quarter of the prior year.

Operating income ~~from~~for the air cargo segment increased by ~~$565 (774%) compared~~$0.5 million due primarily to ~~the third quarter of the prior fiscal year. The increase was principally attributable to margins improved~~more efficient labor utilization and broad-based operational improvements led by ~~flight operations being fully staffed during peak, therefore paying out less bonuses and incentives than prior year comparable quarter.~~a new management team.

The ground equipment sales segment operating income increased by ~~$469 (40%~~$0.9 million (65%) to ~~$1,644.~~$2.2 million. This increase was primarily attributable to the ~~fact that~~improved operating leverage achieved on the sales increase noted in the ~~current quarter contained higher margin orders when compared to prior quarter sales that included broader product mix with lower margin orders.~~segment revenue discussion above.

~~The~~Operating results of the commercial jet engines and parts segment ~~generated an~~decreased to operating ~~income~~loss of ~~$3,440~~$0.9 million in the current-year quarter compared to an operating income of ~~$2,449~~$1.9 million in the prior-year quarter. The change was ~~due~~primarily attributable to ~~increased~~decreased sales at ~~Contrail, partially offset by higher operating costs~~the companies within this segment as explained in the ~~segment.~~

Consolidated operating expenses increased by $15,959 or 30% to $69,580 in the current year quarter. The increase in operating expenses was primarily driven by the commercial jet engines and parts segment. The higher operating expenses was a direct result of increased sales in this segment.segment revenue discussion above.

Following is a table detailing non-operating (loss)/ income ~~(loss)~~ during the three months ended ~~December 31, 2019~~June 30, 2020 compared to the same quarter in the prior fiscal ~~year (in thousands):~~year:


		Three Months Ended December 31,								Change	Three Months Ended June 30,				Change
		2019		2018					2020		2019
Other-than-temporary impairment loss on investments	Other-than-temporary impairment loss on investments	$	(1,095)	$	(2,000)	$	905	Other-than-temporary impairment loss on investments	$	—	$	(815)	$	815
Interest expense		(1,227)		(1,186)		(41)
Interest expense and other								Interest expense and other	(1,161)		(1,024)		(137)
Gain on settlement of bankruptcy	Gain on settlement of bankruptcy	—		—		—		Gain on settlement of bankruptcy	—		4,509		(4,509)
Bargain purchase acquisition gain		—		—		—
Income (Loss) from equity method investments		(282)		201		(483)
Loss from equity method investments								Loss from equity method investments	(558)		(321)		(237)
Other	Other	81		(623)		704		Other	729		271		458
		$	(2,523)	$	(3,608)	$	1,085		$	(990)	$	2,620	$	(3,610)

The Company had net non-operating loss of ~~$(2,523)~~$1.0 million for the quarter ended ~~December 31, 2019, an increase~~June 30, 2020, a decrease of ~~$1,085~~$3.6 million from ~~a non-operating loss of $(3,608)~~$2.6 million in the prior-year ~~quarter. This was primarily driven~~quarter, principally because the prior-year quarter non-operating income included a gain on liquidation of entities of $4.5 million, offset by ~~the fact that the Company incurred~~ an impairment loss in the investment of Insignia of ~~$1,095 in current quarter, compared to an impairment loss of $2,000 in the investment of reinsurance contracts in the prior year comparable quarter.~~

$0.8 million.

Pretax income from continuing operations for the three-month period ended December 31, 2019 was $1,197 compared to pretax loss of $(1,743) in the prior year comparable period, which was primarily attributable to the increase in operating income of $1,855 and decrease in non-operating loss of $1,085 as explained above.

During the ~~three-month period~~three months ended ~~September~~June 30, ~~2019,~~2020, the Company recorded ~~$616 in~~$0.3 million income tax ~~expense~~benefit at an effective rate of ~~51.46%~~23.89%. The Company records income taxes using ~~a discrete, year-to-date~~an estimated annual effective tax ~~expense calculation~~rate for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21% and the Company's effective tax rate for the ~~three-month period~~three months ended ~~December 31, 2019~~June 30, 2020 were the change in valuation allowance related to Delphax, the estimated ~~expense~~benefit for the exclusion of ~~loss~~income for the Company's captive insurance company subsidiary under Section 831(b)~~, the estimated deduction for Foreign-Derived Intangible Income,~~ and the exclusion from the tax provision of the minority owned portion of the pretax income of Contrail Aviation Support, LLC. During the three ~~month period~~months ended ~~December 31, 2018,~~June 30, 2019, the Company recorded ~~$198 in~~$0.4 million income tax ~~expense~~benefit which resulted in an effective tax rate of ~~(11.36)~~(10.42)%. The primary factors contributing to the difference between the federal statutory rate and the Company's effective tax rate for the ~~three-month period~~three months ended ~~December 31, 2018~~June 30, 2019 were the change in valuation allowance related to Delphax, the estimated benefit for the exclusion of income for the Company's captive insurance company subsidiary under Section 831(b), the ~~presentation~~liquidation of ~~the tax impact of the bargain purchase gain~~Delphax UK and ~~state income tax expense.~~

~~First Nine Months of Fiscal 2019 Compared to First Nine Months of Fiscal 2018~~

~~Following is a table detailing revenue by segment (in thousands):~~

Nine Months Ended
December 31, Change
2019 2018 9 mos
Overnight Air Cargo $ 56,771 $ 52,573 $ 4,198 8 %
Ground Equipment Sales 40,939 35,502 5,437 15 %
Printing Equipment and Maintenance 396 544 (148) (27) %
Commercial Jet Engines and Parts 72,665 58,953 13,712 23 %
Corporate 410 601 (191) (32) %
$ 171,181 $ 148,173 $ 23,008 16 %

Revenues from the air cargo segment increased by $4,198 or 8% compared to the nine months ended December 31, 2018. The increase was principally attributable to an increase in maintenance pass-through costs, freight and sales from customers outside of FedEx.

The ground equipment sales segment contributed approximately $40,939 and $35,502 to the Company’s revenues during the nine months ended December 31, 2019 and 2018 respectively, representing a $5,437 or 15% increase in the current period. The increase was due to increased orders of commercial and military deicers in addition to new customers.

The commercial jet engines and parts segment contributed $72,665 of revenues in the nine months ended December 31, 2019 compared to $58,953 in the comparable prior year nine months. The increase was primarily driven by Contrail's sale of 8 assets in the nine-month period ended December 31, 2019 in addition to higher component sales and lease revenues.

~~Following is a table detailing operating income (loss) by segment during the nine months ended December 31, 2019 compared to the same nine months in the prior fiscal year (in thousands):~~

Nine Months Ended
December 31, Change
2019 2018 9 mos
Overnight Air Cargo $ 909 $ 1,328 $ (419) (32) %
Ground Equipment Sales 4,213 2,264 1,949 86 %
Printing Equipment and Maintenance (1,107) (1,007) (100) (10) %
Commercial Jet Engines and Parts 6,411 6,237 174 3 %
Corporate (5,241) (5,145) (96) (2) %
$ 5,185 $ 3,677 $ 1,508 41 %

~~Consolidated operating income for the nine months ended December 31, 2019 was $5,185, an increase of $1,508 from operating income of $3,677 for the comparable nine months of the prior year.~~

Operating income for the air cargo segment decreased by $419 (32)% due primarily to lower maintenance margin from FedEx direct labor maintenance and higher overhead expenses, offset by higher margin on revenues from customers outside of FedEx.

The ground equipment sales segment operating income increased by $1,949 (86%) to $4,213 in the nine-month period ended December 31, 2019. This increase was primarily attributable to increased sales volumeDelphax Canada as ~~well as higher margin product mix.~~

Consolidated operating expenses increased by $21,500 or 15% to $165,996 in the nine months ended December 31, 2019. The increase in operating expenses was primarily driven by the increases in the commercial jet engines and parts segment activity as a result of increased sales at Contrail compared to the prior year period.

~~Following is a table detailing non-operating income (loss) during the nine months ended December 31, 2019 compared to the same nine months in the prior fiscal year (in thousands):~~

Nine Months Ended
December 31, Change
2019 2018 9 months
Other-than-temporary impairment loss on investments $ (2,305) $ (2,000) $ (305)
Interest expense (4,298) (2,608) (1,690)
Gain on settlement of bankruptcy 4,527 — 4,527
Bargain purchase acquisition gain 49 1,984 (1,935)
Income (Loss) from equity method investments (636) 371 (1,007)
Other (124) (489) 365
$ (2,787) $ (2,742) $ (45)

The Company had net non-operating loss of $(2,787) for the nine months ended December 31, 2019, an increase of $(45) from net non-operating loss of $(2,742) in the prior-year nine-month period, principally due to an increase in year-to-date impairment loss of $(305), an increase in interest expense of $(1,690) generated by increased debt activities as detailedmentioned in ~~Footnote 10~~Note 12, ~~a decrease in bargain purchase acquisition gain of $(1,935) offset by the $4,527 gain on settlement of bankruptcy related to Dephax Canada and UK.~~

Pretax income from continuing operations for the nine-month period ended December 31, 2019 was $2,398 compared to $935 in the prior year comparable period, which was primarily attributable to the increase in operating income of $1,508 as explained above.

During the nine-month period ended December 31, 2019, the Company recorded $52 in income tax benefit at an effective rate of 2.17%. The Company records income taxes using a discrete, year-to-date tax expense calculation for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21% and the Company's effective tax rate for the nine-month period ended December 31, 2019 were the change in valuation allowance related to Delphax, the estimated expense for the exclusion of loss for the Company's captive insurance company subsidiary under Section 831(b), the estimated deduction for Foreign-Derived Intangible Income, and the exclusion from the tax provision of the minority owned portion of the pretax income of Contrail Aviation Support, LLC. During the nine-month period ended December 31, 2018, the Company recorded $241 in income tax expense which resulted in an effective tax rate of 25.78%. 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 December 31, 2018 were related to the estimated benefit for the exclusion of income for the Company's captive insurance company subsidiary afforded under Section 831(b), the change in valuation allowance and the presentation of the tax impact of the bargain purchase gain.

Critical Accounting Policies and Estimates

The Company’s significant accounting policies are fully described in Note 1 of Notes to ~~the consolidated financial statements~~Condensed Consolidated Financial Statements included under Part I, Item 1 of this report 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, ~~2019.~~2020. The preparation of the Company’s 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~~three-months ended ~~December 31, 2019.~~June 30, 2020.

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 are not susceptible to material seasonal trends.

Liquidity and Capital Resources

As of December 31, 2019, the Company held approximately $21,605 in cash and cash equivalents and restricted cash. The Company also held $1,008 in restricted investments held as statutory reserve of SAIC and the remaining $69 of restricted investments pledged to secure SAIC’s participation in certain reinsurance pools. In addition, the Company also had $10,000 of restricted cash collateralized for the Opportunity Zone Funds. The Company has approximately $3,880 of marketable securities as of December 31, 2019.

~~As of December 31, 2019, the Company’s working capital amounted to $40,841, an increase of $22,287 compared to March 31, 2019.~~

As of December 31, 2019, the exercise of Warrants to purchase TruPs issued on June 10, 2019 has generated cash proceeds of $6,041, which is disclosed in the financing section on our consolidated statements of cash flows.

~~On October 30, 2019, Contrail entered into Supplement #5 to Master Loan~~Contrail’s Credit Agreement with Old National Bank ~~(“Supplement #5”). In connection therewith,~~(the Contrail entered into the Promissory Note Term Note C in the principal amount of $7,553 to ONB (“Term Note D”). The Term Note D has a maturity date of October 30, 2021, with a variable interest rate equal to the LIBOR rate plus 3.75% per year. There are additional affirmative covenants regarding quarterly cash flow coverage and tangible net worth. Term Note D was fully paid off in the current quarter.

On December 19, 2019, Contrail entered into Supplement #6 to that certain Master Loan Agreement with Old National Bank. In connection therewith, Contrail entered into that certain Promissory Note Term Note E in the principal amount of $6,895 to ONB. The Term Note E has a maturity date of December 1, 2022, with a variable interest rate equal to the LIBOR rate plus 3.75% per year. There are additional affirmative covenants regarding quarterly cash flow coverage and tangible net worth.

On December 31, 2019, the Company and Minnesota Bank & Trust, a Minnesota state banking corporation, entered into Amendment No. 2 to that certain Amended and Restated Credit Agreement. In connection with the Second Amendment, the Company entered into that certain Supplemental Revolving Credit Note in the principal amount of $10,000 to MBT. The Note has a maturity date of June 30, 2020, with a fluctuating annual rate of interest equal to the greater of (a) the sum of (i) the LIBOR Rate, and as the same may adjust monthly, plus (ii) 1.25%; or (b) 3.00%; provided, that, upon the occurrence and during the continuance of any Event of Default as defined therein, the rate of interest hereunder shall be increased by 3.00% above the rate of interest that would otherwise be in effect thereunder. The loan is secured by a pledge of a continuing security interest in the demand deposit cash collateral accounts of Air T OZ 1, LLC, Air T OZ 2, LLC, and Air T OZ 3, LLC, each a Minnesota limited liability company and a subsidiary of the Company, with an aggregate account cash balance of $10,000,000 under the sole control by MBT. Twelve of the Company’s subsidiaries continue to, jointly and severally, guaranty the full and prompt payment and performance of all debts and obligations of the Company to MBT.

The Company's condensed consolidated financial statements as of December 31, 2019 have been prepared assuming that the Company will continue its operations as a going concern. The Company believes cash on hand, net cash provided by operations, together with its current revolving lines of credit, as amended or replaced, 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. However, this evaluation assumes continued positive cash flows and the ability to extend the maturity of or refinance the Air T and AirCo revolvers ("revolvers") maturing February 28, 2020. Based on our discussions to date with MBT, as well as our history of refinancing with MBT and the receipt of written confirmation from MBT indicating their intention to refinance the revolvers, at substantially the same terms, with maturity dates extending beyond February 28, 2021, the Company believes the plan to refinance these revolvers is probable of occurring.

~~The Company’s Credit Agreement with MBT (the Air T~~ debt in ~~Footnote 10~~Note 11 of Notes to ~~the financial statements)~~Condensed Consolidated Financial Statements included under Part I, Item 1 of this report) includes several covenants that are measured ~~once a year as of March 31,~~quarterly, including but not limited to a negative covenant requiring a debt service coverage ratio of 1.25. As of June 30, 2020, Contrail was in compliance with all financial covenants.

As of June 30, 2020, the Company held approximately $16.7 million in cash and cash equivalents and restricted cash, $9.6 million of which related to restricted cash collateralized for the three Opportunity Zone fund investments. The Company isalso held $1.0 million in restricted investments held as statutory reserve of SAIC. The Company also has approximately 2.8 million of marketable securities.

As of June 30, 2020, the Company’s working ~~with its operating subsidiaries~~capital amounted to ~~assure compliance with the MBT covenants at~~$43.5 million, an increase of $12.7 million compared to March 31, 2020.

We are closely monitoring the impact of the COVID-19 pandemic on our business and continue to assess the situation at our businesses and operations on a daily basis. Each of our businesses remains open for business. However, as a result of measures taken

to limit the impact of COVID-19, self-quarantines or actual viral health issues, we continue to experience a reduction in demand for commercial aircraft, jet engines and parts which have negatively could materially and adversely affect the financial performance and value of our inventory. All of the markets in which our businesses are located are subject to some level of restrictions on business operations. We expect that the unprecedented reduction in demand for air travel and the resulting extreme financial pressure put on commercial aviation businesses will negatively impact our condensed consolidated cash flow from operations. However, the continuing impact of COVID-19 on future quarters cannot be determined with certainty at this time. Even after travel advisories and restrictions are modified or lifted, demand for commercial aircraft, jet engines and parts may remain weak for a significant length of time as demand for travel may still remain low, which may be a function of continued concerns over safety, unwillingness to travel, and decreased consumer spending due to economic conditions, including job losses. We cannot predict if and when the demand for our commercial aircraft, jet engines and parts will return to pre-outbreak levels of volume and pricing.

Due to the impact of COVID-19 on its business, as of June 30, 2020, Contrail forecasted a probable non-compliance with its financial covenants for the quarter ended September 30, 2020. Non-compliance with a debt covenant that is not subsequently cured gives ONB the right to declare the amount of Contrail’s outstanding debt at the time of non-compliance immediately due and payable and exercise its remedies with respect to the collateral that secures the debt.

Contrail management is currently in discussion with ONB to obtain a waiver to its financial covenants and applicable paydown provision mentioned above, to seek to revise the financing documents and/or to secure alternative financing to avoid an event of non-compliance. With respect to alternative financing, Contrail intends to access debt financing under the Main Street Lending Program, established by the Federal Reserve in response to economic uncertainty caused by the COVID-19 pandemic. Main Street loans are intended to provide additional credit to companies that were in sound condition prior to the onset of the COVID-19 pandemic. While Contrail believes that they qualify under the criteria set forth under the Main Street Lending Program, there is no assurance that Contrail will obtain funding under the Main Street Lending Program or if such credit is obtained that it would be sufficient.

The obligations of Contrail under the Contrail Credit Agreement with ONB ("Contrail Credit Agreement") are also guaranteed by the Company, ~~will meet each covenant at March 31, 2020~~up to a maximum of $1.6 million, plus costs of collection. The Company is not liable for any other assets or liabilities of Contrail and there are no cross-default provisions with respect to Contrail’s debt in ~~such event~~any of the Company’s debt agreements with other lenders. In the possible absence of Contrail’s operation as a going concern, the Company believes it, along with the rest of its businesses, will ~~work with MBT~~continue to ~~seek~~operate as a ~~waiver and/or undertake~~going concern, given the maximum guarantee of Contrail’s obligations of $1.6 million.

Based on information currently available and our current projected operating cash flow needs and interest and debt repayments, we believe we have adequate cash for at least the next twelve months to fund our business operations, meet all of our financial commitments, and other ~~actions~~obligations. However, we cannot predict whether future developments related to ~~avoid an event of non-compliance.~~the COVID-19 pandemic will adversely affect our liquidity position.

Cash Flows

Following is a table of changes in cash flow for the ~~six~~three months ended ~~December 31, 2019~~June 30, 2020 and ~~2018 (in thousands):~~2019:

Nine Months Ended December 31,
2019 2018
Net Cash (Used in) Provided by Operating Activities (9,691) 1,202
Net Cash (Used in) Investing Activities (7,398) (22,746)
Net Cash Provided by Financing Activities 26,164 19,922
Effect of foreign currency exchange rates on cash and cash equivalents (10) 114
Net Increase in Cash and Cash Equivalents and Restricted Cash 9,065 (1,508)


	Three Months Ended June 30,
	2020		2019

Net Cash (Used in) Provided by Operating Activities	$	(3,335)	$	4,842
Net Cash Used in Investing Activities	(548)		(3,732)
Net Cash Provided by Financing Activities	5,040		2,008
Effect of foreign currency exchange rates on cash and cash equivalents	(72)		3

Net Increase in Cash and Cash Equivalents and Restricted Cash	$	1,085	$	3,121

Net cash used in operating activities was ~~$(9,691)~~$3.3 million for the ~~nine-month~~three-month period ended ~~December 31, 2019~~June 30, 2020 compared to the net cash provided by operating activities of ~~$1,202~~$4.8 million in prior year period. ~~The primary driver for the cash~~Cash was used in operating activities ~~for~~during the ~~nine~~three months ended ~~December 31, 2019 was cash spent on purchasing inventories at Contrail.~~June 30, 2020 because the Company had a net loss in the current-year quarter driven by lower operations due to COVID-19.

Net ~~cash used investing activities for the nine-month period ended December 31, 2019 was $(7,398) compared to net~~ cash used in investing activities ~~of $(22,746)~~for the three-month period ended June 30, 2020 was $0.5 million compared to $3.7 million in prior year period. The primary driver in ~~the decrease of net~~ cash used in investing activities for the three months ended June 30, 2019 was the ~~cash proceeds from the sale of GAS, offset by significant~~$3.6 million in capital expenditures ~~spent on assets on lease~~which included purchase of a $3.3 million engine at Contrail.

Net cash provided by financing activities for the ~~nine-month~~three-month period ended ~~December 31, 2019~~June 30, 2020 was ~~$26,164~~$5.0 million compared to net cash provided by financing activities of ~~$19,922~~$2.0 million in the prior year period. The ~~increase~~cash provided by financing activities was primarily driven by higher net ~~cash~~ proceeds from lines of credit and term loans (by $4.7 million) in ~~addition~~the three months ended June 30, 2020 compared to ~~cash~~the prior-year quarter. This increase was partially offset by the $2.0 million of proceeds from ~~exercise~~issuance of ~~Warrants to purchase~~ TruPs ~~offset by cash used to repurchase common stock.~~

~~Off-Balance Sheet Arrangements~~

~~As of December 31, 2019 and March 31, 2019, we had no off-balance sheet arrangements~~ that ~~have or are reasonably likely to have a current or future effect on our financial condition, changes~~was received in ~~financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.~~the prior-year quarter but not in the current-year quarter.

Impact of Inflation

The Company believes that inflation has not had a material effect on its operations, because increased costs to date have generally been passed on to its customers. Under the terms of its overnight air cargo business contracts the major cost components of this business’ operations, consist principally of fuel, and certain other direct operating costs, and certain maintenance costs that are reimbursed by its customer. Significant increases in inflation rates could, however, have a material impact on future revenue and operating income.

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 revenue earned on engine leases. Depreciation expense for leased engines totaled $0.2 million and $1.6 million for the quarters ended June 30, 2020 and 2019, 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 from continuing operations, the most directly comparable amounts reported under GAAP.

The tables below provide a reconciliation of operating income from continuing operations to Adjusted EBITDA and Adjusted EBITDA by segment for the quarters ended June 30, 2020 and 2019 (in thousands):


	6/30/2020		6/30/2019
Operating income from continuing operations	$	(266)	$	998
Depreciation and amortization (excluding leased engines depreciation)	353		303
Asset impairment, restructuring or impairment charges	—		7
(Gains)/Losses on disposition of assets	—		(4)
Security issuance expenses	—		235��
Adjusted EBITDA	$	87	$	1,539


	6/30/2020		6/30/2019
Overnight Air Cargo	$	570	$	36
Ground Equipment Sales	2,284		1,400
Commercial Jet Engines and Parts	(775)		1,981
Printing Equipment and Maintenance	(221)		(381)
Corporate and Other	(1,771)		(1,497)
Adjusted EBITDA	$	87	$	1,539

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 provides for the use of derivative instruments to provide protection against rising interest rates on variable rate debt.

Not required.

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 ~~December 31, 2019.~~June 30, 2020. Based on that review and evaluation, which included inquiries made to certain other employees of the Company, the Certifying Officers have concluded that the Company’s current disclosure controls and procedures, as designed and implemented, are effective in ensuring that information relating to the Company required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, including ensuring that such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving the stated goals under all potential future conditions, regardless of how remote.

There has not been any change in the Company’s internal control over financial reporting in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act that occurred during the quarter ended ~~December 31, 2019~~June 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II -- OTHER INFORMATION

Item 1A. Risk Factors

In addition to other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. Risk Factors in our 2020 Form 10-K, which could materially impact our business, financial condition or future results. Risks disclosed in our 2020 Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may materially adversely impact our business, financial condition or operating results. There have been no material changes to Part I, Item 1A. Risk Factors in our 2020 Form 10-K.

Item 2.2 Unregistered Sales of Equity Securities and Use of Proceeds

(a)None.

~~(a)~~(b)None.

~~(b)~~(c)On May 14, 2014, the Company announced that its Board of Directors had authorized a program to repurchase up to 750,000 (retrospectively adjusted to 1,125,000 after the stock split inon June 10, 2019) shares of the Company’s common stock from time to time on the open market or in privately negotiated transactions, in compliance with SEC Rule 10b-18, over an indefinite period.

~~Purchases~~ There was no shares repurchased during the quarter ended ~~December 31, 2019 are described below:~~

~~Issuer Purchases of Equity Securities~~

On June 10, 2019, the Company effected a three-for-two stock split of its common stock in the form of a 50% stock dividend to shareholders of record as of June 4, 2019. As such, all share information have been retroactively adjusted to reflect the stock split.

Dates of
Shares Purchased Total Number of
Shares Purchased Average Price
Paid per Share Total Number of Shares
Purchased as Part of
Public Announced
Plans or Programs Maximum Number of
Shares that May Yet Be
Purchased Under the
Plans or Programs
October 1 - October 31, 2019 1,905 $ 19.28 34,323 1,077,929
November 1 - November 30, 2019 108,241 $ 19.59 142,564 969,688
December 1 - December 31, 2019 — 142,564 969,688
110,146

30, 2020.

Item 5. Other Events

On August 11, 2020, AirCo 1, LLC, a wholly-owned subsidiary of Air T Inc. and subsidiaries (“AirCo 1”), and MBT, entered into Amendment No.2 to the Amended and Restated Loan Agreement (the "Second Amendment”). The Second Amendment reduces the total amount of credit available under the revolving line of credit from $10.0 million to $7.5 million.

The foregoing summary of the terms of the financing documents does not purport to be complete and is qualified in its entirety by reference to the documents which are filed as Exhibits 10.2, hereto and are incorporated by reference herein.

Item 6. Exhibits

(a) Exhibits


No.			Description

10.1			~~Aircraft Sale and Purchase Agreement,~~Form of Air T, Inc. Promissory Note, in the principal amount of $8,215,000 in favor of Minnesota Bank & Trust, dated ~~June 244, 2019 byand between Diamond Head 2 (Ireland) DAC, Diamond Head 3 (Ireland) DAC, andContrail Aviation Support, LLC, incorporated by reference to Exhibit 10.1 of theCompany’s Current Report on Form 8-K dated October 31, 2019 (Commission File No.~~001-35476).*April 10, 2020.

10.2			Master Loan Agreement, dated June 24, 2019 by and between Contrail Aviation Support, LLC, Contrail Aviation Leasing, LLC and Old National Bank, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).

~~10.3~~			~~Air T, Inc. Continuing Guaranty in favor of Old National Bank, dated June 24, 2019.,incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-Kdated November 5, 2019 (Commission File No. 001-35476).~~

~~10.4~~			Supplement #1 to Master Loan Agreement, dated June 24, 2019 by and between Contrail Aviation Support, LLC, Contrail Aviation Leasing, LLC and Old National Bank, incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).

~~10.5~~			Contrail Aviation Support, LLC and Contrail Aviation Leasing, LLC First Amended and Restated Promissory Note Term Note A in the principal amount of$9,920,000.00 to Old National Bank, incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).

~~10.6~~			~~Supplement #2 to Master Loan Agreement, dated June 24, 2019 by and between Contrail~~ Supplement #2 to Master Loan Agreement, dated June 24, 2019 by and between Contrail Aviation Support, LLC, and Old National Bank, incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476). ~~Support, LLC, and Old National Bank, incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).~~

~~10.7~~			Contrail Aviation Leasing, LLC Continuing Guaranty in favor of Old National Bank, dated June 24, 2019, incorporated by reference to Exhibit 10.6 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).

~~10.8~~			Contrail Aviation Support, LLC First Amended and Restated Promissory Note Revolving Note in the principal amount of $20,000,000.00 to Old National Bank., incorporated by reference to Exhibit 10.7 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).

~~10.9~~			Supplement #3 to Master Loan Agreement, dated June 24, 2019 by and between Contrail Aviation Support, LLC, Contrail Aviation Leasing, LLC and Old National Bank, incorporated by reference to Exhibit 10.8 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).

~~10.10~~			Contrail Aviation Support, LLC and Contrail Aviation Leasing, LLC First Amended and Restated Promissory Note Term Note B in the principal amount of $18,000,000.00 to Old National Bank, incorporated by reference to Exhibit 10.9 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).

~~10.11~~			Supplement #4 to Master Loan Agreement, dated August 16, 2019 by and between Contrail Aviation Support, LLC, Contrail Aviation Leasing, LLC and Old National Bank, incorporated by reference to Exhibit 10.10 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).

~~10.12~~			Contrail Aviation Support, LLC and Contrail Aviation Leasing, LLC Term Note C in the principal amount of $13,000,594.00 to Old National Bank, incorporated by reference to Exhibit 10.11 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).

~~10.13~~			Trustee Aircraft Security Agreement, dated August 16, 2019 by and between Wells Fargo Trust Company, National Association, Contrail Aviation Support, Contrail Aviation Leasing, LLC and Old National Bank, incorporated by reference to Exhibit 10.12 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).

~~10.14~~			Beneficial Interest Pledge Agreement, dated August 16, 2019 by and between Contrail Aviation Leasing, LLC, and Old National Bank, incorporated by reference to Exhibit 10.13 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).

~~10.15~~			Assignment of Beneficial Interest of Trust, dated August 16, 2019 by and between Contrail Aviation Leasing, LLC and Old National Bank, incorporated by reference to Exhibit 10.14 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).


~~10.16~~			Aircraft Asset Sale and Purchase Agreement, dated August 2, 2019 by and between Sapphire Leasing I (AOE 5) Limited, Sapphire Finance I Holding Designated Activity Company, Wilmington Trust SP Services (Dublin) Limited, and Contrail Aviation Support, LLC, incorporated by reference to Exhibit 10.15 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).*

~~10.17~~			~~Form of Third Aircraft Lease Amendment Agreement, dated August 2, 2019 by and between Sapphire Aviation Finance I (UK) Limited and MIAT Mongolian~~Airlines, incorporated by reference to Exhibit 10.16 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).*

~~10.18~~			Buyer Guarantee, dated August 2, 2019 by and between Contrail Aviation Support, LLC and Sapphire Leasing I (AOE 5) Limited, incorporated by reference to Exhibit 10.17 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).

~~10.19~~			Form of Declaration of Trust (MSN 29922), dated June 26, 2019 by and between Contrail Aviation Leasing, LLC, Wilmington Trust SP Services (Dublin) Limited, and Contrail Aviation Support, LLC.*, incorporated by reference to Exhibit 10.18 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).

~~10.20~~			Novation and Amendment Agreement, dated October 24, 2019 by and between Sapphire Aviation Finance I (UK) Limited, Wilmington Trust SP Services (Dublin) Limited, and MIAT Mongolian Airlines, incorporated by reference to Exhibit 10.19 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).

~~10.21~~			Netting Letter, dated October 31, 2019 by and between Sapphire Leasing I (AOE 5) Limited and Wilmington Trust SP Services (Dublin) Limited, incorporated by reference to Exhibit 10.20 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).*

~~10.22~~			Supplement #5 to Master Loan Agreement, dated October 30, 2019 by and between Contrail Aviation Support, LLC, Contrail Aviation Leasing, LLC and Old National Bank., incorporated by reference to Exhibit 10.21 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).

~~10.23~~			Contrail Aviation Support, LLC and Contrail Aviation Leasing, LLC Term Note D in the principal amount of $7,553,165.00 to Old National Bank, incorporated by reference to Exhibit 10.22 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).

~~10.24~~			Trustee Aircraft Security Agreement, dated October 30, 2019 by and between Wilmington Trust SP Services (Dublin) Limited, Contrail Aviation Support, LLC, Contrail Aviation Leasing, LLC, and Old National Bank, incorporated by reference to Exhibit 10.23 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).

~~10.25~~			Beneficial Interest Pledge Agreement, dated October 30, 2019 by and between Contrail Aviation Leasing, LLC and Old National Bank, incorporated by reference to Exhibit 10.24 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).

~~10.26~~			Form of Assignment of Beneficial Interest of Trust, dated October 30, 2019 by and between Contrail Aviation Leasing, LLC and Old National Bank, incorporated by reference to Exhibit 10.25 of the Company’s Current Report on Form 8-K dated November 5, 2019 (Commission File No. 001-35476).

~~10.27~~			Engine Sale and Purchase Agreement, dated 30November 8, 2019, by and between Contrail Aviation Support, LLC, and Cross Ocean Aviation Fund 1 (Intl) 5 DAC, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated November 14, 2019 (Commission File No. 001-35476).*

~~10.28~~			Change in Terms Agreement dated November 8, 2019, by and between AirCo 1, LLC and Minnesota Bank & Trust., incorporated by reference to Exhibit 10.29 of the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2019 (Commission File No. 001-35476).

~~10.29~~			Change in Terms Agreement, dated November 8, 2019, by and between Air T, Inc. and Minnesota Bank & Trust., incorporated by reference to Exhibit 10.30 of the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2019 (Commission File No. 001-35476).

~~10.30~~			Engine Lease Agreement, dated November 22, 2019 with LLC to Sun Country, Inc. d/b/a Sun Country Airlines, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated December 9, 2019 (Commission File No.001-35476).*

~~10.31~~			Form of Master Short-Term Engine Lease Agreement, IATA Document No. 5016-01, dated October 2012, incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K dated December 9, 2019 (Commission File No. 001-35476).


~~10.32~~			Purchase Agreement, dated December 13, 2019 by and between Wilmington Trust Services (Dublin) Limited and KG Aircraft Rotables Co., Ltd., incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated December 19, 2019 (Commission File No. 001-35476).*

~~10.33~~			Aircraft Sale Agreement, dated December 20, 2019 by and between Contrail Aviation Leasing Ireland DAC, CRO No. 662616 and MAM Seldon Aviation 2 Designated Activity Company, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated December 26, 2019 (Commission File No. 001-35476).*

~~10.34~~			Deed of Lease Novation, dated December 20, 2019 by and between Leasing Ireland DAC, CRO No. 662616, MAM Seldon Aviation 2 Designated Activity Company, and SmartLynx Airlines Estonia Oü, incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K dated December 26, 2019 (Commission File No. 001-35476).*

~~10.35~~			Bill of Sale and Acceptance Certificate, dated December 20, 2019, by and between Diamond Head 3 (Ireland) DAC and Contrail Aviation Support, LLC., incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K dated December 26, 2019 (Commission File No. 001-35476).*

~~10.36~~			Form of Supplement #6 to Master Loan Agreement, dated December 19, 2019 by and between Contrail Aviation Support, LLC, Contrail Aviation Leasing, LLC, Contrail Aviation Leasing Ireland DAC, CRO No. 662616 and Old National Bank, incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K dated December 26, 2019 (Commission File No. 001-35476).

~~10.37~~			Form of Contrail Aviation Support, LLC, Contrail Aviation Leasing, LLC, and Contrail Aviation Leasing Ireland DAC, CRO No. 662616 Term Note E in the principal amount of $6,894,790.00 to Old National Bank, incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K dated December 26, 2019 (Commission File No. 001-35476).

~~10.38~~			Form of Aircraft Security Agreement, dated December 19, 2019 by and between Contrail Aviation Support, LLC, Contrail Aviation Leasing, LLC, Contrail Aviation Leasing Ireland DAC, CRO No. 662616, and Old National Bank, incorporated by reference to Exhibit 10.6 of the Company’s Current Report on Form 8-K dated December 26, 2019 (Commission File No. 001-35476).

~~10.39~~			Form of Subsidiary Equity Pledge Agreement, dated December 19, 2019 by and between Contrail Aviation Support, LLC and Old National Bank, incorporated by reference to Exhibit 10.7 of the Company’s Current Report on Form 8-K dated December 26, 2019 (Commission File No. 001-35476).

~~10.40~~			Form of Air T, Inc. Amendment to Continuing Guaranty in favor of Old National Bank, incorporated by reference to Exhibit 10.8 of the Company’s Current Report on Form 8-K dated December 26, 2019 (Commission File No. 001-35476).

~~10.41~~			Form of Indemnity and Guaranty Agreement, dated December 19, 2019 by and between Contrail Aviation Support, LLC and Contrail Aviation Leasing Ireland DAC, CRO No. 662616, incorporated by reference to Exhibit 10.9 of the Company’s Current Report on Form 8-K dated December 26, 2019 (Commission File No. 001-35476).

~~10.42~~			Warranty Bill of Sale, Acknowledgment of Delivery, and Certificate of Technical Acceptance, dated December 23, 2019 by and between Wilmington Trust SP Services (Dublin) Limited and KG Aircraft Rotables Co., Ltd., incorporated by reference to Exhibit 10.10 of the Company’s Current Report on Form 8-K dated December 26, 2019 (Commission File No. 001-35476).

~~10.43~~			~~Form of Amendment No. 2~~ to Amended and Restated ~~Credit~~AirCo 1 Loan Agreement dated December 31, 2019 by and between Air T, Inc. and Minnesota Bank & Trust, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated January 7, 2020 (Commission File No. 001-35476).

~~10.44~~			Form of Air T, Inc. Supplemental Revolving Credit Note, dated December 31, 2019 in the principal amount of $10,000,000 to Minnesota Bank & Trust, incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K dated January 7, 2020 (Commission File No. 001-35476).

~~10.45~~			Form of Collateral Account Agreement, dated December 31, 2019, by and between Air T OZ 1, LLC and Minnesota Bank & Trust, incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K dated January 7, 2020 (Commission File No. 001-35476).

~~10.46~~			Form of Collateral Account Agreement, dated December 31, 2019, by and between Air T OZ 2, LLC and Minnesota Bank & Trust, incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K dated January 7, 2020 (Commission File No. 001-35476).

~~10.47~~			Form of Collateral Account Agreement, dated December 31, 2019, by and between Air T OZ 3, LLC and Minnesota Bank & Trust, incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K dated January 7, 2020 (Commission File No. 001-35476).

~~10.48~~			Form of Acknowledgement and Agreement of AirCo, LLC, CSA Air, LLC, Global Ground Support, Inc., Jet Yard, LLC, Mountain Air Cargo, Inc., Stratus Aero Partners, LLC, Air T Global Leasing, LLC, AirCo Services, LLC, Space Age Insurance Company, Worthington Acquisition, LLC, Worthington Aviation, LLC and Worthington MRO, LLC, dated December 31, 2019 in favor of Minnesota Bank & Trust, incorporated by reference to Exhibit 10.6 of the Company’s Current Report on Form 8-K dated January 7, 2020 (Commission File No. 001-35476).

31.1			Section 302 Certification of Chief Executive Officer and President

31.2			Section 302 Certification of Chief Financial Officer

32.1			Section 1350 Certifications



101			The following financial information from the Quarterly Report on Form 10-Q for the quarter ended ~~December 31, 2019,~~June 30, 2020, 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 transaction exhibits have been omitted for confidential treatment.

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: ~~February 13,~~August 14, 2020
			/s/ Nick Swenson
			Nick Swenson, Chief Executive Officer and Director



			/s/ Brian Ochocki
			Brian Ochocki, Chief Financial Officer

4133


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	AIRT	NASDAQ ~~Global~~Stock Market
Alpha Income Preferred Securities (also referred to as 8% ~~Cumulative~~cumulative Capital Securities) ~~(“AIP”~~("AIP")*	AIRTP	NASDAQ ~~Global~~Stock Market
Warrant ~~to purchase~~Purchase AIP*	AIRTW	NASDAQ ~~Global~~Stock Market


(In Thousands)		Nine Months Ended December 31,
(in thousands)						(in thousands)	Three Months Ended June 30,
		2019		2018			2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)		$	10,517	$	(462)
Loss from discontinued operations, net of income tax		70		1,156
Gain on sale of discontinued operations, net of income tax		(8,137)		—
Net income from continuing operations		2,450		694
Net (loss) income						Net (loss) income	$	(956)	$	4,156
Less: Income from discontinued operations, net of income tax						Less: Income from discontinued operations, net of income tax	—		161
Net (loss) income from continuing operations						Net (loss) income from continuing operations	(956)		3,995
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	4,640		5,224		Depreciation and amortization	609		1,947
Impairment of investment						Impairment of investment	—		815
Gain on settlement of bankruptcy						Gain on settlement of bankruptcy	—		(4,509)
Bargain purchase acquisition gain	Bargain purchase acquisition gain	(49)		(1,984)		Bargain purchase acquisition gain	—		(34)
Impairment of investment		2,305		2,000
Profit from sale of assets on lease		(3,846)		—
Gain on settlement of bankruptcy		(4,527)		—
Other	Other	775		(611)		Other	369		378

Change in operating assets and liabilities:	Change in operating assets and liabilities:					Change in operating assets and liabilities:
Accounts receivable	Accounts receivable	(4,708)		(1,024)		Accounts receivable	2,570		(4,474)
Costs and estimated earnings in excess of billings and uncompleted projects		—		2,012
Notes receivable and other non-trade receivables		(1,151)		(4,357)
Inventories	Inventories	(7,866)		(191)		Inventories	(663)		2,401
Accounts payable	Accounts payable	1,753		(463)		Accounts payable	(3,141)		2,537
Accrued expenses	Accrued expenses	1,106		1,013		Accrued expenses	971		3,831
Other	Other	(1,774)		284		Other	(3,094)		(2,045)

Net cash (used in) provided by operating activities - continuing operations	Net cash (used in) provided by operating activities - continuing operations	(10,892)		2,597		Net cash (used in) provided by operating activities - continuing operations	(3,335)		4,842
Net cash provided by (used in) operating activities - discontinued operations		1,201		(1,395)
Net cash provided by operating activities - discontinued operations						Net cash provided by operating activities - discontinued operations	—		546
Net cash (used in) provided by operating activities	Net cash (used in) provided by operating activities	(9,691)		1,202		Net cash (used in) provided by operating activities	(3,335)		5,388
CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:					CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities	Purchases of marketable securities	(1,103)		(2,014)		Purchases of marketable securities	(482)		(27)
Sale of marketable securities	Sale of marketable securities	631		837		Sale of marketable securities	658		309
Proceeds from sale of assets on lease		16,956		—
Acquisition of businesses, net of cash acquired	Acquisition of businesses, net of cash acquired	(500)		(3,376)		Acquisition of businesses, net of cash acquired	—		(500)
Investment in unconsolidated entities		(2,811)		(2,000)
Capital expenditures related to property & equipment	Capital expenditures related to property & equipment	(1,017)		(897)		Capital expenditures related to property & equipment	(586)		(250)
Capital expenditures related to assets on lease		(39,885)		(19,150)
Capital expenditures related to assets on lease or held for lease						Capital expenditures related to assets on lease or held for lease	(60)		(3,298)
Other	Other	157		3,967		Other	(78)		34
Net cash used in investing activities - continuing operations	Net cash used in investing activities - continuing operations	(27,572)		(22,633)		Net cash used in investing activities - continuing operations	(548)		(3,732)
Net cash provided by (used in) investing activities - discontinued operations		20,174		(113)
Net cash provided by (used in) investing activities		(7,398)		(22,746)
Net cash used in investing activities - discontinued operations						Net cash used in investing activities - discontinued operations	—		(48)
Net cash used in investing activities						Net cash used in investing activities	(548)		(3,780)
CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:					CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from lines of credit	Proceeds from lines of credit	133,068		86,520		Proceeds from lines of credit	8,006		24,447
Payments on lines of credit	Payments on lines of credit	(100,884)		(83,566)		Payments on lines of credit	(18,205)		(17,143)
Proceeds from term loan	Proceeds from term loan	27,449		22,539		Proceeds from term loan	9,478		—
Proceeds from Payroll Protection Program loan ("PPP loan")						Proceeds from Payroll Protection Program loan ("PPP loan")	8,215		—
Payments on term loan	Payments on term loan	(36,187)		(6,787)		Payments on term loan	(2,437)		(7,026)
Proceeds received from exercise of warrants		6,041		—
Proceeds from life insurance policy loan		—		1,897
Proceeds received from issuance of TruPs						Proceeds received from issuance of TruPs	—		2,018
Other	Other	(3,323)		(681)		Other	(17)		(288)
Net cash provided by financing activities - continuing operations		26,164		19,922
Net cash provided by financing activities						Net cash provided by financing activities	5,040		2,008
Effect of foreign currency exchange rates on cash and cash equivalents	Effect of foreign currency exchange rates on cash and cash equivalents	(10)		114		Effect of foreign currency exchange rates on cash and cash equivalents	(72)		3
NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	9,065		(1,508)		NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	1,085		3,619
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD	CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD	12,540		5,073		CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD	15,571		12,648
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	21,605	$	3,565	CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	16,656	$	16,267


		December 31, 2019		March 31, 2019
							June 30, 2020		March 31, 2020
Ground equipment manufacturing:	Ground equipment manufacturing:					Ground equipment manufacturing:
Raw materials	Raw materials	$	5,413	$	2,498	Raw materials	5,421		4,192
Work in process	Work in process	2,302		1,660		Work in process	1,833		2,731
Finished goods	Finished goods	473		973		Finished goods	1,897		1,725
Printing equipment and maintenance	Printing equipment and maintenance					Printing equipment and maintenance
Raw materials	Raw materials	498		401		Raw materials	468		464
Finished goods	Finished goods	911		1,048		Finished goods	909		910
Commercial jet engines and parts	Commercial jet engines and parts	58,605		21,032		Commercial jet engines and parts	53,936		51,084
Total inventories	Total inventories	68,202		$	27,612	Total inventories	$	64,464	$	61,106
Reserves	Reserves	(86)		(157)		Reserves	(585)		(483)
Total inventories, net of reserves	Total inventories, net of reserves	$	68,116	$	27,455	Total inventories, net of reserves	$	63,879	$	60,623


		Three Months Ended December 31, 2019		Nine Months Ended December 31, 2019			Three Months Ended June 30, 2020		Three Months Ended June 30, 2019
Operating lease cost	Operating lease cost	$	569	$	1,489	Operating lease cost	571		406
Short-term lease cost	Short-term lease cost	63		318		Short-term lease cost	62		204
Variable lease cost	Variable lease cost	97		304		Variable lease cost	75		100
Sublease income	Sublease income	—		—		Sublease income	—		—
Total lease cost	Total lease cost	$	729	$	2,111	Total lease cost	$	708	$	710


		Operating Leases			Operating Leases
2020 (excluding the nine months ended December 31, 2019)		$	349
2021		1,553
2021 (excluding the three months ended June 30, 2020)				2021 (excluding the three months ended June 30, 2020)	1,268
2022	2022	1,402		2022	1,594
2023	2023	1,215		2023	1,412
2024	2024	922		2024	1,041
2025	2025	694		2025	748
2026				2026	537
Thereafter	Thereafter	6,388		Thereafter	5,852
Total undiscounted lease payments	Total undiscounted lease payments	$	12,523	Total undiscounted lease payments	12,452
Less: Interest	Less: Interest	3,045		Less: Interest	(3,458)
Less: Discount	Less: Discount	565		Less: Discount	(561)
Total lease liabilities	Total lease liabilities	$	8,913	Total lease liabilities	8,433


		Page
	PART I

Item 1.	Financial Statements

	Condensed Consolidated Statements of Income ~~(Loss)~~ (Unaudited) Three ~~and~~ ~~Nine~~ Months Ended ~~December 31, 2019 and 2018~~	3

	~~Condensed Consolidated Statements of Comprehensive Income~~ ~~(Loss)~~ ~~(Unaudited) Three~~June 30, 2020 and ~~Nine~~ ~~Months Ended~~ ~~December 31~~, 2019 ~~and 2018~~	4

	Condensed Consolidated ~~Balance Sheets~~Statements of Comprehensive Income (Unaudited) Three Months Ended June 30, 2020~~December 31, 2019 (Unaudited)~~ and ~~March 31,~~ 2019	5

	Condensed Consolidated ~~Statements of Cash Flows~~Balance Sheets June 30, 2020 (Unaudited) ~~Nine~~ ~~Months Ended~~ ~~December 31, 2019~~ and ~~2018~~March 31, 2020	6

	Condensed Consolidated Statements of ~~Equity~~Cash Flows (Unaudited) ~~Nine~~ Three Months Ended June 30, 2020~~December 31, 2019~~ and ~~2018~~2019	7

	Condensed Consolidated Statements of Equity (Unaudited) Three Months Ended June 30, 2020 and 2019	8

	Notes to Condensed Consolidated Financial Statements (Unaudited)	910

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2926

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3530

Item 4.	Controls and Procedures	3531

	PART II

Item1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3631

Item 6.	Exhibits	3732
	Signatures	4133
	Exhibit Index
	Certifications
	Interactive Data Files


(In thousands, except share amounts)	December 31, 2019		March 31, 2019
ASSETS
Current Assets:
Cash and cash equivalents	$	11,536	$	12,417
Marketable securities	1,845		1,760
Restricted cash	10,069		123
Restricted investments	1,008		831
Accounts receivable, net of allowance for doubtful accounts of $394 and $408	15,828		10,881
Income tax receivable	1,504		142
Inventories, net	68,116		27,455
Other current assets	7,302		6,138
Current assets of discontinued operations	—		11,601
Total Current Assets	117,208		71,348

Assets on lease, net of accumulated depreciation of $5,780 and $6,689	15,825		25,164
Property and equipment, net of accumulated depreciation of $4,104 and $3,470	4,172		4,264
Right-of-use assets	8,458		—
Cash surrender value of life insurance policies, net of policy loans	163		122
Other tax receivables-long-term	—		311
Deferred income tax assets	261		548
Investments in securities	1,438		1,086
Equity method investments	5,481		5,611
Other assets	316		200
Intangible assets, net of accumulated amortization of $2,303 and $2,097	826		998
Goodwill	4,227		4,227
Non-current assets of discontinued operations	—		1,264
Total Assets	$	158,375	$	115,143

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	11,105	11,409
Income tax payable	—		888
Accrued expenses and other	12,624		14,175
Current portion of long-term debt	51,504		24,735
Short-term lease liability	1,134		—
Current liabilities of discontinued operations	—		1,587
Total Current Liabilities	76,367		52,794

Long-term debt	39,995		32,918
Deferred income tax liabilities	1,604		—
Long-term lease liability	7,779		—
Other non-current liabilities	1,039		597

Total Liabilities	126,784		86,309

Redeemable non-controlling interest	8,190		5,476

Commitments and contingencies (Note 15)

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, 3,023,085 and 2,022,637 shares issued, 2,912,599 and 2,022,637 shares outstanding	756		506
Treasury stock, 110,146 shares at $19.58	(2,157)		—
Additional paid-in capital	1,029		2,866
Retained earnings	23,180		21,191
Accumulated other comprehensive loss	(420)		(205)
Total Air T, Inc. Stockholders' Equity	22,388		24,358
Non-controlling Interests	1,013		(1,000)
Total Equity	23,401		23,358
Total Liabilities and Equity	$	158,375	$	115,143


	Equity
	Air T, Inc. Stockholders' Equity
(In Thousands)	Common Stock					Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non-controlling Interests		Total Equity
	Shares	Amount
Balance, March 31, 2018	2,044	$	511	$	4,172	$	20,696	$	(261)	$	(875)	$	24,243

Net income*	—	—		—		2,829		—		(46)		2,783

Reclassification of unrealized loss on marketable securities, net of tax	—	—		—		(106)		106		—		—

Foreign currency translation gain	—	—		—		—		31		17		48


Balance, June 30, 2018	2,044	$	511	$	4,172	$	23,419	$	(124)	$	(904)	$	27,074

Net loss*	—	—		—		(1,321)		—		(42)		(1,363)

Exercise of stock options	2	—		18		—		—		—		18

Repurchase of common stock	(1)	—		(2)		(21)		—		—		(23)



Foreign currency translation gain	—	—		—		—		24		8		32

Unrealized gain on interest rate swaps, net of tax	—	—		—		—		29		—		29



Balance, September 30, 2018	2,045	$	511	$	4,188	$	22,077	$	(71)	$	(938)	$	25,767

Net loss*	—	—		—		(2,715)		—		(27)		(2,742)




Repurchase of common stock	(20)	(5)		1		(667)		—		—		(671)

Equity-based compensation	—	—		6		—		—		—		6

Foreign currency translation gain	—	—		—		—		114		7		121

Unrealized loss on interest rate swaps, net of tax	—	—		—		—		(163)		—		(163)

Balance, December 31, 2018	2,025	$	506	$	4,195	$	18,695	$	(120)	$	(958)	$	22,318


	Nine Months Ended September 30, 2019		Nine Months Ended September 30, 2018
Revenue	$	15,636	$	25,119
Gross Profit	3,165		9,314
Operating income (loss)	(3,091)		1,331
Net income (loss)	(2,562)		993
Net income (loss) attributable to Air T, Inc. stockholders	$	(749)	$	203


Year ended March 31,
2020	$	3,133
2021	2,115
2022	1,625
2023	1,241
2024	692
Thereafter	6,267
Total minimum lease payments	$	15,073


	December 31, 2019		March 31, 2019
Australia	$	5	$	5
Canada	51		—
Estonia	7,930		—
Mexico	1,845		2,681
Netherlands	4,969		5,541
China	—		16,808
Total property and equipment, net	$	14,800	$	25,035


	December 31, 2019		December 31, 2018
United States	$	127,115	$	134,753
Foreign	44,066		13,420
Total revenue from continuing operations	$	171,181	$	148,173


	Three Months Ended December 31, 2019						Change
	2019		2018
Overnight Air Cargo	$	638	$	73	$	565	774	%
Ground Equipment Sales	1,644		1,175		469		40	%

Commercial Jet Engines and Parts	3,440		2,449		991		40	%
Printing Equipment and Maintenance	(425)		(353)		(72)		(20)	%
Corporate and other	(1,577)		(1,479)		(98)		(7)	%
	$	3,720	$	1,865	$	1,855	99	%


Dates of Shares Purchased	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Public Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
October 1 - October 31, 2019	1,905	$	19.28	34,323	1,077,929
November 1 - November 30, 2019	108,241	$	19.59	142,564	969,688
December 1 - December 31, 2019	—			142,564	969,688
	110,146