1.	Financial Statement Presentation

The condensed consolidated financial statements of Air T, Inc. (the “Company”) 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.

It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form

-K for the year ended

March 31, 2015.

The results of operations for the periods ended

December 31

are

not

necessarily indicative of the operating results for the full year.

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

New Accounting Pronouncement

May 2014,

a comprehensive new revenue recognition standard was issued that will supersede nearly all existing revenue recognition guidance. The new guidance introduces a

five

-step model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This guidance is effective for annual reporting periods beginning after

December 15, 2017,

including interim periods within that reporting period. Management is currently evaluating the new guidance, including possible transition alternatives, to determine the impact it will have on the Company

’s consolidated financial statements.

February 2015,

a standard was issued that amends the guidance that reporting entities apply when evaluating whether certain legal entities should be consolidated. The Company will be required to adopt the standard as of the

first

quarter of its fiscal year ending

March 31, 2017.

The Company is currently evaluating the impact of adoption on its consolidated financial statements.

April 2015,

a standard was issued that amends existing guidance to require the presentation of debt issuance costs in the balance sheet as a deduction from the carrying amount of the related debt liability instead of a deferred charge. It is effective for annual reporting periods beginning after

December 15, 2015,

but early adoption is permitted. The Company is evaluating the impact of adoption of the standard on its consolidated financial statements.

July 2015,

a standard was issued that amends existing guidance to simplify the measurement of inventory by requiring certain inventory to be measured at the lower of cost or net realizable value. It is effective for fiscal years beginning after

December 15, 2016

and for interim periods therein. The Company is evaluating the impact of the adoption of the standard on its consolidated financial statements.

September 2015,

a standard was issued that simplifies the accounting for measurement period adjustments associated with a business combination by eliminating the requirement to restate prior period financial statements for measurement period adjustments when measurements were incomplete as of the end of the reporting period that includes the business combination. The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. It is effective for interim and annual periods beginning after

December 15, 2015,

with early adoption permitted. The Company is currently evaluating whether it will adopt this new standard during the fiscal year ended

March 31, 2016,

or wait until required adoption in the following fiscal year.

January 2016,

the Financial Accounting Standard Board (FASB) published Accounting Standards Update (ASU)

2016

Financial Instruments Overall: Recognition and Measurement of Financial Assets and Financial Liabilities

that amends the guidance on the classification and measurement of financial instruments. ASU

2016

becomes effective for public business entities in fiscal years beginning after

December 15, 2017,

including interim periods therein. All other entities are provided a

one

-year deferral. ASU

2016

removes equity securities from the scope of Accounting Standards Codification (ASC) Topic

320

and creates ASC Topic

321,

Investments – Equity Securities. Under the new Topic, all equity securities with readily determinable fair values are measured at fair value on the statement of financial position, with changes in fair value recorded through earnings. The update eliminates the option to record changes in the fair value of equity securities through other comprehensive income. The Company is evaluating the impact of the adoption of the standard on its consolidated financial statements.