1A.	Restatement of Previously Issued Consolidated Financial Statements

Pursuant to a Securities Purchase Agreement dated as of

October 2, 2015 (

the “Securities Purchase Agreement”) among the Company, Delphax Technologies Inc. (“Delphax”) and its subsidiary, Delphax Technologies Canada Limited (“Delphax Canada”), on

November 24, 2015 (

the “Closing Date”), the Company purchased (i) at face value a

$2,500,000

principal amount Five-Year Senior Subordinated Promissory Note (the “Senior Subordinated Note”) issued by Delphax Canada for a combination of cash and the outstanding principal of

$500,000

and accrued and unpaid interest under a

-Day Senior Subordinated Note purchased at face value by the Company from Delphax Canada on

October 2, 2015

pursuant to the Securities Purchase Agreement and (ii) for

$1,050,000

in cash a total of

43,000

shares of Delphax

’s Series B Preferred Stock (the “Series B Preferred Stock”) and a Stock Purchase Warrant (the “Warrant”) to acquire an additional

95,600

shares of Series B Preferred Stock at a price of

$33.4728

per share (subject to adjustment for specified dilutive events). As further disclosed in the Original Filing, each share of Series B Preferred Stock is convertible into

100

shares of common stock of Delphax, subject to anti-dilution adjustments, and has

liquidation preference over shares of common stock of Delphax.

dividends are required to be paid with respect to the shares of Series B Preferred Stock, except that ratable dividends (on an as-converted basis) are to be paid in the event that dividends are paid on the common stock of Delphax. Based on the number of shares of Delphax common stock outstanding at the Closing Date, the number of shares of common stock underlying the Series B Preferred Stock purchased by the Company represented approximately

38%

of the shares of Delphax common stock that would be outstanding assuming conversion of Series B Preferred Stock held by the Company. Holders of the Series B Preferred Stock, voting as a separate class, were initially entitled to elect (and exercise rights of removal and replacement with respect to)

three

-sevenths of the board of directors of Delphax, and after

June 1, 2016

the holders of the Series B Preferred Stock, voting as a separate class, were entitled to elect (and to exercise rights of removal and replacement with respect to)

four

-sevenths of the members of the board of directors of Delphax. The Warrant expires on

November 24, 2021

and provides that in the event that dividends are paid on the common stock of Delphax, the holder of the Warrant is entitled to participate in such dividends on a ratable basis as if the 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.

The consolidated financial statements included in the Company

’s Annual Report on Form

-K for the fiscal year ended

March 31, 2016,

originally filed with the Securities and Exchange Commission (the “SEC”) on

June 29, 2016 (

“Original Filing”), reflect the consolidation of Delphax with the Company and its subsidiaries from the

November 24, 2015

Closing Date. Such condensed consolidated financial statements also reflect an attribution of

62%

of Delphax’s loss for periods commencing as of the Closing Date to non-controlling interests in the determination of consolidated net income attributable to Air T, Inc. stockholders. Such attribution was based on the Company’s ownership of the Series B Preferred Stock, which represented approximately

38%

of the shares of Delphax common stock that would be outstanding assuming conversion of Series B Preferred Stock held by the Company.

The Company has concluded that the Company

’s methodology in attributing

62%

of Delphax’s net income or loss to non-controlling interests during the period of consolidation was

not

appropriate and that attribution should be based on consideration of all of Air T’s investments in Delphax and Delphax Canada. The Company’s policy with regarding attribution of Delphax’s net income or loss to non-controlling interests based on consideration of all of Air T’s investments in Delphax and Delphax Canada is set forth below in Note

Summary of Significant Accounting Policies (As Restated). As a result of the application of such policy, for the fiscal year ended

March 31, 2016

the attribution of Delphax losses to non-controlling interests should have been

33%.

In addition,

we are also correcting an otherwise immaterial error associated with our elimination of intercompany interest charged by Air T, Inc. to Delphax Canada under the Five-Year Senior Subordinated Promissory Note and an inadvertent transposition of entries in our Consolidated Statement of Cash Flows described below.

Accordingly, the Company is restating its consolidated financial statements at

March 31, 2016

and for the fiscal year ended

March 31, 2016,

to so correct the treatment of Air T

’s interests in Delphax with respect to the attribution of Delphax losses and the elimination of intercompany interest, to correct an inadvertent transposition of the entries for the fiscal year ended

March 31, 2016

for “proceeds from sale of property and equipment” and “capital expenditures” in the presentation of cash flows from investing activities on our Consolidated Statements of Cash Flows (which correction does

not

affect the reported amount of net cash used in investing activities for that period), and to correct and expand related disclosures.

The combined impacts of all the adjustments to the applicable line items in our consolidated financial statements for the periods covered by this Form

10K/A

are provided in the tables below.

Financial Statement Presentation

In addition to the restatement of our consolidated financial statements, we have also restated the following Notes for the effects of the errors above.

●

Note

Summary of Significant Accounting Policies (As Restated)

●

Note

Earnings Per Common Share (As Restated)

●

Note

Acquisition of Interests in Delphax (As Restated)

●

Note

Variable Interest Entities (As Restated)

●

Note

19.

Quarterly Financial Information (Unaudited) (As Restated)

The following tables present the effect of the correction of the error on selected line items of our previously reported consolidated financial statements at

March 31, 2016

and for the fiscal year ended

March 31, 2016:

	As Previously Reported			As Restated

Consolidated Balance Sheet Information (at March 31, 2016):
Additional paid-in capital	$	4,947,665		$	4,956,171
Retained earnings		29,350,980			28,821,825
Accumulated other comprehensive loss, net		(117,898	)		(140,519	)
Total Air T, Inc. stockholders' equity		34,773,878			34,230,608
Non-controlling interests		497,652			1,040,922
Total equity		35,271,530			35,271,530
Total liabilities and equity		52,154,752			52,154,752
Consolidated Statement of Income (Loss) (for the fiscal year ended March 31, 2016):
Net loss attributable to non-controlling interests	$	1,185,108		$	655,953
Net income attribuable to Air T, Inc. stockholders		4,943,065			4,413,910
Earnings per share - basic		2.08			1.86
Earnings per share - diluted		2.06			1.84
Consolidated Statement of Comprehensive Income (for the fiscal year ended March 31, 2016):
Comprehensive loss attributable to non-controlling interests	$	1,233,470		$	681,694
Comprehensive income attributable to Air T, Inc. stockholders		4,960,080			4,408,304
Consolidated Statement of Cash Flows (for the fiscal year ended March 31, 2016):
Proceeds from sale of property and equipment	$	(1,246,071	)	$	200,634
Capital expenditures		200,634			(1,246,071	)