10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2018

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _____to _____

Commission File Number 001-35476

Air T, Inc.

(Exact name of registrant as specified in its charter)

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

5930 Balsom Ridge Road, Denver, North Carolina 28037

(Address of principal executive offices, including zip code)

(828) 464 – 8741

(Registrant’s telephone number, including area code)

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

Yes ☒                    No☐

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

Yes ☒                    No☐

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

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if smaller reporting company)	Smaller reporting company ☒
	Emerging growth company ☐

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

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

Yes ☐                    No☒

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

Common Stock	Outstanding Shares at July 31, 2018
Common Shares, par value of $.25 per share	2,043,607

		Page
PART I
Item 1.	Financial Statements
	Condensed Consolidated Statements of Income (Unaudited) Three Months Ended June 30, 2018 and 2017	3
	Condensed Consolidated Statements of Comprehensive Income (Unaudited) Three Months Ended June 30, 2018 and 2017	4
	Condensed Consolidated Balance Sheets June 30, 2018 (Unaudited) and March 31, 2017	5
	Condensed Consolidated Statements of Cash Flows (Unaudited) Three Months Ended June 30, 2018 and 2017	6
	Condensed Consolidated Statements of Equity (Unaudited) Three Months Ended June 30, 2018 and 2017	7
	Notes to Condensed Consolidated Financial Statements (Unaudited)	8-23
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24-32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
PART II
Item 6.	Exhibits	32
	Signatures	33
	Exhibit Index
	Certifications
	Interactive Data Files

2

Item 1. Financial Statements

AIR T, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	Three Months Ended June 30,
	2018			2017
Operating Revenues:
Overnight air cargo	$	17,640,658		$	16,742,175
Ground equipment sales		6,384,781			5,949,656
Ground support services		9,047,640			9,113,073
Printing equipment and maintenance		298,823			3,131,381
Commercial jet engines and parts		27,320,175			12,725,341
Corporate		175,392			35,747
		60,867,469			47,697,373
Operating Expenses:
Overnight air cargo		15,174,396			14,562,143
Ground equipment sales		4,937,312			4,754,215
Ground support services		7,805,209			7,418,393
Printing equipment and maintenance		145,528			1,501,056
Commercial jet engines and parts		20,121,118			10,069,850
Research and development		-			195,653
General and administrative		8,584,803			6,584,668
Depreciation, amortization and impairment		1,495,401			398,827
		58,263,767			45,484,805
Operating Income		2,603,702			2,212,568
Non-operating Income (Expense):
Foreign currency gain (loss), net		(2,182	)		(188,624	)
Other-than-temporary impairment loss on investments		-			(771,173	)
Other investment income (loss), net		(315,507	)		30,651
Interest expense and other		(707,199	)		(149,519	)
Unrealized gain on interest rate swap		97,337			-
Bargain purchase acquisition gain, net of tax		1,983,777			501,880
Equity in income (loss) of associated company		9,183			(31,903	)
		1,065,409			(608,688	)
Income Before Income Taxes		3,669,111			1,603,880
Income Taxes		387,000			374,000
Net Income		3,282,111			1,229,880
Net (Income) Attributable to Non-controlling
Interests	$	(453,417	)	$	(261,491	)
Net Income Attributable to Air T, Inc. Stockholders	$	2,828,694		$	968,389
Income Per Share:
Basic	$	1.38		$	0.47
Diluted	$	1.38		$	0.47
Weighted Average Shares Outstanding:
Basic		2,043,607			2,042,789
Diluted		2,049,698			2,047,623

See notes to condensed consolidated financial statements.

3

AIR T, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	Three Months Ended June 30,
	2018			2017
Net income	$	3,282,111		$	1,229,880
Other comprehensive income (loss):
Foreign currency translation gain		47,660			134,789
Unrealized net loss on marketable securities		-			(920,309	)
Tax effect of unrealized net loss on marketable securities		-			331,761
Total unrealized net loss on marketable securities, net of tax		-			(588,548	)
Reclassification of other-than-temporary impairment loss on investments, net of gains on sale of marketable securities, included in income (loss), before income taxes		-			771,173
Tax effect of reclassification		-			(277,622	)
Reclassification adjustment, net of tax		-			493,551
Total Other Comprehensive Income		47,660			39,792
Total Comprehensive Income (Loss)		3,329,771			1,269,672
Comprehensive (Income) Attributable to Non-controlling Interests		(470,569	)		(260,646	)
Comprehensive Income Attributable to Air T, Inc. Stockholders	$	2,859,202		$	1,009,026

See notes to condensed consolidated financial statements.

4

AIR T, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2018			March 31, 2018*
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents (Delphax $371,831 and $241,430)**	$	5,746,521		$	4,803,238
Marketable securities		1,055,075			290,449
Restricted cash		18,832			269,659
Restricted investments		1,119,490			1,235,405
Accounts receivable, less allowance for doubtful accounts of $755,865 and $801,000 (Delphax $41,150 and $317,000)**		19,120,159			15,157,855
Costs and estimated earnings in excess of billings on uncompleted projects		-			2,012,121
Notes and other receivables-current		2,880,560			658,630
Income tax receivable		1,351,597			1,557,180
Inventories, net (Delphax $0 and $0)**		27,619,851			34,231,005
Prepaid expenses and other (Delphax $58,898 and $72,269)**		1,147,368			1,455,566
Total Current Assets		60,059,453			61,671,108
Investments in securities		2,840,175			1,026,920
Property and equipment, net		19,417,752			20,273,171
Cash surrender value of life insurance policies		2,372,289			2,356,507
Other tax receivables-long-term (Delphax $311,000 and $311,000)**		311,000			311,000
Investments in funds		314,026			324,854
Equity method investments		5,238,982			5,032,268
Other assets		772,109			420,981
Intangible assets, net		1,371,561			1,312,472
Goodwill		4,417,605			4,417,605
Total Assets	$	97,114,952		$	97,146,886
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable (Delphax $2,160,817 and $2,145,847)**	$	14,887,263		$	10,181,143
Income tax payable (Delphax $11,312 and $11,312)**		23,000			23,000
Accrued expenses (Delphax $3,180,724 and $3,244,514)**		10,418,865			11,743,973
Short-term debt		9,544,732			9,229,690
Total Current Liabilities		34,873,860			31,177,806
Long-term debt (Delphax $0 and $0)*		31,322,098			38,855,260
Deferred income taxes		681,000			92,000
Other non-current liabilities		719,252			785,797
Total Liabilities		67,596,210			70,910,863
Redeemable non-controlling interest		2,445,563			1,992,939
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, 2,043,607 shares issued and outstanding		510,901			510,901
Additional paid-in capital		4,171,869			4,171,869
Retained earnings		23,418,334			20,695,981
Accumulated other comprehensive loss		(124,051	)		(260,900	)
Total Air T, Inc. Stockholders' Equity		27,977,053			25,117,851
Non-controlling Interests		(903,874	)		(874,767	)
Total Equity		27,073,179			24,243,084
Total Liabilities and Equity	$	97,114,952		$	97,146,886

* Derived from audited consolidated financial statements

** Amounts related to Delphax as of June 30, 2018 and March 31, 2018, respectively.

See notes to condensed consolidated financial statements.

5

AIR T, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Three Months Ended June 30,
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	3,282,111		$	1,229,880
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Gain on sale of marketable securities		10,828			-
Gain on sale of property and equipment		1,661			(1,091	)
Change in inventory reserves		91,547			(405,302	)
Change in accounts receivable reserves		(45,628	)		(20,950	)
Depreciation, amortization and impairment		1,495,401			398,827
Change in cash surrender value of life insurance		(15,782	)		(14,335	)
Bargain purchase acquisition gain, net of tax		(1,983,777	)		(501,880	)
Warranty reserve		(980	)		27,706
Other-than-temporary impairment loss on investments		-			771,173
Unrealized loss on marketable securities		322,477			-
Unrealized gain on interest rate swap		(97,337	)		-
Change in operating assets and liabilities:
Accounts receivable		29,564			(1,071,687	)
Notes receivable and other non-trade receivables		(2,221,930	)		811,207
Inventories		11,319,597			(1,896,441	)
Prepaid expense and other assets		288,286			380,030
Accounts payable		3,942,185			(1,047,556	)
Accrued expenses		(1,982,397	)		(1,206,518	)
Income taxes payable/receivable		205,583			355,186
Non-current liabilities		75,525			47,240
Total adjustments		11,434,823			(3,374,391	)
Net cash provided by (used in) operating activities		14,716,934			(2,144,511	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities		(784,443	)		(30,476	)
Acquisition of businesses, net of cash acquired		(3,325,700	)		(2,900,000	)
Net cash used for equity method investments		(197,532	)		-
Purchase of debt security		(2,000,000	)		-
Capital expenditures		(459,575	)		(489,995	)
Proceeds from sale of property and equipment		50,602			1,861
Net cash used in investing activities		(6,716,648	)		(3,418,610	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from lines of credit		28,933,742			17,002,765
Payments on lines of credit		(38,156,091	)		(14,520,242	)
Proceeds from term loan		3,400,000			2,400,000
Payments on term loan		(1,404,800	)		(200,000	)
Debt issuance costs		(35,702	)		-
Distribution to non-controlling member		(47,051	)		-
Net cash provided by (used in) financing activities		(7,309,902	)		4,682,523
Effect of foreign currency exchange rates on cash and cash equivalents		2,072			6,057
NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		692,456			(874,541	)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD		5,072,897			2,763,365
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	5,765,353		$	1,888,824
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES
Equipment leased to customers transferred to inventory	$	234,151		$	-
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest	$	629,264		$	160,191
Income taxes		181,417			18,814

See notes to condensed consolidated financial statements.

6

AIR T, INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

	Equity
	Air T, Inc. Stockholders' Equity
										Accumulated
	Common Stock				Additional					Other
					Paid-In			Retained		Comprehensive			Non-controlling			Total
	Shares		Amount		Capital			Earnings		Income (Loss)			Interests			Equity
Balance, March 31, 2017		2,042,789	$	510,696	$	4,205,536		$	18,461,347	$	(212,047	)	$	(803,138	)	$	22,162,394
Net income*		-		-		-			968,389		-			18,239			986,628
Net change from marketable securities, net of tax		-		-		-			-		(94,997	)		-			(94,997	)
Foreign currency translation gain (loss)		-		-		-			-		135,634			(845	)		134,789
Redeemable non-controlling interest		-		-		(25,000	)		-		-			-			(25,000	)
Balance, June 30, 2017		2,042,789	$	510,696	$	4,180,536		$	19,429,736	$	(171,410	)	$	(785,744	)	$	23,163,814

	Equity
	Air T, Inc. Stockholders' Equity
										Accumulated
	Common Stock				Additional					Other
					Paid-In		Retained			Comprehensive			Non-controlling			Total
	Shares		Amount		Capital		Earnings			Income (Loss)			Interests*			Equity
Balance, March 31, 2018		2,043,607	$	510,901	$	4,171,869	$	20,695,981		$	(260,900	)	$	(874,767	)	$	24,243,084
Net income*		-		-		-		2,828,694			-			(46,259	)		2,782,435
Adoption of ASU 2016-01		-		-		-		(106,341	)		106,341			-			-
Foreign currency translation gain		-		-		-		-			30,508			17,152			47,660
Balance, June 30, 2018		2,043,607	$	510,901	$	4,171,869	$	23,418,334		$	(124,051	)	$	(903,874	)	$	27,073,179

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

See notes to condensed consolidated financial statements.

7

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. (“AirT”, the “Company”, “we”, “us” or “our”) have been prepared, without audit (except as it relates to the consolidated balance sheet as of March 31, 2018 which has been derived from audited financial statements), 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 10-K for the year ended March 31, 2018. The results of operations for the periods ended June 30 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.

Recently Adopted Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09, Revenue from Contracts with Customers, and created Topic 606 (ASC 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASC 606 replaced most existing revenue recognition guidance in GAAP and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017.

Effective April 1, 2018, the Company adopted the standard using the modified retrospective transition method. Results for reporting periods beginning after April 1, 2018 will be presented according to ASU 2014-09 while prior period amounts will not be adjusted and will continue to be reported in accordance with the Company’s historic accounting policies. The main area impacted by ASU 2014-09 includes the recognition of revenue with the Company’s Ground Equipment Sales segment transitioning from percentage of completion to point in time for the Government Contracts revenue stream. Additionally, certain repair service revenues which were recorded at a point-in-time upon completion of service are now recognized over-time. Due to the short-term nature of these contracts, over-time recognition does not result in a material difference from point-in-time recognition. The Company calculated the transition adjustment and concluded that there was an immaterial impact due to the adoption of ASC 606.

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, that amends the guidance on the classification and measurement of financial instruments (Subtopic 825-10). ASU 2016-01 becomes effective in fiscal years beginning after December 15, 2017, including interim periods therein. ASU 2016-01 removes equity securities from the scope of Accounting Standards Codification (“ASC”) Topic 320 and creates ASC Topic 321, Investments – Equity Securities. Under the new guidance, 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. Transitional guidance provided that entities with unrealized gains or losses on available for sale (“AFS”) equity securities were required to reclassify those amounts to beginning retained earnings in the year of adoption. As a result, the Company has reclassified the beginning amount of accumulated other comprehensive income related to AFS securities to accumulated deficit and all changes in fair values of these securities are now reflected in the Statement of Operations in the Company’s net loss for the period.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 clarifies how cash receipts and cash payments in certain transactions are presented and classified in the statement of cash flows. The effective date of this update is for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The update requires retrospective application to all periods presented but may be applied prospectively if retrospective application is impracticable. The Company adopted the guidance within ASU 2016-15 as of April 1, 2018. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

8

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. ASU 2016-18 requires that the statement of cash flows explain the changes in the combined total of restricted and unrestricted cash balance. Amounts generally described as restricted cash or restricted cash equivalents will be combined with unrestricted cash and cash equivalents when reconciling the beginning and end of period balances on the statement of cash flows. Further, the ASU requires a reconciliation of balances from the statement of cash flows to the balance sheet in situations in which the balance sheet includes more than one-line item of cash, cash equivalents, and restricted cash. Companies will also be disclosing the nature of the restrictions. ASU 2016-18 is effective for financial statements issued for fiscal years beginning after December 15, 2017. The Company adopted the guidance within ASU 2016-18 as of April 1, 2018. The impact of ASU 2016-18 on its financial statements was as follows: (1) changes in restricted cash balances are no longer shown in the statements of cash flows, as these balances are included in the beginning and ending cash balances in the statements of cash flows; and (2) included within Note 4 is a reconciliation between cash balances presented on the balance sheets with the amounts presented in the statements of cash flows.

In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business (Topic 805). This ASU clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance is effective for fiscal years that begin after December 15, 2017 and is to be applied prospectively. The Company adopted the guidance within ASU 2017-01 as of April 1, 2018. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting, which provides guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting. This update is effective for all entities for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. The Company adopted the guidance within ASU 2017-01 as of April 1, 2018. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. Similarly, lessors will be required to classify leases as either sales-type, finance or operating, with classification affecting the pattern of income recognition. Classification for both lessees and lessors will be based on an assessment of whether risks and rewards as well as substantive control have been transferred through a lease contract. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements, with certain practical expedients available. The Company is evaluating the impact of the adoption of the standard on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This standard 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 amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein. The Company is currently evaluating the impact of the adoption of the standard on its consolidated financial statements and disclosures.

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 standard is effective for any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and is to be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements.

9

In August 2017, the FASB issued ASU 2017-12 – Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which provides guidance on hedge accounting for both financial and commodity risks. The provisions in this standard create more transparency around how economic results are presented, both on the face of the financial statements and in the footnotes, for investors and analysts. The standard is effective for public companies for fiscal years beginning after December 15, 2018. Early adoption is permitted in any interim period or fiscal years before the effective date of the standard. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

In February 2018, the FASB amended the Financial Instruments Topic of the Accounting Standards Codification. The amendments clarify certain aspects of the guidance issued in ASU 2016-01. Public business entities with fiscal years beginning between December 15, 2017, and June 15, 2018, are not required to adopt these amendments until the interim period beginning after June 15, 2018. The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements. The Company has not yet concluded how the new standard will impact the consolidated financial statements.

In June 2018, the FASB amended the Compensation—Stock Compensation Topic of the Accounting Standards Codification. The amendments expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year-public business entities. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements. The Company has not yet concluded how the new standard will impact the consolidated financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

2. Revenue recognition

The Company accounts for revenue in accordance with ASC 606, which was adopted on April 1, 2018, using the modified retrospective method. As substantially all of the Company’s revenue is derived from contracts with an initial expected duration of one year or less 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.

10

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 or prompt payment discounts). Performance obligations are short-term in nature and customers are typically billed upon transfer of control.
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. For repair-type services, the Company records revenue over-time based on an input method of costs incurred to total estimated costs. 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 840 (Leases) and out of scope under Topic 606 and Other Revenues (Freight, Management Fees, etc.) which are immaterial for disclosure under Topic 606. The following table summarizes disaggregated revenues by type:

	Three Months Ended June 30,
	2018		2017
Product Sales	$	39,427,051	$	28,350,734
Support Services		19,776,215		19,109,009
Leasing Revenue		1,272,579		65,194
Other		391,624		172,436
Total	$	60,867,469	$	47,697,373

See Note 13 for the Company's disaggregated revenues by geographic region and Note 14 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

The Company does not have material contract assets, liabilities or costs associated with arrangements with its customers at June 30, 2018.

3. Business Combinations

Acquisition of AirCo Assets

On May 2, 2017 and May 31, 2017, our newly formed subsidiaries, AirCo, LLC and AirCo Services, LLC (collectively, “AirCo”) acquired the inventory and principal business assets, and assumed specified liabilities, of Aircraft Instrument and Radio Company, Incorporated, and Aircraft Instrument and Radio Services, Inc. (collectively, the “AirCo Sellers”). The acquired business, which is based in Wichita, Kansas, distributes and sells airplane and aviation parts and maintains a license under Part 145 of the regulations of the Federal Aviation Administration. The consideration paid for the acquired business was $2,400,000.

11

The following table summarizes the fair values of assets acquired and liabilities assumed by AirCo as of May 2, 2017, the date of the completion of the acquisition (the “AirCo Closing Date”):

	May 2, 2017
Assets acquired and liabilities assumed at fair value:
Accounts receivables	$	748,936
Inventories		3,100,000
Property and equipment		26,748
Accounts payable		(313,117	)
Accrued expenses		(382,687	)
Net assets acquired	$	3,179,880
Net assets acquired		3,179,880
Consideration paid		2,400,000
Bargain purchase gain	$	779,880

The Company’s purchase price accounting reflects the estimated net fair value of the AirCo Sellers assets acquired and liabilities assumed as of the AirCo Closing Date.

The transaction resulted in a bargain purchase because AirCo was a non-marketed transaction and in financial distress at the time of the acquisition. The inventory was not being marketed appropriately and as a result, the company was unable to realize market prices for the parts. 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 $278,000.  The resulting net bargain purchase gain after taxes was approximately $502,000.

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

Acquisition of Worthington Aviation and Parts

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 and Parts (“Worthington”), in each case 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 assume the 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:

Earnest money	$	50,000
Cash consideration		3,300,000
Cash acquired		(24,300	)
Total consideration	$	3,325,700

12

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 remaining unallocated purchase price recorded as a bargain purchase gain. A bargain purchase gain has been recognized by the Company due to Worthington being sold in a distressed sale, resulting in the fair value of net assets acquired exceeding consideration paid. 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:

	May 4, 2018
ASSETS
Accounts receivable	$	1,929,120
Inventories		4,564,437
Other current assets		149,792
Property and equipment		391,892
Investment in JVs		189,607
Intangible assets - tradename		138,000
Total assets		7,362,848
LIABILITIES
Accounts payable		1,289,150
Accrued expenses		175,222
Deferred tax liability		589,000
Total liabilities		2,053,372
Net Assets Acquired	$	5,309,476
Consideration paid	$	3,350,000
Less: Cash acquired		(24,301	)
Bargain purchase gain	$	1,983,777

As of June 30, 2018, the purchase price allocation is considered preliminary. The Company’s initial accounting for this acquisition is incomplete as of the date of this report. Therefore, as permitted by applicable accounting guidance, the foregoing amounts are provisional. All relevant facts and circumstances are still being considered by management prior to finalization of the purchase price allocation.

The transaction resulted in a bargain purchase because Worthington needed access to additional capital to maintain its operations. 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.

Worthington’s operating revenue and operating income included in the Company’s results for the three-months ended June 30, 2018 were $2,600,000 and $165,000, respectively.

Pro Forma Financial Information

The following unaudited pro forma consolidated results of operations for the three-month periods ended June 30, 2018 and 2017 present consolidated information of the Company as if the acquisition of Worthington had occurred as of April 1, 2017:

	Pro-Forma Three		Pro-Forma Three
	Months Ended		Months Ended
	June 30, 2018		June 30, 2017
Revenue	$	62,311,340	$	51,212,373
Operating income		2,399,435		1,985,814
Net income Attributable to Air T, Inc. Stockholders		701,272		2,749,338
Basic income per share		0.34		1.35
Dilutive income per share	$	0.34	$	1.34

The unaudited pro forma financial results include certain adjustments for additional amortization expense based upon the definite-lived amortizable asset acquired in the transaction. The provision for income taxes has also been adjusted for all periods, based upon the foregoing adjustments to historical results.

The pro forma net income for the three months ended June 30, 2017 includes certain items, such as the bargain purchase gain and transaction costs directly attributable to the acquisition, which will not have an ongoing impact. These items include the bargain purchase gain of approximately $1,983,000. The unaudited pro forma consolidated results are not necessarily indicative of what the Company’s consolidated results of operations actually would have been had it completed these acquisitions on April 1, 2017.

13

Other Acquisitions and Business Investments

On June 7, 2017, the Company’s Space Age Insurance Company subsidiary (“SAIC”) invested $500,000 for a 40% interest in TFS Partners LLC (“TFS Partners”), a single-purpose investment entity organized by SAIC and other investors for the purpose of making an investment in a limited liability company, The Fence Store LLC (“Fence Store LLC”), organized for the purpose of acquiring substantially all of the assets of The Fence Store, Inc. (“Fence Store Inc.”). TFS Partners acquired a 60% interest in Fence Store LLC, which has completed the purchase of substantially all of the assets of Fence Store Inc. Prior to this transaction, Fence Store Inc. operated a business under the tradename “Town and Country Fence” selling and installing residential and commercial fencing in the greater Twin Cities, Minnesota area. Fence Store LLC intends to continue this business. The Company accounts for its investment in TFS Partners using the equity method of accounting.

On December 15, 2017, BCCM, Inc. (“BCCM”), a newly-formed, wholly-owned subsidiary of the Company, completed the acquisition of Blue Clay Capital Management, LLC (“Blue Clay Capital”). In connection with the transaction, BCCM acquired the assets of, and assumed certain liabilities of Blue Clay Capital. Blue Clay Capital, BCCM, BCCM Advisors, LLC (“BCCM Advisors”), a wholly-owned subsidiary of BCCM purchased the general partnership interests in certain investment funds previously managed by Blue Clay Capital for a purchase price equal to $227,000. Upon acquisition of each of the general partnership interests, BCCM Advisors was admitted as the general partner of each fund.

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

4. Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same such amounts shown in the Consolidated Statement of Cash Flows:

	6/30/2018		3/31/2018
Cash and cash equivalents	$	5,746,521	$	4,803,238
Restricted Cash		18,832		269,659
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$	5,765,353	$	5,072,897

5. Income Taxes

During the three-month period ended June 30, 2018, the Company recorded $387,000 in income tax expense at an effective rate of 10.5%. The Company records income taxes using an estimated annual effective tax rate for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21% and the Company’s effective tax rate for the three-month period ended June 30, 2018 were the estimated benefit for the exclusion of income for the Company’s captive insurance company subsidiary under Section 831(b), the presentation of the tax impact of the bargain purchase gain and state income tax expense. During the three-month period ended June 30, 2017, the Company recorded $374,000 in income tax expense which resulted in an effective tax rate of 23.3%. The primary factors contributing to the difference between the federal statutory rate and the Company’s effective tax rate for the three-month period ended June 30, 2017 were the change in valuation allowance against Delphax’s pretax activity in the period, the benefit for the federal domestic production activities deduction, the increase in the valuation allowance related to the Insignia unrealized impairment loss, state income tax expense, and the estimated benefit for the exclusion of income for the Company’s captive insurance company subsidiary afforded under Section 831(b).

14

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. The computation of basic and diluted earnings per common share is as follows:

	Three Months Ended June 30,
	2018		2017
Net Income (Loss) Attributable to Air T, Inc. Stockholders	$	2,828,694	$	968,389
Income Per Share:
Basic	$	1.38	$	0.47
Diluted	$	1.38	$	0.47
Weighted Average Shares Outstanding:
Basic		2,043,607		2,042,789
Diluted		2,049,698		2,047,623

7. Investments in Securities

At March 31, 2018, the Company classified the marketable equity securities as available-for-sale securities, which are recorded at fair value based upon quoted market prices with changes in fair value recorded in Other Comprehensive Income (Loss) (“OCI”). The gains and losses on available-for-sale securities are not reported in Net (Loss) in the consolidated Statement of Income (Loss) until the securities are sold or if there is an other-than temporary decline in fair value below cost.

The Company adopted ASU 2016-01 as of April 1, 2018 and as a result has reclassified the beginning accumulated OCI balance of approximately $106,000 related to marketable equity securities to beginning Retained Earnings (see Statement of Equity). As a result of adoption of this guidance, the Company now recognizes changes in fair value of these securities in the Consolidated Statement of Income (Loss).

During the three months ended June 30, 2018, the Company had a gross unrealized gains aggregating $61,000 and gross unrealized losses aggregating $416,000, which is included in the Consolidated Statement of Income (Loss).

All investments in marketable securities are priced using publicly quoted market prices and are considered Level 1 fair value measurements.

In June 2018, the Company invested $2,000,000 in a quota share reinsurance program in the form of participating notes. The investment period is 3 years; subject to early redemption if applicable. Based on the Company’s intent and the ability to hold the investment, the Company has classified the investment as held-to-maturity. The investment is reported at amortized cost of $2,000,000 at June 30, 2018.

15

8. Equity Method Investments

On January 16, 2018, the Company purchased approximately 1,133,000 shares of Insignia (NASDAQ: ISIG) at a price of $1.25 per share for a total cost of approximately $1.4 million. After this purchase, the Company owned approximately 26% of Insignia’s total common stock and the Company adopted the equity method of accounting. Insignia Systems, Inc. markets in-store advertising products, programs and services to retailers and consumer packaged goods manufacturers. As a result, as of January 16, 2018, the Company adopted the equity method to account for this investment because of its ability to exercise significant influence, but not control, over the operating and financial policies of Insignia. Air T has elected a three-month lag upon adoption of the equity method. At June 30, 2018, the Company held approximately 3.5 million shares of Insignia’s common stock representing approximately 29% of the outstanding shares for a total net investment basis of approximately $4,801,000. For the quarter ended June 30, 2018, the Company recorded approximately $25,000 of its share of Insignia’s net income for the three months ended March 31, 2018 along with a basis difference adjustment of approximately $20,000.

As discussed previously, the Company’s investment in The Fence Store LLC is accounted for under the equity method of accounting. The Company’s net investment basis is approximately $437,000 at June 30, 2018.

9. Inventories

Inventories consisted of the following:

	June 30, 2018		March 31, 2018
Ground support service parts	$	2,590,319	$	2,489,433
Ground equipment manufacturing:
Raw materials		2,856,870		3,198,939
Work in process		1,828,715		20,089
Finished goods		4,244,487		1,768,897
Printing equipment and maintenance
Raw materials		851,938		747,778
Finished goods		395,044		553,847
Commercial jet engines and parts		14,852,478		25,452,022
Total inventories	$	27,619,851	$	34,231,005

10. Employee and Non-employee Stock Options

Air T, Inc. maintains a stock option plan for the benefit of certain eligible employees and directors. In addition, Delphax maintains a number of stock option plans. Compensation expense is recognized over the requisite service period for stock options which are expected to vest based on their grant-date fair values. The Company uses the Black-Scholes option pricing model to value stock options granted under the Air T, Inc. plan and the Delphax plans. The key assumptions for this valuation method include the expected term of the option, stock price volatility, risk-free interest rate and dividend yield. Many of these assumptions are judgmental and highly sensitive in the determination of compensation expense.

No options were granted or exercised under Air T, Inc.’s stock option plan during the three-month periods ended June 30, 2018 and 2017. Stock-based compensation expense with respect to this plan in the amount of $0 was recognized for the three-month periods ended June 30, 2018 and 2017, respectively. At June 30, 2018, there was no unrecognized compensation expense related to the Air T Inc. stock options.

No options were granted or exercised during the June 2018 and June 2017 quarters under any of Delphax’s stock option plans. Delphax did not recognize any stock-based compensation expense during the June 2018 and June 2017 quarters.

16

11. Financing Arrangements

Material financing arrangements for the Company and its subsidiaries are summarized as follows. AirCo, Contrail Aviation (“Contrail”) and Worthington are subsidiaries of the Company in the commercial jet engines and parts segment.

	6/30/2018			3/31/2018			Maturity Date
Revolver	$	5,603,713		$	-		November 30, 2019
Term Note A		9,500,000			9,750,000		January 1, 2028
Term Note B		4,750,000			4,875,000		January 1, 2028
Term Note D		1,657,600			1,674,400		January 1, 2028
Air T Debt		21,511,313			16,299,400
Revolver		4,686,000			5,000,000		February 21, 2019
Term Loan		1,705,775			2,404,775		March 26, 2019
AirCo Debt		6,391,775			7,404,775
Revolver		-			14,826,062		May 5, 2019
Term Loan		9,920,000			9,920,000		January 26, 2021
Contrail Debt		9,920,000			24,746,062
Term Loan		3,400,000			-		November 30, 2019
Worthington Debt		3,400,000			-
Total Debt		41,223,088			48,450,238
Less: Unamortized Debt Issuance Costs		(356,258	)		(365,288	)
Total Debt, net	$	40,866,830		$	48,084,950

Refer to the Company’s Form 10K for the year ended March 31, 2018 for a detailed explanation of existing debts. For the quarter ended June 30, 2018, the Company has entered the following debt obligations:

On May 25, 2018, the Company’s wholly-owned subsidiaries Worthington Acquisition, LLC, Worthington Aviation, LLC and Worthington MRO, LLC, as Borrowers, completed a loan transaction with Minnesota Bank & Trust (“MBT”) pursuant to which Borrowers obtained from MBT a new revolving loan in the amount of up to $1,500,000 (the “Worthington Revolving Loan”) and new term loan in the amount of $3,400,000 (the “Worthington Term Loan” and together with the Worthington Revolving Loan, the “Worthington Loans”). The entire loan proceeds were disbursed by MBT to the Borrowers on May 25, 2018 and were used to reduce amounts previously advanced on the Company’s line of credit financing with MBT. Until the Worthington Term Loan is paid in full and certain other conditions met, the Company guaranteed up to $3,000,000 of the Worthington Loans. The interest rate on Worthington Term Loan floats at a rate equal to the one-month LIBOR rate plus 2.5% and the interest rate on the Worthington Revolving Loan floats at a rate equal to the one-month LIBOR rate plus 2.0%. The Worthington Loans mature on November 30, 2019, at which time the entire unpaid balance of the Worthington Loans will be due and payable in full. In addition, the loan agreement contains affirmative and negative covenants and the loans are secured by a first lien on all of the assets of the Borrowers and a pledge of certain assets held by Stratus Aero Partners, LLC, a subsidiary of the Company. At June 30, 2018, no borrowings have been made on the Worthington Revolving Loan and the outstanding balance on the Worthington Term Loan is $3,400,000.

17

The Company assumes various financial obligations 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.

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 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 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 consolidated financial statements beginning on that date.

The following table sets forth the carrying values of Delphax’s assets and liabilities as of June 30, 2018 and March 31, 2018:

	June 30, 2018			March 31, 2018
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	371,831		$	241,430
Accounts receivable, net		41,150			316,542
Other current assets		58,898			72,269
Total current assets		471,879			630,241
Other tax receivables-long-term		311,000			311,000
Total assets	$	782,879		$	941,241
LIABILITIES
Current liabilities:
Accounts payable	$	2,160,817		$	2,145,847
Income tax payable		11,312			11,312
Accrued expenses		3,180,724			3,244,514
Short-term debt		1,766,949			1,788,285
Total current liabilities		7,119,802			7,189,958
Total liabilities	$	7,119,802		$	7,189,958
Net Assets	$	(6,336,923	)	$	(6,248,717	)

The short-term debt is comprised of amounts due from Delphax to Air T, Inc. Those amounts have been eliminated in consolidation. As of June 30, 2018, the outstanding principal amount of the Senior Subordinated Note was approximately $800,000 ($900,000 as of March 31, 2018) and the outstanding borrowings under the Delphax Senior Credit Agreement were $0 ($0 as of March 31, 2018). Short-term debt as reflected in the above table includes approximately $967,000 and $888,000 of accrued interest, due to the Company from Delphax Technologies, Inc. under the Senior Subordinated Note as of June 30, 2018 and March 31, 2018. As a result of the foreclosure completed by the Company on August 10, 2017, the amount secured by the Delphax Senior Credit Agreement was satisfied.

The assets of Delphax can only be used to satisfy the obligations of Delphax. Furthermore, Delphax’s creditors do not have recourse to the assets of Air T, Inc. or its subsidiaries.

18

On January 6, 2017, the Company notified Delphax and Delphax Canada of certain “Events of Default” (as defined under the Delphax Senior Credit Agreement) existing under the Delphax Senior Credit Agreement and that the Company was reserving all rights to exercise remedies under the Delphax Senior Credit Agreement and that no delay in exercising any such remedy is to be construed as a waiver of any of its remedies. Also, on January 6, 2017, the Company and Delphax Canada entered into a Forbearance and Amendment Agreement dated as of January 6, 2017, which amended the Senior Subordinated Note to increase the default rate of interest from an annual rate of 10.5% to an annual rate of 18%, to be in effect until all amounts under the Senior Subordinated Note are paid in full, and which provides that so long as no Event of Default (as defined in the Senior Subordinated Note) occurs under the Senior Subordinated Note, other than Events of Default that existed as of January 6, 2017, the Company agreed to forbear from exercising its remedies under the Senior Subordinated Note until May 31, 2017 and further provided for the payment by Delphax Canada to the Company of a forbearance fee equal to approximately $141,000. Notwithstanding the existence of events of default, during the first six calendar months of 2017, the Company permitted additional borrowings under the Delphax Senior Credit Agreement to, among other things, fund a final production run by Delphax Canada of consumable products for its legacy printing systems, which production run was primarily completed over that period. Delphax Canada was Delphax's sole manufacturing subsidiary.

In light of continuing events of default under the Delphax Senior Credit Agreement and the conclusion of final production run by Delphax Canada of consumable products for Delphax’s legacy printing systems, on July 13, 2017, the Company delivered a demand for payment and Notice of Intention to Enforce Security to Delphax Canada. On August 10, 2017, the Company foreclosed on all personal property and rights to undertakings of Delphax Canada. The Company foreclosed as a secured creditor with respect to amounts owed to it by Delphax Canada under the Delphax Senior Credit Agreement. The Company provided notice of its intent to foreclose to Delphax Canada and its secured creditors and shareholders on July 26, 2017. The outstanding amount owed to the Company by Delphax Canada under the Delphax Senior Credit Agreement on July 26, 2017 was approximately $1,510,000. The Company also submitted an application to the Ontario Superior Court of Justice in Bankruptcy and Insolvency (the "Ontario Court") seeking that Delphax Canada be adjudged bankrupt. On August 8, 2017, the Ontario Court issued an order adjudging Delphax Canada to be bankrupt. The recipients of the foreclosure notice did not object to the foreclosure or redeem. As a result, the foreclosure was completed on August 10, 2017, and the Company accepted the personal property and rights to undertakings of Delphax Canada in satisfaction of the amount secured by the Delphax Senior Credit Agreement.

With it being adjudged bankrupt on August 8, 2017, Delphax Canada ceased to have capacity to deal with its property. The property of Delphax Canada vested in the trustee in bankruptcy of Delphax Canada subject to the rights of secured creditors. The Company’s rights under Delphax Senior Credit Agreement permitted it to foreclose upon the personal property and rights of undertakings of Delphax Canada. Since the Company foreclosed on Delphax Canada’s assets within very close time proximity to the commencement of bankruptcy proceedings and because the bankruptcy and foreclosure were undertaken in contemplation of one another, the Company treated these as one single financial reporting event. In accordance with applicable accounting guidance, the Company considered whether Delphax Canada was still a business post-bankruptcy and foreclosure of the assets by the Company and concluded that Delphax Canada no longer constituted a business as it is defined by accounting principles generally accepted in the United States of America and, accordingly, derecognition of Delphax Canada’s liabilities will occur when Delphax Canada is legally released as the primary obligor with respect to the liabilities in the bankruptcy proceedings. As of June 30, 2018, the bankruptcy proceedings were ongoing in accordance with Canadian law and, therefore, Delphax Canada was still the primary obligor of its liabilities.

The intercompany balances under the Delphax Senior Subordinated Note as of June 30, 2018 are eliminated in the presentation of the consolidated financial statements.

Delphax’s revenues and expenses are included in our consolidated financial statements beginning November 24, 2015 through June 30, 2018. 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 Warrant 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. 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 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 zero. 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.

19

As a result of the application of the above-described attribution methodology, for the quarters ended June 30, 2018 and June 30, 2017 the attribution of Delphax losses to non-controlling interests was 33% and 3.4%, 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 (loss) for the three months ended June 30, 2018 and 2017.

	Three Months Ended June 30,
	2018			2017
	(Unaudited)			(Unaudited)
Operating Revenues	$	-		$	3,131,381
Operating Expenses:
Cost of sales		-			1,501,056
General and administrative		52,260			505,945
Research and development		-			195,653
Depreciation, amortization and impairment		-			4,691
		52,260			2,207,345
Operating Income (Loss)		(52,260	)		924,036
Non-operating Expenses, net		(87,917	)		(387,797	)
Income (Loss) Before Income Taxes		(140,177	)		536,239
Income Taxes		-			-
Net Income (Loss)	$	(140,177	)	$	536,239

Non-operating income (expense), net, includes interest expense of approximately $97,000 associated with the Senior Subordinated Note and the Delphax Senior Credit Agreement for the quarter ended June 30, 2018 and approximately $132,000 associated with the Senior Subordinated Note for the quarter ended June 30, 2017. This interest expense was eliminated for purposes of net income (loss) presented in the Company’s accompanying consolidated statements of income (loss) and comprehensive income (loss) for the three months ended June 30, 2018 and 2017, though the effect of intercompany interest under the Senior Subordinated note and the Delphax Senior Credit Agreement is reflected in the attribution of Delphax net income or losses attributed to non-controlling interests.

Unconsolidated Variable Interest Entities and Other Entities

As discussed in Note 3, BCCM Advisors holds equity interests in certain investment funds as of March 31, 2018. The Company determined that the equity interest it holds as the general partner in the following funds are variable interests based on the applicable GAAP guidance: Blue Clay Capital Partners CO I LP, Blue Clay Capital Partners CO III LP, Blue Clay Capital SMid-Cap LO LP and AO Partners II LP. However, the Company further determined that these funds should not be consolidated as BCCM Advisors is not the primary beneficiary of these variable interest entities. The Company determined that its equity interest in the Blue Clay Capital Master Fund Ltd. is not a variable interest and should not be consolidated based on the applicable GAAP guidance. The Company’s total investment within these investment funds at June 30, 2018 is valued at approximately $314,000. The Company’s exposure to loss is limited to its initial investment.

As discussed in Note 4, the Company has an investment in Oxbridge RE NS in the amount of $2,000,000. The Company determined that this investment represents a variable interest based on the applicable GAAP guidance. However, the Company further determined that the Company should not consolidate Oxbridge RE NS as the Company is not the primary beneficiary of the variable interest entity. The Company’s exposure to loss is limited to its initial investment.

20

13. Geographical information

Total property and equipment, net of accumulated depreciation, located in the United States, the Company's country of domicile, held outside the United States are summarized in the following table as of June 30, 2018 and March 31, 2018:

	June 30, 2018		March 31, 2018
United States, the Company’s country of domicile	$	5,357,615	$	5,209,831
Foreign		14,060,137		15,063,340
Total property and equipment, net	$	19,417,752	$	20,273,171

The Company's tangible long-lived assets, net of accumulated depreciation, held outside of the United States represent engines on lease at June 30, 2018. The net book value located within each individual country at June 30, 2018 and March 31, 2018 is listed below:

	June 30, 2018		March 31, 2018
Australia	$	4,793	$	-
Mexico		3,934,399		4,352,257
Romania		3,459,673		3,626,136
Netherlands		6,661,272		7,084,947
Total property and equipment, net	$	14,060,137	$	15,063,340

Total revenue, in and outside the United States is summarized in the following table for the quarters ended June 30, 2018 and June 30, 2017:

	June 30, 2018		June 30, 2017
United States, the Company’s country of domicile	$	54,662,311	$	40,801,228
Foreign		6,205,158		6,896,145
Total revenue	$	60,867,469	$	47,697,373

21

14. Segment Information

The Company has six business segments: overnight air cargo, ground equipment sales, ground support services, commercial jet engine and parts segment, printing equipment and maintenance and corporate. Segment data is summarized as follows:

	Three Months Ended June 30,
	2018			2017
Operating Revenues by Segment:
Overnight Air Cargo	$	17,640,658		$	16,742,175
Ground Equipment Sales:
Domestic		5,292,017			5,276,366
International		1,095,097			673,290
Total Ground Equipment Sales		6,387,114			5,949,656
Ground Support Services		9,047,640			9,113,073
Printing Equipment and Maintenance
Domestic		194,792			1,443,982
International		107,921			1,687,399
Total Printing Equipment and Maintenance		302,713			3,131,381
Commercial Jet Engines and Parts:
Domestic		23,154,535			8,190,885
International		5,002,140			4,535,456
Total Commercial Jet Engines		28,156,675			12,726,341
Corporate		474,205			326,279
Intercompany		(1,141,536	)		(291,532	)
Total	$	60,867,469		$	47,697,373
Operating Income (Loss):
Overnight Air Cargo	$	1,056,692		$	816,666
Ground Equipment Sales		393,500			165,794
Ground Support Services		(87,724	)		356,824
Printing Equipment and Maintenance		(318,278	)		924,036
Commercial Jet Engines and Parts		3,282,908			810,940
Corporate		(1,729,200	)		(863,018	)
Intercompany		5,803			1,326
Total	$	2,603,702		$	2,212,568
Capital Expenditures:
Overnight Air Cargo	$	5,996		$	-
Ground Equipment Sales		140,090			-
Ground Support Services		52,438			25,365
Printing Equipment and Maintenance		-			-
Commercial Jet Engines and Parts		183,821			4,977
Corporate		77,230			459,653
Total	$	459,575		$	489,995
Depreciation, Amortization and Impairment:
Overnight Air Cargo	$	22,763		$	31,016
Ground Equipment Sales		91,349			132,880
Ground Support Services		125,055			111,631
Printing Equipment and Maintenance		14,331			4,691
Commercial Jet Engines and Parts		1,097,933			45,776
Corporate		145,295			74,159
Intercompany		(1,325	)		(1,326	)
Total	$	1,495,401		$	398,827

22

15. Commitments and Contingencies

Contrail Aviation Support, LLC (“Contrail Aviation”), a subsidiary of the Company, completed the purchase of all of the assets owned by Contrail Aviation Support, Inc. (the “Seller”) in July 2016. As part of this purchase, Contrail Aviation agreed to pay contingent additional deferred consideration of up to a maximum of $1,500,000 per year and $3,000,000 in the aggregate. The Company established a liability of $2,900,000 in the initial allocation of purchase price. The Company has paid $1,000,000 of contingent consideration as of June 30, 2018 and the remaining liability of $1,955,000, which includes a current portion of $1,500,000 and a non-current portion of $455,000, is included in the “Accrued expenses” and “Other non-current liabilities”, respectively, in the consolidated balance sheet at June 30, 2018.

Contrail Aviation entered into with the Seller an Operating Agreement (the “Operating Agreement”) 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, the Company has presented this redeemable non-controlling interest in Contrail Aviation between the liabilities and equity sections of the accompanying consolidated balance sheets.

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.

Management is not aware of any subsequent events as of the date of issuance.

23

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

Overview

Air T, Inc. (the “Company,” “Air T,” “we” or “us”) owns a portfolio of powerful businesses, each of which is independent yet interrelated. Our operating assets are designed to expand, strengthen and diversify our cash earnings power. Our goal is to build on Air T’s core businesses and grow after-tax cash flow per share.

We currently operate wholly owned subsidiaries in six 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; and

• Ground support services, which provides local ground support equipment maintenance and facilities maintenance services to domestic airlines and aviation service providers.

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

• Commercial jet engine and air frame asset management and logistics, which manages aviation assets; supplies surplus and aftermarket commercial jet engine components; provides commercial aircraft disassembly/part-out services; commercial aircraft parts sales; procurement services and overhaul and repair services to airlines and commercial aircraft companies.

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

Each business segment has separate management teams and infrastructures that offer different products and services. We evaluate the performance of our business segments based on operating income. 

24

(Dollars in thousands)
	Three Months Ended June 30,
	2018				2017
Overnight Air Cargo Segment:
FedEx	$	17,641	29	%	$	16,742	35	%
Ground Equipment Sales Segment:
Military		2,464	4	%		345	1	%
Commercial - Domestic		2,826	5	%		4,932	10	%
Commercial - International		1,095	2	%		673	1	%
		6,385	10	%		5,950	12	%
Ground Support Services Segment		9,048	15	%		9,113	19	%
Printing Equipment and Maintenance
Domestic		191	0	%		1,444	3	%
International		108	0	%		1,687	4	%
		299	0	%		3,131	7	%
Commercial Jet Engines and Parts
Domestic		22,318	37	%		8,190	17	%
International		5,002	8	%		4,535	10	%
		27,320	45	%		12,725	27	%
Corporate		174	0	%		36	0	%
	$	60,867	100	%	$	47,697	100	%

First Quarter 2019 Compared to First Quarter 2018

Consolidated revenue increased by $13,170,000 (28%) to $60,867,000 for the three-month period ended June 30, 2018 compared to the equivalent prior period. The increase in revenues can be principally attributed to the contribution of revenue from the commercial jet engines and parts segment of $27,320,000, which contributed $12,725,000 in the prior year period. Following is a table detailing revenue by segment:

(Dollars in thousands)
	Three Months Ended June 30,				Change
	2018		2017		3 mos
Overnight Air Cargo Segment	$	17,641	$	16,742	$	899		5	%
Ground Equipment Sales Segment		6,385		5,950		435		7	%
Ground Support Services Segment		9,048		9,113		(65	)	-1	%
Printing Equipment and Maintenance		299		3,131		(2,832	)	-90	%
Commercial Jet Engines and Parts		27,320		12,725		14,595		115	%
Corporate		174		36		138		387	%
	$	60,867	$	47,697	$	13,170		28	%

Revenues from the air cargo segment increased by $898,000 (5%) compared to the first quarter of the prior fiscal year due to additional billable hours including contract labor hours and timing of administrative fees. Pass-through costs under the dry-lease agreements with FedEx totaled $5,520,000 and $4,871,000 for the quarters ended June 30, 2018 and 2017, respectively.

25

Ground equipment sales segment contributed approximately $6,385,000 and $5,950,000 to the Company’s revenues for the three-month periods ended June 30, 2018 and 2017 respectively, representing a $435,000 (7%) increase primarily driven by the sale of deicers to military and commercial customers. At June 30, 2018, GGS’s order backlog was $17.5 million as compared to $13.3 million at March 31, 2018 and $16.4 million at June 30, 2017.

Ground support services segment contributed approximately $9,048,000 and $9,113,000 to the Company’s revenues for the three-month periods ended June 30, 2018 and 2017, respectively, representing a $65,000 (1%) decrease principally due to the loss of two locations offset by opening of a new location and additional customer business.

Revenues from printing equipment and maintenance declined by $2,833,000 (90%) compared to the first quarter of the prior fiscal year due to prior year bankruptcy and that the company has not had any sales from the new printer in the current quarter.

The commercial jet engines and parts segment contributed $27,320,000 of revenues in the quarter ended June 30, 2018. The segment was formed through the acquisitions of the businesses of Contrail Aviation, Jet Yard, AirCo, and Worthington in July 2016, October 2016, May 2017 and May 2018 respectively. As such, the increase in revenues is due to having full quarter ownership of AirCo in Q1 2019, and the acquisition of Worthington in the current quarter as well as Contrail having record levels compared to prior quarterly results, principally due to the sales of four whole engines totaling $17.35 million. There were no such similar sales in the prior comparable quarter.

Operating expenses increased by $12,779,000 (28%) to $58,264,000 in the current year quarter compared to the equivalent prior period. The increase in operating expenses is primarily driven by the commercial jet engines and parts segment of $24,107,000 principally due to cost of sales related to the four whole engines sold described above. Ground equipment sales segment operating expenses increased $208,000 (4%). Ground support services segment operating costs increased by $379,000 (4%).

Consolidated operating income for the quarter ended June 30, 2018 increased by $391,000 (18%) to $2,604,000, compared to operating income of $2,213,000 for the same quarter of the prior year principally due to increase in consolidated sales. Operating income for the air cargo segment increased by $240,000 (29%) due to additional billable hours including contractor labor hours and timing of administrative fees. Ground equipment segment net operating income increased by $227,000 (137%) from a net operating income of $166,000 in the prior year’s comparable quarter. Ground Support Services’ operating income declined by $444,000 (124%) to an operating loss of $87,000 for the current-year period compared to operating income of $357,000 in the prior-year quarter primarily due to the impact of decreased revenues. Operating income for Delphax declined by $1,165,000 (126%) significant negative operating results of Delphax as described in Note 12 above. Operating income of the commercial jet engines and parts segment improved by $2,402,000 (296%) primarily attributable to Contrail Aviation having record level results due to the sales of four whole engines.

Following is a table detailing operating income by segment:

(Dollars in thousands)
	Three Months Ended June 30,						Change
	2018			2017			3 mos
Overnight Air Cargo Segment	$	1,056,692		$	816,666		$	240,026		29	%
Ground Equipment Sales Segment		393,079			165,794			227,285		137	%
Ground Support Services Segment		(87,303	)		356,824			(444,127	)	-124	%
Printing Equipment and Maintenance		(241,070	)		924,036			(1,165,106	)	-126	%
Commercial Jet Engines and Parts		3,213,180			810,940			2,402,240		296	%
Corporate		(1,730,876	)		(861,692	)		(869,184	)	101	%
	$	2,603,702		$	2,212,568		$	391,134		18	%

The Company had net non-operating income of $1,065,000 for the quarter ended June 30, 2018, an improvement of $1,674,000 (275%) from net non-operating loss of $609,000 in the prior period, principally due to a bargain purchase acquisition gain of $1,983,000 net of tax, in connection to the acquisition of Worthington as described in Note 3.

Pretax income was $2,065,000 higher for the three-month period ended June 30, 2018 compared to the prior year comparable period, primarily due to bargain purchase acquisition gain as described above.

26

During the three-month period ended June 30, 2018, the Company recorded $387,000 in income tax expense at an effective rate of 10.5%. The Company records income taxes using an estimated annual effective tax rate for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21% and the Company’s effective tax rate for the three-month period ended June 30, 2018 were the estimated benefit for the exclusion of income for the Company’s captive insurance company subsidiary under Section 831(b), the presentation of the tax impact of the bargain purchase gain and state income tax expense. During the three-month period ended June 30, 2017, the Company recorded $374,000 in income tax expense which resulted in an effective tax rate of 23.3%. The primary factors contributing to the difference between the federal statutory rate and the Company’s effective tax rate for the three-month period ended June 30, 2017 were the change in valuation allowance against Delphax’s pretax activity in the period, the benefit for the federal domestic production activities deduction, the increase in the valuation allowance related to the Insignia unrealized impairment loss, state income tax expense, and the estimated benefit for the exclusion of income for the Company’s captive insurance company subsidiary afforded under Section 831(b).

Critical Accounting Policies and Estimates

The Company’s significant accounting policies are more fully described in Note 1 to the consolidated financial statements and in the notes to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2018. 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. The Company believes that the following are its most significant accounting policies:

Allowance for Doubtful Accounts. An allowance for doubtful accounts receivable is established based on management’s estimates of the collectability of accounts receivable. The required allowance is determined using information such as customer credit history, industry information, credit reports, customer financial condition and the collectability of outstanding receivables. The estimates can be affected by changes in the financial strength of the aviation industry, customer credit issues or general economic conditions.

Inventories. The Company’s inventories are valued at the lower of cost or net realizable value. Provisions for excess and obsolete inventories are based on assessment of the marketability of slow-moving and obsolete inventories. Historical parts usage, current period sales, estimated future demand and anticipated transactions between willing buyers and sellers provide the basis for estimates. Estimates are subject to volatility and can be affected by reduced equipment utilization, existing supplies of used inventory available for sale, the retirement of aircraft or ground equipment, changes in the financial strength of the aviation industry, and market developments impacting both legacy and next-generation products and services of our printing equipment and maintenance segment.

Investments under the Equity Method – The Company utilizes the equity method to account for investments when the Company possesses the ability to exercise significant influence, but not control, over the operating and financial policies of the investee. The ability to exercise significant influence is presumed when an investor possesses more than 20% of the voting interests of the investee. This presumption may be overcome based on specific facts and circumstances that demonstrate that the ability to exercise significant influence is restricted. The Company applies the equity method to investments in common stock and to other investments when such other investments possess substantially identical subordinated interests to common stock.

In applying the equity method, the Company records the investment at cost and subsequently increase or decrease the carrying amount of the investment by our proportionate share of the net earnings or losses. The Company records dividends or other equity distributions as reductions in the carrying value of the investment. In the event that net losses of the investee reduce the carrying amount to zero, additional net losses may be recorded if other investments in the investee are at-risk, even if the Company has not committed to provide financial support to the investee. Such additional equity method losses, if any, are based upon the change in the Company’s claim on the investee’s book value.

For investments that have a different fiscal year-end, if the difference is not more than three months, the Company uses the investment’s most recent financial statements to record the change in the investment.

27

Business Combinations. The Company accounts for business combinations in accordance with FASB Codification Section 805 (“ASC 805”) Business Combinations. Consistent with ASC 805, the Company accounts for each business combination by applying the acquisition method. Under the acquisition method, the Company records the identifiable assets acquired and liabilities assumed at their respective fair values on the acquisition date. Goodwill is recognized for the excess of the purchase consideration over the fair value of identifiable net assets acquired. Included in purchase consideration is the estimated acquisition date fair value of any earn-out obligation incurred. For business combinations where non-controlling interests remain after the acquisition, assets (including goodwill) and liabilities of the acquired business are recorded at the full fair value and the portion of the acquisition date fair value attributable to non-controlling interests is recorded as a separate line item within the equity section or, as applicable to redeemable non-controlling interests, between the liabilities and equity sections of the Company’s consolidated balance sheet.

The acquisition method permits the Company a period of time after the acquisition date during which the Company may adjust the provisional amounts recognized in a business combination. This period of time is referred to as the “measurement period”. The measurement period provides an acquirer with a reasonable time to obtain the information necessary to identify and measure the assets acquired and liabilities assumed. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company reports in its consolidated financial statements provisional amounts for the items for which the accounting is incomplete. Under accounting standards in effect as of the Company’s acquisition of interests in Delphax, the Company had two alternatives available to account for subsequent adjustments to the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. Under the first method, which is no longer an available option since the Company’s first fiscal 2017 quarter, the Company would retrospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained. Under the second method, which is the only allowed method beginning with the Company’s first fiscal 2017 quarter, the Company is required to recognize adjustments to the provisional amounts, with a corresponding adjustment to goodwill, in the reporting period in which the adjustments to the provisional amounts are determined. Thus, the Company would adjust its consolidated financial statements as needed, including recognizing in its current-period earnings the full effect of changes in depreciation, amortization, or other income effects, by line item, if any, as a result of the change to the provisional amounts calculated as if the accounting had been completed at the acquisition date. The Company adopted the second of the two above-described methods with respect to its acquisition of interests in Delphax.

Income statement activity of an acquired business is reflected within the Company’s consolidated statements of income (loss) commencing with the date of acquisition. Amounts for pre-acquisition periods are excluded.

Acquisition-related costs are costs the Company incurs to effect a business combination. Those costs may include such items as finder’s fees, advisory, legal, accounting, valuation, and other professional or consulting fees, and general administrative costs. The Company accounts for such acquisition-related costs as expenses in the period in which the costs are incurred and the services are received.

Changes in estimate of the fair value of earn-out obligations subsequent to the acquisition date are not accounted for as part of the acquisition but are rather recognized in directly in earnings.

Attribution of Net Income or Loss of Partially-Owned Consolidated Entities. In the case of Delphax, we have determined that the attribution of net income or loss should be based on consideration of all of Air T’s investments in Delphax and it subsidiary, Delphax Canada Technologies Limited (“Delphax Canada”). Our investment in the Warrant 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. 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 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 zero. 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. The effect of interest expense arising under the Senior Subordinated Note and, since January 6, 2017, under the Delphax Senior Credit Agreement, and other intercompany transactions, are reflected in the attribution of Delphax net income or losses attributed to non-controlling interests because Delphax is a variable interest entity.

28

The above-described attribution methodology applies only to our investments in Delphax. We establish the appropriate attribution methodology on an entity-specific basis. In the case of Contrail Aviation, we concluded that an attribution methodology based solely on equity ownership percentages was appropriate.

Marketable Securities.  On a quarterly basis, the Company reviews marketable securities for declines in market value that may be considered other than temporary.  Market value declines are considered to be other than temporary based on the length of time and the magnitude of the amount of each security that is in an unrealized loss position. The Company also consider the nature of the underlying investments and other market conditions or when other evidence indicates impairment. If the Company determines that an investment has other than a temporary decline in fair value, the Company recognizes the investment loss in non-operating income, net in the accompanying consolidated statements of comprehensive income (loss). 

Goodwill.  The Company tests goodwill for impairment at least once annually. An impairment test will also be carried out anytime events or changes in circumstances indicate that goodwill might be impaired. Goodwill is tested for impairment at a level of reporting referred to as a reporting unit. The applicable accounting standards provide for two methods to assess goodwill for possible impairment, one qualitative and the other a two-step quantitative method. The Company is permitted to first assess qualitative factors to determine whether it is more likely than not (this is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying value, including goodwill. In qualitatively evaluating whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company assesses relevant events and circumstances such as macroeconomic conditions, industry and market developments, cost factors, and the overall financial performance of the reporting unit. If, after assessing these events and circumstances, it is determined that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the first and second steps of the quantitative goodwill impairment test are unnecessary. In the first step of the quantitative method, recoverability of goodwill is evaluated by estimating the fair value of the reporting unit’s goodwill using multiple techniques, including a discounted cash flow model income approach and a market approach. The estimated fair value is then compared to the carrying value of the reporting unit. If the fair value of a reporting unit is less than its carrying value, a second step is performed to determine the amount of impairment loss, if any. The second step requires allocation of the reporting unit’s fair value to all of its assets and liabilities using the acquisition method prescribed under authoritative guidance for business combinations. Any residual fair value is allocated to goodwill. Impairment losses, limited to the carrying value of goodwill, represent the excess of the carrying amount of goodwill over its implied fair value.

Long-lived Assets. Long-lived assets are tested for impairment whenever events or changes in circumstances indicate the carrying value of the assets may not be recoverable. Factors which may cause an impairment include extended operating cash flow losses from the assets and management's decisions regarding the future use of assets. To conduct impairment testing, the Company groups assets and liabilities at the lowest level for which identifiable cash is largely independent of cash flows of other assets and liabilities. For assets that are to be held and used, impairment is recognized when the estimated undiscounted cash flows associated with an asset group is less than the carrying value. In the event it is determined that the carrying values of long-lived assets are in excess of the estimated undiscounted cash flows from those assets, the Company then will write-down the value of the assets by such excess. Fair values are determined considering quoted market values, discounted cash flows or internal and external appraisals, as applicable.

Accounting for Redeemable Non-Controlling Interest. As more fully described in Note 15 to the consolidated financial statements, the Company is party to a put/call option agreement concerning the non-controlling ownership interest held in the Company’s consolidated subsidiary, Contrail Aviation. The put/call option permits Contrail Aviation, at any time after the fifth anniversary of the Company’s acquisition of Contrail Aviation, to purchase the non-controlling interest from the holder of such interest. The agreement also permits the holder of the non-controlling interest to sell such interest to Contrail Aviation. Per the agreement, the price is to be agreed upon by the parties or, failing such agreement, to be determined pursuant to third-party appraisals in a process specified in the agreement. Applicable accounting guidance requires an equity instrument that is redeemable for cash or other assets to be classified outside of permanent equity if it is redeemable (a) at a fixed or determinable price on a fixed or determinable date, (b) at the option of the holder, or (c) upon the occurrence of an event that is not solely within the control of the issuer. Based on this guidance, the Company has classified the Contrail Aviation non-controlling interest between the liabilities and equity sections of the accompanying consolidated balance sheets. If an equity instrument subject to the guidance is currently redeemable, the instrument is adjusted to its maximum redemption amount at the balance sheet date. If the equity instrument subject to the guidance is not currently redeemable but it is probable that the equity instrument will become redeemable (for example, when the redemption depends solely on the passage of time), the guidance permits either of the following measurement methods: (a) accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument using an appropriate methodology, or (b) 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 amount presented in temporary equity should be no less than the initial amount reported in temporary equity for the instrument. Because the Contrail Aviation equity instrument will become redeemable solely based on the passage of time, the Company determined that it is probable that the Contrail Aviation equity instrument will become redeemable. Company has elected to apply the first of the two measurement options described above. An adjustment to the carrying amount of a non-controlling interest from the application of the above guidance does not impact net income or comprehensive income in the consolidated financial statements. Rather, such adjustments are treated as equity transactions.

29

Revenue Recognition. The Company accounts for revenue in accordance with ASC 606, which was adopted on April 1, 2018, using the modified retrospective method. As substantially all of the Company’s revenue is derived from contracts with an initial expected duration of one year or less 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.

For Product Sales, 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 or prompt payment discounts). Performance obligations are short-term in nature and customers are typically billed upon transfer of control.

For Support Services, the Company provides a variety of support services such as aircraft maintenance, printer maintenance, and short-term repair services to its customers. For each service, the Company recognizes revenues over time as the customer simultaneously receives the benefits provided by the Company's performance.

For repair-type services, the Company records revenue over-time based on an input method of costs incurred to total estimated costs. 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.

Warranty Reserves. The Company warranties its ground equipment products for up to a three-year period from date of sale. Product warranty reserves are recorded at time of sale based on the historical average warranty cost and are adjusted as actual warranty cost becomes known. Delphax warranties its equipment for a period of 90 days commencing with installation, except in the European Union, where it is generally one year from product shipment date. Similarly, Delphax warranties spare parts and supplies for a period of 90 days from shipment date. These warranty reserves are reviewed quarterly and adjustments are made based on actual claims experience in order to properly estimate the amounts necessary to settle future and existing claims.

Income Taxes. Income taxes have been provided using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax laws and rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

A valuation allowance against net deferred tax assets is recorded when it is more likely than not that such assets will not be fully realized. Tax credits are accounted for as a reduction of income taxes in the year in which the credit originates. All deferred income taxes are classified as noncurrent in the consolidated balance sheets. The Company recognizes the benefit of a tax position taken on a tax return, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. An uncertain income tax position is not recognized if it has a less than a 50% likelihood of being sustained.

30

The Tax Cuts and Jobs Act (TCJA) became law for tax years beginning after Friday December 31, 2017. The TCJA includes the reduction in the corporate tax rate from a top rate of 35% to a flat rate of 21%, changes in business deductions, and many international provisions.

Seasonality

GGS’s 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. The Company had worked to reduce GGS’s seasonal fluctuation in revenues and earnings by increasing military and international sales and broadening its product line to increase revenues and earnings. Other segments are not susceptible to seasonal trends.

Liquidity and Capital Resources

As of June 30, 2018, the Company held approximately $5,765,000 in cash and cash equivalents and restricted cash. The Company also held $250,000 in restricted investments held as statutory reserve of SAIC and the remaining $869,000 of restricted investments pledged to secure SAIC’s participation in certain reinsurance pools, and $166,000 was invested in accounts not insured by the Federal Deposit Insurance Corporation (“FDIC”). The Company has approximately $1.1 million of marketable securities as of June 30, 2018. In addition, the Company also owns approximately 3.5 million shares of common stock of Insignia with a market value of $5.7 million as of June 30, 2018.

As of June 30, 2018, the Company’s working capital amounted to $25,186,000, an decrease of $5,308,000 compared to March 31, 2018.

Cash flows from operations, cash and cash equivalents, and the other sources of liquidity described above are expected to be available and sufficient to meet foreseeable cash requirements.

Cash Flows

Following is a table of changes in cash flow for the periods ended June 30, 2018 and 2017:

	Three Months Ended June 30,
	2018			2017
Net Cash Provided by (Used in) Operating Activities	$	14,717,000		$	(2,145,000	)
Net Cash (Used in) Investing Activities		(6,717,000	)		(3,419,000	)
Net Cash Provided by (Used in) Financing Activities		(7,310,000	)		4,683,000
Effect of foreign currency exchange rates on cash and cash equivalents		2,000			6,000
Net Increase/ (Decrease) in Cash and Cash Equivalents	$	692,000		$	(875,000	)

Cash provided by operating activities was $14,717,000 for the three-month period ended June 30, 2018 compared to the net cash used in operating activities of $2,145,000 in prior year period. The primary driver in Cash provided by operating activities in the current period was the sale of inventory of approximately $11,320,000 as described in the MD&A section for the Commercial Aircrafts and Jet Engines Segment.

Cash used in investing activities for the three-month period ended June 30, 2018 was $6,717,000 compared to $3,419,000 in prior year period. The primary driver in Cash used in investing activities for the quarter ended June 30, 2018 was the $2,000,000 investment to Oxbridge RE NS as described in Note 7 and the $3,326,000 net cash used in acquiring Worthington.

Cash used in financing activities for the three-month period ended June 30, 2018 was $7,310,000 compared to cash provided by financing activities of $4,683,000 in the prior year period. The cash used in financing activities in the current period was due to $38,156,000 of payments made on the Company’s lines of credit offset by proceeds received of $32,334,000 ($28,934,000 from lines of credit and $3,400,000 from term loan).

31

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 its operations, consisting principally of fuel, and certain other direct operating costs, and certain maintenance costs are reimbursed by its customer. Significant increases in inflation rates could, however, have a material impact on future revenue and operating income.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

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 June 30, 2018. 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 June 30, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II -- OTHER INFORMATION

Item 6. Exhibits

(a) Exhibits

No. Description

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 June 30, 2018, 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.

32

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: August 14, 2018

/s/ Nick Swenson

Nick Swenson, Chief Executive Officer and Director

/s/ Brett Reynolds

Brett Reynolds, Chief Financial Officer

33

EX-31.1

Exhibit 31.1

SECTION 302 CERTIFICATION

I, Nick Swenson, certify that:

1. I have reviewed this Form 10-Q of Air T, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2018

/s/ Nick Swenson

Nick Swenson

Chief Executive Officer

EX-31.2

Exhibit 31.2

SECTION 302 CERTIFICATION

I, Brett Reynolds, certify that:

1. I have reviewed this Form 10-Q of Air T, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2018

/s/ Brett Reynolds

Brett Reynolds

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Air T, Inc. (the "Company") Quarterly Report on Form 10-Q for the period ended June 30, 2018 as filed with the United States Securities and Exchange Commission on the date hereof (the "Report"), I, Nick Swenson, Chief Executive Officer, and Brett Reynolds, Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: August 14, 2018

/s/ Nick Swenson

Nick Swenson, Chief Executive Officer

/s/ Brett Reynolds

Brett Reynolds, Chief Financial Officer

XML

Document And Entity Information - shares	3 Months Ended
	Jun. 30, 2018	Jul. 31, 2018
Document Information [Line Items]
Entity Registrant Name	AIR T INC
Entity Central Index Key	0000353184
Trading Symbol	airt
Current Fiscal Year End Date	--03-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		2,043,607
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Condensed Consolidated Statements of Income (Unaudited) - USD ($)	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Operating Revenues:
Operating Revenues	$ 60,867,469	$ 47,697,373
Operating Expenses:
Overnight air cargo	15,174,396	14,562,143
Ground equipment sales	4,937,312	4,754,215
Ground support services	7,805,209	7,418,393
Printing equipment and maintenance	145,528	1,501,056
Commercial jet engines and parts	20,121,118	10,069,850
Research and development		195,653
General and administrative	8,584,803	6,584,668
Depreciation, amortization and impairment	1,495,401	398,827
	58,263,767	45,484,805
Operating Income	2,603,702	2,212,568
Non-operating Income (Expense):
Foreign currency gain (loss), net	(2,182)	(188,624)
Other-than-temporary impairment loss on investments		(771,173)
Other investment income (loss), net	(315,507)	30,651
Interest expense and other	(707,199)	(149,519)
Unrealized gain on interest rate swap	97,337
Bargain purchase acquisition gain, net of tax	1,983,777	501,880
Equity in income (loss) of associated company	9,183	(31,903)
	1,065,409	(608,688)
Income Before Income Taxes	3,669,111	1,603,880
Income Taxes	387,000	374,000
Net Income	3,282,111	1,229,880
Interests	(453,417)	(261,491)
Net Income Attributable to Air T, Inc. Stockholders	$ 2,828,694	$ 968,389
Income Per Share:
Basic (in dollars per share)	$ 1.38	$ 0.47
Diluted (in dollars per share)	$ 1.38	$ 0.47
Weighted Average Shares Outstanding:
Basic (in shares)	2,043,607	2,042,789
Diluted (in shares)	2,049,698	2,047,623
Overnight Air Cargo [Member]
Operating Revenues:
Operating Revenues	$ 17,640,658	$ 16,742,175
Ground Equipment Sales [Member]
Operating Revenues:
Operating Revenues	6,384,781	5,949,656
Ground Support Services [Member]
Operating Revenues:
Operating Revenues	9,047,640	9,113,073
Printing Equipment and Maintenance [Member]
Operating Revenues:
Operating Revenues	298,823	3,131,381
Commercial Jet Engines Inventory [Member]
Operating Revenues:
Operating Revenues	27,320,175	12,725,341
Corporate Segment [Member]
Operating Revenues:
Operating Revenues	$ 175,392	$ 35,747

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Net income	$ 3,282,111	$ 1,229,880
Other comprehensive income (loss):
Foreign currency translation gain	47,660	134,789
Unrealized net loss on marketable securities		(920,309)
Tax effect of unrealized net loss on marketable securities		331,761
Total unrealized net loss on marketable securities, net of tax		(588,548)
Reclassification of other-than-temporary impairment loss on investments, net of gains on sale of marketable securities, included in income (loss), before income taxes		771,173
Tax effect of reclassification		(277,622)
Reclassification adjustment, net of tax		493,551
Total Other Comprehensive Income	47,660	39,792
Total Comprehensive Income (Loss)	3,329,771	1,269,672
Comprehensive (Income) Attributable to Non-controlling Interests	(470,569)	(260,646)
Comprehensive Income Attributable to Air T, Inc. Stockholders	$ 2,859,202	$ 1,009,026

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)		Jun. 30, 2018	Mar. 31, 2018
Current Assets:
Cash and cash equivalents	[1]	$ 5,746,521	$ 4,803,238	[2]
Marketable securities		1,055,075	290,449	[2]
Restricted cash		18,832	269,659	[2]
Restricted investments		1,119,490	1,235,405	[2]
Accounts receivable	[1]	19,120,159	15,157,855	[2]
Costs and estimated earnings in excess of billings on uncompleted projects			2,012,121	[2]
Notes and other receivables-current		2,880,560	658,630	[2]
Income tax receivable		1,351,597	1,557,180	[2]
Inventories, net (Delphax $0 and $0)**	[1]	27,619,851	34,231,005	[2]
Prepaid expenses and other (Delphax $58,898 and $72,269)**	[1]	1,147,368	1,455,566	[2]
Total Current Assets		60,059,453	61,671,108	[2]
Investments in securities		2,840,175	1,026,920	[2]
Property and equipment, net		19,417,752	20,273,171	[2]
Cash surrender value of life insurance policies		2,372,289	2,356,507	[2]
Other tax receivables-long-term (Delphax $311,000 and $311,000)**		311,000	311,000	[2]
Investments in funds		314,026	324,854	[2]
Equity method investments		5,238,982	5,032,268	[2]
Other assets		772,109	420,981	[2]
Intangible assets, net		1,371,561	1,312,472	[2]
Goodwill		4,417,605	4,417,605	[2]
Total Assets		97,114,952	97,146,886	[2]
Current Liabilities:
Accounts payable (Delphax $2,160,817 and $2,145,847)**	[1]	14,887,263	10,181,143	[2]
Income tax payable (Delphax $11,312 and $11,312)**	[1]	23,000	23,000	[2]
Accrued expenses (Delphax $3,180,724 and $3,244,514)**	[1]	10,418,865	11,743,973	[2]
Short-term debt		9,544,732	9,229,690	[2]
Total Current Liabilities		34,873,860	31,177,806	[2]
Long-term debt (Delphax $0 and $0)*	[2]	31,322,098	38,855,260
Deferred income taxes		681,000	92,000	[2]
Other non-current liabilities		719,252	785,797	[2]
Total Liabilities		67,596,210	70,910,863	[2]
Redeemable non-controlling interest		2,445,563	1,992,939	[2]
Commitments and contingencies (Note 15)				[2]
Equity:
Preferred stock, $1.00 par value, 50,000 shares authorized				[2]
Common stock, $.25 par value; 4,000,000 shares authorized, 2,043,607 shares issued and outstanding		510,901	510,901	[2]
Additional paid-in capital		4,171,869	4,171,869	[2]
Retained earnings		23,418,334	20,695,981	[2]
Accumulated other comprehensive loss		(124,051)	(260,900)	[2]
Total Air T, Inc. Stockholders' Equity		27,977,053	25,117,851	[2]
Non-controlling Interests		(903,874)	(874,767)	[2]
Total Equity		27,073,179	24,243,084	[2]
Total Liabilities and Equity		$ 97,114,952	$ 97,146,886	[2]

[1] Amounts related to Delphax as of June 30, 2018 and March 31, 2018, respectively.

[2] Derived from audited consolidated financial statements

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)		Jun. 30, 2018	Mar. 31, 2018
Cash and cash equivalents	[1]	$ 5,746,521	$ 4,803,238	[2]
Accounts receivable	[3]	755,865	801,000	[4]
Accounts receivable	[1]	19,120,159	15,157,855	[2]
Inventories, net	[1]	27,619,851	34,231,005	[2]
Prepaid expenses and other	[1]	1,147,368	1,455,566	[2]
Other tax receivables - long term		311,000	311,000	[2]
Accounts payable	[1]	14,887,263	10,181,143	[2]
Income tax payable	[1]	23,000	23,000	[2]
Accrued expenses	[1]	10,418,865	11,743,973	[2]
Long-term debt	[2]	$ 31,322,098	$ 38,855,260
Preferred stock, par value (in dollars per share)		$ 1	$ 1	[4]
Preferred stock, shares authorized (in shares)		50,000	50,000	[4]
Common stock, par value (in dollars per share)		$ 0.25	$ 0.25	[4]
Common stock, shares authorized (in shares)		4,000,000	4,000,000	[4]
Common stock, shares issued (in shares)		2,043,607	2,043,607	[4]
Common stock, shares outstanding (in shares)		2,043,607	2,043,607	[4]
Delphax [Member]
Cash and cash equivalents	[3]	$ 371,831	$ 241,430	[4]
Accounts receivable	[3]	41,150	317,000	[4]
Inventories, net	[3]	0	0	[4]
Prepaid expenses and other	[3]	58,898	72,269	[4]
Other tax receivables - long term	[3]	311,000	311,000	[4]
Accounts payable	[3]	2,160,817	2,145,847	[4]
Income tax payable	[3]	11,312	11,312	[4]
Accrued expenses	[3]	3,180,724	3,244,514	[4]
Long-term debt	[4]	$ 0	$ 0

[1] Amounts related to Delphax as of June 30, 2018 and March 31, 2018, respectively.

[2] Derived from audited consolidated financial statements

[3] Amounts related to Delphax as of June 30, 2018 and March 31, 2018, respectively.

[4] Derived from audited consolidated financial statements

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 3,282,111	$ 1,229,880
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Gain on sale of marketable securities	10,828
Gain on sale of property and equipment	1,661	(1,091)
Change in inventory reserves	91,547	(405,302)
Change in accounts receivable reserves	(45,628)	(20,950)
Depreciation, amortization and impairment	1,495,401	398,827
Change in cash surrender value of life insurance	(15,782)	(14,335)
Bargain purchase acquisition gain, net of tax	(1,983,777)	(501,880)
Warranty reserve	(980)	27,706
Other-than-temporary impairment loss on investments		771,173
Unrealized loss on marketable securities	322,477
Unrealized gain on interest rate swap	(97,337)
Change in operating assets and liabilities:
Accounts receivable	29,564	(1,071,687)
Notes receivable and other non-trade receivables	(2,221,930)	811,207
Inventories	11,319,597	(1,896,441)
Prepaid expense and other assets	288,286	380,030
Accounts payable	3,942,185	(1,047,556)
Accrued expenses	(1,982,397)	(1,206,518)
Income taxes payable/receivable	205,583	355,186
Non-current liabilities	75,525	47,240
Total adjustments	11,434,823	(3,374,391)
Net cash provided by (used in) operating activities	14,716,934	(2,144,511)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities	(784,443)	(30,476)
Acquisition of businesses, net of cash acquired	(3,325,700)	(2,900,000)
Net cash used for equity method investments	(197,532)
Purchase of debt security	(2,000,000)
Capital expenditures	(459,575)	(489,995)
Proceeds from sale of property and equipment	50,602	1,861
Net cash used in investing activities	(6,716,648)	(3,418,610)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from lines of credit	28,933,742	17,002,765
Payments on lines of credit	(38,156,091)	(14,520,242)
Proceeds from term loan	3,400,000	2,400,000
Payments on term loan	(1,404,800)	(200,000)
Debt issuance costs	(35,702)
Distribution to non-controlling member	(47,051)
Net cash provided by (used in) financing activities	(7,309,902)	4,682,523
Effect of foreign currency exchange rates on cash and cash equivalents	2,072	6,057
NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	692,456	(874,541)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD	5,072,897	2,763,365
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	5,765,353	1,888,824
Equipment leased to customers transferred to inventory	234,151
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest	629,264	160,191
Income taxes	$ 181,417	$ 18,814

XML

Condensed Consolidated Statements of Equity (Unaudited) - USD ($)		Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Noncontrolling Interest [Member]	Total
Balance (in shares) at Mar. 31, 2017		2,042,789
Balance at Mar. 31, 2017		$ 510,696	$ 4,205,536	$ 18,461,347	$ (212,047)	$ (803,138)	$ 22,162,394
Net income*	[1]			968,389		18,239	986,628
Net change from marketable securities, net of tax					(94,997)		(94,997)
Foreign currency translation gain					135,634	(845)	134,789
Redeemable non-controlling interest			(25,000)				(25,000)
Balance (in shares) at Jun. 30, 2017		2,042,789
Balance at Jun. 30, 2017		$ 510,696	4,180,536	19,429,736	(171,410)	(785,744)	23,163,814
Balance (in shares) at Mar. 31, 2018		2,043,607
Balance at Mar. 31, 2018		$ 510,901	4,171,869	20,695,981	(260,900)	(874,767)	24,243,084	[2]
Net income*	[1]			2,828,694		(46,259)	2,782,435
Foreign currency translation gain					30,508	17,152	47,660
Adoption of ASU 2016-01 | Accounting Standards Update 2016-01 [Member]				(106,341)	106,341
Balance (in shares) at Jun. 30, 2018		2,043,607
Balance at Jun. 30, 2018		$ 510,901	$ 4,171,869	$ 23,418,334	$ (124,051)	$ (903,874)	$ 27,073,179

[1] Excludes amount attributable to redeemable non-controlling interest in Contrail Aviation.

[2] Derived from audited consolidated financial statements

XML

Note 1 - Financial Statement Presentation

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Significant Accounting Policies [Text Block]

1. Financial Statement Presentation

The condensed consolidated financial statements of Air T, Inc. (“AirT”, the “Company”, “we”, “us” or “our”) have been prepared, without audit (except as it relates to the consolidated balance sheet as of

March 31, 2018

which has been derived from audited financial statements), 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

10

-K for the year ended

March 31, 2018.

The results of operations for the periods ended

June 30

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.

Recent

ly

Adopted

Accounting Pronouncements

In

May 2014,

the Financial Accounting Standards Board (FASB) issued ASU

2014

-

09,

Revenue from Contracts with Customers

, and created Topic

606

(ASC

606

), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASC

606

replaced most existing revenue recognition guidance in GAAP and is effective for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2017.

Effective

April 1, 2018,

the Company adopted the standard using the modified retrospective transition method. Results for reporting periods beginning after

April 1, 2018

will be presented according to ASU

2014

-

09

while prior period amounts will

not

be adjusted and will continue to be reported in accordance with the Company’s historic accounting policies. The main area impacted by ASU

2014

-

09

includes the recognition of revenue with the Company’s Ground Equipment Sales segment transitioning from percentage of completion to point in time for the Government Contracts revenue stream. Additionally, certain repair service revenues which were recorded at a point-in-time upon completion of service are now recognized over-time. Due to the short-term nature of these contracts, over-time recognition does

not

result in a material difference from point-in-time recognition. The Company calculated the transition adjustment and concluded that there was an immaterial impact due to the adoption of ASC

606.

In

January 2016,

the FASB issued ASU

2016

-

01,

Recognition and Measurement of Financial Assets and Financial Liabilities

, that amends the guidance on the classification and measurement of financial instruments (Subtopic

825

-

10

). ASU

2016

-

01

becomes effective in fiscal years beginning after

December 15, 2017,

including interim periods therein. ASU

2016

-

01

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

320

and creates ASC Topic

321,

Investments – Equity Securities

. Under the new guidance, 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. Transitional guidance provided that entities with unrealized gains or losses on available for sale (“AFS”) equity securities were required to reclassify those amounts to beginning retained earnings in the year of adoption. As a result, the Company has reclassified the beginning amount of accumulated other comprehensive income related to AFS securities to accumulated deficit and all changes in fair values of these securities are now reflected in the Statement of Operations in the Company’s net loss for the period.

In

August 2016,

the FASB issued ASU

2016

-

15,

Statement of Cash Flows (Topic

230

): Classification of Certain Cash Receipts and Cash Payments

. ASU

2016

-

15

clarifies how cash receipts and cash payments in certain transactions are presented and classified in the statement of cash flows. The effective date of this update is for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2017,

with early adoption permitted. The update requires retrospective application to all periods presented but

may

be applied prospectively if retrospective application is impracticable. The Company adopted the guidance within ASU

2016

-

15

as of

April 1, 2018.

The adoption of this standard did

not

have a material impact on the Company’s consolidated financial statements.

In

November 2016,

the FASB issued ASU

2016

-

18,

Statement of Cash Flows (Topic

230

): Restricted Cash

. ASU

2016

-

18

requires that the statement of cash flows explain the changes in the combined total of restricted and unrestricted cash balance. Amounts generally described as restricted cash or restricted cash equivalents will be combined with unrestricted cash and cash equivalents when reconciling the beginning and end of period balances on the statement of cash flows. Further, the ASU requires a reconciliation of balances from the statement of cash flows to the balance sheet in situations in which the balance sheet includes more than

one

-line item of cash, cash equivalents, and restricted cash. Companies will also be disclosing the nature of the restrictions. ASU

2016

-

18

is effective for financial statements issued for fiscal years beginning after

December 15, 2017.

The Company adopted the guidance within ASU

2016

-

18

as of

April 1, 2018.

The impact of ASU

2016

-

18

on its financial statements was as follows: (

1

) changes in restricted cash balances are

no

longer shown in the statements of cash flows, as these balances are included in the beginning and ending cash balances in the statements of cash flows; and (

2

) included within Note

4

is a reconciliation between cash balances presented on the balance sheets with the amounts presented in the statements of cash flows.

In

January 2017,

the FASB issued ASU

2017

-

01,

Clarifying the Definition of a Business (Topic

805

)

.

This ASU clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance is effective for fiscal years that begin after

December 15, 2017

and is to be applied prospectively. The Company adopted the guidance within ASU

2017

-

01

as of

April 1, 2018.

The adoption of this standard did

not

have a material impact on the Company’s consolidated financial statements.

In

May 2017,

the FASB issued ASU

2017

-

09,

Compensation – Stock Compensation (Topic

718

): Scope of Modification Accounting

, which provides guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting. This update is effective for all entities for fiscal years beginning after

December 15, 2017,

and interim periods within those years. Early adoption is permitted. The Company adopted the guidance within ASU

2017

-

01

as of

April 1, 2018.

The adoption of this standard did

not

have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

In

February 2016,

the FASB issued ASU

2016

-

02,

Leases (Topic

842

)

. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than

12

months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. Similarly, lessors will be required to classify leases as either sales-type, finance or operating, with classification affecting the pattern of income recognition. Classification for both lessees and lessors will be based on an assessment of whether risks and rewards as well as substantive control have been transferred through a lease contract. The new standard is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years, with early adoption permitted. A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements, with certain practical expedients available. The Company is evaluating the impact of the adoption of the standard on its consolidated financial statements.

In

June 2016,

the FASB issued ASU

2016

-

13,

Financial Instruments—Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments

. This standard 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 amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. Early adoption is permitted for annual periods beginning after

December 15, 2018,

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

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 standard is effective for any interim goodwill impairment tests in fiscal years beginning after

December 15, 2019

and is to be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after

January 1, 2017.

The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements.

In

August 2017,

the FASB issued ASU

2017

-

12

–

Derivatives and Hedging (Topic

815

): Targeted Improvements to Accounting for Hedging Activities

, which provides guidance on hedge accounting for both financial and commodity risks. The provisions in this standard create more transparency around how economic results are presented, both on the face of the financial statements and in the footnotes, for investors and analysts. The standard is effective for public companies for fiscal years beginning after

December 15, 2018.

Early adoption is permitted in any interim period or fiscal years before the effective date of the standard. The adoption of this standard is

not

expected to have a material impact on the Company’s consolidated financial statements.

In

February 2018,

the FASB amended the

Financial Instruments Topic

of the Accounting Standards Codification. The amendments clarify certain aspects of the guidance issued in ASU

2016

-

01.

Public business entities with fiscal years beginning between

December 15, 2017,

and

June 15, 2018,

are

not

required to adopt these amendments until the interim period beginning after

June 15, 2018.

The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements. The Company has

not

yet concluded how the new standard will impact the consolidated financial statements.

In

June 2018,

the FASB amended the

Compensation—Stock Compensation Topic

of the Accounting Standards Codification. The amendments expand the scope of Topic

718

to include share-based payment transactions for acquiring goods and services from nonemployees. The amendments are effective for fiscal years beginning after

December 15, 2018,

including interim periods within that fiscal year-public business entities. Early adoption is permitted, but

no

earlier than an entity’s adoption date of Topic

606.

The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements. The Company has

not

yet concluded how the new standard will impact the consolidated financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are

not

expected to have a material impact on the Company’s financial position, results of operations or cash flows.

XML

Note 2 - Revenue Recognition

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

2. Revenue recognition

The Company accounts for revenue in accordance with ASC

606,

which was adopted on

April 1, 2018,

using the modified retrospective method. As substantially all of the Company’s revenue is derived from contracts with an initial expected duration of

one

year or less 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 or prompt payment discounts). Performance obligations are short-term in nature and customers are typically billed upon transfer of control.
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. For repair-type services, the Company records revenue over-time based on an input method of costs incurred to total estimated costs. 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

840

(Leases) and out of scope under Topic

606

and Other Revenues (Freight, Management Fees, etc.) which are immaterial for disclosure under Topic

606.

The following table summarizes disaggregated revenues by type:

	Three Months Ended June 30,
	2018		2017
Product Sales	$	39,427,051	$	28,350,734
Support Services		19,776,215		19,109,009
Leasing Revenue		1,272,579		65,194
Other		391,624		172,436
Total	$	60,867,469	$	47,697,373

See Note

13

for the Company's disaggregated revenues by geographic region and Note

14

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

The Company does

not

have material contract assets, liabilities or costs associated with arrangements with its customers at

June 30, 2018.

XML

Note 3 - Business Combinations

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Business Combination Disclosure [Text Block]

3. Busines s Combinations

Acquisition of

AirCo Assets

On

May 2, 2017

and

May 31, 2017,

our newly formed subsidiaries, AirCo, LLC and AirCo Services, LLC (collectively, “AirCo”) acquired the inventory and principal business assets, and assumed specified liabilities, of Aircraft Instrument and Radio Company, Incorporated, and Aircraft Instrument and Radio Services, Inc. (collectively, the “AirCo Sellers”). The acquired business, which is based in Wichita, Kansas, distributes and sells airplane and aviation parts and maintains a license under Part

145

of the regulations of the Federal Aviation Administration. The consideration paid for the acquired business was

$2,400,000.

The following table summarizes the fair values of assets acquired and liabilities assumed by AirCo as of

May 2, 2017,

the date of the completion of the acquisition (the “AirCo Closing Date”):

	May 2, 2017
Assets acquired and liabilities assumed at fair value:
Accounts receivables	$	748,936
Inventories		3,100,000
Property and equipment		26,748
Accounts payable		(313,117	)
Accrued expenses		(382,687	)
Net assets acquired	$	3,179,880
Net assets acquired		3,179,880
Consideration paid		2,400,000
Bargain purchase gain	$	779,880

The Company’s purchase price accounting reflects the estimated net fair value of the AirCo Sellers assets acquired and liabilities assumed as of the AirCo Closing Date.

The transaction resulted in a bargain purchase because AirCo was a non-marketed transaction and in financial distress at the time of the acquisition. The inventory was

not

being marketed appropriately and as a result, the company was unable to realize market prices for the parts. 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

$278,000.

  The resulting net bargain purchase gain after taxes was approximately

$502,000.

Pro forma financial information is

not

presented as the results are

not

material to the Company’s condensed consolidated financial statements.

Acquisition of

W

o

rthing

ton

Aviation and Parts

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 and Parts (“Worthington”), in each case 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 assume the 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:

Earnest money	$	50,000
Cash consideration		3,300,000
Cash acquired		(24,300	)
Total consideration	$	3,325,700

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 remaining unallocated purchase price recorded as a bargain purchase gain. A bargain purchase gain has been recognized by the Company due to Worthington being sold in a distressed sale, resulting in the fair value of net assets acquired exceeding consideration paid. 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:

	May 4, 2018
ASSETS
Accounts receivable	$	1,929,120
Inventories		4,564,437
Other current assets		149,792
Property and equipment		391,892
Investment in JVs		189,607
Intangible assets - tradename		138,000
Total assets		7,362,848
LIABILITIES
Accounts payable		1,289,150
Accrued expenses		175,222
Deferred tax liability		589,000
Total liabilities		2,053,372
Net Assets Acquired	$	5,309,476
Consideration paid	$	3,350,000
Less: Cash acquired		(24,301	)
Bargain purchase gain	$	1,983,777

As of

June 30, 2018,

the purchase price allocation is considered preliminary. The Company’s initial accounting for this acquisition is incomplete as of the date of this report. Therefore, as permitted by applicable accounting guidance, the foregoing amounts are provisional. All relevant facts and circumstances are still being considered by management prior to finalization of the purchase price allocation.

The transaction resulted in a bargain purchase because Worthington needed access to additional capital to maintain its operations. 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.

Worthington’s operating revenue and operating income included in the Company’s results for the

three

-months ended

June 30, 2018

were

$2,600,000

and

$165,000,

respectively.

Pro Forma Financial Information

The following unaudited pro forma consolidated results of operations for the

three

-month periods ended

June 30, 2018

and

2017

present consolidated information of the Company as if the acquisition of Worthington had occurred as of

April 1, 2017:

	Pro-Forma Three		Pro-Forma Three
	Months Ended		Months Ended
	June 30, 2018		June 30, 2017
Revenue	$	62,311,340	$	51,212,373
Operating income		2,399,435		1,985,814
Net income Attributable to Air T, Inc. Stockholders		701,272		2,749,338
Basic income per share		0.34		1.35
Dilutive income per share	$	0.34	$	1.34

The unaudited pro forma financial results include certain adjustments for additional amortization expense based upon the definite-lived amortizable asset acquired in the transaction. The provision for income taxes has also been adjusted for all periods, based upon the foregoing adjustments to historical results.

The pro forma net income for the

three

months ended

June 30, 2017

includes certain items, such as the bargain purchase gain and transaction costs directly attributable to the acquisition, which will

not

have an ongoing impact. These items include the bargain purchase gain of approximately

$1,983,000.

The unaudited pro forma consolidated results are

not

necessarily indicative of what the Company’s consolidated results of operations actually would have been had it completed these acquisitions on

April 1, 2017.

Other Acquisitions

and Business Investments

On

June 7, 2017,

the Company’s Space Age Insurance Company subsidiary (“SAIC”) invested

$500,000

for a

40%

interest in TFS Partners LLC (“TFS Partners”), a single-purpose investment entity organized by SAIC and other investors for the purpose of making an investment in a limited liability company, The Fence Store LLC (“Fence Store LLC”), organized for the purpose of acquiring substantially all of the assets of The Fence Store, Inc. (“Fence Store Inc.”). TFS Partners acquired a

60%

interest in Fence Store LLC, which has completed the purchase of substantially all of the assets of Fence Store Inc. Prior to this transaction, Fence Store Inc. operated a business under the tradename “Town and Country Fence” selling and installing residential and commercial fencing in the greater Twin Cities, Minnesota area. Fence Store LLC intends to continue this business. The Company accounts for its investment in TFS Partners using the equity method of accounting.

On

December 15, 2017,

BCCM, Inc. (“BCCM”), a newly-formed, wholly-owned subsidiary of the Company, completed the acquisition of Blue Clay Capital Management, LLC (“Blue Clay Capital”). In connection with the transaction, BCCM acquired the assets of, and assumed certain liabilities of Blue Clay Capital. Blue Clay Capital, BCCM, BCCM Advisors, LLC (“BCCM Advisors”), a wholly-owned subsidiary of BCCM purchased the general partnership interests in certain investment funds previously managed by Blue Clay Capital for a purchase price equal to

$227,000.

Upon acquisition of each of the general partnership interests, BCCM Advisors was admitted as the general partner of each fund.

Pro forma financial information is

not

presented for the above acquisitions as the results are

not

material to the Company’s consolidated financial statements.

XML

Note 4 - Restricted Cash

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Cash and Cash Equivalents Disclosure [Text Block]

4. Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same such amounts shown in the Consolidated Statement of Cash Flows:

	6/30/2018		3/31/2018
Cash and cash equivalents	$	5,746,521	$	4,803,238
Restricted Cash		18,832		269,659
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$	5,765,353	$	5,072,897

XML

Note 5 - Income Taxes

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Income Tax Disclosure [Text Block]

5. Income Taxes

During the

three

-month period ended

June 30, 2018,

the Company recorded

$387,000

in income tax expense at an effective rate of 

10.5%.

The Company records income taxes using an estimated annual effective tax rate for interim reporting. The primary factors contributing to the difference between the federal statutory rate of

21%

and the Company’s effective tax rate for the

three

-month period ended

June 30, 2018

were the estimated benefit for the exclusion of income for the Company’s captive insurance company subsidiary under Section

831

(b), the presentation of the tax impact of the bargain purchase gain and state income tax expense. During the

three

-month period ended

June 30, 2017,

the Company recorded

$374,000

in income tax expense which resulted in an effective tax rate of

23.3%.

The primary factors contributing to the difference between the federal statutory rate and the Company’s effective tax rate for the

three

-month period ended

June 30, 2017

were the change in valuation allowance against Delphax’s pretax activity in the period, the benefit for the federal domestic production activities deduction, the increase in the valuation allowance related to the Insignia unrealized impairment loss, state income tax expense, and the estimated benefit for the exclusion of income for the Company’s captive insurance company subsidiary afforded under Section

831

(b).

XML

Note 6 - Net Earnings Per Share

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Earnings Per Share [Text Block]

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. The computation of basic and diluted earnings per common share is as follows:

	Three Months Ended June 30,
	2018		2017
Net Income (Loss) Attributable to Air T, Inc. Stockholders	$	2,828,694	$	968,389
Income Per Share:
Basic	$	1.38	$	0.47
Diluted	$	1.38	$	0.47
Weighted Average Shares Outstanding:
Basic		2,043,607		2,042,789
Diluted		2,049,698		2,047,623

XML

Note 7 - Investments in Securities

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

7. Investments in Securities

At

March 31, 2018,

the Company classified the marketable equity securities as available-for-sale securities, which are recorded at fair value based upon quoted market prices with changes in fair value recorded in Other Comprehensive Income (Loss) (“OCI”). The gains and losses on available-for-sale securities are

not

reported in Net (Loss) in the consolidated Statement of Income (Loss) until the securities are sold or if there is an other-than temporary decline in fair value below cost.

The Company adopted ASU

2016

-

01

as of

April 1, 2018

and as a result has reclassified the beginning accumulated OCI balance of approximately

$106,000

related to marketable equity securities to beginning Retained Earnings (see Statement of Equity). As a result of adoption of this guidance, the Company now recognizes changes in fair value of these securities in the Consolidated Statement of Income (Loss).

During the

three

months ended

June 30, 2018,

the Company had a gross unrealized gains aggregating

$61,000

and gross unrealized losses aggregating

$416,000,

which is included in the Consolidated Statement of Income (Loss).

All investments in marketable securities are priced using publicly quoted market prices and are considered Level

1

fair value measurements.

In

June 2018,

the Company invested

$2,000,000

in a quota share reinsurance program in the form of participating notes. The investment period is

3

years; subject to early redemption if applicable. Based on the Company’s intent and the ability to hold the investment, the Company has classified the investment as held-to-maturity. The investment is reported at amortized cost of

$2,000,000

at

June 30, 2018.

XML

Note 8 - Equity Method Investments

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Equity Method Investments and Joint Ventures Disclosure [Text Block]

8. Equity Method Investments

On

January 16, 2018,

the Company purchased approximately

1,133,000

shares of Insignia (NASDAQ: ISIG) at a price of

$1.25

per share for a total cost of approximately

$1.4

million. After this purchase, the Company owned approximately

26%

of Insignia’s total common stock and the Company adopted the equity method of accounting. Insignia Systems, Inc. markets in-store advertising products, programs and services to retailers and consumer packaged goods manufacturers. As a result, as of

January 16, 2018,

the Company adopted the equity method to account for this investment because of its ability to exercise significant influence, but

not

control, over the operating and financial policies of Insignia. Air T has elected a

three

-month lag upon adoption of the equity method. At

June 30, 2018,

the Company held approximately

3.5

million shares of Insignia’s common stock representing approximately

29%

of the outstanding shares for a total net investment basis of approximately

$4,801,000.

For the quarter ended

June 30, 2018,

the Company recorded approximately

$25,000

of its share of Insignia’s net income for the

three

months ended

March 31, 2018

along with a basis difference adjustment of approximately

$20,000.

As discussed previously, the Company’s investment in The Fence Store LLC is accounted for under the equity method of accounting. The Company’s net investment basis is approximately

$437,000

at

June 30, 2018.

XML

Note 9 - Inventories

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Inventory Disclosure [Text Block]

9. Inventories

Inventories consisted of the following:

	June 30, 2018		March 31, 2018
Ground support service parts	$	2,590,319	$	2,489,433
Ground equipment manufacturing:
Raw materials		2,856,870		3,198,939
Work in process		1,828,715		20,089
Finished goods		4,244,487		1,768,897
Printing equipment and maintenance
Raw materials		851,938		747,778
Finished goods		395,044		553,847
Commercial jet engines and parts		14,852,478		25,452,022
Total inventories	$	27,619,851	$	34,231,005

XML

Note 10 - Employee and Non-employee Stock Options

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

10. Employee and Non-employee Stock Options

Air T, Inc. maintains a stock option plan for the benefit of certain eligible employees and directors. In addition, Delphax maintains a number of stock option plans. Compensation expense is recognized over the requisite service period for stock options which are expected to vest based on their grant-date fair values. The Company uses the Black-Scholes option pricing model to value stock options granted under the Air T, Inc. plan and the Delphax plans. The key assumptions for this valuation method include the expected term of the option, stock price volatility, risk-free interest rate and dividend yield. Many of these assumptions are judgmental and highly sensitive in the determination of compensation expense.

No

options were granted or exercised under Air T, Inc.’s stock option plan during the

three

-month periods ended

June 30, 2018

and

2017.

Stock-based compensation expense with respect to this plan in the amount of

$0

was recognized for the

three

-month periods ended

June 30, 2018

and

2017,

respectively. At

June 30, 2018,

there was

no

unrecognized compensation expense related to the Air T Inc. stock options.

No

options were granted or exercised during the

June 2018

and

June 2017

quarters under any of Delphax’s stock option plans. Delphax did

not

recognize any stock-based compensation expense during the

June 2018

and

June 2017

quarters.

XML

Note 11 - Financing Arrangements

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Debt Disclosure [Text Block]

11. Financing Arrangements

Material financing arrangements for the Company and its subsidiaries are summarized as follows. AirCo, Contrail Aviation (“Contrail”) and Worthington are subsidiaries of the Company in the commercial jet engines and parts segment.

	6/30/2018			3/31/2018			Maturity Date
Revolver	$	5,603,713		$	-		November 30, 2019
Term Note A		9,500,000			9,750,000		January 1, 2028
Term Note B		4,750,000			4,875,000		January 1, 2028
Term Note D		1,657,600			1,674,400		January 1, 2028
Air T Debt		21,511,313			16,299,400
Revolver		4,686,000			5,000,000		February 21, 2019
Term Loan		1,705,775			2,404,775		March 26, 2019
AirCo Debt		6,391,775			7,404,775
Revolver		-			14,826,062		May 5, 2019
Term Loan		9,920,000			9,920,000		January 26, 2021
Contrail Debt		9,920,000			24,746,062
Term Loan		3,400,000			-		November 30, 2019
Worthington Debt		3,400,000			-
Total Debt		41,223,088			48,450,238
Less: Unamortized Debt Issuance Costs		(356,258	)		(365,288	)
Total Debt, net	$	40,866,830		$	48,084,950

Refer to the Company’s Form

10K

for the year ended

March 31, 2018

for a detailed explanation of existing debts. For the quarter ended

June 30, 2018,

the Company has entered the following debt obligations:

On

May 25, 2018,

the Company’s wholly-owned subsidiaries Worthington Acquisition, LLC, Worthington Aviation, LLC and Worthington MRO, LLC, as Borrowers, completed a loan transaction with Minnesota Bank & Trust (“MBT”) pursuant to which Borrowers obtained from MBT a new revolving loan in the amount of up to

$1,500,000

(the “Worthington Revolving Loan”) and new term loan in the amount of

$3,400,000

(the “Worthington Term Loan” and together with the Worthington Revolving Loan, the “Worthington Loans”). The entire loan proceeds were disbursed by MBT to the Borrowers on

May 25, 2018

and were used to reduce amounts previously advanced on the Company’s line of credit financing with MBT. Until the Worthington Term Loan is paid in full and certain other conditions met, the Company guaranteed up to

$3,000,000

of the Worthington Loans. The interest rate on Worthington Term Loan floats at a rate equal to the

one

-month LIBOR rate plus

2.5%

and the interest rate on the Worthington Revolving Loan floats at a rate equal to the

one

-month LIBOR rate plus

2.0%.

The Worthington Loans mature on

November 30, 2019,

at which time the entire unpaid balance of the Worthington Loans will be due and payable in full. In addition, the loan agreement contains affirmative and negative covenants and the loans are secured by a

first

lien on all of the assets of the Borrowers and a pledge of certain assets held by Stratus Aero Partners, LLC, a subsidiary of the Company. At

June 30, 2018,

no

borrowings have been made on the Worthington Revolving Loan and the outstanding balance on the Worthington Term Loan is

$3,400,000.

The Company assumes various financial obligations 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.

XML

Note 12 - Variable Interest Entities

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Variable Interest Entity Disclosure [Text Block]

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 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 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 consolidated financial statements beginning on that date.

The following table sets forth the carrying values of Delphax’s assets and liabilities as of

June 30, 2018

and

March 31, 2018:

	June 30, 2018			March 31, 2018
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	371,831		$	241,430
Accounts receivable, net		41,150			316,542
Other current assets		58,898			72,269
Total current assets		471,879			630,241
Other tax receivables-long-term		311,000			311,000
Total assets	$	782,879		$	941,241
LIABILITIES
Current liabilities:
Accounts payable	$	2,160,817		$	2,145,847
Income tax payable		11,312			11,312
Accrued expenses		3,180,724			3,244,514
Short-term debt		1,766,949			1,788,285
Total current liabilities		7,119,802			7,189,958
Total liabilities	$	7,119,802		$	7,189,958
Net Assets	$	(6,336,923	)	$	(6,248,717	)

The short-term debt is comprised of amounts due from Delphax to Air T, Inc. Those amounts have been eliminated in consolidation. As of

June 30, 2018,

the outstanding principal amount of the Senior Subordinated Note was approximately

$800,000

(

$900,000

as of

March 31, 2018)

and the outstanding borrowings under the Delphax Senior Credit Agreement were

$0

(

$0

as of

March 31, 2018).

Short-term debt as reflected in the above table includes approximately

$967,000

and

$888,000

of accrued interest, due to the Company from Delphax Technologies, Inc. under the Senior Subordinated Note as of

June 30, 2018

and

March 31, 2018.

As a result of the foreclosure completed by the Company on

August 10, 2017,

the amount secured by the Delphax Senior Credit Agreement was satisfied.

The assets of Delphax can only be used to satisfy the obligations of Delphax. Furthermore, Delphax’s creditors do

not

have recourse to the assets of Air T, Inc. or its subsidiaries.

On

January 6, 2017,

the Company notified Delphax and Delphax Canada of certain “Events of Default” (as defined under the Delphax Senior Credit Agreement) existing under the Delphax Senior Credit Agreement and that the Company was reserving all rights to exercise remedies under the Delphax Senior Credit Agreement and that

no

delay in exercising any such remedy is to be construed as a waiver of any of its remedies. Also, on

January 6, 2017,

the Company and Delphax Canada entered into a Forbearance and Amendment Agreement dated as of

January 6, 2017,

which amended the Senior Subordinated Note to increase the default rate of interest from an annual rate of

10.5%

to an annual rate of

18%,

to be in effect until all amounts under the Senior Subordinated Note are paid in full, and which provides that so long as

no

Event of Default (as defined in the Senior Subordinated Note) occurs under the Senior Subordinated Note, other than Events of Default that existed as of

January 6, 2017,

the Company agreed to forbear from exercising its remedies under the Senior Subordinated Note until

May 31, 2017

and further provided for the payment by Delphax Canada to the Company of a forbearance fee equal to approximately

$141,000.

Notwithstanding the existence of events of default, during the

first

six

calendar months of

2017,

the Company permitted additional borrowings under the Delphax Senior Credit Agreement to, among other things, fund a final production run by Delphax Canada of consumable products for its legacy printing systems, which production run was primarily completed over that period. Delphax Canada was Delphax's sole manufacturing subsidiary.

In light of continuing events of default under the Delphax Senior Credit Agreement and the conclusion of final production run by Delphax Canada of consumable products for Delphax’s legacy printing systems, on

July 13, 2017,

the Company delivered a demand for payment and Notice of Intention to Enforce Security to Delphax Canada. On

August 10, 2017,

the Company foreclosed on all personal property and rights to undertakings of Delphax Canada. The Company foreclosed as a secured creditor with respect to amounts owed to it by Delphax Canada under the Delphax Senior Credit Agreement. The Company provided notice of its intent to foreclose to Delphax Canada and its secured creditors and shareholders on

July 26, 2017.

The outstanding amount owed to the Company by Delphax Canada under the Delphax Senior Credit Agreement on

July 26, 2017

was approximately

$1,510,000.

The Company also submitted an application to the Ontario Superior Court of Justice in Bankruptcy and Insolvency (the "Ontario Court") seeking that Delphax Canada be adjudged bankrupt. On

August 8, 2017,

the Ontario Court issued an order adjudging Delphax Canada to be bankrupt. The recipients of the foreclosure notice did

not

object to the foreclosure or redeem. As a result, the foreclosure was completed on

August 10, 2017,

and the Company accepted the personal property and rights to undertakings of Delphax Canada in satisfaction of the amount secured by the Delphax Senior Credit Agreement.

With it being adjudged bankrupt on

August 8, 2017,

Delphax Canada ceased to have capacity to deal with its property. The property of Delphax Canada vested in the trustee in bankruptcy of Delphax Canada subject to the rights of secured creditors. The Company’s rights under Delphax Senior Credit Agreement permitted it to foreclose upon the personal property and rights of undertakings of Delphax Canada. Since the Company foreclosed on Delphax Canada’s assets within very close time proximity to the commencement of bankruptcy proceedings and because the bankruptcy and foreclosure were undertaken in contemplation of

one

another, the Company treated these as

one

single financial reporting event. In accordance with applicable accounting guidance, the Company considered whether Delphax Canada was still a business post-bankruptcy and foreclosure of the assets by the Company and concluded that Delphax Canada

no

longer constituted a business as it is defined by accounting principles generally accepted in the United States of America and, accordingly, derecognition of Delphax Canada’s liabilities will occur when Delphax Canada is legally released as the primary obligor with respect to the liabilities in the bankruptcy proceedings. As of

June 30, 2018,

the bankruptcy proceedings were ongoing in accordance with Canadian law and, therefore, Delphax Canada was still the primary obligor of its liabilities.

The intercompany balances under the Delphax Senior Subordinated Note as of

June 30, 2018

are eliminated in the presentation of the consolidated financial statements.

Delphax’s revenues and expenses are included in our consolidated financial statements beginning

November 24, 2015

through

June 30, 2018.

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 Warrant 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. 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 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 zero. 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

June 30, 2018

and

June 30, 2017

the attribution of Delphax losses to non-controlling interests was

33%

and

3.4%,

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 (loss) for the

three

months ended

June 30, 2018

and

2017.

	Three Months Ended June 30,
	2018			2017
	(Unaudited)			(Unaudited)
Operating Revenues	$	-		$	3,131,381
Operating Expenses:
Cost of sales		-			1,501,056
General and administrative		52,260			505,945
Research and development		-			195,653
Depreciation, amortization and impairment		-			4,691
		52,260			2,207,345
Operating Income (Loss)		(52,260	)		924,036
Non-operating Expenses, net		(87,917	)		(387,797	)
Income (Loss) Before Income Taxes		(140,177	)		536,239
Income Taxes		-			-
Net Income (Loss)	$	(140,177	)	$	536,239

Non-operating income (expense), net, includes interest expense of approximately

$97,000

associated with the Senior Subordinated Note and the Delphax Senior Credit Agreement for the quarter ended

June 30, 2018

and approximately

$132,000

associated with the Senior Subordinated Note for the quarter ended

June 30, 2017.

This interest expense was eliminated for purposes of net income (loss) presented in the Company’s accompanying consolidated statements of income (loss) and comprehensive income (loss) for the

three

months ended

June 30, 2018

and

2017,

though the effect of intercompany interest under the Senior Subordinated note and the Delphax Senior Credit Agreement is reflected in the attribution of Delphax net income or losses attributed to non-controlling interests.

Unconsolidated Variable Interest Entities and Other Entities

As discussed in Note

3,

BCCM Advisors holds equity interests in certain investment funds as of

March 31, 2018.

The Company determined that the equity interest it holds as the general partner in the following funds are variable interests based on the applicable GAAP guidance: Blue Clay Capital Partners CO I LP, Blue Clay Capital Partners CO III LP, Blue Clay Capital SMid-Cap LO LP and AO Partners II LP. However, the Company further determined that these funds should

not

be consolidated as BCCM Advisors is

not

the primary beneficiary of these variable interest entities. The Company determined that its equity interest in the Blue Clay Capital Master Fund Ltd. is

not

a variable interest and should

not

be consolidated based on the applicable GAAP guidance. The Company’s total investment within these investment funds at

June 30, 2018

is valued at approximately

$314,000.

The Company’s exposure to loss is limited to its initial investment.

As discussed in Note

4,

the Company has an investment in Oxbridge RE NS in the amount of

$2,000,000.

The Company determined that this investment represents a variable interest based on the applicable GAAP guidance. However, the Company further determined that the Company should

not

consolidate Oxbridge RE NS as the Company is

not

the primary beneficiary of the variable interest entity. The Company’s exposure to loss is limited to its initial investment.

XML

Note 13 - Geographical Information

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Geographical Reporting Disclosure [Text Block]

13. Geographical information

Total property and equipment, net of accumulated depreciation, located in the United States, the Company's country of domicile, held outside the United States are summarized in the following table as of

June 30, 2018

and

March 31, 2018:

	June 30, 2018		March 31, 2018
United States, the Company’s country of domicile	$	5,357,615	$	5,209,831
Foreign		14,060,137		15,063,340
Total property and equipment, net	$	19,417,752	$	20,273,171

The Company's tangible long-lived assets, net of accumulated depreciation, held outside of the United States represent engines on lease at

June 30, 2018.

The net book value located within each individual country at

June 30, 2018

and

March 31, 2018

is listed below:

	June 30, 2018		March 31, 2018
Australia	$	4,793	$	-
Mexico		3,934,399		4,352,257
Romania		3,459,673		3,626,136
Netherlands		6,661,272		7,084,947
Total property and equipment, net	$	14,060,137	$	15,063,340

Total revenue, in and outside the United States is summarized in the following table for the quarters ended

June 30, 2018

and

June 30, 2017:

	June 30, 2018		June 30, 2017
United States, the Company’s country of domicile	$	54,662,311	$	40,801,228
Foreign		6,205,158		6,896,145
Total revenue	$	60,867,469	$	47,697,373

XML

Note 14 - Segment Information

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

14. Segment Information

The Company has

six

business segments: overnight air cargo, ground equipment sales, ground support services, commercial jet engine and parts segment, printing equipment and maintenance and corporate. Segment data is summarized as follows:

	Three Months Ended June 30,
	2018			2017
Operating Revenues by Segment:
Overnight Air Cargo	$	17,640,658		$	16,742,175
Ground Equipment Sales:
Domestic		5,292,017			5,276,366
International		1,095,097			673,290
Total Ground Equipment Sales		6,387,114			5,949,656
Ground Support Services		9,047,640			9,113,073
Printing Equipment and Maintenance
Domestic		194,792			1,443,982
International		107,921			1,687,399
Total Printing Equipment and Maintenance		302,713			3,131,381
Commercial Jet Engines and Parts:
Domestic		23,154,535			8,190,885
International		5,002,140			4,535,456
Total Commercial Jet Engines		28,156,675			12,726,341
Corporate		474,205			326,279
Intercompany		(1,141,536	)		(291,532	)
Total	$	60,867,469		$	47,697,373
Operating Income (Loss):
Overnight Air Cargo	$	1,056,692		$	816,666
Ground Equipment Sales		393,500			165,794
Ground Support Services		(87,724	)		356,824
Printing Equipment and Maintenance		(318,278	)		924,036
Commercial Jet Engines and Parts		3,282,908			810,940
Corporate		(1,729,200	)		(863,018	)
Intercompany		5,803			1,326
Total	$	2,603,702		$	2,212,568
Capital Expenditures:
Overnight Air Cargo	$	5,996		$	-
Ground Equipment Sales		140,090			-
Ground Support Services		52,438			25,365
Printing Equipment and Maintenance		-			-
Commercial Jet Engines and Parts		183,821			4,977
Corporate		77,230			459,653
Total	$	459,575		$	489,995
Depreciation, Amortization and Impairment:
Overnight Air Cargo	$	22,763		$	31,016
Ground Equipment Sales		91,349			132,880
Ground Support Services		125,055			111,631
Printing Equipment and Maintenance		14,331			4,691
Commercial Jet Engines and Parts		1,097,933			45,776
Corporate		145,295			74,159
Intercompany		(1,325	)		(1,326	)
Total	$	1,495,401		$	398,827

XML

Note 15 - Commitments and Contingencies

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

15. Commitments and Contingencies

Contrail Aviation Support, LLC (“Contrail Aviation”), a subsidiary of the Company, completed the purchase of all of the assets owned by Contrail Aviation Support, Inc. (the “Seller”) in

July 2016.

As part of this purchase, Contrail Aviation agreed to pay contingent additional deferred consideration of up to a maximum of

$1,500,000

per year and

$3,000,000

in the aggregate. The Company established a liability of

$2,900,000

in the initial allocation of purchase price. The Company has paid

$1,000,000

of contingent consideration as of

June 30, 2018

and the remaining liability of

$1,955,000,

which includes a current portion of

$1,500,000

and a non-current portion of

$455,000,

is included in the “Accrued expenses” and “Other non-current liabilities”, respectively, in the consolidated balance sheet at

June 30, 2018.

Contrail Aviation entered into with the Seller an Operating Agreement (the “Operating Agreement”) 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, the Company has presented this redeemable non-controlling interest in Contrail Aviation between the liabilities and equity sections of the accompanying consolidated balance sheets.

XML

Note 16 - Subsequent Events

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Subsequent Events [Text Block]

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.

Management is

not

aware of any subsequent events as of the date of issuance.

XML

Significant Accounting Policies (Policies)

3 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

Recent

ly

Adopted

Accounting Pronouncements

In

May 2014,

the Financial Accounting Standards Board (FASB) issued ASU

2014

-

09,

Revenue from Contracts with Customers

, and created Topic

606

(ASC

606

), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASC

606

replaced most existing revenue recognition guidance in GAAP and is effective for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2017.

Effective

April 1, 2018,

the Company adopted the standard using the modified retrospective transition method. Results for reporting periods beginning after

April 1, 2018

will be presented according to ASU

2014

-

09

while prior period amounts will

not

be adjusted and will continue to be reported in accordance with the Company’s historic accounting policies. The main area impacted by ASU

2014

-

09

includes the recognition of revenue with the Company’s Ground Equipment Sales segment transitioning from percentage of completion to point in time for the Government Contracts revenue stream. Additionally, certain repair service revenues which were recorded at a point-in-time upon completion of service are now recognized over-time. Due to the short-term nature of these contracts, over-time recognition does

not

result in a material difference from point-in-time recognition. The Company calculated the transition adjustment and concluded that there was an immaterial impact due to the adoption of ASC

606.

In

January 2016,

the FASB issued ASU

2016

-

01,

Recognition and Measurement of Financial Assets and Financial Liabilities

, that amends the guidance on the classification and measurement of financial instruments (Subtopic

825

-

10

). ASU

2016

-

01

becomes effective in fiscal years beginning after

December 15, 2017,

including interim periods therein. ASU

2016

-

01

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

320

and creates ASC Topic

321,

Investments – Equity Securities

. Under the new guidance, 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. Transitional guidance provided that entities with unrealized gains or losses on available for sale (“AFS”) equity securities were required to reclassify those amounts to beginning retained earnings in the year of adoption. As a result, the Company has reclassified the beginning amount of accumulated other comprehensive income related to AFS securities to accumulated deficit and all changes in fair values of these securities are now reflected in the Statement of Operations in the Company’s net loss for the period.

In

August 2016,

the FASB issued ASU

2016

-

15,

Statement of Cash Flows (Topic

230

): Classification of Certain Cash Receipts and Cash Payments

. ASU

2016

-

15

clarifies how cash receipts and cash payments in certain transactions are presented and classified in the statement of cash flows. The effective date of this update is for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2017,

with early adoption permitted. The update requires retrospective application to all periods presented but

may

be applied prospectively if retrospective application is impracticable. The Company adopted the guidance within ASU

2016

-

15

as of

April 1, 2018.

The adoption of this standard did

not

have a material impact on the Company’s consolidated financial statements.

In

November 2016,

the FASB issued ASU

2016

-

18,

Statement of Cash Flows (Topic

230

): Restricted Cash

. ASU

2016

-

18

requires that the statement of cash flows explain the changes in the combined total of restricted and unrestricted cash balance. Amounts generally described as restricted cash or restricted cash equivalents will be combined with unrestricted cash and cash equivalents when reconciling the beginning and end of period balances on the statement of cash flows. Further, the ASU requires a reconciliation of balances from the statement of cash flows to the balance sheet in situations in which the balance sheet includes more than

one

-line item of cash, cash equivalents, and restricted cash. Companies will also be disclosing the nature of the restrictions. ASU

2016

-

18

is effective for financial statements issued for fiscal years beginning after

December 15, 2017.

The Company adopted the guidance within ASU

2016

-

18

as of

April 1, 2018.

The impact of ASU

2016

-

18

on its financial statements was as follows: (

1

) changes in restricted cash balances are

no

longer shown in the statements of cash flows, as these balances are included in the beginning and ending cash balances in the statements of cash flows; and (

2

) included within Note

4

is a reconciliation between cash balances presented on the balance sheets with the amounts presented in the statements of cash flows.

In

January 2017,

the FASB issued ASU

2017

-

01,

Clarifying the Definition of a Business (Topic

805

)

.

This ASU clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance is effective for fiscal years that begin after

December 15, 2017

and is to be applied prospectively. The Company adopted the guidance within ASU

2017

-

01

as of

April 1, 2018.

The adoption of this standard did

not

have a material impact on the Company’s consolidated financial statements.

In

May 2017,

the FASB issued ASU

2017

-

09,

Compensation – Stock Compensation (Topic

718

): Scope of Modification Accounting

, which provides guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting. This update is effective for all entities for fiscal years beginning after

December 15, 2017,

and interim periods within those years. Early adoption is permitted. The Company adopted the guidance within ASU

2017

-

01

as of

April 1, 2018.

The adoption of this standard did

not

have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

In

February 2016,

the FASB issued ASU

2016

-

02,

Leases (Topic

842

)

. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than

12

months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. Similarly, lessors will be required to classify leases as either sales-type, finance or operating, with classification affecting the pattern of income recognition. Classification for both lessees and lessors will be based on an assessment of whether risks and rewards as well as substantive control have been transferred through a lease contract. The new standard is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years, with early adoption permitted. A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements, with certain practical expedients available. The Company is evaluating the impact of the adoption of the standard on its consolidated financial statements.

In

June 2016,

the FASB issued ASU

2016

-

13,

Financial Instruments—Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments

. This standard 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 amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. Early adoption is permitted for annual periods beginning after

December 15, 2018,

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

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 standard is effective for any interim goodwill impairment tests in fiscal years beginning after

December 15, 2019

and is to be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after

January 1, 2017.

The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements.

In

August 2017,

the FASB issued ASU

2017

-

12

–

Derivatives and Hedging (Topic

815

): Targeted Improvements to Accounting for Hedging Activities

, which provides guidance on hedge accounting for both financial and commodity risks. The provisions in this standard create more transparency around how economic results are presented, both on the face of the financial statements and in the footnotes, for investors and analysts. The standard is effective for public companies for fiscal years beginning after

December 15, 2018.

Early adoption is permitted in any interim period or fiscal years before the effective date of the standard. The adoption of this standard is

not

expected to have a material impact on the Company’s consolidated financial statements.

In

February 2018,

the FASB amended the

Financial Instruments Topic

of the Accounting Standards Codification. The amendments clarify certain aspects of the guidance issued in ASU

2016

-

01.

Public business entities with fiscal years beginning between

December 15, 2017,

and

June 15, 2018,

are

not

required to adopt these amendments until the interim period beginning after

June 15, 2018.

The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements. The Company has

not

yet concluded how the new standard will impact the consolidated financial statements.

In

June 2018,

the FASB amended the

Compensation—Stock Compensation Topic

of the Accounting Standards Codification. The amendments expand the scope of Topic

718

to include share-based payment transactions for acquiring goods and services from nonemployees. The amendments are effective for fiscal years beginning after

December 15, 2018,

including interim periods within that fiscal year-public business entities. Early adoption is permitted, but

no

earlier than an entity’s adoption date of Topic

606.

The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements. The Company has

not

yet concluded how the new standard will impact the consolidated financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are

not

expected to have a material impact on the Company’s financial position, results of operations or cash flows.

XML

Note 2 - Revenue Recognition (Tables)

3 Months Ended

Jun. 30, 2018

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three Months Ended June 30,
	2018		2017
Product Sales	$	39,427,051	$	28,350,734
Support Services		19,776,215		19,109,009
Leasing Revenue		1,272,579		65,194
Other		391,624		172,436
Total	$	60,867,469	$	47,697,373

XML

Note 3 - Business Combinations (Tables)

3 Months Ended

Jun. 30, 2018

Worthington Aviation Parts, Inc [Member]

Notes Tables

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

	May 4, 2018
ASSETS
Accounts receivable	$	1,929,120
Inventories		4,564,437
Other current assets		149,792
Property and equipment		391,892
Investment in JVs		189,607
Intangible assets - tradename		138,000
Total assets		7,362,848
LIABILITIES
Accounts payable		1,289,150
Accrued expenses		175,222
Deferred tax liability		589,000
Total liabilities		2,053,372
Net Assets Acquired	$	5,309,476
Consideration paid	$	3,350,000
Less: Cash acquired		(24,301	)
Bargain purchase gain	$	1,983,777

Schedule of Business Acquisitions, by Acquisition [Table Text Block]

Earnest money	$	50,000
Cash consideration		3,300,000
Cash acquired		(24,300	)
Total consideration	$	3,325,700

Business Acquisition, Pro Forma Information [Table Text Block]

	Pro-Forma Three		Pro-Forma Three
	Months Ended		Months Ended
	June 30, 2018		June 30, 2017
Revenue	$	62,311,340	$	51,212,373
Operating income		2,399,435		1,985,814
Net income Attributable to Air T, Inc. Stockholders		701,272		2,749,338
Basic income per share		0.34		1.35
Dilutive income per share	$	0.34	$	1.34

Acquired Inventory and Principal Business Assets, and Assumed Specified Liabilities, of Aircraft Instrument and Radio Company, Incorporated, and Aircraft Instrument and Radio Services, Inc. [Member]

Notes Tables

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

	May 2, 2017
Assets acquired and liabilities assumed at fair value:
Accounts receivables	$	748,936
Inventories		3,100,000
Property and equipment		26,748
Accounts payable		(313,117	)
Accrued expenses		(382,687	)
Net assets acquired	$	3,179,880
Net assets acquired		3,179,880
Consideration paid		2,400,000
Bargain purchase gain	$	779,880

XML

Note 4 - Restricted Cash (Tables)

3 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Cash and Cash Equivalents [Table Text Block]

	6/30/2018		3/31/2018
Cash and cash equivalents	$	5,746,521	$	4,803,238
Restricted Cash		18,832		269,659
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$	5,765,353	$	5,072,897

XML

Note 6 - Net Earnings Per Share (Tables)

3 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended June 30,
	2018		2017
Net Income (Loss) Attributable to Air T, Inc. Stockholders	$	2,828,694	$	968,389
Income Per Share:
Basic	$	1.38	$	0.47
Diluted	$	1.38	$	0.47
Weighted Average Shares Outstanding:
Basic		2,043,607		2,042,789
Diluted		2,049,698		2,047,623

XML

Note 9 - Inventories (Tables)

3 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	June 30, 2018		March 31, 2018
Ground support service parts	$	2,590,319	$	2,489,433
Ground equipment manufacturing:
Raw materials		2,856,870		3,198,939
Work in process		1,828,715		20,089
Finished goods		4,244,487		1,768,897
Printing equipment and maintenance
Raw materials		851,938		747,778
Finished goods		395,044		553,847
Commercial jet engines and parts		14,852,478		25,452,022
Total inventories	$	27,619,851	$	34,231,005

XML

Note 11 - Financing Arrangements (Tables)

3 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Debt [Table Text Block]

	6/30/2018			3/31/2018			Maturity Date
Revolver	$	5,603,713		$	-		November 30, 2019
Term Note A		9,500,000			9,750,000		January 1, 2028
Term Note B		4,750,000			4,875,000		January 1, 2028
Term Note D		1,657,600			1,674,400		January 1, 2028
Air T Debt		21,511,313			16,299,400
Revolver		4,686,000			5,000,000		February 21, 2019
Term Loan		1,705,775			2,404,775		March 26, 2019
AirCo Debt		6,391,775			7,404,775
Revolver		-			14,826,062		May 5, 2019
Term Loan		9,920,000			9,920,000		January 26, 2021
Contrail Debt		9,920,000			24,746,062
Term Loan		3,400,000			-		November 30, 2019
Worthington Debt		3,400,000			-
Total Debt		41,223,088			48,450,238
Less: Unamortized Debt Issuance Costs		(356,258	)		(365,288	)
Total Debt, net	$	40,866,830		$	48,084,950

XML

Note 12 - Variable Interest Entities (Tables) - Delphax [Member]

3 Months Ended

Jun. 30, 2018

Notes Tables

Condensed Balance Sheet [Table Text Block]

	June 30, 2018			March 31, 2018
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	371,831		$	241,430
Accounts receivable, net		41,150			316,542
Other current assets		58,898			72,269
Total current assets		471,879			630,241
Other tax receivables-long-term		311,000			311,000
Total assets	$	782,879		$	941,241
LIABILITIES
Current liabilities:
Accounts payable	$	2,160,817		$	2,145,847
Income tax payable		11,312			11,312
Accrued expenses		3,180,724			3,244,514
Short-term debt		1,766,949			1,788,285
Total current liabilities		7,119,802			7,189,958
Total liabilities	$	7,119,802		$	7,189,958
Net Assets	$	(6,336,923	)	$	(6,248,717	)

Condensed Income Statement [Table Text Block]

	Three Months Ended June 30,
	2018			2017
	(Unaudited)			(Unaudited)
Operating Revenues	$	-		$	3,131,381
Operating Expenses:
Cost of sales		-			1,501,056
General and administrative		52,260			505,945
Research and development		-			195,653
Depreciation, amortization and impairment		-			4,691
		52,260			2,207,345
Operating Income (Loss)		(52,260	)		924,036
Non-operating Expenses, net		(87,917	)		(387,797	)
Income (Loss) Before Income Taxes		(140,177	)		536,239
Income Taxes		-			-
Net Income (Loss)	$	(140,177	)	$	536,239

XML

Note 13 - Geographical Information (Tables)

3 Months Ended

Jun. 30, 2018

Notes Tables

Long-lived Assets by Geographic Areas [Table Text Block]

	June 30, 2018		March 31, 2018
United States, the Company’s country of domicile	$	5,357,615	$	5,209,831
Foreign		14,060,137		15,063,340
Total property and equipment, net	$	19,417,752	$	20,273,171

	June 30, 2018		March 31, 2018
Australia	$	4,793	$	-
Mexico		3,934,399		4,352,257
Romania		3,459,673		3,626,136
Netherlands		6,661,272		7,084,947
Total property and equipment, net	$	14,060,137	$	15,063,340

Revenue from External Customers by Geographic Areas [Table Text Block]

	June 30, 2018		June 30, 2017
United States, the Company’s country of domicile	$	54,662,311	$	40,801,228
Foreign		6,205,158		6,896,145
Total revenue	$	60,867,469	$	47,697,373

XML

Note 14 - Segment Information (Tables)

3 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Three Months Ended June 30,
	2018			2017
Operating Revenues by Segment:
Overnight Air Cargo	$	17,640,658		$	16,742,175
Ground Equipment Sales:
Domestic		5,292,017			5,276,366
International		1,095,097			673,290
Total Ground Equipment Sales		6,387,114			5,949,656
Ground Support Services		9,047,640			9,113,073
Printing Equipment and Maintenance
Domestic		194,792			1,443,982
International		107,921			1,687,399
Total Printing Equipment and Maintenance		302,713			3,131,381
Commercial Jet Engines and Parts:
Domestic		23,154,535			8,190,885
International		5,002,140			4,535,456
Total Commercial Jet Engines		28,156,675			12,726,341
Corporate		474,205			326,279
Intercompany		(1,141,536	)		(291,532	)
Total	$	60,867,469		$	47,697,373
Operating Income (Loss):
Overnight Air Cargo	$	1,056,692		$	816,666
Ground Equipment Sales		393,500			165,794
Ground Support Services		(87,724	)		356,824
Printing Equipment and Maintenance		(318,278	)		924,036
Commercial Jet Engines and Parts		3,282,908			810,940
Corporate		(1,729,200	)		(863,018	)
Intercompany		5,803			1,326
Total	$	2,603,702		$	2,212,568
Capital Expenditures:
Overnight Air Cargo	$	5,996		$	-
Ground Equipment Sales		140,090			-
Ground Support Services		52,438			25,365
Printing Equipment and Maintenance		-			-
Commercial Jet Engines and Parts		183,821			4,977
Corporate		77,230			459,653
Total	$	459,575		$	489,995
Depreciation, Amortization and Impairment:
Overnight Air Cargo	$	22,763		$	31,016
Ground Equipment Sales		91,349			132,880
Ground Support Services		125,055			111,631
Printing Equipment and Maintenance		14,331			4,691
Commercial Jet Engines and Parts		1,097,933			45,776
Corporate		145,295			74,159
Intercompany		(1,325	)		(1,326	)
Total	$	1,495,401		$	398,827

XML

Note 2 - Revenue Recognition - Disaggregation of Revenues (Details) - USD ($)	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Revenues	$ 1,272,579	$ 65,194
Revenues	60,867,469	47,697,373
Product [Member]
Revenues	39,427,051	28,350,734
Support Services [Member]
Revenues	19,776,215	19,109,009
Other [Member]
Revenues	$ 391,624	$ 172,436

XML

Note 3 - Business Combinations (Details Textual) - USD ($)			1 Months Ended	3 Months Ended
	May 04, 2018	Jun. 07, 2017	May 31, 2017	Jun. 30, 2018	Jun. 30, 2017
Business Combination, Bargain Purchase, Gain Recognized, Amount, Net				$ 1,983,777	$ 501,880
Payments to Acquire Equity Method Investments				197,532
Worthington Aviation Parts, Inc [Member]
Payments to Acquire Businesses, Gross	$ 3,300,000
Deferred Income Tax Expense (Benefit), Total				589,000
Business Combination, Bargain Purchase, Gain Recognized, Amount, Net				1,983,000
Payment for Earnest Money Deposit	$ 50,000
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual				2,600,000
Business Combination, Pro Forma Information, Earnings or Loss of Acquiree since Acquisition Date, Actual				165,000
Blue Clay Capital Management, LLC [Member]
Business Combination, Fair Value Amount for Each General Partnership Interest				227,000
AirCo [Member] | Acquired Inventory and Principal Business Assets, and Assumed Specified Liabilities, of Aircraft Instrument and Radio Company, Incorporated, and Aircraft Instrument and Radio Services, Inc. [Member]
Payments to Acquire Businesses, Gross			$ 2,400,000
Deferred Income Tax Expense (Benefit), Total				278,000
Business Combination, Bargain Purchase, Gain Recognized, Amount, Net				$ 502,000
SAIC [Member] | TFS Partners [Member]
Payments to Acquire Equity Method Investments		$ 500,000
Equity Method Investment, Ownership Percentage		40.00%
TFS Partners [Member] | Fence Store LLC [Member]
Equity Method Investment, Ownership Percentage		60.00%

XML

Note 3 - Business Combinations - Assets Acquired and Liabilities Assumed by AirCo (Details) - USD ($)		3 Months Ended
	May 02, 2017	Jun. 30, 2018	Jun. 30, 2017
Consideration paid		$ 3,325,700	$ 2,900,000
AirCo [Member] | Acquired Inventory and Principal Business Assets, and Assumed Specified Liabilities, of Aircraft Instrument and Radio Company, Incorporated, and Aircraft Instrument and Radio Services, Inc. [Member]
Accounts receivables	$ 748,936
Inventories	3,100,000
Property and equipment	26,748
Accounts payable	(313,117)
Accrued expenses	(382,687)
Net assets acquired	3,179,880
Consideration paid	2,400,000
Bargain purchase gain	$ 779,880

XML

Note 3 - Business Combinations - Summary of Total Consideration (Details) - Worthington Aviation Parts, Inc [Member]	May 04, 2018 USD ($)
Earnest money	$ 50,000
Cash consideration	3,300,000
Cash acquired	(24,301)
Total consideration	$ 3,325,700

XML

Note 3 - Business Combinations - Assets Acquired and Liabilities Assumed by Worthington (Details) - USD ($)		3 Months Ended
	May 04, 2018	Jun. 30, 2018	Jun. 30, 2017
Consideration paid		$ 3,325,700	$ 2,900,000
Worthington Aviation Parts, Inc [Member]
Accounts receivable	$ 1,929,120
Inventories	4,564,437
Other current assets	149,792
Property and equipment	391,892
Investment in JVs	189,607
Total assets	7,362,848
Accounts payable	1,289,150
Accrued expenses	175,222
Deferred tax liability	589,000
Total liabilities	2,053,372
Net Assets Acquired	5,309,476
Consideration paid	3,350,000
Less: Cash acquired	(24,301)
Bargain purchase gain	1,983,777
Worthington Aviation Parts, Inc [Member] | Trade Names [Member]
Intangible assets - tradename	$ 138,000

XML

Note 3 - Business Combinations - Pro Forma Information (Details) - Worthington Aviation Parts, Inc [Member] - USD ($)	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Revenue	$ 62,311,340	$ 51,212,373
Operating income	2,399,435	1,985,814
Net income Attributable to Air T, Inc. Stockholders	$ 701,272	$ 2,749,338
Basic income per share (in dollars per share)	$ 0.34	$ 1.35
Dilutive income per share (in dollars per share)	$ 0.34	$ 1.34

XML

Note 4 - Restricted Cash - Cash, Cash Equivalent and Restricted Cash (Details) - USD ($)		Jun. 30, 2018	Mar. 31, 2018		Jun. 30, 2017	Mar. 31, 2017
Cash and cash equivalents	[1]	$ 5,746,521	$ 4,803,238	[2]
Restricted Cash		18,832	269,659
Total cash, cash equivalents and restricted cash shown in the statement of cash flows		$ 5,765,353	$ 5,072,897		$ 1,888,824	$ 2,763,365

[1] Amounts related to Delphax as of June 30, 2018 and March 31, 2018, respectively.

[2] Derived from audited consolidated financial statements

XML

Note 5 - Income Taxes (Details Textual) - USD ($)		3 Months Ended
	Dec. 22, 2017	Jun. 30, 2018	Jun. 30, 2017
Income Tax Expense (Benefit), Total		$ 387,000	$ 374,000
Effective Income Tax Rate Reconciliation, Percent, Total		10.50%	23.30%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	21.00%

XML

Note 6 - Net Earnings Per Share - Earnings Per Common Share (Details) - USD ($)	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Net Income (Loss) Attributable to Air T, Inc. Stockholders	$ 2,828,694	$ 968,389
Income Per Share:
Basic (in dollars per share)	$ 1.38	$ 0.47
Diluted (in dollars per share)	$ 1.38	$ 0.47
Weighted Average Shares Outstanding:
Basic (in shares)	2,043,607	2,042,789
Diluted (in shares)	2,049,698	2,047,623

XML

Note 7 - Investments in Securities (Details Textual) - USD ($)		3 Months Ended
	Apr. 01, 2018	Jun. 30, 2018
Equity Securities, FV-NI, Unrealized Gain		$ 61,000
Equity Securities, FV-NI, Unrealized Loss		$ 416,000
Debt Securities, Held-to-Maturity, Term		3 years
Debt Securities, Held-to-maturity, Total		$ 2,000,000
Accounting Standards Update 2016-01 [Member]
Adoption of ASU 2016-01, Reclassification from AOCI to Retained Earnings
Accounting Standards Update 2016-01 [Member] | Retained Earnings [Member]
Adoption of ASU 2016-01, Reclassification from AOCI to Retained Earnings	$ (106,000)	(106,341)
Accounting Standards Update 2016-01 [Member] | AOCI Attributable to Parent [Member]
Adoption of ASU 2016-01, Reclassification from AOCI to Retained Earnings	$ 106,000	$ 106,341

XML

Note 8 - Equity Method Investments (Details Textual) - USD ($)		3 Months Ended
	Jan. 16, 2018	Jun. 30, 2018	Mar. 31, 2018	[1]
Equity Method Investments		$ 5,238,982	$ 5,032,268
Insignia [Member]
Equity Security, Number of Shares Purchased During Period	1,133,000
Equity Security, Shares Purchased, Price Per Share	$ 1.25
Equity Method Investment, Aggregate Cost	$ 1,400,000
Equity Method Investment, Ownership Percentage	26.00%	29.00%
Equity Method Investment, Number of Shares Held		3,500,000
Equity Method Investments		$ 4,801,000
Equity Method Investment, Summarized Financial Information, Net Income (Loss)		25,000
Equity Method Investment, Difference Between Carrying Amount and Underlying Equity, Total		20,000
Fence Store LLC [Member]
Equity Method Investments		$ 437,000

[1] Derived from audited consolidated financial statements

XML

Note 9 - Inventories - Inventories (Details) - USD ($)	Jun. 30, 2018	Mar. 31, 2018
Ground support service parts	$ 2,590,319	$ 2,489,433
Inventory Gross	27,619,851	34,231,005
Ground Equipment Manufacturing [Member]
Raw materials	2,856,870	3,198,939
Work in process	1,828,715	20,089
Finished goods	4,244,487	1,768,897
Printing Equipment and Maintenance [Member]
Raw materials	851,938	747,778
Finished goods	395,044	553,847
Commercial Jet Engines Inventory [Member]
Inventory Gross	$ 14,852,478	$ 25,452,022

XML

Note 10 - Employee and Non-employee Stock Options (Details Textual) - Employee and Non Employee Director Options [Member] - USD ($) shares in Thousands	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	0	0
Allocated Share-based Compensation Expense, Total	$ 0	$ 0
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options	$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	0	0
Delphax [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	0	0
Allocated Share-based Compensation Expense, Total	$ 0	$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	0	0

XML

Note 11 - Financing Arrangements (Details Textual) - USD ($)	May 25, 2018	Jun. 30, 2018	Mar. 31, 2018
Long-term Debt, Total		$ 40,866,830	$ 48,084,950
Loans [Member] | MBT [Member]
Debt Instrument, Amount Guaranteed by Company for Wholly-owned Subsidiaries, After Certain Conditions Met	$ 3,000,000
Loans [Member] | MBT [Member] | Revolving Loan [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 1,500,000
Long-term Line of Credit, Total		0
Loans [Member] | MBT [Member] | Revolving Loan [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate	2.00%
Loans [Member] | MBT [Member] | Term Loan [Member]
Debt Instrument, Face Amount	$ 3,400,000
Long-term Debt, Total		$ 3,400,000
Loans [Member] | MBT [Member] | Term Loan [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate	2.50%

XML

Note 11 - Financing Arrangements - Long-term Debt (Details) - USD ($)	3 Months Ended
	Jun. 30, 2018	Mar. 31, 2018
Long-term debt, gross	$ 41,223,088	$ 48,450,238
Less: Unamortized Debt Issuance Costs	(356,258)	(365,288)
Long-term Debt, Total	40,866,830	48,084,950
Parent Company [Member]
Long-term debt, gross	21,511,313	16,299,400
AirCo [Member]
Long-term debt, gross	6,391,775	7,404,775
Contrail Aviation Inc. [Member]
Long-term debt, gross	9,920,000	24,746,062
Worthington Aviation Parts, Inc [Member]
Long-term debt, gross	3,400,000
Revolving Loan [Member] | Parent Company [Member]
Long-term debt, gross	$ 5,603,713
Maturity Date	Nov. 30, 2019
Revolving Loan [Member] | AirCo [Member]
Long-term debt, gross	$ 4,686,000	5,000,000
Maturity Date	Feb. 21, 2019
Revolving Loan [Member] | Contrail Aviation Inc. [Member]
Long-term debt, gross		14,826,062
Maturity Date	May 05, 2019
Term Loan A [Member] | Parent Company [Member]
Long-term debt, gross	$ 9,500,000	9,750,000
Maturity Date	Jan. 01, 2028
Term Loan B [Member] | Parent Company [Member]
Long-term debt, gross	$ 4,750,000	4,875,000
Maturity Date	Jan. 01, 2028
Term Loan D [Member] | Parent Company [Member]
Long-term debt, gross	$ 1,657,600	1,674,400
Maturity Date	Jan. 01, 2028
Term Loan [Member] | AirCo [Member]
Long-term debt, gross	$ 1,705,775	2,404,775
Maturity Date	Mar. 26, 2019
Term Loan [Member] | Contrail Aviation Inc. [Member]
Long-term debt, gross	$ 9,920,000	9,920,000
Maturity Date	Jan. 26, 2021
Term Loan [Member] | Worthington Aviation Parts, Inc [Member]
Long-term debt, gross	$ 3,400,000
Maturity Date	Nov. 30, 2019

XML

Note 12 - Variable Interest Entities (Details Textual) - USD ($)		3 Months Ended
	Jan. 06, 2017	Jun. 30, 2018	Jun. 30, 2017	Mar. 31, 2018		Jul. 26, 2017	Jan. 05, 2017
Short-term Debt, Total		$ 9,544,732		$ 9,229,690	[1]
Investments in Funds, Noncurrent		$ 314,026		324,854	[1]
Delphax [Member]
Percentage of Consolidated Subsidiaries Dividends Attributable to Parent		67.00%
Percentage of Consolidated Subsidiaries Dividends Attributable to Noncontrolling Interests		33.00%
Net Income (Loss) Attributable to Noncontrolling Interest, Percentage		33.00%	3.40%
Delphax Canada [Member] | Delphax [Member]
Financing Receivable, Net, Total						$ 1,510,000
Senior Notes [Member] | Delphax Canada [Member]
Debt Instrument, Interest Rate, Stated Percentage	18.00%						10.50%
Line of Credit Facility, Forbearance Fee Amount	$ 141,000
Delphax [Member] | Senior Subordinated Note [Member]
Short-term Debt, Total		$ 800,000		900,000
Delphax [Member] | Senior Subordinated Note [Member] | Short-term Debt [Member]
Interest Payable, Current		967,000		888,000
Delphax [Member] | Delphax Senior Credit Agreement [Member]
Short-term Debt, Total		0		$ 0
Delphax [Member] | Senior Subordinated Note and Delphax Senior Debt Credit Agreement [Member] | Nonoperating Income (Expense) [Member]
Interest Expense, Total		97,000	$ 132,000
Investment Funds Purchased from Blue Clay Capital Management, LLC [Member]
Investments in Funds, Noncurrent		314,000
Investment in Oxbridge RE NS [Member]
Investments in Funds, Noncurrent		$ 2,000,000

[1] Derived from audited consolidated financial statements

XML

Note 12 - Variable Interest Entities - Carrying Values of Assets and Liabilities of Delphax Included on the Company's Consolidated Balance Sheet (Details) - USD ($)		Jun. 30, 2018	Mar. 31, 2018
Cash and cash equivalents	[1]	$ 5,746,521	$ 4,803,238	[2]
Accounts receivable, net	[1]	19,120,159	15,157,855	[2]
Prepaid expenses and other	[1]	1,147,368	1,455,566	[2]
Total current assets		60,059,453	61,671,108	[2]
Total assets		97,114,952	97,146,886	[2]
Accounts payable	[1]	14,887,263	10,181,143	[2]
Income tax payable	[1]	23,000	23,000	[2]
Accrued expenses	[1]	10,418,865	11,743,973	[2]
Short-term Debt, Total		9,544,732	9,229,690	[2]
Total current liabilities		34,873,860	31,177,806	[2]
Total liabilities		67,596,210	70,910,863	[2]
Delphax [Member] | Reportable Legal Entities [Member]
Cash and cash equivalents		371,831	241,430
Accounts receivable, net		41,150	316,542
Prepaid expenses and other		58,898	72,269
Total current assets		471,879	630,241
Other tax receivables-long-term		311,000	311,000
Total assets		782,879	941,241
Accounts payable		2,160,817	2,145,847
Income tax payable		11,312	11,312
Accrued expenses		3,180,724	3,244,514
Short-term Debt, Total		1,766,949	1,788,285
Total current liabilities		7,119,802	7,189,958
Total liabilities		7,119,802	7,189,958
Net Assets		$ (6,336,923)	$ (6,248,717)

[1] Amounts related to Delphax as of June 30, 2018 and March 31, 2018, respectively.

[2] Derived from audited consolidated financial statements

XML

Note 12 - Variable Interest Entities - Revenue and Expenses of Delphax Included in the Company's Consolidated Statements of Operations (Details) - USD ($)	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Revenues	$ 60,867,469	$ 47,697,373
General and administrative	8,584,803	6,584,668
Research and development		195,653
Depreciation, amortization and impairment	1,495,401	398,827
	58,263,767	45,484,805
Operating Income (Loss)	2,603,702	2,212,568
Non-operating Expenses, net	1,065,409	(608,688)
Income (Loss) Before Income Taxes	3,669,111	1,603,880
Income Tax Expense (Benefit), Total	387,000	374,000
Net Income (Loss)	3,282,111	1,229,880
Delphax [Member]
Revenues		3,131,381
Cost of sales		1,501,056
General and administrative	52,260	505,945
Research and development		195,653
Depreciation, amortization and impairment		4,691
	52,260	2,207,345
Operating Income (Loss)	(52,260)	924,036
Non-operating Expenses, net	(87,917)	(387,797)
Income (Loss) Before Income Taxes	(140,177)	536,239
Income Tax Expense (Benefit), Total
Net Income (Loss)	$ (140,177)	$ 536,239

XML

Note 13 - Geographical Information - Long-lived Assets By Geographic Region (Details) - USD ($)	Jun. 30, 2018	Mar. 31, 2018
Non-current Assets	$ 19,417,752	$ 20,273,171
UNITED STATES
Non-current Assets	5,357,615	5,209,831
AUSTRALIA
Non-current Assets	4,793
Non-US [Member]
Non-current Assets	14,060,137	15,063,340
MEXICO
Non-current Assets	3,934,399	4,352,257
ROMANIA
Non-current Assets	3,459,673	3,626,136
NETHERLANDS
Non-current Assets	$ 6,661,272	$ 7,084,947

XML

Note 13 - Geographical Information - Revenue by Geographic Areas (Details) - USD ($)	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Revenues	$ 60,867,469	$ 47,697,373
UNITED STATES
Revenues	54,662,311	40,801,228
Non-US [Member]
Revenues	$ 6,205,158	$ 6,896,145

XML

Note 14 - Segment Information (Details Textual)	3 Months Ended
	Jun. 30, 2018
Number of Operating Segments	6

XML

Note 14 - Segment Information - Segment Data (Details) - USD ($)	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Revenues	$ 60,867,469	$ 47,697,373
Operating Income (Loss)	2,603,702	2,212,568
Capital Expenditures	459,575	489,995
Depreciation and Amortization	1,495,401	398,827
Corporate, Non-Segment [Member]
Revenues	474,205	326,279
Operating Income (Loss)	(1,729,200)	(863,018)
Capital Expenditures	77,230	459,653
Depreciation and Amortization	145,295	74,159
Intersegment Eliminations [Member]
Revenues	(1,141,536)	(291,532)
Operating Income (Loss)	5,803	1,326
Capital Expenditures	(1,325)	(1,326)
Overnight Air Cargo [Member]
Revenues	17,640,658	16,742,175
Overnight Air Cargo [Member] | Operating Segments [Member]
Revenues	17,640,658	16,742,175
Operating Income (Loss)	1,056,692	816,666
Capital Expenditures	5,996
Depreciation and Amortization	22,763	31,016
Ground Equipment Sales [Member]
Revenues	6,384,781	5,949,656
Ground Equipment Sales [Member] | Operating Segments [Member]
Revenues	6,387,114	5,949,656
Operating Income (Loss)	393,500	165,794
Capital Expenditures	140,090
Depreciation and Amortization	91,349	132,880
Ground Equipment Sales [Member] | Operating Segments [Member] | Domestic [Member]
Revenues	5,292,017	5,276,366
Ground Equipment Sales [Member] | Operating Segments [Member] | International [Member]
Revenues	1,095,097	673,290
Ground Support Services [Member]
Revenues	9,047,640	9,113,073
Ground Support Services [Member] | Operating Segments [Member]
Revenues	9,047,640	9,113,073
Operating Income (Loss)	(87,724)	356,824
Capital Expenditures	52,438	25,365
Depreciation and Amortization	125,055	111,631
Printing Equipment and Maintenance [Member]
Revenues	298,823	3,131,381
Printing Equipment and Maintenance [Member] | Operating Segments [Member]
Revenues	302,713	3,131,381
Operating Income (Loss)	(318,278)	924,036
Capital Expenditures
Depreciation and Amortization	14,331	4,691
Printing Equipment and Maintenance [Member] | Operating Segments [Member] | Domestic [Member]
Revenues	194,792	1,443,982
Printing Equipment and Maintenance [Member] | Operating Segments [Member] | International [Member]
Revenues	107,921	1,687,399
Commercial Jet Engines [Member] | Operating Segments [Member]
Revenues	28,156,675	12,726,341
Operating Income (Loss)	3,282,908	810,940
Capital Expenditures	183,821	4,977
Depreciation and Amortization	1,097,933	45,776
Commercial Jet Engines [Member] | Operating Segments [Member] | Domestic [Member]
Revenues	23,154,535	8,190,885
Commercial Jet Engines [Member] | Operating Segments [Member] | International [Member]
Revenues	$ 5,002,140	$ 4,535,456

XML

Note 15 - Commitments and Contingencies (Details Textual) - Contrail Aviation Inc. [Member] - USD ($)	Jun. 30, 2018	Jul. 18, 2016
Business Combination, Contingent Consideration, Liability, Total	$ 1,955,000
Accrued Expense [Member]
Business Combination, Contingent Consideration, Liability, Current	1,500,000
Other Noncurrent Liabilities [Member]
Business Combination, Contingent Consideration, Liability, Noncurrent	$ 455,000
Contrail Aviation Support LLC. [Member]
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value High, Per Year		$ 1,500,000
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High		$ 3,000,000