Equity Method Investments

9 Months Ended

Dec. 31, 2022

Equity Method Investments and Joint Ventures [Abstract]

The Company’s investment in Insignia Systems, Inc. - NASDAQ: ISIG (“Insignia”) is accounted for under the equity method of accounting. The Company has elected a three-month lag upon adoption of the equity method. As of December 31, 2022, the number of Insignia's shares owned by the Company was 0.5 million, representing approximately 27.3% of the outstanding shares. During the fiscal year ended March 31, 2021, due to loss attributions and impairments taken in prior fiscal years, the Company's net investment basis in Insignia was reduced to $0. On August 23, 2021, Insignia restated its 10-K for the fiscal year ended December 31, 2020 and its 10-Q for the quarter ended March 31, 2021. The Company evaluated these restatements and determined that they would not result in any additional impact on the Company's condensed consolidated financial statements. During the three months ended September 30, 2022, Insignia recorded net income of $11.8 million, which was primarily driven by a gain on litigation settlement of $12.0 million. As a result, during the three months ended December 31, 2022, the Company's share of Insignia's net income for three months ended September 30, 2022 was $3.2 million. The Company applied $1.4 million to offset the cumulative value of unrecorded share of losses, resulting in net income recognition of $1.8 million.

The Company's 20.1% investment in Cadillac Casting, Inc. ("CCI") is accounted for under the equity method of accounting. Due to the differing fiscal year-ends, the Company has elected a three-month lag to record the CCI investment at cost, with a basis difference of $0.3 million. The Company recorded income of $0.3 million and $1.0 million as its share of CCI's net income for the three and nine months ended December 31, 2022, along with a basis difference adjustment of $12.0 thousand and $37.0 thousand, respectively. The Company's net investment basis in CCI is $3.4 million as of December 31, 2022. During the quarter ended December 31, 2022, the Company also paid off the $2.0 million promissory note payable to CCI. See Note 12.

Summarized unaudited financial information for the Company's equity method investees for the three and nine months ended September 30, 2022 and 2021 is as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Revenue	$	37,532	$	29,408	$	111,522	$	87,396
Gross Profit	4,045		1,256		13,210		3,160
Operating income (loss)	13,382		(1,339)		17,172		(6,544)
Net income (loss)	13,375		(1,434)		16,180		(5,847)
Net income (loss) attributable to Air T, Inc. stockholders	$	2,183	$	(110)	$	2,926	$	(678)