UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

x	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2019
☐	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 x                    No☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

Yes x                    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 x	Smaller reporting company x
	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 x

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

Common Stock	Common Shares, par value of $.25 per share
Outstanding Shares at August 2, 2019	3,030,173

AIR T, INC. AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

		Page
	PART I
Item 1.	Financial Statements
	Condensed Consolidated Statements of Income (Unaudited) Three Months Ended June 30, 2019 and 2018	3
	Condensed Consolidated Statements of Comprehensive Income (Unaudited) Three Months Ended June 30, 2019 and 2018	4
	Condensed Consolidated Balance Sheets June 30, 2019 (Unaudited) and March 31, 2019	5
	Condensed Consolidated Statements of Cash Flows (Unaudited) Three Months Ended June 30, 2019 and 2018	7
	Condensed Consolidated Statements of Equity (Unaudited) Three Months Ended June 30, 2019 and 2018	9
	Notes to Condensed Consolidated Financial Statements (Unaudited)	11
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
	PART II
Item1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 6.	Exhibits	34
	Signatures	35
	Exhibit Index
	Certifications
	Interactive Data Files

2

Item 1. Financial Statements

AIR T, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTSOF INCOME

(UNAUDITED)

	Three Months Ended June 30,
	2019			2018
Operating Revenues:
Overnight air cargo	$	18,319,682		$	17,640,658
Ground equipment sales	12,248,891			6,384,781
Ground support services	8,516,800			9,047,640
Printing equipment and maintenance	64,270			298,823
Commercial jet engines and parts	16,326,905			27,320,175
Corporate and other	227,987			175,392
	55,704,535			60,867,469
Operating Expenses:
Overnight air cargo	16,518,823			15,174,396
Ground equipment sales	9,730,856			4,937,312
Ground support services	6,963,662			7,805,209
Printing equipment and maintenance	39,047			145,528
Commercial jet engines and parts	8,285,769			20,121,118
General and administrative	10,919,320			8,584,803
Depreciation and amortization	2,026,600			1,485,055
Impairment	6,686			10,346
Loss on sale of property and equipment	2,073			—
	54,492,836			58,263,767
Operating Income	1,211,699			2,603,702
Non-operating Income (Expense):
Gain on sale of marketable securities	36,460			—
Foreign currency gain (loss), net	35,755			(2,182		)
Other-than-temporary impairment loss on investments	(814,558		)	—
Other investment income (loss), net	162,957			(315,507		)
Interest expense	(1,023,622		)	(707,199		)
Unrealized gain on interest rate swap	—			97,337
Gain on settlement of bankruptcy	4,509,302			—
Bargain purchase acquisition gain	34,244			1,983,777
Income (loss) from equity method investments	(320,578		)	9,183
	2,619,960			1,065,409
Income Before Income Taxes	3,831,659			3,669,111
Income Tax Expense (Benefit)	(324,000		)	387,000
Net Income	4,155,659			3,282,111
Net (Income) Attributable to Non-controlling
Interests	$	(2,373,307	)	$	(453,417	)
Net Income Attributable to Air T, Inc. Stockholders	$	1,782,352		$	2,828,694
Income Per Share:
Basic	$	0.79		$	0.92
Diluted	$	0.79		$	0.92
Weighted Average Shares Outstanding:
Basic	2,252,698			3,065,411
Diluted	2,256,868			3,074,547

See notes to condensed consolidated financial statements.

3

AIR T, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OFCOMPREHENSIVEINCOME

(UNAUDITED)

	Three Months Ended June 30, 2019
	2019			2018
Net income	$	4,155,659		$	3,282,111
Other comprehensive income (loss):
Foreign currency translation gain (loss)	(18,130		)	47,660
Unrealized loss on interest rate swaps, net of tax of $52,316 and $0 respectively	(176,038		)	—
Total Other Comprehensive Income (Loss)	(194,168		)	47,660
Total Comprehensive Income	3,961,491			3,329,771
Comprehensive Income Attributable to Non-controlling Interests	(2,385,532		)	(470,569		)
Comprehensive Income Attributable to Air T, Inc. Stockholders	$	1,575,959		$	2,859,202

See notes to condensed consolidated financial statements.

4

AIR T, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2019		March 31, 2019
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents (Delphax $9,430 and $12,315)*	$	16,196,626	$	12,524,321
Marketable securities	1,752,727		1,760,052
Restricted cash	68,979		123,409
Restricted investments	796,958		830,925
Accounts receivable, net of allowance for doubtful accounts of $574,086 and $754,108 (Delphax $291,337 and $294,296)*	23,723,077		19,077,248
Notes and other receivables-current	7,170,143		5,026,549
Income tax receivable	883,131		158,446
Inventories, net	36,528,777		29,967,037
Prepaid expenses and other (Delphax $9,672 and $58,164)*	1,795,614		1,880,126
Total Current Assets	88,916,032		71,348,113
Assets on lease, net of accumulated depreciation of $6,397,157 and $6,688,630	17,982,582		25,164,497
Property and equipment, net of accumulated depreciation of $5,977,699 and $5,665,498	4,752,051		4,817,912
Right-of-use assets	10,071,405		—
Cash surrender value of life insurance policies, net of policy loans	101,259		122,062
Other tax receivables-long-term (Delphax $0 and $311,000)*	—		311,000
Deferred income taxes	600,303		547,987
Investments in funds	318,020		463,892
Investments in securities	557,329		621,610
Equity method investments	4,475,738		5,610,874
Other assets	297,507		491,328
Intangible assets, net of accumulated amortization of $2,207,571 and $2,156,192	1,161,111		1,225,257
Goodwill	4,417,605		4,417,605
Total Assets	$	133,650,942	$	115,142,137
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable (Delphax $96,109 and $2,134,053)*	$	13,296,498	$	12,552,724
Income tax payable	550,727		661,690
Accrued payroll and related items (Delphax $401,275 and $3,146,395 )*	2,729,056		8,910,245
Customer deposits	2,794,277		1,520,000
Accrued insurance liability	1,254,396		1,119,853
Other accrued expenses (Delphax $0 and $11,312)*	3,905,819		2,953,176
Deferred income	5,599,423		341,098
Current portion of long-term debt	27,774,151		24,735,224
Short-term lease liability	2,486,842		—
Total Current Liabilities	60,391,189		52,794,010
Long-term debt	36,285,910		32,917,765
Long-term lease liability	8,071,541		—
Other non-current liabilities	1,229,495		596,598
Total Liabilities	105,978,135		86,308,373
Redeemable non-controlling interest	6,685,000		5,476,000
Commitments and contingencies (Note 17)

5

Equity:
Air T, Inc. Stockholders' Equity:
Preferred stock, $1.00 par value, 50,000 shares authorized	—			—
Common stock, $.25 par value; 4,000,000 shares authorized, 3,015,087 and 2,022,637 shares issued and outstanding	753,770			505,657
Additional paid-in capital	1,629,202			2,866,695
Retained earnings	17,970,387			21,191,126
Accumulated other comprehensive loss	(411,479		)	(205,086		)
Total Air T, Inc. Stockholders' Equity	19,941,880			24,358,392
Non-controlling Interests	1,045,927			(1,000,628		)
Total Equity	20,987,807			23,357,764
Total Liabilities and Equity	$	133,650,942		$	115,142,137

* Amounts related to Delphax as of June 30, 2019 and March 31, 2019, respectively.

See notes to condensed consolidated financial statements.

6

AIR T, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three Months Ended June 30,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	4,155,659		$	3,282,111
Adjustments to reconcile net income to net cash provided by operating activities:
(Gain) Loss on sale of marketable securities	(36,460		)	10,828
Loss on sale of property and equipment	2,073			1,661
Change in inventory reserves	(4,087		)	91,547
Change in accounts receivable reserves	(180,022		)	(45,628		)
Depreciation and  amortization	2,033,286			1,495,401
Amortization of debt issuance costs	73,467			—
Impairment of investment	814,558			—
Change in cash surrender value of life insurance	20,803			(15,782		)
Gain on settlement of bankruptcy	(4,509,302		)	—
Gain on bargain purchase	(34,244		)	(1,983,777		)
Change in warranty reserve	335,632			(980		)
Unrealized loss on marketable securities	6,105			322,477
Unrealized gain on interest rate swap	—			(97,337		)
Change in operating assets and liabilities:
Accounts receivable	(4,254,064		)	29,564
Notes receivable and other non-trade receivables	(2,046,291		)	(2,221,930		)
Inventories	2,374,836			11,319,597
Prepaid expense and other assets	677,015			288,286
Accounts payable	2,801,237			3,942,185
Accrued expenses	3,898,519			(1,982,397		)
Income taxes payable/receivable	(835,646		)	205,583
Non-current liabilities	94,482			75,525
Total adjustments	1,231,897			11,434,823
Net cash provided by operating activities	5,387,556			14,716,934
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities	(27,211		)	(784,443		)
Proceeds from sale of marketable securities	309,012			—
Acquisition of businesses, net of cash acquired	(500,000		)	(3,325,700		)
Cash used for equity method investments	—			(197,532		)
Investment in reinsurance entity	—			(2,000,000		)
Capital expenditures related to property & equipment	(297,967		)	(459,575		)
Capital expenditures related to assets on lease	(3,298,343		)	—
Proceeds from sale of property and equipment	33,995			50,602
Net cash used in investing activities	(3,780,514		)	(6,716,648		)

7

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from lines of credit	24,446,825			28,933,742
Payments on lines of credit	(17,143,130		)	(38,156,091		)
Proceeds from term loan	—			3,400,000
Payments on term loan	(7,026,081		)	(1,404,800		)
Debt issuance costs	(46,319		)	(35,702		)
Distribution to non-controlling member	(115,000		)	(47,051		)
Payments for repurchase of stock	(126,317		)	—
Proceeds from exercise of warrants	2,018,217			—
Net cash provided by financing activities	2,008,195			(7,309,902		)
Effect of foreign currency exchange rates on cash and cash equivalents	2,638			2,072
NET INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	3,617,875			692,456
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD	12,647,730			5,072,897
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	16,265,605		$	5,765,353
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Non-cash capital expenditures related to property & equipment	$	71,703		$	—
Equipment leased to customers transferred to inventory	8,818,109			234,151
Issuance of Debt - Trust Preferred Securities	4,000,000			—
Issuance of warrant liability	840,000			—
Exercise of warrants	(84,092		)	—
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest	678,610			629,264
Income taxes	29,634			181,417

See notes to condensed consolidated financial statements.

8

AIR T, INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(UNAUDITED)

	Equity
	Air T, Inc. Stockholders' Equity
	Common Stock			Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive (Loss)			Non-controlling Interests			Total Equity
	Shares	Amount
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
Reclassification of unrealized loss on marketable securities, net of tax	—	—		—		(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

	Equity
	Air T, Inc. Stockholders' Equity
	Common Stock					Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Non-controlling Interests			Total Equity
	Shares		Amount
Balance, March 31, 2019	2,022,637		$	505,657		$	2,866,695		$	21,191,126		$	(205,086	)	$	(1,000,628	)	$	23,357,764
Net income*	—		—			—			1,782,352			—			2,034,330			3,816,682
Repurchase of Common Stock	(17,424	)	(4,356		)	—			(121,961		)	—			—			(126,317		)
Stock Split	1,009,874		252,469			(252,469		)	—			—			—			—
Issuance of Debt - Trust Preferred Securities	—		—			—			(4,000,000		)	—			—			(4,000,000		)
Issuance of Warrants									(840,000		)							(840,000		)
Adoption of ASC 842 - Leasing	—		—			—			(41,130		)	—			—			(41,130		)
Unrealized loss on interest rate swaps, net of tax	—		—			—			—			(176,038		)	—			(176,038		)
Foreign currency translation gain (loss)	—		—			—			—			(30,355		)	12,225			(18,130		)
Adjustment to fair value of redeemable non-controlling interest	—		—			(985,024		)	—			—			—			(985,024		)
Balance, June 30, 2019	3,015,087		$	753,770		$	1,629,202		$	17,970,387		$	(411,479	)	$	1,045,927		$	20,987,807

9

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

See notes to condensed consolidated financial statements.

10

AIR T, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Financial Statement Presentation

The condensed consolidated financial statements of Air T, Inc. (“Air T”, the “Company”, “we”, “us” or “our”) have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the following disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the results for the periods presented have been made.

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, 2019. The results of operations for the period ended June 30, 2019 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.

RecentlyAdoptedAccounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) as amended by multiple standards updates. The new standard provides that a lessee should recognize the assets and the liabilities that arise from leases, including operating leases. Under the new requirements, a lessee will recognize in the statement of financial position a liability to make lease payments (the lease liability) and the right-of-use asset representing the right to the underlying asset for the lease term. For leases with a term of twelve months or less, the lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities.

The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within such fiscal year, with early adoption permitted. Topic 842 permits two transition methods: (1) a modified retrospective transition method requiring retrospective adjustment of each comparative presented with an adjusting entry at the beginning of the earliest comparative period presented and (2) a modified retrospective approach with no restatement of prior periods and an adjusting entry as of the effective date. Under both transition methods, entities may elect certain transition practical expedients that would be required to be applied to all leases.

The Company adopted the standard in the fiscal year beginning April 1, 2019 using the modified retrospective transition method that does not require retrospective adjustment of the comparative periods. The Company reviewed existing leases to determine the impact of the adoption of the standard on its consolidated financial statements. Implementation had an immaterial cumulative effect on retained earnings. Adoption resulted in the recognition of right-of-use assets of approximately $10.7 million, and lease liabilities of approximately $11.2 million.

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

Recently Issued Accounting Pronouncements

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. For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein. The Company expects the adoption of the standard will not have a material impact 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

11

tests performed on testing dates after January 1, 2017. The Company expects the adoption of the standard will not have a material impact on its consolidated financial statements and disclosures.

In August 2018, the FASB amended the Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure

Requirements for Fair Value Measurement Topic of the Accounting Standards Codification. The amendment is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendment includes different transition requirements based on the disclosure topic. Changes to disclosure requirements for unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other required disclosure changes should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of this update. An entity is permitted to early adopt any removed or modified disclosures upon issuance of the update and delay adoption of the additional disclosures until their effective date. The Company expects the adoption of the standard will not have a material impact on its consolidated financial statements and disclosures.

In August 2018, the FASB amended the Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s

Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract Topic of the Accounting Standards Codification. The amendment is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other entities, the amendments in this update are effective for annual reporting periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021. Early adoption of the amendments in the update is permitted, including adoption in any interim period, for all entities. The amendments in the update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company expects the adoption of the standard will not have a material impact on its consolidated financial statements and disclosures.

In October 2018, the FASB updated the Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable

Interest Entities of the Accounting Standards Codification. The amendments in this update affect reporting entities that are required to

determine whether they should consolidate a legal entity under the guidance within the Variable Interest Entities Subsections of Subtopic 810-10, Consolidation—Overall. Indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. The amendments in this update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company expects the adoption of the standard will not have a material impact on its consolidated financial statements and disclosures.

2. RevenueRecognition

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

The following is a description of the Company’s performance obligations:

12

Type of Revenue	Nature, Timing of Satisfaction of Performance Obligations, and Significant Payment Terms
Product Sales	The Company generates revenue from sales of various distinct products such as parts, aircraft equipment, printing equipment, jet engines, airframes, and scrap metal to its customers. A performance obligation is created when the Company accepts an order from a customer to provide a specified product. Each product ordered by a customer represents a performance obligation. The Company recognizes revenue when obligations under the terms of the contract are satisfied; generally, this occurs at a point-in-time upon shipment or when control is transferred to the customer. Transaction prices are based on contracted terms, which are at fixed amounts based on standalone selling prices. While the majority of the Company's contracts do not have variable consideration, for the limited number of contracts that do, the Company records revenue based on the standalone selling price less an estimate of variable consideration (such as rebates, discounts or prompt payment discounts). The Company estimates these amounts based on the expected incentive amount to be provided to customers and reduces revenue accordingly. Performance obligations are short-term in nature and customers are typically billed upon transfer of control. The Company records all shipping and handling fees billed to customers as revenue. The terms and conditions of the customer purchase orders or contracts are dictated by either the Company’s standard terms and conditions or by a master service agreement or by the contract.
Support Services	The Company provides a variety of support services such as aircraft maintenance, printer maintenance, and short-term repair services to its customers. Additionally, the Company operates certain aircraft routes on behalf of FedEx. A performance obligation is created when the Company agrees to provide a particular service to a customer. For each service, the Company recognizes revenues over time as the customer simultaneously receives the benefits provided by the Company's performance. This revenue recognition can vary from when the Company has a right to invoice to the output or input method depending on the structure of the contract and management’s analysis. For repair-type services, the Company records revenue over-time based on an input method of costs incurred to total estimated costs. The Company believes this is appropriate as the Company is enhancing an asset that the customer controls as repair work, such as labor hours are incurred, and parts installed, is being performed. The vast majority of repair-services are short term in nature and are typically billed upon completion of the service. Some of the Company’s contracts contain a promise to stand ready as the Company is obligated to perform certain maintenance or administrative services. For most of these contracts, the Company applies the 'as invoiced' practical expedient as the Company has a right to consideration from the customer in an amount that corresponds directly with the value of the entity's performance completed to date. A small number of contracts are accounted for as a series and recognized equal to the amount of consideration the Company is entitled to less an estimate of variable consideration (typically rebates). These services are typically ongoing and are generally billed on a monthly basis.

In addition to the above type of revenues, the Company also has Leasing Revenue, which is in scope under Topic 842 (Leases) and out of scope under Topic 606 and Other Revenues (Freight, Management Fees, etc.) which are immaterial for disclosure under Topic 606.

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The following table summarizes disaggregated revenues by type:

	Three Months Ended June 30, 2019		Three Months Ended June 30, 2018
Product Sales
Air cargo	$	5,414,377	$	5,519,611
Ground equipment sales	12,002,366		6,169,103
Ground support services	2,266,859		2,422,581
Commercial jet engines and parts	11,170,632		25,029,114
Printing equipment and maintenance	48,440		286,642
Corporate and other	—		—
Support Services
Air cargo	12,894,182		12,096,874
Ground equipment sales	104,545		100,592
Ground support services	6,213,354		6,605,265
Commercial jet engines and parts	1,410,027		965,826
Printing equipment and maintenance	10,745		7,658
Corporate and other	40,552		—
Leasing Revenue
Air cargo	—		—
Ground equipment sales	20,357		31,002
Ground support services	—		—
Commercial jet engines and parts	3,714,048		1,201,510
Printing equipment and maintenance	—		—
Corporate and other	45,418		40,067
Other
Air cargo	11,123		24,174
Ground equipment sales	121,623		84,084
Ground support services	36,588		19,795
Commercial jet engines and parts	32,197		123,724
Printing equipment and maintenance	5,085		4,523
Corporate and other	142,017		135,324
Total	$	55,704,535	$	60,867,469

The following table summarizes total revenues by segment:

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	Three Months Ended June 30, 2019		Three Months Ended June 30, 2018
Air cargo	$	18,319,682	$	17,640,658
Ground equipment sales	12,248,891		6,384,781
Ground support services	8,516,800		9,047,640
Commercial jet engines and parts	16,326,905		27,320,175
Printing equipment and maintenance	64,270		298,823
Corporate and other	227,987		175,392
Total	$	55,704,535	$	60,867,469

See Note 15 for the Company's disaggregated revenues by geographic region and Note 16 for the Company’s disaggregated revenues by segment. These notes disaggregate revenue recognized from contracts with customers into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

Contract Balances and Costs

Contract liabilities relate to deferred income and advanced customer deposits with respect to product sales. The following table presents outstanding contract liabilities and the amount of outstanding April 1, 2019 contract liabilities that were recognized as revenue during the quarter June 30, 2019:

	Outstanding contract liabilities		Outstanding contract liabilities as of April 1, 2019 Recognized as Revenue
As of June 30, 2019	$	8,393,700
As of April 1, 2019	$	1,866,843
For the quarter ended June 30, 2019			$	447,341

Contract assets primarily relate to deposits paid to customers. The following table presents the amount of contract assets as of April 1, 2019 and June 30, 2019:

	Contract assets
As of June 30, 2019	$	4,621,096
As of April 1, 2019	$	1,743,460

3. BusinessCombinations

Acquisition of Worthington Aviation Parts, Inc.

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

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

Earnest money	$	50,000
Cash consideration	3,300,000
Cash acquired	(24,301		)
Total consideration	$	3,325,699

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

	May 4, 2018
ASSETS
Accounts receivable	$	1,929,120
Inventories	4,564,437
Other current assets	149,792
Property and equipment	391,892
Other assets	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

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

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

4. 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:

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	June 30, 2019		March 31, 2019
Cash and cash equivalents	$	16,196,626	$	12,524,321
Restricted cash	68,979		123,409
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$	16,265,605	$	12,647,730

5. Cash Surrender Value of Life Insurance

The Company is the beneficiary of corporate-owned life insurance policies on certain former employees with a net cash surrender value of approximately $101,259 and $122,062 at June 30, 2019 and March 31, 2019, respectively.

6.    Income Taxes

During the three months ended June 30, 2019, the Company recorded $324,000 in income tax benefit at an effective rate of (8.46)%. 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 months ended June 30, 2019 were the change in valuation allowance related to Delphax, the estimated benefit for the exclusion of income for the Company's captive insurance company subsidiary under Section 831(b), the liquidation of Delphax UK and Delphax Canada as mentioned in Footnote 13 and the exclusion from the tax provision of the minority owned portion of the pretax income of Contrail Aviation Support, LLC.

During the three months ended June 30, 2018, the Company recorded $387,000 in income tax expense which resulted in an effective tax rate of 10.50%. The primary factors contributing to the difference between the federal statutory rate and the Company's effective tax rate for the three months ended June 30, 2018 were related to the estimated benefit for the exclusion of income for the Company's captive insurance company subsidiary afforded under Section 831(b) and the presentation of the tax impact of the Worthington bargain purchase gain and state income tax expense.

7. 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,
	2019		2018
Net Income Attributable to Air T, Inc. Stockholders	$	1,782,352	$	2,828,694
Income Per Share:
Basic	$	0.79	$	0.92
Diluted	$	0.79	$	0.92
Weighted Average Shares Outstanding:
Basic	2,252,698		3,065,411
Diluted	2,256,868		3,074,547

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

With respect to our June 30, 2019 Quarterly Report on Form 10-Q, the effect of the stock split was recognized retroactively in the stockholders’ equity accounts in the Condensed Consolidated Balance Sheets, and in all share data in the Condensed Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations. With respect to our March 31, 2019 Annual Report on Form 10-K, the effect of the stock split on per share amounts and weighted average common shares outstanding for each of the two fiscal years ended March 31, 2019 and March 31, 2018 are as follows:

	Fiscal year ended
	2019		2018
Net Income Attributable to Air T, Inc. Shareholders	1,339,995		2,277,109
Weighted-average common shares outstanding
Basic	3,052,124		3,064,209
Diluted	3,059,838		3,071,528
Basic earnings per common share	$	0.44	$	0.74
Diluted earnings per common share	$	0.44	$	0.74

8. Investments in Securities

As of June 30, 2019, the Company had a gross unrealized gain aggregating to $319,000 and gross unrealized losses aggregating to $268,000, which are included in the Consolidated Statement of Income.

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

9. Equity Method Investments

The Company’s investment in Insignia Systems, Inc. (“Insignia”) is accounted for under the equity method of accounting. The Company has elected a three-month lag upon adoption of the equity method. At June 30, 2019, the Company held approximately 3.5 million shares of Insignia’s common stock representing approximately 30% of the outstanding shares. For the quarter ended June 30, 2019, the Company recorded approximately $322,000 as its share of Insignia’s net loss for the three months ended March 31, 2019 along with a basis difference adjustment of approximately $24,000. In addition, due to the adverse financial results as reported in Insignia's Form 10Q for the quarter ended March 31, 2019, the Company determined that it has suffered from an other-than-temporary impairment in its investment in Insignia . As such, the Company recorded an impairment charge of $814,558 during the quarter ended June 30, 2019. After the impairment, the Company's net investment basis in Insignia is $4,001,106 as of June 30, 2019.

Summarized unaudited financial information for Insignia for the three months ended March 31, 2019 and March 31, 2018 is as follows:

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	Three Months Ended March 31, 2019			Three Months Ended March 31, 2018
Revenue	$	5,140,000		$	7,419,000
Gross Profit	774,000			2,746,000
Operating income (loss)	(1,337,000		)	232,000
Net income (loss)	(1,096,000		)	164,000
Net income (loss) attributable to Air T, Inc. stockholders	$	(322,000	)	$	5,000

10. Inventories

Inventories consisted of the following:

	June 30, 2019			March 31, 2019
Ground support service parts	$	2,580,196		$	2,553,949
Ground equipment manufacturing:
Raw materials	3,017,469			2,497,876
Work in process	1,351,370			1,659,516
Finished goods	643,763			972,542
Printing equipment and maintenance
Raw materials	—			401,103
Finished goods	1,438,161			1,047,893
Commercial jet engines and parts	27,691,133			21,031,558
Total inventories	$	36,722,092		$	30,164,437
Reserves	(193,315		)	(197,400		)
Total inventories, net of reserves	$	36,528,777		$	29,967,037

11. Leases

The Company has operating leases for the use of real estate, machinery, and office equipment. The majority of our leases have a lease term of 2 to 5 years; however, we have certain leases with longer terms of up to 30 years. Many of our leases include options to extend the lease for an additional period.

The lease term for all of the Company’s leases includes the non-cancellable period of the lease, plus any additional periods covered by either a Company option to extend the lease that the Company is reasonably certain to exercise, or an option to extend the lease controlled by the lessor that is considered likely to be exercised.

Payments due under the lease contracts include fixed payments plus, for some of our leases, variable payments. Variable payments are typically operating costs associated with the underlying asset and are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed occurs. Our leases do not contain residual value guarantees.

The Company has elected to combine lease and non-lease components as a single component and not to recognize leases on the balance sheet with an initial term of one year or less.

The interest rate implicit in lease contracts is typically not readily determinable, and as such the Company utilizes the incremental borrowing rate to calculate lease liabilities, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

The components of lease cost for the quarter ended are as follows:

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	Three Months Ended June 30, 2019
Operating lease cost	$	819,854
Short-term lease cost	274,156
Variable lease cost	135,613
Sublease income	—
Total lease cost	$	1,229,623

Amounts reported in the consolidated balance sheets for leases where we are the lessee as of the quarter ended June 30, 2019 were as follows:

	June 30, 2019
Operating leases
Operating lease right-of-use assets	$	10,071,405
Operating lease liabilities	10,558,383
Weighted-average remaining lease term	12.08 years
Operating leases
Weighted-average discount rate	4.51		%
Operating leases

Maturities of lease liabilities under non-cancellable leases where we are the lessee as of the quarter ended June 30, 2019 are as follows:

	Operating Leases
2020 (excluding the three months ended June 30, 2019)	(2,267,538	)
2021	(2,122,870	)
2022	(1,621,902	)
2023	(1,268,783	)
2024	(691,886	)
2025	(457,798	)
Thereafter	(5,809,603	)
Total undiscounted lease payments	(14,240,380	)
Less: Interest	(3,023,181	)
Less: Discount	(658,816	)
Total lease liabilities	(10,558,383	)

At March 31, 2019, future minimum annual lease payments (foreign currency amounts translated using applicable March 31, 2019 exchange rates) are as follows:

Year ended March 31,
2020	3,133,000
2021	2,115,000
2022	1,625,000
2023	1,241,000
2024	692,000
Thereafter	6,267,000
Total minimum lease payments	15,073,000

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12.    Financing Arrangements

Borrowings of the Company and its subsidiaries are summarized below at June 30, 2019 and March 31, 2019, respectively. AirCo, Contrail Aviation (“Contrail”) are subsidiaries of the Company in the commercial jet engines and parts segment.

	June 30, 2019			March 31, 2019			Maturity Date	Interest Rate	Unused commitments
Revolver - MB&T	$	14,830,650		$	12,403,213		November 30, 2019	Prime - 1%	$2,169,351
Term Note A - MB&T	8,500,000			8,750,000			January 1, 2028	1-month LIBOR + 2%
Term Note B - MB&T	4,250,000			4,375,000			January 1, 2028	4.5%
Term Note D - MB&T	1,590,400			1,607,200			January 1, 2028	1-month LIBOR + 2%
Debt - Trust Preferred Securities	6,102,310			—			June 7, 2049	8%
Air T Debt	35,273,360			27,135,413
Revolver - MB&T	—			3,820,000			May 21, 2019	7.5%	5,000,000
Revolver - MB&T	4,876,259			—			November 30, 2019	greater of 6.50% or Prime + 2%	5,123,741
Term Loan - MB&T	—			450,000			December 17, 2019	7.50%
Term Loan - MB&T	—			400,000			June 17, 2020	7.25%
Term Loan - Park State	2,100,000			2,100,000			June 17, 2020	8.50%
AirCo Debt	6,976,259			6,770,000
Revolver	—			—			May 5, 2019	1-month LIBOR + 3%	—
Term Loan	8,152,054			8,616,336			January 26, 2021	1-month LIBOR + 3.75%
Term Loan	14,000,000			15,500,000			September 14, 2021	1-month LIBOR + 3.75%
Contrail Debt - Old National	22,152,054			24,116,336
Total Debt	64,401,673			58,021,749
Less: Unamortized Debt Issuance Costs	(341,612		)	(368,760		)
Total Debt, net	$	64,060,061		$	57,652,989

At June 30, 2019, our contractual financing obligations, including payments due by period, are as follows:

Due by	Amount
June 30, 2020	$	27,774,151
June 30, 2021	17,319,212
June 30, 2022	3,567,200
June 30, 2023	1,567,200
June 30, 2024	1,567,200
Thereafter	12,606,710
	64,401,673
Less: Unamortized Debt Issuance Costs	(341,612		)
	$	64,060,061

On June 10, 2019, the Company completed a transaction with all holders of the Company’s Common Stock to receive a special, pro-rata distribution of three securities as enumerated below:

• A dividend of one additional share for every two shares already held (a 50% stock dividend, or the equivalent of a 3-for-2 stock split). See Footnote 7 for discussion.

• The Company issued and distributed to existing common shareholders an aggregate of 1,600,000 trust preferred capital security ("TruPs") shares (aggregate $4,000,000 stated value) and an aggregate of 8,400,000 warrants ("Warrants") (representing warrants to purchase $21,000,000 in stated value of TruPs). The Warrants are exercisable for one year from issuance.

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• The Company entered into an 8% Junior Subordinated Debenture (“Debenture”) to pay to Air T Funding ("the Trust") a principal sum of $4,000,000 on June 7, 2049, and to pay interest on said principal sum quarterly at the rate of 8.0% per annum. The Company's Debenture and the Trust's associated note receivable (the "Note") are eliminated in the Company's consolidated financial statements, and Debt - Trust Preferred Securities is presented as a component of long-term debt on our consolidated balance sheets.

The issuance of the TruPs and Warrants is disclosed on our consolidated statements of equity as well as within the supplemental non-cash disclosure of the Company's consolidated statements of cash flows. As of June 30, 2019, 840,924 Warrants have been exercised. As a result, the amount outstanding on the Company's Debt - Trust Preferred Securities is $6,102,310 as of June 30, 2019.

At June 30, 2019, the Company had Warrants outstanding and exercisable to purchase 7,559,076 shares of its TruPs at an exercise price of $2.40 per share, which represents a discount to the $2.50 face value of each Trust Preferred Security. The Warrants will expire on June 7, 2020 or earlier upon redemption or liquidation.

	Fair Value Measurement as of June 30, 2019
Warrant liability (Level 2)	$	755,907

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

On April 3, 2019, AirCo entered into a revolving line of credit agreement with MBT in the amount of $10,000,000 with a maturity date of November 30, 2019. The annual interest rate is stated at the greater of 6.50% or the sum of the Prime Rate plus 2.00%. AirCo used the proceeds from this transaction to pay off the outstanding balances on their term loans.

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.

As part of the Company’s interest rate risk management strategy, the Company, from time to time, uses derivative instruments to minimize significant unanticipated earnings fluctuations that may arise from rising variable interest rate costs associated with existing borrowings (Air T Term Note A and Term Note D). To meet these objectives, the Company entered into interest rate swaps with notional amounts consistent with the outstanding debt to provide a fixed rate of 4.56% and 5.09%, respectively, on Term Notes A and D. The swaps mature in January 2028.

As of August 1, 2018, these swap contracts were designated as cash flow hedging instruments and qualified as effective hedges in accordance with ASC 815-30. The effective portion of changes in the fair value on these instruments is recorded in other comprehensive income and is reclassified into the consolidated statement of income as interest expense in the same period in which the underlying hedge transaction affects earnings. As of June 30, 2019 and March 31, 2019, the fair value of the interest-rate swap contracts was a liability of $456,000 and $227,000, respectively, which is included within other non-current liabilities in the consolidated balance sheets. During the three months ended June 30, 2019, the Company recorded a loss of approximately $176,038, net of tax, in the consolidated statement of comprehensive income for changes in the fair value of the instruments.

13. 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.

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The Company concluded that its investments in Delphax’s equity and debt, and its investment in the Delphax warrant, each constituted a variable interest. In addition, the Company concluded that it became the primary beneficiary of Delphax on November 24, 2015. The Company consolidated Delphax in its 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, 2019 and March 31, 2019:

	June 30, 2019			March 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	9,430		$	12,315
Accounts receivable, net	49,844			46,844
Other current assets	9,672			58,441
Total current assets	68,946			117,600
Other tax receivables-long-term				311,000
Total assets	$	68,946		$	428,600
LIABILITIES
Current liabilities:
Accounts payable	$	96,109		$	2,151,235
Accrued expenses	401,275			3,157,707
Short-term debt	—			1,749,779
Total current liabilities	497,384			7,058,721
Total liabilities	$	497,384		$	7,058,721
Net Liabilities	$	(428,438	)	$	(6,630,121	)

Upon petition by the Company, on August 8, 2017 the Ontario Superior Court of Justice in Bankruptcy and Insolvency adjudged Delphax Canada to be bankrupt. As a result, Delphax Canada ceased to have capacity to deal with its property, which then vested in the trustee in bankruptcy of Delphax Canada subject to the rights of secured creditors. As of June 30, 2019, the bankruptcy proceedings were finalized in accordance with Canadian law and, therefore, Delphax Canada was legally discharged of its liabilities. The conclusion of the bankruptcy proceedings also resulted in the dissolution of Delphax Canada. In addition, on June 11, 2019, the Company has also fully dissolved Delphax UK. As such, the only Delphax entity that remains in existence as of June 30, 2019 is Delphax France. The Company extinguished the assets and liabilities of Delphax Canada and Delphax UK during the quarter ended June 30, 2019 and recognized a gain on dissolution of entities of $4,509,302.

Delphax’s revenues and expenses are included in our consolidated financial statements beginning November 24, 2015 through June 30, 2019. Revenues and expenses prior to the date of initial consolidation were excluded. We have determined that the attribution of Delphax net income or loss should be based on consideration of all of Air T’s investments in Delphax and Delphax Canada. The Delphax warrant 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, 2019 and June 30, 2018 the attribution of Delphax losses to non-controlling interests was 33% and 33%, respectively.

The following table sets forth the revenue and expenses of Delphax prior to intercompany eliminations that are included in the Company’s condensed consolidated statement of income for the three months ended June 30, 2019 and 2018.

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	Three Months Ended June 30,
	2019			2018
Operating Revenues	$	—		$	—
Operating Expenses:
Cost of sales	—			—
General and administrative	72,748			52,260
	72,748			52,260
Operating Loss	(72,748		)	(52,260		)
Non-operating Income (Expenses), net	6,237,385			(87,917		)
Income (Loss) Before Income Taxes	6,164,637			(140,177		)
Income Taxes	—			—
Net Income (Loss)	$	6,164,637		$	(140,177	)

Unconsolidated Variable Interest Entities and Other Entities

As discussed in Note 3, BCCM Advisors holds equity interests in certain investment funds as of June 30, 2019 and March 31, 2019. The Company determined that the equity interests 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, 2019 is valued at approximately $318,020. The Company’s exposure to loss is limited to its initial investment.

As mentioned in Footnote 12, Financing Arrangements, the Company formed the Trust to issue and distribute TruPs and Warrants to our existing shareholders. The Company determined that it holds variable interest in the Trust and therefore, is the primary beneficiary of the Trust. As such, the Company consolidated the Trust as of June 30, 2019.

14. ShareRepurchase

On May 14, 2014, the Company announced that its Board of Directors had authorized a program to repurchase up to 750,000 shares of the Company’s common stock from time to time on the open market or in privately negotiated transactions, in compliance with SEC Rule 10b-18, over an indefinite period. During the three months ended June 30, 2019, the Company repurchased 17,424 shares at an aggregate cost of $126,317. These shares are reflected as retired as of June 30, 2019 in accordance with the intent of the authorized share repurchase program. The Company has reduced common stock and retained earnings to reflect the retirement of those shares.

15. Geographical information

Total property and equipment, including assets on lease, net of accumulated depreciation, located in the United States, the Company's country of domicile, and held outside the United States are summarized in the following table as of June 30, 2019 and March 31, 2019:

	June 30, 2019		March 31, 2019
United States	$	4,865,948	$	4,946,997
Foreign	17,868,685		25,035,412
Total property and equipment, net	$	22,734,633	$	29,982,409

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

	June 30, 2019		March 31, 2019
Australia	$	3,594	$	5,186
Mexico	2,262,967		2,680,825
Netherlands	5,350,275		5,541,072
China	10,251,849		16,808,329
Total property and equipment, net	$	17,868,685	$	25,035,412

Total revenue, in and outside the United States is summarized in the following table for the three months ended June 30, 2019 and June 30, 2018:

	June 30, 2019		June 30, 2018
United States	$	46,127,349	$	54,662,311
Foreign	9,577,186		6,205,158
Total revenue	$	55,704,535	$	60,867,469

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16.    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 and other. Segment data is summarized as follows:

	Three Months Ended June 30,
	2019			2018
Operating Revenues by Segment:
Overnight Air Cargo	$	18,319,682		$	17,640,658
Ground Equipment Sales:
Domestic	10,858,891			5,292,017
International	1,390,000			1,095,097
Total Ground Equipment Sales	12,248,891			6,387,114
Ground Support Services	8,516,800			9,047,640
Printing Equipment and Maintenance
Domestic	21,684			194,792
International	46,186			107,921
Total Printing Equipment and Maintenance	67,870			302,713
Commercial Jet Engines and Parts:
Domestic	8,938,715			23,154,535
International	8,141,000			5,002,140
Total Commercial Jet Engines and Parts	17,079,715			28,156,675
Corporate and other	598,988			474,205
Intercompany	(1,127,411		)	(1,141,536		)
Total	$	55,704,535		$	60,867,469
Operating Income (Loss):
Overnight Air Cargo	$	47,918		$	1,056,692
Ground Equipment Sales	1,347,378			393,500
Ground Support Services	213,081			(87,724		)
Printing Equipment and Maintenance	(456,199		)	(318,278		)
Commercial Jet Engines and Parts	1,909,029			3,282,908
Corporate and other	(1,869,296		)	(1,729,200		)
Intercompany	19,788			5,804
Total	$	1,211,699		$	2,603,702
Capital Expenditures:
Overnight Air Cargo	$	8,288		$	5,996
Ground Equipment Sales	10,402			140,090
Ground Support Services	47,608			52,438
Printing Equipment and Maintenance	—			—
Commercial Jet Engines and Parts	3,465,404			183,821
Corporate and other	60,224			77,230
Total	$	3,591,926		$	459,575
Depreciation, Amortization and Impairment:
Overnight Air Cargo	18,176			$	22,763
Ground Equipment Sales	52,380			91,349
Ground Support Services	86,252			125,055
Printing Equipment and Maintenance	2,225			14,331
Commercial Jet Engines and Parts	1,735,490			1,097,933
Corporate and other	140,088			145,295
Intercompany	(1,325		)	(1,325		)
Total	$	2,033,286		$	1,495,401

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17. 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 with a present value of $2,900,000 in the initial allocation of purchase price. This is based on the expectation that the earn-out will be paid at the maximum level. The Company has paid $2,500,000 of contingent consideration as of June 30, 2019 and the remaining liability of $497,000, which is entirely current, is included in the “Other accrued expenses” in the consolidated balance sheet as of June 30, 2019.

Contrail Aviation entered into an Operating Agreement (the “Operating Agreement”) with the Seller providing for the governance of and the terms of membership interests in Contrail Aviation and including put and call options (“Put/Call Option”). The Put/Call Option permits the Seller to require Contrail Aviation to purchase all of the Seller’s equity membership interests in Contrail Aviation commencing on the fifth anniversary of the acquisition, which is on July 18, 2021. The Company has presented this redeemable non-controlling interest in Contrail Aviation between the liabilities and equity sections of the accompanying consolidated balance sheets. In addition, the company has elected to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The fair value of the redeemable non-controlling interest is $6,685,000. The change in the redemption value for the three months ended June 30, 2019 is $1,209,000, of which $985,024 related to the change in fair value, which is reflected on our consolidated statements of equity.

18.     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.

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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”) is a holding company with a portfolio of operating businesses and financial assets. Our goal is to prudently and strategically diversify Air T’s earnings power and compound the growth in its free cash flow per share over time.

We currently operate in 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;

• Ground support services, which provides ground support equipment maintenance and facilities maintenance services to domestic airlines and aviation service providers across the United States;

• Commercial aircraft, engines and parts, which manages and leases aviation assets; supplies surplus and aftermarket commercial jet engine components; provides commercial aircraft disassembly/part-out services; commercial aircraft parts sales; procurement services and overhaul and repair services to airlines;

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

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

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. 

First Quarter Fiscal 2020 Compared to First Quarter Fiscal 2019

Consolidated revenue decreased by $5,162,934 (8%) to $55,704,535 for the three-month period ended June 30, 2019 compared to the same quarter in the prior fiscal year.

Following is a table detailing revenue by segment, net of intercompany during the three months ended December 31, 2018 compared to the same quarter in the prior fiscal year:

	Three Months Ended June 30,				Change
	2019		2018
Overnight Air Cargo	$	18,319,682	$	17,640,658	$	679,024		4	%
Ground Equipment Sales	12,248,891		6,384,781		5,864,110			92	%
Ground Support Services	8,516,800		9,047,640		(530,840		)	(6	)%
Commercial Jet Engines and Parts	16,326,905		27,320,175		(10,993,270		)	(40	)%
Printing Equipment and Maintenance	64,270		298,823		(234,553		)	(78	)%
Corporate and other	227,987		175,392		52,595			30	%
	$	55,704,535	$	60,867,469	$	(5,162,934	)	(8	)%

Revenues from the air cargo segment increased by $679,024 (4%) compared to the first quarter of the prior fiscal year. The increase was principally attributable to higher flight crew administrative fees and additional maintenance customers other than FedEx.

The ground equipment sales segment contributed approximately $12,248,891 and $6,384,781 to the Company’s revenues for the three-month periods ended June 30, 2019 and 2018 respectively, representing a $5,864,110 (92%) increase in the current quarter primarily driven by an increase of military and commercial deicers sales. At June 30, 2019, the ground equipment sales segment’s order backlog was $31.8 million compared to $17.5 million at June 30, 2018.

The ground support services segment contributed approximately $8,516,800 and $9,047,640 to the Company’s revenues for the three-month periods ended June 30, 2019 and 2018, respectively, representing a decrease of $(530,840) or (6)% decrease in the current quarter principally due to a reduction in business in the southeast region.

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The commercial jet engines and parts segment contributed $16,326,905 of revenues in the quarter ended June 30, 2019 compared to $27,320,175 in the comparable prior year quarter which is a decrease of $(10,993,270) or (40)%. The decrease is primarily attributable to the fact that Contrail had record sales of four engines during the prior year comparable quarter that did not recur in the current year quarter.

Revenues from the printing equipment and maintenance segment declined $(234,553)(78)% compared to the comparable prior quarter due to Delphax bankruptcy and dissolution as mentioned in Footnote 13.

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

	Three Months Ended June 30, 2019						Change
	2019			2018
Overnight Air Cargo	$	17,476		$	1,056,692		$	(1,039,216	)	-98	%
Ground Equipment Sales	1,347,378			393,079			$	954,299		243	%
Ground Support Services	213,081			(87,303		)	$	300,384		n/m
Commercial Jet Engines and Parts	1,887,894			3,213,180			$	(1,325,286	)	-41	%
Printing Equipment and Maintenance	(382,183		)	(241,070		)	$	(141,113	)	59	%
Corporate and other	(1,871,947		)	(1,730,876		)	$	(141,071	)	8	%
	$	1,211,699		$	2,603,702		$	(1,392,003	)	(53	)%

Consolidated operating income for the quarter ended June 30, 2019 was $1,211,699, a decrease of $(1,392,003) from operating income of $2,603,702 for the comparable quarter of the prior year.

Operating income for the air cargo segment decreased by $(1,039,216) (-98%) due primarily to additional pilot incentives and bonus expenses as a result of the nationwide pilot shortage.

The ground equipment sales segment operating income increased by $954,299 (243%) to $1,347,378. This increase was primarily attributable to the increased sales volume of military and commercial deicers.

The operating income for the ground support services segment increased by $300,384 to $213,081 for the current-year quarter compared to an operating loss of $(87,303) in the prior-year quarter due to operational improvements across the organization.

Operating results of the commercial jet engines and parts segment decreased to operating income of $1,887,894 in the current-year quarter compared to an operating income of $3,213,180 in the prior-year quarter. The change was primarily attributable to decreased sales at Contrail as explained above, in addition to a full quarter of operating expenses at Worthington in the current year quarter (Worthington was acquired in May 2018).

The operating loss in the printing equipment and maintenance segment declined to $(382,183) in the current-year quarter from $(241,070) in the prior-year quarter primarily attributable to expenses associated with the bankruptcy of Delphax Canada.

Overall, operating expenses decreased by $3,770,931 (6%) to $54,492,836 in the current year quarter compared to the equivalent prior year period. The decrease in operating expenses was primarily driven by the commercial jet engines and parts segment, which experienced a decrease of $(11,835,349) (-59%) principally due to the decreased operating costs as a result of decreased sales at Contrail.

Following is a table detailing non-operating income during the three months ended June 30, 2019 compared to the same quarter in the prior fiscal year:

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	Three Months Ended June 30,						Change
	2019			2018
Gain on sale of marketable securities	$	36,460		$	—		$	36,460		100	%
Foreign currency gain (loss), net	35,755			(2,182		)	37,937			n/m
Other-than-temporary impairment loss on investments	(814,558		)	—			(814,558		)	(100	)%
Other investment income (loss), net	162,957			(315,507		)	478,464			n/m
Interest expense and other	(1,023,622		)	(707,199		)	(316,423		)	(45	)%
Unrealized gain on interest rate swap	—			97,337			(97,337		)	(100	)%
Gain on settlement of bankruptcy	4,509,302			—			4,509,302			100	%
Bargain purchase acquisition gain	34,244			1,983,777			(1,949,533		)	(98	)%
Income (loss) from equity method investments	(320,578		)	9,183			(329,761		)	n/m
	$	2,619,960		$	1,065,409		$	1,554,551		146	%

The Company had net non-operating income of $2,619,960 for the quarter ended June 30, 2019, an increase of $1,554,551 (146%) from $1,065,409 in the prior-year quarter, principally due to a gain on liquidation of entities of $4,509,302, offset by an impairment loss in the investment of Insignia of $(814,558) and a decrease in bargain purchase gain of $(1,949,533). The gain on liquidation of entities was attributed to the extinguishment of Delphax Canada and UK. The bargain purchase gain in the current year quarter was attributable to AirCo 2 and was minimal in comparison to the bargain purchase gain recognized in prior year quarter on the acquisition of Worthington.

Pretax income for the three-month period ended June 30, 2019 was $3,831,659 an increase of $162,548 compared to the prior year comparable period, which was attributable to the increase in non-operating income of $1,554,551, offset by decrease in operating income of $1,392,003 as explained above.

During the three months ended June 30, 2019, the Company recorded $324,000 in income tax benefit at an effective rate of (8.46)%. 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 months ended June 30, 2019 were the change in valuation allowance related to Delphax, the estimated benefit for the exclusion of income for the Company's captive insurance company subsidiary under Section 831(b), the liquidation of Delphax UK and Delphax Canada as mentioned in Footnote 13 and the exclusion from the tax provision of the minority owned portion of the pretax income of Contrail Aviation Support, LLC. During the three months ended June 30, 2018, the Company recorded $387,000 in income tax expense which resulted in an effective tax rate of 10.50%. The primary factors contributing to the difference between the federal statutory rate and the Company's effective tax rate for the three months ended June 30, 2018 were related to the estimated benefit for the exclusion of income for the Company's captive insurance company subsidiary afforded under Section 831(b) and the presentation of the tax impact of the Worthington bargain purchase gain and state income tax expense.

Critical Accounting Policies and Estimates

The Company’s significant accounting policies are 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, 2019. The preparation of the Company’s consolidated financial statements in conformity with accounting principles generally accepted in the United States requires the use of estimates and assumptions to determine certain assets, liabilities, revenues and expenses. Management bases these estimates and assumptions upon the best information available at the time of the estimates or assumptions. The Company’s estimates and assumptions could change materially as conditions within and beyond our control change. Accordingly, actual results could differ materially from estimates. There were no significant changes to the Company’s critical accounting policies and estimates during the three-months ended June 30, 2019.

Seasonality

The ground equipment sales segment business has historically been seasonal, with the revenues and operating income typically being lower in the first and fourth fiscal quarters as commercial deicers are typically delivered prior to the winter season. Other segments are not susceptible to material seasonal trends.

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Liquidity and Capital Resources

As of June 30, 2019, the Company held approximately $16,265,605 in cash and cash equivalents and restricted cash. The Company also held $796,958 in restricted investments held as statutory reserve of SAIC and the remaining $68,979 of restricted investments pledged to secure SAIC’s participation in certain reinsurance pools. The Company has approximately $5,753,832 of marketable securities as of June 30, 2019.

As of June 30, 2019, the Company’s working capital amounted to $28,524,843, an increase of $9,970,740 compared to June 30, 2018. 

On June 10, 2019, the Company issued and distributed to existing common shareholders an aggregate of 1,600,000 trust preferred capital security ("TruPs") shares (aggregate $4,000,000 stated value) and an aggregate of 8,400,000 warrants ("Warrants") (representing warrants to purchase $21,000,000 in stated value of TruPs). If all of the Warrants are exercised, this will provide the Company with approximately $20 million in cash proceeds, with a total of $25 million (stated value) in TruPs outstanding. Management believes this will be sufficient to create a liquid market in the TruPs, which in turn should provide the Trust better capability to issue more TruPs in a later cash offering directly to market if needed. The purpose of the trust preferred transaction is to raise long-term capital (30-year debenture term), to fund growth through M&A and growth capital in the Company's portfolio companies.

The revolving lines of credit at both Air T and Contrail have due dates or expire within the next twelve months, as does some term debts within various business units. We are currently seeking to refinance or extend the maturities of these obligations prior to the expiration dates; however, there is no assurance that we will be able to execute this refinancing or extension or, if we are able to refinance or extend these obligations, that the terms of such refinancing or extension would be as favorable as the terms of our existing credit facility.

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. 

The Company’s Credit Agreement with MBT (the Air T debt in footnote 12 to the financial statements) includes several covenants that are measured once a year as of March 31, 2020, including but not limited to a negative covenant requiring a debt service coverage ratio of 1.25. The Company is working with its operating subsidiaries to assure compliance with the MBT covenants at March 31, 2020. However, there is no assurance that the Company will meet each covenant at March 31, 2020 and in such event the Company will work with MBT to seek a waiver and/or undertake other actions to avoid an event of non-compliance.

Cash Flows

Following is a table of changes in cash flow for the three months ended June 30, 2019 and 2018:

	Three Months Ended June 30,
	2019			2018
Net Cash Provided by Operating Activities	5,387,556			14,716,934
Net Cash Used in Investing Activities	(3,780,514		)	(6,716,648		)
Net Cash Provided by/ (Used in) Financing Activities	2,008,195			(7,309,902		)
Effect of foreign currency exchange rates on cash and cash equivalents	2,638			2,072
Net Increase/ (Decrease) in Cash and Cash Equivalents and Restricted Cash	$	3,617,875		$	692,456

Net cash provided by operating activities was $5,387,556 for the three-month period ended June 30, 2019 compared to the net cash provided by operating activities of $14,716,934 in prior year period. The primary drivers in the decrease in cash provided by operating activities for the three months ended June 30, 2019 was the increase in inventory levels in the commercial jet engines and parts segment and a decrease in accrued liabilities.

Net cash used in investing activities for the three-month period ended June 30, 2019 was $(3,780,514) compared to $(6,716,648) in prior year period. The primary driver in cash used in investing activities for the three months ended June 30, 2019 was the $3,596,000 in capital expenditures which included purchase of a $3,291,000 engine at Contrail.

Net cash provided by financing activities for the three-month period ended June 30, 2019 was $2,008,195 compared to net cash used in financing activities of $(7,309,902) in the prior year period. The cash provided by financing activities was primarily driven by the

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$7,304,000 net proceeds on lines of credit and $2,018,217 net proceeds received from exercise of Warrants. These proceeds were offset by payments on the Company’s existing term loans of $7,026,000, cash used to repurchase common stock of $126,000, and distribution to non-controlling member of Contrail of $115,000 during the three-months ended June 30, 2019.

Impact of Inflation

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The Company is exposed to various risks, including interest rate risk. As interest rates are projected to increase and can be volatile, the Company has designated a risk management policy which provides for the use of derivative instruments to provide protection against rising interest rates on variable rate debt.

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, 2019. 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, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II -- OTHER INFORMATION

Item 1A.  Risk Factors

In addition to other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. Risk Factors in our 2019 Form 10-K, which could materially impact our business, financial condition or future results. Risks disclosed in our 2019 Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may materially adversely impact our business, financial condition or operating results. There have been no material changes to Part I, Item 1A. Risk Factors in our 2019 Form 10-K.

Item 2     Unregistered Sales of Equity Securities and Use of Proceeds

(a) None.

(b) None.

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

Purchases during the quarter ended June 30, 2019 are described below:

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Issuer Purchases of Equity Securities

Dates of Shares Purchased	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Public Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
April 1 - April 30, 2019	1,932	$	28.73	24,584	725,416
May 1 - May 30, 2019	913	$	27.13	25,497	724,503
June 1 - June 30, 2019	14,579	$	16.50	40,076	709,924

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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, 2019, 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.

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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, 2019
	/s/ Nick Swenson
	Nick Swenson, Chief Executive Officer and Director
	/s/ Brian Ochocki
	Brian Ochocki, Chief Financial Officer

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