Published: 2021-11-12 00:00:00 ET

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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.

These condensed consolidated financial statements should 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, 2021. The results of operations for the period ended September 30, 2021 are not necessarily indicative of the operating results for the full year.

Discontinued Operations

On September 30, 2019, the Company completed the sale of Global Aviation Services, LLC ("GAS"). The results of operations of GAS are reported as discontinued operations in the condensed consolidated statements of operations for the three and six months ended September 30, 2021 and 2020. Unless otherwise indicated, the disclosures accompanying the condensed consolidated financial statements reflect the Company's continuing operations.

Formation of new entities

On May 5, 2021, the Company formed a new aircraft asset management business called Contrail Asset Management, LLC (“CAM”), and a new aircraft capital joint venture called Contrail JV II LLC (“CJVII”). The Company and Mill Road Capital (“MRC”) have agreed to become common members in CAM. CAM will serve two separate and distinct functions: 1) to direct the sourcing, acquisition and management of aircraft assets owned by CJVII (“Asset Management Function”), and 2) to directly invest into CJVII alongside other institutional investment partners (“Investment Function”). For the Asset Management Function, CAM will receive origination fees, management fees, consignment fees (where applicable) and a carried interest. For its Investment Function, CAM has an initial commitment to CJVII of approximately $53.0 million, which is comprised of an $8.0 million initial commitment from the Company and an approximately $45.0 million initial commitment from MRC. Any investment returns will be shared pro-rata between the Company and MRC.

COVID-19 Pandemic

COVID-19 and its impact on the current financial, economic and capital markets environment, and future developments in these and other areas present uncertainty and risk with respect to our financial condition and results of operations. Each of our businesses implemented measures to attempt to limit the impact of COVID-19 but we still experienced a substantial number of disruptions, and we experienced and continue to experience a reduction in demand for commercial aircraft, jet engines and parts compared to historical periods. Many of our businesses may continue to generate reduced operating cash flow and may continue to operate at a loss from time to time during the remainder of fiscal 2022. We expect that the impact of COVID-19 will continue to some extent. The fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions and our businesses in particular, and, as a result, present material uncertainty and risk with respect to us and our results of operations.

Recently Issued Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04- Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this Update provide optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this Update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments are effective for all entities from the beginning of an interim period that includes the issuance date of this ASU. An entity may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the impact of this amendment on our contracts, hedging relationships, and other transactions affected by reference rate reform.

In July 2021, the FASB updated the Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments. The amendments in this Update address stakeholders’ concerns by amending the lease classification requirements for lessors to align them with practice under Topic 840. Lessors should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if both of the following criteria are met:

1.The lease would have been classified as a sales-type lease or a direct financing lease in accordance with the classification criteria in paragraphs 842-10-25-2 through 25-3.

2.The lessor would have otherwise recognized a day-one loss.

When a lease is classified as operating, the lessor does not recognize a net investment in the lease, does not derecognize the underlying asset, and, therefore, does not recognize a selling profit or loss. The leased asset continues to be subject to the measurement and impairment requirements under other applicable GAAP. The amendments in this Update are effective for fiscal years beginning after December 15, 2021, for all entities, and interim periods within those fiscal years for public business entities. The Company is currently evaluating the impact of this amendment on its consolidated financial statements and disclosures.

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Substantially all of the Company’s non-lease 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:

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 performing labor hours and installing parts to enhance an asset that the customer controls. 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.

The following table summarizes disaggregated revenues by type (in thousands):

			Three Months Ended September 30,												Six Months Ended September 30,
			2021						2020						2021						2020
Product Sales
Air Cargo			$	5,615					$	5,728					$	12,188					$	10,043
Ground equipment sales			8,928						11,833						16,926						27,571
Commercial jet engines and parts			13,157						4,283						20,449						6,979
Corporate and other			37						—						114						33
Support Services
Air Cargo			13,222						11,558						25,494						23,408
Ground equipment sales			69						67						134						84
Commercial jet engines and parts			1,554						956						3,656						2,580
Corporate and other			54						6						117						24
Leasing Revenue
Air Cargo			—						—						—						—
Ground equipment sales			39						23						78						71
Commercial jet engines and parts			177						791						343						1,164
Corporate and other			37						107						76						142
Other
Air Cargo			10						9						15						15
Ground equipment sales			153						137						233						162
Commercial jet engines and parts			28						84						62						85
Corporate and other			158						22						321						215
Total			$	43,238					$	35,604					$	80,206					$	72,576

See Note 11 for the Company's disaggregated revenues by geographic region and Note 12 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 as of April 1, 2021 and September 30, 2021 and the amount of contract liabilities as of April 1, 2021 that were recognized as revenue during the six-month period ended September 30, 2021 (in thousands):

			Outstanding contract liabilities						Outstanding contract liabilities as of April 1, 2021 Recognized as Revenue
As of September 30, 2021			$	1,978
As of April 1, 2021			$	1,358
For the six months ended September 30, 2021									$	638

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During the three-month period ended September 30, 2021, the Company recorded $38.0 thousand in income tax expense at an effective tax rate ("ETR") of 0.5%. 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 21.0% and the Company's effective tax rate for the three-month period ended September 30, 2021 were the change in valuation allowance related to the Company's subsidiaries in the corporate and other segment, Delphax Solutions, Inc. and Delphax Technologies, Inc. (collectively known as "Delphax"), the estimated benefit for the exclusion of income for the Company's captive insurance company subsidiary ("SAIC") under Section 831(b), the exclusion from the tax provision of the minority owned portion of the pretax income of Contrail, and the exclusion from taxable income of the PPP loan forgiveness income, as directed by the CARES Act enacted in 2020, and any accrued interest forgiven as a part of that Act.

During the three-month period ended September 30, 2020, the Company recorded $1.5 million in income tax benefit at an ETR of 31.5%. The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the three-month period ended September 30, 2020 were the change in valuation allowance related to Delphax, the estimated benefit for the exclusion of income for SAIC under Section 831(b) and the exclusion from the tax provision of the minority owned portion of the pretax income of Contrail.

During the six-month period ended September 30, 2021, the Company recorded $33.0 thousand in income tax expense at an effective rate of 0.4%. 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 21.0% and the Company's effective tax rate for the six-month period ended September 30, 2021 were the change in valuation allowance related to Delphax, the estimated benefit for the exclusion of income for SAIC under Section 831(b), the exclusion from the tax provision of the minority owned portion of the pretax income of Contrail, the exclusion from taxable income of the PPP loan forgiveness income, as directed by the CARES Act enacted in 2020, and any accrued interest forgiven as a part of that Act.

During the six-month period ended September 30, 2020, the Company recorded $1.8 million in income tax benefit which resulted in an effective tax rate of 30.0%. The primary factors contributing to the difference between the federal statutory rate and the Company's effective tax rate for the six-month period ended September 30, 2020 were related to the change in valuation allowance related to Delphax, the estimated benefit for the exclusion of income for SAIC under Section 831(b), and the exclusion from the tax provision of the minority owned portion of the pretax income of Contrail.

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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 (loss) 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 (in thousands, except for per share figures):

			Three Months Ended September 30,												Six Months Ended September 30,
			2021						2020						2021						2020
Net income (loss) from continuing operations			$	8,003					$	(3,357)					$	8,329					$	(4,314)
Net (income) loss from continuing operations attributable to non-controlling interests			(448)						433						(486)						549
Net income (loss) from continuing operations attributable to Air T, Inc. Stockholders			7,555						(2,924)						7,843						(3,765)
Income (Loss) from continuing operations per share:
Basic			$	2.62					$	(1.01)					$	2.72					$	(1.31)
Diluted			$	2.60					$	(1.01)					$	2.71					$	(1.31)
Antidilutive shares excluded from computation of income (loss) per share from continuing operations			—						5						—						5
Gain on sale of discontinued operations, net of tax			—						4						—						4
Income from discontinued operation attributable to Air T, Inc. stockholders			—						4						—						4
Income from discontinued operations per share:
Basic			—						—						—						—
Diluted			—						—						—						—
Income (Loss) per share:
Basic			$	2.62					$	(1.01)					$	2.72					$	(1.31)
Diluted			$	2.60					$	(1.01)					$	2.71					$	(1.31)
Antidilutive shares excluded from computation of income (loss) per share			—						5						—						5
Weighted Average Shares Outstanding:
Basic			2,882						2,882						2,882						2,882
Diluted			2,901						2,882						2,893						2,882

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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 mentioned in Note 10, on August 31, 2021, Air T and MBT refinanced Term Note A and fixed its interest rate at 3.42%. As a result of this refinancing, the Company determined that the interest rate swap on Term Note A was no longer an effective hedge. The Company will amortize the fair value of the interest-rate swap contract included in accumulated other comprehensive income associated with Term Note A at the time of de-designation into earnings over the remainder of its term. In addition, any changes in the fair value of Term Note A's swap after August 31, 2021 are recognized directly into earnings.

The remaining swap contract associated with Term Note D is designated as an effective cash flow hedging instrument in accordance with ASC 815. The effective portion of changes in the fair value on this instrument is recorded in other comprehensive income and is reclassified into the condensed consolidated statement of income (loss) as interest expense in the same period in which the underlying hedged transaction affects earnings. This interest rate swap is considered a Level 2 fair value measurement. As of September 30, 2021 and March 31, 2021, the fair value of this interest-rate swap contract was a liability of $0.5 million and $0.6 million, respectively, which is included within other non-current liabilities in the condensed consolidated balance sheets. During the three and six months ended September 30, 2021, the Company recorded a gain of approximately $46.0 thousand and $57.0 thousand, net of tax, respectively, in the condensed consolidated statement of comprehensive income (loss) for changes in the fair value of this instrument.

The Company may, from time to time, employ trading strategies designed to profit from market anomalies and opportunities it identifies. Management uses derivative financial instruments to execute those strategies, which may include options, and futures contracts. These derivative instruments are priced using publicly quoted market prices and are considered Level 1 fair value measurements. During the three and six months ended September 30, 2021, the Company did not record any gain or loss related to these derivative instruments. During the three months ended September 30, 2020, the Company had a gross gain aggregating to $0.4 million and $0.1 million gross loss related to these derivative instruments. During the six months ended September 30, 2020, the Company had a gross gain aggregating to $0.7 million and $0.1 million gross loss related to these derivative instruments.

The Company also invests in exchange-traded marketable securities and accounts for that activity in accordance with ASC 321, Investments- Equity Securities. Marketable equity securities are carried at fair value, with changes in fair market value included in the determination of net income. The fair market value of marketable equity securities is determined based on quoted market prices in active markets. During the three months ended September 30, 2021, the Company had a gross unrealized gain aggregating $0.4 million and a gross unrealized loss aggregating $0.1 million. During the six months ended September 30, 2021, the Company had a gross unrealized gain aggregating $0.8 million and a gross unrealized loss aggregating $0.2 million. During the three months ended September 30, 2020, the Company had a gross unrealized gain aggregating $0.1 million and a gross unrealized loss aggregating $0.3 million. During the six months ended September 30, 2020, the Company had a gross unrealized gain aggregating $0.7 million and a gross unrealized loss aggregating $0.7 million. These unrealized gains and losses are included in Other Income (Loss) on the condensed consolidated statement of income (loss).

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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. As of September 30, 2021, the number of Insignia's shares owned by the Company was 0.5 million, representing approximately 28% 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. As such, the Company did not record any additional share of Insignia's net loss as of September 30, 2021. 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.

The Company's 18.98% 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 a loss of $0.3 million and $0.5 million as its share of CCI's net loss for the three and six months ended September 30, 2021, along with a basis difference adjustment of $13.0 thousand and $25.0 thousand, respectively. The Company's net investment basis in CCI is $3.2 million as of September 30, 2021.

Summarized unaudited financial information for the Company's equity method investees for the three and six months ended June 30, 2021 and 2020 is as follows (in thousands):

			Three Months Ended												Six Months Ended
			June 30, 2021						June 30, 2020						June 30, 2021						June 30, 2020
Revenue			$	27,715					$	12,138					$	57,988					$	34,074
Gross Profit			1,097						1,161						1,904						1,966
Operating loss			(2,110)						(1,814)						(5,205)						(4,192)
Net loss			(2,268)						(1,925)						(4,413)						(4,211)
Net loss attributable to Air T, Inc. stockholders			$	(273)					$	(542)					$	(568)					$	(1,112)

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Inventories consisted of the following (in thousands):

			September 30, 2021						March 31, 2021
Ground equipment manufacturing:
Raw materials			$	4,722					$	4,695
Work in process			9,350						5,820
Finished goods			6,113						1,691
Corporate and Other:
Raw materials			488						462
Finished goods			889						889
Commercial jet engines and parts			62,894						60,516
Total inventories			$	84,456					$	74,073
Reserves			(1,867)						(2,102)
Total inventories, net of reserves			$	82,589					$	71,971

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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 three and six months ended September 30, 2021 and 2020 are as follows (in thousands):

			Three Months Ended September 30,												Six Months Ended September 30,
			2021						2020						2021						2020
Operating lease cost			$	420					$	481					$	867					$	1,052
Short-term lease cost			376						139						658						201
Variable lease cost			143						216						290						291
Total lease cost			$	939					$	836					$	1,815					$	1,544

Amounts reported in the consolidated balance sheets for leases where we are the lessee as of September 30, 2021 and March 31, 2021 were as follows (in thousands):

			September 30, 2021						March 31, 2021
Operating leases
Operating lease ROU assets			7,738						7,757
Operating lease liabilities			8,477						8,445
Weighted-average remaining lease term
Operating leases			13 years, 4 months						13 years, 9 months
Weighted-average discount rate
Operating leases			4.38		%				4.37		%

Maturities of lease liabilities under non-cancellable leases where we are the lessee as of September 30, 2021 are as follows (in thousands):

			Operating Leases
2022 (excluding the six months ended September 30, 2021)			$	895
2023			1,689
2024			1,326
2025			1,023
2026			725
2027			596
Thereafter			5,301
Total undiscounted lease payments			$	11,555
Less: Interest			(2,572)
Less: Discount			(506)
Total lease liabilities			$	8,477

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On August 31, 2021, Air T entered into a Third Amended and Restated Credit Agreement with Minnesota Bank & Trust ("MBT"). The terms of the Amended and Restated Credit Agreement were revised to extend the Air T revolver's termination date to August 31, 2023. The maximum amount available under the revolving facility remains at $17 million and interest will be due on the outstanding balance at the rate of 2.5% or the prime rate plus 1%, whichever is greater.

Air T and MBT also revised Term Note A to extend the maturity date to August 30, 2031 and to increase the principal amount to $9 million. The revised note utilizes a fixed 3.42% interest rate. Air T and MBT also revised Term Note B to extend the maturity date to August 30, 2031. The principal balance was set at the then current balance amount of $3.2 million. The interest rate on Term Note B is fixed at 3.42%.

A prepayment penalty provision was added to Term Note A and Term Note B that provides for a 3% premium payment if prepayment occurs in year 1, 1% in years 2-3 and 0% thereafter. 20% of the loan amount can be prepaid without penalty each year and no penalty payment is due for prepayments made to cure a covenant violation.

Term Note E was restated to set the principal amount of the note at the then current balance due amount ($3.7 million), which amount reflects principal payments through August 31, 2021.

The parties also agreed to add the Company’s indirect subsidiary, Jet Yard, LLC ("Jet Yard") as a co-Borrower. Jet Yard entered into a promissory note with MBT in the principal amount of $2 million. The Jet Yard Note matures on August 30, 2031 and has a fixed interest rate of 4.14%. Jet Yard intends to use the proceeds of the note for leasehold improvements at Jet Yard’s facility in Marana, AZ.

On September 2, 2021, Contrail Aviation Support, LLC (“Contrail”), a 79%-owned subsidiary of Air T, Inc. entered into a Fourth Amendment to Supplement #2 to Master Loan Agreement (the “Amendment”) and Third Amended and Restated Promissory Note Revolving Note with Old National Bank ("ONB"). The principal revisions to Contrail’s existing credit facility with ONB as contained in the Amendment and the Restated Promissory Note Revolving Note are summarized below:

a.The termination date of the facility was extended to September 5, 2023;

b.The Revolving Note principal amount was revised from $40 million to $25 million;

c.The net worth covenant was amended and the definition of “net worth” was revised. The net worth covenant now requires that the borrower maintain a net worth of at least: (i) $8 million at all times prior to March 31, 2023; (ii) $10 million at all times during the period beginning March 31, 2023 and ending on March 30, 2024; and (iii) $12 million at all times on or after March 31, 2024.

On April 13, 2020, the Company entered into a loan with MBT with a principal amount of $8.2 million pursuant to the Payroll Protection Program ("PPP Loan"), backed by the Small Business Administration ("SBA"), under the CARES Act. As of September 30, 2021, the Company's PPP Loan was fully forgiven by the SBA. As such, the Company accounted for its then outstanding principal and accrued interest as a gain on extinguishment in accordance with ASC 470.

The following table provides certain information about the current financing arrangements of the Company's and its subsidiaries as of September 30, 2021:

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At September 30, 2021, our contractual financing obligations, including payments due by period, are as follows (in thousands):

Due by			Amount
September 30, 2022			$	1,319
September 30, 2023			5,974
September 30, 2024			8,752
September 30, 2025			12,253
September 30, 2026			36,263
Thereafter			31,175
			95,736
Less: Unamortized Debt Issuance Costs			(1,054)
			$	94,682

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).

•The Company issued and distributed to existing common stockholders an aggregate of 1.6 million TruPs shares (aggregate $4.0 million stated value) and an aggregate of 8.4 million warrants ("Warrants") (representing warrants to purchase $21.0 million in stated value of TruPs).

On January 14, 2020, Air T effected a one-for-ten reverse split of its TruPs. As a result of the reverse split, the stated value of the TruPs will be $25.00 per share. Further, each Warrant conferred upon its holder the right to purchase one-tenth of a share of TruPs for $2.40, representing a 4% discount to the new stated value of $2.50 for one-tenth of a share. As of September 30, 2021, 5.3 million Warrants have been exercised. The remaining 3.1 million Warrants were not exercised and expired on August 30, 2021.

On May 14, 2021, the Company entered into an At the Market Offering Agreement (the “ATM Agreement”) with Ascendiant Capital Markets, LLC (the “sales agent” or “Ascendiant”), pursuant to which it may sell and issue its TruPs having an aggregate offering price of up to $8.0 million from time to time. The Company has no obligation to sell any TruPs, and may at any time suspend offers under the ATM Agreement or terminate the ATM Agreement. As of September 30, 2021, the Company has sold 0.2 million shares of TruPs under the ATM agreement for net proceeds of $5.0 million.

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Total tangible long-lived assets, 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 September 30, 2021 and March 31, 2021 (in thousands):

			September 30, 2021						March 31, 2021
United States			$	8,994					$	8,632
Foreign			1,600						2,018
Total tangible long-lived assets, net			$	10,594					$	10,650

The Company's tangible long-lived assets, net of accumulated depreciation, held outside of the United States represent engines and aircraft on lease at September 30, 2021. The net book value located within each individual country at September 30, 2021 and March 31, 2021 is listed below (in thousands):

			September 30, 2021						March 31, 2021
Macau			$	1,489					$	1,896
Other			111						122
Total tangible long-lived assets, net			$	1,600					$	2,018

Total revenue, in and outside the United States, is summarized in the following table for the six months ended September 30, 2021 and September 30, 2020 (in thousands):

			September 30, 2021						September 30, 2020
United States			$	69,225					$	67,163
Foreign			10,981						5,413
Total revenue			$	80,206					$	72,576

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The Company has four business segments: overnight air cargo, ground equipment sales, commercial jet engine and parts segment and corporate and other. We have presented prior periods based on the current presentation. Segment data is summarized as follows (in thousands):

(In Thousands)			Three Months Ended September 30,												Six Months Ended September 30,
			2021						2020						2021						2020
Operating Revenues by Segment:
Overnight Air Cargo
Domestic			$	18,607					$	17,295					$	37,375					$	33,466
International			240						—						322						—
Total Overnight Air Cargo			18,847						17,295						37,697						33,466
Ground Equipment Sales:
Domestic			8,178						10,996						14,156						26,807
International			1,011						1,064						3,215						1,081
Total Ground Equipment Sales			9,189						12,060						17,371						27,888
Commercial Jet Engines and Parts:
Domestic			10,461						4,155						17,230						6,625
International			4,455						1,959						7,280						4,183
Total Commercial Jet Engines and Parts			14,916						6,114						24,510						10,808
Corporate and other:
Domestic			210						67						464						264
International			76						68						164						150
Total Corporate and other			286						135						628						414
Total			$	43,238					$	35,604					$	80,206					$	72,576
Operating Income (Loss):
Overnight Air Cargo			857						573						1,589						1,127
Ground Equipment Sales			43						924						1,465						3,140
Commercial Jet Engines and Parts			1,902						(2,275)						1,664						(3,177)
Corporate and other			(2,098)						(2,906)						(4,019)						(5,039)
Total			$	704					$	(3,684)					$	699					$	(3,949)
Capital Expenditures:
Overnight Air Cargo			44						93						68						144
Ground Equipment Sales			4						—						17						111
Commercial Jet Engines and Parts			646						1,054						738						1,510
Corporate and other			12						—						19						28
Total			$	706					$	1,147					$	842					$	1,793
Depreciation and Amortization:
Overnight Air Cargo			14						19						27						35
Ground Equipment Sales			32						46						64						114
Commercial Jet Engines and Parts			214						978						479						1,360
Corporate and other			62						106						133						249
Total			$	322					$	1,149					$	703					$	1,758

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Redeemable Non-controlling Interest

Contrail entered into an Operating Agreement (the “Contrail Operating Agreement”) in connection with the acquisition of Contrail providing for the governance of and the terms of membership interests in Contrail and including put and call options with the Seller of Contrail (“Contrail Put/Call Option”). The Contrail Put/Call Option permits the Seller to require Contrail to purchase all of the Seller’s equity membership interests in Contrail commencing on the fifth anniversary of the acquisition, which was on July 18, 2021. The Company has presented this redeemable non-controlling interest in Contrail ("Contrail RNCI") between the liabilities and equity sections of the accompanying condensed 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 $7.3 million as of September 30, 2021. The change in the redemption value compared to March 31, 2021 is an increase of $0.7 million. The increase was driven by $0.3 million of contributions made from the non-controlling interest and $0.1 million of the net change in fair value, in addition to $0.3 million of net income attributable to the non-controlling interest during the six months ended September 30, 2021.

As of the date of this filing, neither the Seller nor Air T has indicated an intent to exercise the put and call options. If either side were to exercise the option, the Company anticipates that the price would approximate the fair value of the Contrail RNCI, as determined on the transaction date. The Company currently expects that it would fund any required payment from cash provided by operations.

On May 5, 2021, the Company formed a new aircraft asset management business called CAM, and a new aircraft capital joint venture called CJVII. The new venture will focus on acquiring commercial aircraft and jet engines for leasing, trading and disassembly. CJVII will target investments in current generation narrow-body aircraft and engines, building on Contrail’s origination and asset management expertise. CAM will serve two separate and distinct functions: 1) to direct the sourcing, acquisition and management of aircraft assets owned by CJVII, and 2) to directly invest into CJVII alongside other institutional investment partners. CAM has an initial commitment to CJVII of approximately $53 million, which is comprised of an $8 million initial commitment from the Company and an approximately $45 million initial commitment from MRC. As of September 30, 2021, CAM's unfunded capital commitments are approximately $6.9 million from the Company and $43.9 million from MRC.

2020 Omnibus Stock and Incentive Plan

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