AIR T INC

12. Financing Arrangements

On May 30, 2025, the Company, along with AAM 24-1 (the "Issuer"), entered into new transaction documents withtwo Institutional Investors that replaced the Second Note Purchase Agreement ("Second NPA") transaction documents. Pursuant to the Third Note Purchase Agreement ("Third NPA") with the Institutional Investors, the Issuer agreed to issue and sell a Multiple Advance Senior Secured Note in an aggregate principal amount of up to $100.0 million (the “Multiple Advance Note”). Provided no default or event of default of the Issuer exists, and subject to satisfaction of all requirements for any closing as set forth in the Third NPA, the Investors agreed to advance to the Issuer an additional aggregate $60.0 million in $10.0 million increments, each on or within fifteen days of the following dates, of which the Issuer has received all contractually required advances through June 30, 2026 (in thousands):

1 The Investors advanced $15.0 million for the scheduled $10.0 million issuance on May 30, 2026. For the remaining scheduled issuances, the Company has the flexibility to choose which advance amount will be reduced by $5.0 million. As of the date the condensed consolidated financial statements are issued, the Company has not made that determination.

As of June 30, 2026, the Issuer has collectively received a total of $75.0 million of advances from the Investors.

The Multiple Advance Note bears annual interest at a rate of 8.5% which is computed on the basis of a 30/360-day year and actual days elapsed and is payable semi-annually in arrears, pursuant to the terms of the Multiple Advance Note. The maturity date of the Multiple Advance Note is May 31, 2035. The Multiple Advance Note contains standard and customary events of default including, but not limited to, failure to make payments when due under the Multiple Advance Note, failure to comply with certain covenants contained in the Multiple Advance Note, or bankruptcy or insolvency of, or certain monetary judgments against the Issuer or the Company. The prior notes were cancelled and replaced by the Multiple Advance Note. Funds advanced under the Multiple Advance Note may be reinvested for a period ofsix years from the date of closing.

The Issuer may prepay all or a portion of the outstanding principal and accrued but unpaid interest at any time, provided that (i) if the Issuer prepays all or any portion of the Multiple Advance Note withinone year from the Issue Date, the Issuer is required to pay the Investors a prepayment premium equal 2.0% of the amount being prepaid, and (ii) if the Issuer prepays all or any portion of the Multiple Advance Note after the first anniversary of the Issue Date but on or prior to the second anniversary of the Issue Date, the Issuer is required to pay the Investors a prepayment premium equal to 1.0% of the amount being prepaid. If the Issuer elects to prepay a portion of the outstanding principal and accrued but unpaid interest, then in no event can such prepayment be for an amount less than $1.0 million.

The various equity interests that were assigned by the Company to the Issuer on or about the closing date of the original financings continue to serve as collateral for the repayment of the Multiple Advance Note as do all of the issued and outstanding capital stock of the Issuer owned by the Company, and the 320,000 Trust Preferred Securities, held by the Issuer.

On June 2, 2026, Contrail entered into a subordinated promissory note with OCAS, Inc. ("OCAS"), the former minority owner of Contrail, in the amount of $3.5 million ("Term Loan - OCAS II") with an economic effective date of April 1, 2026. The note was made pursuant to Contrail's purchase and redemption of OCAS'5% membership interest in Contrail. The note matures on April 1, 2029 and bears interest at an annual rate equal to the ten year Treasury bond yield plus 2.50% which is compounded monthly on the basis of a 365-day year for the actual number of days elapsed. The rate adjusts on each anniversary date of the note.

On June 15, 2026, Air’Zona Aircraft Services, Inc., CSA Air, Inc., Global Ground Support, LLC, Jet Yard, LLC, Jet Yard Solutions, LLC, Mountain Air Cargo, Inc., Worldwide Aircraft Services, Inc., Royal Aircraft Services, LLC and Worthington Aviation, LLC, each a subsidiary or affiliate of the Company (collectively, the “Alerus Loan Parties”), entered into Amendment No. 6 to Credit Agreement with Alerus Financial, National Association (“Alerus”), as lender. In connection with Amendment No. 6, the Alerus Loan Parties executed an Overline Note with Alerus in the original principal amount of $2.8 million (the “Overline Note”). The Overline Note bears interest at a fluctuating annual rate equal to the greater of 5.00% or 1-month term SOFR plus 2.50% and matures on the earlier of October 15, 2026 or the termination of the overline commitment in accordance with the Alerus Credit Agreement.

The following table provides certain information about the current financing arrangements of the Company and its subsidiaries (other than related party obligations) as of June 30, 2026 and March 31, 2026:

2 Does not include $13.0 million held by wholly-owned subsidiaries of the Company.

3 Includes Air T's guarantee of approximately $2.0 million.

At June 30, 2026, our contractual financing obligations, including payments due by period, are as follows (in thousands):

Net interest expense (income) for the Company and its subsidiaries was as follows for the three months ended June 30, 2026 and 2025:

Cash paid for interest totaled $5.5 million and $2.3 million during the three months ended June 30, 2026 and 2025, respectively.