Company: AIRTP
Filing Date: 2025-08-12
Form Type: 10-K/A
Source: 0000353184-25-000069
Chunk: 80

Company: AIR T INC
Filing Date: 2025-08-12
Form: 10-K/A
Chunk 80
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 margins used in the relief of inventory as parts are sold from established groups of parts from one engine or airframe purchase. Additionally, in its periodic evaluation of the carrying value of the inventories, the Company is required to make estimates regarding the net realizable value. These estimates include assumptions about sales patterns, expected future demand and costs to refurbish. Changes in these assumptions could have a significant impact on the valuation of inventory held by the Company’s commercial aircraft, engines and parts reportable segment.

We identified the valuation of certain inventory held by the Company’s commercial aircraft, engines and parts reportable segment as a critical audit matter. Given the magnitude of the inventories at certain business units, coupled with the significant judgments necessary to estimate the expected profit margins and to project sales patterns, expected future demand and costs to refurbish, auditing such estimates required a high degree of auditor judgment and an increased extent of effort when performing audit procedures and evaluating the results of those procedures

How the Critical Audit Matter Was Addressed in the Audit

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Our audit procedures related to expected profit margins utilized in the relief of inventory, and related to the sales patterns, expected future demand and costs to refurbish used in estimating the net realizable value of inventory, included the following, among others:

• We assessed the reasonableness of management’s estimates of expected profit margins for a representative sample of inventories by:

◦ Comparing the life-to-date profit margin on sales from the group of parts to management’s initial profit margin assessment.

◦ Evaluating the reasonableness of management’s judgments about changes to the initial profit margin estimates, if any.

• We assessed the reasonableness of management’s projections of sales patterns, expected future demand and costs to refurbish by:

◦ Comparing the information to historical results of those business units.

◦ Evaluating the methodology and assumptions used by, and the qualifications of, the Company’s third-party valuation specialist.

◦ Performing the following procedures for a representative sample of inventories:

◦ Evaluating the key assumptions underlying the valuation by examining recent sales of comparable parts and component condition.

◦ Utilizing historical costs to develop an independent estimate of costs necessary to refurbish the parts.

▪ We compared management’s assumptions to market data and industry forecasts.

/s/ Deloitte & Touche LLP

Minneapolis, Minnesota

June 27, 2025

We have served as the Company's auditor since 2018.

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