##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2007
 OR
 o
    
    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: 1-13025
 AirNet Systems, Inc.
  Ohio
    
    31-1458309(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)7250 Star Check Drive, Columbus, Ohio
    
    43217(Address of principal executive offices)
    
    (Zip Code)
 (614) 409-4900
 Not Applicable
 þ o
  o o þ
 o þ




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##### 



TABLE OF CONTENTS
 PAGEPART I. FINANCIAL INFORMATIONItem 1.
    
    Financial Statements:Condensed Consolidated Balance Sheets:
June 30, 2007 (Unaudited) and December 31, 2006
    
    
    3Condensed Consolidated Statements of Operations:
Three and Six Months Ended June 30, 2007 and 2006 (Unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows:
Six Months Ended June 30, 2007 and 2006 (Unaudited)
    
    
    5Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    21Item 4.
    
    Controls and Procedures
    
    
    21PART II. OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    22Item 1A.
    
    Risk Factors
    
    
    22Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23Item 3.
    
    Defaults Upon Senior Securities
    
    
    23Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    23Item 5.
    
    Other Information
    
    
    24Item 6.
    
    Exhibits
    
    
    24SIGNATURES
    
    
    25INDEX TO EXHIBITS
    
    
    26EX-3.2EX-31.1EX-31.2EX-32
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 AIRNET SYSTEMS, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 June 30,
    
    
    December 31,2007
    
    
    2006In thousands, except par value data
    
    (unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,347
    
    
    $
    2,244Accounts receivable, less allowances
    
    
    21,334
    
    
    
    22,345Taxes receivable
    
    
    36
    
    
    
    Deposits and prepaids
    
    
    1,907
    
    
    
    2,463Assets related to discontinued operations
    
    
    507
    
    
    
    1,465Assets held for sale
    
    
    
    
    
    
    280Total current assets
    
    
    25,131
    
    
    
    28,797Net property and equipment
    
    
    27,770
    
    
    
    27,690Deposits and other assets
    
    
    60
    
    
    
    60Total assets
    
    $
    52,961
    
    
    $
    56,547LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses
    
    $
    8,128
    
    
    $
    8,876Salaries and related liabilities
    
    
    2,769
    
    
    
    4,716Current portion of notes payable
    
    
    
    
    
    
    1,944Taxes payable
    
    
    
    
    
    
    935Other liabilities related to discontinued operations
    
    
    10
    
    
    
    50Total current liabilities
    
    
    10,907
    
    
    
    16,521Notes payable, less current portion
    
    
    2,539
    
    
    
    6,011Shareholders equity:Preferred shares, $.01 par value; 10,000 shares authorized; no
shares issued and outstanding
    
    
    
    
    
    
    Common shares, $.01 par value; 40,000 shares authorized; 12,763
issued at June 30, 2007 and December 31, 2006, respectively
    
    
    128
    
    
    
    128Additional paid-in-capital
    
    
    76,966
    
    
    
    76,906Retained deficit
    
    
    (14,357
    )
    
    
    (19,746
    )Accumulated other comprehensive loss
    
    
    (13
    )
    
    
    (13
    )Treasury shares, 2,592and 2,598 common shares held at cost at
June 30, 2007 and December 31, 2006, respectively
    
    
    (23,209
    )
    
    
    (23,260
    )Total shareholders equity
    
    
    39,515
    
    
    
    34,015Total liabilities and shareholders equity
    
    $
    52,961
    
    
    $
    56,547
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##### Table of Contents



AIRNET SYSTEMS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,In thousands, except per share data
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006NET REVENUES, NET OF EXCISE TAXBank services
    
    $
    25,935
    
    
    $
    29,101
    
    
    $
    52,429
    
    
    $
    57,385Express services
    
    
    15,140
    
    
    
    14,981
    
    
    
    29,354
    
    
    
    29,025Aviation services
    
    
    1,095
    
    
    
    272
    
    
    
    1,899
    
    
    
    649Total net revenues
    
    
    42,170
    
    
    
    44,354
    
    
    
    83,682
    
    
    
    87,059COSTS AND EXPENSESAircraft fuel
    
    
    6,387
    
    
    
    7,723
    
    
    
    12,510
    
    
    
    14,715Aircraft maintenance
    
    
    5,973
    
    
    
    4,128
    
    
    
    13,301
    
    
    
    8,223Operating wages and benefits
    
    
    4,519
    
    
    
    4,736
    
    
    
    9,451
    
    
    
    9,711Contracted air costs
    
    
    3,788
    
    
    
    4,439
    
    
    
    7,571
    
    
    
    8,608Ground courier
    
    
    8,759
    
    
    
    8,717
    
    
    
    17,665
    
    
    
    16,896Depreciation
    
    
    1,256
    
    
    
    2,930
    
    
    
    2,502
    
    
    
    5,813Insurance, rent and landing fees
    
    
    2,058
    
    
    
    2,112
    
    
    
    4,196
    
    
    
    3,989Travel, training and other operating
    
    
    1,509
    
    
    
    1,147
    
    
    
    3,093
    
    
    
    2,678Selling, general and administrative
    
    
    4,118
    
    
    
    4,772
    
    
    
    8,380
    
    
    
    9,237Net (gain) on disposition of assets
    
    
    (3
    )
    
    
    (4
    )
    
    
    (883
    )
    
    
    (12
    )Total costs and expenses
    
    
    38,364
    
    
    
    40,700
    
    
    
    77,786
    
    
    
    79,858Income from continuing operations before interest and income taxes
    
    
    3,806
    
    
    
    3,654
    
    
    
    5,896
    
    
    
    7,201Interest expense
    
    
    175
    
    
    
    443
    
    
    
    307
    
    
    
    973Income from continuing operations before income taxes
    
    
    3,631
    
    
    
    3,211
    
    
    
    5,589
    
    
    
    6,228Provision for income taxes
    
    
    100
    
    
    
    1,146
    
    
    
    200
    
    
    
    2,267Income from continuing operations
    
    
    3,531
    
    
    
    2,065
    
    
    
    5,389
    
    
    
    3,961Income (loss) from discontinued operations, net of tax
    
    
    
    
    
    
    (87
    )
    
    
    
    
    
    
    (296
    )Net income
    
    $
    3,531
    
    
    $
    1,978
    
    
    $
    5,389
    
    
    $
    3,665Income (loss) per common share  basic and diluted:Continuing operations
    
    $
    0.35
    
    
    $
    0.20
    
    
    $
    0.53
    
    
    $
    0.39Discontinued operations
    
    
    
    
    
    
    (0.01
    )
    
    
    
    
    
    
    (0.03
    )Net income per common share  basic and diluted
    
    $
    0.35
    
    
    $
    0.19
    
    
    $
    0.53
    
    
    $
    0.36
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AIRNET SYSTEMS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six Months EndedJune 30,In thousands
    
    2007
    
    
    2006Operating activities:Income from continuing operations
    
    $
    5,389
    
    
    $
    3,961Adjustments to reconcile income from continuing operations to net cash
provided by operating activities:Depreciation
    
    
    2,502
    
    
    
    5,813Net (gain) on disposition of assets
    
    
    (883
    )
    
    
    (12
    )Deferred income taxes
    
    
    
    
    
    
    2,174Stock-based compensation expense
    
    
    103
    
    
    
    58Cash provided by (used in) operating assets and liabilities:Accounts receivable
    
    
    1,011
    
    
    
    (1,527
    )Taxes receivable or payable
    
    
    (971
    )
    
    
    (37
    )Deposits and prepaids
    
    
    556
    
    
    
    295Accounts payable and accrued expenses
    
    
    (1,007
    )
    
    
    (1,723
    )Salaries and related liabilities
    
    
    (1,947
    )
    
    
    (733
    )Other  net
    
    
    
    
    
    
    (35
    )Net cash provided by (used in) continuing operations
    
    
    4,753
    
    
    
    8,234Net cash provided by (used in) discontinued operations
    
    
    418
    
    
    
    2,074Net cash provided by (used in) operating activities
    
    
    5,171
    
    
    
    10,308Investing activities:Purchases of property and equipment   net
    
    
    (2,903
    )
    
    
    (4,649
    )Proceeds from the sales of property and equipment
    
    
    1,743
    
    
    
    Net cash provided by (used in) continuing operations
    
    
    (1,160
    )
    
    
    (4,649
    )Net cash provided by (used in) discontinued operations
    
    
    500
    
    
    
    (749
    )Net cash provided by (used in) investing activities
    
    
    (660
    )
    
    
    (5,398
    )Financing activities:Net borrowings (repayments) of debt
    
    
    (5,416
    )
    
    
    (3,861
    )Other  net
    
    
    8
    
    
    
    25Net cash provided by (used in) continuing operations
    
    
    (5,408
    )
    
    
    (3,836
    )Net cash provided by (used in) discontinued operations
    
    
    
    
    
    
    (1,019
    )Net cash provided by (used in) financing activities
    
    
    (5,408
    )
    
    
    (4,855
    )Net increase (decrease) in cash
    
    
    (897
    )
    
    
    55Cash and cash equivalents at beginning of period
    
    
    2,244
    
    
    
    1,590Cash and cash equivalents at end of period
    
    $
    1,347
    
    
    $
    1,645
  5




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AIRNET SYSTEMS, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. Basis of Presentation
     , Accounting for Planned Major Maintenance Activities
 2. Major Bank Services Customers
   3. Discontinued Operations
  6




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Accounting for
the Impairment or Disposal of Long-Lived Assets,
  4. Stock Plans and Awards
 Accounting for Stock Issued to Employees, Accounting for Stock-Based Compensation Share-Based Payment
   7




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Impact of the Adoption of FAS 123(R)
   5. Net Income (loss) Per Common Share
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Numerator:Income from continuing operations
    
    $
    3,531
    
    
    $
    2,065
    
    
    $
    5,389
    
    
    $
    3,961Income (loss) from discontinued operations, net of tax
    
    
    
    
    
    
    (87
    )
    
    
    
    
    
    
    (296
    )Net income
    
    $
    3,531
    
    
    $
    1,978
    
    
    $
    5,389
    
    
    $
    3,665Denominator:Basic  weighted average common shares outstanding
    
    
    10,171
    
    
    
    10,144
    
    
    
    10,168
    
    
    
    10,140DilutedDilutive effect of stock options  employees, officers and directors
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    Adjusted weighted average common shares outstanding
    
    
    10,173
    
    
    
    10,144
    
    
    
    10,168
    
    
    
    10,140Income (loss) per common share  basic and diluted:Income from continuing operations
    
    $
    0.35
    
    
    $
    0.20
    
    
    $
    0.53
    
    
    $
    0.39Income (loss) from discontinued operations, net of tax
    
    $
    
    
    
    $
    (0.01
    )
    
    $
    
    
    
    $
    (0.03
    )Net income per common share
    
    $
    0.35
    
    
    $
    0.19
    
    
    $
    0.53
    
    
    $
    0.36
  6. Bank Financing Matters
 Revolving Credit Facility  Second Amended Credit Agreement  March 29, 2007
  8




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##### Table of Contents



Other Term Loan
  Term Loans  Discontinued Operations
  7. Income Taxes
 Accounting for Income Taxes ,
  9




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##### Table of Contents



Accounting for Uncertainty in Income Taxes
   8. Aircraft Dispositions
   10




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##### Table of Contents



AIRNET SYSTEMS, INC.
 
 ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 Safe Harbor Statement
  General
   11




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##### Table of Contents



Share-Based Payment
 Sale of Jetrides Passenger Charter Business
   12




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##### Table of Contents



Results of Operations
 Financial Overview
 Net Revenues
 Dollars in 000s
    
    Three Months Ended
    
    
    Increase (Decrease)
    
    
    Six Months Ended
    
    
    Increase (Decrease)June 30,
    
    
    2007 to 2006
    
    
    June 30,
    
    
    2007 to 2006% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofNet Revenues
    
    2007
    
    
    Total
    
    
    2006
    
    
    Total
    
    
    $
    
    
    %
    
    
    2007
    
    
    Total
    
    
    2006
    
    
    Total
    
    
    $
    
    
    %Revenues Net of Excise Tax:Bank Services
    
    $
    25,935
    
    
    
    62
    %
    
    $
    29,101
    
    
    
    66
    %
    
    $
    (3,166
    )
    
    
    (11
    )%
    
    $
    52,429
    
    
    
    63
    %
    
    $
    57,385
    
    
    
    66
    %
    
    $
    (4,956
    )
    
    
    (9
    )%Express Services
    
    
    15,140
    
    
    
    36
    %
    
    
    14,981
    
    
    
    34
    %
    
    
    159
    
    
    
    1
    %
    
    
    29,354
    
    
    
    35
    %
    
    
    29,025
    
    
    
    33
    %
    
    
    329
    
    
    
    1
    %Aviation Services
    
    
    1,095
    
    
    
    2
    %
    
    
    272
    
    
    
    0
    %
    
    
    823
    
    
    
    303
    %
    
    
    1,899
    
    
    
    2
    %
    
    
    649
    
    
    
    1
    %
    
    
    1,250
    
    
    
    193
    %Total Net Revenues
    
    $
    42,170
    
    
    
    100
    %
    
    $
    44,354
    
    
    
    100
    %
    
    $
    (2,184
    )
    
    
    (5
    )%
    
    $
    83,682
    
    
    
    100
    %
    
    $
    87,059
    
    
    
    100
    %
    
    $
    (3,377
    )
    
    
    (4
    )%
     13




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##### Table of Contents



Bank Services Revenues
 Dollars in 000s
    
    Three Months Ended
    
    
    Increase (Decrease)
    
    
    Six Months Ended
    
    
    Increase (Decrease)June 30,
    
    
    2007 to 2006
    
    
    June 30,
    
    
    2007 to 2006Bank Services Revenues
    
    2007
    
    
    2006
    
    
    $
    
    
    %
    
    
    2007
    
    
    2006
    
    
    $
    
    
    %Bank Services Revenues
    
    $
    21,925
    
    
    $
    24,783
    
    
    $
    (2,858
    )
    
    
    (12
    )%
    
    $
    45,035
    
    
    $
    49,528
    
    
    $
    (4,493
    )
    
    
    (9
    )%Fuel Surcharge
    
    
    4,010
    
    
    
    4,318
    
    
    
    (308
    )
    
    
    (7
    )%
    
    
    7,394
    
    
    
    7,857
    
    
    
    (463
    )
    
    
    (6
    )%Total Net Bank Services Revenues
    
    $
    25,935
    
    
    $
    29,101
    
    
    $
    (3,166
    )
    
    
    (11
    )%
    
    $
    52,429
    
    
    $
    57,385
    
    
    $
    (4,956
    )
    
    
    (9
    )%Revenues before fuel surcharge:Weekday Revenues Per Flying Day
    
    $
    406
    
    
    $
    465
    
    
    $
    (59
    )
    
    
    (13
    )%
    
    $
    426
    
    
    $
    472
    
    
    $
    (46
    )
    
    
    (10
    )%Weekend Revenues Per Weekend
    
    $
    122
    
    
    $
    144
    
    
    $
    (22
    )
    
    
    (15
    )%
    
    $
    126
    
    
    $
    144
    
    
    $
    (18
    )
    
    
    (13
    )%
   Bank Services Cancellations
   14




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##### Table of Contents



Express Services Revenues
 Dollars in 000s
    
    Three Months Ended
    
    
    Increase (Decrease)
    
    
    Six Months Ended
    
    
    Increase (Decrease)June 30,
    
    
    2007 to 2006
    
    
    June 30,
    
    
    2007 to 2006Express Services Revenues
    
    2007
    
    
    2006
    
    
    $
    
    
    %
    
    
    2007
    
    
    2006
    
    
    $
    
    
    %Express Revenues  Non Charter
    
    $
    9,703
    
    
    $
    8,640
    
    
    $
    1,063
    
    
    
    12
    %
    
    $
    18,925
    
    
    $
    17,510
    
    
    $
    1,415
    
    
    
    8
    %Express Revenues  Charter
    
    
    3,638
    
    
    
    3,748
    
    
    
    (110
    )
    
    
    (3
    )%
    
    
    7,042
    
    
    
    6,980
    
    
    
    62
    
    
    
    1
    %Fuel Surcharge
    
    
    1,799
    
    
    
    2,593
    
    
    
    (794
    )
    
    
    (31
    )%
    
    
    3,387
    
    
    
    4,535
    
    
    
    (1,148
    )
    
    
    (25
    )%Total Net Express Services Revenues
    
    $
    15,140
    
    
    $
    14,981
    
    
    $
    159
    
    
    
    1
    %
    
    $
    29,354
    
    
    $
    29,025
    
    
    $
    329
    
    
    
    1
    %
    15




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##### Table of Contents



Aviation Services
  Costs and Expenses
 Dollars in 000s
    
    Three Months Ended
    
    
    Increase (Decrease)
    
    
    Six Months Ended
    
    
    Increase (Decrease)June 30,
    
    
    2007 to 2006
    
    
    June 30,
    
    
    2007 to 2006Costs and Expenses
    
    2007
    
    
    2006
    
    
    $
    
    
    %
    
    
    2007
    
    
    2006
    
    
    $
    
    
    %Aircraft fuel
    
    $
    6,387
    
    
    $
    7,723
    
    
    $
    (1,336
    )
    
    
    (17
    )%
    
    $
    12,510
    
    
    $
    14,715
    
    
    $
    (2,205
    )
    
    
    (15
    )%Aircraft maintenance
    
    
    5,973
    
    
    
    4,128
    
    
    
    1,845
    
    
    
    45
    %
    
    
    13,301
    
    
    
    8,223
    
    
    
    5,078
    
    
    
    62
    %Operating wages and benefits
    
    
    4,519
    
    
    
    4,736
    
    
    
    (217
    )
    
    
    (5
    )%
    
    
    9,451
    
    
    
    9,711
    
    
    
    (260
    )
    
    
    (3
    )%Contracted air costs
    
    
    3,788
    
    
    
    4,439
    
    
    
    (651
    )
    
    
    (15
    )%
    
    
    7,571
    
    
    
    8,608
    
    
    
    (1,037
    )
    
    
    (12
    )%Ground courier
    
    
    8,759
    
    
    
    8,717
    
    
    
    42
    
    
    
    0
    %
    
    
    17,665
    
    
    
    16,896
    
    
    
    769
    
    
    
    5
    %Depreciation
    
    
    1,256
    
    
    
    2,930
    
    
    
    (1,674
    )
    
    
    (57
    )%
    
    
    2,502
    
    
    
    5,813
    
    
    
    (3,311
    )
    
    
    (57
    )%Insurance, rent and landing fees
    
    
    2,058
    
    
    
    2,112
    
    
    
    (54
    )
    
    
    (3
    )%
    
    
    4,196
    
    
    
    3,989
    
    
    
    207
    
    
    
    5
    %Travel, training and other operating
    
    
    1,509
    
    
    
    1,147
    
    
    
    362
    
    
    
    32
    %
    
    
    3,093
    
    
    
    2,678
    
    
    
    415
    
    
    
    15
    %Selling, general and administrative
    
    
    4,118
    
    
    
    4,772
    
    
    
    (654
    )
    
    
    (14
    )%
    
    
    8,380
    
    
    
    9,237
    
    
    
    (857
    )
    
    
    (9
    )%Net gain on disposition of assets
    
    
    (3
    )
    
    
    (4
    )
    
    
    1
    
    
    
    *
    
    
    
    (883
    )
    
    
    (12
    )
    
    
    (871
    )
    
    
    *Total Costs and Expenses
    
    $
    38,364
    
    
    $
    40,700
    
    
    $
    (2,336
    )
    
    
    (6
    )%
    
    $
    77,786
    
    
    $
    79,858
    
    
    $
    (2,072
    )
    
    
    (3
    )%
 
 *
    
    The percentage increase (decrease) is not meaningful.   16




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##### Table of Contents



17




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##### Table of Contents



Accounting for Income Taxes
 Liquidity and Capital Resources
 Cash flow from operating activities  Continuing Operations
  Cash flow from operating activities  Discontinued Operations
  Financing Activities  Continuing Operations
 Revolving Credit Facility  Second Amended Credit Agreement  March 29, 2007
  18




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##### Table of Contents



Other Term Loan
  Financing Activities  Discontinued Operations
  Investing Activities  Continuing Operations
  19




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##### Table of Contents



Investing Activities  Discontinued Operations
  Regulation
       20




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##### Table of Contents



The Next Generation Air Transportation System Financing Reform Act of 2007 The Next Generation Air Transportation System Financing Reform
Act of 2007 Aviation Investment and Modernization Act of 2007 FAA Reauthorization Act of 2007
 Off-Balance Sheet Arrangements
  Seasonality and Variability in Quarterly Results
  
 ITEM 3  Quantitative and Qualitative Disclosures About Market Risk
 Inflation and Interest Rates
  Fuel Surcharge
  21




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##### Table of Contents



ITEM 4  Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  
    
    information required to be disclosed by AirNet in this Quarterly Report on Form
10-Q and the other reports that AirNet files or submits under the Exchange Act would
be accumulated and communicated to AirNets management, including its principal
executive officer and principal financial officer, as appropriate to allow timely
decisions regarding required disclosure;
    
    information required to be disclosed by AirNet in this Quarterly Report on Form
10-Q and the other reports that AirNet files or submits under the Exchange Act would
be recorded, processed, summarized and reported within the time periods specified in
the SECs rules and forms; and
    
    AirNets disclosure controls and procedures were effective as of the end of the
quarterly period covered by this Quarterly Report on Form 10-Q.
 Changes in Internal Control Over Financial Reporting
  
 PART II  OTHER INFORMATION
 
 ITEM 1  Legal Proceedings
   
 ITEM 1A  Risk Factors
  22




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##### Table of Contents



Proposed legislative changes in the manner in which the FAA is funded by the federal government may
increase AirNets operating costs.
  The U.S. aviation industry is experiencing a shortage of qualified pilots which could adversely
impact AirNets flight schedule and air transportation network.
  
 ITEM 2  Unregistered Sales of Equity Securities and Use of Proceeds
 (a)
    
    Not applicable.(b)
    
    Not applicable.(c)
    
    Neither AirNet Systems, Inc. nor any affiliated purchaser, as
defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as
amended, purchased any common shares of AirNet Systems, Inc. during the
quarterly period ended June 30, 2007. On February 18, 2000, AirNet Systems,
Inc. announced a stock repurchase plan under which up to $3.0 million of its
common shares may be repurchased from time to time. These repurchases may be
made in open market transactions or through privately negotiated transactions.
As of June 30, 2007, AirNet Systems, Inc. had the authority to repurchase
approximately $0.6 million of its common shares under this stock repurchase
plan.
 
 ITEM 3  Defaults Upon Senior Securities.
  
 ITEM 4  Submission of Matters to a Vote of Security Holders.
   23




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##### Table of Contents



Director
    
    For
    
    WithheldJames M. Chadwick
    
    
    9,663,258
    
    
    
    216,268Russell M. Gertmenian
    
    
    9,549,689
    
    
    
    329,837Gerald Hellerman
    
    
    9,547,699
    
    
    
    331,827Bruce D. Parker
    
    
    9,564,058
    
    
    
    315,468James E. Riddle
    
    
    9,594,101
    
    
    
    305,368
  For
    
    Against
    
    AbstainAdoption of Amendments to Sections
1.04(A) and 1.04(B) of AirNets Code
of Regulations
    
    
    9,594,101
    
    
    
    273,920
    
    
    
    11,505
 
 ITEM 5  Other Information
  
 ITEM 6  Exhibits
  Exhibit No.
    
    Description
    
    Location3.1
    
    Certificate Regarding Adoption
of Amendments to Sections
1.04(A) and 1.04(B) of AirNet
Systems, Inc.s Code of
Regulations by the Shareholders
on June 6, 2007
    
    Incorporated herein by
reference from Exhibit 3.1 to
AirNet Systems, Inc.s Current
Report on Form 8-K dated June
11, 2007 and filed with the SEC
on the same date (File No.
1-13025)3.2
    
    Code of Regulations of AirNet
Systems, Inc. (reflecting all
amendments through June 6,
2007) [for SEC reporting
compliance purposes only]
    
    Filed herewith31.1
    
    Rule 13a-14(a)/15d-14(a)
Certification (Principal
Executive Officer)
    
    Filed herewith31.2
    
    Rule 13a-14(a)/15d-14(a)
Certification (Principal
Financial Officer)
    
    Filed herewith32
    
    Section 1350 Certification
(Principal Executive Officer
and Principal Financial
Officer)
    
    Filed herewith
 24




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##### Table of Contents



AIRNET SYSTEMS, INC.
 
 SIGNATURES
  AIRNET SYSTEMS, INC.Dated: August 14, 2007
    By:
    /s/ Gary W. QualmannGary W. Qualmann,Chief Financial Officer, Treasurer and Secretary
(Duly Authorized Officer)
(Principal Financial Officer)Dated:  August 14, 2007
    By:
    /s/ Ray L. DruseikisRay L. Druseikis,Vice President of Finance and Controller
(Duly Authorized Officer)
(Principal Accounting Officer) 25




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##### Table of Contents



AIRNET SYSTEMS, INC.
 
 INDEX TO EXHIBITS
 Exhibit No.
    
    Description
    
    Location3.1
    
    Certificate Regarding Adoption
of Amendments to Sections
1.04(A) and 1.04(B) of AirNet
Systems, Inc.s Code of
Regulations by the Shareholders
on June 6, 2007
    
    Incorporated herein by
reference from Exhibit 3.1 to
AirNet Systems, Inc.s Current
Report on Form 8-K dated June
11, 2007 and filed with the SEC
on the same date (File No.
1-13025)3.2
    
    Code of Regulations of AirNet
Systems, Inc. (reflecting all
amendments through June 6,
2007) [for SEC reporting
compliance purposes only]
    
    Filed herewith31.1
    
    Rule 13a-14(a)/15d-14(a)
Certification (Principal
Executive Officer)
    
    Filed herewith31.2
    
    Rule 13a-14(a)/15d-14(a)
Certification (Principal
Financial Officer)
    
    Filed herewith32
    
    Section 1350 Certification
(Principal Executive Officer
and Principal Financial
Officer)
    
    Filed herewith
 26