|   |      X   |                                Quarterly Report Pursuant to Section 13 or 15(d) of the Securities                Exchange Act of 1934 for the quarterly period ended June 30,                2007 |
|--------|---------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | Transition                Report Pursuant to Section 13 or 15(d) of the Securities Exchange                Act of                1934 for the transition period from _____to                _____ |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                    | AIR                T, INC. AND SUBSIDIARIES                |   |   |                  |
|-------------------------------------------------------------------------|------------------------------------------------------------|--------|--------|-----------------------|
|                                                                    |                                                       |   |   |                  |
|                                                                    | INDEX                                                      |   |   |                  |
|                                                                    |                                                       |   | PAGE   |                  |
| PART                I.  FINANCIAL INFORMATION                 |                                                       |   |   |
|                                                                    |                                                       |   |   |
|                                                                    |                                                       |   |   |                  |
| Item                1.  Financial Statements                  |                                                       |   |   |
|                                                                    |                                                       |   |   |                  |
| Condensed                Consolidated Statements of Operations          |                                                       |   |   |
| for                the three-months ended                               |                                                       |   |   |
| June                30, 2007 and 2006 (Unaudited)                       |                                                       |   | 3      |                  |
|                                                                    |                                                       |   |   |                  |   |
| Condensed                Consolidated Balance Sheets at                 |                                                       |   |   |                  |
| June                30, 2007 (Unaudited)                                |                                                       |   |   |                  |
| and                March 31, 2007                                       |                                                       |   | 4      |                  |
|                                                                    |                                                       |   |   |                  |   |
| Condensed                Consolidated Statements of Cash                |                                                       |   |   |                  |
| Flows                for the three-months                               |                                                       |   |   |                  |
| ended                June 30, 2007 and 2006  (Unaudited)           |                                                       |   | 5      |                  |
|                                                                    |                                                       |   |   |                  |   |
| Condensed                Consolidated Statements of Stockholders’ |                                                       |   |   |                  |
| Equity                and Comprehensive Income for the                  |                                                       |   |   |                  |
| three-months                ended June 30,                              |                                                       |   |   |                  |
| 2007                and 2006(Unaudited)                                 |                                                       |   | 6      |                  |
|                                                                    |                                                       |   |   |                  |   |
| Notes                to Condensed Consolidated Financial                |                                                       |   |   |                  |
| Statements                (Unaudited)                                   |                                                       |   | 7-11   |                  |
|                                                                    |                                                       |   |   |                  |   |
| Item                2.                                                  | Management’s                Discussion and Analysis  |   |   |                  |   |
|                                                                    | of                Financial Condition and Results          |   |   |                  |   |
|                                                                    | of                Operations                               |   |   | 11-15                 |   |
|                                                                    |                                                       |   |   |                  |   |
| Item                3.                                                  | Quantitative                and Qualitative Disclosure     |   |   |                  |   |
|                                                                    | About                Market Risk                           |   |   | 15                    |   |
|                                                                    |                                                       |   |   |                  |   |
| Item                4.                                                  | Controls                and Procedures                     |   |   | 16                    |   |
|                                                                    |                                                       |   |   |                  |   |
| PART                II.  OTHER INFORMATION                    |                                                       |   |   |                  |
|                                                                    |                                                       |   |   |                  |   |
| Item                1.                                                  | Legal                Proceedings                           |   |   | 16                    |   |
|                                                                    |                                                       |   |   |                  |   |
| Item                2.                                                  | Unregistered                Sales of Equity Securities and |   |   |                  |   |
|                                                                    | Use                of Proceeds                             |   |   | 16                -17 |   |
|                                                                    |                                                       |   |   |                  |   |
| Item                6.                                                  | Exhibits                                                   |   |   | 18                    |   |
|                                                                    |                                                       |   |   |                  |   |
|                                                                    | Signatures                                                 |   |   | 19                    |   |
|                                                                    |                                                       |   |   |                  |   |
|                                                                    | Exhibit                Index                               |   |   | 20                    |   |
|                                                                    |                                                       |   |   |                  |   |
|                                                                    | Officers’                Certifications              |   |   | 21-23                 |   |

----

|                                                                     |   | Three                Months Ended |       |
|--------------------------------------------------------------------------|--------|-----------------------------------|------------|
|                                                                     |   | June                30,           |       |
|                                                                     |   | 2007                              |       |   | 2006 |   |
| Operating                Revenues:                                       |   |                              |       |   |   |   |
| Overnight                air cargo                                       |   | $                                 | 8,512,451  |   |   | $ | 8,575,952 |   |
| Ground                equipment                                          |   |                              | 7,283,516  |   |   |   | 7,507,857 |   |
|                                                                     |   |                              | 15,795,967 |   |   |   | 16,083,809 |   |
|                                                                     |   |                              |       |   |   |   |   |   |
| Operating                Expenses:                                       |   |                              |       |   |   |   |   |   |
| Flight-air                cargo                                          |   |                              | 4,350,062  |   |   |   | 4,173,861 |   |
| Maintenance-air                cargo                                     |   |                              | 2,839,161  |   |   |   | 3,098,683 |   |
| Ground                equipment                                          |   |                              | 5,178,368  |   |   |   | 5,258,264 |   |
| General                and administrative                                |   |                              | 2,336,906  |   |   |   | 2,271,552 |   |
| Depreciation                and amortization                             |   |                              | 123,874    |   |   |   | 176,834 |   |
|                                                                     |   |                              | 14,828,371 |   |   |   | 14,979,194 |   |
|                                                                     |   |                              |       |   |   |   |   |   |
| Operating                Income                                          |   |                              | 967,596    |   |   |   | 1,104,615 |   |
|                                                                     |   |                              |       |   |   |   |   |   |
| Non-operating                Expense (Income) Expense:                   |   |                              |       |   |   |   |   |   |
| Interest,                net                                             |   |                              | 57,247     |   |   |   | 4,109 |   |
| Deferred                retirement expense                               |   |                              | 3,500      |   |   |   | 5,250 |   |
| Investment                income and other                               |   |                              | (66,537    | ) |   |   | (60,441 | ) |
|                                                                     |   |                              | (5,790     | ) |   |   | (51,082 | ) |
|                                                                     |   |                              |       |   |   |   |   |   |
|                                                                     |   |                              |       |   |   |   |   |   |
| Earnings                Before Income Taxes                              |   |                              | 973,386    |   |   |   | 1,155,697 |   |
|                                                                     |   |                              |       |   |   |   |   |   |
| Income                Tax Expense                                        |   |                              | 347,018    |   |   |   | 428,902 |   |
|                                                                     |   |                              |       |   |   |   |   |   |
| Net                Earnings                                              |   | $                                 | 626,368    |   |   | $ | 726,795 |   |
|                                                                     |   |                              |       |   |   |   |   |   |
|                                                                     |   |                              |       |   |   |   |   |   |
| Basic                and Diluted Net Earnings Per Share                  |   | $                                 | 0.25       |   |   | $ | 0.27 |   |
|                                                                     |   |                              |       |   |   |   |   |   |
|                                                                     |   |                              |       |   |   |   |   |   |
| Weighted                Average Shares Outstanding:                      |   |                              |       |   |   |   |   |   |
| Basic                                                                    |   |                              | 2,461,719  |   |   |   | 2,671,293 |   |
| Diluted                                                                  |   |                              | 2,461,968  |   |   |   | 2,671,732 |   |
|                                                                     |   |                              |       |   |   |   |   |   |
| See                notes to condensed consolidated financial statements. |   |                              |       |   |   |

----

|                                                                                                                        |   | June                30, 2007 |       |   | March                31, 2007 |   |
|-----------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|------------|--------|-------------------------------|--------|
| ASSETS                                                                                                                      |   | (Unaudited)                  |       |   | (Note)                        |   |
| Current                Assets:                                                                                              |   |                         |       |   |                          |   |
| Cash                and cash equivalents                                                                                    |   | $                            | 3,815,482  |   |                          | $      | 2,895,499 |   |
| Marketable                securities                                                                                        |   |                         | 875,638    |   |                          |   | 860,870 |   |
| Accounts                receivable, less allowance                                                                          |   |                         |       |   |                          |   |   |   |
| for                doubtful accounts of $417,000 at June                                                                    |   |                         |       |   |                          |
|   30,                2007 and $413,000 at March 31, 2007                                                          |   |                         | 4,304,603  |   |                          |   | 7,643,391 |   |
| Income                taxes receivable                                                                                      |   |                         | 171,380    |   |                          |   | - |   |
| Notes                and other non-trade receivables-current                                                                |   |                         | 54,695     |   |                          |   | 68,730 |   |
| Inventories,                net                                                                                             |   |                         | 8,940,018  |   |                          |   | 8,085,755 |   |
| Deferred                tax assets                                                                                          |   |                         | 722,030    |   |                          |   | 724,534 |   |
| Prepaid                expenses and other                                                                                   |   |                         | 113,706    |   |                          |   | 325,533 |   |
|   Total                Current Assets                                                                             |   |                         | 18,997,552 |   |                          |   | 20,604,312 |   |
|                                                                                                                        |   |                         |       |   |                          |   |   |   |
| Property                and Equipment                                                                                       |   |                         | 7,541,067  |   |                          |   | 8,113,363 |   |
| Less                accumulated depreciation                                                                                |   |                         | (5,729,448 | )      |                          |   | (5,820,852 | ) |
|   Property                and Equipment, net                                                                      |   |                         | 1,811,619  |   |                          |   | 2,292,511 |   |
|                                                                                                                        |   |                         |       |   |                          |   |   |   |
| Deferred                Tax Assets                                                                                          |   |                         | 211,358    |   |                          |   | 170,353 |   |
| Cash                Surrender Value of Life Insurance Policies                                                              |   |                         | 1,313,704  |   |                          |   | 1,296,703 |   |
| Notes                and Other Non-Trade Receivables-Long Term                                                              |   |                         | 190,399    |   |                          |   | 200,529 |   |
| Other                Assets                                                                                                 |   |                         | 50,575     |   |                          |   | 50,576 |   |
|   Total                Assets                                                                                     |   | $                            | 22,575,207 |   |                          | $      | 24,614,984 |   |
|                                                                                                                        |   |                         |       |   |                          |
| LIABILITIES                AND STOCKHOLDERS' EQUITY                                                                         |   |                         |       |   |                          |   |   |   |
| Current                Liabilities:                                                                                         |   |                         |       |   |                          |   |   |   |
| Accounts                payable                                                                                             |   | $                            | 4,800,403  |   |                          | $      | 5,304,022 |   |
| Accrued                expenses                                                                                             |   |                         | 1,373,620  |   |                          |   | 2,236,106 |   |
| Income                taxes payable                                                                                         |   |                         | -          |   |                          |   | 194,840 |   |
| Current                portion of long-term debt and obligations                                                            |   |                         | 133,994    |   |                          |   | 144,684 |   |
|  Total                Current Liabilities                                                                              |   |                         | 6,308,017  |   |                          |   | 7,879,652 |   |
|                                                                                                                        |   |                         |       |   |                          |   |   |   |
| Capital                Lease Obligations (less current portion)                                                             |   |                         | 70,151     |   |                          |   | 77,702 |   |
| Long-Term                Debt (less current portion)                                                                        |   |                         | 547,192    |   |                          |   | 575,204 |   |
| Deferred                Retirement Obligations (less current portion)                                                       |   |                         | 635,996    |   |                          |   | 633,693 |   |
|                                                                                                                        |   |                         |       |   |                          |   |   |   |
| Stockholders'                Equity:                                                                                        |   |                         |       |   |                          |   |   |   |
| Preferred                stock, $1 par value, authorized 50,000 shares,                                                     |   |                         |       |   |                          |
|   none                issued                                                                                      |   |                         | -          |   |                          |   | - |   |
| Common                stock, par value $.25; authorized 4,000,000 shares;                                                   |   |
| 2,442,306                and 2,509,998 shares issued and                                                                    |   |                         |       |   |                          |
|   outstanding                                                                                                     |   |                         | 610,576    |   |                          |   | 627,499 |   |
| Additional                paid in capital                                                                                   |   |                         | 5,615,222  |   |                          |   | 6,058,070 |   |
| Retained                earnings                                                                                            |   |                         | 8,674,123  |   |                          |   | 8,658,606 |   |
| Accumulated                other comprehensive income, net                                                                  |   |                         | 113,930    |   |                          |   | 104,558 |   |
| Total                Stockholders' Equity                                                                                   |   |                         | 15,013,851 |   |                          |   | 15,448,733 |   |
|   Total                Liabilities and Stockholders’ Equity                                                 |   | $                            | 22,575,207 |   |                          | $      | 24,614,984 |   |
|                                                                                                                        |   |                         |       |   |                          |   |   |   |
| Note: The                balance sheet at March 31, 2007 has been derived from the audited                consolidated |   |
| financial                statements included in the Company's Annual Report on Form 10-K for                the             |   |
| fiscal                year ended March 31, 2007.                                                                            |   |                         |       |   |                          |
|                                                                                                                        |   |                         |       |   |                          |   |   |   |
| See                notes to condensed consolidated financial statements.                                                    |   |                         |       |   |                          |

----

|                                                                                                 |   | Three                Months Ended |       |
|------------------------------------------------------------------------------------------------------|--------|-----------------------------------|------------|
|                                                                                                 |   | June                30,           |       |
|                                                                                                 |   | 2007                              |       |   | 2006 |   |
| Cash                flows from operating activities:                                                 |   |                              |       |   |   |   |
| Net                earnings                                                                          |   | $                                 | 626,368    |   |   | $ | 726,795 |   |
| Adjustments                to reconcile net earnings to net                                          |   |                              |       |   |   |   |   |   |
|  cash                provided by operating activities:                                          |   |                              |       |   |   |   |   |   |
| Change                in accounts receivable and inventory reserves                                  |   |                              | 34,106     |   |   |   | 162,579 |   |
| Depreciation                and amortization                                                         |   |                              | 123,874    |   |   |   | 176,834 |   |
| Increase                in cash surrender value of life insurance                                    |   |                              | (17,001    | ) |   |   | (17,000 | ) |
| Deferred                taxes                                                                        |   |                              | (43,897    | ) |   |   | (78,661 | ) |
| Warranty                reserve                                                                      |   |                              | (41,000    | ) |   |   | (47,767 | ) |
| Compensation                expense related to stock options                                         |   |                              | 87,278     |   |   |   | 30,750 |   |
| Change                in assets and liabilities which provided (used) cash:                          |   |                              |       |   |   |   |   |   |
| Accounts                receivable                                                                   |   |                              | 3,334,737  |   |   |   | 4,267,693 |   |
| Notes                receivable                                                                      |   |                              | 24,165     |   |   |   | 10,995 |   |
| Income                taxes receivable/payable                                                       |   |                              | (366,220   | ) |   |   | 188,268 |   |
| Inventories                                                                                          |   |                              | (426,019   | ) |   |   | (871,035 | ) |
| Prepaid                expenses and other                                                            |   |                              | 211,828    |   |   |   | 246,658 |   |
| Accounts                payable                                                                      |   |                              | (503,619   | ) |   |   | (575,001 | ) |
| Accrued                expenses and other liabilities                                                |   |                              | (831,574   | ) |   |   | (679,160 | ) |
|  Total                adjustments                                                               |   |                              | 1,586,658  |   |   |   | 2,815,153 |   |
|  Net                cash provided by operating activities                                       |   |                              | 2,213,026  |   |   |   | 3,541,948 |   |
| Cash                flows from investing activities:                                                 |   |                              |       |   |   |   |   |   |
| Capital                expenditures                                                                  |   |                              | (101,281   | ) |   |   | (34,032 | ) |
|  Net                cash used in investing activities                                           |   |                              | (101,281   | ) |   |   | (34,032 | ) |
| Cash                flows from financing activities:                                                 |   |                              |       |   |   |   |   |   |
| Payments                on aircraft term loan                                                        |   |                              | (26,825    | ) |   |   | (22,243 | ) |
| Net                borrowings on line of credit                                                      |   |                              | -          |   |   |   | 280,211 |   |
| Stock                repurchase                                                                      |   |                              | (547,049   | ) |   |   | - |   |
| Payments                on capital leases                                                            |   |                              | (7,037     | ) |   |   | (43,301 | ) |
| Payment                of cash dividend                                                              |   |                              | (610,851   | ) |   |   | (667,823 | ) |
|  Net                cash used in financing activities                                           |   |                              | (1,191,762 | ) |   |   | (453,156 | ) |
| Net                increase in cash and cash equivalents                                             |   |                              | 919,983    |   |   |   | 3,054,760 |   |
| Cash                and cash equivalents at beginning of period                                      |   |                              | 2,895,499  |   |   |   | 2,702,424 |   |
| Cash                and cash equivalents at end of period                                            |   | $                                 | 3,815,482  |   |   | $ | 5,757,184 |   |
|                                                                                                 |   |                              |       |   |   |   |   |   |
| Supplemental                disclosure of cash flow information:                                     |   |                              |       |   |   |   |   |   |
| Cash                paid during the period for:                                                      |   |                              |       |   |   |   |   |   |
| Interest                                                                                             |   | $                                 | 83,428     |   |   | $ | 24,518 |   |
| Income                taxes                                                                          |   |                              | 757,900    |   |   |   | 318,060 |   |
|                                                                                                 |   |                              |       |   |   |   |   |   |
| Summary                of significant non-cash information:                                          |   |                              |       |   |   |   |   |   |
| Increase                (decrease) in fair value of marketable securities, net of                tax |   | $                                 | 14,768     |   |   | $ | (11,814 | ) |
| Leased                equipment transferred to inventory                                             |   |                              | (458,300   | ) |   |   | (380,340 | ) |
|                                                                                                 |   |                              |       |   |   |   |   |   |
| See                notes to condensed consolidated financial statements.                             |   |                              |       |   |   |   |   |   |
|                                                                                                 |   |                              |       |   |   |   |   |   |
|                                                                                                 |   |                              |       |   |   |   |   |   |

----

|                                                                     |   |                        |      |   |       |   |    |     |   |    |      |   |     | Accumulated   |      |          |          |        |
|--------------------------------------------------------------------------|--------|-----------------------------|-----------|--------|------------|--------|---------|----------|--------|---------|-----------|--------|----------|---------------|-----------|---------------|---------------|-------------|
|                                                                     |   | Common                Stock |      |   | Additional |   |    | Retained |   |    | Other     |   |     | Total         |      |
|                                                                     |   |                        |      |   |       |   |    | Paid-In  |   |    | Earnings  |   |     | Comprehensive |      |          | Stockholders' |        |
|                                                                     |   | Shares                      |      |   | Amount     |   |    | Capital  |   |    |      |   |     | Income        |      |          | Equity        |        |
|                                                                     |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      |          |          |        |
| Balance,                March 31, 2006                                   |   |                        | 2,671,293 |   |       | $      | 667,823 |     |   | $       | 6,939,357 |   |     | $             | 6,840,383 |          |          | $           | 52,479 |   |   | $ | 14,500,042 |   |
|                                                                     |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      |          |          |        |   |   |   |   |   |   |
| Comprehensive                Income:                                     |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      |          |          |        |   |   |   |   |   |   |
| Net                earnings                                              |   |                        |      |   |       |   |    |     |   |    |      |   |     |          | 726,795   |          |          |        |   |   |   |   |   |   |
| Unrealized                loss                                           |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      |          |          |        |   |   |   |   |   |   |
| on                securities, net of tax                                 |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      | (11,814       | )             |        |   |   |   |
| Total                Comprehensive Income                                |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      |          |          |        |   | 714,981 |   |
| Cash                dividend                                             |   |                        |      |   |       |   |    |     |   |    |      |   |     |          | (667,823  | )             |          |        |   |   |   |   | (667,823 | ) |
| Compensation                expense                                      |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      |          |          |        |   |   |   |   |   |   |
| related                to stock options                                  |   |                        |      |   |       |   |    | 30,750   |   |    |      |   |     |          |      |          |          |        |   | 30,750 |   |
|                                                                     |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      |          |          |        |   |   |   |   |   |   |
| Balance,                June 30, 2006                                    |   |                        | 2,671,293 |   |       | $      | 667,823 |     |   | $       | 6,970,107 |   |     | $             | 6,899,355 |          |          | $           | 40,665 |   |   | $ | 14,577,950 |   |
|                                                                     |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      |          |          |        |   |   |   |   |   |   |
|                                                                     |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      |          |          |        |   |   |   |   |   |   |
|                                                                     |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      |          |          |        |   |   |   |   |   |   |
|                                                                     |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      |          |          |        |   |   |   |   |   |   |
|                                                                     |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      |          |          | Accumulated |   |   |   |   |   |
|                                                                     |   | Common                Stock |      |   | Additional |   |    | Retained |   |    | Other     |   |     | Total         |      |
|                                                                     |   |                        |      |   |       |   |    |     |   | Paid-In |      |   | Earnings |          |      | Comprehensive |          |        | Stockholders' |   |
|                                                                     |   | Shares                      |      |   | Amount     |   |    | Capital  |   |    |      |   |     |          | Income    |          |          | Equity      |   |
|                                                                     |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      |          |          |        |   |   |   |   |   |   |
| Balance,                March 31, 2007                                   |   |                        | 2,509,998 |   |       | $      | 627,499 |     |   | $       | 6,058,070 |   |     | $             | 8,658,606 |          |          | $           | 104,558 |   |   | $ | 15,448,733 |   |
|                                                                     |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      |          |          |        |   |   |   |   |   |   |
| Comprehensive                Income:                                     |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      |          |          |        |   |   |   |   |   |   |
| Net                earnings                                              |   |                        |      |   |       |   |    |     |   |    |      |   |     |          | 626,368   |          |          |        |   |   |   |   |   |   |
| Unrealized                gain                                           |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      |          |          |        |   |   |   |   |   |   |
| on                securities, net of tax                                 |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      | 9,372         |          |        |   |   |   |
| Total                Comprehensive Income                                |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      |          |          |        |   | 635,740 |   |
|                                                                     |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      |          |          |        |   |   |   |   | - |   |
|                                                                     |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      |          |          |        |   |   |   |   | - |   |
| Cash                dividend                                             |   |                        |      |   |       |   |    |     |   |    |      |   |     |          | (610,851  | )             |          |        |   |   |   |   | (610,851 | ) |
| Compensation                expense                                      |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      |          |          |        |   |   |   |   |   |   |
| related                to stock options                                  |   |                        |      |   |       |   |    | 87,278   |   |    |      |   |     |          |      |          |          |        |   | 87,278 |   |
| Stock                repurchase                                          |   |                        | (67,692   | )      |       |   | (16,923 | )        |   |    | (530,126  | )      |     |          |      |          |          |        |   |   |   |   | (547,049 | ) |
| Balance,                June 30, 2007                                    |   |                        | 2,442,306 |   |       | $      | 610,576 |     |   | $       | 5,615,222 |   |     | $             | 8,674,123 |          |          | $           | 113,930 |   |   | $ | 15,013,851 |   |
|                                                                     |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      |          |          |        |   |   |   |   |   |   |
|                                                                     |   |                        |      |   |       |   |    |     |   |    |      |   |     |          |      |          |          |        |   |   |   |   |   |   |
| See                notes to condensed consolidated financial statements. |   |                        |      |   |       |   |    |     |   |    |      |   |     |

----

*Accounting for Uncertainty in Income Taxes- an Interpretation of FASB      Statement No. 109, *

----

|                                                                  |   | Three                Months Ended |      |
|-----------------------------------------------------------------------|--------|-----------------------------------|-----------|
|                                                                  |   | June                30,           |      |
|                                                                  |   | 2007                              |      |   | 2006 |   |
|                                                                  |   |                              |      |   |   |   |
| Net                earnings                                           |   | $                                 | 626,368   |   |   | $ | 726,795 |   |
|                                                                  |   |                              |      |   |   |   |   |   |
| Basic                and Diluted Net Earnings Per Share               |   | $                                 | 0.25      |   |   | $ | 0.27 |   |
|                                                                  |   |                              |      |   |   |   |   |   |
| Weighted                Average Shares Outstanding:                   |   |                              |      |   |   |   |   |   |
| Basic                                                                 |   |                              | 2,461,719 |   |   |   | 2,671,293 |   |
| Plus:  Incremental                shares from stock options |   |                              | 249       |   |   |   | 439 |   |
| Diluted                                                               |   |                              | 2,461,968 |   |   |   | 2,671,732 |   |

|                                           |   | June                30, 2007 |      |   | March                31, 2007 |   |
|------------------------------------------------|--------|------------------------------|-----------|--------|-------------------------------|--------|
| Aircraft                parts and supplies     |   | $                            | 508,403   |   |                          | $      | 485,209 |   |
| Ground                equipment manufacturing: |   |                         |      |   |                          |   |   |   |
| Raw                materials                   |   |                         | 7,239,854 |   |                          |   | 6,250,813 |   |
| Work                in process                 |   |                         | 1,077,691 |   |                          |   | 1,648,896 |   |
| Finished                goods                  |   |                         | 807,976   |   |                          |   | 364,688 |   |
| Total                inventory                 |   |                         | 9,633,924 |   |                          |   | 8,749,606 |   |
| Reserves                                       |   |                         | (693,906  | )      |                          |   | (663,851 | ) |
|                                           |   |                         |      |   |                          |   |   |   |
| Total,                net of reserves          |   | $                            | 8,940,018 |   |                          | $      | 8,085,755 |   |
|                                           |   |                         |      |   |                          |   |   |   |

*Share-Based Payment*

*Fair Value      Measurements*

*The Fair Value Option for      Financial Assets and Liabilities *

----

|   |     |
|--------|--------------------|

|                                                                |   | Three                Months Ended June 30, |       |
|---------------------------------------------------------------------|--------|--------------------------------------------|------------|
|                                                                |   | 2007                                       |       |   | 2006 |   |
| Operating                Revenues:                                  |   |                                       |       |   |   |   |
| Overnight                Air Cargo                                  |   | $                                          | 8,512,451  |   |   | $ | 8,575,952 |   |
| Ground                Equipment:                                    |   |                                       |       |   |   |   |   |   |
|    Domestic                                          |   |                                       | 7,185,016  |   |   |   | 7,470,357 |   |
|    International                                     |   |                                       | 98,500     |   |   |   | 37,500 |   |
| Total                Ground Equipment                               |   |                                       | 7,283,516  |   |   |   | 7,507,857 |   |
| Total                                                               |   | $                                          | 15,795,967 |   |   | $ | 16,083,809 |   |
|                                                                |   |                                       |       |   |   |   |   |   |
| Operating                Income (Loss):                             |   |                                       |       |   |   |   |   |   |
| Overnight                Air Cargo                                  |   | $                                          | 346,065    |   |   | $ | 462,538 |   |
| Ground                Equipment                                     |   |                                       | 1,212,786  |   |   |   | 1,357,755 |   |
| Corporate  (1)                                            |   |                                       | (591,255   | ) |   |   | (715,678 | ) |
| Total                                                               |   | $                                          | 967,596    |   |   | $ | 1,104,615 |   |
|                                                                |   |                                       |       |   |   |   |   |   |
| Depreciation                and Amortization:                       |   |                                       |       |   |   |
| Overnight                Air Cargo                                  |   | $                                          | 110,058    |   |   | $ | 125,957 |   |
| Ground                Equipment                                     |   |                                       | 12,261     |   |   |   | 39,040 |   |
| Corporate                                                           |   |                                       | 1,555      |   |   |   | 11,837 |   |
| Total                                                               |   | $                                          | 123,874    |   |   | $ | 176,834 |   |
|                                                                |   |                                       |       |   |   |   |   |   |
| Capital                Expenditures, net:                           |   |                                       |       |   |   |   |   |   |
| Overnight                Air Cargo                                  |   | $                                          | 15,823     |   |   | $ | 5,000 |   |
| Ground                Equipment                                     |   |                                       | 38,439     |   |   |   | - |   |
| Corporate                                                           |   |                                       | 47,019     |   |   |   | 29,032 |   |
| Total                                                               |   | $                                          | 101,281    |   |   | $ | 34,032 |   |
|                                                                |   |                                       |       |   |   |   |   |   |
|                                                                |   |                                       |       |   |   |   |   |   |
|                                                                |   | As                of                       |       |
|                                                                |   | June                30, 2007               |       |   | March                31, 2007 |   |
| Identifiable                Assets:                                 |   |                                       |       |   |   |   |   |   |
| Overnight                Air Cargo                                  |   | $                                          | 4,380,109  |   |   | $ | 5,823,455 |   |
| Ground                Equipment                                     |   |                                       | 11,466,921 |   |   |   | 13,247,048 |   |
| Corporate                                                           |   |                                       | 6,728,177  |   |   |   | 5,544,481 |   |
|                                                                |   |                                       |       |   |   |   |   |   |
| Total                                                               |   | $                                          | 22,575,207 |   |   | $ | 24,614,984 |   |
|                                                                |   |                                       |       |   |   |   |   |   |
| (1)                Includes income from inter-segment transactions. |   |
|                                                                |   |                                       |       |   |   |   |   |   |

----

*U.S. Airways vs. Elliott Equipment Company, et al*
*Emerson vs. Elliott Equipment      Company, et al*
*City of Philadelphia v. Elliott Equipment Company, et al*

----

*Global Ground Support, LLC v. Sautter      Crane Rental, Inc.*

----

|                                        |   | Three                Months Ended |       |
|---------------------------------------------|--------|-----------------------------------|------------|
|                                        |   | June                30,           |       |
|                                        |   | 2007                              |       |   | 2006 |   |
|                                        |   |                              |       |   |   |   |   |   |   |   |   |   |
| Overnight                Air Cargo Segment: |   |                              |       |   |   |   |   |   |   |   |   |   |
| FedEx                                       |   | $                                 | 8,512,451  |   |   |   | 54 | % |   | $ | 8,575,952 |   |   |   | 53 | % |
|                                        |   |                              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ground                Equipment Segment:    |   |                              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Military                                    |   |                              | 5,728,956  |   |   |   | 36 | % |   |   | 5,496,392 |   |   |   | 34 | % |
| Commercial                - Domestic        |   |                              | 1,456,060  |   |   |   | 9 | % |   |   | 1,973,965 |   |   |   | 13 | % |
| Commercial                - International   |   |                              | 98,500     |   |   |   | 1 | % |   |   | 37,500 |   |   |   | 0 | % |
|                                        |   |                              | 7,283,516  |   |   |   | 46 | % |   |   | 7,507,857 |   |   |   | 47 | % |
|                                        |   | $                                 | 15,795,967 |   |   |   | 100 | % |   | $ | 16,083,809 |   |   |   | 100 | % |

----

----

----

*Fair Value      Measurements*

*The Fair Value Option for      Financial Assets and Liabilities *

----

----

|                                |   |                                          |       |   |                                                          |       |     |                                                                                                      |   |       |                                                                                                                             |   |
|-------------------------------------|--------|-----------------------------------------------|------------|--------|---------------------------------------------------------------|------------|----------|-----------------------------------------------------------------------------------------------------------|--------|------------|----------------------------------------------------------------------------------------------------------------------------------|--------|
| **Period**                          |   | **(a)                Total Number of Shares** |       |   | **(b)                Average Price Paid per Share purchased** |       |     | **(c)                Total Number of Shares Purchased as Part of Publicly Announced                Plan** |   |       | **(d)                Approximate Dollar Value of Shares that May Yet Be Purchased Under                the                Plan** |   |
|                                |   |                                          |       |   |                                                          |       |     |                                                                                                      |   |       |                                                                                                                             |   |
| **April                1, 2007 to** |   |                                          |       |   |                                                          |       |     |                                                                                                      |   |       |                                                                                                                             |   |
| **April                30, 2007**   |   | ** **                                    | **39,050** |   |                                                          | **$**      | **8.11** |                                                                                                      |   | ** ** | **39,050**                                                                                                                       |   |   | **$** | **396,000** |   |
|                                |   |                                          |       |   |                                                          |       |     |                                                                                                      |   |       |                                                                                                                             |   |   |   |   |   |
| **May                1, 2007 to**   |   |                                          |       |   |                                                          |       |     |                                                                                                      |   |       |                                                                                                                             |   |   |   |   |   |
| **May                31, 2007**     |   | ** **                                    | **27,342** |   |                                                          | ** ** | **8.03** |                                                                                                      |   | ** ** | **27,342**                                                                                                                       |   |   | ** ** | **177,000** |   |
|                                |   |                                          |       |   |                                                          |       |     |                                                                                                      |   |       |                                                                                                                             |   |   |   |   |   |
| **June                1, 2007 to**  |   |                                          |       |   |                                                          |       |     |                                                                                                      |   |       |                                                                                                                             |   |   |   |   |   |
| **June                30, 2007**    |   | ** **                                    | **1,300**  |   |                                                          | ** ** | **8.29** |                                                                                                      |   | ** ** | **1,300**                                                                                                                        |   |   | ** ** | **166,000** |   |
|                                |   |                                          |       |   |                                                          |       |     |                                                                                                      |   |       |                                                                                                                             |   |   |   |   |   |
| **Total**                           |   | ** **                                    | **67,692** |   |                                                          | **$**      | **8.08** |                                                                                                      |   | ** ** | **67,692**                                                                                                                       |   |   | **$** | **166,000** |   |
|                                |   |                                          |       |   |                                                          |       |     |                                                                                                      |   |       |                                                                                                                             |   |   |   |   |   |
|                                |   |                                          |       |   |                                                          |       |     |                                                                                                      |   |       |                                                                                                                             |   |   |   |   |   |
|                                |   |                                          |       |   |                                                          |       |     |                                                                                                      |   |       |                                                                                                                             |   |   |   |   |   |

----

|   | (a)  Exhibits |
|--------|-------------------------|

| 3.1   | Restated                Certificate of Incorporation, incorporated by reference to                Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for the                period ended September 30, 2001 |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.2   | By-laws                of the Company, as amended, incorporated by reference to Exhibit 3.2                of the Company’s Annual Report on Form 10-K for the fiscal year ended                March 31, 1996 |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.1   | Specimen                Common Stock Certificate, incorporated by reference to Exhibit 4.1 of                the Company’s Annual Report on Form 10-K for the fiscal year ended                March 31, 1994 |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.1   |   Certification                of Walter Clark |
|------------------|----------------------------------------------------------|

| 31.2   |   Certification                of John Parry |
|------------------|--------------------------------------------------------|

| 32.1   |   Section                1350 Certification |
|------------------|-------------------------------------------------------|

----

----