Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. AIR T INC (353184) 10-Q published on Aug 14, 2019 at 4:00 pm
Reporting Period: Jun 29, 2019
With respect to our June 30, 2019 Quarterly Report on Form 10-Q, the effect of the stock split was recognized retroactively in the stockholders’ equity accounts in the Condensed Consolidated Balance Sheets, and in all share data in the Condensed Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations. With respect to our March 31, 2019 Annual Report on Form 10-K, the effect of the stock split on per share amounts and weighted average common shares outstanding for each of the two fiscal years ended March 31, 2019 and March 31, 2018 are as follows:
The Company’s investment in Insignia Systems, Inc. (“Insignia”) is accounted for under the equity method of accounting. The Company has elected a three-month lag upon adoption of the equity method. At June 30, 2019, the Company held approximately 3.5 million shares of Insignia’s common stock representing approximately 30% of the outstanding shares. For the quarter ended June 30, 2019, the Company recorded approximately $322,000 as its share of Insignia’s net loss for the three months ended March 31, 2019 along with a basis difference adjustment of approximately $24,000. In addition, due to the adverse financial results as reported in Insignia's Form 10Q for the quarter ended March 31, 2019, the Company determined that it has suffered from an other-than-temporary impairment in its investment in Insignia . As such, the Company recorded an impairment charge of $814,558 during the quarter ended June 30, 2019. After the impairment, the Company's net investment basis in Insignia is $4,001,106 as of June 30, 2019.
On June 10, 2019, the Company issued and distributed to existing common shareholders an aggregate of 1,600,000 trust preferred capital security ("TruPs") shares (aggregate $4,000,000 stated value) and an aggregate of 8,400,000 warrants ("Warrants") (representing warrants to purchase $21,000,000 in stated value of TruPs). If all of the Warrants are exercised, this will provide the Company with approximately $20 million in cash proceeds, with a total of $25 million (stated value) in TruPs outstanding. Management believes this will be sufficient to create a liquid market in the TruPs, which in turn should provide the Trust better capability to issue more TruPs in a later cash offering directly to market if needed. The purpose of the trust preferred transaction is to raise long-term capital (30-year debenture term), to fund growth through M&A and growth capital in the Company's portfolio companies.
The revolving lines of credit at both Air T and Contrail have due dates or expire within the next twelve months, as does some term debts within various business units. We are currently seeking to refinance or extend the maturities of these obligations prior to the expiration dates; however, there is no assurance that we will be able to execute this refinancing or extension or, if we are able to refinance or extend these obligations, that the terms of such refinancing or extension would be as favorable as the terms of our existing credit facility.
In addition to other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. Risk Factors in our 2019 Form 10-K, which could materially impact our business, financial condition or future results. Risks disclosed in our 2019 Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may materially adversely impact our business, financial condition or operating results. There have been no material changes to Part I, Item 1A. Risk Factors in our 2019 Form 10-K.