On June 10, 2019, all holders of Common Stock of Air T, Inc. (the Company) will receive a special distribution of three securities:

• Additional Common Stock: A dividend of one additional share for every two shares already held (a 50% stock dividend, or the equivalent of a 3-for-2 stock split).
• Alpha Income Preferred Stock (AIP or Capital Securities): A fixed income trust preferred capital security with a stated value of $2.50 per share, paying quarterly distributions of 8% per annum. The Company will distribute an aggregate of 1,600,000 shares of AIP ($4,000,000 stated value).
• Warrants to Purchase AIP (Warrants): The Warrants allow the holder to purchase additional AIP at a discounted price (exercise price of $2.40 per share of AIP with a stated value of $2.50 per share). The Company will distribute an aggregate of 8,400,000 Warrants to purchase 8,400,000 shares of AIP (representing Warrants to purchase $21,000,000 in stated value of AIP). The Warrants are exercisable for one year.

Again, the distribution will be effective at 5:00 p.m. EST on June 10, 2019.

As of market open on Monday, June 10, 2019, the Company’s Common Stock will trade on the NASDAQ Global Market, and the AIP and Warrants will also be listed on the NASDAQ Global Market under the symbols “AIRTP” and “AIRTW” respectively. No public market currently exists for the AIP or Warrants. However, starting on June 3, 2019, there will be a market for the AIP and Warrants on the NASDAQ Global Market on a “when issued” basis.

Yes. Any shares of Common Stock purchased after the Record Date through the date of the distribution will trade “regular way” with “due bills”, which entitle the purchaser to receive the additional Common Stock, AIP and Warrants. Starting on June 10, 2019, the Common Stock will trade ex-dividend, with the trading price reflecting the value of the Common Stock on a post-distribution basis without the additional securities.

Example: A holder of 1,000 shares of Common Stock on the Record Date (market value of approximately $27,000, based on a hypothetical market price of $27.00 per share) would receive the following additional securities in the distribution on June 7, 2019: (a) 500 additional shares of Common Stock; (b) 790 AIP shares (stated value of $1,975.00); and (c) 4,150 Warrants to purchase 4,150 additional shares of AIP (stated value of $10,375.00, for an aggregate exercise price of $9,960.00, representing a discount of $415.00). Note: this example assumes 2,024,331 shares of common stock outstanding on the Record Date (based on the outstanding shares as of February 14, 2019).

After the distribution, the holder would hold the following securities:

• 1,500 shares of Common Stock, with the market value reduced to reflect the impact of the 50% stock dividend and the impact of the issuance of the AIP on the Company’s equity capital;
• 790 shares of AIP with an aggregate stated value of $1,975.00, paying quarterly distributions of 8% per annum; and
• 4,150 Warrants to purchase up to 4,150 additional shares of AIP (stated value of $10,375.00 in additional AIP, for an aggregate exercise price of $9,960.00, representing a discount of up to $415.00).

What to expect: Form 8937 has been posted here, addressing the common stock dividend.

2) Alpha Income Preferred Stock (AIP or Capital Securities)

What to expect: The AIP security is a debt instrument for US federal income tax purposes. The distribution of the AIP security will be reported on a 2019 Form 1099-DIV, which will be issued prior to January 31, 2020. We are in the process of determining the amount of the dividend to be reported on the 2019 Form 1099-DIV.

3) Warrants to Purchase AIP (Warrant)

What to expect: The AIP warrant is an option to acquire a debt instrument for US federal income tax purposes at a $0.10 discount from face value. The distribution of the AIP warrant will be reported on a 2019 Form 1099-DIV which will be issued prior to January 31, 2020. We are in the process of determining the amount of the dividend to be reported on the 2019 Form 1099-DIV.

If you own your shares through a brokerage account, you should notify your broker of your desire to transfer your AIP or Warrants. After the date of the distribution, your broker can provide a statement indicating the securities in your account and can facilitate the sale of the AIP
or Warrants, or the purchase of additional AIP and Warrants.

If you hold your shares in an account in your name, you should contact the transfer agent of the Company, American Stock Transfer.

Each Warrant entitles the holder to purchase one-tenth share of AIP for $2.40. Therefore, each ten (10) Warrants confer upon the holder the right to purchase one (1) full share of AIP for $24.00, representing a 4% discount to the stated value of $25.00 for one share.

The Warrants will expire on September 8, 2020. The exercise price and number of shares of AIP issuable upon exercise is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting the Company’s common stock and the exercise price.

No fractional shares of AIP will be issued in connection with the exercise of a Warrant. In lieu of fractional shares, the Company will either pay the holder an amount in cash equal to the fractional amount multiplied by the exercise price or round up to the next whole share. Other terms of the Warrants and the AIP are described in the Prospectus that you will receive in connection with the distribution.

If you own your shares through a brokerage account, you should notify your broker of your desire to exercise Warrants. Your broker, via DTC, can facilitate the exercise through the DTC automated warrant exercise program, including your payment of the cash exercise price to purchase AIP.

If you hold your shares directly in your name, you can obtain a transfer notice form by contacting the transfer agent of the Company, American Stock Transfer. You should complete the exercise notice and deliver it to American Stock Transfer, along with a wire transfer of $24.00 per AIP to be purchased pursuant to the exercise.

Note: The purchase of AIP through exercise of the Warrants is described in a Prospectus that you will receive in connection with the distribution. Before purchasing the AIP, you should review the information in the Prospectus carefully, including the information under the caption “Risk Factors”.

Air T’s annual shareholders’ meeting is usually held in August. We provide the specific date, time and place for each year’s shareholder meeting in our annual proxy statement and through this website.

Equinity
Operations Center
6201 15th Avenue
Brooklyn, NY 11219
Telephone: (800) 468-9716
Contact: Contact Equinty Here
Account access via Web site: www.equinity.com
Ticker Symbol: AIRT