Beyond Air Inc

Previous wording

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains “forward-looking statements.” Beyond Air, Inc (together with its subsidiaries, “Beyond Air”, “the “Company” or “we”) intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts contained in this Form 10-Q, including statements regarding our future results of operations and financial position, business strategy, prospective product candidates and products, product approvals, timing of our clinical development activities, research and development costs, timing and likelihood of success and the plans and objectives of management for future operations and future results of anticipated products are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements express or implied by the forward-looking statements.

Current wording

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains “forward-looking statements.” We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts contained in this Form 10-Q, including statements regarding our future results of operations and financial position, business strategy, prospective product candidates and products, product approvals, timing of our clinical development activities, research and development costs, timing and likelihood of success and the plans and objectives of management for future operations and future results of anticipated products are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements express or implied by the forward-looking statements.

Previous wording

With Beyond Air’s focus on NO and its effect on the human condition, there are two additional programs that do not utilize our LungFit®system. Through our majority-owned affiliate Beyond Cancer, Ltd. (“Beyond Cancer”), NO is used to target solid tumors. The LungFit®platform is not utilized for the solid tumor indication due to the need for ultra-high concentrations of gaseous nitric oxide (“UNO”). A proprietary delivery system has been developed that is designed to safely deliver UNO in excess of 10,000 ppm directly to a solid tumor. This program has advanced to a phase 1 clinical trial.

Current wording

With Beyond Air’s focus on NO and its effect on the human condition, there are two additional programs that do not utilize our LungFit®system. Through our majority-owned affiliate Beyond Cancer, Ltd. (“Beyond Cancer”), NO is used to target solid tumors. The LungFit®platform is not utilized for the solid tumor indication due to the need for ultra-high concentrations of gaseous nitric oxide (“UNO”). A proprietary delivery system has been developed that is designed to safely deliver UNO in excess of 10,000 ppm directly to a solid tumor. This program has advanced to phase 1 clinical trials.

Previous wording

The second program, which does not utilize the LungFit® platform, partially inhibits neuronal nitric oxide synthase (“nNOS”) in the brain to treat neurological conditions. The first target indication is autism spectrum disorder (“ASD”). ASD is a serious neurodevelopmental and behavioral disorder, and one of the most disabling conditions and chronic illnesses in children. ASD includes a wide range of developmental disorders that share a core of neurobehavioral deficits manifested by abnormalities in social interactions, deficits in communication, restricted interests, and repetitive behaviors. In 2023, the CDC reported that approximately 1 in 36 children in the U.S. is diagnosed with an ASD. The cost of caring for Americans with autism had reached $268 billion in 2015 and would rise to $461 billion by 2025 in the absence of more-effective interventions and support across the life span. We expect this program to progress from preclinical to a phase 1 first-in-human clinical trial by early 2025.

Current wording

The second program, which does not utilize the LungFit® platform, partially inhibits neuronal nitric oxide synthase (“nNOS”) in the brain to treat neurological conditions. The first target indication is autism spectrum disorder (“ASD”). ASD is a serious neurodevelopmental and behavioral disorder, and one of the most disabling conditions and chronic illnesses in children. ASD includes a wide range of developmental disorders that share a core of neurobehavioral deficits manifested by abnormalities in social interactions, deficits in communication, restricted interests, and repetitive behaviors. In 2023, the CDC reported that approximately 1 in 36 children in the U.S. is diagnosed with an ASD. The cost of caring for Americans with autism had reached $268 billion in 2015 and would rise to $461 billion by 2025 in the absence of more-effective interventions and support across the life span. We expect this program to progress from preclinical to a phase 1 first-in-human clinical trial in 2025. Beyond Air has formed a wholly owned subsidiary called NeuroNOS which is responsible for pre-clinical and clinical development.

Previous wording

LungFit®PH is the first FDA-approved system using our patented ionizer technology to generate on-demand NO from ambient air and, regardless of dose or flow, deliver it to a ventilator circuit. The device uses a medical air compressor to drive room air through a plasma chamber in the center of the unit where pulses of electrical discharge are created between two electrodes. The system uses the power equivalent to a 60-watt lightbulb to ionize the nitrogen and oxygen molecules, which then combine as NO with low levels of nitrogen dioxide (“NO 2”) created as a byproduct. The products are then passed through a Smart Filter, which removes the toxic NO 2 from the internal circuit. With respect to PPHN, the novel LungFit® PH is designed to deliver a dosage of NO to the lungs that is consistent with current guidelines for delivery of 20 ppm NO with a range of 0.5 ppm – 80 ppm (low concentration NO) for ventilated patients.

Current wording

LungFit®PH is the first FDA-approved system using our patented plasma pulse technology to generate on-demand NO from ambient air and, regardless of dose or flow, deliver it to a ventilator circuit. The device uses a medical air compressor to drive room air through a plasma chamber in the center of the unit where pulses of electrical discharge are created between two electrodes. The system uses the power equivalent to a 60-watt lightbulb to ionize the nitrogen and oxygen molecules, which then combine as NO with low levels of nitrogen dioxide (“NO 2”) created as a byproduct. The products are then passed through a Smart Filter, which removes the toxic NO 2 from the internal circuit. With respect to PPHN, the novel LungFit® PH is designed to deliver a dosage of NO to the lungs that is consistent with current guidelines for delivery of 20 ppm NO with a range of 0.5 ppm – 80 ppm (low concentration NO) for ventilated patients.

Previous wording

We have submitted a PMA supplement to the FDA in November 2023 for the expansion of the label to include certain cardiac surgeries and we also expect to receive CE mark under the Medical Device Regulation (“MDR”) in the EU during the first half of calendar 2024. According to the most recent year-end report from Mallinckrodt Pharmaceuticals (“Mallinckrodt”), sales of NO were $339.7 million in 2022 (down from $448.5 million in 2021) for the United States, Canada, Japan, Mexico and Australia, with ~90% in the United States. Outside of the U.S. there are multiple market participants which translates to considerably lower sales than in the U.S. We believe the U.S. sales potential of LungFit®PH in PPHN to be approximately $350 million and worldwide sales potential to be approximately $700 million. We initiated the first phase of our commercial launch in July 2022, and entered into phase 2 with an expanded commercial presence during the spring of 2023 in the U.S. and will continue to work toward a potential launch in the EU and globally in 2024 and beyond.

Current wording

We submitted a PMA supplement to the FDA in November 2023 for the expansion of the label to include certain cardiac surgeries and we expect to receive CE mark under the Medical Device Regulation (“MDR”) in the EU during the second half of calendar 2024. According to the most recent year-end report from Mallinckrodt Pharmaceuticals (“Mallinckrodt”), sales of NO were $303.2 million in 2023 (down from $339.7 million in 2022) for the United States, Canada, Japan, Mexico and Australia, with >90% in the United States. Outside of the U.S. there are multiple market participants which translates to considerably lower sales than in the U.S. We believe the addressable U.S. market for LungFit®PH to be approximately $350 million and worldwide to be approximately $700 million. We initiated the first phase of our commercial launch (the limited launch phase to introduce Lungfit PH and Beyond Air to hospitals) in July 2022, and entered into phase 2 (to target initial market share gains in certain geographies) with an expanded commercial presence during the spring of 2023 in the U.S. and will continue to work towards a potential launch in the EU and globally in 2024 and beyond. We anticipate entering the final phase of our launch process in calendar 2025 where we intend to equip our commercial organization to become the market leader in the U.S. in a few years.

Previous wording

Viral pneumonia in adults is most commonly caused by rhinovirus, respiratory syncytial virus (“RSV”) and influenza virus. However, newly emerging viruses (including SARS-CoV-1, SARS-CoV-2, avian influenza A, and H1N1 viruses) have been identified as pathogens contributing to the overall burden of adult viral pneumonia. COVID-19 is an infectious disease caused by SARS-CoV-2, that resulted in a global pandemic, causing millions of hospitalizations and over 6.6 million deaths worldwide as of January 2023 according to the World Health Organization. Excluding the pandemic, there are approximately 350,000 annual viral pneumonia hospitalizations in the U.S., and up to 16 million annual viral pneumonia hospitalizations globally. For the broader annual viral pneumonia hospitalizations, we believe U.S. market potential to be greater than $1.5 billion and worldwide market potential to be greater than $3 billion.

Current wording

Viral pneumonia in adults is most commonly caused by rhinovirus, respiratory syncytial virus (“RSV”) and influenza virus. However, newly emerging viruses (including SARS-CoV-1, SARS-CoV-2, avian influenza A, and H1N1 viruses) have been identified as pathogens contributing to the overall burden of adult viral pneumonia. COVID-19 is an infectious disease caused by SARS-CoV-2, that resulted in a global pandemic, causing millions of hospitalizations and over 7 million deaths worldwide reported as of January 2024, according to the World Health Organization. Excluding the pandemic, there are approximately 350,000 annual viral pneumonia hospitalizations in the U.S., and up to 16 million annual viral pneumonia hospitalizations globally. For the broader annual viral pneumonia hospitalizations, we believe U.S. market potential to be greater than $1.5 billion and worldwide market potential to be greater than $3 billion.

Previous wording

Following completion of the clinical trial and the 180-day follow-up period, incremental data were provided in a poster presentation at IDWeek 2022 held from October 19, 2022, through October 23, 2022 in Washington, D.C. In addition to the positive clinical results provided at ECCMID 2022, the poster showed a larger decline in c-reactive protein (“CRP”) from baseline for patients treated with NO + SST compared to the control group. Analysis of the data provides compelling evidence that high concentration NO delivery with the LungFit® PRO generator and delivery system can be a powerful tool against any type of pneumonia, especially COVID-19. The Company commenced a clinical trial in 2023 in the United States and anticipates completion of the trial in the second quarter of calendar 2025.

Current wording

Following completion of the clinical trial and the 180-day follow-up period, incremental data were provided in a poster presentation at IDWeek 2022 held from October 19, 2022, through October 23, 2022 in Washington, D.C. In addition to the positive clinical results provided at ECCMID 2022, the poster showed a larger decline in c-reactive protein (“CRP”) from baseline for patients treated with NO + SST compared to the control group. Analysis of the data provides compelling evidence that high concentration NO delivery with the LungFit® PRO generator and delivery system can be a powerful tool against any type of pneumonia, especially COVID-19. The Company commenced a clinical trial in the second half of calendar 2023 in the United States and has made the decision to pause this study pending future funding.

Previous wording

There are approximately 50,000 to 90,000 people with NTM infections in the U.S. In Asia, the number of patients suffering from NTM surpasses what is seen in the U.S. There is one inhaled antibiotic approved for the treatment of refractoryMycobacterium avium complex (“MAC”). Current guideline-based approaches to treat NTM lung disease involve multi-drug regimens of antibiotics that may cause severe, long lasting side effects, and treatment can be longer than 18 months. Median survival for NTM MAC patients is approximately 13 years while median survival for patients with other variations of NTM is typically 4.6 years. The prevalence of human disease attributable to NTM has increased over the past two decades. In a clinical trial conducted between 2007 and 2016, researchers found that the prevalence of NTM in the U.S. is increasing at approximately 7.5% per year.M. abscessus treatment costs are estimated to be more than double that of MAC. A 2015 publication by co-authors from several U.S. government departments stated that cases in 2014 alone cost the U.S. healthcare system approximately $1.7 billion. For this indication, we believe U.S. sales potential to be greater than $1 billion and worldwide sales potential to be greater than $2.5 billion.

Current wording

Current estimates place the number of people with NTM infections in the U.S as high as 220,000. It is estimated that in Asia, the number of patients suffering from NTM surpasses what is seen in the U.S. There is one inhaled antibiotic approved for the treatment of refractoryMycobacterium avium complex (“MAC”). Current guideline-based approaches to treat NTM lung disease involve multi-drug regimens of antibiotics that may cause severe, long lasting side effects, and treatment can be longer than 18 months. Median survival for NTM MAC patients is approximately 13 years while median survival for patients with other variations of NTM is typically 4.6 years. The prevalence of human disease attributable to NTM has increased over the past two decades. In a clinical trial conducted between 2007 and 2016, researchers found that the prevalence of NTM in the U.S. is increasing at approximately 7.5% per year.M. abscessus treatment costs are estimated to be more than double that of MAC. A 2015 publication by co-authors from several U.S. government departments stated that cases in 2014 alone cost the U.S. healthcare system approximately $1.7 billion. For this indication, we believe U.S. sales potential to be greater than $1 billion and worldwide sales potential to be greater than $2.5 billion.

Previous wording

In the fourth calendar quarter of 2021, Beyond Cancer, our majority-owned affiliate, raised $30.0 million in a private placement of common shares. The investors purchased a 20% equity ownership in Beyond Cancer, while Beyond Air maintained 80% equity ownership. The funding is being used to accelerate ongoing preclinical work, including the completion of IND-enabling studies, completion of a Phase 1 clinical trial, expansion of preclinical programs for combination studies, hiring of additional Beyond Cancer team members, and optimization of the delivery system, as well as for general corporate purposes.

Current wording

In the fourth calendar quarter of 2021, Beyond Cancer, our majority-owned affiliate, raised $30 million in a private placement of common shares. The investors purchased a 20% equity ownership in Beyond Cancer, while Beyond Air maintained 80% equity ownership. The funding is being used to accelerate ongoing preclinical work, including the completion of IND-enabling studies, completion of a Phase 1 clinical trial, expansion of preclinical programs for combination studies, hiring of additional Beyond Cancer team members, and optimization of the delivery system, as well as for general corporate purposes.

Previous wording

In October 2023 Beyond Cancer presented positive pre-clinical data at the EORTC International Conference on Molecular Targets and Cancer Therapeutics demonstrating a statistically significant survival benefit in mice treated with UNO plus anti-PD1 versus anti PD1 alone. This was a pooled analysis of multiple studies done with 50,000 or 100,000 ppm NO for a single administration of 5 or 10 minutes. Additionally, Beyond Cancer’s second manuscript was published in the Cells Journal in an article titled Intratumoral Administration of High-Concentration Nitric Oxide and Anti-mPD-1 Treatment Improves Tumor Regression Rates and Survival in CT26 Tumor-Bearing Mice.

Current wording

In October 2023, Beyond Cancer presented positive pre-clinical data at the EORTC International Conference on Molecular Targets and Cancer Therapeutics, demonstrating a statistically significant survival benefit in mice treated with UNO plus anti-PD1 versus anti-PD1 alone. This was a pooled analysis of multiple studies done with 50,000 or 100,000 ppm NO for a single administration of 5 or 10 minutes. Additionally, Beyond Cancer’s second manuscript was published in theCells Journal in an article titled “Intratumoral Administration of High-Concentration Nitric Oxide and Anti-mPD-1 Treatment Improves Tumor Regression Rates and Survival in CT26 Tumor-Bearing Mice.”

Previous wording

In late December 2023, the safety review committee completed its review of the first 6 human subjects treated with UNO and reported that there were no dose limiting toxicities at the 25,000 ppm NO concentration and the study may progress to the next concentration of 50,000 ppm NO.

Current wording

In late December 2023, the Company’s safety review committee completed its review of the first 6 human subjects treated with UNO and reported that there were no dose limiting toxicities at the 25,000 ppm NO concentration and the study may progress to the next concentration of 50,000 ppm NO.

Previous wording

Work is currently being done by the University in a preclinical setting. We expect the program to progress into a phase 1 first-in-human clinical trial in calendar year 2025.

Current wording

Work is currently being done by the University in a preclinical setting. We expect the program to progress into a phase 1 first-in-human clinical trial prior to the end of calendar year 2025.

Previous wording

Our unaudited condensed consolidated financial statements are presented in accordance with generally accepted accounting principles in the United States (U.S. GAAP), and all applicable U.S. GAAP accounting standards effective as of December 31, 2023, have been taken into consideration in preparing the unaudited condensed consolidated financial statements. The preparation of unaudited consolidated financial statements requires estimates and assumptions that affect the reported amounts of assets, liabilities, expenses and related disclosures. Some of those estimates are subjective and complex, and, consequently, actual results could differ from those estimates. The following accounting policies and estimates have been highlighted as significant because changes to certain judgments and assumptions inherent in these policies could affect our consolidated financial statements:

Current wording

Our unaudited condensed consolidated financial statements are presented in accordance with U.S. GAAP, and all applicable U.S. GAAP accounting standards effective as of June 30, 2024, have been taken into consideration in preparing the unaudited condensed consolidated financial statements. The preparation of unaudited consolidated financial statements requires estimates and assumptions that affect the reported amounts of assets, liabilities, expenses and related disclosures. Some of those estimates are subjective and complex, and, consequently, actual results could differ from those estimates. The following accounting policies and estimates have been highlighted as significant because changes to certain judgments and assumptions inherent in these policies could affect our consolidated financial statements:

Previous wording

Below are the results of operations for the three and nine months ended December 31, 2023 and December 31, 2022:

Current wording

Below are the results of operations for the three months ended June 30, 2024 and June 30, 2023:

Previous wording

Comparison of Three and Nine Months Ended December 31, 2023 with the Three and Nine Months Ended December 31, 2022

Current wording

Comparison of Three Months Ended June 30, 2024 with the Three Months Ended June 30, 2023

Previous wording

$0.4 million and $0 revenue was recognized for the three months ended December 31, 2023 and December 31, 2022, respectively. Cost of revenue of $0.8 million (which included $0.2 million of costs related to PH system upgrades) and gross losses of $0.4 million were recognized for the three months ended December 31, 2023, compared to a cost of revenue of $0.1 million and gross losses of $0.1 million for the three months ended December 31, 2022.

Current wording

$0.7 million and $0.1 million revenue was recognized for the three months ended June 30, 2024 and June 30, 2023, respectively. Cost of revenue of $1.0 million and gross losses of $0.3 million were recognized for the three months ended June 30, 2024, compared to cost of revenue of $0.3 million and gross losses of $0.2 million for the three months ended June 30, 2023. The increase in revenue was due to the commercial product launch at the end of June 2022. Cost of revenue exceeded revenue primarily driven by costs of supply chain infrastructure required to grow revenue in future periods and depreciation of Lung Fit devices built to be able to capture future revenue.

Previous wording

Selling, general and administrative expenses for the nine months ended December 31, 2023 and December 31, 2022 were $30.9 million and $25.1 million, respectively. The increase of $5.8 million was attributed primarily to an increase in salaries $2.1 million ($1.6 million in Beyond Air and $0.5 million in Beyond Cancer) mainly driven by an increase of 20 positions globally, an increase in stock-based compensation of $3.0 million ($2.6 million in Beyond Air and $0.4 million in Beyond Cancer), rent ($0.2 million), marketing ($0.2 million) and consulting fees in relation to ex -U.S. expansion and patent protections ($0.6 million) offset by a reduction in motor and travel expenses of $0.2 million and insurance expenses of $0.1 million.

Current wording

Selling, general and administrative expenses for the three months ended June 30, 2024 and June 30, 2023 were $7.2 million and $10.9 million, respectively. The decrease of $3.7 million was attributed primarily to a decrease in stock-based compensation $2.2 million ($1.2 million in Beyond Air and $1.0 million in Beyond Cancer), salaries $0.4 million (Beyond Air $0.8 million offset by an increase in Beyond Cancer $0.4 million), professional fees ($0.7 million) rent ($0.2 million), and travel expenses ($0.1 million).

Previous wording

Other income/(expense) for the nine months ended December 31, 2023, and December 31, 2022 was income of $0.6 million and an expense of $0.2 million, respectively. The $0.8 million increase in income is mainly due to a change in fair value of warrant liability of $0.7 million and derivative liability of $1.1 million on the Loan and Security Agreement, in addition to $1 million of interest and dividend income from our investments in marketable securities partially offset by an increase in interest expense of $1.8 million, and $0.4 million of non-product related litigation.

Current wording

Other income for the three months ended June 30, 2024, and June 30, 2023 was income of $0.5 million and income of $0.8 million, respectively. The $0.3 million decrease in income is mainly due to increased interest payable ($0.8 million), increased foreign exchange loss ($0.1 million), a change in fair value of warrant liability ($0.1 million), offset by a change in the derivative liability of $0.5 million on the Loan and Security Agreement (as defined below) and a reduction in contingent losses ($0.2m).

Previous wording

Net loss attributed to non-controlling interest for the three months ended December 31, 2023, was $1.0 million, compared to $1.1 million for the three months ended December 31, 2022. Net loss attributed to non-controlling interest for the nine months ended December 31, 2023, was $3.2 million, compared to $2.6 million for the nine months ended December 31, 2022. Non-controlling interest represent 20% of the net loss of our Beyond Cancer subsidiary, which was established in November 2021.

Current wording

Net loss attributed to non-controlling interest for the three months ended June 30, 2024, was $0.9 million, compared to $1.0 million for the three months ended June 30, 2023. Non-controlling interests represent 20% of the net loss of our Beyond Cancer majority-owned affiliate and the increase in net loss is reflective of the increase in spend in Beyond Cancer versus the prior year.

Previous wording

Net loss attributed to common stockholders of Beyond Air, Inc for the three months ended December 31, 2023, was ($16.2) million or a loss of ($0.50) per share, basic and diluted. Our net loss attributed to common stockholders of Beyond Air, Inc for the three months ended December 31, 2022 was ($12.7) million or a loss of ($0.43) per share, basic and diluted.

Current wording

Net loss attributed to common stockholders for the three months ended June 30, 2024, was $12.2 million or a loss of $0.27 per share, basic and diluted. Our net loss attributed to common stockholders for the three months ended June 30, 2023 was $14.1 million or a loss of $0.45 per share, basic and diluted.

Previous wording

Below is a summary of our cash flows activities for the nine months ended December 31, 2023 and December 31, 2022:

Current wording

Below is a summary of the Company’s cash flows activities for the three months ended June 30, 2024 and June 30, 2023:

Previous wording

For the nine months ended December 31, 2023 the net cash used in operating activities was $45.3 million which was primarily due to our net loss of $49.7 million, which includes $19.0 million of stock-based compensation, $0.4 million received in grant payments, $1.2 million of depreciation and amortization and $0.5 million decrease in accounts payable, $1.8 million increase in prepaid accounts, partially offset by ($3.5) million of the payment of the second tranche of a May 2021 settlement with Circassia Limited and its affiliates (“Circassia”), ($2.9) million for the Hudson Bay settlement and ($7.6) million attributable to the resolution ofEmpery Asset Master, Ltd. Et AL, vs AIT Therapeutics Inc.

Current wording

For the three months ended June 30, 2023, the net cash used in operating activities was $17.2 million which was primarily due to the Company’s net loss adjusted for non-cash items of $9.4 million, and a decrease of $7.2 million due to a one-time payment of $7.6 million attributable to the resolution ofEmpery Asset Master, Ltd. Et AL, vs AIT Therapeutics Inc.

Previous wording

Net cash provided by financing activities for the nine months ended December 31, 2023 was $27.3 million, mainly from the Loan and Security Agreement of which the net proceeds were $15.8 million, and the issuance of common stock in connection with the 2022 ATM (as defined below) of $12 million partially offset by $0.7 million from the payment of short-term loans. Net cash used in financing activities for the nine months ended December 31, 2022 was $0.7 million, mainly from the $0.9 million payment of loans related to the financing of directors and officers insurance, partially offset by $0.2 million of funds received from issuance of common stock through the 2022 ATM.

Current wording

Net cash used by financing activities for the three months ended June 30, 2024 was $0.3 million, which were wholly comprised of loan repayments. Net cash provided by financing activities for the three months ended June 30, 2023 was $21.6 million, mainly from the Loan and Security Agreement of which the net proceeds were $15.8 million, and the issuance of common stock in connection with the ATM of $6.0 million partially offset by $0.3 million from the payment of short-term loans.

Previous wording

We have generated revenue of $0.7 million from the sale of products to date. We had an operating cash flow decrease of $45.3 million for the nine months ended December 31, 2023 and we have experienced an accumulated loss of $226.0 million since inception through December 31, 2023. As of December 31, 2023, we had cash, cash equivalents and marketable securities of $31.3 million and $0.2 million in restricted cash. In addition, $5.2 million of cash is held on deposit by their contract manufacturer to be applied against future purchases.

Current wording

We have generated revenue of $1.9 million from the sale of products to date. We had an operating cash flow decrease of $7.2 million for the three months ended June 30, 2024 and we have experienced an accumulated loss of $252 million since inception through June 30, 2024. As of June 30, 2024, we had cash, cash equivalents and marketable securities of $21.4 million ($13.2 million excluding Beyond Cancer) and $0.2 million in restricted cash.

Previous wording

On May 25, 2021, we and Circassia entered a settlement agreement (the “Settlement Agreement”) resolving all claims by and between both parties and mutually terminating the agreement with Circassia disclosed in Note 8 above. Pursuant to the terms of the Settlement Agreement, we agreed to pay Circassia $10.5 million in three instalments, the first being a payment of $2.5 million triggered upon FDA approval (fixing the “Initial Payment Due Date” at July 28, 2022). Thereafter, we are to pay $3.5 million to Circassia on the first anniversary of the Initial Payment Due Date and $4.5 million on the second anniversary of the Initial Payment Due Date. Additionally, beginning in year three post-approval, Circassia will receive a quarterly royalty payment equal to 5% of LungFit® PH net sales in the U.S. This royalty will terminate once the aggregate payment reaches $6.0 million. $2.5 million was paid to Circassia in July 2022 and $4.5 million has been recorded as an accrued liability for three months ended December 31, 2023. $3.5 million was paid in August 2023 and the final $4.5 million will be paid in the second fiscal quarter of 2025.

Current wording

On May 25, 2021, the Company and Circassia Limited and its affiliates (collectively “Circassia”) entered into a settlement agreement (“the Settlement Agreement”) resolving all claims by and between the parties and mutually terminating the agreement with Circassia disclosed in Note 8 above. Pursuant to the terms of the Settlement Agreement, the Company agreed to pay Circassia $10.5 million in three installments. The first payment of $2.5 million was triggered upon FDA approval for the LungFit® PH (fixing the Initial Payment Due Date at July 28, 2022). Thereafter, the Company is to pay $3.5 million to Circassia on the first anniversary of the Initial Payment Due Date and $4.5 million on the second anniversary of the Initial Payment Due Date. Additionally, beginning in year three post-approval, Circassia will receive a quarterly royalty payment equal to 5% of LungFit® PH net sales in the U.S. $4.5 million is included in accrued liabilities at June 30, 2024 and will be paid in the second fiscal quarter of 2025.

Previous wording

On February 4, 2022, we entered into an At-The-Market Equity Offering Sales Agreement with Truist Securities, Inc. and Oppenheimer & Co, Inc. (the “2022 ATM”). Under the 2022 ATM, we may sell shares of our common stock having aggregate sales proceeds of up to $50.0 million, from time to time and at various prices. If shares of our common stock are sold, there is a 3% fee paid to the sales agent. As of December 31, 2023, there was a balance of $34.3 million available under the 2022 ATM.

Current wording

On February 4, 2022, we entered into an At-The-Market Equity Offering Sales Agreement with Truist Securities, Inc. and Oppenheimer & Co, Inc. (the “2022 ATM”). Under the 2022 ATM, we may sell shares of our common stock having aggregate sales proceeds of up to $50.0 million, from time to time and at various prices. If shares of our common stock are sold, there is a 3% fee paid to the sales agent. As of June 30, 2024, there was a balance of $32.9 million available under the 2022 ATM.

Previous wording

On June 15, 2023 (the closing date), we entered into the Loan Agreement with the Agent and the Lenders. Also, on June 15, 2023 we entered into a Supplement to the Loan and Security Agreement (collectively with the Agreement, the “Loan Agreement) with the Agent and Lenders. The Loan agreement provides for senior secured term loans (the “Loans”) in an aggregate principal amount of up to $40 million, with (i) $17.5 million advanced on the Closing Date, (ii) up to $10 million between April 1, 2024 and September 30, 2024, subject to our achieving revenue milestones, and (iii) up to $12.5 million after April 1, 2024, subject to mutual agreement. The Loans are due and payable on June 1, 2027. The Loan principal is repayable beginning on January 1, 2025, with the possibility of deferring principal payments an additional 6 to 18 months. The Loans bear interest at a rate per annum equal to the greater of (i) the prime rate, as published by the Wall Street Journal from time to time, plus 3.75% and (ii) 12.00%. A final payment fee of 3.50% of the principal amount of the first two tranches under the Loan Agreement Loans is also due upon repayment of the principal (see Note 10).

Current wording

On June 15, 2023 (the “Closing Date”), the Company and its wholly owned subsidiary, Beyond Air Ltd. entered into a Loan and Security Agreement (the “LSA”) with Avenue Capital Management II, L.P., as administrative agent and collateral agent (the “Agent”), Avenue Venture Opportunities Fund, L.P., a Delaware limited partnership (“Avenue”), and Avenue Venture Opportunities Fund II, L.P, a Delaware limited partnership (“Avenue 2” and, together with Avenue, the “Lenders”). Also on June 15, 2023, the Company entered into a Supplement to the LSA (collectively with the Agreement, the “Loan Agreement”) with the Agent and the Lenders for senior secured term loans in an aggregate principal amount of up to $40.0 million, with (i) $17.5 million advanced on the Closing Date, (ii) up to $10.0 million between April 1, 2024 and September 30, 2024, subject to our achieving revenue milestones, and (iii) up to $12.5 million after April 1, 2024, subject to mutual agreement. The loans are due and payable on June 1, 2027. The loan principal is repayable beginning on January 1, 2025, with the possibility of deferring principal payments an additional 6 to 18 months. The loans bear interest at a rate per annum equal to the greater of (i) the prime rate, as published by the Wall Street Journal from time to time, plus 3.75% and (ii) 12.00%. A final payment fee of 3.50% of the principal amount of the first two tranches under the Loan Agreement and an additional final payment of $0.8 million is also due upon repayment of the principal.

Previous wording

We are subject to a financial covenant requiring us to maintain $5.0 million in unrestricted cash. The Loan Agreement also contains affirmative and negative covenants customary for financing of this type.

Current wording

We are subject to a financial covenant requiring us to maintain $5.0 million in unrestricted cash on deposit in a US bank. The Loan Agreement also contains affirmative and negative covenants customary for financing of this type.

Previous wording

The Loan Agreement also includes events of default customary for financings of this type, in certain cases subject to customary periods to cure, following which the Agent may accelerate all amounts outstanding under the Loans. We granted the Lenders warrants to purchase an aggregate of 233,843 shares of common stock at an exercise price of the lesser of $5.88 or the price per share of our next bona fide round of equity financing before June 30, 2024.

Current wording

The Loan Agreement also includes events of default customary for financings of this type, in certain cases subject to customary periods to cure, following which the Agent may accelerate all amounts outstanding under the Loans.