Beyond Air, Inc.

NOTE 1 ORGANIZATION AND BUSINESS

Beyond Air, Inc. (together with its subsidiaries, “Beyond Air” or the “Company”) was incorporated on April 28, 2015 under Delaware law. On June 25, 2019, the Company’s name was changed to Beyond Air, Inc. from AIT Therapeutics, Inc.

The Company is a commercial-stage medical device and biopharmaceutical company developing a platform of nitric oxide (“NO”) generators and delivery systems (the “LungFit® platform”) capable of generating NO from ambient air. The Company’s first device, LungFit®PH (“LungFit®PH”) received premarket approval (“PMA”) from the U.S. Food and Drug Administration (“FDA”) in June 2022. The NO generated by the LungFit® PH system is indicated to improve oxygenation and reduce the need for extracorporeal membrane oxygenation in term and near-term (>34 weeks gestation) neonates with hypoxic respiratory failure associated with clinical or echocardiographic evidence of pulmonary hypertension in conjunction with ventilatory support and other appropriate agents. This condition is commonly referred to as persistent pulmonary hypertension of the newborn (“PPHN”). The LungFit® platform can generate NO up to 400 parts per million (“ppm”) for delivery to a patient’s lungs directly or via a ventilator. LungFit®can deliver NO either continuously or for a fixed amount of time at various flow rates and has the ability to either titrate dose on demand or maintain a constant dose. In July 2022, the Company commenced marketing LungFit® PH in the United States for PPHN as a medical device.

On November 26, 2024, the Company received European CE mark approval of the LungFit PH® system for the following:

LungFit® can be used to treat patients on ventilators that require NO, as well as patients with chronic or acute severe lung infections via delivery of NO at concentrations > 100 parts per million (ppm) through a breathing mask or similar apparatus. The Company’s other areas of focus with the LungFit® platform beyond PPHN are nontuberculous mycobacteria (“NTM”) lung infection and those with various severe lung infections with underlying chronic obstructive pulmonary disease (“COPD”). The Company’s current product candidates will be subject to premarket reviews and approvals by the FDA, certification through the conduct of a conformity assessment by a notified body in the EU for the product to be CE marked, as well as comparable foreign regulatory authorities.

With Beyond Air’s focus on NO and its effect on the human condition, the Company has two additional programs that do not utilize the LungFit® system. Through the Company’s 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 human clinical trial.

On November 4, 2021, Beyond Air reorganized its oncology business into a new private company called Beyond Cancer. Beyond Air’s preclinical oncology team and the exclusive right to the intellectual property portfolio utilizing UNO for the treatment of solid tumors now reside with Beyond Cancer. Beyond Air has 80% ownership in Beyond Cancer.

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”). On June 15, 2023, the Company announced that it has entered into an agreement with Yissum Research Development Company of the Hebrew University of Jerusalem, LTD. (the “University”) to acquire the commercial rights for nNOS inhibitors being developed for the treatment of ASD and other neurological conditions. Currently, there are no FDA-approved therapies specifically for the treatment of ASD. Under the terms of the agreement, Beyond Air will make payments to the University over the three-year period from the date of the agreement for pre-clinical work. Also, the Company will pay a low single-digit royalty on net sales and certain one-time payments based on clinical, regulatory and sales milestones. The Company expects this program to progress from preclinical to a phase 1 first-in-human clinical trial by the end of 2026.

On March 24, 2025, Beyond Air reorganized its neurology business into a new private company called NeuroNOS. Beyond Air’s infrastructure, for example regulatory, quality, legal, etc., will continue to support the NeruoNOS team. Beyond Air has 85.7% ownership in NeuroNOS.

The Company’s current product candidates will be subject to premarket reviews and approvals by the FDA, certification through the conduct of a conformity assessment by a notified body in the European Union (the “EU”), as well as comparable foreign regulatory authorities’ reviews or approvals in other countries or regions.

On July 14, 2025, the Company effectuated a one-for-twenty (1:20) reverse stock split (the “2025 Reverse Stock Split”). The Company’s common stock began trading on the Nasdaq Stock Market on a split-adjusted basis on July 14, 2025. There was no change to the number of authorized shares of the Company’s common stock or the par value per share of common stock. Any fraction of a share of common stock created as a result of the 2025 Reverse Stock Split was rounded up to the nearest whole share.

All share and per share information in these accompanying unaudited condensed consolidated financial statements have been retroactively adjusted to reflect the 2025 Reverse Stock Split for all periods presented. In addition, (i) a proportionate adjustment has been made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding stock options and warrants to purchase shares of common stock, and (ii) the number of shares reserved for issuance pursuant to the 2013 Beyond Air Equity Incentive Plan has been reduced proportionately.

NOTE 2 SIGNIFICANT ACCOUNTING POLICIES AND OTHER RISKS AND UNCERTAINTIES

Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and with the instructions to the Form 10-Q. Accordingly, they do not include all the information and footnotes required to be presented for complete financial statements. The accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring items) which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. The unaudited condensed consolidated financial statements and related disclosures should be read in conjunction with the Company’s audited consolidated financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2025 (the “2025 Annual Report”), filed with the U.S. Securities and Exchange Commission (the “SEC”) on June 20, 2025.

Principles of Consolidation

These unaudited condensed consolidated financial statements include the accounts of the Company and the accounts of all of the Company’s subsidiaries and a variable interest entity (“VIE”) for which the Company is the primary beneficiary. As the Company has both the power to direct activities of Beyond Cancer Ltd. and its affiliates (“Beyond Cancer”) and of NeuroNOS Ltd. and its affiliates (“NeuroNos”) that most significantly impact these entities’ economic performance and the right to receive benefits and losses that may potentially be significant, these financial statements are fully consolidated with those of the Company. The non-controlling owners’20% interest in Beyond Cancer’s net assets and result of operations and the 14.3% interest in NeuroNos’ net assets and result of operations is reported as “non-controlling interest” on the Company’s unaudited condensed consolidated balance sheets and as “net loss attributable to non-controlling interest” in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss. All intercompany balances and transactions have been eliminated in the accompanying unaudited condensed consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the reporting period. Actual results could significantly differ from those estimates. On an ongoing basis, the Company evaluates its significant estimates and assumptions including expense recognition and accrual assumptions under consulting and clinical trial agreements, stock-based compensation, impairment assessments, accounting for licensed rights to use technologies and other long-lived assets, the valuation of warrants, contingency recognition and accruals and the determination of valuation allowance requirements on deferred tax attributes.

Going Concern, Liquidity and Other Uncertainties

The Company used cash in operating activities of $9.0 million for the six months ended September 30, 2025, and has an accumulated deficit attributable to the stockholders of Beyond Air, Inc. of $302.0 million. The Company had cash, cash equivalents and marketable securities of $10.7 million as of September 30, 2025. In addition, $3.8 million of cash is held on deposit by the Company’s contract manufacturer to be applied against future purchases.

The Company expects to incur net losses and have significant cash outflows for at least the next year, including making significant investments in research and development. Management believes these factors raise substantial doubt about the Company’s ability to meet its obligations with cash on hand and concluded that the Company will require additional funding within one year from the date these financial statements are issued.

Management is confident that the efforts to arrange financing, while not assured, will enable the Company to meet its obligations.

The Company’s future capital needs and the adequacy of its available funds will depend on many factors, including, but not necessarily limited to, the success and costs of commercialization of the Company’s approved product and the actual cost and time necessary for current and anticipated preclinical studies, clinical trials and other actions needed to obtain certification or regulatory approval of the Company’s product candidates.

Other Risks and Uncertainties

The Company is subject to risks common to development and early-stage medical device companies including, but not limited to, new technological innovations, certifications or regulatory approval, dependence on key personnel, protection of proprietary technology, compliance with government regulations, product liability, uncertainty of market acceptance of approved products and the potential need to obtain additional financing. The Company is also dependent on third-party suppliers and, in some cases, single-source suppliers.

The Company’s products require approval or clearance from the FDA prior to commencement of commercial sales in the United States. There can be no assurance that the Company’s products beyond LungFit® PH in the U.S. will receive the required approvals or clearances. Certifications, approvals or clearances are also required in foreign jurisdictions in which the Company may license or sell its products. If the Company is denied such certifications or approvals or clearances or such certifications, approvals or clearances are delayed, such denial or delay may have a material adverse impact on the Company’s results of operations, financial position and liquidity. Further, there can be no assurance that the Company’s product will be accepted in the marketplace, nor can there be any assurance that any future products can be developed or manufactured at an acceptable cost and with appropriate performance characteristics, or that such products will be successfully marketed, if at all.

Revenue Recognition

The Company generates revenue from the leases of its LungFit® PH devices to its customers under fixed fee arrangements over periods of up to three years. The fixed fee is typically broken down into ratable monthly payments over the term of the arrangement. The Company’s customers include hospitals and medical facilities. The Company’s LungFit® PH leases include filters, calibration gas, bagging kits, cables, adapters, and other components and accessories required to use the LungFit® PH device (the “Consumables”). The consumables’ quantities are varied and may be supplied upon demand of the customers and are unlimited, or the arrangement may provide for the maximum quantities available to the customer over the term of the arrangement. The Company’s LungFit® PH leases also include maintenance and training required to use the LungFit® PH device, as well as device back-up services (the “Services”), which are recorded in cost of revenue.

The Company accounts for its rental arrangements of LungFit® PH devices in accordance with Accounting Standards Codification 842,Leases(“ASC 842”). Under ASC 842, leases may be classified as either financing, sales-type, or operating, and the Company is required to disclose key information about leasing arrangements. The classification determines the pattern of revenue recognition and classification within the statement of operations and comprehensive loss. The Company typically classifies the rental arrangement of its LungFit® PH contracts as operating leases. The Company’s leases do not contain any restrictive covenants or any material residual value guarantees. The Company’s equipment leases may contain renewal options which range from one month to two years. The lease term is adjusted for renewal or termination options that the Company believes the customer is reasonably certain to exercise.

The Company elected the practical expedient applied to operating leases not to separate lease and non-lease components as long as the lease and non-lease components have the same timing and pattern of transfer. As such, the non-lease components, including the Consumables and Services, are combined with the predominant lease component. The total fixed fees that the Company is reasonably certain to collect are recognized on a straight line basis over the term of the arrangement. Additionally, the Company made an accounting policy election to present LungFit® PH revenue net of sales and other similar taxes.

At the lease commencement date, the Company will defer initial direct costs, including commission expense and the cost is recognized over the lease term on the same basis as lease income.

See Note 10 to the unaudited condensed consolidated financial statements for more information regarding leasing arrangements.

The Company also generates revenue from the sale of its LungFit® PH devices and consumables to its customers under distribution arrangements. Contracts include one performance obligation as any individual promised good or services other than delivery of the devices and consumables are generally either not capable of being distinct or not distinct within the context of the contracts. Purchased quantities of devices and consumables are varied and may be supplied upon demand of the customers. Revenue is recognized at a point in time when the Company delivers the goods to its customer. The transaction includes a fixed component based on contractual rates. Revenue recognized reflects the consideration the Company expects to receive in exchange for delivering the goods.

Amounts billed in advance of performance obligations being satisfied are recognized as deferred revenue.

The Company records the costs of shipping devices and consumables in cost of revenues in its unaudited condensed consolidated statements of operations and comprehensive loss.

Fair Value Measurements

As of September 30, 2025 and March 31, 2025, the Company’s financial instruments included restricted cash, marketable securities, accounts payable, long-term debt and liability classified warrants. The carrying amounts reported in the accompanying condensed consolidated financial statements for cash and cash equivalents, restricted cash and marketable securities approximate their respective fair values because of the short-term nature of these accounts. The carrying value of the Company’s long-term debt approximates fair value based on current interest rates for similar types of borrowings. The liability classified warrants liability is recorded at fair value and is Level 3 of the fair value hierarchy.

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis:

The fair value amounts as of September 30, 2025 are:

The fair value amounts as of March 31, 2025 are:

The following table summarizes the Company’s short-term marketable securities with unrealized gains and losses as of September 30, 2025, aggregated by major security type:

The following table summarizes the Company’s short-term marketable securities with unrealized gains and losses as of March 31, 2025, aggregated by major security type:

Level 3 Valuation

The warrant liability is remeasured each reporting period with the change in fair value recorded to other income (expense) in the condensed consolidated statement of operations and comprehensive loss until the warrants are exercised, expired, reclassified or otherwise settled. The significant assumptions used in valuing the warrants were as follows:

The following table is a summary of changes in the fair value of the Company’s Level 3 valuation for the warrants for the six months ended September 30, 2025:

Cash and Cash Equivalents, Short-Term Investments and Restricted Cash

The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase and an investment in a U.S. government money market fund to be cash equivalents. The Company maintains its cash and cash equivalents in highly rated financial institutions in Australia, Israel, Ireland and the U.S., the balances of which, at times, may exceed federally insured limits. Marketable securities may include investment in a combination of fixed income bonds, U.S. Treasury securities, and mutual funds that are considered to be highly liquid and easily tradeable. The marketable securities are considered trading securities and are measured at fair value and are accounted for in accordance with ASC 320. The marketable securities are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 within the Company’s fair value hierarchy.

As of September 30, 2025 and March 31, 2025, restricted cash included approximately $0.2 million and $0.2 million, respectively.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times, may exceed the federal depository insurance coverage of $250,000 in the United States, A$250,000 in Australia, $25,000 in Bermuda, €100,000 in Ireland and €100,000 in Cyprus. There is currently no official federal depository insurance in Israel. The Company has not experienced losses on these accounts, and management believes the Company is not exposed to significant risks on such accounts. As of September 30, 2025, the Company had greater than $250,000 at United States financial institutions, less than A$250,000 at Australian financial institutions, greater than €100,000 at Irish financial institutions and also has funds on deposit in Israel. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations and cash flows.

The following table is the reconciliation of the presentation and disclosure of cash, cash equivalents, marketable securities by major security type, and restricted cash as shown on the Company’s condensed consolidated statements of cash flows:

Research and Development

Research and development expenses are charged to the unaudited condensed consolidated statements of operations and comprehensive loss as incurred. Research and development expenses include salaries, benefits, stock-based compensation and costs incurred by outside laboratories, manufacturers, clinical research organizations, consultants, and accredited facilities in connection with preclinical studies and clinical trials. Research and development expenses are partially offset by the benefit of tax incentive payments for qualified research and development expenditures from the Australian tax authority (“AU Tax Rebates”). The Company does not record AU Tax Rebates until payment is received due to the uncertainty of receipt. For the six months ended September 30, 2025 and September 30, 2024, the Company received $0.1 million and $0, respectively, in AU Tax Rebates.

Supplier Concentration

The Company relies on third-party suppliers to provide materials for its devices and consumables.

In the three months ended September 30, 2025, the Company purchased approximately 90% of its materials from two third-party vendors, with these vendors representing 71% and 19%, respectively. In the three months ended September 30, 2024, the Company purchased approximately 86% of its materials from two third-party vendors, with these vendors representing 76% and 10%, respectively.

In the six months ended September 30, 2025, the Company purchased approximately 90% of its materials from two third-party vendors, with these vendors representing 66% and 24%, respectively. In the six months ended September 30, 2024, the Company purchased approximately 90% of its materials from two third-party vendors, with these vendors representing 84% and 6%, respectively.

Leases

Operating lease assets are included within operating lease right-of-use assets, and the corresponding operating lease obligation on the condensed consolidated balance sheets as of September 30, 2025 and March 31, 2025 in accordance with ASC 842,Leases. The Company has elected not to present short-term leases as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that the Company is reasonably certain to exercise. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of the Company’s leases do not provide an implicit rate of return, the Company used an incremental borrowing rate based on the information available at adoption date in determining the present value of lease payments.

NOTE 3 PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

Depreciation and amortization for the three months ended September 30, 2025 and September 30, 2024 was $0.8 million and $0.8 million, respectively.

Depreciation and amortization for the six months ended September 30, 2025 and September 30, 2024 was $1.5 million and $1.5 million, respectively.

NOTE 4 STOCKHOLDERS’ EQUITY

On February 10, 2025, the Company entered into an At-The-Market Equity Offering Sales Agreement with BTIG, Inc. (the “2025 ATM”). Under the 2025 ATM, the Company may sell shares of its common stock having aggregate sales proceeds of up to $35.0 million, from time to time and at various prices. If shares of the Company’s common stock are sold, there is a 2.5% fee paid to the sales agent. Pursuant to the “baby shelf rules” promulgated by the SEC, if the Company’s public float is less than $75.0 million as of specified measurement periods, the number of shares of common stock that may be offered and sold by the Company under a Form S-3 registration statement, including pursuant to the 2025 ATM, in any twelve-month period is limited to an aggregate amount that does not exceed one-third of the Company’s public float. As of September 30, 2025, due to the SEC’s “baby shelf rules,” the Company is permitted to sell up to $0 million of shares of common stock pursuant to the 2025 ATM. The Company will remain subject to the “baby shelf rules” under the Form S-3 registration statement until such time as its public float exceeds $75.0 million.

During the six months ended September 30, 2025, the Company received net proceeds of $8.1 million from the sale of 2,441,775 shares of common stock through the 2025 ATM. During the six months ended September 30, 2024, the Company received net proceeds of $0.6 million from the sale of 64,341 shares of common stock through the 2022 ATM.

Stock Option Plans

The Company’s Seventh Amended and Restated 2013 Beyond Air Equity Incentive Plan (the “2013 BA Plan”) allows for awards to officers, directors, employees, and consultants of stock options, restricted stock units and restricted shares of the Company’s common stock. On October 11, 2024, the Company’s Board of Directors (the “Board”) approved an amendment to the 2013 BA Plan to increase the number of shares in the 2013 BA Plan by 150,000 and to provide the Board the requested authority to (i) modify the exercise or grant price of an option or stock appreciation right after it is granted, (ii) cancel an option or stock appreciation right at a time when its exercise or grant price exceeds the fair market value of the underlying stock, in exchange for cash, another option or stock appreciation right, restricted stock, or other equity award, or (iii) take any other action that is treated as a repricing under generally accepted accounting principles. This amendment was approved by the Company’s stockholders at the 2025 annual stockholder meeting on November 22, 2024. The 2013 BA Plan has 830,000 shares authorized for issuance. As of September 30, 2025,48,016 shares were available under the 2013 BA Plan.

Restricted Stock Units

The fair value for the restricted stock unit awards was valued at the closing price of the Company’s common stock on the date of grant. Restricted stock units vest annually over five years.

A summary of the Company’s restricted stock unit awards for the six months ended September 30, 2025 is as follows:

Stock-based compensation expense related to these stock issuances for the three months ended September 30, 2025 and September 30, 2024 was $0.2 million and $0.3 million, respectively.

Stock-based compensation expense related to these stock issuances for the six months ended September 30, 2025 and September 30, 2024 was $0.3 million and $0.6 million, respectively.

As of September 30, 2025, the Company had unrecognized stock-based compensation expense for the restricted stock unit awards in the 2013 BA Plan of approximately $0.5 million, which is expected to be expensed over the weighted average remaining service period of 1.0 years.

As of September 30, 2025, all vested shares had been issued.

Stock Options

The vesting terms of the options issued under the 2013 BA Plan are generally four years and expire ten years from the grant date.

A summary of the change in stock options for the six months ended September 30, 2025 is as follows:

As of September 30, 2025, the Company had unrecognized stock-based compensation expense for the stock options in the 2013 BA Plan of approximately $3.2 million, which is expected to be expensed over the weighted average remaining service period of 1.4 years.

For the six months ended September 30, 2025, the weighted average fair value of options granted was $2.41 per share.

The Company’s 2021 Beyond Cancer Ltd Equity Incentive Plan (the “2021 BC Plan”) allows for awards to officers, directors, employees, and consultants of stock options, restricted stock units and restricted shares of Beyond Cancer’s common shares. The vesting terms of the options issued under the 2021 BC Plan are generally four years and they expire ten years from the grant date. On November 3, 2022, the Company’s Board of Directors approved an amendment to reserve for issuance an additional 2,000,000 shares of common stock. The 2021 BC Plan has 4,000,000 shares authorized for issuance. As of September 30, 2025,1,588,000 common shares were available under the 2021 BC Plan.

A summary of the change in stock options for Beyond Cancer for the six months ended September 30, 2025 is as follows:

As of September 30, 2025, the Company had unrecognized stock-based compensation expense for the stock options in the 2021 BC Plan of approximately $1.1 million, which is expected to be expensed over the weighted average remaining service period of 0.8 years.

The Company’s 2023 NeuroNos Ltd. Equity Incentive Plan (the “2023 NNOS Plan”) allows for awards to officers, directors, employees, and consultants of stock options, restricted stock units and restricted shares of NeuroNos Ltd.’s common stock. The vesting terms of the options issued under the 2025 NNOS Plan are generally four years and they expire ten years from the grant date. On September 15, 2025, the Company’s Board of Directors approved to reserve for issuance 1,725,000 shares of common stock. As of September 30, 2025,332,861 shares were available under the 2023 NNOS Plan.

A summary of the change in stock options for NeuroNos for the six months ended September 30, 2025 is as follows:

As of September 30, 2025, the Company had unrecognized stock-based compensation expense for the stock options in the 2023 NNOS Plan of approximately $0.3 million, which is expected to be expensed over the weighted average remaining service period of 1.5 years.

For the six months September 30, 2025, the weighted average fair value of options granted was $2.38 per share.

The following was utilized to calculate the fair value of options on the date of grant:

The Company determined that the fair value per share of NeuroNos’ common stock to be $3.00 at the grant date during the six months ended September 30, 2025 based on the valuation of common stock purchased by external investors during March 2025.

The following summarizes the components of stock-based compensation expense which included stock options and restricted stock units for the three and six months ended September 30, 2025 and September 30, 2024 (in thousands):

Warrants

On September 8, 2025, the Company entered into an inducement offer letter agreement (“Inducement Letter”) with certain holders of the September 2024 equity offering common stock warrants (“Existing Warrants”). Pursuant to the Inducement Letter, such holders immediately exercised some of all of their respective outstanding Existing Warrants to purchase up to an aggregate of 1,439,128 shares of common stock at a reduced exercise price of $2.21. The proceeds to the Company from the exercise of the Existing Warrants were approximately $2.9 million, net of placement agent fees and other offering expenses of $0.2 million and $0.1 million, respectively. In consideration of the inducement offer, the Company issued new common stock warrants to purchase up to 719,562 shares of common stock for a purchase price of $0.125 per share of common stock underlying the new warrant. The new warrants have an exercise price of $2.21 per share and are immediately exercisable, with a term of five years from the issuance date.

A summary of the Company’s outstanding warrants as of September 30, 2025 is as follows:

NOTE 5 OTHER CURRENT ASSETS AND PREPAID EXPENSES

A summary of other current assets and prepaid expenses as of September 30, 2025 and March 31, 2025 is as follows (in thousands):

NOTE 6 ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

A summary of accrued expenses and other current liabilities as of September 30, 2025 and March 31, 2025 is as follows (in thousands):

NOTE 7 BASIC AND DILUTED NET LOSS PER SHARE OF COMMON STOCK

In accordance with ASC 260,Earnings Per Share, warrants that are accounted for as liabilities which are potentially dilutive have not been included in diluted earnings per share as they would have been anti-dilutive during the six months ended September 30, 2025 and September 30, 2024.

The following potentially dilutive securities were not included in the calculation of diluted net loss per share attributable to common stockholders of Beyond Air because their effect would have been anti-dilutive for the periods presented:

The Company’s pre-funded warrants were included in the calculation of diluted net loss per share.

NOTE 8 COMMITMENTS AND CONTINGENCIES

License Agreements

In August 2015, Beyond Air Ltd., a wholly-owned subsidiary of the Company (“BA Ltd.”) entered into an Option Agreement (the “Option Agreement”) with Pulmonox Technologies Corporation (“Pulmonox”) whereby BA Ltd. acquired the option (the “Option”) to purchase certain intellectual property assets and rights. On January 13, 2017, BA Ltd. exercised the Option and paid $0.5 million to Pulmonox. BA Ltd. became obligated to make certain one-time development and sales milestone payments to Pulmonox, commencing with the date on which BA Ltd. receives regulatory approval for the commercial sale of the first product candidate qualifying under the Option Agreement. These milestone payments are capped at a total of $87 million across three separate and distinct indications that fall under the agreement, with the majority of them, approximately $83 million, being sales-related based on cumulative sales milestones for each of the three products. BA Ltd. is not currently developing any qualifying products.

On January 31, 2018, the Company entered into an agreement (the “NitricGen Agreement”) with NitricGen, Inc. (“NitricGen”) to acquire a global, exclusive, transferable license and associated assets including intellectual property, know-how, trade secrets and confidential information from NitricGen related to the LungFit®. The Company acquired the licensing right to use the technology and agreed to pay NitricGen a total of $2.0 million in future payments based upon achieving certain milestones, as defined in the NitricGen Agreement, and single-digit royalties on sales of the LungFit®. The Company paid NitricGen $0.1 million upon the execution of the NitricGen Agreement, $0.1 million upon achieving the next milestone and $1.5 million in January 2023, six months after approval of the LungFit®by the FDA) and issued 100,000 warrants to purchase the Company’s common stock valued at $0.3 million upon executing the NitricGen Agreement. As of September 30, 2025, the remaining future milestone payments total $0.3 million.

Supply Agreement and Purchase Order

In August 2020, the Company entered into a supply agreement with an initial expiration date of December 31, 2024. The agreement will renew automatically for successive three-year periods unless and until the Company provides 12 months’ notice of intent not to renew. As of the date of this report, the Company has not provided such notice. The Company has opened several non-cancellable purchase orders and the outstanding amount remaining under the purchase order as of September 30, 2025 was approximately $0.5 million with this supplier. This supplier holds $3.8 million of restricted cash to partially secure materials on the Company’s behalf recorded in other current assets and prepaid expenses.

Contingencies

From time to time, the Company is involved in various legal matters arising in the normal course of business. The Company does not expect the outcome of such proceedings, either individually or in the aggregate, to have a material effect on its financial position, cash flows or results of operations.

NOTE 9 LOANS

On November 1, 2024, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) for a secured loan with certain lenders, including its Chief Executive Officer Steven Lisi and director Robert Carey, for an aggregate principal balance of $11.5 million. The Loan Agreement was approved by each of the Company’s independent and disinterested directors, following the receipt of a recommendation from an independent investment bank. The Loan Agreement provides for the following terms: (i) principal amount of $11,500,000; (ii) ten-year term; (iii) interest of 15% per annum of which 3% shall be payable in cash and 12% payable in kind through June 30, 2026 and thereafter all in cash; (iv) a royalty interest of 8% of the Company’s net sales on a quarterly basis from July 2026 until the facility is repaid in full; (v) the Company’s obligations will be secured by substantially all of the Company’s assets and (vi) the Company issued the lenders warrants to purchase shares of the Company’s common stock at an exercise price, adjusted for the 2025 Reverse Stock Split, of $7.59 per share.

As the repayments under the Loan Agreement are based on a fixed percentage of future net sales, the timing and amounts of future principal payments may vary with the Company’s performance. The outstanding debt balance has been classified in the condensed consolidated balance sheets based on the Company’s current estimate of the repayment timing.

Components of Loan Agreement (in thousands)

On June 2, 2025, the Company received $2.0 million of advanced financing from a related party, a director of the Company who is also an existing lender under its Loan Agreement (“Additional Loans”). The Company is currently arranging the terms and expects that such financing will be issued on terms and conditions materially consistent with those of the Loan Agreement. The $2.0 million of Additional Loans is reported as other long-term liabilities on the Company’s unaudited condensed consolidated balance sheet, as of September 30, 2025.

NOTE 10 –LEASE REVENUES

The Company leases the LungFit® PH device to customers and receives a fixed rental fee over the term of the arrangement. Contract terms (generally one-to-three years) vary by customer and may include options to terminate the contract or options to extend the contract. The LungFit® PH lease agreements are accounted for as operating leases. The non-lease components, including consumables and device-related services are combined with the predominant lease component under the practical expedient. The fixed rental fee is recognized over the period of the lease agreement on a straight-line basis.

The Company recognized $1.4 million and $0.8 million in LungFit® PH lease revenues for the three months ended September 30, 2025 and September 30, 2024, respectively, reported as revenues in the accompanying condensed consolidated statements of operations. The Company received approximately $1.4 million and $0.6 million in cash associated with leases which the Company is the lessor for the three months ended September 30, 2025 and September 30, 2024, respectively. The Company has recorded $0.1 million and $0.1 million in deferred revenue as of September 30, 2025 and September 30, 2024, respectively.

The Company recognized $2.7 million and $1.5 million in LungFit® PH lease revenues for the six months ended September 30, 2025 and September 30, 2024, respectively, reported as revenues in the accompanying condensed consolidated statements of operations and comprehensive loss. The Company received approximately $2.6 million and $1.0 million in cash associated with leases which the Company is the lessor for the six months ended September 30, 2025 and September 30, 2024, respectively. The Company has recorded $0.1 million and $0.2 million in deferred revenue as of September 30, 2025 and September 30, 2024, respectively.

The following schedule presents the minimum future lease payments under the LungFit® PH lease arrangements that were in place as of September 30, 2025 (in thousands):

The LungFit® PH devices are included in Property and Equipment (Note 3) and have the useful life of five years. Depreciation expense related to leased LungFit® PH devices was $0.7 million and $0.6 million for the three months ended September 30, 2025 and September 30, 2024, respectively.

Depreciation expense related to leased LungFit® PH devices was $1.3 million and $1.1 million for the six months ended September 30, 2025 and September 30, 2024, respectively.

The depreciation expense related to customer leased devices is included in the cost of revenues in the condensed consolidated statements of operations and comprehensive loss.

Capitalized sales commissions

Sales commissions related to obtaining LungFit® PH lease agreements are accounted for as initial direct costs and are capitalized and amortized on a straight-line basis over the lease term. Total capitalized costs for the three and six months ended September 30, 2025 and September 30, 2024 were immaterial.

NOTE 11 SEGMENTS

During the three months ended September 30, 2025, NeuroNos issued and sold 166,667 additional common shares, par value $0.001 to certain investors pursuant to a subscription agreement at a purchase price of $3.00 per share. As of September 30, 2025, the Company retained 85.71% of the equity in NeuroNos, with minority interest holding 14.29% ownership of NeuroNos.

The following table summarizes financial performance by business segment for the three months ended September 30, 2025:

The following table summarizes financial performance by business segment for the six months ended September 30, 2025:

The following table summarizes financial performance by business segment for the three months ended September 30, 2024:

NOTE 11 SEGMENTS (continued)

The following table summarizes financial performance by business segment for the six months ended September 30, 2024:

The following table summarizes financial information by business segment at September 30, 2025:

The following table summarizes financial information by business segment at March 31, 2025:

NOTE 12 –SUBSEQUENT EVENTS

On November 4, 2025, the Company entered into and closed on a note purchase agreement (the “Note Purchase Agreement”) with Streeterville Capital LLC (“Streeterville” or “Investor”), which provided for the issuance of a secured promissory note in the principal amount of $12.0 million (the “Note”). The principal amount of the Note is due 24 months following the date of issuance. Interest will accrue at the rate of 15% per annum, with no interest accruing for the first 12 months following issuance; provided however, that Streeterville is guaranteed 12 months of interest, of $1.8 million even if the Note is redeemed or prepaid prior to the maturity date. Of the total $12.0 million Note, $6.0 million will be placed in a restricted account and will be accessible by the Company as the first $6.0 million is repaid.

Also on November 4, 2025, the Company entered into an equity purchase agreement (the “Purchase Agreement”) with Streeterville for the purchase of up to $20.0 million of the Company’s shares of common stock. In connection with the Purchase Agreement, the Company and Streeterville entered into a registration rights agreement (the “Registration Rights Agreement”), pursuant to which the Company agreed to file with the Securities and Exchange Commission a registration statement (the “Registration Statement”) covering the resale of the shares by November 24, 2025. Pursuant to the Purchase Agreement, upon effectiveness of the Registration Statement and so long as there is no balance outstanding on the Note, the Company shall have the right, but not the obligation, to direct Streeterville, by its delivery to Streeterville of a put notice from time to time during a period of up to two years, to purchase newly issued shares of the Company’s common stock, subject to customary limitations.

On November 3, 2025, the Company amended and restated the original Loan Agreement (as amended, the “Amended Loan Agreement”) to provide for and finalize the terms of the $2.0 million Additional Loans and the issuance of new five-year warrants to purchase up to 512,821 shares of the Company’s common stock (the “Supplemental Warrants”) with an exercise price of $1.95 per share and subject to the same terms and conditions applicable to the existing warrants issued under the original Loan and Security Agreement (the “2024 Debt Warrants”). Concurrently, the parties entered into a waiver agreement pursuant to which the Lender consented to the Company’s issuance of the Note in exchange for reducing the exercise price of the 2024 Debt Warrants from $7.59 per share to $1.95 per share.

On November 4, 2025, the board of directors approved a one-time stock option repricing of 726,618 options (the “Option Repricing”), effective November 4, 2025. The Option Repricing was undertaken in accordance with, and as permitted by, the Company’s 2013 BA Plan. Pursuant to the Option Repricing, all options granted pursuant to the 2013 BA Plan that are held by Company Board members, officers, and employees expected to continue providing services to the Company were repriced, to the extent such options had an exercise price in excess of $1.95, the closing price per share of the Company’s common stock as reported on The Nasdaq Stock Market on November 3, 2025. All such options were repriced such that the exercise price per share was reduced to $1.95.