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.

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 completed a phase 1a 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.

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., is currently supporting the NeuroNOS team. Beyond Air has 84.75% 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 aone-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 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 and Principles of Consolidation

These consolidated financial statements include the accounts of Beyond Air, Inc. and its subsidiaries and have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The Company determined that Beyond Cancer Ltd. and its affiliates (“Beyond Cancer”) and NeuroNOS Ltd. and its affiliates (“NeuroNos”) are each a variable interest entity (“VIE”) for which the Company is the primary beneficiary and consolidates in its financial statements. All intercompany balances and transactions have been eliminated in the accompanying consolidated financial statements.

Use of Estimates

The preparation of consolidated 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 consolidated 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, allowance for credit losses, excess and obsolete inventory reserves, impairment assessments, accounting for licensed rights to use technologies and other long-lived assets, the valuation of warrants, the valuation of derivatives, 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 $18.1 million for the year ended March 31, 2026, and has an accumulated deficit attributable to the stockholders of Beyond Air, Inc. of $319.6 million. The Company had cash, cash equivalents and marketable securities of $11.6 million as of March 31, 2026. In addition, $3.4 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 consolidated 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 consolidated statements 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 15 to the 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 consolidated statements of operations and comprehensive loss.

Accounts Receivable

The Company extends credit to its customers on an unsecured basis. Accounts receivable are recorded at the invoiced amount, based on agreed contract terms, less an allowance for credit losses.

The Company establishes an allowance for accounts receivable that are considered to be at increased risk of becoming uncollectible. When evaluating the adequacy of this allowance for credit losses, the Company considers factors such as, historical collection experience and creditworthiness, the composition of outstanding receivables by customer class, and expected economic conditions and other trends. The Company’s estimates are reflected in the period they are made. The charges recorded for credit losses are reported within Selling, general and administrative expenses on the consolidated statements of operations and comprehensive loss. Receivables are written off against the allowance for credit losses when it is definitively determined that amounts are uncollectible. As of March 31, 2026 and 2025, the allowance for credit losses were $0.1 million and $0, respectively.

Fair Value Measurements

ASC 820,Fair Value Measurements and Disclosures (“ASC 820”), defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value standard also establishes a three-level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels are defined as follows:

Level 1—inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market.

Level 2—inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability.

Level 3—inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability.

As of March 31, 2026 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 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 are recorded at fair value and are included in 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 March 31, 2026 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 March 31, 2026, 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

Warrant liability

The warrant liability is remeasured each reporting period with the change in fair value recorded to other income (expense) in the consolidated statements 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:

Derivative liability

The derivative liability represents an embedded redemption feature (embedded put option) that meets the criteria to be classified as a derivative and is bifurcated from the Note (see Note 9). On any trading day during which the Registration Statement (Note 4) remains effective and the Note remains outstanding and (i) any trading price of the Company’s common stock is at least 5% greater than the current Nasdaq minimum price as defined under Nasdaq Rule 5635(d) (the “Nasdaq Minimum Price”) or (ii) the total dollar trading volume has reached $750,000.00, Streeterville may elect to purchase shares of common stock up to the Beneficial Ownership Limitation at a purchase price equal to 85% of the Nasdaq Minimum Price, subject to a floor of $0.39 per share. The aggregate purchase price for these shares shall be offset by an equal amount outstanding under the Note.

This feature was concluded to not be clearly and closely related to the host instrument and is required to be measured at fair value at each reporting period. The fair value was determined using the Monte Carlo valuation model. The key inputs of the simulation are the valuation date, the Company’s common stock share price and volatility, the risk-free rate, and the maximum convertible shares eligible to offset the outstanding balance on the Note.

During January 2026, Streeterville elected to purchase 1.6 million shares of common stock at an average of $0.73 per share which offset principal of approximately $1.2 million outstanding under the Note (Note 9). The fair value of the issued common stock was approximately $3.3 million (Note 4). The Company remeasured the fair value of the derivative liability to $2.2 million immediately prior to the conversion. Accordingly, the embedded derivative was extinguished as of March 31, 2026.

The table presented below is a summary of changes in the fair value of the Company’s Level 3 valuation for the warrants and derivatives for the years ended March 31, 2026 and March 31, 2025 (in thousands):

Warrant Liability

The Company classifies warrants as equity for any contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies warrants as assets or liabilities for any contracts that (i) require net-cash settlement (including a requirement to net-cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). Such warrants are subject to remeasurement at each consolidated balance sheet date and any change in fair value is recognized as a component of other income/expense on the consolidated statements of operations and comprehensive loss. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of such warrants. At that time, the portion of the warrant liability related to warrants will be reclassified to additional paid-in capital.

***Derivative Liability ***

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC 815,Derivatives and Hedging. For derivative financial instruments that are accounted for as assets or liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations and comprehensive loss. The classification of derivative instruments, including whether such instruments should be recorded as assets or liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the consolidated balance sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.

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 March 31, 2026 and March 31, 2025, restricted cash included approximately $5.6 million and $0.2 million, respectively. Restricted cash as of March 31, 2026 includes $5.4 million of proceeds from the Company’s secured promissory note issued on November 4, 2025 that is required to be held in a restricted account pursuant to the Note Purchase Agreement. Amounts held in the restricted account become available to the Company as the outstanding principal of the Note is repaid (see Note 9).

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 March 31, 2026, 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 consolidated statements of cash flows for:

Fixed Assets

Property and equipment are stated at cost less accumulated depreciation and accumulated amortization. Depreciation and amortization are calculated using the straight-line method over the estimated useful life of the assets as follows:

Segment Reporting

Operating segments are defined as components of an entity for which both discrete financial information is available and regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The CODM is the Company’s Chief Executive Officer. The Company’s CODM evaluates performance and allocates resources for all of the Company’s reportable segments based on income/loss from operations. The CODM is involved in determining and reviewing projected income/loss from operations as part of the annual budget process. Throughout the year, the CODM considers forecast to actual results and variances to allocate resources. The CODM also considers this information in strategic decisions related to capital allocations, including investments in assets, research and development activities, and human capital.

The Company’s reportable segments at March 31, 2026 included Beyond Air, Beyond Cancer, and NeuroNos.

The Beyond Air segment includes unallocated corporate expenses associated with the public company fees as well as all corporate related assets and liabilities.

Inventories

Inventories consist primarily of purchased filters, bagging kits, cables, adapters, and other components and accessories required to use the LungFit® PH device held for sale to customers. Inventories are recorded at the lower of cost or net realizable value. Cost comprises direct materials, third-party manufacturing costs and shipping costs incurred to deliver goods to the Company’s central warehouse location. Costs are assigned to individual items of inventory on the basis of weighted average costs. Inventory items are tracked by batch/lot number for specific identification whenever possible.

Inventory reserves are established for estimated excess and obsolete inventory equal to the difference between the cost of the inventory and the estimated net realizable value of the inventory based on historical usage, known trends, and market conditions and judgment about the anticipated future consumption and the Company’s ability to sell the inventory. At March 31, 2026 and March 31, 2025, excess and obsolescence reserves were $0.4 million and $0.2 million, respectively.

Leases

Operating lease assets are included within operating lease right-of-use assets, and the corresponding operating lease obligation on the consolidated balance sheets 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. Operating lease expense is recognized on a straight-line basis over the lease term and is included in general and administrative and research development expenses.

The interest rate implicit in the Company’s leases is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate in determining the present value of lease payments, which reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment.

Research and Development

Research and development expenses are charged to the 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 years ended March 31, 2026 and March 31, 2025, the Company received $0.1 million and $0.0 million, respectively, in AU Tax Rebates.

Foreign Exchange Transactions

The Company’s subsidiaries transact in U.S. dollars, Euros, New Israeli Shekels and Australian dollars. The Company’s main operations are in the United States and the U.S. dollar is the currency of the primary economic environment in which the Company operates and expects to continue to operate in the foreseeable future. The Company translated its non-U.S. operations’ assets and liabilities denominated in foreign currencies into U.S. dollars at current rates of exchange as of the balance sheet date and income and expense items at the average exchange rate for the reporting period. Gains or losses from foreign currency transactions are included in other income (expense) in the consolidated statements of operations and comprehensive loss as foreign currency exchange gain/(loss).

In consolidating international subsidiaries, balance sheet currency effects are recorded as a component of accumulated other comprehensive income and loss. The accumulated other comprehensive income and loss account includes the cumulative results of translating certain balance sheet assets and liabilities at current exchange rates and some accounts at historical rates. For the year ended March 31, 2026, the Company recorded gains of $0.2 million in accumulated other comprehensive income. For the year ended March 31, 2025, the Company recorded losses of $0.1 million in accumulated other comprehensive loss.

Stock-Based Compensation

The Company measures the cost of employee and non-employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. Fair value for restricted stock unit awards is valued using the closing price of the Company’s common stock on the date of grant. The grant date fair value is recognized over the requisite service period during which an employee and non-employee is required to provide service in exchange for the award, using the accelerated method with each tranche being expensed over its vesting period. The grant date fair value of employee and non-employee share options is estimated using the Black-Scholes option pricing model. The risk-free interest rate assumptions were based upon the observed interest rates appropriate for the expected term of the equity instruments. The expected dividend yield was assumed to be zero as the Company has not paid any dividends since its inception and does not anticipate paying dividends in the foreseeable future. The Company accounts for forfeitures as they occur. Starting in 2023, Beyond Air used its own historical volatility as an input for expected volatility, but due to Beyond Cancer’s and NeuroNos’ lack of marketability, the Company utilizes the implied volatility based on an aggregate of guideline companies for expected volatility. The Company uses the simplified method to estimate the expected term.

Supplier Concentration

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

In the year ended March 31, 2026, the Company purchased approximately 74% and 18% of its materials from two third-party vendors. In the year ended March 31, 2025, the Company purchased approximately 85% of its materials from one third-party vendor.

Customer Concentration

For the year ended March 31, 2026, the Company derived 11% and 10% of its revenues from two customers. For the year ended March 31, 2025, the Company derived 16% and 10% of its revenues from two customers.

Licensed Right to Use Technology

Licensed right to use technology that is considered platform technology with alternative future uses is recorded as an intangible asset and is amortized on a straight-line method over its estimated useful life, determined to be thirteen years.

The expected amortization expense for the next five years and thereafter is as follows for the year ended March 31 (in thousands):

Long-Lived Assets

The Company assesses the impairment of long-lived assets on an ongoing basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that the Company considers as potential triggers of an impairment review include the following:

Recoverability of assets that will continue to be used in the Company’s operations is measured by comparing the carrying value to the future net undiscounted cash flows expected to be generated by the asset or asset group. Future undiscounted cash flows include estimates of future revenues, driven by market growth rates, and estimates of future costs. There were no events during the reporting periods that were deemed to be a triggering event that would require an impairment assessment, other than the impairment of $0.5 million recorded during the year ended March 31, 2025 associated with certain R&D assets following Management’s decision to put its VCAP clinical trial on hold.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rate is recognized in income or expense in the period that the change is effective. Tax benefits are recognized when it is probable that the deduction will be sustained. A valuation allowance is established when it is more likely than not that all or a portion of a deferred tax asset will either expire before the Company is able to realize the benefit, or that future deductibility is uncertain. As of March 31, 2026 and March 31, 2025, the Company recorded a valuation allowance to the full extent of the Company’s net deferred tax assets since the likelihood of realization of the benefit does not meet the more-likely-than-not threshold.

The Company’s reserves related to taxes are based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized following resolution of any potential contingencies present related to the tax benefit. The Company would recognize both estimated accrued interest and penalties related to unrecognized benefits within income tax expense in the consolidated statements of operations and comprehensive loss. The Company’s uncertain tax positions are related to years that remain subject to examination by relevant tax authorities. Since the Company is in a loss carryforward position, the Company is generally subject to examination by the U.S. federal, state and local income tax authorities for all tax years in which a loss carryforward is available.

Net Loss Per Share

Basic and diluted net loss per share attributable to common stockholders is computed by dividing the net loss attributable to Beyond Air, Inc., by the weighted average number of shares of common stock outstanding for the period. The dilutive effect of outstanding options, warrants, restricted stock and other stock-based compensation awards is reflected in diluted net loss per share by application of the treasury stock method. The calculation of diluted net loss attributed to common stockholders per share excludes all anti-dilutive shares of common stock. For periods in which the Company has reported net losses, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, because such shares of common stock are not assumed to have been issued if their effect is anti-dilutive (Note 8).

Variable Interest Entity

As the Company has the power to direct activities of both Beyond Cancer and NeuroNos that most significantly impact their 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 non-controlling owners’15.25% interest in NeuroNos’ net assets and result of operations are reported as “non-controlling interest” on the Company’s consolidated balance sheets and as “net loss attributable to non-controlling interest” in the Company’s consolidated statements of operations and comprehensive loss.

Recently Adopted Accounting Standards

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09,*Improvements to Tax Disclosures (Topic 740),*to enhance the disclosures related to income taxes, including the rate reconciliation and information on income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024 (fiscal 2026 for the Company), with early adoption permitted. The Company adopted this standard effective April 1, 2025 prospectively. See Note 11, “Income Taxes,” for further information regarding the Company’s effective income tax.

Recently Issued Accounting Standards Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03,Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). This standard requires disclosure of specific information about costs and expenses and becomes effective for fiscal years beginning after December 15, 2026 (fiscal 2028 for the Company), with early adoption permitted. The Company is assessing the impact of this ASU and, upon adoption, may be required to include certain additional disclosures in the footnotes to the Consolidated Financial Statements.

NOTE 3 PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

Depreciation and amortization for the years ended March 31, 2026 and March 31, 2025 was $3.1 million and $3.0 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 U.S. Securities and Exchange Commission (“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 March 31, 2026, due to the SEC’s “baby shelf rules,” the Company may currently not sell any 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 year ended March 31, 2026, 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 year ended March 31, 2025, the Company received net proceeds of $2.1 million from the sale of 337,100 shares of common stock through the 2025 ATM.

On November 4, 2025, the Company entered into an equity purchase agreement (the “Streeterville Purchase Agreement”) with Streeterville Capital, LLC (“Streeterville”) for the purchase of up to $20 million of the Company’s shares of Common Stock. In connection with the Streeterville Purchase Agreement, Streeterville and the Company entered into a Registration Rights Agreement, pursuant to which the Company filed a registration statement for the resale of up to 1,600,000 shares of Common Stock (the “Registration Statement”). During January 2026, Streeterville elected to purchase 1.6 million shares of common stock with an average fair market value of $2.09 per share over each issuance date, resulting in approximately $3.3 million recorded to additional paid-in capital.

Pursuant to the Streeterville Purchase Agreement (so long as there is no balance outstanding on the Note (Note 9), the Company has the right, but not the obligation, to direct Streeterville, by delivery to Streeterville of a put notice from time to time during a period of up to two years, to purchase shares of Common Stock (i) in a minimum amount not less than $25,000, and (ii) in a maximum amount up to the median daily trading volume of the Common Stock during the five trading days immediately preceding delivery of the put notice, or such other greater amount mutually agreed upon by the parties; provided, however, that the number of put shares shall not exceed the beneficial ownership limitation, of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable pursuant to a put notice.

On January 14, 2026, the Company entered into the Securities Purchase Agreement with an institutional investor pursuant to which the Company sold, in a private placement offering, an aggregate of (i)524,990 shares of common stock (ii)3,405,828 pre-funded stock purchase warrants, (the “2026 Pre-funded Warrants”) and (iii)3,930,818 stock purchase warrants (the “2026 Common Warrants” and together with the 2026 Pre-funded Warrants, the “2026 Warrants”). Each common share and accompanying 2026 Common Warrant were sold together at a combined offering price of $1.272 per share, and each 2026 Pre-Funded Warrant was sold at an offering price of $1.2719 per 2026 Pre-funded Warrant for gross proceeds of $5.0 million. The 2026 Pre-Funded Warrants have an exercise price of $0.0001 per share, and the 2026 Common Warrants have an exercise price of $1.147 per share. The private placement offering closed on January 16, 2026. The Company received total net proceeds of $4.5 million after deductions for placement agent commissions and other offering costs of $0.3 million and $0.2 million, respectively, during the year ended March 31, 2026.

Stock Option Plans

The Company’s Eighth 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 November 25, 2025, the Company’s Board of Directors approved an amendment to the 2013 BA Plan to increase the number of shares in the 2013 BA Plan by 850,000, which was approved by the Company’s stockholders at the 2026 annual stockholder meeting on January 30, 2026. The 2013 BA Plan has 1,680,000 shares authorized for issuance. As of March 31, 2025,894,276 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 years ended March 31, 2026 and March 31, 2025 is as follows:

Stock-based compensation expense related to these stock issuances for the years ended March 31, 2026 and March 31, 2025 was $0.5 million and $1.0 million, respectively.

As of March 31, 2026, the Company had unrecognized stock-based compensation expense for the restricted stock unit awards in the 2013 BA Plan of approximately $0.3 million, which is expected to be expensed over the weighted average remaining service period of 1.0 years.

As of March 31, 2026, 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 expireten years from the grant date.

A summary of the change in stock options for the years ended March 31, 2026 and March 31, 2025 is as follows:

As of March 31, 2026, the Company had unrecognized stock-based compensation expense for the stock options in the 2013 BA Plan of approximately $1.7 million which is expected to be expensed over the weighted average remaining service period of 1.7 years.

For the years ended March 31, 2026 and March 31, 2025, the weighted average fair value of options granted was $0.80 and $5.03 per share, respectively.

On March 27, 2026, the Company executed a Separation and Release of Claims Agreement with the former CEO, Steven Lisi (“Release Agreement”). All unvested options held by Mr. Lisi as of March 27, 2026, were accelerated and immediately vested, and remain exercisable for twenty-four months from March 27, 2026. The Company recorded $0.1 million of non-cash stock compensation expense reflecting the acceleration of expense recognition of these equity awards.

On November 4, 2025, the Company’s Board of Directors approved a stock option repricing of 726,618 options (the “2026 Option Repricing”), effective November 4, 2025. The 2026 Option Repricing was undertaken in accordance with, and as permitted by, the Company’s 2013 BA Plan. Pursuant to the 2026 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. The modification resulted in incremental stock compensation expense of $0.3 million recognized during the year ended March 31, 2026. There is approximately $0.1 million of unrecognized stock-based compensation expense for the 2026 Option Repricing which is expected to be expensed over the weighted average remaining service period of 1.5 years.

On November 22, 2024, the Company’s Board of Directors approved a stock option repricing (“2025 Option Repricing”), effective November 22, 2024 (“Effective Date”). The 2025 Option Repricing was undertaken in accordance with, and as permitted by, the Company’s Amended 2013 Plan. Pursuant to the 2025 Option Repricing, all options granted pursuant to the Amended 2013 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 $10.80, the closing price per share of the Common Stock as reported on The Nasdaq Stock Market on November 22, 2024. As of the Effective Date, all such options were repriced such that the exercise price per share was reduced to $10.80. The modification resulted in incremental stock compensation expense of $0.3 million and $1.6 million recognized during the years ended March 31, 2026 and March 31, 2025, respectively. There is approximately $0.1 million of unrecognized stock-based compensation expense for the 2025 Option Repricing which is expected to be expensed over the weighted average remaining service period of 1.0 years.

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 Ltd.’s common stock. The vesting terms of the options issued under the 2021 BC Plan are generally four years and they expireten 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 March 31, 2026,1,745,500 shares were available under the 2021 BC Plan.

A summary of the change in stock options for Beyond Cancer for the years ended March 31, 2026 and March 31, 2025 is as follows:

As of March 31, 2026, the Company had unrecognized stock-based compensation expense for the stock options in the 2021 BC Plan of approximately $0.4 million which is expected to be expensed over the weighted average remaining service period of 1.0 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 2023 NNOS Plan are generally four years and they expire ten years from the grant date. On March 31, 2025, the Company’s Board of Directors approved to reserve for issuance 1,725,000 shares of common stock. As of March 31, 2026,465,670 shares were available under the 2023 NNOS Plan.

A summary of the change in stock options for NeuroNos for the years ended March 31, 2026 and March 31, 2025 is as follows:

As of March 31, 2025, the Company had unrecognized stock-based compensation expense for the stock options in the 2023 NNOS Plan of approximately $0.1 million which is expected to be expensed over the weighted average remaining service period of 1.5 years.

For the years ended March 31, 2026 and March 31, 2025, the weighted average fair value of options granted was $2.38 and $0.11 per share, respectively.

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 $0.14 at the grant date during the year ended March 31, 2025 based on a third-party valuation, and to be $3.00 at the grant date during the year ended March 31, 2026 based on the valuation of common stock purchased by external investors during the fiscal year.

The following summarizes the components of stock-based compensation expense which included stock options and restricted stock for the years ended March 31, 2026 and March 31, 2025 (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 offive years from the issuance date.

On November 3, 2025, warrants to purchase up to an aggregate of 512,821 of Company common stock were issued as part of the Amended Loan Agreement with certain lenders including its director Robert Carey at an exercise price of $1.95 per common stock warrant.

On January 16, 2026, warrants to purchase up to an aggregate of 3,930,818 of Company common stock were issued to certain institutional investors at an exercise price of $1.147 per common stock warrant. The warrant exercise price was calculated at the 5-trading day average closing share price as of January 13, 2026.

On January 16, 2026, pre-funded warrants to purchase up to 3,405,828 of Company common stock were issued to certain institutional investors at an exercise price of $0.0001 per common stock warrant. During the year ended March 31, 2026, holders exercised 1,263,215 of these 2026 Pre-Funded Warrants.

A summary of the Company’s outstanding warrants as of March 31, 2026 is as follows:

ESPP

On March 4, 2021, the stockholders approved the 2021 Employee Stock Purchase Plan (“ESPP”). The purpose of the ESPP is to encourage and to enable eligible employees of the Company, through after-tax payroll deductions, to acquire proprietary interests in the Company through the purchase and ownership of shares of Stock. The ESPP is intended to benefit the Company and its stockholders by (a) incentivizing participants to contribute to the success of the Company and to operate and manage the Company’s business in a manner that will provide for the Company’s long-term growth and profitability and that will benefit its stockholders and other important stakeholders and (b) encouraging participants to remain in the employ of the Company. As of March 31, 2026 and March 31, 2025, no shares were issued under the ESPP.

NOTE 5 OTHER CURRENT ASSETS AND PREPAID EXPENSES

A summary of other current assets and prepaid expenses as of March 31, 2026 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 March 31, 2026 and March 31, 2025 is as follows (in thousands):

NOTE 7 LEASES

Lease population

The Company leases various office facilities under non-cancelable operating leases that expire at various dates through 2031. The Company does not have any finance leases.

In March 2026, the Company entered into a second amendment to lease of one of its facilities (the “Lease Amendment”). The Lease Amendment extended the lease for an additional three years through May 31, 2029 with fixed monthly base rent amounts through the extended term. The Company accounted for the Lease Amendment on the effective date, resulting in the remeasurement of the operating lease liability with a corresponding adjustment to the right-of-use asset in the amount of $0.1 million.

In April 2025, the Company entered into an agreement to sublease the Beyond Cancer office space in Atlanta, Georgia beginning June 1, 2025 and continuing through September 30, 2026 coinciding with the termination of the existing lease. The sublease has been classified as an operating lease by the Company. Sublease rental income offsets the monthly rental expense from the Company’s lease of the office, and is recorded as reduction of selling, general, and administrative expenses in the Company’s consolidated statements of operation and comprehensive loss.

There were no new leases entered into during the years ended March 31, 2026 and March 31, 2025.

Lease position

The following table summarizes the lease-related assets and liabilities recorded on the Company’s consolidated balance sheets as of March 31, 2026 and March 31, 2025 (in thousands):

Lease costs

The following table summarizes the lease-related costs for the years ended March 31, 2026 and March 31, 2025 (in thousands):

Other lease information

Non-cash operating lease right-of-use assets obtained in exchange for operating lease liabilities were $0.1 million and $0 million during the years ended March 31, 2026 and March 31, 2025, respectively.

NOTE 8 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 years ended March 31, 2026 and March 31, 2025.

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

The Company’s pre-funded warrants of 2,362,619 and 606,367 as of March 31, 2026 and March 31, 2025, respectively, were included in the calculation of diluted net loss per share.

NOTE 9 LOANS

The following is a summary of long-term debt as of March 31, 2026:

The following is a summary of long-term debt as of March 31, 2025:

Loan Agreement

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 former 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. On November 3, 2025, the parties entered into a waiver agreement pursuant to which the Loan Agreement lenders consented to the Company’s issuance of the Streeterville Note in exchange for reducing the exercise price from $7.59 per share to $1.95 per share.

On June 2, 2025, the Company received $2.0 million of advanced financing from a related party, director Robert Carey who is also an existing lender under its Loan Agreement (“Additional Loans”). 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 newfive-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 amendment was accounted for as a modification under ASC 470,Debt.

As the repayments under the Amended 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 consolidated balance sheets based on the Company’s current estimate of the repayment timing.

Promissory Note

On November 4, 2025, the Company entered into and closed on a note purchase agreement (the “Note Purchase Agreement”) with Streeterville Capital LLC (“Streeterville”), 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, or $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 was placed in a restricted account and will be accessible by the Company as the first $6.0 million is repaid.

The Note contains an embedded put feature that meet the definition of an embedded derivative in accordance with ASC 815 (Note 2).

During January 2026, Streeterville elected to purchase 1.6 million shares of common stock at an average price of $0.73 per share based on the average closing stock price during the five trading days immediately preceding delivery of the offset notice, which offset principal of approximately $1.2 million outstanding under the Note. The average fair value of the 1.6 million shares of common stock issued during January 2026 was $2.09 per share (Note 4). The difference in the principal offset and the fair value of stock issued of $2.2 million was recorded to the fair value of the embedded derivative liability and subsequent settlement of such feature (Note 2). The conversion of debt to equity through the embedded put feature is treated as a partial extinguishment of the Note, and therefore proportionate amounts of unamortized debt discount and financing costs were written-off during the year ended March 31, 2026, resulting in a loss of $0.2 million recorded within Loss on extinguishment of debt in the consolidated statement of operations and comprehensive loss. In connection with this reduction to the principal balance outstanding, approximately $0.6 million was released from restricted cash during the year ended March 31, 2026.

Pursuant to the contractual terms of the Note, the Company was charged a one-time monitoring fee (as defined within the Note) of $1.9 million that is recognized as part of the Note’s principal outstanding balance on February 4, 2026. The monitoring fee will be credited back to the Company, on a pro-rata basis, if any principal payment is made in cash and certain market conditions are met. The Company determined the monitoring fee is accounted for as an additional debt discount equivalent, with the offsetting increase to the long-term debt principal balance and will be amortized into interest expense over the remaining term of the Note under the effective interest method. If cash principal payments occur in the future, a pro-rata portion of the monitoring fee will be waived, which will reduce the obligation and a gain on extinguishment (or reduction of interest expense) will be recognized at such time.

NOTE 10 LOAN PAYABLE

As of March 31, 2026 and March 31, 2025 in connection with the Company’s insurance policy, a loan was used to finance part of the premium. The details concerning the loan are as follows:

NOTE 11 INCOME TAXES

As of March 31, 2026, the Company has approximately $185.0 million, $30.9 million, $10.2 million and $3.5 million of net operating losses (“NOL”) carryforwards for U.S. federal, Israeli, Irish and Cypriot tax purposes, respectively. The U.S. federal NOL carryforwards of approximately $1.4 million, which were generated prior to March 2018 expire starting in 2035 through 2037. The NOL of approximately $183.6 million can be carried forward indefinitely but limited to offset 80% of taxable income. The entire NOL for Israel, Ireland and Australia can be carried forward indefinitely. The Company also has state NOL carryforwards in the amount of approximately $89.6 million expiring during the years from 2036 to 2043. The Tax Cuts and Jobs Act of 2017 (“TCJA”) has modified the Internal Revenue Code (“IRC”) 174 expenses related to research and development for tax years beginning after December 31, 2021. Under the TCJA, the Company must now capitalize the expenditures related to research and development activities and amortize over five years for U.S. activities and 15 years for non-U.S. activities using a mid-year convention. Therefore, the capitalization of research and development costs in accordance with IRC 174 resulted in a gross deferred tax asset of $27.2 million.

The Company also has R&D tax credits of $3.3 million expiring during the years from 2038 to 2042. The Company has not, as yet, conducted a study of R&D credit carryforwards. This study may result in an adjustment to the Company’s R&D credit carryforwards. The Company assessed its uncertain tax positions and determined that a 25% reserve on federal research and development credit is appropriate and in line with industry standards. As of March 31, 2026, the total amount of unrecognized tax benefits was $0.8 million, exclusive of interest and penalties. A full valuation allowance has been provided against the Company’s R&D credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the consolidated balance sheets and the consolidated statements of operations and comprehensive loss if an adjustment were required. No estimated interest or penalties related to unrecognized tax benefits have been recorded as of March 31, 2026.

Pursuant to Section 382 of the Internal Revenue Code, changes in the Company’s ownership may limit the amount of its NOL carryforwards that could be utilized annually to offset future taxable income, if any. This limitation would generally apply in the event of a cumulative change in ownership of the Company of more than 50% within a three-year period. The Company has performed a study as of March 31, 2021 and determined that on or around February 15, 2017 and February 15, 2020 ownership changes for purposes of Section 382 have occurred. The annual limitations caused by these prior ownership changes will no longer impact the utilizations of NOL’s after March 31, 2022. The Company has not updated the study since March 31, 2021 and therefore has not determined if any other NOL limitations exist.

The components of net loss before the provision for income taxes are as follows (in thousands):

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets were as follows (in thousands):

NOTE 11 INCOME TAXES (continued)

The following table presents the principal reasons for the difference between the effective tax rate and the U.S. federal enacted statutory income tax rate of 21% for the year ended March 31, 2026:

A reconciliation of income tax expense calculated at the federal enacted statutory income tax rate of 21% is as follows for the year ended March 31 2025:

Taxes paid across all jurisdictions were immaterial for all periods presented.

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was signed into law. The OBBBA includes significant tax provisions, including the permanent extension of certain provisions of the Tax Cuts and Jobs Act of 2017 (“TCJA”), modifications to the international tax framework, and the restoration of favorable tax treatment for certain business expenditures. The legislation contains multiple effective dates, with certain provisions effective for tax years beginning in 2025 and others phased in through 2027.

The Company has evaluated the provisions of the OBBBA and their applicability to its operations. Based on this assessment, the OBBBA did not have a material impact on the Company’s consolidated financial statements for the fiscal year ended March 31, 2026. The Company will continue to monitor regulatory guidance and assess the potential impact of provisions with future effective dates on its consolidated financial statements.

**NOTE 12 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 March 31, 2026, 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 Company has opened several non-cancellable purchase orders and the outstanding amount remaining under the purchase order as of March 31, 2026 was approximately $0.5 million with this supplier. This supplier holds $3.4 million of restricted cash to partially secure materials on the Company’s behalf recorded in other current assets and prepaid expenses. This agreement will expire on March 31, 2027. At that time all excess inventory will be returned to the Company and any excess restricted cash will be released.

The Company entered into a new supply agreement with Plexus Corp. for the manufacturing of its second generation device and service of all devices beginning on April 1, 2027.

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 13 SEGMENTS

On November 4, 2021, the Company announced that Beyond Air and Beyond Cancer, Ltd agreed to terms to which the Company, through its subsidiaries would be licensing certain intellectual property and other assets related to, or necessary for the development, commercialization, manufacture and distribution of certain cancer treatment products and/or technologies to a subsidiary of the Company (the “2021 Transaction”). In connection and concurrently with the closing of the 2021 Transaction, Beyond Cancer issued and sold common shares, par value $1.00 to certain investors pursuant to a subscription agreement (the “2021 Offering”). The 2021 Offering consisted of an aggregate of 3 million common shares of Beyond Cancer at a purchase price of $10.00 per share. On November 18, 2021, the Company announced that the maximum amount of shares offered had been purchased for a total of $30 million (including $4.8 million from the terminated Loan Facility and $1.1 million from related parties) for 20% of the equity in Beyond Cancer. The Company retained 80% ownership of Beyond Cancer, which will have exclusive right to the intellectual property portfolio utilizing UNO for the treatment of solid tumors. Beyond Cancer will pay Beyond Air a single digit royalty on all future revenues.

Members of the Board of Directors of Beyond Air who are also members of the Board of Directors of Beyond Cancer, and their families, are considered related parties to the 2021 Offering. Related parties invested $1.1 million in the 2021 Offering.

On March 24, 2025, the Company announced that Beyond Air and NeuroNos Limited agreed to terms to which the Company, through its subsidiaries would be licensing certain intellectual property and other assets related to, or necessary for the development, commercialization, manufacture and distribution of certain neurological treatment products and/or technologies to a subsidiary of the Company (the “2025 Transaction”). In connection and concurrently with the closing of the 2025 Transaction, NeuroNos issued and sold common shares, par value $0.001 to certain investors pursuant to a subscription agreement (the “2025 Offering”). The 2025 Offering consisted of an aggregate of 666,667 common shares of NeuroNos at a purchase price of $3.00 per share. On March 31, 2025, the offered shares had been purchased for a total of $2.0 million for 11.76% of the equity in NeuroNos. During the year ended March 31, 2026, an additional 233,333 common shares of NeuroNos were issued and sold to certain investors at a purchase price of $3.00 per share. As of March 31, 2026,15.25% of the equity in NeuroNos was held by non-controlling interests. Beyond Air retained 84.75% ownership of NeuroNos and will have exclusive right to the intellectual property portfolio for the regulation of nitric oxide as it relates to neurological therapies. NeuroNos will pay Beyond Air a single digit royalty on all future revenues.

NOTE 13 SEGMENTS (continued)

The following table summarizes segment financial information by business segment for the year ended and at March 31, 2026:

The following table summarizes segment financial information by business segment for the year ended and at March 31, 2025:

The following table summarizes financial information by business segment at March 31, 2026:

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

NOTE 14 RELATED PARTY TRANSACTIONS

With the exception of the related party transactions referred to in Note 4 and Note 9, there were no additional related party transactions in the fiscal years ended March 31, 2026 and March 31, 2025.

NOTE 15 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 $6.2 million and $3.7 million in LungFit® PH lease revenues for the years ended March 31, 2026 and March 31, 2025, respectively, reported as revenues in the consolidated statements of operations and comprehensive loss. The Company received approximately $5.8 million and $3.2 million in cash associated with leases which the Company is the lessor for the years ended March 31, 2026 and March 31, 2025, respectively.

The following schedule presents the minimum future lease payments under the LungFit® PH lease arrangements that were in place as of March 31, 2026 (in thousands):

The LungFit® PH devices are included in Property and Equipment (Note 3) and have the useful life offive years. Depreciation expense related to leased LungFit® PH devices was $2.7 million and $2.3 million for the years ended March 31, 2026 and March 31, 2025, respectively.

The depreciation expense related to customer leased devices is included in the cost of revenues in the 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 years ended March 31, 2026 and March 31, 2025 were immaterial.

NOTE 16 SUBSEQUENT EVENTS

On June 24, 2026, the Company’s Board of Directors approved a change in Company’s fiscal year from the twelve-month period ending on March 31 to the twelve-month period ending on December 31 of each year. The Company will complete a transition period commencing on April 1, 2026, and ending on December 31, 2026, after which the Company’s fiscal years shall consist of the twelve-month periods ending on December 31 of each calendar year.