Beyond Air, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

In November 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 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. As of June 30, 2026, Beyond Air has 71.6% 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 13, 2026, the Company effectuated aone-for-twenty (1:20) reverse stock split (the “2026 Reverse Stock Split”). The Company’s common stock began trading on the Nasdaq Stock Market on a split-adjusted basis on July 13, 2026. 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 2026 Reverse Stock Split was rounded up to the nearest whole share.

All share and per share information in these accompanying condensed consolidated financial statements have been retroactively adjusted to reflect the 2026 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, 2026 (the “2026 Annual Report”), filed with the U.S. Securities and Exchange Commission (the “SEC”) on June 26, 2026.

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 28.4% 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, 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, 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 $4.9 million for the three months ended June 30, 2026, and has an accumulated deficit attributable to the stockholders of Beyond Air, Inc. of $327.5 million. The Company had cash, cash equivalents and marketable securities of $9.8 million as of June 30, 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 unaudited condensed 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 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 we expect 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 revenue in its unaudited condensed consolidated statements of operations and comprehensive loss.

Fair Value Measurements

As of June 30, 2026 and March 31, 2026, 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 June 30, 2026 are:

The fair value amounts as of March 31, 2026 are:

The following table summarizes the Company’s short-term marketable securities with unrealized gains and losses as of June 30, 2026, aggregated by major security type:

The following table summarizes our short-term marketable securities with unrealized gains and losses as of March 31, 2026, 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 table presented below is a summary of changes in the fair value of the Company’s Level 3 valuation for the warrants for the three months ended June 30, 2026 (in thousands):

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 June 30, 2026 and March 31, 2026, restricted cash included approximately $5.4 million and $5.6 million, respectively. Restricted cash as of June 30, 2026 includes $5.2 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 (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 June 30, 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 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 three months ended June 30, 2026 and June 30, 2025, the Company received $0 million and $0 million, respectively, in AU Tax Rebates.

Supplier Concentration

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

For the three months ended June 30, 2026, the Company purchased approximately 90% of its materials from one third-party vendor. For the three months ended June 30, 2025, the Company purchased approximately 89% of its materials from two third-party vendors, with these vendors representing 56% and 33%, 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 as of June 30, 2026 and March 31, 2026 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 June 30, 2026 and June 30, 2025 was $0.8 million for each period.

NOTE 4 STOCKHOLDERS’ EQUITY

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 80,000 shares of common stock (the “Registration Statement”).

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.

During the three months ended June 30, 2026, the Company and Streeterville entered into various exchange agreements on the Note, pursuant to which the Company delivered 58,692 shares of common stock to Streeterville with an average fair market value of $9.20 per share over each issuance date, resulting in approximately $0.5 million recorded to additional paid-in capital.

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. The 2013 BA Plan has 84,000 shares authorized for issuance. As of June 30, 2026,44,359 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 three months ended June 30, 2026 is as follows:

Stock-based compensation expense related to these stock issuances for the three months ended June 30, 2026 and June 30, 2025 was $0.1 million and $0.2 million, respectively.

As of June 30, 2026, the Company had unrecognized stock-based compensation expense for the restricted stock unit awards in the 2013 BA Plan of approximately $0.2 million, which is expected to be expensed over the weighted average remaining service period of 0.7 years.

As of June 30, 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 three months ended June 30, 2026 is as follows:

As of June 30, 2026, the Company had unrecognized stock-based compensation expense for the stock options in the 2013 BA Plan of approximately $1.0 million, which is expected to be expensed over the weighted average remaining service period of 1.5 years.

For the three months ended June 30, 2026, the weighted average fair value of options granted, adjusted for the 2026 Reverse Stock Split, was $7.48 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 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 June 30, 2026,1,771,250 common shares were available under the 2021 BC Plan.

As of June 30, 2026, the Company had unrecognized stock-based compensation expense for the stock options in the 2021 BC Plan of approximately $0.1 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 June 30, 2026,446,149 shares were available under the 2023 NNOS Plan.

A summary of the change in stock options for NeuroNos for the three months ended June 30, 2026 is as follows:

As of June 30, 2026, 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 0.5 years.

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

The following summarizes the components of stock-based compensation expense which included stock options and restricted stock units for the three months ended June 30, 2026 and June 30, 2025:

Warrants

During the three months ended June 30, 2026, holders exercised 95,000 of the 2026 Pre-Funded Warrants.

A summary of the Company’s outstanding warrants as of June 30, 2026 is as follows:

NOTE 5 OTHER CURRENT ASSETS AND PREPAID EXPENSES

A summary of other current assets and prepaid expenses as of June 30, 2026 and March 31, 2026 is as follows (in thousands):

NOTE 6 ACCRUED EXPENSES

A summary of the accrued expenses and other current liabilities as of June 30, 2026 and March 31, 2026 is as follows (in thousands):

NOTE 7 BASIC AND DILUTED NET INCOME (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 three months ended June 30, 2026 and June 30, 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 because their effect would have been anti-dilutive for the periods presented:

The Company’s pre-funded warrants of 23,133 and 30,321 as of June 30, 2026 and June 30, 2025, respectively, 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 June 30, 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 non-cancellable purchase orders of approximately $2.7 million with this supplier, as of June 30, 2026. This supplier holds $3.4 million of deposits to partially secure materials on the Company’s behalf recorded in other current assets and prepaid expenses. This agreement will expire on December 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 beginning on April 1, 2027. The Company has non-cancellable purchase orders of approximately $2.7 million with this supplier, as of June 30, 2026.

Contingencies

From time to time, we are involved in various legal matters arising in the normal course of business. We do not expect the outcome of such proceedings, either individually or in the aggregate, to have a material effect on our financial position, cash flows or results of operations.

NOTE 9 LOANS

The following is a summary of long-term debt as of June 30, 2026:

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

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 up to 37,900 shares of the Company’s common stock at an exercise price, adjusted for the 2026 Reverse Stock Split, of $151.80 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 $151.80 per share to $39.00 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 25,642 shares of the Company’s common stock (the “Supplemental Warrants”) with an exercise price of $39.00 per share, as adjusted for the 2026 Reverse Stock Split, 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.

NOTE 9 LOANS (continued)

During the three months ended June 30, 2026, the Company and Streeterville entered into various exchange agreements, pursuant to which the Company delivered to Streeterville 58,692 shares of common stock at an average price of $8.52 per share, as adjusted for the 2026 Reverse Stock Split, based on the average closing stock price during the five trading days immediately preceding the effectiveness of each exchange agreement, which offset principal of approximately $0.5 million outstanding under the Note. The average fair value of the 58,692 shares of common stock issued was $9.20 per share. The difference in the principal offset and the fair value of stock issued was recorded as loss on extinguishment of debt. As the exchanges are treated as partial extinguishment of the Note, a proportionate amount of unamortized debt discount and financing costs were written-off during the three months ended June 30, 2026, resulting in a loss of $0.2 million recorded within Loss on extinguishment of debt in the condensed consolidated statement of operations and comprehensive loss. In connection with this reduction to the principal balance outstanding, approximately $0.2 million was released from restricted cash during the three months ended June 30, 2026.

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 (generallyone-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 $1.6 million and $1.3 million in LungFit® PH lease revenues for the three months ended June 30, 2026 and June 30, 2025, respectively, reported as revenues in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss. The Company received approximately $1.4 million and $1.2 million in cash associated with leases which the Company is the lessor for the three months ended June 30, 2026 and June 30, 2025, respectively.

The following schedule presents the minimum future lease payments under the LungFit® PH lease arrangements that were in place as of June 30, 2026 (in thousands):

The LungFit® PH devices are included in Property and Equipment (Note 3) and have a useful life offive years. Depreciation expense related to leased LungFit® PH devices was $0.7 million and $0.6 million for the three months ended June 30, 2026 and June 30, 2025, respectively.

The depreciation expense related to customer leased devices is included in the cost of revenue in the unaudited 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 months ended June 30, 2026 and June 30, 2025 were immaterial.

NOTE 11 SEGMENTS

During the three months ended June 30, 2026, NeuroNos issued and sold 1,085,470 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 June 30, 2026, the Company retained 71.6% of the equity in NeuroNos, with minority interest holding 28.4% ownership of NeuroNos.

The following table summarizes segment financial information by business segment for the three months ended and at June 30, 2026:

The following table summarizes segment financial information by business segment for the three months ended and at June 30, 2025:

The following table summarizes financial information by business segment at June 30, 2026:

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

NOTE 12 –SUBSEQUENT EVENTS

On July 29, 2026, the Company entered into a securities purchase agreement with certain institutional investors and its Chief Executive Officer and Chief Financial Officer for the private placement of (i)167,011 shares of common stock, (ii) pre-funded warrants to purchase 1,638,835 shares of common stock and (iii) Series A and Series B warrants, each to purchase 1,805,846 shares of common stock. Each share or pre-funded warrant was sold with one Series A warrant and one Series B warrant at a combined price of $5.66 per share for institutional investors, $5.76 per share for participating officers and $5.6599 per pre-funded warrant. The private placement closed on July 31, 2026, resulting in gross proceeds of approximately $10.2 million and net proceeds of approximately $9.2 million after approximately $0.7 million of placement agent fees and $0.3 million of other offering expenses. The officers purchased an aggregate 39,062 shares and accompanying warrants for approximately $0.2 million, which participation was approved by the Audit Committee.

The pre-funded warrants are immediately exercisable at $0.0001 per share and expire when exercised in full. The Series A and Series B warrants are immediately exercisable at $5.51 per share. Subject to the applicable registration provisions, the Series A warrants expire on the earlier of the first anniversary of issuance and 45 days following FDA approval of the Company’s pending premarket approval supplement for LungFit PH II, and the Series B warrants expire five years after issuance.