{"url_path":"/sec/xair/10-k/2026/item-16","section_key":"item-16","section_title":"Item 16 Form 10-K Summary**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-26","source_url":"https://www.sec.gov/Archives/edgar/data/1641631/0001493152-26-030287-index.html","accession_number":"0001493152-26-030287","cik":"0001641631","ticker":"XAIR","issuer_name":"Beyond Air, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1641631/0001493152-26-030287-index.html","primary_entity_key":"0001641631","primary_entity_name":"Beyond Air, Inc."},"word_count":17431,"has_tables":true,"body_markdown":"**Item\n16. Form 10-K Summary**\n\n \n\nInformation\nwith respect to this item is not required and has been omitted at the Company’s option.\n\n \n\n97\n\n \n\n \n\n**SIGNATURES**\n\n \n\nPursuant\nto the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed\non its behalf by the undersigned, thereunto duly authorized.\n\n \n\nDate:\nJune 26, 2026\n\n \n\n \n**BEYOND\nAIR, INC.**\n\n \n \n \n\n \nBy:\n*/s/\nRobert S. Goodman*\n\n \n \n\nRobert\nS. Goodman\n\n*Chief\nExecutive Officer*\n\n*(Principal\nExecutive Officer)*\n\n \n\nPursuant\nto the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the\nregistrant and in the capacities and on the dates indicated.\n\n \n\n**Name**\n \n**Title**\n \n**Date**\n\n \n \n \n \n \n\n*/s/\nRobert S. Goodman*\n \nChief\nExecutive Officer\n \nJune\n26, 2026\n\nRobert\nS. Goodman\n \n(Principal\nExecutive Officer)\n \n \n\n \n \n \n \n \n\n*/s/\nDaniel Moorhead*\n \nChief\nFinancial Officer (Principal Financial\n \nJune\n26, 2026\n\nDaniel\nMoorhead\n \nOfficer\nand Principal Accounting Officer)\n \n \n\n \n \n \n \n \n\n*/s/\nErick Lucera*\n \nDirector\n \nJune\n26, 2026\n\nErick\nLucera\n \n \n \n \n\n \n \n \n \n \n\n*/s/\nYoori Lee*\n \nDirector\n \nJune\n26, 2026\n\nYoori\nLee\n \n \n \n \n\n \n \n \n \n \n\n*/s/\nWilliam Forbes*\n \nDirector\n \nJune\n26, 2026\n\nWilliam\nForbes\n \n \n \n \n\n \n \n \n \n \n\n*/s/\nRobert Carey*\n \nChairman\n \nJune\n26, 2026\n\nRobert\nCarey\n \n \n \n \n\n \n\n98\n\n \n\n \n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n \n\n**CONSOLIDATED\nFINANCIAL STATEMENTS**\n\n \n\n**AS\nOF MARCH 31, 2026**\n\n \n\n**INDEX**\n\n \n\n \n**Page**\n\n \n \n\n**Report of Independent Registered Public Accounting Firm WithumSmith+Brown, PC (PCAOB ID:100)**\n**F-2**\n\n \n \n\n**Consolidated Balance Sheets**\n**F-3**\n\n \n \n\n**Consolidated Statements of Operations and Comprehensive Loss**\n**F-4**\n\n \n \n\n**Consolidated Statements of Changes in Stockholders’ Equity**\n**F-5**\n\n \n \n\n**Consolidated Statements of Cash Flows**\n**F-6**\n\n \n \n\n**Notes to Consolidated Financial Statements**\n**F-7\n– F-32**\n\n \n\nF-1\n\n \n\n \n\n**REPORT\nOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**\n\n \n\nBoard\nof Directors and Stockholders\n\nBeyond\nAir, Inc.\n\n \n\n**Opinion\non the Consolidated Financial Statements**\n\n \n\nWe\nhave audited the accompanying consolidated balance sheets of Beyond Air, Inc. (the “Company”) as of March 31, 2026 and\n2025, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash\nflows for each of the two years in the period ended March 31, 2026, and the related notes (collectively referred to as the\n“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all\nmaterial respects, the financial position of Beyond Air, Inc. as of March 31, 2026 and 2025, and the results of its operations and\nits cash flows for each of the two years in the period ended March 31, 2026, in conformity with accounting principles generally\naccepted in the United States of America.\n\n \n\n**Substantial\nDoubt About the Company’s Ability to Continue as a Going Concern**\n\n \n\nThe\naccompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed\nin Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations, has experienced negative\ncash flows from operating activities since inception, and has an accumulated deficit that raise substantial doubt about its ability\nto continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial\nstatements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect\nto this matter.\n\n \n\n**Basis\nfor Opinion**\n\n \n\nThese\nconsolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion\non the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public\nCompany Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to Beyond Air,\nInc. in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission\nand the PCAOB.\n\n \n\nWe\nconducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain\nreasonable assurance about whether these consolidated financial statements are free of material misstatement, whether due to error or\nfraud. Beyond Air, Inc. is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.\nAs part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose\nof expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express\nno such opinion.\n\n \n\nOur\naudits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due\nto error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence\nregarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles\nused and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.\nWe believe that our audits provide a reasonable basis for our opinion.\n\n \n\n**Critical\nAudit Matter**\n\n \n\nThe\ncritical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements\nthat was communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are\nmaterial to the consolidated financial statements and (2) involved especially challenging, subjective, or complex judgments. The\ncommunication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as\na whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matter\nor on the accounts or disclosures to which it relates.\n\n \n\n**Accounting\nfor Debt/Equity Financing and Embedded Features**\n\n** **\n\n**Critical\nAudit Matter Description**\n\n** **\n\nThe\nCompany evaluates its debt/equity issuances to determine if those contracts or embedded components of those contracts qualify as derivative\ninstruments requiring separate recognition in the Company’s consolidated financial statements. As described in Note 4 and 9, on\nNovember 4, 2025, the Company entered into an equity purchase agreement for the purchase of up to $20 million of the Company’s\nshares of common stock and a note purchase agreement in the principal amount of $12 million with an investor. In connection with the\nequity purchase agreement, the investor and the Company also entered into a registration rights agreement, pursuant to which the Company\nfiled a registration statement for the resale of up to 1.6 million shares of common stock. We identified the accounting for debt/equity\nfinancing as a critical audit matter because of the complexity in applying the accounting framework, including identifying and valuing\nany embedded features. This required extensive audit effort related to the application of the accounting framework.\n\n \n\n**How\nthe Critical Audit Matter Was Addressed in the Audit**\n\n \n\nAddressing\nthe matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated\nfinancial statements. These procedures included the following, among others: as part of walkthrough procedures we reviewed the design\nand the operating effectiveness of controls over management’s process for the accounting treatment, read the agreements, and evaluated\nthe accounting for the note purchase and equity purchase agreement and any embedded features. We tested management’s process, which\nincluded (i) evaluating the application of the accounting framework used by management; (ii) testing the mathematical accuracy of management’s\ncalculations; and (iii) testing the completeness and accuracy of the underlying data used. Professionals with specialized skill and knowledge\nwere used to assist in (i) evaluating management’s application of the accounting framework and (ii) recalculating management’s\ncalculation of the fair value of the embedded feature.\n\n \n\n/s/\nWithumSmith+Brown, PC\n\n \n\nWe\nhave served as Beyond Air, Inc.’s auditor since 2024.\n\n \n\nEast\nBrunswick, New Jersey\n\nJune\n26, 2026\n\n \n\nF-2\n\n \n\n \n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**CONSOLIDATED\nBALANCE SHEETS**\n\n**(in\nthousands, except share data)**\n\n \n\n  \n\nMarch 31,\n\n2026\n  \n\nMarch 31,\n\n2025\n \n\n  \n   \n  \n\nASSETS \n    \n   \n\nCurrent assets \n    \n   \n\nCash and cash equivalents \n$6,740  \n$4,665 \n\nMarketable securities \n 4,901  \n 2,252 \n\nRestricted cash \n 5,622  \n 231 \n\nAccounts receivable, net \n 1,086  \n 710 \n\nInventory, net \n 1,406  \n 2,417 \n\nOther current assets and prepaid expenses \n 5,012  \n 5,743 \n\nTotal current assets \n 24,767  \n 16,018 \n\n  \n    \n   \n\nLicensed right to use technology \n 1,018  \n 1,222 \n\nRight-of-use lease assets \n 1,193  \n 1,706 \n\nProperty and equipment, net \n 8,249  \n 11,013 \n\nOther assets \n 158  \n 103 \n\nTOTAL ASSETS \n$35,385  \n$30,062 \n\n  \n    \n   \n\nLIABILITIES AND STOCKHOLDERS’ EQUITY \n    \n   \n\nCurrent liabilities \n    \n   \n\nAccounts payable \n$2,417  \n$1,950 \n\nAccrued expenses and other current liabilities \n 3,372  \n 2,045 \n\nOperating lease liabilities, current portion \n 321  \n 396 \n\nLoans payable, current portion \n 401  \n 609 \n\nTotal current liabilities \n 6,511  \n 5,000 \n\n  \n    \n   \n\nOperating lease liabilities, net \n 1,023  \n 1,486 \n\nLong-term debt, net \n 21,639  \n 9,197 \n\nWarrant liability \n 2  \n 38 \n\nTotal liabilities \n 29,175  \n 15,721 \n\n \n \n \n \n \n \n \n \n \n\nCommitments and contingencies (Note 12)\n \n \n- \n \n \n \n- \n \n\n  \n    \n   \n\nStockholders’ equity \n    \n   \n\nPreferred Stock, $0.0001 par value per share: 10,000,000 shares authorized, 0 shares issued and outstanding \n -  \n - \n\nCommon Stock, $0.0001\npar value per share: 500,000,000 shares\nauthorized, 11,792,684 and 4,128,539\nshares issued and outstanding as of March 31, 2026 and 2025, respectively (1) \n 1  \n - \n\nTreasury stock \n (25) \n (25)\n\nAdditional paid-in capital \n 325,587  \n 299,990 \n\nAccumulated deficit \n (319,571) \n (286,322)\n\nAccumulated other comprehensive income/(loss) \n 134  \n (60)\n\nTotal stockholders’ equity attributable to Beyond Air, Inc. \n 6,126  \n 13,583 \n\nNon-controlling interest \n 84  \n 758 \n\nTotal stockholders’ equity \n 6,210  \n 14,341 \n\nTOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY \n$35,385  \n$30,062 \n\n \n\n(1)\nPrior\nperiod results have been adjusted to reflect the one-for-twenty stock split in July 2025. See Note 1, *Organization and Business*\nfor details.\n\n \n\nThe\naccompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF-3\n\n \n\n \n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**CONSOLIDATED\nSTATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS**\n\n**(in\nthousands, except share and per share data)**\n\n \n\n****\n\n \n\n** **\n\n \n \n\n**Year\nEnded**\n\n**March\n31,**\n\n**2026**\n\n \n \n\n**Year\nEnded**\n\n**March\n31,**\n\n**2025**\n\n \n\n \n \n \n \n \n \n \n\nRevenues\n \n$\n7,679\n \n \n$\n3,705\n \n\n \n \n \n \n \n \n \n \n \n\nCost\nof revenues\n \n \n7,427\n\n \n \n5,368\n\n \n \n \n \n \n \n \n \n \n\nGross\nprofit (loss)\n \n \n252\n \n \n \n(1,663\n)\n\n \n \n \n \n \n \n \n \n \n\nOperating\nexpenses:\n \n \n \n \n \n \n \n \n\n \n \n \n \n \n \n \n \n \n\nResearch\nand development\n \n \n10,241\n \n \n \n16,857\n \n\nSelling,\ngeneral and administrative\n \n \n19,055\n \n \n \n26,017\n \n\nTotal\noperating expenses\n \n \n29,296\n \n \n \n42,874\n \n\n \n \n \n \n \n \n \n \n \n\nLoss\nfrom operations\n \n \n(29,044\n)\n \n \n(44,537\n)\n\n \n \n \n \n \n \n \n \n \n\nOther\nincome/(expense):\n \n \n \n \n \n \n \n \n\nDividend/investment\nincome\n \n \n303\n \n \n \n705\n \n\nInterest\nand finance expense\n \n \n(3,515\n)\n \n \n(3,019\n)\n\nChange\nin fair value of warrant liability\n \n \n35\n \n \n \n237\n \n\nChange\nin fair value of derivative liability\n \n \n(1,395\n) \n \n \n1,314\n \n\nForeign\nexchange loss\n \n \n(108\n)\n \n \n(3\n)\n\nLoss\non extinguishment of debt\n \n \n(165\n)\n \n \n(2,447\n)\n\nLoss\non disposal/impairment of fixed assets\n \n \n(431\n)\n \n \n(738\n)\n\nOther\nincome/(expense)\n \n \n(14)\n \n \n \n9\n \n\nTotal\nother income/(expense)\n \n \n(5,290\n)\n \n \n(3,942\n)\n\n \n \n \n \n \n \n \n \n \n\nLoss\nbefore income taxes\n \n \n(34,334\n)\n \n \n(48,479\n)\n\n \n \n \n \n \n \n \n \n \n\nProvision\nfor income taxes\n \n \n-\n \n \n \n-\n \n\n \n \n \n \n \n \n \n \n \n\nNet\nloss\n \n$\n(34,334\n)\n \n$\n(48,479\n)\n\n \n \n \n \n \n \n \n \n \n\nLess:\nnet loss attributable to non-controlling interest\n \n \n(1,085\n)\n \n \n(1,854\n)\n\n \n \n \n \n \n \n \n \n \n\nNet\nloss attributable to Beyond Air, Inc.\n \n$\n(33,249\n)\n \n$\n(46,625\n)\n\n \n \n \n \n \n \n \n \n \n\nOther\ncomprehensive income/(loss), net of tax:\n \n \n \n \n \n \n \n \n\nForeign\ncurrency translation adjustment\n \n \n194\n \n \n \n(45\n)\n\n \n \n \n \n \n \n \n \n \n\nComprehensive\nloss attributable to Beyond Air, Inc.\n \n$\n(33,055\n)\n \n$\n(46,670\n)\n\n \n \n \n \n \n \n \n \n \n\nNet\nbasic and diluted loss per share attributable to Beyond Air, Inc. (1)\n \n$\n(4.01\n)\n \n$\n(13.77\n)\n\n \n \n \n \n \n \n \n \n \n\nWeighted\naverage number of shares of common stock outstanding – basic and diluted (1)\n \n \n8,300,916\n \n \n \n3,385,327\n \n\n \n\n(1)\nPrior\nperiod results have been adjusted to reflect the one-for-twenty stock split in July 2025. See Note 1, *Organization and Business*\nfor details.\n\n \n\nThe\naccompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF-4\n\n \n\n** **\n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**CONSOLIDATED\nSTATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY**\n\n**(in\nthousands, except share data)**\n\n \n\n \n\n \n\n \n\n \n\n  \nNumber  \nAmount\n(1)  \nStock  \nCapital  \nDeficit  \nIncome  \nInterest  \nEquity \n\n  \nCommon Stock (1)  \nTreasury  \n\n**Additional**\n\n**Paid-in**\n  \nAccumulated  \n\n**Accumulated**\n\n**Other**\n\n**Comprehensive**\n  \n\n**Non-**\n\n**Controlling**\n  \nTotal \n\n  \nNumber  \nAmount  \nStock  \nCapital  \nDeficit  \nIncome/(Loss)  \nInterest  \nEquity \n\nBalance as of March 31, 2024 \n 2,295,042  \n$-  \n$(25) \n$264,785  \n$(239,697) \n$(15) \n$2,138  \n$27,186 \n\nIssuance of common stock – At The Market equity offering \n 337,101  \n -  \n -  \n 2,151  \n -  \n -  \n -  \n 2,151 \n\nSale of common stock and pre-funded warrants \n 1,250,000  \n -  \n -  \n 18,858  \n -  \n -  \n -  \n 18,858 \n\nIssue of common stock warrants \n -  \n -  \n -  \n 3,159  \n -  \n -  \n -  \n 3,159 \n\nIssuance of common stock upon exercise of warrants \n 234,156  \n -  \n -  \n 365  \n -  \n -  \n -  \n 365 \n\nIssuance of common stock upon vesting of restricted shares \n 12,240  \n -  \n -  \n -  \n -  \n -  \n -  \n - \n\nNeuroNos issuance of stock \n -  \n -  \n -  \n 1,765  \n -  \n -  \n 235  \n 2,000 \n\nStock-based compensation \n -  \n -  \n -  \n 8,907  \n -  \n -  \n 239  \n 9,146 \n\nOther comprehensive loss \n -  \n -  \n -  \n -  \n -  \n (45) \n -  \n (45)\n\nNet loss \n -  \n -  \n -  \n -  \n (46,625) \n -  \n (1,854) \n (48,479)\n\nBalance as of March 31, 2025 \n 4,128,539  \n$-  \n$(25) \n$299,990  \n$(286,322) \n$(60) \n$758  \n$14,341 \n\nIssuance of common stock – At The Market equity offering \n 2,441,775  \n 1  \n -  \n 8,134  \n -  \n -  \n -  \n 8,135 \n\nIssuance of common stock – 2025 Reverse Stock Split rounding\n \n \n46\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n\nSale of common stock and pre-funded warrants \n 524,990  \n -  \n -  \n 4,500  \n -  \n -  \n -  \n 4,500 \n\nIssue of common stock warrants \n -  \n -  \n -  \n 1,183  \n -  \n -  \n -  \n 1,183 \n\nIssuance of common stock upon exercise of warrants \n 3,088,704  \n -  \n -  \n 2,868  \n -  \n -  \n -  \n 2,868 \n\nIssuance of common stock upon vesting of restricted shares \n 8,630  \n -  \n -  \n -  \n -  \n -  \n -  \n - \n\nIssuance of common stock for conversion of debt \n 1,600,000  \n \n-\n  \n \n-\n  \n 3,341  \n \n-\n  \n \n-\n  \n \n-\n  \n 3,341 \n\nNeuroNos issuance of stock \n -  \n -  \n -  \n 573  \n -  \n -  \n 127  \n 700 \n\nStock-based compensation \n -  \n -  \n -  \n 4,998  \n -  \n -  \n 284  \n 5,282 \n\nOther comprehensive gain \n -  \n -  \n -  \n -  \n -  \n 194  \n -  \n 194 \n\nNet loss \n -  \n -  \n -  \n -  \n (33,249) \n -  \n (1,085) \n (34,334)\n\nBalance as of March 31, 2026 \n 11,792,684  \n$1  \n$(25) \n$325,587  \n$(319,571) \n$134  \n$84  \n$6,210 \n\n \n\n(1)\nPrior\nperiod results have been adjusted to reflect the one-for-twenty stock split in July 2025. See Note 1, *Organization and Business*\nfor details.\n\n \n\nThe\naccompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF-5\n\n \n\n \n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**CONSOLIDATED\nSTATEMENTS OF CASH FLOWS**\n\n**(in\nthousands)**\n\n \n\n  \n\n**Year**\n\n**Ended**\n\n****\n\n**March 31,**\n\n**2026**\n  \n\n**Year**\n\n**Ended**\n\n**March 31,**\n\n**2025**\n \n\nCash flows from operating activities: \n    \n   \n\nNet loss \n$(34,334) \n$(48,479)\n\nAdjustments to reconcile net loss to net cash used in operating activities: \n    \n   \n\nDepreciation \n 3,047  \n 2,999 \n\nStock-based compensation \n 5,282  \n 9,146 \n\nAmortization of debt discount and accretion of debt issuance costs \n 551  \n 1,028 \n\nAmortization of licensed right to use technology \n 204  \n 205 \n\nAmortization of operating lease assets \n 398  \n 367 \n\nChange in fair value of warrant liability \n (35) \n (237)\n\nChange in fair value of derivative liability \n 1,395  \n (1,314)\n\nUnrealized loss on marketable securities \n -  \n 60 \n\nProvision for inventory losses \n 672  \n 177 \n\nProvision for bad debt \n 91  \n - \n\nForeign currency adjustments \n (119) \n - \n\nLoss on extinguishment of debt \n 165  \n 2,447 \n\nImpairment of fixed assets \n -  \n 505 \n\nLoss on disposal of fixed assets \n 431  \n 334 \n\nPaid in kind interest \n 1,762  \n 696 \n\nChanges in: \n    \n   \n\nInventory \n 1,110  \n (466)\n\nAccounts receivable \n (468) \n (390)\n\nOther current assets and prepaid expenses \n 683  \n 1,048 \n\nAccounts payable \n 267  \n 399 \n\nAccrued expenses \n 1,127  \n (6,358)\n\nOperating lease liabilities \n (373) \n (385)\n\nNet cash used in operating activities \n (18,144) \n (38,218)\n\n  \n    \n   \n\nCash flows from investing activities: \n    \n   \n\nPurchase of marketable securities \n (4,053) \n (30,878)\n\nProceeds from sale of marketable securities \n 1,404  \n 51,656 \n\nSecurity deposits made on operating leases \n -  \n 10 \n\nPurchase of property and equipment \n (1,025) \n (5,883)\n\nNet cash (used in)/provided by investing activities \n (3,674) \n 14,905 \n\n  \n    \n   \n\nCash flows from financing activities: \n    \n   \n\nProceeds from issuance of common stock through at the market offerings, net \n 8,135  \n 2,151 \n\nProceeds from the sale of common stock of NeuroNos \n 700  \n 2,000 \n\nProceeds from issuance of common stock and pre-funded warrants through securities purchase, net \n 4,500  \n 18,858 \n\nProceeds from issuance of common stock through exercise of warrants \n 2,869  \n 365 \n\nProceeds from issuance of common stock warrants \n 90  \n - \n\nProceeds from long term loan \n 14,000  \n 11,324 \n\nDebt issuance costs \n (996) \n - \n\nPayment of loan \n (208) \n (18,052)\n\nNet cash provided by financing activities \n 29,090  \n 16,646 \n\n  \n    \n   \n\nEffect of exchange rate changes on cash and cash equivalents \n 194  \n (45)\n\n  \n    \n   \n\nIncrease/(decrease) in cash, cash equivalents and restricted cash \n 7,466  \n (6,712)\n\nCash, cash equivalents and restricted cash at beginning of year \n 4,896  \n 11,608 \n\nCash, cash equivalents and restricted cash at end of year \n$12,362  \n$4,896 \n\nSupplemental disclosure of non-cash investing and financing activities: \n    \n   \n\nDebt discount \n$1,094  \n$3,249 \n\nDerivative liability \n$775  \n$- \n\nShort term finance liability \n$457  \n$693 \n\nFixed assets recorded in accounts payable and accrued expenses \n$398  \n$396 \n\nRight-of-use assets acquired under operating leases \n$139  \n$- \n\nDebt principal balance converted to equity \n$1,171  \n$- \n\nInterest paid \n$423  \n$1,197 \n\nIncome taxes paid \n$-  \n$- \n\n \n\nThe\naccompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF-6\n\n \n\n \n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n1 ORGANIZATION AND BUSINESS**\n\n \n\nBeyond\nAir, Inc. (together with its subsidiaries, “Beyond Air” or the “Company”) was incorporated on April 28, 2015\nunder Delaware law. On June 25, 2019, the Company’s name was changed to Beyond Air, Inc. from AIT Therapeutics, Inc.\n\n \n\nThe\nCompany is a commercial-stage medical device and biopharmaceutical company developing a platform of nitric oxide (“NO”) generators\nand delivery systems (the “LungFit® platform”) capable of generating NO from ambient air. The Company’s\nfirst device, LungFit® PH (“LungFit® PH”) received premarket approval (“PMA”) from\nthe U.S. Food and Drug Administration (“FDA”) in June 2022. The NO generated by the LungFit® PH system is indicated to\nimprove oxygenation and reduce the need for extracorporeal membrane oxygenation in term and near-term (>34 weeks gestation) neonates\nwith hypoxic respiratory failure associated with clinical or echocardiographic evidence of pulmonary hypertension in conjunction with\nventilatory support and other appropriate agents. This condition is commonly referred to as persistent pulmonary hypertension of the\nnewborn (“PPHN”). The LungFit® platform can generate NO up to 400 parts per million (“ppm”) for\ndelivery to a patient’s lungs directly or via a ventilator. LungFit® can deliver NO either continuously or for a\nfixed amount of time at various flow rates and has the ability to either titrate dose on demand or maintain a constant dose. In July\n2022, the Company commenced marketing LungFit® PH in the United States for PPHN as a medical device.\n\n \n\nIn\nNovember 2024, the Company received European CE mark approval of the LungFit PH® system for the following:\n\n \n\n●\nThe\ntreatment of infants >34 weeks gestation with hypoxic respiratory failure associated with clinical or echocardiographic\nevidence of pulmonary hypertension, in order to improve oxygenation and to reduce the need for extracorporeal membrane oxygenation;\nand\n\n●\nThe\ntreatment of peri- and post-operative pulmonary hypertension in adults and newborn infants, infants and toddlers, children and adolescents,\nages 0-17 years in conjunction to heart surgery, in order to selectively decrease pulmonary arterial pressure and improve right ventricular\nfunction and oxygenation.\n\n \n\nLungFit®\ncan be used to treat patients on ventilators that require NO, as well as patients with chronic or acute severe lung infections via delivery\nof NO at concentrations > 100 parts per million (ppm) through a breathing mask or similar apparatus. The Company’s other areas\nof focus with the LungFit® platform beyond PPHN are nontuberculous mycobacteria (“NTM”) lung infection and\nthose with various severe lung infections with underlying chronic obstructive pulmonary disease (“COPD”). The Company’s\ncurrent product candidates will be subject to premarket reviews and approvals by the FDA, certification through the conduct of a conformity\nassessment by a notified body in the EU for the product to be CE marked, as well as comparable foreign regulatory authorities.\n\n \n\nWith\nBeyond Air’s focus on NO and its effect on the human condition, the Company has two additional programs that do not utilize\nthe LungFit® system. Through the Company’s majority-owned affiliate Beyond Cancer, Ltd. (“Beyond\nCancer”), NO is used to target solid tumors. The LungFit® platform is not utilized for the solid tumor\nindication due to the need for ultra-high concentrations of gaseous nitric oxide (“UNO”). A proprietary delivery system\nhas been developed that is designed to safely deliver UNO in excess of 10,000 ppm directly to a solid tumor. This program has\ncompleted a phase 1a human clinical trial.\n\n \n\nOn\nNovember 4, 2021, Beyond Air reorganized its oncology business into a new private company called Beyond Cancer. Beyond Air’s preclinical\noncology team and the exclusive right to the intellectual property portfolio utilizing UNO for the treatment of solid tumors now reside\nwith Beyond Cancer. Beyond Air has 80% ownership in Beyond Cancer.\n\n \n\nThe\nsecond program which does not utilize the LungFit® platform partially inhibits neuronal nitric oxide synthase (“nNOS”) in the brain\nto treat neurological conditions. The first target indication is autism spectrum disorder (“ASD”). On June 15, 2023, the\nCompany announced that it has entered into an agreement with Yissum Research Development Company of the Hebrew University of Jerusalem,\nLTD. (the “University”) to acquire the commercial rights for nNOS inhibitors being developed for the treatment of ASD and\nother neurological conditions. Currently, there are no FDA-approved therapies specifically for the treatment of ASD. Under the terms\nof the agreement, Beyond Air will make payments to the University over the three-year period from the date of the agreement for pre-clinical\nwork. Also, the Company will pay a low single-digit royalty on net sales and certain one-time payments based on clinical, regulatory\nand sales milestones.\n\n \n\nOn\nMarch 24, 2025, Beyond Air reorganized its neurology business into a new private company called NeuroNOS. Beyond Air’s infrastructure,\nfor example regulatory, quality, legal, etc., is currently supporting the NeuroNOS team. Beyond Air has 84.75% ownership in NeuroNOS.\n\n \n\nThe\nCompany’s current product candidates will be subject to premarket reviews and approvals by the FDA, certification through the conduct\nof a conformity assessment by a notified body in the European Union (the “EU”), as well as comparable foreign regulatory\nauthorities’ reviews or approvals in other countries or regions.\n\n \n\nOn\nJuly 14, 2025, the Company effectuated a one-for-twenty (1:20) reverse stock split (the “2025 Reverse Stock Split”). The\nCompany’s common stock began trading on the Nasdaq Stock Market on a split-adjusted basis on July 14, 2025. There was no change\nto the number of authorized shares of the Company’s common stock or the par value per share of common stock. Any fraction of a\nshare of common stock created as a result of the 2025 Reverse Stock Split was rounded up to the nearest whole share.\n\n \n\nAll\nshare and per share information in these accompanying consolidated financial statements have been retroactively adjusted to reflect the\n2025 Reverse Stock Split for all periods presented. In addition, (i) a proportionate adjustment has been made to the per share exercise\nprice and the number of shares issuable upon the exercise of all outstanding stock options and warrants to purchase shares of common\nstock, and (ii) the number of shares reserved for issuance pursuant to the 2013 Beyond Air Equity Incentive Plan has been reduced proportionately.\n\n \n\nF-7\n\n \n\n** **\n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n2 SIGNIFICANT ACCOUNTING POLICIES AND OTHER RISKS AND UNCERTAINTIES**\n\n \n\n**Basis\nof Presentation and Principles of Consolidation**\n\n \n\nThese\nconsolidated financial statements include the accounts of Beyond Air, Inc. and its subsidiaries and have been prepared in accordance\nwith generally accepted accounting principles in the United States (“U.S. GAAP”). The Company determined that Beyond Cancer\nLtd. and its affiliates (“Beyond Cancer”) and NeuroNOS Ltd. and its affiliates (“NeuroNos”) are each a\nvariable interest entity (“VIE”) for which the Company is the primary beneficiary and consolidates in its financial\nstatements. All intercompany balances and transactions have been eliminated in the accompanying consolidated financial\nstatements.\n\n \n\n**Use\nof Estimates**\n\n \n\nThe\npreparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions\nthat affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the\nconsolidated financial statements and the reported amounts of revenues and expenses for the reporting period. Actual results could\nsignificantly differ from those estimates. On an ongoing basis, the Company evaluates its significant estimates and assumptions\nincluding expense recognition and accrual assumptions under consulting and clinical trial agreements, stock-based compensation,\nallowance for credit losses, excess and obsolete inventory reserves, impairment assessments, accounting for licensed rights to use\ntechnologies and other long-lived assets, the valuation of warrants, the valuation of derivatives, contingency recognition and\naccruals and the determination of valuation allowance requirements on deferred tax attributes.\n\n \n\n**Going\nConcern, Liquidity and Other Uncertainties**\n\n \n\nThe\nCompany used cash in operating activities of $18.1 million for the year ended March 31, 2026, and has an accumulated deficit attributable\nto the stockholders of Beyond Air, Inc. of $319.6 million. The Company had cash, cash equivalents and marketable securities of $11.6\nmillion as of March 31, 2026. In addition, $3.4 million of cash is held on deposit by the Company’s contract manufacturer to be\napplied against future purchases.\n\n \n\nThe\nCompany expects to incur net losses and have significant cash outflows for at least the next year, including making significant\ninvestments in research and development. Management believes these factors raise substantial doubt about the Company’s ability\nto meet its obligations with cash on hand and concluded that the Company will require additional funding within one year from the\ndate these consolidated financial statements are issued.\n\n \n\nManagement\nis confident that the efforts to arrange financing, while not assured, will enable the Company to meet its obligations.\n\n \n\nThe\nCompany’s future capital needs and the adequacy of its available funds will depend on many factors, including, but not necessarily\nlimited to, the success and costs of commercialization of the Company’s approved product and the actual cost and time necessary\nfor current and anticipated preclinical studies, clinical trials and other actions needed to obtain certification or regulatory approval\nof the Company’s product candidates.\n\n \n\n**Other\nRisks and Uncertainties**\n\n \n\nThe\nCompany is subject to risks common to development and early-stage medical device companies including, but not limited to, new technological\ninnovations, certifications or regulatory approval, dependence on key personnel, protection of proprietary technology, compliance with\ngovernment regulations, product liability, uncertainty of market acceptance of approved products and the potential need to obtain additional\nfinancing. The Company is also dependent on third-party suppliers and, in some cases, single-source suppliers.\n\n \n\nThe\nCompany’s products require approval or clearance from the FDA prior to commencement of commercial sales in the United States. There\ncan be no assurance that the Company’s products beyond LungFit® PH in the U.S. will receive the required approvals or clearances.\nCertifications, approvals or clearances are also required in foreign jurisdictions in which the Company may license or sell its products.\nIf the Company is denied such certifications or approvals or clearances or such certifications, approvals or clearances are delayed,\nsuch denial or delay may have a material adverse impact on the Company’s results of operations, financial position and liquidity.\nFurther, there can be no assurance that the Company’s product will be accepted in the marketplace, nor can there be any assurance\nthat any future products can be developed or manufactured at an acceptable cost and with appropriate performance characteristics, or\nthat such products will be successfully marketed, if at all.\n\n \n\nF-8\n\n \n\n \n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n2 SIGNIFICANT ACCOUNTING POLICIES AND OTHER RISKS AND UNCERTAINTIES (continued)**\n\n \n\n**Revenue\nRecognition**\n\n \n\nThe\nCompany generates revenue from the leases of its LungFit® PH devices to its customers under fixed fee arrangements over periods of\nup to three years. The fixed fee is typically broken down into ratable monthly payments over the term of the arrangement. The Company’s\ncustomers include hospitals and medical facilities. The Company’s LungFit® PH leases include filters, calibration gas, bagging\nkits, cables, adapters, and other components and accessories required to use the LungFit® PH device (the “Consumables”).\nThe consumables’ quantities are varied and may be supplied upon demand of the customers and are unlimited, or the arrangement may\nprovide for the maximum quantities available to the customer over the term of the arrangement. The Company’s LungFit® PH leases\nalso include maintenance and training required to use the LungFit® PH device, as well as device back-up services (the “Services”),\nwhich are recorded in cost of revenue.\n\n \n\nThe\nCompany accounts for its rental arrangements of LungFit® PH devices in accordance with Accounting Standards Codification 842, *Leases*\n(“ASC 842”). Under ASC 842, leases may be classified as either financing, sales-type, or operating, and the Company is\nrequired to disclose key information about leasing arrangements. The classification determines the pattern of revenue recognition\nand classification within the consolidated statements of operations and comprehensive loss. The Company typically classifies the\nrental arrangement of its LungFit® PH contracts as operating leases. The Company’s leases do not contain any restrictive\ncovenants or any material residual value guarantees. The Company’s equipment leases may contain renewal options which range\nfrom one month to two years. The lease term is adjusted for renewal or termination options that the Company believes the customer is\nreasonably certain to exercise.\n\n \n\nThe\nCompany elected the practical expedient applied to operating leases not to separate lease and non-lease components as long as the lease\nand non-lease components have the same timing and pattern of transfer. As such, the non-lease components, including the Consumables and\nServices, are combined with the predominant lease component. The total fixed fees that the Company is reasonably certain to collect are\nrecognized on a straight line basis over the term of the arrangement. Additionally, the Company made an accounting policy election to\npresent LungFit® PH revenue net of sales and other similar taxes.\n\n \n\nAt\nthe lease commencement date, the Company will defer initial direct costs, including commission expense and the cost is recognized over\nthe lease term on the same basis as lease income.\n\n \n\nSee\nNote 15 to the consolidated financial statements for more information regarding leasing arrangements.\n\n \n\nThe\nCompany also generates revenue from the sale of its LungFit® PH devices and consumables to its customers under distribution arrangements.\nContracts include one performance obligation as any individual promised good or services other than delivery of the devices and consumables\nare generally either not capable of being distinct or not distinct within the context of the contracts. Purchased quantities of devices\nand consumables are varied and may be supplied upon demand of the customers. Revenue is recognized at a point in time when the Company\ndelivers the goods to its customer. The transaction includes a fixed component based on contractual rates. Revenue recognized reflects\nthe consideration the Company expects to receive in exchange for delivering the goods.\n\n \n\nAmounts\nbilled in advance of performance obligations being satisfied are recognized as deferred revenue.\n\n \n\nThe\nCompany records the costs of shipping devices and consumables in cost of revenues in its consolidated statements of operations and comprehensive\nloss.\n\n \n\n**Accounts\nReceivable**\n\n \n\nThe\nCompany extends credit to its customers on an unsecured basis. Accounts receivable are recorded at the invoiced amount, based on agreed\ncontract terms, less an allowance for credit losses.\n\n \n\nThe\nCompany establishes an allowance for accounts receivable that are considered to be at increased risk of becoming uncollectible. When\nevaluating the adequacy of this allowance for credit losses, the Company considers factors such as, historical collection experience\nand creditworthiness, the composition of outstanding receivables by customer class, and expected economic conditions and other trends.\nThe Company’s estimates are reflected in the period they are made. The charges recorded for credit losses are reported within Selling,\ngeneral and administrative expenses on the consolidated statements of operations and comprehensive loss. Receivables are written off\nagainst the allowance for credit losses when it is definitively determined that amounts are uncollectible. As of March 31, 2026 and 2025,\nthe allowance for credit losses were $0.1 million and $0, respectively.\n\n \n\nF-9\n\n \n\n \n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n2 SIGNIFICANT ACCOUNTING POLICIES AND OTHER RISKS AND UNCERTAINTIES (continued)**\n\n \n\n**Fair\nValue Measurements**\n\n \n\nASC\n820, *Fair Value Measurements and Disclosures* (“ASC 820”), defines fair value as the price that would be received to\nsell an asset, or paid to transfer a liability, in the principal or most advantageous market in an orderly transaction between market\nparticipants on the measurement date. The fair value standard also establishes a three-level hierarchy, which requires an entity to maximize\nthe use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The valuation hierarchy is based\nupon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels are defined as follows:\n\n \n\nLevel\n1—inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market.\n\n \n\nLevel\n2—inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model-derived\nvaluations in which all significant inputs are observable for substantially the full term of the asset or liability.\n\n \n\nLevel\n3—inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability.\n\n \n\nAs\nof March 31, 2026 and March 31, 2025, the Company’s financial instruments included restricted cash, marketable securities,\naccounts payable, long-term debt and liability classified warrants. The carrying amounts reported in the accompanying consolidated\nfinancial statements for cash and cash equivalents, restricted cash and marketable securities approximate their respective fair\nvalues because of the short-term nature of these accounts. The carrying value of the Company’s long-term debt approximates\nfair value based on current interest rates for similar types of borrowings. The liability classified warrants are recorded at fair\nvalue and are included in Level 3 of the fair value hierarchy.\n\n \n\nThe\nfollowing table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis:\n\n \n\nThe\nfair value amounts as of March 31, 2026 are:\n\n SCHEDULE\nOF FAIR VALUE ON A RECURRING BASIS \n\n(in thousands) \nTotal  \nLevel 1  \nLevel 2  \nLevel 3 \n\n  \n   \n   \n   \n  \n\nMarketable securities: \n    \n    \n    \n   \n\nMutual funds \n$4,901  \n$4,901  \n$-  \n$- \n\nTotal assets measured and recorded at fair value \n$4,901  \n$4,901  \n$-  \n$- \n\n  \n    \n    \n    \n   \n\nLiabilities: \n    \n    \n    \n   \n\nWarrant liability \n$2  \n$-  \n$-  \n$2 \n\nTotal liabilities measured and recorded at fair value \n$2  \n$-  \n$-  \n$2 \n\n \n\nThe\nfair value amounts as of March 31, 2025 are:\n\n \n\n(in thousands) \nTotal  \nLevel 1  \nLevel 2  \nLevel 3 \n\n  \n   \n   \n   \n  \n\nMarketable securities: \n    \n    \n    \n   \n\nMutual funds \n$2,252  \n$2,252  \n$-  \n$- \n\nTotal assets measured and recorded at fair value \n$2,252  \n$2,252  \n$-  \n$- \n\n  \n    \n    \n    \n   \n\nLiabilities: \n    \n    \n    \n   \n\nWarrant liability \n$38  \n$-  \n$-  \n$38 \n\nTotal liabilities measured and recorded at fair value \n$38  \n$-  \n$-  \n$38 \n\n \n\nThe\nfollowing table summarizes the Company’s short-term marketable securities with unrealized gains and losses as of March 31, 2026,\naggregated by major security type:\n\nSUMMARY\nOF SHORT-TERM MARKETABLE SECURITIES WITH UNREALIZED GAINS AND LOSSES \n\n(in thousands) \nFair Value  \nUnrealized Gains \n\nMutual funds \n$4,901  \n$39 \n\nTotal short-term marketable securities \n$4,901  \n$39 \n\n \n\nThe\nfollowing table summarizes the Company’s short-term marketable securities with unrealized gains and losses as of March 31, 2025,\naggregated by major security type:\n\n \n\n(in thousands) \nFair Value  \nUnrealized Gains \n\nMutual funds \n$2,252  \n$39 \n\nTotal short-term marketable securities \n$2,252  \n$39 \n\n \n\nF-10\n\n \n\n \n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n2 SIGNIFICANT ACCOUNTING POLICIES AND OTHER RISKS AND UNCERTAINTIES (continued)**\n\n \n\n**Level\n3 Valuation**\n\n \n\n*Warrant\nliability*\n\n \n\nThe\nwarrant liability is remeasured each reporting period with the change in fair value recorded to other income (expense) in the consolidated\nstatements of operations and comprehensive loss until the warrants are exercised, expired, reclassified or otherwise settled.\n\n \n\nThe\nsignificant assumptions used in valuing the warrants were as follows:\n\nSCHEDULE\nOF ASSUMPTIONS USED IN VALUING WARRANTS \n\nAt March 31, 2026 \nWarrants \n\nExpected term (in years) \n 2.25 \n\nVolatility \n 132.1%\n\nRisk-free rate \n 3.8%\n\n \n\nAt March 31, 2025 \nWarrants \n\nExpected term (in years) \n 3.25 \n\nVolatility \n 99.0%\n\nRisk-free rate \n 3.9%\n\n \n\n*Derivative\nliability*\n\n \n\nThe\nderivative liability represents an embedded redemption feature (embedded put option) that meets the criteria to be classified as a\nderivative and is bifurcated from the Note (see Note 9). On any trading day during which the Registration Statement (Note 4) remains\neffective and the Note remains outstanding and (i) any trading price of the Company’s common stock is at least 5% greater than\nthe current Nasdaq minimum price as defined under Nasdaq Rule 5635(d) (the “Nasdaq Minimum Price”) or (ii) the total\ndollar trading volume has reached $750,000.00, Streeterville may elect to purchase shares of common stock up to the Beneficial\nOwnership Limitation at a purchase price equal to 85% of the Nasdaq Minimum Price, subject to a floor of $0.39 per share. The\naggregate purchase price for these shares shall be offset by an equal amount outstanding under the Note.\n\n \n\nThis\nfeature was concluded to not be clearly and closely related to the host instrument and is required to be measured at fair value at each\nreporting period. The fair value was determined using the Monte Carlo valuation model. The key inputs of the simulation are the valuation\ndate, the Company’s common stock share price and volatility, the risk-free rate, and the maximum convertible shares eligible to\noffset the outstanding balance on the Note.\n\nSCHEDULE\nOF KEY INPUTS DERIVATIVE   \n\nAt November 4, 2025 (issuance) \nDerivative \n\nMaximum convertible shares \n 1,600,000 \n\nShare price \n$1.86 \n\nVolatility \n 125%\n\nRisk-free rate \n 3.6%\n\n \n\nDuring\nJanuary 2026, Streeterville elected to purchase 1.6\nmillion shares of common stock at an average of $0.73\nper share which offset principal of approximately $1.2\nmillion outstanding under the Note (Note 9). The fair value of the issued common stock was approximately $3.3\nmillion (Note 4). The Company remeasured the fair value of the derivative liability to $2.2\nmillion immediately prior to the conversion. Accordingly, the embedded derivative was extinguished as of March 31, 2026.\n\n \n\nThe\ntable presented below is a summary of changes in the fair value of the Company’s Level 3 valuation for the warrants and derivatives\nfor the years ended March 31, 2026 and March 31, 2025 (in thousands):\n\n SCHEDULE OF CHANGES IN FAIR VALUE OF WARRANTS AND DERIVATIVES\n\n  \nWarrants  \nDerivative \n\nBalance at March 31, 2024 \n$275  \n$1,314 \n\nChange in fair value \n (237) \n (1,314)\n\nBalance at March 31, 2025 \n$38  \n$- \n\nIssuance \n -  \n 775 \n\nChange in fair value \n (36) \n 1,395 \n\nExtinguishment \n -  \n (2,170)\n\nBalance at March 31, 2026 \n$2  \n$- \n\n \n\nF-11\n\n \n\n** **\n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n2 SIGNIFICANT ACCOUNTING POLICIES AND OTHER RISKS AND UNCERTAINTIES (continued)**\n\n \n\n**Warrant\nLiability**\n\n \n\nThe\nCompany classifies warrants as equity for any contracts that (i) require physical settlement or net-share settlement or (ii) gives\nthe Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The\nCompany classifies warrants as assets or liabilities for any contracts that (i) require net-cash settlement (including a requirement\nto net-cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) gives the\ncounterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). Such warrants\nare subject to remeasurement at each consolidated balance sheet date and any change in fair value is recognized as a component of\nother income/expense on the consolidated statements of operations and comprehensive loss. The Company will continue to adjust the liability\nfor changes in fair value until the earlier of the exercise or expiration of such warrants. At that time, the portion of the warrant\nliability related to warrants will be reclassified to additional paid-in capital.\n\n \n\n**Derivative\nLiability**\n\n \n\nThe\nCompany evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as\nembedded derivatives in accordance with ASC 815, *Derivatives and Hedging.* For derivative financial instruments that are\naccounted for as assets or liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is\nthen re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations and\ncomprehensive loss. The classification of derivative instruments, including whether such instruments should be recorded as assets or\nliabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the\nconsolidated balance sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument\ncould be required within 12 months of the balance sheet date.\n\n \n\n**Cash\nand Cash Equivalents, Short-Term Investments and Restricted Cash**\n\n \n\nThe\nCompany considers all highly liquid investments with original maturities of three months or less at the date of purchase and an investment\nin a U.S. government money market fund to be cash equivalents. The Company maintains its cash and cash equivalents in highly rated financial\ninstitutions in Australia, Israel, Ireland and the U.S., the balances of which, at times, may exceed federally insured limits. Marketable\nsecurities may include investment in a combination of fixed income bonds, U.S. Treasury securities, and mutual funds that are considered\nto be highly liquid and easily tradeable. The marketable securities are considered trading securities and are measured at fair value\nand are accounted for in accordance with ASC 320. The marketable securities are valued using inputs observable in active markets for\nidentical securities and are therefore classified as Level 1 within the Company’s fair value hierarchy.\n\n \n\nAs\nof March 31, 2026 and March 31, 2025, restricted cash included approximately $5.6 million and $0.2 million, respectively. Restricted\ncash as of March 31, 2026 includes $5.4 million of proceeds from the Company’s secured promissory note issued on November 4, 2025\nthat is required to be held in a restricted account pursuant to the Note Purchase Agreement. Amounts held in the restricted account become\navailable to the Company as the outstanding principal of the Note is repaid (see Note 9).\n\n \n\n**Concentration\nof Credit Risk**\n\n \n\nFinancial\ninstruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,\nwhich at times, may exceed the federal depository insurance coverage of $250,000 in the United States, A$250,000 in Australia, $25,000\nin Bermuda, €100,000 in Ireland and €100,000 in Cyprus. There is currently no official federal depository insurance in Israel.\nThe Company has not experienced losses on these accounts, and management believes the Company is not exposed to significant risks on\nsuch accounts. As of March 31, 2026, the Company had greater than $250,000 at United States financial institutions, less than A$250,000\nat Australian financial institutions, greater than €100,000 at Irish financial institutions and also has funds on deposit in Israel.\nAny loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition,\nresults of operations and cash flows.\n\n \n\nThe\nfollowing table is the reconciliation of the presentation and disclosure of cash, cash equivalents, marketable securities by major security\ntype and restricted cash as shown on the Company’s consolidated statements of cash flows for:\n\n SCHEDULE OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH\n\n(in thousands) \n\nMarch 31,\n\n2026\n  \n\nMarch 31,\n\n2025\n \n\nCash and cash equivalents \n$6,740  \n$4,665 \n\nRestricted cash \n 5,622  \n 231 \n\nTotal cash, cash equivalents and restricted cash \n$12,362  \n$4,896 \n\nMarketable securities: \n    \n   \n\nMutual funds \n 4,901  \n 2,252 \n\nTotal marketable securities \n$4,901  \n$2,252 \n\n  \n    \n   \n\nTotal cash, cash equivalents, marketable securities and restricted cash \n$17,263  \n$7,148 \n\n \n\nF-12\n\n \n\n** **\n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n2 SIGNIFICANT ACCOUNTING POLICIES AND OTHER RISKS AND UNCERTAINTIES (continued)**\n\n \n\n**Fixed\nAssets**\n\n \n\nProperty\nand equipment are stated at cost less accumulated depreciation and accumulated amortization. Depreciation and amortization are calculated\nusing the straight-line method over the estimated useful life of the assets as follows:\n\n SCHEDULE OF PROPERTY AND EQUIPMENT USEFUL LIFE OF ASSETS\n\nComputer\nequipment\nThree\nyears\n\nFurniture\nand fixtures\nFive\nyears\n\nClinical\nand medical equipment\nThree3/Five\nyears\n\nEquipment\ndeployable as part of a service offering\nFive\nyears\n\nLeasehold\nimprovements\nShorter\nof term of lease or estimated useful life of the asset\n\n \n\n**Segment\nReporting**\n\n \n\nOperating\nsegments are defined as components of an entity for which both discrete financial information is available and regularly reviewed by\nthe Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing\nperformance. The CODM is the Company’s Chief Executive Officer. The Company’s CODM evaluates performance and allocates resources for all\nof the Company’s reportable segments based on income/loss from operations. The CODM is involved in determining and reviewing projected\nincome/loss from operations as part of the annual budget process. Throughout the year, the CODM considers forecast to actual results\nand variances to allocate resources. The CODM also considers this information in strategic decisions related to capital allocations,\nincluding investments in assets, research and development activities, and human capital.\n\n \n\nThe\nCompany’s reportable segments at March 31, 2026 included Beyond Air, Beyond Cancer, and NeuroNos.\n\n \n\nThe\nBeyond Air segment includes unallocated corporate expenses associated with the public company fees as well as all corporate related assets\nand liabilities.\n\n \n\n**Inventories**\n\n \n\nInventories\nconsist primarily of purchased filters, bagging kits, cables, adapters, and other components and accessories required to use the LungFit®\nPH device held for sale to customers. Inventories are recorded at the lower of cost or net realizable value. Cost comprises direct materials,\nthird-party manufacturing costs and shipping costs incurred to deliver goods to the Company’s central warehouse location. Costs\nare assigned to individual items of inventory on the basis of weighted average costs. Inventory items are tracked by batch/lot number\nfor specific identification whenever possible.\n\n \n\nInventory\nreserves are established for estimated excess and obsolete inventory equal to the difference between the cost of the inventory and the\nestimated net realizable value of the inventory based on historical usage, known trends, and market conditions and judgment about the\nanticipated future consumption and the Company’s ability to sell the inventory. At March 31, 2026 and March 31, 2025, excess and obsolescence reserves\nwere $0.4 million and $0.2 million, respectively.\n\n \n\n**Leases**\n\n \n\nOperating\nlease assets are included within operating lease right-of-use assets, and the corresponding operating lease obligation on the consolidated\nbalance sheets in accordance with ASC 842, *Leases*. The Company has elected not to present short-term leases as these leases have\na lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that the Company is reasonably\ncertain to exercise. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the\nlease term at commencement date. Operating lease expense is recognized on a straight-line basis over the lease term and is included in\ngeneral and administrative and research development expenses.\n\n \n\nThe\ninterest rate implicit in the Company’s leases is typically not readily determinable. As a result, the Company utilizes its incremental\nborrowing rate in determining the present value of lease payments, which reflects the fixed rate at which the Company could borrow on\na collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment.\n\n \n\nF-13\n\n \n\n \n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n2 SIGNIFICANT ACCOUNTING POLICIES AND OTHER RISKS AND UNCERTAINTIES (continued)**\n\n \n\n**Research\nand Development**\n\n \n\nResearch\nand development expenses are charged to the consolidated statements of operations and comprehensive loss as incurred. Research and development\nexpenses include salaries, benefits, stock-based compensation and costs incurred by outside laboratories, manufacturers, clinical research\norganizations, consultants, and accredited facilities in connection with preclinical studies and clinical trials. Research and development\nexpenses are partially offset by the benefit of tax incentive payments for qualified research and development expenditures from the Australian\ntax authority (“AU Tax Rebates”). The Company does not record AU Tax Rebates until payment is received due to the uncertainty\nof receipt. For the years ended March 31, 2026 and March 31, 2025, the Company received $0.1 million and $0.0 million, respectively,\nin AU Tax Rebates.\n\n \n\n**Foreign\nExchange Transactions**\n\n \n\nThe\nCompany’s subsidiaries transact in U.S. dollars, Euros, New Israeli Shekels and Australian dollars. The Company’s main operations\nare in the United States and the U.S. dollar is the currency of the primary economic environment in which the Company operates and expects\nto continue to operate in the foreseeable future. The Company translated its non-U.S. operations’ assets and liabilities denominated\nin foreign currencies into U.S. dollars at current rates of exchange as of the balance sheet date and income and expense items at the\naverage exchange rate for the reporting period. Gains or losses from foreign currency transactions are included in other income (expense)\nin the consolidated statements of operations and comprehensive loss as foreign currency exchange gain/(loss).\n\n \n\nIn\nconsolidating international subsidiaries, balance sheet currency effects are recorded as a component of accumulated other comprehensive\nincome and loss. The accumulated other comprehensive income and loss account includes the cumulative results of translating certain balance\nsheet assets and liabilities at current exchange rates and some accounts at historical rates. For the year ended March 31, 2026, the\nCompany recorded gains of $0.2 million in accumulated other comprehensive income. For the year ended March 31, 2025, the Company recorded\nlosses of $0.1 million in accumulated other comprehensive loss.\n\n \n\n**Stock-Based\nCompensation**\n\n \n\nThe\nCompany measures the cost of employee and non-employee services received in exchange for an award of equity instruments based on the\ngrant date fair value of the award. Fair value for restricted stock unit awards is valued using the closing price of the Company’s\ncommon stock on the date of grant. The grant date fair value is recognized over the requisite service period during which an employee\nand non-employee is required to provide service in exchange for the award, using the accelerated method with each tranche being expensed\nover its vesting period. The grant date fair value of employee and non-employee share options is estimated using the Black-Scholes option\npricing model. The risk-free interest rate assumptions were based upon the observed interest rates appropriate for the expected term\nof the equity instruments. The expected dividend yield was assumed to be zero as the Company has not paid any dividends since its inception\nand does not anticipate paying dividends in the foreseeable future. The Company accounts for forfeitures as they occur. Starting in 2023,\nBeyond Air used its own historical volatility as an input for expected volatility, but due to Beyond Cancer’s and NeuroNos’\nlack of marketability, the Company utilizes the implied volatility based on an aggregate of guideline companies for expected volatility.\nThe Company uses the simplified method to estimate the expected term.\n\n \n\n**Supplier\nConcentration**\n\n \n\nThe\nCompany relies on third-party suppliers to provide materials for its devices and consumables.\n\n \n\nIn\nthe year ended March 31, 2026, the Company purchased approximately 74% and 18% of its materials from two third-party vendors. In the\nyear ended March 31, 2025, the Company purchased approximately 85% of its materials from one third-party vendor.\n\n \n\n**Customer\nConcentration**\n\n \n\nFor\nthe year ended March 31, 2026, the Company derived 11% and 10% of its revenues from two customers. For the year ended March 31, 2025,\nthe Company derived 16% and 10% of its revenues from two customers.\n\n \n\n**Licensed\nRight to Use Technology**\n\n \n\nLicensed\nright to use technology that is considered platform technology with alternative future uses is recorded as an intangible asset and is\namortized on a straight-line method over its estimated useful life, determined to be thirteen years.\n\n \n\nThe\nexpected amortization expense for the next five years and thereafter is as follows for the year ended March 31 (in thousands):\n\n SCHEDULE OF FUTURE EXPECTED AMORTIZATION EXPENSE\n\n  \n   \n\n2027 \n$205 \n\n2028 \n 205 \n\n2029 \n 205 \n\n2030 \n 205 \n\n2031 \n 198 \n\nTotal \n$1,018 \n\n \n\n**Long-Lived\nAssets**\n\n \n\nThe\nCompany assesses the impairment of long-lived assets on an ongoing basis and whenever events or changes in circumstances indicate that\nthe carrying value may not be recoverable. Factors that the Company considers as potential triggers of an impairment review include the\nfollowing:\n\n \n\n●\nsignificant\nunderperformance relative to expected historical or projected future operating results,\n\n●\nsignificant\nchanges in the manner of the Company’s use of the acquired assets or the strategy for its overall business,\n\n●\nsignificant\nnegative regulatory or economic trends, and\n\n●\nsignificant\ntechnological changes, which would render the platform technology, equipment, and manufacturing processes obsolete.\n\n \n\nRecoverability\nof assets that will continue to be used in the Company’s operations is measured by comparing the carrying value to the future net\nundiscounted cash flows expected to be generated by the asset or asset group. Future undiscounted cash flows include estimates of future\nrevenues, driven by market growth rates, and estimates of future costs. There were no events during the reporting periods that were deemed\nto be a triggering event that would require an impairment assessment, other than the impairment of $0.5 million recorded during the year\nended March 31, 2025 associated with certain R&D assets following Management’s decision to put its VCAP clinical trial on hold.\n\n \n\nF-14\n\n \n\n** **\n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n2 SIGNIFICANT ACCOUNTING POLICIES AND OTHER RISKS AND UNCERTAINTIES (continued)**\n\n \n\n**Income\nTaxes**\n\n \n\nThe\nCompany accounts for income taxes using the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized\nfor the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities\nand their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable\nincome in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and\nliabilities of a change in the tax rate is recognized in income or expense in the period that the change is effective. Tax benefits are\nrecognized when it is probable that the deduction will be sustained. A valuation allowance is established when it is more likely than\nnot 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\ndeductibility is uncertain. As of March 31, 2026 and March 31, 2025, the Company recorded a valuation allowance to the full extent of\nthe Company’s net deferred tax assets since the likelihood of realization of the benefit does not meet the more-likely-than-not\nthreshold.\n\n \n\nThe\nCompany’s reserves related to taxes are based on a determination of whether and how much of a tax benefit taken by the Company\nin its tax filings or positions is more likely than not to be realized following resolution of any potential contingencies present related\nto the tax benefit. The Company would recognize both estimated accrued interest and penalties related to unrecognized benefits within\nincome tax expense in the consolidated statements of operations and comprehensive loss. The Company’s uncertain tax positions are\nrelated to years that remain subject to examination by relevant tax authorities. Since the Company is in a loss carryforward position,\nthe Company is generally subject to examination by the U.S. federal, state and local income tax authorities for all tax years in which\na loss carryforward is available.\n\n \n\n**Net\nLoss Per Share**\n\n \n\nBasic\nand diluted net loss per share attributable to common stockholders is computed by dividing the net loss attributable to Beyond Air, Inc.,\nby the weighted average number of shares of common stock outstanding for the period. The dilutive effect of outstanding options, warrants,\nrestricted stock and other stock-based compensation awards is reflected in diluted net loss per share by application of the treasury\nstock method. The calculation of diluted net loss attributed to common stockholders per share excludes all anti-dilutive shares of common\nstock. For periods in which the Company has reported net losses, diluted net loss per share attributable to common stockholders is the\nsame as basic net loss per share attributable to common stockholders, because such shares of common stock are not assumed to have been\nissued if their effect is anti-dilutive (Note 8).\n\n \n\n**Variable\nInterest Entity**\n\n \n\nAs\nthe Company has the power to direct activities of both Beyond Cancer and NeuroNos that most significantly impact their economic\nperformance and the right to receive benefits and losses that may potentially be significant, these financial statements are fully consolidated\nwith those of the Company. The non-controlling owners’ 20% interest in Beyond Cancer’s net assets and result of operations\nand the non-controlling owners’ 15.25% interest in NeuroNos’ net assets and result of operations are reported as “non-controlling\ninterest” on the Company’s consolidated balance sheets and as “net loss attributable to non-controlling interest”\nin the Company’s consolidated statements of operations and comprehensive loss.\n\n \n\n**Recently\nAdopted Accounting Standards**\n\n \n\nIn\nDecember 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)\n2023-09, *Improvements to Tax Disclosures (Topic 740),*to enhance the disclosures related to income taxes, including the rate\nreconciliation and information on income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024\n(fiscal 2026 for the Company), with early adoption permitted. The Company adopted this standard effective April 1, 2025\nprospectively. See Note 11, “Income Taxes,” for further information regarding the\nCompany’s effective income tax.\n\n \n\n**Recently\nIssued Accounting Standards Not Yet Adopted**\n\n \n\nIn\nNovember 2024, the FASB issued ASU 2024-03, *Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures\n(Subtopic 220-40).* This standard requires disclosure of specific information about costs and expenses and becomes effective for fiscal\nyears beginning after December 15, 2026 (fiscal 2028 for the Company), with early adoption permitted. The Company is assessing the impact\nof this ASU and, upon adoption, may be required to include certain additional disclosures in the footnotes to the Consolidated Financial\nStatements.\n\n \n\nF-15\n\n \n\n** **\n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n3 PROPERTY AND EQUIPMENT**\n\n \n\nProperty\nand equipment consist of the following:\n\nSCHEDULE\nOF PROPERTY AND EQUIPMENT \n\n(in thousands) \n\n**March 31,**\n\n**2026**\n  \n\n**March 31,**\n\n**2025**\n \n\n  \n   \n  \n\nClinical and medical equipment \n$206  \n$1,048 \n\nEquipment deployable as part of a service offering \n 13,871  \n 13,511 \n\nComputer equipment \n 853  \n 927 \n\nFurniture and fixtures \n 458  \n 506 \n\nLeasehold improvements \n 521  \n 521 \n\nProperty and equipment, gross \n 15,909  \n 16,513 \n\nAccumulated depreciation \n (7,660) \n (5,500)\n\nProperty\nand equipment, net \n$8,249  \n$11,013 \n\n \n\nDepreciation\nand amortization for the years ended March 31, 2026 and March 31, 2025 was $3.1 million and $3.0 million, respectively.\n\n \n\nF-16\n\n \n\n \n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n4 STOCKHOLDERS’ EQUITY**\n\n \n\nOn\nFebruary 10, 2025, the Company entered into an At-The-Market Equity Offering Sales Agreement with BTIG, Inc. (the “2025 ATM”).\nUnder the 2025 ATM, the Company may sell shares of its common stock having aggregate sales proceeds of up to $35.0 million, from time\nto 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\nto 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\nmeasurement periods, the number of shares of common stock that may be offered and sold by the Company under a Form S-3 registration statement,\nincluding pursuant to the 2025 ATM, in any twelve-month period is limited to an aggregate amount that does not exceed one-third of the\nCompany’s public float. As of March 31, 2026, due to the SEC’s “baby shelf rules,” the Company may currently\nnot sell any shares of common stock pursuant to the 2025 ATM. The Company will remain subject to the “baby shelf rules” under\nthe Form S-3 registration statement until such time as its public float exceeds $75.0 million.\n\n \n\nDuring\nthe 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\nthe 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\nof common stock through the 2025 ATM.\n\n \n\nOn\nNovember 4, 2025, the Company entered into an equity purchase agreement (the “Streeterville Purchase Agreement”) with\nStreeterville Capital, LLC (“Streeterville”) for the purchase of up to $20\nmillion of the Company’s shares of Common Stock. In connection with the Streeterville Purchase Agreement, Streeterville and\nthe Company entered into a Registration Rights Agreement, pursuant to which the Company filed a registration statement for the\nresale of up to 1,600,000\nshares 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\nvalue of $2.09 per share over each issuance date, resulting in approximately $3.3 million recorded to additional paid-in capital.\n\n \n\nPursuant\nto the Streeterville Purchase Agreement (so long as there is no balance outstanding on the Note (Note 9), the Company has the right,\nbut not the obligation, to direct Streeterville, by delivery to Streeterville of a put notice from time to time during a period of up\nto 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\nmedian daily trading volume of the Common Stock during the five trading days immediately preceding delivery of the put notice, or such\nother greater amount mutually agreed upon by the parties; provided, however, that the number of put shares shall not exceed the beneficial\nownership limitation, of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance\nof shares of Common Stock issuable pursuant to a put notice.\n\n \n\nOn\nJanuary 14, 2026, the Company entered into the Securities Purchase Agreement with an institutional investor pursuant to which the Company\nsold, in a private placement offering, an aggregate of (i) 524,990 shares of common stock (ii) 3,405,828 pre-funded stock purchase warrants,\n(the “2026 Pre-funded Warrants”) and (iii) 3,930,818 stock purchase warrants (the “2026 Common Warrants” and\ntogether with the 2026 Pre-funded Warrants, the “2026 Warrants”). Each common share and accompanying 2026 Common Warrant\nwere 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\n$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\nper share, and the 2026 Common Warrants have an exercise price of $1.147 per share. The private placement offering closed on January\n16, 2026. The Company received total net proceeds of $4.5 million after deductions for placement agent commissions and other offering\ncosts of $0.3 million and $0.2 million, respectively, during the year ended March 31, 2026.\n\n \n\nF-17\n\n \n\n** **\n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n4 STOCKHOLDERS’ EQUITY (continued)**\n\n \n\n**Stock\nOption Plans**\n\n \n\nThe\nCompany’s Eighth Amended and Restated 2013 Beyond Air Equity Incentive Plan (the “2013 BA Plan”) allows for awards\nto officers, directors, employees, and consultants of stock options, restricted stock units and restricted shares of the Company’s\ncommon stock. On November 25, 2025, the Company’s Board of Directors approved an amendment to the 2013 BA Plan to increase the\nnumber of shares in the 2013 BA Plan by 850,000, which was approved by the Company’s stockholders at the 2026 annual stockholder\nmeeting 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\navailable under the 2013 BA Plan.\n\n \n\n**Restricted\nStock Units**\n\n \n\nThe\nfair value for the restricted stock unit awards was valued at the closing price of the Company’s common stock on the date of grant.\nRestricted stock units vest annually over five years.\n\n \n\nA\nsummary of the Company’s restricted stock unit awards for the years ended March 31, 2026 and March 31, 2025 is as follows:\n\nSCHEDULE OF RESTRICTED STOCK AWARDS\n\n  \n\n**Number Of**\n\n**Shares**\n  \n\n**Weighted**\n\n**Average Grant**\n\n**Date Fair**\n\n**Value**\n \n\n  \n   \n  \n\nUnvested as of March 31, 2024 \n 30,945  \n$139.60 \n\nGranted \n -  \n - \n\nVested \n (12,240) \n 137.20 \n\nForfeited \n (440) \n 229.60 \n\nUnvested as of March 31, 2025 \n 18,265  \n$139.40 \n\nGranted \n -  \n - \n\nVested \n (8,630) \n 150.26 \n\nForfeited \n (150) \n 137.40 \n\nUnvested as of March 31, 2026 \n 9,485  \n$129.41 \n\n \n\nStock-based\ncompensation expense related to these stock issuances for the years ended March 31, 2026 and March 31, 2025 was $0.5 million and $1.0\nmillion, respectively.\n\n \n\nAs\nof March 31, 2026, the Company had unrecognized stock-based compensation expense for the restricted stock unit awards in the 2013 BA\nPlan of approximately $0.3 million, which is expected to be expensed over the weighted average remaining service period of 1.0 years.\n\n \n\nAs\nof March 31, 2026, all vested shares had been issued.\n\n \n\nF-18\n\n \n\n \n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n4 STOCKHOLDERS’ EQUITY (continued)**\n\n** **\n\n**Stock\nOptions**\n\n \n\nThe\nvesting terms of the options issued under the 2013 BA Plan are generally four years and expire ten years from the grant date.\n\n \n\nA\nsummary of the change in stock options for the years ended March 31, 2026 and March 31, 2025 is as follows:\n\nSCHEDULE OF OPTION ACTIVITY \n\n  \n\n**Number**\n\n**Of**\n\n**Options**\n  \n\n**Weighted**\n\n**Average**\n\n**Exercise**\n\n**Price–-**\n\n**Options**\n  \n\n**Weighted**\n\n**Average**\n\n**Remaining**\n\n**Contractual**\n\n**Life-**\n\n**Options**\n  \n\n**Aggregate**\n\n**Intrinsic**\n\n**Value**\n\n**(thousands)**\n \n\n  \n   \n   \n   \n  \n\nOptions outstanding as of March 31, 2024 \n 566,645  \n$88.39  \n 8.0  \n$760 \n\nGranted \n 227,550  \n 6.06  \n    \n   \n\nExercised \n -  \n -  \n    \n   \n\nForfeited \n (54,976) \n 61.74  \n    \n   \n\nOptions outstanding as of March 31, 2025 \n 739,219  \n$9.34  \n 7.9  \n$- \n\nGranted \n 94,800  \n 0.92  \n    \n   \n\nExercised \n -  \n -  \n    \n   \n\nForfeited \n (77,270) \n 1.95  \n    \n   \n\nOutstanding as of March 31, 2026 \n 756,749  \n$1.82  \n 7.2  \n$- \n\nExercisable as of March 31, 2026 \n 497,591  \n$1.95  \n 6.3  \n$- \n\n \n\nAs\nof March 31, 2026, the Company had unrecognized stock-based compensation expense for the stock options in the 2013 BA Plan of approximately\n$1.7 million which is expected to be expensed over the weighted average remaining service period of 1.7 years.\n\n \n\nFor\nthe 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,\nrespectively.\n\n \n\nOn\nMarch 27, 2026, the Company executed a Separation and Release of Claims Agreement with the former CEO, Steven Lisi (“Release Agreement”).\nAll unvested options held by Mr. Lisi as of March 27, 2026, were accelerated and immediately vested, and remain exercisable for twenty-four\nmonths from March 27, 2026. The Company recorded $0.1 million of non-cash stock compensation expense reflecting the acceleration of expense\nrecognition of these equity awards.\n\n \n\nOn\nNovember 4, 2025, the Company’s Board of Directors approved a stock option repricing of 726,618\noptions (the “2026 Option Repricing”), effective November 4, 2025. The 2026 Option Repricing was undertaken in\naccordance with, and as permitted by, the Company’s 2013 BA Plan. Pursuant to the 2026 Option Repricing, all options granted\npursuant to the 2013 BA Plan that are held by Company Board members, officers, and employees expected to continue providing services\nto the Company were repriced, to the extent such options had an exercise price in excess of $1.95,\nthe closing price per share of the Company’s common stock as reported on The Nasdaq Stock Market on November 3, 2025. All such\noptions were repriced such that the exercise price per share was reduced to $1.95.\nThe modification resulted in incremental stock compensation expense of $0.3\nmillion recognized during the year ended March 31, 2026. There is approximately $0.1\nmillion of unrecognized stock-based compensation expense for the 2026 Option Repricing which is expected to be expensed over the\nweighted average remaining service period of 1.5\nyears.\n\n \n\nOn\nNovember 22, 2024, the Company’s Board of Directors approved a stock option repricing (“2025 Option\nRepricing”), effective November 22, 2024 (“Effective Date”). The 2025 Option Repricing was undertaken in\naccordance with, and as permitted by, the Company’s Amended 2013 Plan. Pursuant to the 2025 Option Repricing, all options\ngranted pursuant to the Amended 2013 Plan that are held by Company Board members, officers, and employees expected to continue\nproviding services to the Company were repriced, to the extent such options had an exercise price in excess of $10.80,\nthe closing price per share of the Common Stock as reported on The Nasdaq Stock Market on November 22, 2024. As of the Effective\nDate, all such options were repriced such that the exercise price per share was reduced to $10.80.\nThe modification resulted in incremental stock compensation expense of $0.3\nmillion and $1.6\nmillion recognized during the years ended March 31, 2026 and March 31, 2025, respectively. There is approximately $0.1\nmillion of unrecognized stock-based compensation expense for the 2025 Option Repricing which is expected to be expensed over the\nweighted average remaining service period of 1.0\nyears.\n\n \n\nF-19\n\n \n\n** **\n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n4 STOCKHOLDERS’ EQUITY (continued)**\n\n \n\nThe\nCompany’s 2021 Beyond Cancer Ltd. Equity Incentive Plan (the “2021 BC Plan”) allows for awards to officers, directors,\nemployees, and consultants of stock options, restricted stock units and restricted shares of Beyond Cancer Ltd.’s common stock.\nThe vesting terms of the options issued under the 2021 BC Plan are generally four years and they expire ten years from the grant date.\nOn November 3, 2022, the Company’s Board of Directors approved an amendment to reserve for issuance an additional 2,000,000 shares\nof 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\nunder the 2021 BC Plan.\n\n \n\nA\nsummary of the change in stock options for Beyond Cancer for the years ended March 31, 2026 and March 31, 2025 is as follows:\n\nSCHEDULE\nOF OPTION ACTIVITY FOR BEYOND CANCER \n\n  \n\n**Number**\n\n**Of**\n\n**Options**\n  \n\n**Weighted**\n\n**Average**\n\n**Exercise**\n\n**Price–-**\n\n**Options**\n  \n\n**Weighted**\n\n**Average**\n\n**Remaining**\n\n**Contractual**\n\n**Life-**\n\n**Options**\n  \n\n**Aggregate**\n\n**Intrinsic**\n\n**Value**\n\n**(thousands)**\n \n\n  \n   \n   \n   \n  \n\nOptions outstanding as of March 31, 2024 \n 3,819,000  \n$5.50  \n 8.3  \n$                   - \n\nGranted \n -  \n -  \n -  \n - \n\nExercised \n -  \n -  \n -  \n - \n\nForfeited \n (1,002,750) \n 5.50  \n -  \n - \n\nOptions outstanding as of March 31, 2025 \n 2,816,250  \n$5.50  \n 7.2  \n$- \n\nGranted \n -  \n -  \n -  \n - \n\nExercised \n -  \n -  \n -  \n - \n\nForfeited \n (561,750) \n 5.50  \n -  \n - \n\nOutstanding as of March 31, 2026 \n 2,254,500  \n$5.50  \n 6.2  \n$- \n\nExercisable as of March 31, 2026 \n 1,975,750  \n$5.50  \n 6.1  \n$- \n\n \n\nAs\nof March 31, 2026, the Company had unrecognized stock-based compensation expense for the stock options in the 2021 BC Plan of approximately\n$0.4 million which is expected to be expensed over the weighted average remaining service period of 1.0 years.\n\n \n\nThe\nCompany’s 2023 NeuroNos Ltd. Equity Incentive Plan (the “2023 NNOS Plan”) allows for awards to officers, directors,\nemployees, and consultants of stock options, restricted stock units and restricted shares of NeuroNos Ltd.’s common stock. The\nvesting terms of the options issued under the 2023 NNOS Plan are generally four years and they expire ten years from the grant date.\nOn March 31, 2025, the Company’s Board of Directors approved to reserve for issuance 1,725,000 shares of common stock. As of March\n31, 2026, 465,670 shares were available under the 2023 NNOS Plan.\n\n \n\nA\nsummary of the change in stock options for NeuroNos for the years ended March 31, 2026 and March 31, 2025 is as follows:\n\nSCHEDULE\nOF OPTION ACTIVITY FOR NEURONOS  \n\n  \n\n**Number**\n\n**Of**\n\n**Options**\n  \n\n**Weighted**\n\n**Average**\n\n**Exercise**\n\n**Price–-**\n\n**Options**\n  \n\n**Weighted**\n\n**Average**\n\n**Remaining**\n\n**Contractual**\n\n**Life-**\n\n**Options**\n  \n\n**Aggregate**\n\n**Intrinsic**\n\n**Value**\n\n**(thousands)**\n \n\n  \n   \n   \n   \n  \n\nOptions outstanding as of March 31, 2024 \n -  \n$-  \n -  \n$- \n\nGranted \n 1,224,139  \n 0.14  \n -  \n - \n\nExercised \n -  \n -  \n -  \n - \n\nForfeited \n -  \n -  \n -  \n - \n\nOptions outstanding as of March 31, 2025 \n 1,224,139  \n$0.14  \n 9.1  \n$3,501 \n\nGranted \n 169,913  \n 3.00  \n -  \n - \n\nExercised \n -  \n -  \n -  \n - \n\nForfeited \n (134,723) \n 2.82  \n -  \n - \n\nOutstanding as of March 31, 2026 \n 1,259,329  \n$0.24  \n 8.1  \n$3,477 \n\nExercisable as of March 31, 2026 \n 622,341  \n$0.19  \n 8.1  \n$1,748 \n\n \n\nAs\nof March 31, 2025, the Company had unrecognized stock-based compensation expense for the stock options in the 2023 NNOS Plan of approximately\n$0.1 million which is expected to be expensed over the weighted average remaining service period of 1.5 years.\n\n \n\nFor\nthe 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,\nrespectively.\n\n \n\nF-20\n\n \n\n \n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n4 STOCKHOLDERS’ EQUITY (continued)**\n\n \n\nThe\nfollowing was utilized to calculate the fair value of options on the date of grant:\n\nSCHEDULE\nOF FAIR VALUE OF OPTION \n\n  \n\nMarch 31,\n\n2026\n  \n\nMarch 31,\n\n2025\n \n\nRisk -free interest rate \n 3.7-4.2% \n 3.6-4.4%\n\nExpected volatility (Beyond Air) \n 91.6-106.2% \n 83.6-89.9%\n\nExpected volatility (Beyond Cancer) \n N/A% \n N/A%\n\nExpected volatility (NeuroNos) \n 95.0% \n 95.0%\n\nDividend yield \n 0% \n 0%\n\nExpected terms (in years) \n 6.25  \n 6.25 \n\n \n\nThe\nCompany determined that the fair value per share of NeuroNos’ common stock to be $0.14 at the grant date during the year ended\nMarch 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\nvaluation of common stock purchased by external investors during the fiscal year.\n\n \n\nThe\nfollowing summarizes the components of stock-based compensation expense which included stock options and restricted stock for the years\nended March 31, 2026 and March 31, 2025 (in thousands):\n\nSCHEDULE\nOF STOCK-BASED COMPENSATION EXPENSE \n\n  \n2026  \n2025 \n\n  \nYear Ended \n\n  \nMarch 31, \n\n  \n2026  \n2025 \n\n  \n   \n  \n\nResearch and development \n$1,153  \n$471 \n\nGeneral and administrative \n 4,129  \n 8,675 \n\n  \n    \n   \n\nTotal stock-based compensation expense \n$5,282  \n$9,146 \n\n \n\n**Warrants**\n\n \n\nOn\nSeptember 8, 2025, the Company entered into an inducement offer letter agreement (“Inducement Letter”) with certain holders\nof the September 2024 equity offering common stock warrants (“Existing Warrants”). Pursuant to the Inducement Letter, such\nholders immediately exercised some of all of their respective outstanding Existing Warrants to purchase up to an aggregate of 1,439,128\nshares of common stock at a reduced exercise price of $2.21. The proceeds to the Company from the exercise of the Existing Warrants were\napproximately $2.9 million, net of placement agent fees and other offering expenses of $0.2 million and $0.1 million, respectively. In\nconsideration of the inducement offer, the Company issued new common stock warrants to purchase up to 719,562 shares of common stock\nfor 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\nper share and are immediately exercisable, with a term of five years from the issuance date.\n\n \n\nOn\nNovember 3, 2025, warrants to purchase up to an aggregate of 512,821 of Company common stock were issued as part of the Amended Loan\nAgreement with certain lenders including its director Robert Carey at an exercise price of $1.95 per common stock warrant.\n\n \n\nOn\nJanuary 16, 2026, warrants to purchase up to an aggregate of 3,930,818 of Company common stock were issued to certain institutional investors\nat an exercise price of $1.147 per common stock warrant. The warrant exercise price was calculated at the 5-trading day average closing\nshare price as of January 13, 2026.\n\n \n\nOn\nJanuary 16, 2026, pre-funded warrants to purchase up to 3,405,828 of Company common stock were issued to certain institutional investors\nat 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\nPre-Funded Warrants.\n\n \n\nA\nsummary of the Company’s outstanding warrants as of March 31, 2026 is as follows:\n\nSUMMARY\nOF OUTSTANDING WARRANTS \n\nWarrant Holders \n\n**Number of**\n\n**Warrants**\n  \n\n**Exercise**\n\n**Price**\n  \n\n**Intrinsic Value**\n\n**(in thousands)**\n  \n\n**Date of**\n\n**Expiration**\n\n  \n   \n   \n   \n \n\nNitricGen agreement \n 4,000  \n$138.00  \n$-  \nJanuary 2028\n\nAvenue agreement \n 11,693  \n$7.59  \n -  \nJune 2028\n\nMarch 2024 raise \n 481,936  \n$45.00  \n -  \nMarch 2027\n\nAvenue extension agreement \n 5,000  \n$25.60  \n -  \nJune 2029\n\nSeptember 2024 equity offering \n 555,229  \n$7.59  \n -  \nSeptember 2029\n\nSeptember 2024 debt instrument \n 1,270,796  \n$1.95  \n -  \nSeptember 2029 / November 2030\n\nSeptember 2025 inducement \n 719,562  \n$2.21  \n -  \nSeptember 2030\n\nJanuary 2026 equity offering \n 3,930,818  \n$1.147  \n -  \nJanuary 2031\n\nSubtotal \n 6,979,034  \n$5.05  \n$-  \n \n\n  \n    \n    \n    \n \n\nPre-funded warrants (Sep-2024 offering) \n 220,006  \n$0.002  \n$151  \nSeptember 2029\n\nPre-funded warrants (Jan-2026 offering) \n 2,142,613  \n$0.0001  \n$1,479  \nJanuary 2031\n\nTotal \n 9,341,653  \n$3.773  \n$1,630  \n \n\n \n\n**ESPP**\n\n \n\nOn\nMarch 4, 2021, the stockholders approved the 2021 Employee Stock Purchase Plan (“ESPP”). The purpose of the ESPP is to encourage\nand to enable eligible employees of the Company, through after-tax payroll deductions, to acquire proprietary interests in the Company\nthrough the purchase and ownership of shares of Stock. The ESPP is intended to benefit the Company and its stockholders by (a) incentivizing\nparticipants to contribute to the success of the Company and to operate and manage the Company’s business in a manner that will\nprovide for the Company’s long-term growth and profitability and that will benefit its stockholders and other important stakeholders\nand (b) encouraging participants to remain in the employ of the Company. As of March 31, 2026 and March 31, 2025, no shares were issued\nunder the ESPP.\n\n \n\nF-21\n\n \n\n** **\n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n5 OTHER CURRENT ASSETS AND PREPAID EXPENSES**\n\n \n\nA\nsummary of other current assets and prepaid expenses as of March 31, 2026 and March 31, 2025 is as follows (in thousands):\n\n SCHEDULE\nOF OTHER CURRENT ASSETS AND PREPAID EXPENSES\n\n  \n\nMarch 31,\n\n2026\n  \n\nMarch 31,\n\n2025\n \n\nResearch and development \n$696  \n$108 \n\nPrepaid insurance \n 579  \n 817 \n\nPrepaid rents and tenant improvement \n 8  \n 10 \n\nValue added tax receivable \n 105  \n 150 \n\nDeposits to secure manufacturing materials \n 3,420  \n 4,377 \n\nDemonstration materials \n 14  \n 78 \n\nOther \n 190  \n 203 \n\nTotal other current assets and prepaid expenses \n$5,012  \n$5,743 \n\n \n\n**NOTE\n6 ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES**\n\n \n\nA\nsummary of accrued expenses and other current liabilities as of March 31, 2026 and March 31, 2025 is as follows (in thousands):\n\n SUMMARY OF ACCRUED EXPENSES\n\n  \n\nMarch 31,\n\n2026\n  \n\nMarch 31,\n\n2025\n \n\nResearch and development \n$16  \n$360 \n\nProfessional fees \n 252  \n 440 \n\nEmployee salaries and benefits \n 465  \n 924 \n\nAccrued severance* \n 696  \n \n-\n \n\nAccrued interest \n 750  \n - \n\nDeferred revenue \n 777  \n - \n\nGoods received not invoiced \n 273  \n 98 \n\nOther \n 143  \n 223 \n\nTotal accrued expenses and other current liabilities \n$3,372  \n$2,045 \n\n \n\n*Pursuant to the\nterms of the Release Agreement with Steve Lisi, former CEO, the Company is obligated to pay Mr. Lisi $650,000\nin cash compensation over 12 months. After expected employer\ntaxes and benefits, the Company accrued $0.7\nmillion The Company shall also pay Mr. Lisi COBRA premiums\nfor 12 months, as more specifically described in the Release Agreement. All unvested options and all unvested stock restriction unit\nawards held by Mr. Lisi as of March 27, 2026, shall be accelerated and shall immediately vest, and shall continue to remain exercisable\nfor twenty-four (24) months from March 27, 2026.\n\n \n\nF-22\n\n \n\n \n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n7 LEASES**\n\n \n\n*Lease\npopulation*\n\n \n\nThe\nCompany leases various office facilities under non-cancelable operating leases that expire at various dates through 2031. The\nCompany does not have any finance leases.\n\n \n\nIn\nMarch 2026, the Company entered into a second amendment to lease of one of its facilities (the “Lease Amendment”). The Lease\nAmendment extended the lease for an additional three years through May 31, 2029 with fixed monthly base rent amounts through the extended\nterm. The Company accounted for the Lease Amendment on the effective date, resulting in the remeasurement of the operating lease liability\nwith a corresponding adjustment to the right-of-use asset in the amount of $0.1 million.\n\n \n\nIn\nApril 2025, the Company entered into an agreement to sublease the Beyond Cancer office space in Atlanta, Georgia beginning June 1, 2025\nand continuing through September 30, 2026 coinciding with the termination of the existing lease. The sublease has been classified as\nan operating lease by the Company. Sublease rental income offsets the monthly rental expense from the Company’s lease of the office,\nand is recorded as reduction of selling, general, and administrative expenses in the Company’s consolidated statements of operation\nand comprehensive loss.\n\n \n\nThere\nwere no new leases entered into during the years ended March 31, 2026 and March 31, 2025.\n\n \n\n*Lease\nposition*\n\n \n\nThe\nfollowing table summarizes the lease-related assets and liabilities recorded on the Company’s consolidated balance sheets as of\nMarch 31, 2026 and March 31, 2025 (in thousands):\n\n SCHEDULE\nOF OPERATING LEASE LIABILITY\n\n  \n\nMarch 31,\n\n2026\n  \n\nMarch 31,\n\n2025\n \n\n  \n   \n  \n\nRight-of-use assets \n$1,193  \n$1,706 \n\n  \n    \n   \n\nOperating lease liability short-term \n$321  \n$396 \n\nOperating lease liability long-term \n 1,023  \n 1,486 \n\nTotal lease liabilities \n$1,344  \n$1,882 \n\n  \n    \n   \n\nWeighted-average remaining lease term – operating leases \n 4.5 years  \n 5.0 years \n\nWeighted-average discount rate – operating leases \n 8.9% \n 8.3%\n\n \n\n*Lease\ncosts*\n\n* *\n\nThe\nfollowing table summarizes the lease-related costs for the years ended March 31, 2026 and March 31, 2025 (in thousands):\n\n \n\n SCHEDULE\nOF LEASE RELATED COSTS\n\n  \n\nMarch 31,\n\n2026\n  \n\nMarch 31,\n\n2025\n \n\n  \n   \n  \n\nOperating lease cost \n$505  \n$539 \n\nShort-term lease costs \n 88  \n 261 \n\nSublease income \n (49) \n - \n\nTotal lease cost \n$544  \n$800 \n\n \n\n*Other\nlease information*\n\n SCHEDULE OF LEASE OTHER INFORMATION\n\n  \n\nMarch 31,\n\n2026\n \n\nCash paid for amounts included in the measurement of lease liabilities: \n   \n\nOperating cash flows for operating leases \n$532 \n\n \n\nNon-cash\noperating lease right-of-use assets obtained in exchange for operating lease liabilities were $0.1 million\nand $0 million\nduring the years ended March 31, 2026 and March 31, 2025, respectively.\n\n \n\n SCHEDULE\nOF MATURITY OF LEASE LIABILITIES\n\nMaturity of Lease Liabilities \nOperating Leases \n\nPayments remaining for the year ended March 31: \n   \n\n2027 \n$419 \n\n2028 \n 301 \n\n2029 \n 309 \n\n2030 \n 268 \n\n2031 \n 266 \n\nThereafter \n 60 \n\nTotal lease payments \n 1,623 \n\nLess: amount of lease payments representing interest \n (279)\n\nPresent value of future lease payments \n$1,344 \n\n \n\nF-23\n\n \n\n \n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n8 BASIC AND DILUTED NET LOSS PER SHARE OF COMMON STOCK**\n\n \n\nIn\naccordance with ASC 260, *Earnings Per Share,* warrants that are accounted for as liabilities which are potentially dilutive have\nnot been included in diluted earnings per share as they would have been anti-dilutive during the years ended March 31, 2026 and March\n31, 2025.\n\n \n\nThe\nfollowing potentially dilutive securities were not included in the calculation of diluted net loss per share attributable to common stockholders\nof Beyond Air, Inc. because their effect would have been anti-dilutive for the periods presented:\n\nSCHEDULE OF POTENTIAL ANTI-DILUTIVE SECURITIES \n\n  \n\nMarch 31,\n\n2026\n  \n\nMarch 31,\n\n2025\n \n\n  \n   \n  \n\nCommon stock warrants \n 6,979,034  \n 3,254,967 \n\nCommon stock options \n 756,749  \n 739,214 \n\nRestricted shares \n 9,485  \n 18,265 \n\nTotal \n 7,745,268  \n 4,012,446 \n\nAnti-dilutive securities \n 7,745,268  \n 4,012,446 \n\n \n\nThe\nCompany’s pre-funded warrants of 2,362,619 and 606,367 as of March 31, 2026 and March 31, 2025, respectively, were included in\nthe calculation of diluted net loss per share.\n\n \n\nF-24\n\n \n\n \n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n9 LOANS**\n\n \n\nThe\nfollowing is a summary of long-term debt as of March 31, 2026:\n\nSCHEDULE\nOF LONG-TERM DEBT \n\n  \n\nLoan\n\nAgreement\n  \n\nPromissory\n\nNote\n  \nTotal \n\n  \n   \n   \n  \n\nPrincipal balance outstanding \n$13,500  \n$12,799  \n$26,299 \n\nPaid in kind interest \n 2,459  \n -  \n 2,459 \n\nDebt discount \n (4,343) \n (3,576) \n (7,919)\n\nAmortization of debt discount \n 427  \n 373  \n 800 \n\nTotal \n$12,043  \n$9,596  \n$21,639 \n\n \n\nThe\nfollowing is a summary of long-term debt as of March 31, 2025:\n\n \n\n  \n\nLoan\n\nAgreement\n \n\n  \n  \n\nPrincipal balance outstanding \n$11,500 \n\nPaid in kind interest \n 696 \n\nDebt discount \n (3,249)\n\nAmortization of debt discount \n 250 \n\nTotal \n$9,197 \n\n \n\n**Loan\nAgreement**\n\n* *\n\nOn\nNovember 1, 2024, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) for a secured loan with certain\nlenders, including its former Chief Executive Officer Steven Lisi and director Robert Carey, for an aggregate principal balance of $11.5\nmillion. The Loan Agreement was approved by each of the Company’s independent and disinterested directors, following the receipt\nof a recommendation from an independent investment bank. The Loan Agreement provides for the following terms: (i) principal amount of\n$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\nJune 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\n2026 until the facility is repaid in full; (v) the Company’s obligations will be secured by substantially all of the Company’s\nassets and (vi) the Company issued the lenders warrants to purchase shares of the Company’s common stock at an exercise price,\nadjusted for the 2025 Reverse Stock Split, of $7.59 per share. On November 3, 2025, the parties entered into a waiver agreement pursuant\nto which the Loan Agreement lenders consented to the Company’s issuance of the Streeterville Note in exchange for reducing the\nexercise price from $7.59 per share to $1.95 per share.\n\n \n\nOn\nJune 2, 2025, the Company received $2.0 million of advanced financing from a related party, director Robert Carey who is also an existing\nlender under its Loan Agreement (“Additional Loans”). On November 3, 2025, the Company amended and restated the original\nLoan Agreement (as amended, the “Amended Loan Agreement”) to provide for and finalize the terms of the $2.0 million Additional\nLoans and the issuance of new 5five-year warrants to purchase up to 512,821 shares of the Company’s common stock (the “Supplemental\nWarrants”) with an exercise price of $1.95 per share and subject to the same terms and conditions applicable to the existing warrants\nissued under the original Loan and Security Agreement. The amendment was accounted for as a modification under ASC 470, *Debt*.\n\n \n\nAs\nthe repayments under the Amended Loan Agreement are based on a fixed percentage of future net sales, the timing and amounts of future\nprincipal payments may vary with the Company’s performance. The outstanding debt balance has been classified in the consolidated\nbalance sheets based on the Company’s current estimate of the repayment timing.\n\n \n\n**Promissory\nNote**\n\n* *\n\nOn\nNovember 4, 2025, the Company entered into and closed on a note purchase agreement (the “Note Purchase Agreement”) with Streeterville\nCapital LLC (“Streeterville”), which provided for the issuance of a secured promissory note in the principal amount of $12.0\nmillion (the “Note”). The principal amount of the Note is due 24 months following the date of issuance. Interest will accrue\nat the rate of 15% per annum, with no interest accruing for the first 12 months following issuance; provided however, that Streeterville\nis 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\n$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\nrepaid.\n\n \n\nThe\nNote contains an embedded put feature that meet the definition of an embedded derivative in accordance with ASC 815 (Note 2).\n\n \n\nDuring\nJanuary 2026, Streeterville elected to purchase 1.6\nmillion shares of common stock at an average price of $0.73\nper share based on the average closing stock price during the five trading days immediately preceding delivery of the offset notice,\nwhich offset principal of approximately $1.2 million\noutstanding under the Note. The average fair value of the 1.6 million shares of common stock issued during January 2026 was $2.09\nper share (Note 4). The difference in the principal offset and the fair value of stock issued of $2.2 million was recorded to the\nfair value of the embedded derivative liability and subsequent settlement of such feature (Note 2). The conversion of debt to equity\nthrough the embedded put feature is treated as a partial extinguishment of the Note, and therefore proportionate amounts of\nunamortized debt discount and financing costs were written-off during the year ended March 31, 2026, resulting in a loss of $0.2\nmillion recorded within Loss on extinguishment of debt in the consolidated statement of operations and comprehensive loss. In\nconnection with this reduction to the principal balance outstanding, approximately $0.6\nmillion was released from restricted cash during the year ended March 31, 2026.\n\n \n\nPursuant\nto the contractual terms of the Note, the Company was charged a one-time monitoring fee (as defined within the Note) of $1.9 million\nthat is recognized as part of the Note’s principal outstanding balance on February 4, 2026. The monitoring fee will be credited\nback to the Company, on a pro-rata basis, if any principal payment is made in cash and certain market conditions are met. The Company\ndetermined the monitoring fee is accounted for as an additional debt discount equivalent, with the offsetting increase to the long-term\ndebt principal balance and will be amortized into interest expense over the remaining term of the Note under the effective interest method.\nIf cash principal payments occur in the future, a pro-rata portion of the monitoring fee will be waived, which will reduce the obligation\nand a gain on extinguishment (or reduction of interest expense) will be recognized at such time.\n\n \n\nF-25\n\n \n\n \n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n \n\n**NOTE\n10 LOAN PAYABLE**\n\n \n\nAs\nof March 31, 2026 and March 31, 2025 in connection with the Company’s insurance policy, a loan was used to finance part of the\npremium. The details concerning the loan are as follows:\n\n \n\nSCHEDULE\nOF LOAN PAYABLE\n\n  \n\nMarch 31,\n\n2026\n  \n\nMarch 31,\n\n2025\n \n\n  \n   \n  \n\nAmount outstanding (thousands) \n$401  \n$579 \n\nMonthly payments (thousands) \n$59  \n$117 \n\nNumber of monthly payments remaining \n 7  \n 5 \n\nInterest rate \n 6.60% \n 6.25%\n\nDue date \n October 2026  \n August 2025 \n\n \n\nF-26\n\n \n\n \n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n11 INCOME TAXES**\n\n \n\nAs\nof March 31, 2026, the Company has approximately $185.0 million, $30.9 million, $10.2 million and $3.5 million of net operating losses\n(“NOL”) carryforwards for U.S. federal, Israeli, Irish and Cypriot tax purposes, respectively. The U.S. federal NOL carryforwards\nof approximately $1.4 million, which were generated prior to March 2018 expire starting in 2035 through 2037. The NOL of approximately\n$183.6 million can be carried forward indefinitely but limited to offset 80% of taxable income. The entire NOL for Israel, Ireland and\nAustralia can be carried forward indefinitely. The Company also has state NOL carryforwards in the amount of approximately $89.6 million\nexpiring during the years from 2036 to 2043. The Tax Cuts and Jobs Act of 2017 (“TCJA”) has modified the Internal Revenue\nCode (“IRC”) 174 expenses related to research and development for tax years beginning after December 31, 2021. Under the\nTCJA, the Company must now capitalize the expenditures related to research and development activities and amortize over five years for\nU.S. activities and 15 years for non-U.S. activities using a mid-year convention. Therefore, the capitalization of research and development\ncosts in accordance with IRC 174 resulted in a gross deferred tax asset of $27.2 million.\n\n \n\nThe\nCompany also has R&D tax credits of $3.3\nmillion expiring\nduring the years from 2038 to 2042. The Company has not, as yet, conducted a study of R&D credit carryforwards. This\nstudy may result in an adjustment to the Company’s R&D credit carryforwards. The Company assessed its uncertain tax\npositions and determined that a 25%\nreserve on federal research and development credit is appropriate and in line with industry standards. As of March 31, 2026, the\ntotal amount of unrecognized tax benefits was $0.8\nmillion, exclusive of interest and penalties. A full valuation allowance has been provided against the Company’s R&D\ncredits and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there\nwould be no impact to the consolidated balance sheets and the consolidated statements of operations and comprehensive loss if an\nadjustment were required. No estimated interest or penalties related to unrecognized tax benefits have been recorded as of March 31,\n2026.\n\n \n\nPursuant\nto Section 382 of the Internal Revenue Code, changes in the Company’s ownership may limit the amount of its NOL carryforwards that\ncould be utilized annually to offset future taxable income, if any. This limitation would generally apply in the event of a cumulative\nchange in ownership of the Company of more than 50% within a three-year period. The Company has performed a study as of March 31, 2021\nand determined that on or around February 15, 2017 and February 15, 2020 ownership changes for purposes of Section 382 have occurred.\nThe annual limitations caused by these prior ownership changes will no longer impact the utilizations of NOL’s after March 31,\n2022. The Company has not updated the study since March 31, 2021 and therefore has not determined if any other NOL limitations exist.\n\n \n\nThe\ncomponents of net loss before the provision for income taxes are as follows (in thousands):\n\n \n\nSCHEDULE\nOF PROFIT (LOSS) BEFORE TAXES\n\n  \n\n**For the Year**\n\n**Ended**\n\n**March 31,**\n\n**2026**\n  \n\n**For the Year**\n\n**Ended**\n\n**March 31,**\n\n**2025**\n \n\nDomestic \n$(27,066) \n$(42,186)\n\nForeign \n (7,268) \n (6,293)\n\nTotal \n$(34,334) \n$(48,479)\n\n \n\nThe\ntax effects of temporary differences that gave rise to significant portions of the deferred tax assets were as follows (in thousands):\n\n SCHEDULE\nOF DEFERRED TAX ASSET/LIABILITY\n\n  \n\nMarch 31,\n\n2026\n  \n\nMarch 31,\n\n2025\n \n\nNet operating loss carryforwards \n$55,607  \n$48,702 \n\nResearch and development tax credits \n 2,506  \n 2,197 \n\nResearch and development tax credit capitalization \n 6,572  \n 8,066 \n\nOther \n (111) \n (15)\n\nDepreciation \n (1,803) \n (2,337)\n\nStock-based compensation \n 6,714  \n 7,556 \n\nReserves and accruals \n 33  \n 36 \n\nRight-of-use asset \n (282) \n (298)\n\nLease liability \n 314  \n 333 \n\n  \n    \n   \n\nNet deferred tax \n 69,550  \n 64,240 \n\nValuation allowance \n (69,550) \n (64,240)\n\nNet deferred tax asset \n$-  \n$- \n\n \n\nF-27\n\n \n\n \n\n**BEYOND AIR, INC. AND SUBSIDIARIES**\n\n**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE 11 INCOME TAXES (continued)**\n\n \n\nThe\nfollowing table presents the principal reasons for the difference between the effective tax rate and the U.S. federal enacted\nstatutory income tax rate of 21%\nfor the year ended March 31, 2026:\n\n SCHEDULE\nOF DIFFERENCE EFFECTIVE INCOME TAX RATE\n\n  \nAmount  \nPercent \n\n  \nYear Ended \n\n  \nMarch 31, 2026 \n\n  \nAmount  \nPercent \n\nU.S. federal statutory tax rate \n$(7,210) \n 21.00%\n\nCurrent state and local income taxes, net of federal benefit \n -  \n - \n\nForeign Tax Effects \n    \n   \n\nIreland \n    \n   \n\nChange in valuation allowance \n 440  \n (1.28)\n\nOther \n 235  \n (0.69)\n\nIsrael \n    \n   \n\nChange in valuation allowance \n 371  \n (1.08)\n\nOther \n 101  \n (0.29)\n\nOther foreign jurisdictions \n 88  \n (0.26)\n\nTax credits \n    \n   \n\nResearch and development tax credits \n (308) \n 0.90 \n\nChanges in valuation allowance \n 3,759  \n (10.95)\n\nEffect of cross-border tax laws \n    \n   \n\nSubpart F Income \n 7  \n (0.02)\n\nNontaxable or nondeductible items \n    \n   \n\nShare-based payment awards \n 1,878  \n (5.47)\n\nOther \n 293  \n (0.85)\n\nOther adjustments \n 346  \n (1.01)\n\n  \n    \n   \n\nProvision for income taxes \n$-  \n 0.00%\n\n \n\nA reconciliation of income tax expense calculated at the federal enacted statutory income tax rate of 21% is as follows\nfor the year ended March 31 2025:\n\n SCHEDULE\nOF STATUTORY US FEDERAL EFFECTIVE RATE\n\n \n \n\nMarch\n31, 2025\n \n\nFederal income tax at statutory rate\n \n 21.00%\n\nState income tax, net of federal benefit\n \n 2.73\n\nPermanent items\n \n 0.58\n\nNon-deductible compensation\n \n (10.45)\n\nChange in valuation allowance\n \n (10.46)\n\nResearch and development tax credits\n \n 0.12\n\nForeign tax rate differential\n \n (0.65)\n\nOther\n \n (2.87)\n\nChange to foreign NOL’s\n \n - \n\nEffective income tax expense rate\n \n 0.00%\n\n \n\nTaxes paid across all jurisdictions were immaterial\nfor all periods presented.\n\n \n\nOn July 4, 2025, the One Big Beautiful Bill Act (the\n“OBBBA”) was signed into law. The OBBBA includes significant tax provisions, including the permanent extension of certain provisions\nof the Tax Cuts and Jobs Act of 2017 (“TCJA”), modifications to the international tax framework, and the restoration of favorable\ntax treatment for certain business expenditures. The legislation contains multiple effective dates, with certain provisions effective\nfor tax years beginning in 2025 and others phased in through 2027.\n\n \n\nThe Company has evaluated the provisions of the OBBBA and their applicability to its operations. Based on this assessment,\nthe OBBBA did not have a material impact on the Company’s consolidated financial statements for the fiscal year ended March 31, 2026.\nThe Company will continue to monitor regulatory guidance and assess the potential impact of provisions with future effective dates on\nits consolidated financial statements.\n\n \n\nF-28\n\n \n\n \n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n12 COMMITMENTS AND CONTINGENCIES**\n\n \n\n**License\nAgreements**\n\n \n\nIn\nAugust 2015, Beyond Air Ltd., a wholly-owned subsidiary of the Company (“BA Ltd.”) entered into an Option Agreement (the\n“Option Agreement”) with Pulmonox Technologies Corporation (“Pulmonox”) whereby BA Ltd. acquired the option (the\n“Option”) to purchase certain intellectual property assets and rights. On January 13, 2017, BA Ltd. exercised the Option\nand paid $0.5 million to Pulmonox. BA Ltd. became obligated to make certain one-time development and sales milestone payments to Pulmonox,\ncommencing with the date on which BA Ltd. receives regulatory approval for the commercial sale of the first product candidate qualifying\nunder the Option Agreement. These milestone payments are capped at a total of $87 million across three separate and distinct indications\nthat fall under the agreement, with the majority of them, approximately $83 million, being sales-related based on cumulative sales milestones\nfor each of the three products. BA Ltd. is not currently developing any qualifying products.\n\n \n\nOn\nJanuary 31, 2018, the Company entered into an agreement (the “NitricGen Agreement”) with NitricGen, Inc. (“NitricGen”)\nto acquire a global, exclusive, transferable license and associated assets including intellectual property, know-how, trade secrets and\nconfidential information from NitricGen related to the LungFit®. The Company acquired the licensing right to use the technology\nand agreed to pay NitricGen a total of $2.0 million in future payments based upon achieving certain milestones, as defined in the NitricGen\nAgreement, and single-digit royalties on sales of the LungFit®. The Company paid NitricGen $0.1 million upon the execution\nof the NitricGen Agreement, $0.1 million upon achieving the next milestone and $1.5 million in January 2023, six months after approval\nof the LungFit® by the FDA, and issued 100,000 warrants to purchase the Company’s common stock valued at $0.3 million\nupon executing the NitricGen Agreement. As of March 31, 2026, the remaining future milestone payments total $0.3 million.\n\n \n\n**Supply\nAgreement and Purchase Order**\n\n \n\nIn\nAugust 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\nand the outstanding amount remaining under the purchase order as of March 31, 2026 was approximately $0.5 million with this supplier.\nThis supplier holds $3.4 million of restricted cash to partially secure materials on the Company’s behalf recorded in other current\nassets and prepaid expenses. This agreement will expire on March 31, 2027. At that time all excess inventory will be returned to the Company and\nany excess restricted cash will be released.\n\n \n\nThe\nCompany entered into a new supply agreement with Plexus Corp. for the manufacturing of its second generation device\nand service of all devices beginning on April 1, 2027.\n\n \n\n**Contingencies**\n\n \n\nFrom\ntime to time, the Company is involved in various legal matters arising in the normal course of business. The Company does not expect\nthe outcome of such proceedings, either individually or in the aggregate, to have a material effect on its financial position, cash\nflows or results of operations.\n\n \n\nF-29\n\n \n\n \n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n13 SEGMENTS**\n\n \n\nOn\nNovember 4, 2021, the Company announced that Beyond Air and Beyond Cancer, Ltd agreed to terms to which the Company, through its subsidiaries\nwould be licensing certain intellectual property and other assets related to, or necessary for the development, commercialization, manufacture\nand distribution of certain cancer treatment products and/or technologies to a subsidiary of the Company (the “2021 Transaction”).\nIn connection and concurrently with the closing of the 2021 Transaction, Beyond Cancer issued and sold common shares, par value $1.00\nto certain investors pursuant to a subscription agreement (the “2021 Offering”). The 2021 Offering consisted of an aggregate\nof 3 million common shares of Beyond Cancer at a purchase price of $10.00 per share. On November 18, 2021, the Company announced that\nthe maximum amount of shares offered had been purchased for a total of $30 million (including $4.8 million from the terminated Loan Facility\nand $1.1 million from related parties) for 20% of the equity in Beyond Cancer. The Company retained 80% ownership of Beyond Cancer, which\nwill have exclusive right to the intellectual property portfolio utilizing UNO for the treatment of solid tumors. Beyond Cancer will\npay Beyond Air a single digit royalty on all future revenues.\n\n \n\nMembers\nof the Board of Directors of Beyond Air who are also members of the Board of Directors of Beyond Cancer, and their families, are considered\nrelated parties to the 2021 Offering. Related parties invested $1.1 million in the 2021 Offering.\n\n \n\nOn\nMarch 24, 2025, the Company announced that Beyond Air and NeuroNos Limited agreed to terms to which the Company, through its subsidiaries\nwould be licensing certain intellectual property and other assets related to, or necessary for the development, commercialization, manufacture\nand distribution of certain neurological treatment products and/or technologies to a subsidiary of the Company (the “2025 Transaction”).\nIn connection and concurrently with the closing of the 2025 Transaction, NeuroNos issued and sold common shares, par value $0.001 to\ncertain investors pursuant to a subscription agreement (the “2025 Offering”). The 2025 Offering consisted of an aggregate\nof 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\nfor 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\nshares 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\nthe equity in NeuroNos was held by non-controlling interests. Beyond Air retained 84.75% ownership of NeuroNos and will have exclusive\nright to the intellectual property portfolio for the regulation of nitric oxide as it relates to neurological therapies. NeuroNos will\npay Beyond Air a single digit royalty on all future revenues.\n\n \n\nF-30\n\n \n\n \n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n13 SEGMENTS (continued)**\n\n \n\nThe\nfollowing table summarizes segment financial information by business segment for the year ended and at March 31, 2026:\n\n SCHEDULE\nOF SEGMENT FINANCIAL INFORMATION BY BUSINESS SEGMENT\n\n(in thousands) \nBeyond Air  \nBeyond Cancer  \n\n** **\n\n**NeuroNos**\n  \nTotal \n\nCapital expenditures \n$1,024  \n$-  \n$2  \n$1,026 \n\n  \n    \n    \n    \n   \n\nRevenues \n$7,679  \n$-  \n$-  \n$7,679 \n\nCost of revenues \n (7,427) \n -  \n -  \n (7,427)\n\nResearch and development \n (7,677) \n (1,170) \n (1,394) \n (10,241)\n\nSelling, general, and administrative \n (15,418) \n (2,207) \n (1,430) \n (19,055)\n\nLoss from operations \n (22,843) \n (3,377) \n (2,824) \n (29,044)\n\nInterest and finance expense \n (3,515) \n -  \n -  \n (3,515)\n\nOther non-operating income/(expense) \n (1,668) \n (323) \n 216  \n (1,775)\n\nNet loss before income taxes \n$(28,026) \n$(3,700) \n$(2,608) \n$(34,334)\n\nOperating activities included in net loss: \n    \n    \n    \n   \n\nDepreciation and amortization \n$3,228  \n$23  \n$-  \n$3,251 \n\nStock-based compensation expense \n$3,813  \n$1,373  \n$96  \n$5,282 \n\n  \n    \n    \n    \n   \n\nCash used in operations \n$(14,775) \n$(1,314) \n$(2,055) \n$(18,144)\n\nCash used in (provided by) investing \n (4,660) \n 988  \n (2) \n (3,674)\n\nCash provided by financing \n 28,390  \n -  \n 700  \n 29,090 \n\nImpact of exchange rates \n 228  \n 164  \n (198) \n 194 \n\nNet change for the year \n$9,183  \n$(162) \n$(1,555) \n$7,466\n\n \n\nThe\nfollowing table summarizes segment financial information by business segment for the year ended and at March 31, 2025:\n\n \n\n(in thousands) \nBeyond Air  \nBeyond Cancer  \n\n** **\n\n**NeuroNos**\n  \nTotal \n\nCapital expenditures \n$5,859  \n$24  \n$-  \n$5,883 \n\n  \n    \n    \n    \n   \n\nRevenues \n$3,705  \n$-  \n$-  \n$3,705 \n\nCost of revenues \n (5,368) \n -  \n -  \n (5,368)\n\nResearch and development \n (13,780) \n (3,062) \n (15) \n (16,857)\n\nSelling, general, and administrative \n (19,565) \n (6,344) \n (108) \n (26,017)\n\nLoss from operations \n (35,008) \n (9,406) \n (123) \n (44,537)\n\nInterest and finance expense \n (3,019) \n -  \n -  \n (3,019)\n\nOther non-operating income/(expense) \n (1,132) \n 209  \n -  \n (923)\n\nNet loss before income taxes \n$(39,159) \n$(9,197) \n$(123) \n$(48,479)\n\nOperating activities included in net loss: \n    \n    \n    \n   \n\nDepreciation and amortization \n$3,143  \n$61  \n$-  \n$3,204 \n\nStock-based compensation expense \n$7,920  \n$1,154  \n$72  \n$9,146 \n\n  \n    \n    \n    \n   \n\nCash used in operations \n$(29,599) \n$(8,619) \n$-  \n$(38,218)\n\nCash provided by investing \n 11,844  \n 3,061  \n -  \n 14,905 \n\nCash provided by financing \n 14,646  \n -  \n 2,000  \n 16,646 \n\nImpact of exchange rates \n (39) \n (6) \n -  \n (45)\n\nNet change for the year \n$(3,148) \n$(5,564) \n$2,000  \n$(6,712)\n\n \n\nThe\nfollowing table summarizes financial information by business segment at March 31, 2026:\n\n \n\n(in thousands) \nBeyond Air  \nBeyond Cancer  \nNeuroNos  \nTotal \n\nCash, cash equivalents and marketable securities \n$10,140  \n$1,043  \n$458  \n$11,641 \n\nAll other assets \n 23,901  \n (219) \n 62  \n 23,744 \n\nTotal assets \n$34,041  \n$824  \n$520  \n$35,385 \n\nTotal liabilities \n (28,224) \n (378) \n (573) \n (29,175)\n\nNet assets \n$5,817  \n$446  \n$(53) \n$6,210 \n\nNon-controlling interest \n$-  \n$64  \n$20  \n$84 \n\n \n\nThe\nfollowing table summarizes financial information by business segment at March 31, 2025:\n\n \n\n(in thousands) \nBeyond Air  \nBeyond Cancer  \nNeuroNos  \nTotal \n\nCash, cash equivalents and marketable securities \n$2,750  \n$2,167  \n$2,000  \n$6,917 \n\nAll other assets \n 22,116  \n 1,029  \n -  \n 23,145 \n\nTotal assets \n$24,866  \n$3,196  \n$2,000  \n$30,062 \n\nTotal liabilities \n (15,082) \n (589) \n (50) \n (15,721)\n\nNet assets \n$9,784  \n$2,607  \n$1,950  \n$14,341 \n\nNon-controlling interest \n$-  \n$529  \n$229  \n$758 \n\n \n\nF-31\n\n \n\n \n\n**BEYOND\nAIR, INC. AND SUBSIDIARIES**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n14 RELATED PARTY TRANSACTIONS**\n\n \n\nWith\nthe exception of the related party transactions referred to in Note 4 and Note 9, there were no additional related party transactions\nin the fiscal years ended March 31, 2026 and March 31, 2025.\n\n \n\n**NOTE\n15 LEASE REVENUES**\n\n \n\nThe\nCompany leases the LungFit® PH device to customers and receives a fixed rental fee over the term of the arrangement. Contract terms\n(generally one1-to-three years) vary by customer and may include options to terminate the contract or options to extend the contract.\nThe LungFit® PH lease agreements are accounted for as operating leases. The non-lease components, including consumables and device-related\nservices are combined with the predominant lease component under the practical expedient. The fixed rental fee is recognized over the\nperiod of the lease agreement on a straight-line basis.\n\n \n\nThe\nCompany recognized $6.2 million and $3.7 million in LungFit® PH lease revenues for the years ended March 31, 2026 and March 31, 2025,\nrespectively, reported as revenues in the consolidated statements of operations and comprehensive loss. The Company received approximately\n$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\n31, 2025, respectively.\n\n \n\nThe\nfollowing schedule presents the minimum future lease payments under the LungFit® PH lease arrangements that were in place as of March\n31, 2026 (in thousands):\n\n SCHEDULE\nOF MATURITY OF FUTURE LEASE PAYMENTS\n\nFuture lease payments under the LungFit® PH lease arrangements (in thousands) \nMarch 31 \n\n  \n  \n\n2027 \n$4,919 \n\n2028 \n 3,512 \n\n2029 \n 1,560 \n\nTotal \n$9,991 \n\n \n\nThe\nLungFit® PH devices are included in Property and Equipment (Note 3) and have the useful life of five years. Depreciation expense\nrelated 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.\n\n \n\nThe\ndepreciation expense related to customer leased devices is included in the cost of revenues in the consolidated statements of operations\nand comprehensive loss.\n\n \n\n*Capitalized\nsales commissions*\n\n \n\nSales\ncommissions related to obtaining LungFit® PH lease agreements are accounted for as initial direct costs and are capitalized and amortized\non a straight-line basis over the lease term. Total capitalized costs for the years ended March 31, 2026 and March 31, 2025 were immaterial.\n\n \n\n**NOTE 16 SUBSEQUENT EVENTS**\n\n \n\nOn June 24, 2026, the Company’s Board of Directors\napproved a change in Company’s fiscal year from the twelve-month period ending on March 31 to the twelve-month period ending on\nDecember 31 of each year. The Company will complete a transition period commencing on April 1, 2026, and ending on December 31, 2026,\nafter which the Company’s fiscal years shall consist of the twelve-month periods ending on December 31 of each calendar year.\n\n \n\nF-32"}