{"url_path":"/sec/xair/10-k/2026/item-1a","section_key":"item-1a","section_title":"Item 1A RISK FACTORS**","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":31862,"has_tables":true,"body_markdown":"** **\n\n**ITEM\n1A. RISK FACTORS**\n\n \n\n*Investing\nin our common stock involves a high degree of risk. You should consider carefully the risks described below, together with the other\ninformation included or incorporated by reference in this Annual Report. If any of the following risks occur, our business, financial\ncondition, results of operations and future growth prospects could be materially and adversely affected. In these circumstances, the\nmarket price of our common stock could decline. Other events that we do not currently anticipate or that we currently deem immaterial\nmay also affect our business, prospects, financial condition and results of operations.*\n\n \n\n**Risks\nRelated to Our Financial Position and Capital Requirements**\n\n \n\n**Our\nindependent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about\nour ability to continue as a “going concern.”**\n\n \n\nThe\nCompany has incurred recurring net losses, including a net loss of $34.3 million for the year ended March 31, 2026, compared to $48.5\nmillion for the year ended March 31, 2025 and the Company’s operations have not provided net positive cash flows in the year ended\nMarch 31, 2026. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.\nThe Company’s continuation as a going concern is dependent upon its ability to generate positive cash flows from operations and\nto secure additional sources of equity and/or debt financing. Despite the Company’s intent to fund operations through equity and\ndebt financing arrangements, there is no assurance that such financing will be available on terms acceptable to the Company, if at all.\n\n \n\nOur\nindependent auditors have included an explanatory paragraph in their audit report, included in this Annual Report on Form 10-K, regarding\nthe Company’s ability to continue as a going concern. This going concern risk may materially limit our ability to raise additional\nfunds through the issuance of new debt or equity or may adversely affect the terms upon which such capital may be available. The inability\nto obtain sufficient financing on acceptable terms could have a material adverse effect on the Company’s financial condition, results\nof operations, and business prospects.\n\n \n\nThe\nCompany is actively pursuing strategies to mitigate these risks. However, there can be no assurance that these efforts will prove successful\nor that the Company will achieve its intended financial stability. The failure to successfully address these going concern risks may\nmaterially and adversely affect the Company’s business, financial condition, and results of operations. Investors should consider\nthe substantial risks and uncertainties inherent in the Company’s business before investing in the Company’s securities.\n\n \n\n**Numerous\nfactors, including the incurring of significant losses, are relevant to our financial success and any or all such factors could have\na disproportionate impact on our bottom line.**\n\n \n\nOur\nability to implement our business strategy is subject to numerous risks that you should be aware of before making an investment decision.\nThese are not the only risks we face. These risks include, among others, that:\n\n \n\n \n●\nwe\nare a medical device and biopharmaceutical company with only one FDA/CE-approved product and a limited operating history on which\nto assess our business, have incurred significant losses since our inception and incurred a net cash used in operating activities\nfor the year ended March 31, 2026 of approximately $18.1 million. As of March 31, 2026, we have an accumulated deficit of approximately\n$319.6 million and we anticipate losses declining in fiscal 2027 and 2028.\n\n \n \n \n\n \n●\nwe\nare unable to predict the extent of future losses or when we will become profitable based on the sale of any product, if at all.\nEven if we succeed in scaling the commercialization of our approved product and succeed in developing and commercializing our product\ncandidates, we may never generate revenue to sustain profitability;\n\n \n \n \n\n \n●\nwe\nhave only one FDA/CE-approved product, and we expect that we will need to raise additional funding before we can expect to become\nprofitable from sales of our products;\n\n \n \n \n\n \n●\nwe\nare heavily dependent upon the success of our approved product and product candidates (which are in various stages of clinical development),\nand we cannot provide any assurance that the FDA or comparable foreign regulatory authorities will allow us to conduct further clinical\ntrials;\n\n \n \n \n\n \n●\nwe\nare in the process of further developing our proprietary NO delivery system, and unexpected delays will adversely impact the timing\nof our U.S.-based clinical trials and approvals;\n\n \n \n \n\n \n●\nwe\nmight be unable to develop product candidates that will achieve commercial success in a timely and cost-effective manner, or ever;\n\n \n \n \n\n \n●\nour\ncompetitors may develop or commercialize products faster or more successfully than us;\n\n \n \n \n\n \n●\nbecause\nsome of the target patient populations of our approved product or product candidates are small, we must be able to successfully identify\npatients and achieve a significant market share to maintain profitability and growth;\n\n \n \n \n\n \n●\nwe\nrely on third parties to help conduct our preclinical studies, clinical trials and commercial scale manufacturing;\n\n \n \n \n\n \n●\nif\nwe are unable to obtain and maintain effective intellectual property rights for our technologies, approved product or current or\nfuture product candidates, we may not be able to compete effectively in our markets; and\n\n \n \n \n\n \n●\nour\nfuture success depends in part upon our ability to retain our executive and scientific teams, and to attract, retain and motivate\nother qualified personnel.\n\n \n\nBecause\nof the numerous risks and uncertainties associated with product development and commercialization, we are unable to accurately predict\nthe timing or amount of expenses or when, or if, we will be able to achieve profitability. If we are required by regulatory authorities\nto perform studies in addition to those expected or if there are any delays in the initiation and completion of our clinical trials or\nthe development of any of our product candidates, our expenses could increase.\n\n \n\n27\n\n \n\n \n\n**We\nwill need to raise additional capital to meet our business requirements in the future, and such capital raising may be costly or difficult\nto obtain, and could dilute current stockholders’ ownership interests.**\n\n \n\nOur\nfuture capital requirements will depend on many factors, including the success and costs of our commercialization activities, including\nproduct marketing, sales, and distribution progress, the results of our clinical trials, the timing and outcome of regulatory review\nof our product candidates, commercial manufacturing success, and the number and development requirements of product candidates that we\npursue. Because of the numerous risks and uncertainties associated with the development and commercialization of our approved product\nand product candidates, we are unable to reasonably estimate the amounts of additional capital outlays and operating expenditures that\nour business will require. We will need to raise additional funds through public or private debt or equity financings to meet various\nobjectives including, but not limited to:\n\n \n\n \n●\nexpanding\ncommercialization of our approved product;\n\n \n \n \n\n \n●\nclinical\ntrials for our product candidates;\n\n \n \n \n\n \n●\nresearching\nand developing new products;\n\n \n \n \n\n \n●\npursuing\ngrowth opportunities, including more rapid expansion;\n\n \n \n \n\n \n●\nacquiring\ncomplementary businesses or technologies;\n\n \n \n \n\n \n●\nmaking\ncapital improvements to improve our infrastructure;\n\n \n \n \n\n \n●\nhiring\nqualified management and key employees;\n\n \n \n \n\n \n●\nresponding\nto competitive pressures;\n\n \n \n \n\n \n●\ncomplying\nwith regulatory requirements; and\n\n \n \n \n\n \n●\nmaintaining\ncompliance with applicable laws.\n\n \n\nAny\nadditional capital raised through the sale of equity or equity-linked securities may dilute our current stockholders’ ownership\nin us and could also result in a decrease in the market price of our common stock. The terms of those securities issued by us in future\ncapital transactions may be more favorable to new investors and may include preferences, superior voting rights and the issuance of warrants\nor other derivative securities, which may have a further dilutive effect.\n\n \n\nFurthermore,\nany debt or equity financing that we may need may not be available on terms favorable to us, or at all.\n\n \n\nAdditionally,\nwe may incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting fees,\nsecurities law compliance fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses\nin connection with certain securities we issue, such as convertible notes and warrants, which may adversely impact our financial condition.\n\n \n\nIf\nwe are unable to obtain required additional capital, we may have to curtail our growth plans or cut back on existing business, and we\nmay not be able to continue operating if we do not generate sufficient revenues from operations needed to stay in business.\n\n \n\n28\n\n \n\n \n\n**Our\nfailure to comply with the covenants or other terms of the Loan Agreement, including as a result of events beyond our control, could\nresult in a default under the Loan Agreement that could materially and adversely affect the ongoing viability of our business.**\n\n \n\nOn\nNovember 1, 2024 we entered into a loan and security agreement, and subsequently on November 3, 2025, we entered into an amended and\nrestated loan agreement (as amended, the “Amended Loan Agreement”) for a secured loan with certain lenders including our\nformer chief executive officer and chairman Steven Lisi and Robert Carey, our present Chairman. The Amended Loan Agreement provides\nfor a $13,500,000 loan. The loan bears interest at a rate per annum (subject to increase during an event of default) equal to 15% of\nwhich 3% shall be payable in cash and 12% payable in kind through June 30, 2026 and thereafter all in cash. If not earlier repaid in\nfull, the outstanding principal amount of the loan, together with any accrued and unpaid interest, shall be due and payable on\nOctober 4, 2034. The Company’s obligations under the Loan Agreement are secured by substantially all of the Company’s\nassets.\n\n \n\nThe\nLoan Agreement contains affirmative and negative covenants customary for financings of this type that, among other things, limit the\nability of the Company and its subsidiaries to incur additional debtor or pay any dividends.\n\n \n\nThe\nLoan Agreement also includes events of default customary for financings of this type, in certain cases subject to customary periods to\ncure, following which the lenders may accelerate all amounts outstanding under the loan. Events of default include, among other things:\n\n \n\n \n●\nour\nfailure to pay any principal or interest under the Loan Agreement or any note in connection therewith;\n\n \n●\nany\nrepresentation or warranty made shall prove to have been false or misleading in any material respect; and\n\n \n●\ncertain\nspecified insolvency and bankruptcy-related events.\n\n \n\nSubject\nto any applicable cure period set forth in the Loan Agreement, all amounts outstanding with respect to the loan (principal and accrued\ninterest), as well as any other obligations and amounts owing under the Loan Agreement, would become due and payable at the option of\nthe lenders. Our assets or cash flow may not be sufficient to fully repay our obligations under the Loan Agreement if the obligations\nthereunder are accelerated upon any events of default. Further, if we are unable to repay, refinance or restructure our obligations,\nthe lenders could proceed to protect and enforce their rights under the Loan Agreement by exercising such remedies (including foreclosure\non the assets securing our obligations under the Loan Agreement) as are available to the lenders and in respect thereof under applicable\nlaw, either by suit in equity or by action at law, or both, whether for specific performance of any covenant or other agreement contained\nin the Loan Agreement or the other loan documents or in aid of the exercise of any power granted in the Loan Agreement or other loan\ndocuments. The foregoing would materially and adversely affect the ongoing viability of our business.\n\n** **\n\n**Our\nLoan Agreement contains restrictions that limit our flexibility in operating our business.**\n\n \n\nThe\nLoan Agreement contains various covenants that limit our ability to engage in specified types of transactions without the prior consent\nof the lenders. These covenants limit our ability to, among other things:\n\n \n\n \n●\ncreate,\nincur or assume additional indebtedness;\n\n \n●\nsubject\nto certain exceptions, make restricted payments, including paying dividends on, repurchasing or making distributions with respect\nto our common stock; and\n\n \n●\nconsolidate,\nmerge, sell or otherwise dispose of all or substantially all of our assets.\n\n \n\nThe\ncovenants in the Loan Agreement may limit our ability to take certain actions that may be in our long-term best interests. In the event\nthat we breach one or more covenants, the lenders may choose to declare an event of default and require that we immediately repay all\namounts outstanding under the Loan Agreement, plus penalties and interest and foreclose on the collateral granted to them to secure the\nobligations under the Loan Agreement. Such repayment could have a material adverse effect on our business, operating results and financial\ncondition.\n\n \n\n29\n\n \n\n \n\n**Risks\nRelated to Commercialization of Our Approved Product or Product Candidates**\n\n \n\n**If\nthe market opportunities for our approved product or product candidates are smaller than we believe they are, our revenue may be adversely\naffected, and our business may suffer.**\n\n \n\nOur\nprojections of both the number of people who have our target diseases, as well as the subset of people with these diseases who have the\npotential to benefit from treatment with LungFit® PH and our product candidates, are based on our beliefs and estimates.\nThese estimates have been derived from a variety of sources, including scientific literature, surveys of clinics, patient foundations\nor market research and may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of these diseases.\nThe number of patients may turn out to be lower than expected. The effort to identify patients with diseases we seek to treat is in early\nstages, and we cannot accurately predict the number of patients for whom treatment might be possible. Additionally, the potentially addressable\npatient population for LungFit® PH and each of our product candidates may be limited or may not be amenable to treatment\nwith LungFit® PH or our product candidates, and new patients may become increasingly difficult to identify or gain access\nto, which would adversely affect our results of operations and our business.\n\n \n\n**The\ninsurance coverage and reimbursement status of newly-approved products is uncertain. Failure to obtain or maintain adequate coverage\nand reimbursement for new or current products could limit our ability to market those products and decrease our ability to generate revenue.**\n\n \n\nThe\npricing, coverage and reimbursement of our approved product and product candidates, if approved, must be adequate to support our commercial\ninfrastructure. Our per-patient prices must be sufficient to recover our development and manufacturing costs and potentially achieve\nprofitability. Accordingly, the availability and adequacy of coverage and reimbursement by governmental and private payors are essential\nfor most patients to be able to afford expensive treatments such as ours, assuming certification or approval. Sales of our approved product\nand product candidates will depend substantially, both domestically and abroad, on the extent to which the costs of our approved product\nand product candidates will be paid for by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations,\nor reimbursed by government authorities, private health insurers and other third-party payors. If coverage and reimbursement are not\navailable, or are available only to limited levels, we may not be able to successfully commercialize our approved product and product\ncandidates. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain\npricing sufficient to realize a return on our investment.\n\n \n\nThere\nis significant uncertainty related to the insurance coverage and reimbursement of newly approved products. In the U.S., there is no uniform\nsystem among payors for making coverage and reimbursement decisions. In addition, the process for determining whether a payor will provide\ncoverage for a product or service may be separate from the process for setting the price or reimbursement rate that the payor will pay\nfor the product or service once coverage is approved. Payors may limit coverage to specific products or services on an approved list,\nor formulary, which might not include all of the FDA-approved or -cleared products for a particular indication. In the U.S., the principal\ndecisions about Medicare coverage and reimbursement for new medical devices are typically made by the Centers for Medicare & Medicaid\nServices (“CMS”), an agency within the U.S. Department of Health and Human Services, or Medicare contractors that process\nand pay claims, as CMS and/or the contractors decide whether and to what extent a new device will be covered and reimbursed under Medicare.\nPrivate payors tend to, but are not required to, follow the coverage and reimbursement policies established by CMS to a substantial degree.\nIt is difficult to predict what CMS or the Medicare contractors will decide with respect to reimbursement for products such as ours.\n\n \n\nOutside\nthe U.S., international operations are generally subject to extensive governmental price controls and other market regulations, and we\nbelieve the increasing emphasis on cost-containment initiatives in the EEA, Canada and other countries has and will continue to put pressure\non the pricing and usage of our approved product or product candidates. In many countries, the prices of medical products are subject\nto varying price control mechanisms as part of national health systems. In general, the prices of medical devices under such systems\nare substantially lower than in the U.S. Other countries allow companies to fix their own prices for medical products, but monitor and\ncontrol company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are\nable to charge for our approved product or product candidates. Accordingly, in markets outside the U.S., the reimbursement for our products\nmay be reduced compared with the U.S. and may be insufficient to generate commercially reasonable revenue and profits.\n\n \n\nMoreover,\nincreasing efforts by governmental and third-party payors in the U.S. and abroad to cap or reduce healthcare costs may cause such organizations\nto limit both coverage and the level of reimbursement for new products approved and, as a result, they may not cover or provide adequate\npayment for our approved product and product candidates. We expect to experience pricing pressures in connection with the sale of any\nof our approved product and product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance\norganizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs\nand surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the\nentry of new products.\n\n \n\nAccordingly,\nthe certification or approval of our product and product candidates for insurance coverage and reimbursement by governmental and private\npayors may impact our ability to generate revenues.\n\n \n\n30\n\n \n\n \n\n**We\nface intense competition and rapid technological change and the possibility that our competitors may discover, develop or commercialize\ntherapies that are similar, more advanced or more effective than ours, which may adversely affect our financial condition and our ability\nto successfully commercialize LungFit® PH and our product candidates.**\n\n \n\nWe\nare working on PPHN which is a highly competitive market. A delivery system with a generator of NO has never been commercialized anywhere\nin the world, and market acceptance at an appropriate price is proving to be a somewhat difficult and lengthy process. The biotechnology,\npharmaceutical and medical device industries are highly competitive. There are many pharmaceutical companies, biotechnology companies,\nmedical device companies, public and private universities and research organizations actively engaged in the research and development\nof products that may be similar to our approved product or our product candidates. We are aware of several companies currently developing\nand selling NO therapies for various indications such as hypoxic respiratory failure (HRF). For example, Mallinckrodt commercializes\nINOMAX® (nitric oxide) for inhalation, which is approved for use to treat newborns suffering from HRF-PPHN in the U.S.,\nCanada, Australia, Mexico and Japan. Linde Group markets a generic version of the Mallinckrodt offering with their delivery system called\nNOxBOX®. The Linde Group has marketing rights to INOMAX® in Europe. Air Liquide sells a similar product\nin Europe, called KINOX™, together with their delivery platform called SoKINOX™, for the treatment of pulmonary hypertension\nof the newborn. In Europe, EKU, International Biomedical, Cahouet and ITC each have a device that delivers nitric oxide. VERO Biotech\nLLC received FDA approval for their delivery system GENOSYL DS for HRF associated with PPHN in 2019 and received FDA approval for a third\ngeneration of that delivery system in 2023. In addition, other companies may be developing inhaled NO delivery systems at various concentrations.\nNovan Inc. has recently received approval for a nitric oxide-based prescription treatment called berdazimer for molluscum, a contagious\nskin infection. SaNOtize has an NO nasal spray that has received approval in India, Israel, and eight other countries for preventing\nCOVID-19 after exposure. NovLead Biotechnology (Nanjing, China) has approval in China for a device that produces nitric oxide through\na process of passing an electric charge into an electrolyte solution and Shenzhen Respomed Medical Technology (Shenzhen, China) also\nhas approval in China for a device that uses electrical discharge to generate nitric oxide gas. Neither of these devices have approval\noutside of China. Third Pole has reported the development of an NO generator and delivery system, but we are not aware of any display\nof any product at any medical/scientific conference in recent years. Our patents surrounding LungFit® have priority date\nover those of Third Pole.\n\n \n\nIn\naddition to NO treatments currently available or under development, we also face competition from non-NO-based drugs and therapies. For\nexample, the successful development of immunizations for bronchiolitis may render useless any product we develop for that indication.\nAlso, antibiotic treatments for infections associated with CF and other underlying lung conditions may be preferred over any product\nthat we develop. Even if we successfully develop our product candidates, and obtain certification or approval for them, other treatments\nmay be preferred and we may not be successful in commercializing our product candidates.\n\n \n\nSome\nof our competitors have substantially greater financial, technical and other resources, such as larger research and development staff\nand experienced marketing and manufacturing organizations. Additional mergers and acquisitions in the medical device, biotechnology and\npharmaceutical industries may result in even more resources being concentrated in our competitors. As a result, these companies may obtain\ncertification or regulatory approval more rapidly than we are able to and may be more effective in selling and marketing their products\nas well. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements\nwith large, established companies. Competition may increase further as a result of advances in the commercial applicability of technologies\nand greater availability of capital for investment in these industries. Our competitors may succeed in developing, acquiring or licensing\non an exclusive basis, products that are more effective or less costly than LungFit® PH or any product candidate that\nwe may develop, or achieve earlier patent protection, certification or regulatory approval, product commercialization and market penetration\nthan we do. Additionally, technologies developed by our competitors may render LungFit® PH or our potential product candidates\nuneconomical or obsolete, and we may not be successful in marketing LungFit® PH or our product candidates against competitors.\n\n \n\n31\n\n \n\n \n\nWe\ncurrently have a limited marketing and sales organization. If we are unable to scale sales and marketing capabilities or enter into agreements\nwith third parties to market and sell LungFit® PH or our product candidates, we may be unable to generate revenue.\n\n \n\nAlthough\nsome of our employees may have sold other similar products in the past while employed at other companies, we as a company have limited\nexperience selling and marketing our product candidates and we currently have a nascent marketing and sales organization. To successfully\ncommercialize LungFit® PH or any other products that may result from our development programs, we will need to further\ndevelop these capabilities, either on our own or with others. We continue to refine our commercialization efforts for LungFit®\nPH and intend to establish a more complete sales and marketing organization with technical expertise to potentially reach all U.S.\nhospitals using or capable of using NO. This will be an expensive, difficult and time-consuming endeavor. Any failure or delay in the\ndevelopment of our internal sales, marketing and distribution capabilities would adversely impact the commercialization of our products.\n\n \n\nFurther,\ngiven our limited experience in marketing and selling medical device products, our estimate of the size of the required sales force may\nbe materially more or less than the size of the sales force actually required to effectively commercialize LungFit® PH\nand our product candidates. As such, we may be required to hire substantially more sales representatives to adequately support the commercialization\nof LungFit® PH and our product candidates, or we may incur excess costs as a result of hiring more sales representatives\nthan necessary. With respect to certain geographical markets, we may enter into collaborations with other entities to utilize their local\nmarketing and distribution capabilities, but we may be unable to enter into such agreements on favorable terms, if at all. If our future\ncollaborators do not commit sufficient resources to commercialize our future products, if any, and we are unable to develop the necessary\nmarketing capabilities on our own, we will be unable to generate sufficient product revenue to sustain our business. We may be competing\nwith companies that currently have extensive and well-funded marketing and sales operations. Without an internal team or the support\nof a third party to perform marketing and sales functions, we may be unable to compete successfully against these more established companies.\n\n \n\n**The\ncommercial success of LungFit® PH and any current or future product candidate will depend upon the degree of market acceptance\nby physicians, patients, third-party payors and others in the medical community.**\n\n \n\nEven\nwith approval from the FDA and potential future certification or approvals from comparable foreign regulatory authorities, the commercial\nsuccess of LungFit® PH and our product candidates will depend in part on the medical community, patients and third-party\npayors accepting LungFit® PH and our product candidates as medically useful, cost-effective and safe. Any product that\nwe bring to the market may not gain market acceptance by physicians, patients, third-party payors and others in the medical community.\nThe degree of market acceptance of LungFit® PH and any of our product candidates that become approved for commercial sale\nwill depend, in part, on a number of factors, including:\n\n \n\n \n●\nthe\nsafety and efficacy of the product(s) as demonstrated in clinical trials and potential advantages over competing treatments;\n\n \n \n \n\n \n●\nthe\nprevalence and severity of any side effects, including any limitations or warnings contained in a product’s approved labeling;\n\n \n \n \n\n \n●\nthe\nclinical indications for which certification or approval is granted;\n\n \n \n \n\n \n●\n\nrelative\nconvenience and ease of administration;\n\n \n\n \n●\nfamiliarity\nof group purchasing organizations with our products;\n\n \n \n \n\n \n●\nthe\ncost of treatment, particularly in relation to competing treatments;\n\n \n \n \n\n \n●\nthe\nwillingness of the target patient population to try new therapies and of physicians to prescribe these therapies;\n\n \n \n \n\n \n●\nthe\nstrength of marketing and distribution support and timing of market introduction of competitive products;\n\n \n \n \n\n \n●\npublicity\nconcerning our products or competing products and treatments; and\n\n \n \n \n\n \n●\nsufficient\nthird-party insurance coverage and reimbursement.\n\n \n\n32\n\n \n\n \n\nEven\nif a potential product displays a favorable efficacy and safety profile in preclinical studies and clinical trials, market acceptance\nof the product will not be fully known until after it is launched. Our efforts to educate the medical community and third-party payors\non the benefits of the product candidates may require significant resources and may never be successful. If the LungFit®\nPH or our product candidates are approved for commercialization but fail to achieve an adequate level of acceptance by physicians, patients,\nthird-party payors and others in the medical community, we will not be able to generate sufficient revenue to become or remain profitable.\n\n \n\n**If\nwe fail to properly manage our anticipated growth, our business could suffer.**\n\n \n\nOur\nrapid growth has placed, and will continue to place, a significant strain on our management and on our operational and financial resources\nand systems. Failure to manage our growth effectively could cause us to over-invest or under-invest in infrastructure, and result in\nlosses or weaknesses in our infrastructure, which could materially adversely affect us. Additionally, our anticipated growth will increase\nthe demands placed on our suppliers, resulting in an increased need for us to carefully monitor for quality assurance. Any failure by\nus to manage our growth effectively could have an adverse effect on our ability to achieve our development and commercialization goals.\n\n \n\n**Pricing\npressure from our competitors and our customers may impact our ability to sell our products at prices necessary to support our current\nbusiness strategies.**\n\n \n\nThe\nindustry in which we operate is characterized by intense competition, and the market continues to attract numerous new companies and\ntechnologies, which has encouraged more established companies to intensify competitive pricing pressure. As a result of this increased\ncompetition, as well as the challenges of third-party coverage and reimbursement practices, we believe there will be continued pricing\npressure in the future. If competitive forces drive down the prices we are able to charge for our products, our profit margins will shrink,\nwhich will adversely affect our ability to maintain our profitability and to invest in and grow our business.\n\n \n\n**Cybersecurity\nrisks and the failure to maintain the confidentiality, integrity, and availability of our computer hardware, software, and Internet applications\nand related tools and functions could result in harm to our business and/or subject us to costs, fines or lawsuits.**\n\n \n\nOur\nproducts may rely on embedded software, digital interfaces, electronic components and interoperability with hospital or clinical infrastructure,\nincluding ventilators, monitoring systems and gas-delivery systems. Certain deployments of our systems may operate in limited-connectivity,\nisolated or “air-gapped” clinical environments. Despite such architecture, these systems may remain vulnerable to cybersecurity\nincidents through removable media, servicing activities, third-party maintenance tools, software updates, configuration errors, unauthorized\nphysical access or supply-chain compromise. Any cybersecurity incident affecting our products, infrastructure, suppliers, distributors,\nhospital customers or service providers could result in device malfunction, interruption of therapy delivery, data integrity issues,\nrecalls, remediation costs, litigation, reputational harm, regulatory scrutiny or patient safety events.\n\n \n\nRemediation\nof cybersecurity vulnerabilities affecting our products may require extensive validation, customer coordination, regulatory review or\non-site servicing activities, which could delay implementation of corrective measures and increase operational costs.\n\n \n\nChanges\nin regulatory expectations relating to software-enabled medical devices, cybersecurity, or interoperability may increase our compliance\ncosts, require design modifications, delay approvals or require additional post-market controls.\n\n \n\nWe\nrely on sophisticated information technology systems and network infrastructure to operate and manage our business. We also maintain\npersonally identifiable information (“PII”) about our employees, and given the nature of our business, we have access to\nprotected health information (“PHI”). Our business therefore depends on the continuous, effective, reliable, and secure operation\nof our computer hardware, software, networks, Internet servers, and related infrastructure. To the extent that our hardware or software\nmalfunctions or access to our data by internal personnel, suppliers or customers through the Internet is interrupted or compromised,\nour business could suffer.\n\n \n\nThe\nintegrity and protection of our customer, personnel, financial, research and development, and other confidential data is critical to\nour business, and our customers and employees have a high expectation that we will adequately protect their personal information. The\nregulatory environment governing information, security and privacy laws is increasingly demanding and continues to evolve and a number\nof states have adopted laws and regulations that may affect our privacy and data security practices regarding the use, disclosure and\nprotection of PII. For example, the California Consumer Privacy Act (“the CCPA”), among other things, creates individual\nprivacy rights and imposes increased obligations on companies handling PII.\n\n \n\nAlthough\nour computer and communications hardware are protected through physical and software safeguards, they are still vulnerable to system\nmalfunction, computer viruses, malware and ransomware, and other cybersecurity threats such as phishing and social engineering attacks.\nThese events could lead to the unauthorized access of our information technology systems and result in financial loss and the misappropriation\nor unauthorized disclosure of confidential information belonging to us, our employees, partners, customers, or suppliers. The techniques\nused by criminal elements to attack computer systems are sophisticated, change frequently and may originate from less regulated and remote\nareas of the world. As a result, we may not be able to address these techniques proactively or implement adequate preventative measures.\nIf our information technology systems are compromised, we could be subject to fines, damages, litigation and enforcement actions, incur\nfinancial losses, suffer reputational damage, and lose trade secrets or other confidential information, each of which could significantly\nharm our business.\n\n \n\n33\n\n \n\n** **\n\n**Healthcare\nlegislative or regulatory reform measures, including government restrictions on pricing and reimbursement, may have a negative impact\non our business and results of operations.**\n\n \n\nIn\nthe U.S., there have been and continue to be a number of legislative and regulatory changes and proposed changes to contain healthcare\ncosts. For example, in March 2010, the Patient Protection and Affordable Care Act (“ACA”) was enacted, which, among other\nthings, substantially changes the way health care is financed by both governmental and private insurers, and significantly impacts the\nU.S. medical device industry. Some of the provisions of the ACA have been subject to judicial challenges as well as efforts to modify\nthem or alter their interpretation or implementation. For example, the Tax Cuts and Jobs Act of 2017 (“Tax Act”), includes\na provision that eliminated the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain\nqualifying health coverage for all or part of a year, commonly referred to as the “individual mandate,” effective January\n1, 2019. It is unclear how efforts to modify or invalidate the ACA or its implementing regulations, or portions thereof, will affect\nour business. Additional legislative changes, regulatory changes and judicial challenges related to the ACA remain possible. We cannot\npredict what effect further changes related to the ACA would have on our business.\n\n \n\nWe\ncannot be sure whether additional legislative changes will be enacted, or whether government regulations, guidance or interpretations\nwill be changed, or what the impact of such changes would be on the certification or marketing approvals, sales, pricing, or reimbursement\nof our approved product or product candidates, if any, may be. We expect that any such healthcare reform measures that may be adopted\nin the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any\napproved product. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments\nfrom private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate\nrevenue, attain profitability, or commercialize our approved product or product candidates.\n\n \n\nMoreover,\nin order to obtain reimbursement for our products in some EEA countries, including some EU Member States, we may be required to compile\nadditional data comparing the cost-effectiveness of our products to other available therapies. Health Technology Assessment (“HTA”)\nof both medicinal products and medical devices is becoming an increasingly common part of the pricing and reimbursement procedures in\nsome EU Member States, including those representing the larger markets. The HTA process, which is currently governed by national laws\nin each EU Member State, is the procedure to assess therapeutic, economic and societal impact of a given medical product in the national\nhealthcare systems of the individual country. The outcome of an HTA will often influence the pricing and reimbursement status granted\nto these medical products by the competent authorities of the respective EU Member State. The extent to which pricing and reimbursement\ndecisions are influenced by the HTA of the specific medical product currently varies between EU Member States. On December 13, 2021,\nthe EU adopted a new HTA Regulation which entered into force on January 11, 2022 and will become applicable to all EU Member States from\nJanuary 12, 2025. The new EU HTA regulation aims to harmonize the clinical benefit assessment of HTA across the EU and provides the basis\nfor permanent and sustainable cooperation at the EU level for joint clinical assessments in these areas.\n\n \n\n34\n\n \n\n \n\n**We\nare subject to additional federal and state laws and regulations relating to our business, and our failure to comply with those laws\ncould have a material adverse effect on our results of operations and financial conditions.**\n\n \n\nWe\nare subject to additional health care regulation and enforcement by the federal government and the states in which we conduct our business.\nOf note, regulations that may relate to our operations include the following:\n\n \n\n \n●\nthe\nfederal health care program AKS prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering,\nor providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for,\nor the purchase, lease, or order or arranging for the purchase, lease or order of any good or service, for which payment may be made,\nin whole or in part, under federal health care programs such as Medicare and Medicaid. This statute has been interpreted to apply\nto arrangements between pharmaceutical or device manufacturers, on the one hand, and prescribers, purchasers and formulary managers\nand others on the other. The term “remuneration” has been broadly interpreted to apply to anything of value including,\nfor example, gifts, cash payments, donations, waivers of payment, ownership interests, and providing any item, service, or compensation\nfor something other than fair market value. Liability under the AKS may be established without proving actual knowledge of the statute\nor specific intent to violate it. Although there are a number of statutory exceptions and regulatory safe harbors to the AKS protecting\ncertain common business arrangements and activities from prosecution or regulatory sanctions, the exceptions and safe harbors are\ndrawn narrowly. Practices that involve remuneration to those who prescribe, purchase, or recommend medical device products, including\ncertain discounts, or engaging such individuals as consultants, advisors and speakers, may be subject to scrutiny if they do not\nfit squarely within an exception or safe harbor. Moreover, there are no safe harbors for many common practices, such as educational\ngrants and reimbursement support programs;\n\n \n \n \n\n \n●\nthe\nfederal civil FCA that prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented,\nfalse or fraudulent, claims for payment of government funds, knowingly making, using or causing to be made or used a false statement\nor record material to an obligation to pay money to the government, or knowingly concealing or knowingly and improperly avoiding,\ndecreasing or concealing an obligation to pay money to the federal government. A claim including items or services resulting from\na violation of the AKS constitutes a false or fraudulent claim for purposes of the FCA. Actions under the FCA may be brought by the\ngovernment or as a qui tam action by a private individual in the name of the government, who may also share in any monetary recovery.\nQui tam actions are filed under seal and impose a mandatory duty on the U.S. Department of Justice to investigate such allegations.\nManufacturers have faced liability under the FCA for providing inaccurate billing or coding information to customers or promoting\na product off-label. FCA liability is potentially significant in the healthcare industry because the statute provides for treble\ndamages and significant mandatory penalties per false or fraudulent claim or statement for violations, as well as exclusion from\nparticipation in federal healthcare programs;\n\n \n \n \n\n \n●\nHIPAA\nimposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme\nto defraud any healthcare benefit program, including private third-party payors, or knowingly and willfully falsifying, concealing,\nor covering up a material fact or making any materially false, fictitious, or fraudulent statement or representation, or using any\nfalse writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry, in connection\nwith the delivery of or payment for healthcare benefits, items, or services;\n\n \n \n \n\n \n●\nthe\nfederal Sunshine Act requires applicable manufacturers of devices, biologics and medical supplies for which payment is available\nunder Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS information\nrelated to payments and other transfers of value to physicians, physician assistants, nurse practitioners, clinical nurse specialists,\ncertified nurse anesthetists, and certified nurse midwives, and teaching hospitals, as well as ownership and investment interests\nheld by physicians and their immediate family members; and\n\n \n \n \n\n \n●\nanalogous\nstate and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements\nand claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers.\nSeveral states have enacted legislation requiring medical device manufacturers to, among other things, establish marketing compliance\nprograms; file periodic reports with the state, including reports on gifts and payments to individual health care providers; and/or\nregister their sales representatives. Some states prohibit certain sales and marketing practices, including the provision of gifts,\nmeals, or other items to health care providers.\n\n \n\nEfforts\nto ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve\nsubstantial costs. Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it\nis possible that some of our business activities could be subject to challenge under one or more of such laws. The scope and enforcement\nof these laws is uncertain and subject to change in the current environment of health care reform. We cannot predict the impact on our\nbusiness of any changes in these laws. Federal or state regulatory authorities may challenge our current or future activities under these\nlaws. Any such challenge, even if we are able to successfully defend against it, could have a material adverse effect on our reputation,\nbusiness, results of operations, and financial condition. Any state or federal regulatory review of us, regardless of the outcome, would\nbe costly and time-consuming. If our operations are found to be in violation of any of the laws described above or any other governmental\nregulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from\nparticipation in government health care programs, such as Medicare and Medicaid, imprisonment and the curtailment or restructuring of\nour operations, any of which could adversely affect our ability to operate our business and our results of operations.\n\n \n\n35\n\n \n\n \n\n**If\nwe fail to comply with applicable privacy, data protection and data security laws and regulations, we could face substantial penalties,\nliability and adverse publicity and our business, operations and financial condition could be adversely affected.**\n\n \n\nWe\nare subject to various laws and regulations globally regarding privacy and data protection, including laws and regulations relating to\nthe collection, storage, handling, use, disclosure, transfer and security of personal data. The restrictions under applicable privacy,\ndata protection and data security laws and regulations that may affect our ability to operate include but are not limited to:\n\n \n\n \n●\nHIPAA\ngoverns the use, disclosure, and security of protected health information by HIPAA “covered entities” and their “business\nassociates.” Covered entities are health plans, health care clearinghouses and health care providers that engage in specific\ntypes of electronic transactions. A business associate is any person or entity (other than members of a covered entity’s workforce)\nthat performs a service for or on behalf of a covered entity involving the use or disclosure of protected health information. Most\nhealthcare providers who prescribe our products and from whom we obtain patient health information are subject to privacy and security\nrequirements under HIPAA, as are we in certain circumstances. The U.S. Department of Health and Human Services (through the Office\nfor Civil Rights) has direct enforcement authority against covered entities and business associates with regard to compliance with\nHIPAA regulations. We also could be subject to criminal penalties if we knowingly obtain individually identifiable health information\nfrom a covered entity in a manner that is not authorized or permitted by HIPAA or for aiding and abetting and/or conspiring to commit\na violation of HIPAA. We are unable to predict whether our actions could be subject to prosecution in the event of an impermissible\ndisclosure of health information to us;\n\n \n●\nnumerous\nU.S. federal and state laws and regulations, including state data breach notification laws, state health information privacy laws\nand federal and state consumer protection laws, govern the collection, use, disclosure and protection of personal information. These\nlaws may impose a number of compliance obligations on us, including requiring that we obtain consent before we collect, use, or disclose\npersonal information, implement certain security protections to safeguard personal information, and notify individuals or regulators\nin the event of a breach;\n\n \n●\nother\ncountries also have, or are developing, laws governing the collection, use, disclosure and protection of personal information. The\nGDPR, for example, imposes restrictions on the processing (e.g., collection, use, disclosure) of personal data in the EEA and also\nimposes strict restrictions on the transfer of personal data out of the EU to the U.S. Our business could be adversely impacted if\nour ability to transfer personal data outside of the EEA or Switzerland is restricted, which could adversely impact our operating\nresults. For example, in July 2020, the Court of Justice of the European Union (the CJEU) declared the EU-U.S. Privacy Shield framework\nbetween the EU and U.S. to be invalid and raised concerns about other data transfer mechanisms in a case known colloquially as “Schrems\nII”, which could adversely impact our ability to transfer personal data from the EU to the U.S or otherwise may cause us to\nincur significant costs to do so legally. At present, there are few viable alternatives to the EU-U.S. Privacy Shield and the Standard\nContractual Clauses (“SCCs”). If the level of protection in the U.S. or any other importing country is called into question\nunder the SCCs, this could further impact our ability to transfer data outside of the EEA or Switzerland. Furthermore, following\nthe Brexit and the UK’s exit from the EU, the UK became a third country to the EU in terms of personal data transfers. The\nEuropean Commission has adopted an Adequacy Decision concerning the level of personal data protection in the UK under which personal\ndata may now flow freely from the EU to the UK. However, personal data transfers from the EU to the UK may nevertheless be at a greater\nrisk than before because the Adequacy Decision could in theory someday be suspended. On July 10, 2023, the European Commission adopted an adequacy decision for the EU-U.S. Data Privacy Framework (“EU-U.S.\nDPF”), concluding that participating U.S. organizations certified under the framework provide an adequate level of protection for\npersonal data transferred from the European Economic Area (“EEA”) to the United States. The United Kingdom has also adopted\nthe UK Extension to the EU-U.S. DPF, and Switzerland has recognized the Swiss-U.S. Data Privacy Framework as a valid transfer mechanism\nfor personal data transferred from Switzerland to participating U.S. organizations. Accordingly, personal data transfers from the EEA,\nthe United Kingdom and Switzerland to the United States may, in certain circumstances, be based on participation in the applicable Data\nPrivacy Framework program. In addition, Standard Contractual Clauses (“SCCs”) and other lawful transfer mechanisms remain available\nfor cross-border transfers of personal data. However, the legal landscape governing international data transfers remains subject to ongoing\nregulatory developments, judicial scrutiny and potential legal challenges. Future decisions by European courts, regulators or lawmakers\ncould invalidate, restrict or impose additional requirements on the EU-U.S. DPF, SCCs or other transfer mechanisms. Any such developments\ncould require us to implement additional safeguards, modify our business practices, incur significant compliance costs, suspend certain\ndata transfers or otherwise adversely affect our ability to process personal data across jurisdictions. If we are unable to transfer personal\ndata lawfully between jurisdictions in which we operate, our business, financial condition, results of operations and prospects could\nbe materially adversely affected; and\n\n \n●\nthe\nlegislative and regulatory landscape for privacy and data security continues to evolve, and there has been an increasing amount of\nfocus on privacy and data security issues with the potential to affect our business. For example, the CCPA, as amended by the California\nPrivacy Rights Act (CPRA), contains disclosure obligations for businesses that collect personal information about California residents\nand affords those individuals new rights relating to their personal information that may affect our ability to use personal information.\nOther states, including Virginia, Colorado, Utah, Connecticut, Indiana, Iowa, Tennessee, Utah, and others have enacted privacy laws\nsimilar to the CCPA that impose new obligations or limitations in areas affecting our business and we continue to assess the impact\nof these state legislation, on our business as additional information and guidance becomes available. The federal government has\nalso considered similar privacy laws that could impose new obligations or limitations in areas affecting our business.\n\n \n\nThese\nprivacy and data security laws and regulations could increase our cost of doing business, and failure to comply with these laws and regulations\ncould result in government enforcement actions (which could include civil or criminal penalties), private litigation and/or adverse publicity\nand could materially and negatively affect our operating results and business. Although a thorough privacy compliance program could mitigate\nthe risk of investigation and prosecution for violations of these laws and regulations, the risks cannot be entirely eliminated. Any\naction against us for violation of these laws or regulations, even if we successfully defend against it, could cause us to incur significant\nlegal expenses and divert our management’s attention from the operation of our business. Moreover, achieving and sustaining compliance\nwith applicable federal, state, and foreign privacy and data security laws and regulations may prove costly.\n\n \n\n36\n\n \n\n** **\n\n**If\nwe or our suppliers fail to comply with ongoing FDA or other foreign regulatory authority requirements, or if we experience unanticipated\nproblems with our products, these products could be subject to restrictions or withdrawal from the market.**\n\n \n\nAny\nproduct for which we obtain FDA certification, clearance or approval, and the manufacturing processes, post-market surveillance, post-certification/approval\nclinical data and promotional activities for such product, remain subject to continued regulatory review, oversight, requirements, and\nperiodic inspections by the FDA and other domestic and foreign regulatory authorities and notified bodies. For such products, we must\nalso comply with equivalent standards in non-U.S. countries should we choose to engage in comparable activity in those jurisdictions.\nThese obligations extend to our third-party suppliers as well.\n\n \n\nIn\nparticular, we and our suppliers are required to comply with the FDA’s QSR in the U.S. and other regulations enforced outside the\nUnited States which cover the manufacture of our products and the methods and documentation of the design, testing, production, control,\nquality assurance, labeling, packaging, storage and shipping of medical devices. Regulatory authorities, such as the FDA, and notified\nbodies enforce the QSR in the U.S. and other regulations through periodic inspections. The failure by us or one of our suppliers to comply\nwith applicable statutes and regulations administered by the FDA, or the failure to timely and adequately respond to any adverse inspectional\nobservations or product safety issues, could result in, among other things, any of the following enforcement actions:\n\n \n\n \n●\nuntitled\nletters, warning letters, fines, injunctions, consent decrees and civil penalties;\n\n \n \n \n\n \n●\nunanticipated\nexpenditures to address or defend such actions;\n\n \n \n \n\n \n●\ncustomer\nnotifications for repair, replacement, refunds;\n\n \n \n \n\n \n●\nrecall,\ndetention or seizure of our products;\n\n \n \n \n\n \n●\noperating\nrestrictions or partial suspension or total shutdown of production;\n\n \n \n \n\n \n●\nrefusing\nor delaying our requests for 510(k) clearance, de novo authorization or PMA approval of new products or modified products;\n\n \n \n \n\n \n●\noperating\nrestrictions;\n\n \n \n \n\n \n●\nwithdrawal\nof 510(k) clearances on PMA approvals that have already been granted;\n\n \n \n \n\n \n●\nrefusal\nto grant export approval for our products; or\n\n \n \n \n\n \n●\ncriminal\nprosecution.\n\n \n\nIf\nany of these actions were to occur, it would harm our reputation and cause our product sales and profitability to suffer and may prevent\nus from generating revenue. Furthermore, our key component suppliers may not currently be or may not continue to be in compliance with\nall applicable regulatory requirements which could result in our failure to produce our products on a timely basis and in the required\nquantities, if at all.\n\n \n\nIn\naddition, we are required to conduct costly post-market testing and surveillance to monitor the safety or effectiveness of our approved\nproducts, and we must comply with medical device reporting requirements, including the reporting of adverse events and malfunctions related\nto our products. Later discovery of previously unknown problems with such products, including unanticipated adverse events or adverse\nevents of unanticipated severity or frequency, manufacturing problems, or failure to comply with regulatory requirements such as QSR,\nmay result in changes to labeling, restrictions on such products or manufacturing processes, withdrawal of the products from the market,\nvoluntary or mandatory recalls, a requirement to repair, replace or refund the cost of any medical device we manufacture or distribute,\nfines, suspension of certification or regulatory approval, product seizures, injunctions or the imposition of civil or criminal penalties\nwhich would adversely affect our business, operating results and prospects.\n\n \n\n37\n\n \n\n \n\nMoreover,\nwe may be required to conduct costly post-market testing and surveillance to monitor the safety or effectiveness of our products in the\nEEA. We must comply with medical device reporting requirements, including the reporting of adverse events and malfunctions related to\nour products. Later discovery of previously unknown problems with our products, including unanticipated adverse events or adverse events\nof unanticipated severity or frequency, manufacturing problems, or failure to comply with regulatory requirements may result in changes\nto labeling, restrictions on such products or manufacturing processes, withdrawal of the products from the market, voluntary or mandatory\nrecalls, a requirement to repair, replace or refund the cost of any medical device we manufacture or distribute, fines, suspension of\ncertification, regulatory clearances or approvals, product seizures, injunctions or the imposition of civil or criminal penalties which\nwould adversely affect our business, operating results and prospects.\n\n \n\n**Our\nproducts may cause or contribute to adverse medical events or be subject to failures or malfunctions that we are required to report to\nthe FDA or comparable foreign regulatory authorities, and if we fail to do so, we would be subject to sanctions that could harm our reputation,\nbusiness, financial condition and results of operations. The discovery of serious safety issues with our products, or a recall of our\nproducts either voluntarily or at the direction of the FDA or comparable foreign regulatory authorities, could have a negative impact\non us.**\n\n \n\nAs\na commercial-stage company, we are subject to the FDA’s medical device reporting regulations and similar foreign regulations, which\nrequire us to report to the FDA when we receive or become aware of information that reasonably suggests that one or more of our products\nmay have caused or contributed to a death or serious injury or malfunctioned in a way that, if the malfunction were to recur, it could\ncause or contribute to a death or serious injury. The timing of our obligation to report is triggered by the date we become aware of\nthe adverse event as well as the nature of the event. We may fail to report adverse events of which we become aware within the prescribed\ntimeframe. We may also fail to recognize that we have become aware of a reportable adverse event, especially if it is not reported to\nus as an adverse event or if it is an adverse event that is unexpected or removed in time from the use of the product. If we fail to\ncomply with our reporting obligations, the FDA could take action, including warning letters, untitled letters, administrative actions,\ncriminal prosecution, imposition of civil monetary penalties, revocation of our device clearance or approval, seizure of our products\nor delay in clearance or approval of future products.\n\n \n\nThe\nFDA and comparable foreign regulatory authorities have the authority to require the recall of commercialized products in the event of\nmaterial deficiencies or defects in design or manufacture of a product or in the event that a product poses an unacceptable risk to health.\nThe FDA’s authority to require a recall must be based on a finding that there is reasonable probability that the device could cause\nserious injury or death. We may also choose to voluntarily recall a product if any material deficiency is found. A government-mandated\nor voluntary recall by us could occur as a result of an unacceptable risk to health, component failures, malfunctions, manufacturing\ndefects, labeling or design deficiencies, packaging defects or other deficiencies or failures to comply with applicable regulations.\nProduct defects or other errors may occur in the future.\n\n \n\nDepending\non the corrective action we take to redress a product’s deficiencies or defects, the FDA may require, or we may decide, that we\nwill need to obtain new clearances or approvals for the device before we may market or distribute the corrected device. Seeking such\nclearances or approvals may delay our ability to replace the recalled devices in a timely manner. Moreover, if we do not adequately address\nproblems associated with our devices, we may face additional regulatory enforcement action, including FDA warning letters, product seizure,\ninjunctions, administrative penalties or civil or criminal fines.\n\n \n\nCompanies\nare required to maintain certain records of recalls and corrections, even if they are not reportable to the FDA. We may initiate voluntary\nwithdrawals or corrections for our products in the future that we determine do not require notification of the FDA. If the FDA disagrees\nwith our determinations, it could require us to report those actions as recalls and we may be subject to enforcement action. A future\nrecall announcement could harm our reputation with customers, potentially lead to product liability claims against us and negatively\naffect our sales. Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require\nthe dedication of our time and capital, will distract management from operating our business and may harm our reputation and financial\nresults.\n\n \n\n38\n\n \n\n \n\nAll\nmanufacturers placing medical devices on the market in the EEA are legally bound to report to the relevant competent authorities (a)\nany serious incident involving devices made available on the EEA market, except expected side-effects which are clearly documented in\nthe product information and quantified in the technical documentation and are subject to trend reporting, and (b) any field safety corrective\naction in respect of devices made available on the EEA market, including any field safety corrective action undertaken in a third country\nin relation to a device which is also legally made available on the EEA market, if the reason for the field safety corrective action\nis not limited to the device made available in the third country. Reports should be submitted through the electronic system set up and\nmanaged by the European Commission in collaboration with EEA countries. Reports of serious incidents will be automatically transmitted\nto the competent authority of the EEA country in which the incident occurred and reports on field safety corrections actions will be\nautomatically transmitted to the competent authority of the EEA country in which the field safety corrective action is being or is to\nbe undertaken and the EEA country in which the manufacturer has its registered place of business.\n\n \n\nUnder\nthe EU MDR, a “serious incident” means any incident that directly or indirectly led, might have led or might lead to any\nof the following: (a) the death of a patient, user or other person; (b) the temporary or permanent serious deterioration of a patient’s,\nuser’s or other person’s state of health; or (c) a serious public health threat. A “field safety corrective action”\nmeans corrective action taken by a manufacturer for technical or medical reasons to prevent or reduce the risk of a serious incident\nin relation to a device made available on the market.\n\n \n\nMalfunction\nof our products could result in future voluntary corrective actions, such as recalls, including corrections, or customer notifications,\nor agency action, such as inspection or enforcement actions. If malfunctions do occur, we may be unable to correct the malfunctions adequately\nor prevent further malfunctions, in which case we may need to cease manufacture and distribution of the affected products, initiate voluntary\nrecalls, and redesign the products. Regulatory authorities may also take actions against us, such as ordering recalls, imposing fines,\nor seizing the affected products. Any corrective action, whether voluntary or involuntary, will require the dedication of our time and\ncapital, distract management from operating our business, and may harm our reputation and financial results.\n\n \n\n**Our\napproved product or product candidates may in the future be subject to product recalls that could harm our reputation, business and financial\nresults.**\n\n \n\nMedical\ndevices can experience performance problems in the field that require review and possible corrective action. The occurrence of component\nfailures, manufacturing errors, software errors, design defects or labeling inadequacies affecting a medical device could lead to a government-mandated\nor voluntary recall by the device manufacturer, in particular when such deficiencies may endanger health. The FDA requires that certain\nclassifications of recalls be reported to the FDA within 10 working days after the recall is initiated. Comparable foreign regulatory\nauthorities impose similar deadlines. Companies are required to maintain certain records of recalls, even if they are not reportable\nto the FDA or to comparable foreign regulatory authorities. We may initiate voluntary recalls involving our products in the future that\nwe determine do not require notification of the FDA. If the FDA disagrees with our determinations, they could require us to report those\nactions as recalls. Product recalls may divert management attention and financial resources, expose us to product liability or other\nclaims, harm our reputation with customers and adversely impact our business, financial condition and results of operations.\n\n \n\n**We\nmay be subject to regulatory or enforcement actions if we engage in improper marketing or promotion of our approved product or product\ncandidates.**\n\n \n\nOur\neducational and promotional activities and training methods must comply with FDA and other applicable laws, including the prohibition\nof the promotion of a medical device for a use that has not been cleared or approved by the FDA. Use of a device outside of its cleared\nor approved indications is known as “off-label” use. Physicians may use our products off-label in their professional medical\njudgment, as the FDA does not restrict or regulate a physician’s choice of treatment within the practice of medicine. However,\nif the FDA determines that our educational and promotional activities or training constitutes promotion of an off-label use, it could\nrequest that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance\nof warning letters, untitled letters, fines, penalties, injunctions, or seizures, any of which could have an adverse impact on our reputation\nand financial results.\n\n \n\n39\n\n \n\n \n\nIt\nis also possible that other federal, state or comparable foreign regulatory authorities might take action if they consider our educational\nand promotional activities or training methods to constitute promotion of an off-label use, which could result in significant fines or\npenalties under other statutory authorities, such as laws prohibiting false claims for reimbursement. In that event, our reputation could\nbe damaged, and adoption of the products could be impaired. Although our policy is to refrain from statements that could be considered\noff-label promotion of our products, the FDA or comparable foreign regulatory authorities could disagree and conclude that we have engaged\nin off-label promotion. It is also possible that other federal, state or comparable foreign regulatory authorities might take action,\nincluding, but not limited to, through a whistleblower action under the FCA, if they consider our business activities constitute promotion\nof an off-label use, which could result in significant penalties, including, but not limited to, criminal, civil or administrative penalties,\ntreble damages, fines, disgorgement, exclusion from participation in government healthcare programs, reporting requirements and compliance\noversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with\nthese laws, and the curtailment or restructuring of our operations. In addition, the off-label use of our products may increase the risk\nof product liability claims. Product liability claims are expensive to defend and could divert our management’s attention, result\nin substantial damage awards against us, and harm our reputation.\n\n \n\nThe\nadvertising and promotion of our products in the EEA is subject to EEA countries’ national laws implementing Directive 2006/114/EC\nconcerning misleading and comparative advertising, and Directive 2005/29/EC on unfair commercial practices, as well as other national\nlegislation of individual EEA country governing the advertising and promotion of medical devices. EEA country legislation may also restrict\nor impose limitations on our ability to advertise our products directly to the general public. In addition, voluntary EU and national\nCodes of Conduct provide guidelines on the advertising and promotion of our products to the general public and may impose limitations\non our promotional activities with healthcare professionals.\n\n \n\n**We\nface extensive, ongoing regulatory requirements and review, and our products may face future development and regulatory difficulties.**\n\n \n\nThe\nholder of an approved PMA, de novo authorization, or cleared 510(k) is subject to obligations to monitor and report adverse events and\ninstances of the failure of a product to meet the specifications in the marketing application. Application holders must submit new or\nsupplemental applications and obtain FDA approval for certain changes to the approved product, product labeling, or manufacturing process.\nLegal requirements have also been enacted to require disclosure of clinical trial results on publicly available databases.\n\n \n\nIn\naddition, manufacturers of FDA regulated products and their facilities are subject to continual review and periodic inspections by the\nFDA and comparable foreign regulatory authorities for compliance with the FDA’s QSR and, as applicable, cGMP regulations. Our relationships\nwith healthcare providers, physicians and third-party payors must comply with FDA laws and regulations, the AKS, the FCA, HIPAA, various\ntransparency laws, and similar state and foreign laws. If products are made available to authorized users of the Federal Supply Schedule\nof the General Services Administration and to low-income patients of certain hospitals, additional laws and requirements apply. Our activities\nare also potentially subject to federal and state consumer protection and unfair competition laws. If we or our third-party collaborators\nfail to comply with applicable regulatory requirements, a regulatory authority may take any of the following actions:\n\n \n\n \n●\nconduct\nan investigation into our practices and any alleged violation of law;\n\n \n \n \n\n \n●\nissue\nwarning letters or untitled letters asserting that we are in violation of the law;\n\n \n \n \n\n \n●\nseek\nan injunction or impose civil or criminal penalties or monetary fines;\n\n \n \n \n\n \n●\nsuspend\nor withdraw certification or regulatory approval;\n\n \n \n \n\n \n●\nrequire\nthat we suspend or terminate any ongoing clinical trials;\n\n \n \n \n\n \n●\nrefuse\nto approve pending applications or supplements to applications filed by us;\n\n \n \n \n\n \n●\nsuspend\nor impose restrictions on operations, including costly new manufacturing requirements;\n\n \n \n \n\n \n●\nseize\nor detain products, refuse to permit the import or export of products, or require us to initiate a product recall; or\n\n \n \n \n\n \n●\nexclude\nus from providing our products to those participating in government health care programs, such as Medicare and Medicaid, and refuse\nto allow us to enter into supply contracts, including government contracts.\n\n \n\n40\n\n \n\n \n\nThe\noccurrence of any of the foregoing events or penalties may force us to expend significant amounts of time and money and may significantly\ninhibit our ability to bring to market or continue to market our products and generate revenue. Similar regulations apply in foreign\njurisdictions.\n\n \n\n**Risks\nRelated to the Discovery and Development of Our Product Candidates**\n\n \n\n**We\nare heavily dependent on the success of our product candidates, which are in various stages of clinical development. We cannot give any\nassurance that any of our product candidates will receive certification or regulatory approval, which is necessary before they can be\ncommercialized.**\n\n \n\nTo\ndate, we have invested substantially all of our efforts and financial resources to design and develop our product candidates, including\nconducting clinical trials and providing general and administrative support for these operations. Our future success is dependent on\nour ability to successfully develop, obtain regulatory certification or approval for, and then successfully commercialize one or more\nproduct candidates.\n\n \n\nSeveral\nof our product candidates are in the early stages of development and will require additional clinical development (and in some cases\nadditional preclinical development), management of nonclinical, clinical and manufacturing activities, certification or regulatory approval,\nobtaining adequate manufacturing supply, building of a commercial organization and significant marketing efforts before we generate any\nrevenue from product sales. To date, we have conducted 3 pilot clinical trials involving 198 patients with bronchiolitis (mainly caused\nby RSV) and a pilot clinical trial in nine patients with CF. In addition, Rambam healthcare campus in Israel conducted a compassionate\ntreatment for two patients with CF who suffer from NTM infections (specifically M. abscessus). Additionally, two pilot clinical trials\nwere completed in 2022, one in viral pneumonia and one in NTM lung infection. Both of these studies were using our LungFit® system\n(PRO and GO, respectively). Although the results of these trials demonstrated improvements in various endpoints and clinical outcomes\nwhich we believe support our efforts towards obtaining FDA approval, these trials were small and conducted outside the US, so it is unlikely\nthat the FDA will view them as significant because of their size and scope. Therefore, we intend to conduct larger clinical trials aiming\nfor statistically and clinically significant favorable results, or we will not be able to obtain certification or regulatory approval\nto market such product candidates. It may be some time before a pivotal trial is initiated, if at all, for such product candidates. Before\na medical device clinical trial can be undertaken in the U.S., the sponsor of the trial must submit an IDE application for a medical\ndevice and the FDA must permit the trial to go forward. We cannot assure that we will obtain such agency acquiescence in a timely manner,\nor at all. In addition to our respiratory program using the LungFit® device, we have programs in Cancer and Autism which require\nsignificant further development before submission to the FDA.\n\n \n\nAlthough\nwe received approval of LungFit® PH from the FDA, we can make no assurances as to what any other comparable foreign regulatory\nauthorities and notified bodies where we are seeking certification or regulatory approval will do. We are expending significant resources\nto commercialize LungFit® PH in the U.S. and we can make no assurances that our efforts will be successful. We cannot\nbe certain that any of our product candidates will be successful in clinical trials or receive certification or regulatory approval.\nFurther, our product candidates may not receive certification or regulatory approval even if they are successful in clinical trials.\nIf we do not receive certification or regulatory approvals for our other product candidates, we may not be able to continue our operations.\n\n \n\n41\n\n \n\n \n\nWe\ngenerally plan to seek certification or regulatory approval to commercialize our approved product and product candidates in the U.S.,\nthe EU and in additional foreign countries, as applicable. To obtain certification or regulatory approvals we must comply with the numerous\nand varying regulatory requirements of such countries regarding safety, efficacy, chemistry, manufacturing and controls, clinical trials,\ncommercial sales, pricing and distribution of our approved product and product candidates. Even if we are successful in obtaining marketing\ncertification or regulatory approval in one jurisdiction, we cannot ensure that we will obtain certification or regulatory approval in\nany other jurisdictions. If we are unable to obtain certification, clearance or approval for our product candidates in multiple jurisdictions,\nour revenue and results of operations would be negatively affected.\n\n \n\nSome\nof our product candidates may be considered a drug/device combination and the process for obtaining regulatory approval in the U.S. on\nour product candidates will require compliance with complex procedures because concordance between two centers of the FDA (CDRH and CDER)\nis necessary for approval of this combination product. A change in the FDA’s prior determination that CDRH would lead the review\nof a marketing application for our product candidates would adversely impact our development timeline and significantly raise our costs\nto complete clinical development and obtain regulatory approvals.\n\n \n\n**The\nsuccess of our business may also depend upon our ability to identify, license or discover additional product candidates.**\n\n \n\nAlthough\na substantial amount of our effort will focus on the continued clinical testing, potential certification, regulatory approval and commercialization\nof LungFit® PH and our existing product candidates, the success of our business may also depend upon our ability to identify,\nlicense or discover additional product candidates. Our research programs or licensing efforts may fail to yield additional product candidates\nfor clinical development for a number of reasons, including but not limited to the following:\n\n \n\n \n●\nour\nresearch or business development methodology or search criteria and process may be unsuccessful in identifying potential product\ncandidates;\n\n \n \n \n\n \n●\nwe\nmay not be able or willing to assemble sufficient resources to acquire or discover additional product candidates;\n\n \n \n \n\n \n●\nour\nproduct candidates may not succeed in preclinical or clinical testing;\n\n \n \n \n\n \n●\nour\npotential product candidates may be shown to have harmful side effects or may have other characteristics that may make the product\ncandidates unmarketable or unlikely to receive certification or marketing approval;\n\n \n \n \n\n \n●\ncompetitors\nmay develop alternatives that render our product candidates obsolete or less attractive;\n\n \n \n \n\n \n●\nproduct\ncandidates we develop may be covered by third parties’ patents or other exclusive rights;\n\n \n \n \n\n \n●\nthe\nmarket for a product candidate may change during our program so that such a product may become unreasonable to continue to develop;\n\n \n \n \n\n \n●\na\nproduct candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and\n\n \n \n \n\n \n●\na\nproduct candidate may not be accepted as safe and effective by patients, the medical community or third-party payors.\n\n \n\nIf\nany of these events occur, we may be forced to abandon our development efforts for a program or programs, or we may not be able to identify,\nlicense or discover additional product candidates, which would have a material adverse effect on our business and could potentially cause\nus to cease operations. Research programs to identify new product candidates require substantial technical, financial and human resources.\nWe may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful.\n\n \n\n42\n\n \n\n \n\n**The\ncertification or regulatory approval processes of the FDA and comparable foreign regulatory authorities and notified bodies are lengthy,\ntime-consuming and inherently unpredictable. If we are ultimately unable to obtain certification or regulatory approval for our product\ncandidates, our business will be substantially harmed.**\n\n \n\nThe\ntime required to obtain certification or regulatory approval by the FDA or notified bodies in the EU is unpredictable, typically takes\nmany years following the commencement of clinical trials and depends upon numerous factors. In addition, certification or regulatory\napproval policies, regulations or the type and amount of clinical data necessary to gain certification or regulatory approval may change\nduring the course of a product candidate’s clinical development and may vary among jurisdictions, which may cause delays in the\ncertification or regulatory approval or the decision not to certify or approve an application. We have not obtained certification or\nregulatory approval for any product other than LungFit® PH, and it is possible that none of our existing product candidates\nor any product candidates we may seek to develop in the future will ever obtain certification or regulatory approval.\n\n \n\nThe\nprocess required by the FDA before a new medical device may be marketed in the U.S. generally involves the following:\n\n \n\n \n●\ncompletion\nof or reference to extensive preclinical laboratory tests and preclinical animal studies, all performed in accordance with the FDA’s\nGood Laboratory Practice (“GLP”);\n\n \n \n \n\n \n●\nperformance\nof adequate and well-controlled human clinical trials to establish the safety and efficacy of the medical device candidate for each\nproposed indication; and\n\n \n \n \n\n \n●\nsubmission\nto the FDA of a 510(k), de novo application, or PMA, after completion of all pivotal clinical trials.\n\n \n\n**Applications\nfor our product candidates could fail to receive regulatory approval for many reasons, including but not limited to the following:**\n\n \n\n \n●\nthe\nFDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials;\n\n \n \n \n\n \n●\nwe\nmay be unable to demonstrate to the FDA or comparable foreign regulatory authorities that a product candidate’s risk-benefit\nratio for its proposed indication is acceptable;\n\n \n \n \n\n \n●\nthe\nFDA may determine that the population studied in the clinical program was not sufficiently broad or representative to assure safety\nin the full population for which we seek approval;\n\n \n \n \n\n \n●\nthe\nFDA may disagree with our interpretation of data from preclinical studies or clinical trials;\n\n \n \n \n\n \n●\nthe\ndata collected from clinical trials of our product candidates may not be sufficient to support the submission of a PMA in the U.S.\nor elsewhere;\n\n \n \n \n\n \n●\nthe\nFDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes, test procedures and specifications\nor facilities of third-party manufacturers with which we contract for clinical and commercial supplies;\n\n \n \n \n\n \n●\nthe\napproval policies or regulations of the FDA or comparable foreign regulatory authorities and notified bodies may significantly change\nin a manner rendering our clinical data insufficient for certification or approval; and\n\n \n\nThis\nlengthy certification or regulatory approval process, as well as the unpredictability of the results of clinical trials, may result in\nour failing to obtain certification or regulatory approval to market any of our product candidates, which would significantly harm our\nbusiness, results of operations and prospects.\n\n \n\n43\n\n \n\n \n\n**Our\nbusiness and sale of our approved product and product candidates are subject to extensive regulatory requirements, including compliance\nwith labelling, manufacturing and reporting controls. If we fail or are unable to timely obtain the necessary 510(k) clearances, de-novo\nauthorizations, or PMA approvals for new products, or equivalent steps in third countries including the EEA, our ability to generate\nrevenue could be materially harmed.**\n\n \n\nOur\napproved product and product candidates are classified as medical devices and are subject to extensive regulation in the United States\nby the FDA and other federal, state and local authorities and by comparable foreign regulatory authorities. The FDA can delay, limit\nor deny 510(k) clearance, authorization of a de novo application, or PMA approval of a device for many reasons, including:\n\n \n\n \n●\nwe\nmay not be able to demonstrate to the FDA’s satisfaction that our systems are safe and effective for its intended use;\n\n \n \n \n\n \n●\nthe\ndata from our preclinical studies and clinical trials may be insufficient to support clearance or approval, where required;\n\n \n \n \n\n \n●\nthe\nmanufacturing process or facilities we use or contract to use may not meet applicable requirements; and\n\n \n \n \n\n \n●\ndisruptions\nat the FDA caused by funding shortages or global health concerns.\n\n \n\nThe\nFDA may refuse our requests for 510(k) clearance, de-novo or PMA of new products, new intended uses or modifications to existing products.\n\n \n\nFrom\ntime to time, legislation is drafted and introduced in the United States that could significantly change the statutory provisions governing\nany regulatory approval or clearance that we receive in the United States. In addition, the FDA may change its clearance and approval\npolicies, adopt additional regulations or revise existing regulations, or take other actions which may prevent or delay approval or clearance\nof our test kits under development or impact our ability to modify our currently approved or cleared test kits on a timely basis.\n\n \n\nOur\nproducts are also subject to approval, certification and regulation by foreign regulatory and safety agencies. For example, the EU has\nadopted the EU MDR, which imposes stricter requirements for the marketing and sale of medical devices, including in the area of clinical\nevaluation requirements, quality systems and post-market surveillance. Complying with the requirements of the EU MDR may require us to\nincur significant expenditures. Failure to meet these requirements could adversely impact our business in the EEA and other regions that\ntie their product registrations to the EU requirements.\n\n \n\n**Once\ncommercialized, modifications to our marketed products may require new 510(k) clearances or approval of PMA supplements, or equivalent\nsteps in other countries or regions including the EEA, or may require us to cease marketing or recall the modified products until certification,\nclearances or regulatory approvals are obtained.**\n\n \n\nModifications\nto any of our products once they are commercialized may require new regulatory approvals or clearances, including 510(k) clearances or\napproval of PMA supplements, or require us to recall or cease marketing the modified systems until these clearances or approvals are\nobtained. The FDA requires device manufacturers to initially make and document a determination of whether or not a modification requires\na new approval, supplement or clearance. A manufacturer may determine that a modification could not affect safety or efficacy and does\nnot represent a major change in its intended use, so that no new clearance or approval is necessary. However, the FDA can review a manufacturer’s\ndecision and may disagree. The FDA may also on its own initiative determine that a new clearance or approval of a PMA Supplement is required.\nWe may make modifications in the future that we believe do not or will not require additional clearances or approvals. If the FDA disagrees\nand requires new clearances or approvals for the modifications, we may be required to recall and to stop marketing our products as modified,\nwhich could require us to redesign our products and/or seek new marketing authorizations and harm our operating results. In these circumstances,\nwe may be subject to significant enforcement actions.\n\n \n\n44\n\n \n\n \n\nFor\nexample, if a manufacturer determines that a modification to a PMA approved device could affect its safety or effectiveness or would\nconstitute a major change in its intended use, then the manufacturer must file for a new a new PMA or approval of a PMA supplement. Where\nwe determine that modifications to our products require a new PMA approval, we may not be able to obtain those additional approvals for\nthe modifications or additional indications in a timely manner, or at all. Obtaining new approvals can be a time-consuming process, and\ndelays in obtaining required future approvals would adversely affect our ability to introduce new or enhanced products in a timely manner,\nwhich in turn would harm our future growth.\n\n \n\nFor\nthose products sold in the EEA, we must notify our EU notified body if significant changes are made to the products or if there are substantial\nchanges to our quality assurance systems affecting those products. Obtaining certification can be a time-consuming process, and delays\nin obtaining required future clearances or approvals would adversely affect our ability to introduce new or enhanced products in a timely\nmanner, which in turn would harm our future growth.\n\n \n\n**Clinical\ndevelopment involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies may not be predictive\nof future study results.**\n\n \n\nClinical\ntesting is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during\nthe clinical trial process. The results of preclinical studies and early clinical trials of our product candidates may not be predictive\nof the results of later-stage clinical trials. Product candidates that have shown promising results in early-stage clinical trials may\nstill suffer significant setbacks in subsequent advanced clinical trials. There is a high failure rate for product candidates proceeding\nthrough clinical trials, and product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits\ndespite having progressed satisfactorily through preclinical studies and initial clinical trials. A number of companies in the medical\ndevice and biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse\nsafety profiles, notwithstanding promising results in earlier studies. Moreover, preclinical and clinical data are often susceptible\nto varying interpretations and analyses. We do not know whether any pivotal clinical trials we may conduct will demonstrate consistent\nor adequate efficacy and safety sufficient to obtain certification or regulatory approval to market our product candidates. Nor do we\nknow whether the FDA will permit us to proceed directly to pivotal trials without performing pilot trials in the U.S. using the same\ndelivery system that we will seek approval by the agency.\n\n \n\n**Legislative\nor regulatory reforms may make it more difficult and costly for us to obtain certification, regulatory clearance or approval of any future\nproducts and to manufacture, market and distribute our products after certification, clearance or approval is obtained.**\n\n \n\nFrom\ntime to time, legislation is drafted and introduced in Congress that could significantly change the statutory provisions governing the\nregulatory approval, manufacture and marketing of regulated products or the reimbursement thereof. In addition, the FDA may change its\nclearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions, which may prevent\nor delay approval or clearance of our future products under development or impact our ability to modify our currently cleared products\non a timely basis. Any new regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen\nreview times of planned or future products. It is impossible to predict whether legislative changes will be enacted or FDA regulations,\nguidance or interpretations changed, and what the impact of such changes, if any, may be.\n\n \n\nFDA\nregulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our products.\nAny new statutes, regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review\ntimes of any future products or make it more difficult to obtain clearance or approval for, manufacture, market or distribute our products.\nWe cannot determine what effect changes in regulations, statutes, legal interpretation or policies, when and if promulgated, enacted\nor adopted may have on our business in the future. Such changes could, among other things, require: additional testing prior to obtaining\nclearance or approval; changes to manufacturing methods; recall, replacement or discontinuance of our products; or additional record\nkeeping.\n\n \n\nThe\nFDA’s and comparable foreign regulatory authorities’ policies may change and additional government regulations may be promulgated\nthat could prevent, limit or delay certification, regulatory clearance or approval of our product candidates. We cannot predict the likelihood,\nnature or extent of government regulation that may arise from future legislation or administrative action, either in the U.S. or abroad.\nFor example, the results of the upcoming mid-term Congressional elections may impact our business and industry. Any change in the laws\nor regulations that govern the clearance and approval processes relating to our current, planned and future products could make it more\ndifficult and costly to obtain clearance or approval for new products or to produce, market and distribute existing products. Significant\ndelays in receiving clearance or approval or the failure to receive clearance or approval for any new products would have an adverse\neffect on our ability to expand our business. If we are slow or unable to adapt to changes in existing requirements or the adoption of\nnew requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing clearance that we may\nhave obtained and we may not achieve or sustain profitability.\n\n \n\n45\n\n \n\n \n\nIn\naddition, on May 25, 2017, the new EU MDR entered into force for medical devices marketed in the EEA. Implementation of the EU MDR was\ndelayed by one year due to the COVID-19 pandemic. Following its entry into application on May 26, 2021, the EU MDR introduced substantial\nchanges to the obligations with which medical device manufacturers must comply in the EEA. High risk medical devices are subject to additional\nscrutiny during the conformity assessment procedure. Specifically, the EU MDR repeals and replaces the EU Medical Devices Directive.\nUnlike directives, which must be implemented into the national laws of the EEA countries, the regulations is directly applicable, i.e.,\nwithout the need for adoption of EEA country laws implementing them, in all EEA countries and are intended to eliminate current differences\nin regulation of medical devices among EEA countries. The EU MDR, among other things, is intended to establish a uniform, transparent,\npredictable and sustainable regulatory framework across the EEA for medical devices to ensure a high level of safety and health while\nsupporting innovation. The EU MDR entered into application on May 26, 2021 and among other things:\n\n \n\n \n●\nstrengthens\nthe rules on placing devices on the market and reinforce surveillance once they are available;\n\n \n●\nestablishes\nexplicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of devices\nplaced on the market;\n\n \n●\nimproves\nthe traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number;\n\n \n●\nsets\nup a central database to provide patients, healthcare professionals and the public with comprehensive information on products available\nin the EEA; and\n\n \n●\nstrengthens\nrules for the assessment of certain high-risk devices which may have to undergo an additional check by experts before they are placed\non the market.\n\n \n\nThe\nEU MDR imposes a number of new requirements on manufacturers of medical devices. Notified bodies need to be accredited by the EU Member\nStates’ accreditation bodies to conduct assessment procedures for medical devices in accordance with the EU MDR. There are currently\na relatively small number of notified bodies that have been accredited to conduct these assessments and their capacity to deal with new\napplications is currently limited. In addition, the timeline to go through an EU MDR conformity assessment is substantially longer than\nunder the previous Directive (currently between 13 and 18 months in average). This may delay conformity assessment procedures in the\nfuture in the EEA, and may impact any of our future activities in the EEA and the UK, the renewal of our existing CE Certificates of\nConformity and conformity assessment related to future bodies.\n\n \n\nFurther,\nthe EU MDR imposes increased compliance obligations for us to access the EEA market. Our failure to comply with applicable foreign regulatory\nrequirements, including those administered by authorities of the EEA countries, could result in enforcement actions against us, including\nrefusal, suspension, variation, or withdrawal of any CE Certificates of Conformity by the applicable EU notified body, which could impair\nour ability to market products in the EEA. Any changes to the membership of the EU, such as the departure of the United Kingdom (Brexit),\nmay impact the regulatory requirements for the impacted countries and impair our business operations and our ability to market products\nin such countries.\n\n \n\nBrexit\nhas created significant uncertainty concerning the future relationship between the UK and the EU. On 24 December 2020, the EU and UK\nreached an agreement in principle on the framework for their future relationship, the EU-UK Trade and Cooperation Agreement (the “Trade\nAgreement”), which took effect on May 1, 2021. The Trade Agreement primarily focuses on ensuring free trade between the EU and\nthe UK in relation to goods. The Trade Agreement does not however, specifically address medical devices. The Trade Agreement seeks to\nensure that the parties ensure “regulatory cooperation”. Among the changes that will now occur are that Great Britain (England,\nScotland and Wales) will be treated as a third country. Northern Ireland will, with regard to EU regulations, continue to follow the\nEU regulatory rules. In light of the fact that the CE marking process is set out in EU law, which no longer applies in the UK, the UK\nhas devised a new route to market culminating in a UK Conformity Assessed (“UKCA”) mark to replace the CE mark. Northern\nIreland will, however, continue to be covered by the regulations governing CE marks. As part of the Trade Agreement, the EU and the UK\nhave agreed to continue to recognize declarations of conformity based on a self-assessment in the other territory. On July 1, 2023, The\nUK Medical Device Regulations 2002 (SI 2002 No 618, as amended) (“UK MDR”) was amended to extend the acceptance of CE marked\nmedical devices on the Great Britain market up to June 30, 2030.\n\n \n\n46\n\n \n\n \n\n**We\nare working on NTM lung infection which is very rare.**\n\n \n\nNTM\nlung infection is a very rare disease and only a small number of people suffer from this condition. As a result of these small numbers,\nwe may not be able to complete the study related to NTM or, even if approved, the device for that indication may never be profitable.\n\n \n\n**We\nare working on bronchiolitis that usually is caused by the RSV virus and any related trials we conduct are dependent on a number of factors\noutside of our control, which may lead to varied trial results and possibly delays in our plans.**\n\n \n\nRSV\nis a seasonal virus (only in the winter). For any RSV related clinical trial that we pursue, we are heavily dependent on the occurrence\nand the severity of this virus. Treating for RSV is highly reliant on the weather conditions in winter. The weather in the winter is\nnot predictable. For example, if the winter is warm or short, or the RSV infection was not severe enough when we conducted our trial,\nor the length of stay in the hospital at the year that trial was conducted was different from previous seasons, then we might miss the\noptimal trial season or the results can be significantly different between two seasons or between different countries or even between\ndifferent sites. Due to these factors, it may take us longer than anticipated to obtain data from RSV related trials.\n\n \n\n**Our\nsubsidiaries are exploring novel therapeutic processes with NO and once they put forth product candidates, those product candidates are\nlikely to be classified as pharmaceutical drugs by the FDA; pharmaceutical regulation is more stringent than the standards to which our\ncurrent approved product is subject, and as such, as our subsidiaries’ research and results expand, the Company’s regulatory\nand related costs will increase, which may affect our financial results, in particular, to the extent that these therapies remain investigative\nand do not lead to the outcomes anticipated.**\n\n \n\nWe\nexpect the novel nature of our subsidiaries’ product candidates to create challenges in obtaining regulatory approval, and we anticipate\nthat they may likely be classified as drug product candidates based on the therapeutic processes being created. The FDA has limited experience\nwith the commercial development of NO-related drug therapies for cancer and autism, respectively. Accordingly, the regulatory approval\npathway for such future product candidates may be uncertain, and complex, in addition to being expensive and lengthy, and approval may\nnot be obtained. Beyond Cancer’s research data has shown that UNO has anticancer properties and elicits an immune response from\nthe host. Beyond Cancer utilizes an intratumoral UNO technology as a gas delivery of NO at high concentrations to tumors to induce an\nimmune response. Gas based intratumoral therapies for the treatment of cancer are considered novel and new medical science. Beyond Cancer’s\nefforts are currently also focused on utilizing UNO in combination with Keytruda, a PD-1 inhibitor or other PD-1 or PDL-1 inhibitors\nas a treatment for cancers. To date, no such gas-based therapy has been approved for commercialization by the FDA or other regulatory\nagencies. As a result, the processes and requirements imposed by relevant regulatory authorities in multiple jurisdictions for these\nfuture pharmaceutical product candidates may cause delays and additional costs in obtaining approvals for marketing authorization. Likewise,\npharmaceutical regulation as opposed to medical device regulation, requires different clearance standards than those the Company is currently\nsubject to, in order to conduct business. As a result, once our subsidiaries go through initial preclinical research and expand into\nclinical trials, they are likely to face additional cost burdens in order to get a product candidate to market.\n\n \n\n**Clinical\ntrials are necessary to support our future product submissions to the FDA and such trials involve regulatory complexity, are lengthy,\niterative and involve working with third parties, including CROs and patients for enrollment. These and other factors may affect our\nability to complete clinical trials and may lead to delays or failures that would affect our business and financial prospects.**\n\n \n\nInitiating\nand completing clinical trials necessary to support any future PMAs, and additional safety and efficacy data beyond that typically required\nfor a 510(k) clearance, for our possible future product candidates, will be time-consuming and expensive and the outcome uncertain. Moreover,\nthe results of early clinical trials are not necessarily predictive of future results, and any product we advance into clinical trials\nmay not have favorable results in later clinical trials. The results of preclinical studies and clinical trials of our products and product\ncandidates conducted to date and ongoing or future studies and trials of our current, planned or future products may not be predictive\nof the results of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. Our interpretation\nof data and results from our clinical trials do not ensure that we will achieve similar results in future clinical trials. In addition,\npreclinical and clinical data are often susceptible to various interpretations and analyses, and many companies that have believed their\nproducts performed satisfactorily in preclinical studies and earlier clinical trials have nonetheless failed to replicate results in\nlater clinical trials. Products in later stages of clinical trials may fail to show the desired safety and efficacy despite having progressed\nthrough nonclinical studies and earlier clinical trials. Failure can occur at any stage of clinical testing. Our clinical trials may\nproduce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical and non-clinical\ntesting in addition to those we have planned.\n\n \n\n47\n\n \n\n \n\nThe\ninitiation and completion of our clinical trials may be prevented, delayed, or halted for numerous reasons. We may experience delays\nin our ongoing clinical trials for a number of reasons, which could adversely affect the costs, timing or successful completion of our\nclinical trials, including related to the following:\n\n \n\n \n●\nwe\nmay be required to submit an IDE application to the FDA, which must become effective prior to commencing certain human clinical trials\nof medical devices, and the FDA may reject our IDE application and notify us that we may not begin clinical trials;\n\n \n \n \n\n \n●\nregulators\nand other comparable foreign regulatory authorities may disagree as to the design or implementation of our clinical trials;\n\n \n \n \n\n \n●\nregulators\nand/or an IRB, or other reviewing bodies may not authorize us or our investigators to commence a clinical trial, or to conduct or\ncontinue a clinical trial at a prospective or specific trial site;\n\n \n \n \n\n \n●\nwe\nmay not reach agreement on acceptable terms with prospective contract research organizations (“CROs”) and clinical trial\nsites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;\n\n \n \n \n\n \n●\nclinical\ntrials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical\ntrials or abandon product development programs;\n\n \n \n \n\n \n●\nthe\nnumber of subjects or patients required for clinical trials may be larger than we anticipate, enrollment in these clinical trials\nmay be insufficient or slower than we anticipate, and the number of clinical trials being conducted at any given time may be high\nand result in fewer available patients for any given clinical trial, or patients may drop out of these clinical trials at a higher\nrate than we anticipate;\n\n \n \n \n\n \n●\nour\nthird-party contractors, including those manufacturing products or conducting clinical trials on our behalf, may fail to comply with\nregulatory requirements or meet their contractual obligations to us in a timely manner, or at all;\n\n \n \n \n\n \n●\nwe\nmight have to suspend or terminate clinical trials for various reasons, including a finding that the subjects are being exposed to\nunacceptable health risks;\n\n \n \n \n\n \n●\nwe\nmay have to amend clinical trial protocols or conduct additional studies to reflect changes in regulatory requirements or guidance,\nwhich we may be required to submit to an IRB and/or regulatory authorities for re-examination;\n\n \n \n \n\n \n●\nregulators,\nIRBs, or other parties may require or recommend that we or our investigators suspend or terminate clinical research for various reasons,\nincluding safety signals or noncompliance with regulatory requirements;\n\n \n \n \n\n \n●\nthe\ncost of clinical trials may be greater than we anticipate;\n\n \n \n \n\n \n●\nclinical\nsites may not adhere to the clinical protocol or may drop out of a clinical trial;\n\n \n \n \n\n \n●\nwe\nmay be unable to recruit a sufficient number of clinical trial sites;\n\n \n \n \n\n \n●\nregulators,\nIRBs, or other reviewing bodies may fail to approve or subsequently find fault with our manufacturing processes or facilities of\nthird-party manufacturers with which we enter into agreement for clinical and commercial supplies, the supply of devices or other\nmaterials necessary to conduct clinical trials may be insufficient, inadequate or not available at an acceptable cost, or we may\nexperience interruptions in supply;\n\n \n \n \n\n \n●\napproval\npolicies or regulations of the FDA or comparable foreign regulatory authorities may change in a manner rendering our clinical data\ninsufficient for certification or approval;\n\n \n \n \n\n \n●\nour\ncurrent or future products may have undesirable side effects or other unexpected characteristics; and\n\n \n \n \n\n \n●\nimpacts\nof regional or global public health crises, such as the COVID-19 pandemic, could adversely affect any clinical trials we are conducting\nor plan to conduct, including delays or difficulties in enrolling or onboarding patients, initiating clinical sites, or obtaining\nthe requisite certification or regulatory approvals, interruption of key clinical trial activities, or supply chain disruptions that\ndelay or make it more difficult or costly to obtain the supplies and materials we need for clinical trials.\n\n \n\n48\n\n \n\n \n\nAny\nof these occurrences may significantly harm our business, financial condition and prospects. In addition, many of the factors that cause,\nor lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of certification or regulatory\napproval of our product candidates.\n\n \n\nClinical\ntrials must be conducted in accordance with the laws and regulations of the FDA and other comparable foreign regulatory authorities’\nlegal requirements, regulations or guidelines, and are subject to oversight by these governmental authorities and IRBs at the medical\ninstitutions where the clinical trials are conducted. Conducting successful clinical trials will require the enrollment of large numbers\nof patients, and suitable patients may be difficult to identify and recruit. Patient enrollment in clinical trials and completion of\npatient participation and follow-up depends on many factors, including the size of the patient population, the nature of the trial protocol,\nthe attractiveness of, or the discomforts and risks associated with, the treatments received by enrolled subjects, the availability of\nappropriate clinical trial investigators, support staff, and proximity of patients to clinical sites and able to comply with the eligibility\nand exclusion criteria for participation in the clinical trial and patient compliance. For example, patients may be discouraged from\nenrolling in our clinical trials if the trial protocol requires them to undergo extensive post-treatment procedures or follow-up to assess\nthe safety and effectiveness of our products or if they determine that the treatments received under the trial protocols are not attractive\nor involve unacceptable risks or discomforts.\n\n \n\nWe\ndepend on our collaborators and on medical institutions and CROs to conduct our clinical trials in compliance with Good Clinical Practice\n(“GCP”) requirements. To the extent our collaborators or the CROs fail to enroll participants for our clinical trials, fail\nto conduct the study to GCP standards or are delayed for a significant time in the execution of trials, including achieving full enrollment,\nwe may be affected by increased costs, program delays or both. In addition, clinical trials that are conducted in countries outside the\nUnited States may subject us to further delays and expenses as a result of increased shipment costs, additional regulatory requirements\nand the engagement of non-U.S. CROs, as well as expose us to risks associated with clinical investigators who are unknown to the FDA,\nand different standards of diagnosis, screening and medical care.\n\n \n\nDevelopment\nof sufficient and appropriate clinical protocols to demonstrate safety and efficacy are required and we may not adequately develop such\nprotocols to support clearance and approval. Further, the FDA may require us to submit data on a greater number of patients than we originally\nanticipated and/or for a longer follow-up period or change the data collection requirements or data analysis applicable to our clinical\ntrials. Delays in patient enrollment or failure of patients to continue to participate in a clinical trial may cause an increase in costs\nand delays in the approval and attempted commercialization of our products or result in the failure of the clinical trial. In addition,\ndespite considerable time and expense invested in our clinical trials, the FDA may not consider our data adequate to demonstrate safety\nand efficacy. Such increased costs and delays or failures could adversely affect our business, operating results and prospects.\n\n \n\nEven\nif our products are approved or cleared in the United States and CE marked in the EEA in the future, comparable regulatory authorities\nof additional foreign countries must also approve the manufacturing and marketing of our products in those countries, should we desire\nto access those markets. Certification, approval and clearance procedures vary among jurisdictions and can involve requirements and administrative\nreview periods different from, and greater than, those in the United States or the EEA, including additional preclinical studies or clinical\ntrials. Any of these occurrences may harm our business, financial condition and prospects significantly.\n\n \n\n**We\nmay experience delays in obtaining a CE mark in the EEA for our approved product due to possible EU MDR regulatory classification that\ndiffers from the FDA’s regulatory paradigm.**\n\n \n\nIn\nthe EEA, we expect that, if approved, our products would be classified as a medical device. However, competent regulatory authorities\nin EEA countries or notified bodies could disagree and consider our products to be a drug-delivery combination product composed of a\nmedical device and a medicinal product. In the EEA, drug-delivery systems can fall within the scope of the medical device legislation\nor the pharmaceutical legislation depending on their combination with the relevant medicinal substance.\n\n \n\nIf\nour device is considered as being intended to administer a medicinal product and our device and the medicinal product are placed on the\nmarket in such a way that they form a single integral product which is intended exclusively for use in the given combination and which\nis not reusable, that single integral product shall be governed by Directive 2001/83/EC and be subject to a marketing authorization.\nThe medical device part of the drug-delivery combination product would not need to be CE marked. However, the relevant general safety\nand performance requirements set out in Annex I to the EU MDR would apply as far as the safety and performance of the device part of\nthe single integral product are concerned. As a result, we would need to pursue different regulatory pathways for placing our product\non the EEA market which may lead to additional costs and time.\n\n \n\n49\n\n \n\n \n\n**We\nmay find it difficult to enroll patients in our clinical trials. Difficulty in enrolling patients could delay or prevent clinical trials\nof our product candidates.**\n\n \n\nIdentifying\nand qualifying patients to participate in clinical trials of our product candidates is critical to our success. The timing of our clinical\ntrials depends in part on the speed at which we can recruit patients to participate in testing our product candidates, and we may experience\ndelays in our clinical trials if we encounter difficulties in enrollment.\n\n \n\nSome\nof the conditions for which we plan to evaluate our current product candidates are for rare diseases. For example, we estimate that 15,000\npatients suffer from refractory NTM lung infection in the U.S. Accordingly, there is a limited patient pool from which to draw for clinical\ntrials. Further, the eligibility criteria of our clinical trials will further limit the pool of available study participants as we will\nrequire that patients have specific characteristics that we can measure or to assure their disease is either severe enough or not too\nadvanced to include them in a study.\n\n \n\nAdditionally,\nthe process of finding patients may prove costly. We also may not be able to identify, recruit and enroll a sufficient number of patients\nto complete our clinical trials because of the perceived risks and benefits of the product candidate under study, particularly the toxicity\nof NO in certain doses, the availability and efficacy of competing therapies and clinical trials, the proximity and availability of clinical\ntrial sites for prospective patients and the patient referral practices of physicians. If patients are unwilling to participate in our\nstudies for any reason, the timeline for recruiting patients, conducting studies and obtaining certification or regulatory approval of\npotential products will be delayed.\n\n \n\nIf\nwe experience delays in the completion or termination of any clinical trial of our product candidates, the commercial prospects of our\nproduct candidates will be harmed, and our ability to generate product revenue from any of these product candidates could be delayed\nor prevented. In addition, any delays in completing our clinical trials will increase our costs, slow down our product candidate development\nand certification or approval process and jeopardize our ability to commence product sales and generate revenue. Any of these occurrences\nmay harm our business, financial condition and prospects significantly. In addition, many of the factors that cause, or lead to, a delay\nin the commencement or completion of clinical trials may also ultimately lead to the denial of certification or regulatory approval of\nour product candidates.\n\n \n\n**We\nmay encounter substantial delays in our clinical trials, or we may fail to demonstrate safety and efficacy to the satisfaction of applicable\nregulatory authorities.**\n\n \n\nBefore\nobtaining certification or marketing approval from regulatory authorities and notified bodies for the sale of our product candidates,\nwe must conduct extensive clinical trials to demonstrate the safety and efficacy of the product candidates in humans. Clinical testing\nis expensive, time-consuming and uncertain as to outcome. We cannot guarantee that any clinical trials will be conducted as planned or\ncompleted on schedule, if at all. Our clinical trials involve infants, children, and adults and, before we are permitted to enroll them\nin clinical trials, we must demonstrate that although the research may pose a risk to the subjects, there is a prospect of direct benefit\nto each patient. We must do so to the satisfaction of each research site’s IRB. If we fail to adequately demonstrate this to the\nsatisfaction of the relevant IRB, it will decline to approve the research, which could have significant adverse consequences for us.\n\n \n\n50\n\n \n\n \n\nA\nfailure of one or more clinical trials can occur at any stage of testing, and our future clinical trials may not be successful. Events\nthat may prevent successful or timely completion of clinical development include but are not limited to:\n\n \n\n \n●\ninability\nto generate sufficient preclinical, toxicology or other in vivo or in vitro data to support the initiation of human clinical trials;\n\n \n \n \n\n \n●\ndelays\nin reaching a consensus with regulatory authorities on study design;\n\n \n \n \n\n \n●\ndelays\nin reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive\nnegotiation and may vary significantly among different CROs and clinical trial sites;\n\n \n \n \n\n \n●\ndelays\nin obtaining required IRB approval at each clinical trial site;\n\n \n \n \n\n \n●\nimposition\nof a clinical hold by regulatory authorities, after review of an IDE application or equivalent application, or an inspection of our\nclinical trial operations or study sites;\n\n \n \n \n\n \n●\ndelays\nin recruiting suitable patients to participate in our clinical trials;\n\n \n \n \n\n \n●\ndifficulty\ncollaborating with patient groups and investigators;\n\n \n \n \n\n \n●\nfailure\nby our CROs, other third parties or us to adhere to clinical trial requirements;\n\n \n \n \n\n \n●\nfailure\nto perform in accordance with the FDA’s GCP requirements, or applicable regulatory guidelines in other foreign countries;\n\n \n \n \n\n \n●\ndelays\nin having patients complete participation in a study or return for post-treatment follow-up;\n\n \n \n \n\n \n●\noccurrence\nof serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits;\n\n \n \n \n\n \n●\nchanges\nin regulatory requirements and guidance that require amending or submitting new clinical protocols;\n\n \n \n \n\n \n●\nthe\ncost of clinical trials of our product candidates being greater than we anticipate;\n\n \n \n \n\n \n●\nclinical\ntrials of our product candidates producing negative or inconclusive results, which may result in us deciding, or regulators requiring\nus, to conduct additional clinical trials or abandon product development programs; and\n\n \n \n \n\n \n●\ndelays\nin manufacturing, testing, releasing, validating or importing/exporting sufficient stable quantities of our product candidates for\nuse in clinical trials or the inability to do any of the foregoing.\n\n \n\nAny\ninability to successfully complete preclinical and clinical development could result in additional costs to us or impair our ability\nto generate revenue. We may also be required to conduct additional safety, efficacy and comparability studies before we will be allowed\nto start clinical trials. Clinical trial delays could also shorten any periods during which our products have patent protection and may\nallow our competitors to bring products to market before we do, which could impair our ability to successfully commercialize our product\ncandidates and may harm our business and results of operations.\n\n \n\n**Our\nproduct candidates may cause undesirable side effects or have other properties that could delay or prevent their certification or regulatory\napproval, limit the commercial profile of an approved label or result in significant negative consequences following marketing approval,\nif any.**\n\n \n\nUndesirable\nside effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and\ncould result in a more restrictive marketing label or the delay or denial of certification or regulatory approval by the FDA or other\ncomparable foreign regulatory authorities. There is currently limited data regarding possible side effects for an antimicrobial dosage\nof NO treatments, such as our product candidates. Potential side effects of NO treatments may include high MetHb, NO2 toxicity,\nnose bleeding and low blood pressure. Results of our studies may identify unacceptable severity and prevalence of these or other side\neffects. In such an event, our studies could be suspended or terminated, and the FDA or comparable foreign regulatory authorities or\nnotified bodies could order us to cease further development of or deny certification or approval of our product candidates for any or\nall targeted indications.\n\n \n\n51\n\n \n\n \n\nNO-related\nside effects could affect patient recruitment, the ability of enrolled patients to complete the study or result in potential product\nliability claims.\n\n \n\nAdditionally,\nif our product candidates receive certification or marketing approval, and we or others later identify undesirable side effects caused\nby such products, a number of potentially significant negative consequences could result, including but not limited to:\n\n \n\n \n●\nregulatory\nauthorities and notified bodies may withdraw certification or approvals of such product;\n\n \n \n \n\n \n●\nregulatory\nauthorities may require additional warnings on the label;\n\n \n \n \n\n \n●\nwe\ncould be sued and held liable for harm caused to patients; and\n\n \n \n \n\n \n●\nour\nreputation may suffer.\n\n \n\nAny\nof these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and\ncould significantly harm our business, results of operations and prospects.\n\n \n\n**Risks\nRelated to our Reliance on Third Parties**\n\n \n\n**We\nrely on third parties to conduct our preclinical studies and clinical trials and perform other tasks for us. If these third parties do\nnot successfully carry out their contractual duties, meet expected deadlines or comply with regulatory requirements, we may not be able\nto obtain certification or regulatory approval for or commercialize our approved product or product candidates and our business could\nbe substantially harmed.**\n\n \n\nWe\nhave relied on and plan to continue to rely on third-party CROs to monitor and manage data for our ongoing preclinical and clinical programs.\nWe rely on these parties for execution of our preclinical studies and clinical trials, and we directly control only certain aspects of\ntheir activities, although from a regulatory perspective we are responsible for their actions. We are responsible for ensuring that each\nof our studies is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards and our reliance on\nthe CROs does not relieve us of our regulatory responsibilities. We and our CROs and other vendors are required to comply with GCP, QSR\nand GLP, which are regulations and guidelines enforced by the FDA, the competent authorities of the EEA countries, and comparable foreign\nregulatory authorities for all of our product candidates in clinical development. Regulatory authorities enforce these regulations through\nperiodic inspections of study sponsors, principal investigators, study sites and other contractors. If we or any of our CROs or vendors\nfail to comply with applicable regulations, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or\ncomparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications.\nWe cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical\ntrials comply with GCP regulations. In addition, our clinical trials must be conducted with products that are produced under QSR regulations.\nOur failure to comply with these regulations may require us to repeat clinical trials, which would delay the certification or regulatory\napproval process, or have other adverse consequences.\n\n \n\nIf\nany of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or\ndo so on commercially reasonable terms. In addition, our CROs are not our employees, and except for remedies available to us under our\nagreements with such CROs, we cannot control whether they devote sufficient time and resources to our on-going clinical, nonclinical\nand preclinical programs. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if\nthey need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to\nour clinical protocols, regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and\nwe may not be able to obtain certification or regulatory approval for or successfully commercialize our approved product or product candidates.\nCROs may also generate higher costs than anticipated. As a consequence, our results of operations and the commercial prospects for our\napproved product or product candidates would be harmed, our costs could increase and our ability to generate revenue could be delayed.\n\n \n\nSwitching\nor adding additional CROs involves additional cost and requires management time and focus. In addition, there is a natural transition\nperiod when a new CRO commences work. As a result, delays may occur, which could materially impact our ability to meet our desired clinical\ndevelopment timelines. Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter\nsimilar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business,\nfinancial condition and prospects.\n\n \n\n52\n\n \n\n \n\n**We\nrely on third parties to manufacture our NO generator and delivery system. Our business could be harmed if those third parties fail to\nprovide us with sufficient quantities of our needed supplies, or fail to do so at acceptable quality levels or prices.**\n\n \n\nWe\ndo not currently have the infrastructure or capability internally to manufacture the components of our NO generator and delivery system,\nand we lack the resources and the capability to manufacture our approved product or any of our product candidates on a clinical or commercial\nscale. We rely on third parties for such supplies. There are a limited number of manufacturers who have the ability to produce our delivery\nsystem, and there may be a need to identify alternate manufacturers to prevent a possible disruption of our clinical trials. Any significant\ndelay or discontinuity in the supply of these components could considerably delay commercialization of our approved product, completion\nof our clinical trials, product testing and potential certification or regulatory approval of our product candidates, which could harm\nour business and results of operations.\n\n \n\n**We\nand our collaborators and contract manufacturers are subject to significant regulation with respect to manufacturing our approved product\nor product candidates. The manufacturing facilities on which we rely may not continue to meet regulatory requirements and have limited\ncapacity.**\n\n \n\nAll\nentities involved in the preparation of medical devices for clinical trials or commercial sale, including our existing contract manufacturers\nfor our approved product and product candidates, are subject to extensive regulation. Components of a finished medical device product\napproved for commercial sale or used in late-stage clinical trials must be manufactured in accordance with QSR in the U.S., and similar\nrequirements in foreign countries. These regulations govern manufacturing processes and procedures (including record keeping) and the\nimplementation and operation of quality systems to control and assure the quality of investigational products and products approved for\nsale. Poor control of production processes can lead to the introduction of contaminants or to inadvertent changes in the properties or\nstability of our approved product or product candidates that may not be detectable in final product testing. We, our collaborators or\nour contract manufacturers must supply all necessary documentation in support of any marketing application on a timely basis and must\nadhere to GLP and QSR regulations enforced by the FDA and comparable foreign regulatory authorities through their facilities inspection\nprogram. The facilities and quality systems of some or all of our collaborators and third-party contractors must pass a pre-approval\ninspection for compliance with the applicable regulations as a condition of certification or regulatory approval of our product candidates\nor any of our other potential products. In addition, the regulatory authorities may, at any time, audit or inspect a manufacturing facility\ninvolved with the preparation of our approved product, product candidates or our other potential products or the associated quality systems\nfor compliance with the regulations applicable to the activities being conducted. We do not control the manufacturing process of, and\nare completely dependent on, our contract manufacturing partners for compliance with the regulatory requirements. If these facilities\ndo not pass a pre-approval plant inspection, certification or regulatory approval of the products may not be granted or may be substantially\ndelayed until any violations are corrected to the satisfaction of the regulatory authority, if ever.\n\n \n\nThe\nregulatory authorities also may, at any time following certification or approval of a product for sale, audit the manufacturing facilities\nof our collaborators and third-party contractors. If any such inspection or audit identifies a failure to comply with applicable regulations\nor if a violation of our product specifications or applicable regulations occurs independent of such an inspection or audit, we or the\nrelevant regulatory authority may require remedial measures that may be costly and/or time-consuming for us or a third party to implement,\nand that may include the temporary or permanent suspension of a clinical trial or commercial sales, or the temporary or permanent closure\nof a facility. Any such remedial measures imposed upon us or third parties with whom we contract could materially harm our business.\nIf we, our collaborators, or any of our third-party manufacturers fail to maintain regulatory compliance, the FDA or comparable foreign\nregulatory authorities can impose regulatory sanctions including, among other things, refuse to approve a pending application for a new\nproduct, withdrawal of a certification or approval, suspend production, suspend clinical trials, require a recall or suspension of production.\nAs a result, our business, financial condition and results of operations may be materially harmed.\n\n \n\n53\n\n \n\n \n\nAdditionally,\nif supply from one approved manufacturer is interrupted, an alternative manufacturer would need to be qualified through a PMA Supplement\nor Marketing Authorization Application amendment, or equivalent foreign regulatory filing, which could result in further delays. The\nregulatory authorities may also require additional studies if a new manufacturer is relied on for commercial production. Switching manufacturers\nmay involve substantial costs and is likely to result in a delay in our desired clinical and commercial timelines.\n\n \n\nThese\nfactors could cause us to incur higher costs and could cause the delay or termination of clinical trials, regulatory submissions, required\ncertification or approvals or commercialization of our approved product or product candidates. Furthermore, if our suppliers fail to\nmeet contractual requirements and we are unable to secure one or more replacement suppliers capable of production at a substantially\nequivalent cost, our clinical trials may be delayed or we could lose potential revenue.\n\n \n\n**If\nwe encounter issues with our contract manufacturers or suppliers, we may need to qualify alternative manufacturers or suppliers, which\ncould impair our ability to sufficiently and timely manufacture and supply LungFit® PH.**\n\n \n\nWe\ncurrently depend on contract manufacturers and suppliers for LungFit® PH and its components. Although we could obtain\neach of these components from other third-party suppliers, we would need to qualify and obtain FDA approval for another contract manufacturer\nor supplier as an alternative source for each such component, which could be costly and cause significant delays. Each of our current\ncommercial manufacturing and supply agreements include limitations on our ability to utilize alternative manufacturers or suppliers for\nthese components above certain specified thresholds during the terms of the agreements, which impairs our ability to fully implement\nany future manufacturing strategies to prevent supply shortages or quality issues.\n\n \n\nIn\naddition, some of our suppliers and contract manufacturers, including Spartronics and Medisize, conduct their manufacturing operations\nfor us at a single facility. Unless and until we qualify additional facilities, we may face limitations in our ability to respond to\nmanufacturing and supply issues. For example, if regulatory, manufacturing or other problems require one of these manufacturers or suppliers\nto discontinue production at their respective facility, or if the equipment used for the production of LungFit® PH in\nthese facilities is significantly damaged or destroyed by fire, flood, earthquake, power loss or similar events, the ability of such\nmanufacturer or supplier to provide components needed for LungFit® PH, or to manufacture LungFit® PH may\nbe significantly impaired. In the event that these parties suffer a temporary or protracted loss of its facility or equipment, we would\nstill be required to obtain FDA approval to qualify a new manufacturer or supplier, as applicable, as an alternate manufacturer or source\nfor the respective component before any components manufactured by such manufacturer or by such supplier could be sold or used.\n\n \n\nAny\nproduction shortfall that impairs the supply of LungFit® PH or any of these components could have a material adverse effect\non our business, financial condition and results of operations and adversely affect our ability to satisfy demand for LungFit®\nPH, which could adversely affect our product sales and operating results materially.\n\n \n\n**We\ndepend on third-party manufacturers, including sole source suppliers, to manufacture LungFit® PH and our product candidates\nand the materials we require for our clinical trials. We may not be able to maintain these relationships and could experience supply\ndisruptions outside of our control.**\n\n \n\nWe\nrely on a network of third-party manufacturers to manufacture and supply LungFit® PH for commercial sale and post-certification/approval\nclinical trials, and our product candidates for clinical trials and any commercial sales if they are approved. As a result of our reliance\non these third-party manufacturers and suppliers, including sole source suppliers of certain components of LungFit® PH\nand our product candidates, we could be subject to significant supply disruptions, in particular, should any issues occur with our sole\nsource suppliers. Our supply chain for sourcing raw materials and manufacturing our products ready for distribution is a multi-step endeavor.\nIn some cases, third-party contract manufacturers supply us with raw materials, and contract manufacturers in the United States convert\nthese raw materials into substances from which we need to test our product’s final dosage. Establishing and managing this supply\nchain requires a significant financial commitment and the creation and maintenance of numerous third-party contractual relationships.\nAlthough we attempt to effectively manage the business relationships with companies in our supply chain, we do not have control over\ntheir operations.\n\n \n\n54\n\n \n\n \n\nWe\nrequire a supply of LungFit® PH for sale in the United States and international markets. We currently rely, and expect\nto continue to rely, on sole source third party manufacturers to produce starting materials, substance, and final product, and to package\nand label LungFit® PH and our product candidates. While we have identified and expect to qualify and engage back-up third\nparty manufacturers as additional or alternative suppliers for the commercial supply of LungFit® PH, we currently do not\nhave such arrangements in place. Moreover, some of these alternative manufacturers will have to be approved by the FDA before we can\nuse them for manufacturing LungFit® PH. It is also possible that supplies of materials that cannot be second-sourced can\nbe managed with inventory planning. There can be no assurance, however, that failure of any of our original sole source third-party manufacturers\nto meet our commercial demands for LungFit® PH in a timely manner, or our failure to engage qualified additional or back-up\nsuppliers for the commercial supply of LungFit® PH, would not have a material adverse effect on commercialization of LungFit®\nand our business.\n\n \n\nSupply\ndisruptions may result from a number of factors, including shortages in product raw materials, labor or technical difficulties, regulatory\ninspections or restrictions, shipping or customs delays or any other performance failure by any third-party manufacturer on which we\nrely. Any supply disruptions could disrupt sales of LungFit® PH and/or the timing of our clinical trials, which could\nhave a material adverse impact on our business. Furthermore, we may be required to modify our production methods to permit us to economically\nmanufacture our product for sale and our product candidates for clinical trials. These modifications may require us to re-evaluate our\nresources and the resources of our third-party manufacturers, which could result in abrupt changes in our production methods and supplies.\n\n \n\nIn\nthe course of providing its services, a contract manufacturer may develop process technology related to the manufacture of our products\nor product candidates that the manufacturer owns, either independently or jointly with us. This would increase our reliance on that manufacturer\nor require us to obtain a license from that manufacturer in order to have LungFit® PH or our product candidates manufactured\nby other suppliers utilizing the same process.\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 a third-party vendor.\n\n \n\nThe\nfailure of our third-party manufacturers to meet our commercial demands for LungFit® PH in a timely manner, or our failure\nto engage qualified additional or back-up suppliers for the commercial supply of LungFit® PH, would have a material adverse\neffect on our business, results of operations and financial position.\n\n \n\n**Our\nreliance on third parties may require us to share our trade secrets, which increases the possibility that a competitor will discover\nthem or that our trade secrets will be misappropriated or disclosed.**\n\n \n\nBecause\nwe rely on third parties to develop and manufacture LungFit® PH and our product candidates, we must, at times, share trade\nsecrets with them. We seek to protect our proprietary technology in part by entering into confidentiality agreements and, if applicable,\nmaterial transfer agreements, collaborative research agreements, consulting agreements or other similar agreements with our collaborators,\nadvisors, employees and consultants prior to beginning research or disclosing proprietary information. These agreements typically limit\nthe rights of the third parties to use or disclose our confidential information, such as trade secrets. Despite the contractual provisions\nemployed when working with third parties, the need to share trade secrets and other confidential information increases the risk that\nsuch trade secrets become known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or\nused in violation of these agreements. Given that our proprietary position is based, in part, on our know-how and trade secrets, a competitor’s\ndiscovery of our trade secrets or other unauthorized use or disclosure would impair our competitive position and may have a material\nadverse effect on our business.\n\n \n\n55\n\n \n\n \n\n**Risks\nRelated to Our Intellectual Property**\n\n \n\n**If\nwe are unable to obtain and maintain effective patent rights for LungFit® PH, our product candidates or any future product\ncandidates, we may not be able to compete effectively in our markets.**\n\n \n\nWe\nrely on a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related\nto our technologies, approved product and product candidates. Our success depends in large part on our and our licensors’ ability\nto obtain and maintain intellectual property protection in the U.S. and in other countries with respect to our proprietary technology\nand products.\n\n \n\nWe\nhave sought to protect our proprietary position by filing patent applications in the U.S. and abroad related to our novel technologies\nand products that are important to our business. This process is expensive and time-consuming, and we may not be able to file and prosecute\nall necessary or desirable patent applications at a reasonable cost or in a timely manner. We may also fail to identify patentable aspects\nof our research and development output before it is too late to obtain patent protection.\n\n \n\nThe\npatent position of medical device, biotechnology and pharmaceutical companies generally is highly uncertain and involves complex legal\nand factual questions for which legal principles remain unsolved. The patent applications that we own or in-license may fail to result\nin issued patents with claims that cover our approved product or product candidates in the U.S. or in other foreign countries. There\nis no assurance that all potentially relevant prior art relating to our patents and patent applications has been found, which can invalidate\na patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue, and even if such\npatents cover our approved product or product candidates, third parties may challenge their validity, enforceability or scope, which\nmay result in such patents being narrowed, found unenforceable or invalidated. Furthermore, even if they are unchallenged, our patents\nand patent applications may not adequately protect our intellectual property, provide exclusivity for our approved product or product\ncandidates or prevent others from designing around our claims. Any of these outcomes could impair our ability to prevent competition\nfrom third parties, which may have an adverse impact on our business.\n\n \n\nWe\nhave filed several patent applications directed to various aspects of our approved product and product candidates. We cannot offer any\nassurances about which, if any, patents will issue, the breadth of any such patent or whether any issued patents will be found invalid\nand unenforceable or will be threatened by third parties. Any successful opposition to these patents or any other patents owned by or\nlicensed to us after patent issuance could deprive us of rights necessary for the successful commercialization of our approved product\nor any product candidates that we may develop. Further, if we encounter delays in certification or regulatory approvals, the period of\ntime during which we could market a product candidate under patent protection could be reduced. In addition, some or all of our patent\napplications may not result in issued patents.\n\n \n\nIf\nwe cannot obtain and maintain effective patent rights for our approved product or product candidates, we may not be able to compete effectively\nand our business and results of operations would be harmed.\n\n \n\n**Intellectual\nproperty rights of third parties could adversely affect our ability to commercialize our approved product or product candidates, and\nwe might be required to litigate or obtain licenses from third parties in order to develop or market our approved product or product\ncandidates. Such litigation or licenses could be costly or not available on commercially reasonable terms.**\n\n \n\nGiven\nthe number of companies developing various types of NO devices, it is difficult to conclusively assess our freedom to operate without\ninfringing on third-party rights. There are numerous companies that have pending patent applications and issued patents in the field\nof therapeutic NO delivery. Our competitive position may suffer if patents issued to third parties or other third-party intellectual\nproperty rights cover our products or elements thereof, or our manufacture or uses relevant to our development plans. In such cases,\nwe may not be in a position to develop or commercialize our approved product or product candidates unless we successfully pursue litigation\nto nullify or invalidate the third-party intellectual property right concerned, or enter into a license agreement with the intellectual\nproperty right holder, if available on commercially reasonable terms. There may be pending patent applications of which we are not aware,\nthat if they result in issued patents, could be alleged to be infringed by our approved product or product candidates. If such an infringement\nclaim should be brought and be successful, we may be required to pay substantial damages, be forced to abandon our approved product or\nproduct candidates or seek a license from any patent holders. No assurances can be given that a license will be available on commercially\nreasonable terms, if at all.\n\n \n\n56\n\n \n\n \n\nIt\nis also possible that we have failed to identify relevant third-party patents or applications. Patent applications in the U.S. and elsewhere\nare published approximately 18 months after the earliest filing for which priority is claimed, with such earliest filing date being commonly\nreferred to as the priority date. Therefore, patent applications covering our approved product, product candidates or platform technology\ncould have been filed by others without our knowledge. Additionally, pending patent applications which have been published can, subject\nto certain limitations, be later amended in a manner that could cover our platform technologies, our approved product or product candidates\nor the use of our approved product or product candidates. Third-party intellectual property right holders may also actively bring infringement\nclaims against us. We cannot guarantee that we will be able to successfully settle or otherwise resolve such infringement claims. If\nwe are unable to successfully settle future claims on terms acceptable to us, we may be required to engage in or continue costly, unpredictable\nand time-consuming litigation and may be prevented from or experience substantial delays in pursuing the development of and/or marketing\nour approved product or product candidate. If we fail in any such dispute, in addition to being forced to pay damages, we may be temporarily\nor permanently prohibited from commercializing our approved product or product candidate that is held to be infringing. We might, if\npossible, also be forced to redesign our approved product or product candidate so that we no longer infringe the third-party intellectual\nproperty rights. Any of these events, even if we were ultimately to prevail, could require us to divert substantial financial and management\nresources that we would otherwise be able to devote to our business.\n\n \n\n**Patent\nterms are limited and we may not be able to effectively protect our products and business.**\n\n \n\nPatents\nhave a limited lifespan. In the U.S., the natural expiration of a patent is generally 20 years after it is filed. Although various extensions\nmay be available, the life of a patent, and the protection it affords, is limited.\n\n \n\nIn\naddition, upon issuance in the U.S., the patent term may be extended based on certain delays caused by the applicant(s) or the U.S. Patent\nand Trademark Office (“USPTO”). Even if we obtain effective patent rights for our approved product or product candidates,\nwe may not have sufficient patent terms or regulatory exclusivity to protect our products, and our business and results of operations\nwould be adversely affected.\n\n \n\n**Patent\npolicy and rule changes could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement\nor defense of our issued patents.**\n\n \n\nChanges\nin either the patent laws or interpretation of the patent laws in the U.S. and other countries may diminish the value of our patents\nor narrow the scope of our patent protection. The laws of foreign countries may not protect our rights to the same extent as the laws\nof the U.S. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications\nin the U.S. and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. We therefore\ncannot be certain that we or our licensor were the first to make the invention claimed in our owned and licensed patents or pending applications,\nor that we or our licensor were the first to file for patent protection of such inventions. Assuming the other requirements for patentability\nare met, in the U.S. prior to March 15, 2013, the first to invent the claimed invention is entitled to the patent, while outside the\nU.S., the first to file a patent application is entitled to the patent. After March 15, 2013, under the Leahy-Smith America Invents Act\n(“Leahy-Smith Act”), enacted on September 16, 2011, the U.S. moved to a first-to-file system. The Leahy-Smith Act also includes\na number of significant changes that affect the way patent applications will be prosecuted and may also affect patent litigation. The\neffects of these changes are currently unclear as the USPTO must still implement various regulations, the courts have yet to address\nthese provisions and the applicability of the act and new regulations on specific patents discussed herein have not been determined and\nwould need to be reviewed. In general, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding\nthe prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse\neffect on our business and financial condition.\n\n \n\n**If\nwe are unable to maintain effective proprietary rights for our approved product, product candidates or any future product candidates,\nwe may not be able to compete effectively in our markets.**\n\n \n\nIn\naddition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary\nknow-how that is not patentable or that we elect not to patent, processes for which patents are difficult to enforce and any other elements\nof our product candidate discovery and development processes that involve proprietary know-how, information or technology that is not\ncovered by patents. However, trade secrets can be difficult to protect. We seek to protect our proprietary technology and processes,\nin part, by entering into confidentiality agreements with our employees, consultants, scientific advisors, vendors, collaborators and\ncontractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security\nof our premises and physical and electronic security of our information technology systems. While we have confidence in these individuals,\norganizations and systems, agreements or security measures may be breached, and we may not have adequate remedies for any breach. In\naddition, our trade secrets may otherwise become known or be independently discovered by competitors.\n\n \n\n57\n\n \n\n \n\nAll\nof our employees, consultants, advisors and any third parties who have access to our proprietary know-how, information or technology\nenter into confidentiality agreements and we expect they will assign all rights in their inventions to us pursuant to the terms of such\nagreements; however, we cannot provide any assurances that all such agreements have been duly executed or that our trade secrets and\nother confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets\nor independently develop substantially equivalent information and techniques. Misappropriation or unauthorized disclosure of our trade\nsecrets could impair our competitive position and may have a material adverse effect on our business. Additionally, if the steps taken\nto maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties for misappropriating the\ntrade secret.\n\n \n\n**Third-party\nclaims of intellectual property infringement may prevent or delay our development and commercialization efforts.**\n\n \n\nOur\ncommercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties. There have been\nmany lawsuits and other proceedings involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries,\nincluding with respect to NO delivery systems and formulations, including patent infringement lawsuits, interferences, oppositions and\nreexamination proceedings before the USPTO and corresponding foreign patent offices. Numerous U.S. and foreign issued patents and pending\npatent applications, which are owned by third parties, exist in the fields in which we are developing product candidates. As the biotechnology\nand pharmaceutical industries expand and more patents are issued, the risk increases that our approved product or product candidates\nmay be subject to claims of infringement of the patent rights of third parties.\n\n \n\nThird\nparties may assert that we are employing their proprietary technology without authorization. There may be third-party patents or patent\napplications with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture\nof our approved product or product candidates. We do not know whether there are any third-party patents that would impair our ability\nto commercialize our approved product or such product candidates. We also cannot be sure that we have identified each and every patent\nand pending patent application in the U.S. and abroad that is relevant or necessary to the commercialization of our approved product\nand product candidates. Because patent applications can take many years to issue, there may be currently pending patent applications\nthat may later result in issued patents that our approved product or product candidates may infringe. In addition, third parties may\nobtain patents in the future and claim that use of our technologies infringes upon these patents. If any third-party patents were held\nby a court of competent jurisdiction to cover the manufacturing process of our approved product or any of our product candidates, any\nmolecules formed during the manufacturing process or any final product itself, the holders of any such patents may be able to block our\nability to continue commercializing our approved product or such product candidates unless we obtained a license under the applicable\npatents, or until such patents expire or are finally determined to be invalid or unenforceable.\n\n \n\nSimilarly,\nif any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture\nor methods of use, the holders of any such patents may be able to block our ability to develop and commercialize our approved product\nor the applicable product candidate unless we obtained a license or until such patent expires or is finally determined to be invalid\nor unenforceable. In either case, such a license may not be available on commercially reasonable terms or at all.\n\n \n\nParties\nmaking claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop\nand further commercialize our approved product or one or more of our product candidates. Defense of these claims, regardless of their\nmerit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In\nthe event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’\nfees for willful infringement, pay royalties, redesign our “infringing” products or obtain one or more licenses from third\nparties, which may be impossible or require substantial time and monetary expenditure.\n\n \n\n58\n\n \n\n \n\n**We\nmay not be successful in obtaining or maintaining necessary rights to our approved product or product candidates through acquisitions\nand in-licenses.**\n\n \n\nWe\ncurrently own and have in-licensed rights to intellectual property through licenses from third parties and under patents that we own,\nto develop our approved product and product candidates. Because our programs may require the use of proprietary rights held by third\nparties, the growth of our business will likely depend in part on our ability to acquire, in-license or use these proprietary rights.\nIn addition, our approved product or product candidates may require specific formulations to work effectively and efficiently and the\nrights to these formulations may be held by others. We may be unable to acquire or in-license any compositions, methods of use, processes\nor other third-party intellectual property rights from third parties that we identify as necessary for our approved product or product\ncandidates. The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established\ncompanies are also pursuing strategies to license or acquire third-party intellectual property rights that we may consider attractive.\nThese established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development\nand commercialization capabilities.\n\n \n\nFor\nexample, we sometimes collaborate with U.S. and foreign academic institutions to accelerate our preclinical research or development underwritten\nagreements with these institutions. Typically, these institutions provide us with an option to negotiate a license to any of the institution’s\nrights in technology resulting from the collaboration. Regardless of such option, we may be unable to negotiate a license within the\nspecified timeframe or under terms that are acceptable to us. If we are unable to do so, the institution may offer the intellectual property\nrights to other parties, potentially blocking our ability to pursue our program.\n\n \n\nIn\naddition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to\nlicense or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment.\nIf we are unable to successfully obtain rights to required third-party intellectual property rights, we may have to abandon development\nof that program and our business and financial condition could suffer.\n\n \n\n**If\nwe fail to comply with our obligations in the agreements under which we license intellectual property and other rights from third parties\nor otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important\nto our business.**\n\n \n\nWe\nare party to intellectual property license agreements that are important to our business, and we may enter into additional license agreements\nin the future. Our existing license agreements impose, and we expect that future license agreements will impose, various diligence, milestone\npayment, royalty and other obligations on us.\n\n \n\nLicensing\nof intellectual property is of critical importance to our business and involves complex legal, business and scientific issues. Disputes\nmay arise regarding intellectual property subject to a licensing agreement, including but not limited to:\n\n \n\n \n●\nthe\nscope of rights granted under the license agreement and other interpretation-related issues;\n\n \n \n \n\n \n●\nthe\nextent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing\nagreement;\n\n \n \n \n\n \n●\nthe\nsublicensing of patent and other rights;\n\n \n \n \n\n \n●\nour\ndiligence obligations under the license agreement and what activities satisfy those diligence obligations;\n\n \n \n \n\n \n●\nthe\nownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and\nour collaborators; and\n\n \n \n \n\n \n●\nthe\npriority of invention of patented technology.\n\n \n\nIf\ndisputes over intellectual property and other rights that we have licensed prevent or impair our ability to maintain our current licensing\narrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected approved product or product\ncandidates and this may affect our financial performance.\n\n \n\n59\n\n \n\n \n\n**We\nmay be involved in lawsuits or post-grant proceedings to protect or enforce our patents or the patents of our licensor, which could be\nexpensive, time-consuming and unsuccessful.**\n\n \n\nWe\nmay face risk if our competitors infringe the patents of any licensor with whom we may be involved. If any such licensing partner were\nto initiate legal proceedings against a third party to enforce a patent covering one of our product candidates, the defendant could counterclaim\nthat the patent covering our product candidate is invalid and/or unenforceable. In patent litigation in the U.S., defendant counterclaims\nalleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any\nof several statutory requirements, including lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion\ncould be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a\nmisleading statement, during prosecution. The outcome following legal assertions of invalidity and unenforceability is unpredictable.\n\n \n\nPending\npatent applications may be subject to third-party pre-issuance submission of prior art to the USPTO, and any patents issuing thereon\nmay become involved in derivation, reexamination, inter parties review, post grant review, interference proceedings or other patent office\nproceedings in the U.S. challenging our patent rights.\n\n \n\nProceedings\nprovoked by third parties or brought by us or declared by the USPTO may be necessary to determine the priority of inventions with respect\nto our patents or patent applications or those of our licensor. An unfavorable outcome could require us to cease using the related technology\nor to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer\nus a license on commercially reasonable terms. Our defense of litigation or proceedings may fail and, even if successful, may result\nin substantial costs and distract our management and other employees. In addition, the uncertainties associated with litigation could\nhave a material adverse effect on our ability to raise the funds necessary to continue our clinical trials, continue our research programs,\nlicense necessary technology from third parties or enter into development partnerships that would help us bring our approved product\nand product candidates to market.\n\n \n\nFurthermore,\nbecause of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some\nof our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements\nof the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these\nresults to be negative, it could have a material adverse effect on the price of our common stock.\n\n \n\n**We\nmay be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information\nof third parties or that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.**\n\n \n\nWe\nemploy individuals who were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors\nor potential competitors. Although we try to ensure that our employees, consultants and independent contractors do not use the proprietary\ninformation or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants or independent\ncontractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information,\nof any of our employee’s former employer or other third parties. Litigation may be necessary to defend against these claims. If\nwe fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel,\nwhich could adversely impact our business. Even if we are successful in defending against such claims, litigation could result in substantial\ncosts and be a distraction to management and other employees.\n\n \n\n**We\nmay be subject to claims challenging the inventorship of our patents and other intellectual property.**\n\n \n\nWe\nmay be subject to claims that former employees, collaborators or other third parties have an interest in or right to compensation with\nrespect to our patents or other intellectual property as an inventor or co-inventor. For example, we may have inventorship disputes arise\nfrom conflicting obligations of consultants or others who are involved in developing our approved product or product candidates. Litigation\nmay be necessary to defend against these and other claims challenging inventorship or claiming the right to compensation. If we fail\nin defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive\nownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business.\nEven if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management\nand other employees. To the extent that our employees have not effectively waived the right to compensation with respect to inventions\nthat they helped create, they may be able to assert claims for compensation with respect to our future revenue may be successful. As\na result, we may receive less revenue from future products if such claims are successful which in turn could impact our future profitability.\n\n \n\n60\n\n \n\n \n\n**Changes\nin U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.**\n\n \n\nAs\nis the case with other biopharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents.\nObtaining and enforcing patents in the biotechnology industry involves both technological and legal complexity. Therefore, obtaining\nand enforcing biotechnology patents is costly, time-consuming and inherently uncertain. In addition, the U.S. has recently enacted and\nis currently implementing wide-ranging patent reform legislation. Recent U.S. Supreme Court rulings have narrowed the scope of patent\nprotection available in certain circumstances and weakened the rights of patent owners in certain situations. In addition to increasing\nuncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect\nto the value of patents, once obtained. Depending on future actions by the U.S. Congress, the federal courts and the USPTO, the laws\nand regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce\nour existing patents and patents that we might obtain in the future.\n\n \n\n**We\nmay not be able to protect our intellectual property rights throughout the world.**\n\n \n\nFiling,\nprosecuting and defending patents on our approved product or product candidates in all countries throughout the world would be prohibitively\nexpensive, and our intellectual property rights in some countries outside the U.S. can be less extensive than those in the U.S. In addition,\nthe laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the U.S.\n\n \n\nCompetitors\nmay use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and may also export\notherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the U.S. These\nproducts may compete with our products and our patents or other intellectual property rights may not be effective or sufficient to prevent\nthem from competing.\n\n \n\nMany\ncompanies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The\nlegal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets\nand other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for\nus to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings\nto enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts\nand attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our\npatent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits\nthat we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce\nour intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual\nproperty that we develop or license.\n\n \n\n61\n\n \n\n \n\n**Risks\nRelated to Our Business Operations**\n\n \n\n**We\nmanage our business through a small number of employees and key consultants.**\n\n \n\nAs\nof March 31, 2026, we had a total of 54 full-time employees between us and our subsidiaries and a number of dedicated consultants, all\nof whom work for us on a part-time basis. In addition, any of our employees and consultants may leave the Company at any time, subject\nto certain notice periods. The loss of the services of any of our executive officers or any key employees or consultants would adversely\naffect our ability to execute our business plan and harm our operating results.\n\n \n\nWe\ndo not currently carry “key person” insurance on the lives of members of management.\n\n \n\n**We\nmay need to expand our organization and we may experience difficulties in recruiting needed additional employees and consultants, which\ncould disrupt our operations.**\n\n \n\nAs\nour development and commercialization plans and strategies develop, we may need additional managerial, operational, sales, marketing,\nfinancial, legal and other resources. The competition for qualified personnel in the life sciences field is intense. Due to this intense\ncompetition, we may be unable to attract and retain qualified personnel necessary for the development of our business or to recruit suitable\nreplacement personnel. We may experience difficulty retaining and motivating existing employees and attracting qualified personnel to\nfill key positions. In addition, labor shortages and employee mobility may make it more difficult to hire and retain employees.\n\n \n\nOur\nmanagement may need to divert a disproportionate amount of its attention away from our day-to-day activities and devote a substantial\namount of time to managing these growth activities. We may not be able to effectively manage the expansion of our operations, which may\nresult in weaknesses in our infrastructure, operational mistakes, loss of business opportunities, loss of employees and reduced productivity\namong remaining employees. Our expected growth could require significant capital expenditures and may divert financial resources from\nother projects, such as the development of additional product candidates. If our management is unable to effectively manage our growth,\nour expenses may increase more than expected, our ability to generate and/or grow revenue could be reduced and we may not be able to\nimplement our business strategy. Our future financial performance and our ability to commercialize our approved product and compete effectively\nwill depend, in part, on our ability to effectively manage any future growth.\n\n \n\n**Our\ninternational operations and plans to expand such operations present challenges and risks related to doing business internationally.**\n\n \n\nInternational\nexpansion of our business further exposes us to business, regulatory, political, operational, financial and economic risks associated\nwith doing business outside of the U.S., the EEA or Israel.\n\n \n\nOther\nthan our operations that are located in the EEA and Israel (as further described below), we currently have limited international operations,\nbut our business strategy incorporates potentially significant international expansion, particularly in anticipation of certification\nor regulatory approval of our product candidates. We plan to maintain non-commercial infrastructure and conduct physician and patient\nassociation outreach activities, as well as clinical trials, outside of the U.S., the EEA and Israel. Doing business internationally\ninvolves a number of risks, including but not limited to:\n\n \n\n \n●\nmultiple,\nconflicting and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, employment laws,\nregulatory requirements and other governmental certification, approvals, permits and licenses;\n\n \n \n \n\n \n●\nfailure\nby us to obtain certification or regulatory approvals for the use of our products in various countries;\n\n \n \n \n\n \n●\nadditional\npotentially relevant third-party patent rights;\n\n \n \n \n\n \n●\ncomplexities\nand difficulties in obtaining protection and enforcing our intellectual property;\n\n \n \n \n\n \n●\ndifficulties\nin staffing and managing foreign operations;\n\n \n \n \n\n \n●\ncomplexities\nassociated with managing multiple payor reimbursement regimes, government payors or patient self-pay systems;\n\n \n \n \n\n \n●\nlimits\non our ability to penetrate international markets;\n\n \n\n62\n\n \n\n \n\n \n●\nfinancial\nrisks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises\non demand and payment for our products and exposure to foreign currency exchange rate fluctuations;\n\n \n \n \n\n \n●\nnatural\ndisasters, political and economic instability, including wars, terrorism and political unrest, outbreak of disease, boycotts, curtailment\nof trade and other business restrictions;\n\n \n \n \n\n \n●\ncertain\nexpenses including, among others, expenses for travel, translation and insurance; and\n\n \n \n \n\n \n●\nregulatory\nand compliance risks that relate to maintaining accurate information and control over sales and activities that may fall within the\npurview of the FCPA, its books and records provisions or its anti-bribery provisions.\n\n \n\nAny\nof these factors could significantly harm our future international expansion and operations and, consequently, our results of operations.\n\n \n\n**Conditions\nin Israel may materially and adversely affect the Company’s business.**\n\n \n\nWe are currently operating in\na period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due\nto the ongoing conflicts in the Middle East, including conflicts involving Iran and Israel. On February 28, 2026, a significant military\nconflict commenced involving the United States, the State of Israel, and Iran, significantly escalating regional hostilities. This situation\nhas led to the declaration of a nationwide state of emergency in Israel, the closure of regional airspace, and retaliatory missile strikes\nimpacting multiple nations in the Middle East.\n\n \n\nAny armed conflicts, terrorist activities or political instability involving\nIsrael or other countries in the region could adversely affect the Company’s business. Moreover, the Company has a significant\nnumber of employees located in Israel. The Company’s operations could also be disrupted by the absence for significant periods\nof one or more key employees or a significant number of other employees because of military service. While there are business continuity\nplans in place to address the military call-ups, any of these circumstances could have a material adverse effect on the Company’s\nbusiness.\n\n \n\nAlthough the length and impact\nof the ongoing military conflict is highly unpredictable, the impact of these military conflicts could lead to market disruptions, including\nsignificant volatility in prices, credit and capital markets, as well as supply chain interruptions. Disruption of global financial markets\nand a recession or market correction, including the significant tariffs imposed by the United States on imports from other countries and\nother global macroeconomic factors such as inflation and rising interest rates, could reduce our ability to access capital, which could\nin the future negatively affect our liquidity and could materially affect our business. Our business, financial condition and results\nof operations may be materially and adversely affected by any negative impact on the global economy and capital markets resulting from\nsuch conflicts or any other geopolitical tensions. U.S. and global markets have experienced and will likely continue to experience volatility\nand disruption following the escalation of geopolitical tensions and the start of the conflicts in the Middle East.\n\n \n\n**The\nuse of any of our products could result in product liability or similar claims that could be expensive, damage our reputation and harm\nour business.**\n\n \n\nOur\nbusiness exposes us to an inherent risk of potential product liability or similar claims. The medical device industry has historically\nbeen litigious, and we face financial exposure to product liability or similar claims if the use of any of our products were to cause\nor contribute to injury or death. There is also the possibility that defects in the design or manufacture of any of our products might\nnecessitate a product recall. Although we maintain product liability insurance, the coverage limits of these policies may not be adequate\nto cover future claims. In the future, we may be unable to maintain product liability insurance on acceptable terms or at reasonable\ncosts and such insurance may not provide us with adequate coverage against potential liabilities. A product liability claim, regardless\nof merit or ultimate outcome, or any product recall could result in substantial costs to us, damage to our reputation, customer dissatisfaction\nand frustration and a substantial diversion of management attention. A successful claim brought against us in excess of, or outside of,\nour insurance coverage could have a material adverse effect on our business, financial condition and results of operations.\n\n \n\n**Natural\ndisasters, geopolitical unrest, war, terrorism, public health issues or other catastrophic events could disrupt the supply, delivery\nor demand of products, which could negatively affect our operations and performance.**\n\n \n\nWe\nare subject to the risk of disruption by earthquakes, floods and other natural disasters, fire, power shortages, geopolitical unrest,\nwar, terrorist attacks and other hostile acts, public health issues, epidemics or pandemics such as the COVID-19 pandemic, and other\nevents beyond our control and the control of the third parties on which we depend. Any of these catastrophic events, whether in the United\nStates, Europe or abroad, may have a strong negative impact on the global economy, our employees, facilities, partners, suppliers, distributors\nor customers, and could decrease demand for our products, create delays and inefficiencies in our supply chain and make it difficult\nor impossible for us to deliver products to our customers.\n\n \n\n63\n\n \n\n \n\n**We\nare dependent on information technology and our systems and infrastructure face certain risks, including from cybersecurity breaches\nand data leakage.**\n\n \n\nWe\nrely to a large extent upon sophisticated information technology systems to operate our businesses, some of which are managed, hosted,\nprovided and/or used for third parties or their vendors. We may collect, store and transmit large amounts of confidential information\n(including personal information and pseudonymized information), and we deploy and operate an array of technical and procedural controls\nto maintain the confidentiality and integrity of such confidential information. A significant breakdown, invasion, corruption, destruction,\ninterruption, or unavailability of critical information technology systems or infrastructure, by our workforce, others with authorized\naccess to our systems or unauthorized persons could negatively impact operations. Hardware, software, or applications we develop or obtain\nfrom third parties may contain defects in design or manufacture or other supply chain problems that could unexpectedly compromise our\ninformation and network security.\n\n \n\nThe\never-increasing use and evolution of technology, including cloud-based computing, creates opportunities for the unintentional dissemination\nor intentional destruction of confidential information stored in our or our third-party providers’ systems, portable media or storage\ndevices. We could also experience a business interruption, theft of confidential information or reputational damage from industrial espionage\nattacks, malware or other cyber-attacks (including ransomware), which may compromise our system infrastructure or lead to data leakage,\neither internally or at our third-party providers. While we have invested in the protection of data and information technology, there\ncan be no assurance that our efforts will prevent service interruptions or security breaches. Any such interruption or breach of our\nsystems could adversely affect our business operations and/or result in the loss of critical or sensitive confidential information or\nintellectual property, and could result in financial, legal, business and reputational harm to us. In addition, as the regulatory environment\nrelated to information security, data collection and use, and privacy becomes increasingly rigorous, with new and constantly changing\nrequirements applicable to our business, compliance with those requirements could also result in additional costs.\n\n \n\n**Risks\nRelated to the Ownership of our Common Stock**\n\n \n\n**We\nare currently listed on The Nasdaq Capital Market. Our failure to maintain our compliance with Nasdaq’s continued listing standards\nor other requirements could result in our common stock being delisted from Nasdaq, which could adversely affect our liquidity and the\ntrading volume and market price of our common stock and decrease or eliminate your investment.**\n\n \n\nOur\ncommon stock is currently listed on the Nasdaq Capital Market on Nasdaq under the symbol “XAIR.” Nasdaq requires listed issuers\nto comply with certain standards in order to remain listed on its exchange. If, for any reason, Nasdaq should delist our securities from\ntrading on its exchange and we are unable to obtain listing on another reputable national securities exchange, a reduction in some or\nall of the following may occur, each of which could materially adversely affect our stockholders.\n\n \n\nIf\nwe violate Nasdaq’s listing requirements, or if we fail to meet any of Nasdaq’s listing standards, our common stock may be\ndelisted. A delisting of our common stock from Nasdaq may materially impair our stockholders’ ability to buy and sell our common\nstock and could have an adverse effect on the market price of, and the efficiency of the trading market for, our common stock. The delisting\nof our common stock could significantly impair our ability to raise capital and the value of your shares.\n\n \n\nOn\nApril 7, 2026, we received a letter from Nasdaq notifying us that we were no longer in compliance with the $1.00 minimum bid price\nrequirement for continued listing on Nasdaq under the Bid Price Rule. While companies are typically afforded a 180-calendar day\ncompliance period to comply with the Bid Price Rule, the Notice stated that, pursuant to Nasdaq Listing Rule 5810(c)(3)(A)(iv), we\nwere not eligible for any compliance period specified in Nasdaq Listing Rule 5810(c)(3)(A) due to the fact that we had effected a\nreverse stock split over the prior one-year period. We had effected a 1-for-20 reverse stock split on July 14, 2025. Following a\ndelisting appeal and hearing, Nasdaq hearing Panel granted our request for continued listing on Nasdaq, subject to certain\nconditions. pursuant to Nasdaq Listing Rule 5815(d)(4)(A), we will be subject to a Discretionary Panel Monitor for a period of one\nyear from the date the Company regains compliance with the Bid Price Rule. If we fail to regain compliance with the Bid Price Rule\nby July 31, 2026, or if we fail to continue to meet all applicable continued listing requirements for Nasdaq in the future, Nasdaq\nwould promptly issue a written determination to delist our securities.\n\n \n\nAny\ndelisting determination by Nasdaq could seriously decrease or eliminate the value of an investment in our common stock and other securities\nlinked to our common stock. While a listing on an over-the-counter exchange could maintain some degree of a market in our common stock,\nwe could face substantial material adverse consequences, including, but not limited to, the following: limited availability for market\nquotations for our common stock; reduced liquidity with respect to and decreased trading prices of our common stock; a determination\nthat shares of our common stock are “penny stock” under the SEC rules, subjecting brokers trading our common stock to more\nstringent rules on disclosure and the class of investors to which the broker may sell the common stock; limited news and analyst coverage\nfor our Company, in part due to the “penny stock” rules; decreased ability to issue additional securities or obtain additional\nfinancing in the future; and potential breaches under or terminations of our agreements with current or prospective large stockholders,\nstrategic investors and banks. The perception among investors that we are at heightened risk of delisting could also negatively affect\nthe market price of our securities and trading volume of our common stock.\n\n \n\n**Our\namended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive\nforum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable\njudicial forum for disputes with us or our directors, officers or employees.**\n\n \n\nOur\ncertificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for (A) any derivative\naction or proceeding brought on behalf of us; (B) any action asserting a claim of breach of a fiduciary duty owed by any of our directors,\nofficers or other employees to us or our stockholders; (C) any action asserting a claim against us arising pursuant to any provision\nof the Delaware General Corporation Law, our Amended and Restated Certificate of Incorporation or our Bylaws; or (D) any action asserting\na claim against us governed by the internal affairs doctrine. Section 27 of the Exchange Act creates exclusive federal jurisdiction over\nall suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result,\nthe exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other\nclaim for which the federal courts have exclusive jurisdiction. In addition, Section 22 of the Securities Act creates concurrent jurisdiction\nfor federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations\nthereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the\nSecurities Act or any other claim for which the federal and state courts have concurrent jurisdiction.\n\n \n\nThe\nchoice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes\nwith us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and\nother employees. Alternatively, if a court were to find the choice of forum provision contained in our certificate of incorporation to\nbe inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions,\nwhich could adversely affect our business and financial condition.\n\n \n\n64\n\n \n\n \n\n*T**rading\nin our common stock has been volatile and may continue to be volatile in the future.***\n\n \n\nThe\nstock market in general has experienced extreme price and volume fluctuations. The market prices of the securities of biotechnology and\nspecialty pharmaceutical companies, particularly companies like ours without product revenues and earnings, have been highly volatile\nand may continue to be highly volatile in the future. This volatility has often been unrelated to the operating performance of particular\ncompanies.\n\n \n\nThe\nfollowing factors, in addition to other risk factors described in this section, may have a significant impact on the market price of\nour common stock:\n\n \n\n●\nannouncements of technological innovations or new products by us or our competitors;\n\n \n\n●\nannouncement of FDA/CE approval, disapproval or delay of approval of our product candidates or other product-related actions;\n\n \n\n●\ndevelopments involving our discovery efforts and clinical trials;\n\n \n\n●\ndevelopments or disputes concerning patents or proprietary rights, including announcements of infringement, interference or other litigation\nagainst us or our potential licensees;\n\n \n\n●\ndevelopments involving our efforts to commercialize our products, including developments impacting the timing of commercialization;\n\n \n\n●\nannouncements concerning our competitors, or the biotechnology, pharmaceutical or drug delivery industry in general;\n\n \n\n●\npublic concerns as to the safety or efficacy of our approved product or product candidates or our competitors’ products;\n\n \n\n●\nchanges in government regulation of the pharmaceutical or medical industry;\n\n \n\n●\nchanges in the reimbursement policies of third-party insurance companies or government agencies;\n\n \n\n●\nactual or anticipated fluctuations in our operating results;\n\n \n\n●\nchanges in financial estimates or recommendations by securities analysts;\n\n \n\n●\ndevelopments involving corporate collaborators, if any;\n\n \n\n●\nchanges in accounting principles; and\n\n \n\n●\nthe loss of any of our key scientific or management personnel.\n\n \n\nIn\nthe past, securities class action litigation has often been brought against companies that experience volatility in the market price\nof their securities. Whether or not meritorious, litigation brought against us could result in substantial costs and a diversion of management’s\nattention and resources, which could adversely affect our business, operating results and financial condition.\n\n \n\nWe\ncannot assure you that our common stock price and volume will remain at current levels in which case investors may sustain large losses.\n\n \n\nIn\naddition, the stock market in general, and the stocks of small-cap biotechnology companies in particular, have experienced extreme price\nand volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market\nand industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance. The\nrealization of any of the above risks or any of a broad range of other risks, including those described in these “Risk Factors,”\ncould have a dramatic and material adverse impact on the market price of our common stock.\n\n \n\n65\n\n \n\n \n\n**Anti-takeover\nprovisions in our amended and restated certificate of incorporation and our amended and restated bylaws, as well as provisions of Delaware\nlaw, might discourage, delay or prevent a change in control of the Company or changes in our Board of Directors or management and, therefore,\ndepress the trading price of our common stock.**\n\n \n\nOur\namended and restated certificate of incorporation, amended and restated bylaws and Delaware law contain provisions that may depress the\nmarket price of our common stock by acting to discourage, delay or prevent a merger, acquisition or other change in control that stockholders\nmay consider favorable, including transactions in which you might otherwise receive a premium for your shares of our common stock. These\nprovisions may also prevent or frustrate attempts by our stockholders to replace or remove members of our Board of Directors or our management.\nOur corporate governance documents include provisions:\n\n \n\n \n●\nproviding\nthat directors may be removed by stockholders with or without cause;\n\n \n \n \n\n \n●\nlimiting\nthe ability of our stockholders to call and bring business before special meetings and to take action by written consent in lieu\nof a meeting;\n\n \n \n \n\n \n●\nrequiring\nadvance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates\nfor election to our Board of Directors;\n\n \n \n \n\n \n●\nauthorizing\nblank check preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our common stock;\nand\n\n \n \n \n\n \n●\nlimiting\nthe liability of, and providing indemnification to, our directors and officers.\n\n \n\nAs\na Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation\nLaw, which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock from engaging in certain business\ncombinations with us. Any provision of our amended and restated certificate of incorporation, amended and restated bylaws or Delaware\nlaw that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium\nfor their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.\n\n \n\nThe\nexistence of the foregoing provisions and anti-takeover measures could limit the price that investors might be willing to pay in the\nfuture for shares of our common stock. They could also deter potential acquirers of the Company, thereby reducing the likelihood that\nyou could receive a premium for your common stock in an acquisition.\n\n \n\n66\n\n \n\n \n\n**Risks\nRelated to Employee Matters**\n\n \n\n**Our\nbusiness could suffer if we lose the services of key members of our senior management, key advisors or personnel.**\n\n \n\nWe\nare dependent upon the continued services of key members of our senior management and a limited number of key advisors and personnel.\nThe loss of any one of these individuals could disrupt our operations or our strategic plans. Additionally, our future success will depend\non, among other things, our ability to continue to hire and retain the necessary qualified scientific, technical and managerial personnel,\nfor whom we compete with numerous other companies, academic institutions and organizations. The loss of members of our management team,\nkey advisors or personnel, or our inability to attract or retain other qualified personnel or advisors, could have a material adverse\neffect on our business, results of operations and financial condition. Though members of our sales force generally enter into noncompetition\nagreements that restrict their ability to compete with us, most of the members of our executive management team are not subject to such\nagreements. Accordingly, the adverse effect resulting from the loss of certain executives could be compounded by our inability to prevent\nthem from competing with us.\n\n \n\n**Our\nemployees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and\ninsider trading.**\n\n \n\nWe\nare exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with\nFDA regulations, to provide accurate information to the FDA, to comply with federal and state healthcare fraud and abuse laws and regulations,\nto report financial information or data accurately, to disclose unauthorized activities to us or to comply with our code of business\nconduct and ethics. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws\nand regulations intended to prevent fraud, kickbacks, false claims, inappropriate promotion, self-dealing and other abusive practices.\nThese laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission,\ncustomer incentive programs and other business arrangements. Employee misconduct could also involve the improper use of information obtained\nin the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. The precautions we take\nto detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from\ngovernmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If\nany such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could\nhave a significant impact on our business, including the imposition of significant fines or other sanctions.\n\n \n\n**We\nare subject to applicable fraud and abuse laws, including anti-kickback and false claims, transparency, health information privacy and\nsecurity and other healthcare laws. Failure to comply with such laws may result in substantial penalties.**\n\n \n\nWe\nare subject to broadly applicable healthcare laws and regulations that may constrain the business or financial arrangements and relationships\nthrough which we conduct research, market, sell and distribute any product candidates for which we obtain marketing approval. The healthcare\nlaws that may affect us include: the federal fraud and abuse laws, including the federal anti-kickback, and false claims and civil monetary\npenalties laws; federal data privacy and security laws; and federal transparency laws related to ownership and investment interests and\npayments and/or other transfers of value made to or held by physicians (including doctors, dentists, optometrists, podiatrists and chiropractors)\nand teaching hospitals and, information regarding payments and transfers of value provided to and other healthcare professionals during\nthe previous year. In addition, many states have similar laws and regulations that may differ from each other and federal law in significant\nways, thus complicating compliance efforts. Moreover, several states require biopharmaceutical companies to comply with the biopharmaceutical\nindustry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and may require\nmedical device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare\nproviders or marketing expenditures. Additionally, some state and local laws require the registration of biopharmaceutical sales representatives\nin the jurisdiction.\n\n \n\nEnsuring\nthat our operations and future business arrangements with third parties comply with applicable healthcare laws and regulations will involve\nsubstantial costs. It is possible that governmental authorities will conclude that our business practices, including our relationships\nwith physicians and other healthcare providers, some of whom are compensated in the form of stock options for consulting services provided,\nmay not comply with current or future statutes, regulations, agency guidance or case law involving applicable fraud and abuse or other\nhealthcare laws and regulations. If our operations are found to be in violation of any of the laws described above or any other governmental\nlaws and regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, disgorgement,\nfines, imprisonment, exclusion of products from government funded healthcare programs, such as Medicare and Medicaid, additional reporting\nrequirements and/or oversight if a corporate integrity agreement or similar agreement is executed to resolve allegations of non-compliance\nwith these laws and the curtailment or restructuring of operations. In addition, violations may also result in reputational harm, diminished\nprofits and future earnings.\n\n \n\n67\n\n \n\n \n\n**Employee\nlitigation and unfavorable publicity could negatively affect our future business.**\n\n \n\nOur\nemployees may, from time to time, bring lawsuits against us regarding injury, creating a hostile work place, discrimination, wage and\nhour disputes, sexual harassment, or other employment issues. In recent years, there has been an increase in the number of discrimination\nand harassment claims generally. Coupled with the expansion of social media platforms and similar devices that allow individuals access\nto a broad audience, these claims have had a significant negative impact on some businesses. Certain companies that have faced employment-\nor harassment-related lawsuits have had to terminate management or other key personnel, and have suffered reputational harm that has\nnegatively impacted their business. If we were to face any employment-related claims, our business could be negatively affected.\n\n \n\n**Under\napplicable employment laws, such as in Israel, we may not be able to enforce covenants not to compete and therefore may be unable to\nprevent our competitors from benefiting from the expertise of some of our former employees.**\n\n \n\nWe\ngenerally enter into non-competition agreements with our employees and certain key consultants. These agreements prohibit our employees\nand certain key consultants, if they cease working for us, from competing directly with us or working for our competitors or clients\nfor a limited period of time. We may be unable to enforce these agreements under the laws of the jurisdictions in which our employees\nwork and it may be difficult for us to restrict our competitors from benefitting from the expertise our former employees or consultants\ndeveloped while working for us. For example, Israeli courts have required employers seeking to enforce non-compete undertakings of a\nformer employee to demonstrate that the competitive activities of the former employee will harm one of a limited number of material interests\nof the employer which have been recognized by the courts, such as the secrecy of a company’s confidential commercial information\nor the protection of its intellectual property. If we cannot demonstrate that such interests will be harmed, we may be unable to prevent\nour competitors from benefiting from the expertise of our former employees or consultants and our ability to remain competitive may be\ndiminished.\n\n \n\n**General\nRisk Factors**\n\n \n\n**The\nincreasing use of social media platforms presents new risks and challenges.**\n\n \n\nSocial\nmedia is increasingly being used to communicate about our research, development candidates, investigational medicines, and the diseases\nour development candidates and investigational medicines are being developed to treat. Social media practices in the biopharmaceutical\nindustry continue to evolve and regulations relating to such use are not always clear. This evolution creates uncertainty and risk of\nnoncompliance with regulations applicable to our business, resulting in potential regulatory actions against us. For example, subjects\nmay use social media channels to comment on their experience in an ongoing blinded clinical trial or to report an alleged adverse event.\nWhen such disclosures occur, there is a risk that we fail to monitor and comply with applicable adverse event reporting obligations or\nwe may not be able to defend our business or the public’s legitimate interests in the face of the political and market pressures\ngenerated by social media due to restrictions on what we may say about our development candidates and investigational medicines. There\nis also a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or comments about us on any social\nnetworking website. If any of these events were to occur or we otherwise fail to comply with applicable regulations, we could incur liability,\nface regulatory actions, or incur other harm to our business.\n\n \n\n**Unfavorable\nU.S. or global economic conditions could adversely affect our business, financial condition, or results of operations.**\n\n \n\nOur\nresults of operations could be adversely affected by general conditions in the global economy and financial markets, including global\npandemics, recent geopolitical events, unfavorable changes related to interest rates and rising inflation. The most recent global financial\ncrisis caused extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn, such as\nthe most recent global financial crisis, could result in a variety of risks to our business, including weakened demand for our investigational\nmedicines and our ability to raise additional capital when needed on favorable terms, if at all. A weak or declining economy could strain\nour suppliers, possibly resulting in supply disruption, or cause delays in payments for our services by third-party payors or our collaborators.\nAny of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial\nmarket conditions could adversely impact our business.\n\n \n\n68"}