{"url_path":"/sec/xair/10-k/2026/item-7","section_key":"item-7","section_title":"Item 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**","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":4634,"has_tables":true,"body_markdown":"**ITEM\n7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**\n\n \n\n*The\nfollowing discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated\nfinancial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. This discussion and other parts of this\nAnnual Report contain forward-looking statements that involve risks and uncertainties, such as statements regarding our plans, objectives,\nexpectations, intentions and projections. Our actual results could differ materially from those discussed in these forward-looking statements.\nFactors that could cause or contribute to such differences include, but are not limited to, those discussed in Item 1A “Risk Factors.”*\n\n \n\n**Introduction**\n\n \n\nWe\nare a commercial-stage medical device and biopharmaceutical company developing a platform of nitric oxide (“NO”) generators\nand delivery systems (the “LungFit® platform”) capable of generating NO from ambient air. The Company’s\nfirst device, LungFit® PH received premarket approval (“PMA”) from the FDA in June 2022. The NO generated\nby the LungFit® PH system is indicated to improve oxygenation and reduce the need for extracorporeal membrane oxygenation\nin term and near-term (>34 weeks gestation) neonates with hypoxic respiratory failure associated with clinical or echocardiographic\nevidence of pulmonary hypertension in conjunction with ventilatory support and other appropriate agents. This condition is commonly referred\nto as persistent pulmonary hypertension of the newborn (“PPHN”). The LungFit® platform can generate NO up\nto 400 parts per million (“ppm”) for delivery to a patient’s lungs directly or via a ventilator. LungFit®\ncan deliver NO either continuously or for a fixed amount of time at various flow rates and has the ability to either titrate dose\non demand or maintain a constant dose. In July 2022, we commenced marketing LungFit® PH in the United States for PPHN\nas a medical device.\n\n \n\nIn\nNovember 2024, the Company received European CE mark approval of the LungFit PH® system for the following:\n\n \n\n \n●\nThe\ntreatment of infants >34 weeks gestation with hypoxic respiratory failure associated with clinical or echocardiographic\nevidence of pulmonary hypertension, in order to improve oxygenation and to reduce the need for extracorporeal membrane oxygenation;\nand\n\n \n●\nThe\ntreatment of peri- and post-operative pulmonary hypertension in adults and newborn infants, infants and toddlers, children and adolescents,\nages 0-17 years in conjunction to heart surgery, in order to selectively decrease pulmonary arterial pressure and improve right ventricular\nfunction and oxygenation\n\n \n\nLungFit®\ncan be used to treat patients on ventilators that require NO, as well as patients with chronic or acute severe lung infections\nvia delivery of NO at concentrations > 100 parts per million (ppm) through a breathing mask or similar apparatus. Furthermore, we\nbelieve that there is a high unmet medical need for patients suffering from certain severe lung infections that the LungFit®\nplatform can potentially address. The Company’s other areas of focus with the LungFit® platform beyond PPHN\nare nontuberculous mycobacteria (“NTM”) lung infection and those with various severe lung infections with underlying chronic\nobstructive pulmonary disease (“COPD”). Our current product candidates will be subject to premarket reviews and approvals\nby the FDA, certification through the conduct of a conformity assessment by a notified body in the EU for the product to be CE marked,\nas well as comparable foreign regulatory authorities.\n\n \n\nIn\naddition to the above-mentioned programs, we have two subsidiaries that are currently engaging in novel preclinical stage pharmaceutical\nresearch, Beyond Cancer and NeuroNos.\n\n \n\n**Financial\nOperations Overview**\n\n \n\n**Critical\nAccounting Estimates**\n\n \n\nOur\nmanagement’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial\nstatements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation\nof our consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect\nthe reported amount of assets, liabilities, costs and expenses and related disclosures. Our critical accounting estimates are those estimates\nthat involve a significant level of uncertainty at the time the estimate was made, and changes in them have had or are reasonably likely\nto have a material effect on our financial condition or results of operations. Accordingly, actual results could differ materially from\nour estimates. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances,\nand we evaluate these estimates on an ongoing basis. Our most critical accounting estimates include determining the accruals associated\nwith third party providers supporting research and development efforts.\n\n \n\n**Accrued\nResearch and Development Expenses**\n\n \n\nAs\npart of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development\nexpenses. This process involves reviewing purchase orders, open contracts, reconciling payments and invoices and communicating with our\npersonnel and suppliers to identify services that have been performed on our behalf. It also includes the research and development vendors\nproviding us with milestone and percentage of completion reports on the statuses within each active purchase order and contract along\nwith estimating the level of service performed and the associated cost incurred for the services when we have not yet been invoiced or\notherwise notified of the actual cost. Our vendors invoice us in various ways via advance payments, as contractual milestones are met,\nor monthly in arrears for services performed.\n\n \n\n72\n\n \n\n \n\nWe\nmake estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances\nknown to us at that time. We periodically confirm the accuracy of our estimates with the service providers and adjust if necessary. The\nsignificant estimates in our accrued research and development expenses include the costs incurred for services performed by clinical\nand pre-clinical vendors in connection with research and development activities for which we have not yet been invoiced.\n\n \n\nWe\ncontract with these vendors to conduct clinical and pre-clinical services on our behalf. We base our expenses on our estimates of the\nservices received and efforts expended pursuant to quotes and contracts with the research and development vendors. The financial terms\nof these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances\nin which payments made to our vendors will exceed the level of services provided and result in a prepayment of the research and development\nexpense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended\nin each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual\nor amount of prepaid expense accordingly. Non-refundable advance payments for goods and services that will be used in future research\nand development activities are expensed when the activity has been performed or when the goods have been received rather than when the\npayment is made.\n\n \n\nAlthough\nwe do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing\nof services performed relative to the actual status and timing of services performed may vary and may result in us reporting amounts\nthat are too high or too low in any particular period. To date, there have been no material differences between our estimates of such\nexpenses and the amounts actually incurred.\n\n \n\n**Results\nof Operations and Other Comprehensive Loss**\n\n \n\n(in thousands, except number of shares and loss per share) \n\n**Year Ended**\n\n**March 31,**\n\n**2026**\n  \n\n**Year Ended**\n\n**March 31,**\n\n**2025**\n \n\n  \n   \n  \n\nRevenues \n$7,679  \n$3,705 \n\n  \n    \n   \n\nCost of revenues \n 7,427 \n 5,368\n\n  \n    \n   \n\nGross profit (loss) \n 252  \n (1,663)\n\n  \n    \n   \n\nResearch and development \n 10,241  \n 16,857 \n\nSelling, general and administrative \n 19,055  \n 26,017 \n\nTotal operating expenses \n 29,296  \n 42,874 \n\n  \n    \n   \n\nLoss from operations \n (29,044) \n (44,537)\n\n  \n    \n   \n\nOther income (expense): \n    \n   \n\nDividend/investment income \n 303  \n 705 \n\nInterest and finance expense \n (3,515) \n (3,019)\n\nChange in fair value of warrant liability \n 35  \n 237 \n\nChange in fair value of derivative liability \n (1,395) \n 1,314 \n\nLoss on extinguishment of debt \n (165) \n (2,447)\n\nLoss on disposal/impairment of fixed assets \n (431) \n (738)\n\nForeign exchange gain/(loss) \n (108) \n (3)\n\nOther income/(expense) \n (14) \n 9 \n\nTotal other income/(expense) \n (5,290) \n (3,942)\n\n  \n    \n   \n\nProvision for income taxes \n -  \n - \n\n  \n    \n   \n\nNet loss \n$(34,334) \n$(48,479)\n\n  \n    \n   \n\nLess: net loss attributable to non-controlling interests \n (1,085) \n (1,854)\n\n  \n    \n   \n\nNet loss attributable to Beyond Air, Inc. \n$(33,249) \n$(46,625)\n\n  \n    \n   \n\nForeign currency translation adjustment \n 194  \n (45)\n\nComprehensive loss attributable to Beyond Air, Inc \n$(33,055) \n$(46,670)\n\n  \n    \n   \n\nNet basic and diluted loss per share attributable to Beyond Air, Inc. \n$(4.01) \n$(13.77)\n\n  \n    \n   \n\nWeighted average number of shares of common stock outstanding – basic and diluted \n 8,300,916  \n 3,385,327 \n\n \n\n73\n\n \n\n \n\n**Comparison\nof the year ended March 31, 2026 to the year ended March 31, 2025**\n\n \n\n**Revenue\nand Cost of Revenue**\n\n \n\nRevenue\nwas $7.7 million and $3.7 for the years ended March 31, 2026 and March 31, 2025 respectively. Cost\nof revenue of $7.4 million and gross profit of $0.3 million\nwere recognized for the year ended March 31, 2026 compared to a cost of revenue of $5.4 million and gross losses of $1.7 million for\nthe year ended March 31, 2025.\n\n \n\nRevenues\ncontinue to expand as we continue to sign new hospital contracts and begin selling into international markets. The increase in gross\nprofit is primarily associated with sales growth, partially offset by one-time costs required to upgrade our existing fleet of devices\nand provisions for excess inventory.\n\n \n\n**Research\nand Development Expenses**\n\n \n\nResearch\nand development expenses for the year ended March 31, 2026 were $10.2 million as compared\nto $16.9 million for the year ended March 31, 2025. The decrease of $6.7 million was primarily\nattributed primarily to a decrease in salaries of $2.8 million ($1.5 million in Beyond Air\nand $1.5 million in Beyond Cancer, partially offset by increase of $0.2 million in NeuroNos), pre-clinical expenses of $0.8\nmillion ($0.3 million in Beyond Cancer and $0.5 million in NeuroNos), professional fees of $0.4 million ($0.4 million in Beyond\nAir and $0.3 million in Beyond Cancer, partially offset by increase of $0.3 million in NeuroNos), and a reduction in Gen II device development\ncosts of $2.3 million, partially offset by increased stock-based compensation costs of $0.7 million ($1.4 million in Beyond Cancer, partially\noffset by a decrease of $0.7 million in Beyond Air).\n\n \n\n**Selling,\nGeneral and Administrative Expenses**\n\n \n\nSelling,\ngeneral and administrative expenses for the year ended March 31, 2026 were $19.1 million as compared to $26.0 million for the year ended\nMarch 31, 2025. The decrease of $6.9 million was attributed primarily to a decrease in salaries\nof $1.0 million ($0.6 million in Beyond Air and $0.5 million in Beyond Cancer, partially offset by increase of $0.1 million in NeuroNos),\nstock-based compensation costs of $4.5 million ($3.4 million in Beyond Air and $1.1 million in Beyond Cancer, partially offset by increase\nof $0.1 million in NeuroNos), legal fees of $0.7 million, travel expenses of $0.3 million, and facility expenses of $0.2 million, partially\noffset by an increase of $0.4 million in royalties.\n\n \n\n**Other\nIncome and Expense**\n\n \n\nOther\nexpense for the year ended March 31, 2026 were $5.3 million as compared to other expense of $3.9 million for the year ended March 31,\n2025. The increase in expense of $1.4 million was attributed primarily to the change in fair value of the prior year derivative liability of $1.3 million\ngain compared to the loss of $1.4 million associated with the remeasurement of the Note derivative liability that occurred during the\ncurrent period. This was partially offset by the prior period loss associated with extinguishment of debt\nof $2.5 million as compared to current period loss associated with extinguishment of debt of $0.2 million.\n\n \n\n**Net\nLoss Attributable to Non-controlling Interest**\n\n \n\nNet\nloss attributed to non-controlling interests for the year ended March 31, 2026 was $1.1 million, compared to $1.9 million for the year\nended March 31, 2025. Non-controlling interests represent 20% of the net loss of our Beyond Cancer subsidiary and the applicable ownership\nstructure during each reporting period of the net loss of our NeuroNos subsidiary.\n\n \n\n**Net\nLoss Attributed to Common Stockholders**\n\n \n\nNet\nloss attributed to common stockholders of Beyond Air, Inc. for the year ended March 31, 2026 was $33.2 million or a loss of $4.01 per\nshare, basic and diluted. Our net loss attributed to common stockholders of Beyond Air, Inc. for the year ended March 31, 2025 was $46.6\nmillion or a loss of $13.77 per share, basic and diluted.\n\n \n\n74\n\n \n\n \n\n**Liquidity\nand Capital Resources**\n\n \n\nWe\nhave generated revenue of $12.5 million from the sale of products to date. We had an operating cash flow decrease of $18.1 million for\nthe year ended March 31, 2026 and we have experienced an accumulated loss of $319.6 million since inception through March 31, 2026. As\nof March 31, 2026, we had cash, cash equivalents and marketable securities of $11.6 million and $5.6 million in restricted cash.\n\n \n\nWe\nexpect to incur net losses and have net cash outflows for at least the next twelve months. Management believes these factors raise substantial\ndoubt about the Company’s ability to meet its obligations with cash on hand and concluded that the Company will require additional\nfunding within one year from the date these financial statements are issued.\n\n \n\nManagement\nis confident that the efforts to arrange financing as described below, while not assured, will enable them to meet the Company’s\nobligations.\n\n \n\nThe\nCompany’s future capital needs and the adequacy of its available funds will depend on many factors, including, but not necessarily\nlimited to, the success and costs of commercialization of the Company’s approved product and the actual cost and time necessary\nfor current and anticipated preclinical studies, clinical trials and other actions needed to obtain certification or regulatory approval\nof the Company’s product candidates.\n\n \n\nOn\nNovember 1, 2024, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) and subsequently on\nNovember 3, 2025 the Company amended and restated the Loan Agreement (as amended, the “Amended Loan Agreement”) for a\nsecured loan with certain lenders, including its former chief executive officer, Steven Lisi, and director Robert Carey, for an\naggregate principal amount of $13.5 million. The Loan Agreement was approved by each of the Company’s independent and\ndisinterested directors, following the receipt of a recommendation from an independent investment bank. The Amended Loan Agreement\nprovides for the following terms: (i) principal amount of $13,500,000; (ii) ten-year term; (iii) interest of 15% per annum, of which\n3% shall be payable in cash and 12% payable in kind through June 30, 2026 and thereafter all in cash; (iv) a royalty interest of 8%\nof the Company’s net sales on a quarterly basis from July 2026 until the facility is repaid in full; (v) the Company’s\nobligations will be secured by substantially all of the Company’s assets and (vi) the Company issued the lenders warrants to\npurchase shares of the Company’s common stock. Concurrent with entering into the Amended Loan Agreement, the parties entered into a waiver agreement pursuant to\nwhich the Lender consented to the Company’s issuance of the Note in exchange for reducing the exercise price of the warrants from $7.586 per share to $1.95 per share.\n\n \n\nOn\nFebruary 10, 2025, we entered into the At-The Market Offering Sales Agreement with BTIG, Inc. (the “2025 ATM”). Under\nthe 2025 ATM, we may sell shares of our common stock having aggregate sales proceeds of up to $35.0 million, from time to time and\nat various prices. Pursuant to the “baby shelf rules” promulgated by the SEC, if our public float is less than $75.0\nmillion as of specified measurement periods, the number of shares of common stock that may be offered and sold by us under a Form\nS-3 registration statement, including pursuant to the 2025 ATM, in any twelve-month period is limited to an aggregate amount that\ndoes not exceed one-third of our public float. As of March 31, 2026, due to the SEC’s “baby shelf rules,” we are\npermitted to sell up to $0 million of shares of common stock pursuant to the 2025 ATM. We will remain subject to the “baby\nshelf rules” under the Form S-3 registration statement until such time as our public float exceeds $75.0 million. If shares of\nour common stock are sold, there is a 2.5% fee paid to the sales agent.\n\n \n\nOn\nSeptember 8, 2025, we entered into an inducement offer letter agreement (“Inducement Letter”) with certain holders of our\nexisting common stock purchase warrants (“Existing Warrants”). Pursuant to the Inducement Letter, such holders immediately\nexercised some or all of their respective outstanding Existing Warrants to purchase up to an aggregate of 1,439,128 shares of common\nstock at a reduced exercise price of $2.21. The proceeds to the Company from the exercise of the Existing Warrants were approximately\n$2.9 million, net of placement agent fees and other offering expenses of $0.2 million and $0.1 million, respectively. In consideration\nof the inducement offer, the Company issued new common stock warrants to purchase up to 719,562 shares of common stock for a purchase\nprice of $0.125 per share of common stock underlying the new warrant. The new warrants have an exercise price of $2.21 per share and\nare immediately exercisable, with a term of five years from the issuance date.\n\n \n\nOn\nNovember 4, 2025, the Company entered into and closed on a note purchase agreement (the “Note Purchase Agreement”) with Streeterville\nCapital LLC (“Streeterville” or “Investor”), which provided for the issuance of a secured promissory note in\nthe principal amount of $12.0 million (the “Note”). The principal amount of the Note is due 24 months following the date\nof issuance. Interest will accrue at the rate of 15% per annum, with no interest accruing for the first 12 months following issuance;\nprovided however, that Streeterville is guaranteed 12 months of interest, of $1.8 million even if the Note is redeemed or prepaid prior\nto the maturity date. Of the total $12.0 million Note, $6.0 million will be placed in a restricted account and will be accessible by\nthe Company as the first $6.0 million is repaid.\n\n \n\n75\n\n \n\n \n\nAlso\non November 4, 2025, the Company entered into an equity purchase agreement (the “Purchase Agreement”) with Streeterville\nfor the purchase of up to $20.0 million of the Company’s shares of common stock. In connection with the Purchase Agreement, the\nCompany and Streeterville entered into a registration rights agreement (the “Registration Rights Agreement”), pursuant to\nwhich the Company agreed to file with the Securities and Exchange Commission a registration statement (the “Registration Statement”)\ncovering the resale of the shares by November 24, 2025. Pursuant to the Purchase Agreement, upon effectiveness of the Registration Statement\nand so long as there is no balance outstanding on the Note, the Company shall have the right, but not the obligation, to direct Streeterville,\nby its delivery to Streeterville of a put notice from time to time during a period of up to two years, to purchase newly issued shares\nof the Company’s common stock, subject to customary limitations.\n\n \n\nOn\nJanuary 14, 2026, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an institutional\ninvestor. Pursuant to the Purchase Agreement, the Company sold to the investor, and the investor purchased from the Company, in a private\nplacement offering, an aggregate of (i) 524,990 shares (the “Shares”) of the Company’s common stock, at a purchase\nprice of $1.272 per Share, (ii) pre-funded warrants to purchase up to 3,405,828 shares of Common Stock (the “Pre-funded Warrants”)\nat a purchase price of $1.2719 per Pre-funded Warrant and (iii) warrants to purchase up to 3,930,818 shares of Common Stock (the “Common\nWarrants”, and together with the Pre-funded Warrants the “Warrants”), for aggregate gross proceeds under the Purchase\nAgreement of $5,000,000. The Pre-funded Warrants have an exercise price of $0.0001 per share, and the Common Warrants have an exercise\nprice of $1.147 per share. The offering closed on January 16, 2026, on satisfaction of customary closing conditions.\n\n \n\nWith\nrespect to Beyond Cancer, discussions with investors continue in parallel to the advancement to a phase 1b combination study of UNO with\nanti-PD1 therapy and other strategic alternatives.\n\n \n\nNeuroNOS continues to evaluate and pursue a variety of strategic financing opportunities to support its operations,\nadvance its development programs and execute its long-term business objectives. NeuroNOS is actively engaged in discussions with potential\ninvestors and other financing sources and may seek to raise additional capital through equity investments, strategic partnerships, licensing\narrangements, debt financings or other transactions. While no assurance can be given that any such financing or transaction will be completed\non acceptable terms, or at all, NeuroNOS remains focused on securing the resources necessary to further its strategic initiatives and\nsupport future growth.\n\n \n\nThe\naccompanying consolidated financial statements have been prepared assuming that the Company will continue operating as a going concern.\nThis basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course\nof business.\n\n \n\nOur\nfuture capital needs and the adequacy of our available funds will depend on many factors, including, but not necessarily limited to,\nthe cost and time necessary for the development, preclinical studies, clinical trials and certification or regulatory approval of our\nother medical devices, indications as well as the commercial success of our approved product and any product candidates that receive\nmarketing approval by the FDA. We may be required to raise additional funds through sale of equity or debt securities or through strategic\ncollaborations and/or licensing agreements in order to fund operations until we are able to generate enough product or royalty revenues,\nif any. Financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could have a material\nadverse effect on our strategic objectives, results of operations and financial condition.\n\n \n\nOn\nMay 25, 2021, the Company and Circassia entered into a settlement agreement (“the Settlement Agreement”) resolving all claims\nby and between the parties and mutually terminating the agreement with Circassia. Pursuant to the terms of the Settlement Agreement,\nthe Company agreed to pay Circassia $10.5 million in three installments, all of which has been paid. Additionally, starting in 2025, Circasia began receiving a quarterly royalty payment equal to 5% of LungFit® PH net sales in the\nU.S. This royalty will terminate once the aggregate payment reaches $6.0 million. As of March 31, 2026, approximately $0.4 million of royalties have been paid.\n\n \n\nOur\nability to continue to operate beyond the fourth fiscal quarter of 2027 will be largely dependent upon the successful commercial launch\nof LungFit® PH, obtaining partners in other parts of the world, the timing of the FDA approval for LungFit PH 2 and possibly\nraising additional funds to finance our activities until we are generating cash flow from operations. Further, there are no assurances\nthat we will be successful in obtaining an adequate level of financing for the development and commercialization of our other product\ncandidates.\n\n \n\n76\n\n \n\n \n\nThere\nare numerous risks and uncertainties associated with the development of our NO delivery system and we are unable to estimate the amounts\nof increased capital outlays and operating expenses associated with completing the research and development of our product candidates.\n\n \n\nOur\nfuture capital requirements will depend on many factors, including:\n\n \n\n●\nthe\nprogress and costs of our preclinical studies, clinical trials and other research and development activities;\n\n●\nthe\ncosts of commercializing the LungFit® system;\n\n●\nthe\nscope, prioritization and number of our clinical trials and other research and development programs;\n\n●\nthe\ncosts and timing of obtaining certification or regulatory approval for our product candidates;\n\n●\nthe\ncosts of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights;\n\n●\nthe\ncosts of, and timing for, strengthening our manufacturing agreements for production of sufficient clinical quantities of our product\ncandidates;\n\n●\nthe\npotential costs of contracting with third parties to provide marketing and distribution services for us or for building such capacities\ninternally;\n\n●\nthe\ncosts of acquiring or undertaking the development and commercialization efforts for additional, future therapeutic applications of\nour product candidates;\n\n●\nthe\nmagnitude of our general and administrative expenses; and\n\n●\nany\ncost that we may incur under current and future in-and-out-licensing arrangements relating to our product candidates.\n\n \n\n**Comparison\nbetween Fiscal Years Ended March 31, 2026 and March 31, 2025**\n\n \n\n**Cash\nFlows**\n\n \n\nBelow\nis a summary of the statements of cash flow activities for the years ended March 31, 2026 and March 31, 2025.\n\n \n\n(in thousands) \n\n**For The Year**\n\n**Ended**\n\n**March 31,**\n\n**2026**\n  \n\n**For The Year**\n\n**Ended**\n\n**March 31,**\n\n**2025**\n \n\n  \n   \n  \n\nNet cash provided by (used in): \n    \n   \n\nOperating activities \n$(18,144) \n$(38,218)\n\nInvesting activities \n$(3,674) \n$14,905 \n\nFinancing activities \n$29,090  \n$16,646 \n\nEffect of exchange rate changes on cash and cash equivalents \n$194  \n$(45)\n\nNet increase (decrease) in cash, cash equivalents and restricted cash \n$7,466  \n$(6,712)\n\n \n\n**Operating\nActivities**\n\n \n\nFor\nthe year ended March 31, 2026, the net cash used in operating activities was $18.1 million, which was primarily due to our net loss of\n$34.3 million which includes $5.3 million of stock-based compensation, $3.0 million of depreciation and amortization, $1.8 million of\npaid-in-kind interest associated with the Loan Agreement, $1.4 million loss on the change in fair value of derivative liability, $0.7\nmillion provision for inventory losses, and $0.4 million loss on disposal of fixed assets.\n\n \n\nFor\nthe year ended March 31, 2025, the net cash used in operating activities was $38.2 million, which was primarily due to our net loss of\n$48.5 million which includes $9.1 million of stock-based compensation, $3.0 million of depreciation and amortization, a non-cash loss\nof $2.4 million on the extinguishment of debt, an impairment of fixed assets charge $0.5 million, a $0.4 million increase in accounts\nreceivable, a $0.4 million increase in inventory, partially offset by a $1.0 million decrease in prepaid accounts, a decrease in accrued\nliabilities $6.4 million (which included $4.5 million in payment of the final tranche of a May 2021 settlement with Circassia).\n\n \n\n**Investing\nActivities**\n\n \n\nFor\nthe year ended March 31, 2026, net cash used in investing activities was $3.7 million which was attributable to a net purchase of investments\nin marketable securities of $2.7 million and investment of $1.0 million for the purchase of property and equipment, mainly LungFit®\nPH devices.\n\n \n\nFor\nthe year ended March 31, 2025, cash provided by investing activities was $14.9 million which was attributable to a net redemption of\ninvestments in marketable securities of $20.8 million and investment of $5.9 million for the purchase of property and equipment, mainly\nLungFit® PH devices.\n\n \n\n77\n\n \n\n \n\n**Financing\nActivities**\n\n \n\nNet\ncash provided by financing activities for the year ended March 31, 2026 was $29.1 million, mainly from the issuance of common stock in\nconnection with the At-The-Market Offering Sales Agreement with BTIG, Inc (the “2025 ATM”) of $8.1 million in addition to\n$3.0 million from the issuance of common stock in connection with the warrant inducement and issuance of additional warrants. Additionally,\nthe Company received $2.0 million of Additional Loans from a related party, a director of the Company who is also an existing lender\nunder its Loan Agreement. Further, the Company entered into the Note Purchase Agreement with Streeterville, which provided for the issuance\nof the Note in the principal amount of $12.0 million, partially offset by $1.0 million of fees paid at closing. Finally, the Company\nentered into a Securities Purchase Agreement with an institutional investor, which provided for the sale of common stock and warrants\nfor aggregate proceeds of $5.0 million, partially offset by $0.5 million of fees paid at closing.\n\n \n\nFor\nthe year ended March 31, 2025, net cash provided by financing activities was $16.6 million, mainly from the issuance of securities through\nsecurities purchase agreements which the net proceeds were $18.8 million, $11.3 million payment received on the loan agreement, and the\nissuance of common stock in connection with an At-The-Market Offering Sales Agreement with Truist Securities, Inc. (the “2022 ATM”)\nof $0.7 million and $1.5 million in connection with the 2025 ATM partially offset by $18.0 million from the payment of long- and short-term\nloans, including a $17.5 million repayment to Avenue Capital."}