XAIR

Business Context and Reporting Period

Beyond Air, Inc. (XAIR) is a commercial-stage medical device and biopharmaceutical company developing nitric oxide (NO) generators and delivery systems. The primary commercial product, LungFit® PH, received FDA approval in June 2022 for treating persistent pulmonary hypertension of the newborn (PPHN) and CE mark approval in November 2024 for additional indications. The company operates through three segments: Beyond Air (medical devices), Beyond Cancer (oncology, 80% owned), and NeuroNos (neurology, 71.6% owned). This Form 10-Q covers the quarterly period ended June 30, 2026. All share and per-share data have been retroactively adjusted for a 1-for-20 reverse stock split effective July 13, 2026.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Stability: Revenue remained flat at approximately $1.8 million quarter-over-quarter, driven by lease arrangements for the LungFit® PH device.
• Improved Gross Margin: Gross margin improved to 12.7% from 8.9% due to a decrease in cost of revenues ($1.54M vs $1.60M) despite stable revenue.
• Reduced Operating Loss: Operating loss narrowed by $1.0 million to $6.6 million, primarily due to a $1.1 million decrease in Research and Development (R&D) expenses.
• Increased Interest Expense: Interest and finance expense more than doubled to $1.5 million from $0.5 million, attributed to increased outstanding debt balances and paid-in-kind (PIK) interest.
• Debt Extinguishment: The company recorded a $0.15 million loss on the extinguishment of debt following the conversion of approximately $0.5 million of principal into equity.

Outlook, Risks, and Unusual Items

• Going Concern Warning: Management has concluded that the company will require additional funding within one year. The filing states that factors such as the accumulated deficit of $327.5 million and expected net losses raise substantial doubt about the company's ability to continue as a going concern without further financing.
• Subsequent Financing: On July 29, 2026, the company closed a private placement raising approximately $10.2 million in gross proceeds (net proceeds ~$9.2 million) through the sale of common stock, pre-funded warrants, and Series A/B warrants.
• Nasdaq Compliance: The company regained compliance with Nasdaq's $1.00 minimum bid price requirement via a 1-for-20 reverse stock split effective July 13, 2026. However, it is subject to a one-year Discretionary Panel Monitor. Failure to maintain compliance could lead to delisting.
• Product Pipeline: The company is awaiting FDA approval for the LungFit® PH II (submitted June 2025) and continues development of LungFit® PRO for viral pneumonia and LungFit® GO for NTM infections. Beyond Cancer completed a Phase 1a trial for solid tumors, and NeuroNos received Orphan Drug Designation for Phelan-McDermid Syndrome and Glioblastoma.
• Supplier Concentration: Approximately 90% of materials were purchased from a single third-party vendor in Q2 2026.

Investor Verification Checklist

• Liquidity Runway: Verify the sufficiency of the $9.2 million net proceeds from the July 2026 private placement against the stated need for funding within one year.
• Debt Covenants: Review the terms of the $25.8 million total debt principal, specifically the 15% interest rate (with 12% PIK) and the 8% royalty on net sales required under the Loan Agreement.
• Restricted Cash: Confirm the release schedule for the $5.4 million in restricted cash, which is tied to the repayment of the Streeterville promissory note.
• Regulatory Milestones: Monitor the status of the LungFit® PH II PMA supplement and the potential impact of FDA approval on commercial revenue projections.
• Stock Split Impact: Ensure all financial models account for the 1-for-20 reverse stock split and the resulting changes in share count and per-share metrics.