Company: XAIR
Filing Date: 2025-06-20
Form Type: 10-K
Source: 0001641172-25-015750
Chunk: 1287

Company: Beyond Air, Inc.
Filing Date: 2025-06-20
Form: 10-K
Item: Item 2
Chunk 1287
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 AIR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 SIGNIFICANT ACCOUNTING POLICIES AND OTHER
RISKS AND UNCERTAINTIES (continued)

Inventories

Raw materials, work in progress and finished goods
are stated at the lower of cost or net realizable value. Cost comprises direct materials, third-party manufacturing costs and shipping
costs incurred to deliver goods to the Company’s central warehouse location.

Costs are assigned to individual items of inventory
on the basis of weighted average costs. Inventory items are tracked by batch/lot number for specific identification whenever possible.
The Company uses judgement to determine the proportion of inventory items held which will be provided to a hospital as part of its service
delivery versus the inventory items that will be provided free of charge on hospital evaluations. Inventory items held for hospital evaluations
have no realizable value.

Leases

Operating lease assets are included within operating
lease right-of-use assets, and the corresponding operating lease obligation on the consolidated balance sheets as of March 31, 2025
and March 31, 2024 in accordance with ASC 842, Leases. The Company has elected not to present short-term leases as these leases
have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that the Company is reasonably
certain to exercise. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the
lease term at commencement date. Because most of the Company’s leases do not provide an implicit rate of return, the Company used
an incremental borrowing rate based on the information available at adoption date in determining the present value of lease payments.

Grant Receivable

Under a collaboration arrangement with the Cystic
Fibrosis Foundation (“CFF”), grant milestones are achieved subject to certain performance steps and requirements under a development
program. Grant milestones are recorded as reimbursements against the applicable portion of the Company’s research and development
expenses. Such reimbursements are reflected as a reduction of research and development expenses in the Company’s consolidated statements
of operations and comprehensive loss, as the performance of research and development services for reimbursement is not considered to be
an ongoing component or central to the Company’s operations. The grant provides for royalty payments to CFF upon the commercialization
of any product developed under the grant program at a rate of 10% of net sales. The royalties are capped at four times