Company: XAIR
Filing Date: 2025-06-20
Form Type: 10-K
Source: 0001641172-25-015750
Chunk: 1264

Company: Beyond Air, Inc.
Filing Date: 2025-06-20
Form: 10-K
Item: Item 2
Chunk 1264
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, proportionate amounts of unamortized discount and deferred financing costs were written off during the year ended March
31, 2025, resulting in the Company recording loss on extinguishment of debt of $2.5 million in the consolidated statements of operations
and comprehensive loss. On November 1, 2024, the Company entered into an $11.5 million secured Loan Agreement with certain lenders, including
its CEO and a director. The loan has a ten-year term, 15% annual interest (3% cash, 12% in kind through June 2026, then all cash), an
8% royalty on net sales starting July 2026, is secured by substantially all assets, and includes warrants to purchase common stock at
$0.3793 per share. We identified the accounting for equity financing and warrant issuances as a critical audit matter because of the complexity
in applying the accounting framework. This required extensive audit effort related to the application of the accounting framework.

How
the Critical Audit Matter Was Addressed in the Audit

Addressing
the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated
financial statements. These procedures included the following, among others: we obtained an understanding of, evaluated the design of
the operating effectiveness of controls over management’s process for the accounting treatment, read the agreements, and evaluated
the accounting for the warrant issuance. We tested management’s process, which included (i) evaluating the application of the accounting
framework used by management; (ii) tested the mathematical accuracy of management’s calculations; and (iii) tested the completeness
and accuracy of the underlying data used. Professionals with specialized skill and knowledge were used to assist in (i) evaluating management’s
application of the accounting framework and (ii) tested the mathematical accuracy of management’s calculation and conclusion related
to the accounting classification of the warrant issuances.

/s/
WithumSmith+Brown, PC

We
have served as Beyond Air, Inc.’s auditor since 2024.

East Brunswick,
New Jersey

June
20, 2025

F-2

REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Stockholders and Board of Directors of

Beyond
Air, Inc.

Opinion
on the Financial Statements

We
have audited the accompanying consolidated balance sheet of Beyond Air,
Inc. (the “Company”) as of March 31, 2024, the related consolidated statements of operations and