Company: XAIR
Filing Date: 2025-02-10
Form Type: 10-Q
Source: 0001493152-25-005678
Chunk: 20

Company: Beyond Air, Inc.
Filing Date: 2025-02-10
Form: 10-Q
Item: Part I, Item 1
Chunk 20
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 device back-up services (the “Services”),
which are recorded in cost of revenue.

The
Company accounts for its rental arrangements of LungFit® PH devices in accordance with Accounting Standards Codification 842, Leases
(“ASC 842”). Under ASC 842, leases may be classified as either financing, sales-type, or operating, and the Company is
required to disclose key information about leasing arrangements. The classification determines the pattern of revenue recognition and
classification within the statement of operations and comprehensive loss. The Company typically classifies the rental arrangement of
its LungFit® PH contracts as operating leases. The Company’s leases do not contain any restrictive covenants or any material
residual value guarantees. The Company’s equipment leases may contain renewal options which range from one month to two years.
The lease term is adjusted for renewal or termination options that the Company believe the customer is reasonably certain to exercise.

The
Company elected the practical expedient applied to operating leases not to separate lease and non-lease components as long as the lease
and non-lease components have the same timing and pattern of transfer. As such, the non-lease components, including the Consumables and
Services, are combined with the predominant lease component. The total fixed fees that the Company is reasonably certain to collect are
recognized on a straight line basis over the term of the arrangement. Additionally, the Company made an accounting policy election to
present LungFit® PH revenue net of sales and other similar taxes.

Amounts
billed in advance of performance obligations being satisfied are recognized as deferred revenue.

At
the lease commencement date, the Company will defer initial direct costs, including commission expense and the cost is recognized over
the lease term on the same basis as lease income.

The
Company records the costs of shipping related to contract devices and consumables in cost of revenue in its unaudited condensed
consolidated statements of operations and comprehensive loss.

See
Note 11 to the unaudited condensed consolidated financial statements for more information regarding leasing arrangements.

Fair
Value Measurements

As
of December 31, 2024 and March 31, 2024, the Company’s financial instruments included restricted cash, marketable securities, accounts
payable, long-term debt and liability classified warrants. In addition, as of March 31, 2024, the Company’s financial instruments
also included derivative liabilities. The carrying amounts reported in the accompanying consolidated financial statements for cash and
cash equivalents, restricted cash and marketable securities approximate