Company: XAIR
Filing Date: 2025-06-20
Form Type: 10-K
Source: 0001641172-25-015750
Chunk: 316

Company: Beyond Air, Inc.
Filing Date: 2025-06-20
Form: 10-K
Item: Item 16
Chunk 316
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 that: (1) relate to accounts or disclosures that are
material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication
of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are
not, by communicating the critical audit matters below, providing separate opinions on the critical audit matter or on the accounts
or disclosures to which they relate.

Accounting
for Equity Financing and Warrant Issuances

Critical
Audit Matter Description

The Company evaluates its equity issuances to determine if those contracts
or embedded components of those contracts qualify as derivative instruments requiring separate recognition in the Company’s consolidated
financial statements. As described in Note 4, on September 26, 2024, the Company entered into the Securities Purchase Agreement II with
certain institutional and accredited investors, which included certain directors and officers of the Company, pursuant to which the Company
sold, in a private placement offering, an aggregate of (i) 24,999,999 shares of common stock (ii) 15,848,712 pre-funded stock purchase
warrants, (the “Pre-funded Warrants”) to purchase up to 15,848,712 shares of common stock and (iii) 40,848,711 stock purchase
warrants (the “Common Warrants” and together with the Pre-funded Warrants, the “Warrants”) to purchase up to 40,848,711
shares of common stock. Each common share and accompanying Common Warrant were sold together at a combined offering price of $0.5043,
and each Pre-Funded Warrant and accompanying Common Warrant were sold together at a combined offering price of $0.5042 for gross proceeds
of $20.6 million (which includes $2.0 million from related parties). Members of the Board of Directors and certain executives of the Company
are considered related parties to this offering. The Pre-Funded Warrants have an exercise price of $0.0001 per share, and the Common Warrants
have an exercise price of $0.3793 per share. The private placement offering closed on September 30, 2024. As described in Note 10, on
September 30, 2024, Beyond Air and the Lenders reached an agreement to extinguish the Avenue Capital senior secured term loan for a one-time
payment of $17.85 million. This agreement eliminated the debt and interest