Company: XAIR
Filing Date: 2025-08-12
Form Type: 10-Q
Source: 0001641172-25-023243
Chunk: 73

Company: Beyond Air, Inc.
Filing Date: 2025-08-12
Form: 10-Q
Item: Part II, Item 8
Chunk 73
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Fit® PH leases
also include maintenance and training required to use the LungFit® PH device, as well as 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 believes 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.

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.

See
Note 10 to the unaudited condensed consolidated financial statements for more information regarding leasing arrangements.

The
Company also generates revenue from the sale of its LungFit® PH devices and consumables to its customers under distribution arrangements.
Contracts include one performance obligation as any individual promised good or services other than delivery of the devices and consumables
are generally either not capable of being distinct or not distinct within the context of the contracts. Purchased quantities of devices
and consumables are varied and may be supplied upon demand of the customers. Revenue is recognized at a point in time when the Company
delivers the goods to its customer. The transaction includes a fixed component based on contractual rates. Revenue recognized reflects
the consideration we expect to receive in