Company: XAIR
Filing Date: 2025-06-20
Form Type: 10-K
Source: 0001641172-25-015750
Chunk: 1279

Company: Beyond Air, Inc.
Filing Date: 2025-06-20
Form: 10-K
Item: Item 2
Chunk 1279
---
 of up to three years. The fixed fee is typically broken
down into ratable monthly payments over the term of the arrangement. The Company’s customers include hospitals and medical facilities.
The Company’s LungFit® PH leases include filters, calibration gas, bagging kits, cables, adapters, and other components and
accessories required to use the LungFit® PH device (the “Consumables”). The Consumables’ quantities are varied and
may be supplied upon demand of the customers and are unlimited, or the arrangement may provide for the maximum quantities available to
the customer over the term of the arrangement. The Company’s LungFit® 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 consolidated statements 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