UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X]☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 20202021
OR
[ ]☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________to _________
Commission File Number: 001-38892
BEYOND AIR, INCINC..
(Exact name of registrant as specified in its charter)
Delaware | 47-3812456 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
825 East Gate Boulevard, Suite 320 | ||
Garden City, NY | 11530 | |
(Address of principal executive offices) | (Zip Code) |
516-665-8200516-665-8200
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: | Trading Symbol | Name of each exchange on which registered: | ||
Common Stock, par value $0.0001 per share | XAIR | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] ☒ No [ ]☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] ☒ No [ ]☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer | Accelerated Filer | |
Non-accelerated filer | Smaller reporting company | |
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] ☐ No [X] ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of August 3, 2020,6, 2021, there were 17,147,214 shares of common stock, par value $0.0001 per share, outstanding.
BEYOND AIR, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q FILING
FOR THE PERIOD ENDED JUNE 30, 20202021
Table of Contents
2 |
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
INDEX
3 |
BEYOND AIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2020 | March 31, 2020 | June 30, 2021 | March 31, 2021 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
ASSETS | ||||||||||||||||
Current assets | ||||||||||||||||
Cash and cash equivalents | $ | 23,808,900 | $ | 19,829,275 | $ | 38,581,386 | $ | 34,630,682 | ||||||||
Restricted cash | 636,317 | 5,635,836 | 1,046,606 | 637,025 | ||||||||||||
Grant receivable | - | 425,000 | ||||||||||||||
Other current assets and prepaid expenses | 1,207,238 | 1,149,806 | 1,325,064 | 1,530,096 | ||||||||||||
Total current assets | 25,652,455 | 26,614,917 | 40,953,056 | 37,222,803 | ||||||||||||
Licensed right to use technology | 403,244 | 412,763 | 365,158 | 374,686 | ||||||||||||
Right-of-use lease assets | 398,102 | 195,727 | 1,815,351 | 1,860,885 | ||||||||||||
Property and equipment, net | 421,214 | 211,337 | 897,550 | 928,842 | ||||||||||||
Other assets | 137,880 | 137,880 | ||||||||||||||
TOTAL ASSETS | $ | 26,875,015 | $ | 27,434,744 | $ | 44,168,995 | $ | 40,525,096 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
Current liabilities | ||||||||||||||||
Accounts payable | $ | 1,920,337 | $ | 2,256,229 | $ | 2,261,777 | $ | 1,324,988 | ||||||||
Accrued expenses | 1,084,604 | 1,097,534 | 1,695,235 | 1,804,938 | ||||||||||||
Deferred revenue | 644,029 | 873,190 | ||||||||||||||
Stock to be issued to a vendor | - | 240,000 | ||||||||||||||
Operating lease liability | 79,668 | 69,342 | 187,288 | 113,141 | ||||||||||||
Loan payable | 209,579 | 335,358 | 349,165 | 556,514 | ||||||||||||
Total current liabilities | 3,938,217 | 4,871,653 | 4,493,465 | 3,799,581 | ||||||||||||
Long-term liabilities | ||||||||||||||||
Operating lease liability | 323,270 | 131,581 | 1,720,389 | 1,789,461 | ||||||||||||
Facility agreement loan, net | 4,372,257 | 4,339,065 | ||||||||||||||
Long-term debt, net | 4,505,393 | 4,472,201 | ||||||||||||||
Total liabilities | 8,633,744 | 9,342,299 | 10,719,247 | 10,061,243 | ||||||||||||
Commitments and contingencies | ||||||||||||||||
Shareholders’ equity | ||||||||||||||||
Stockholders’ equity | ||||||||||||||||
Preferred Stock, $0.0001 par value per share: 10,000,000 shares authorized, 0 shares issued and outstanding | - | - | - | - | ||||||||||||
Common Stock, $0.0001 par value per share: 100,000,000 shares authorized,16,841,555 and 16,056,360 shares issued and outstanding as of June 30, 2020 and March 31, 2020, respectively | 1,684 | 1,606 | ||||||||||||||
Common Stock, shares authorized, and shares issued and outstanding as of June 30, 2021 and March 31, 2021, respectively | par value per share:2,327 | 2,183 | ||||||||||||||
Treasury stock | (25,000 | ) | (25,000 | ) | (25,000 | ) | (25,000 | ) | ||||||||
Additional paid-in capital | 82,593,467 | 75,702,915 | 120,677,112 | 110,948,477 | ||||||||||||
Accumulated deficit | (64,328,880 | ) | (57,587,076 | ) | (87,204,691 | ) | (80,461,807 | ) | ||||||||
Total shareholders’ equity | 18,241,271 | 18,092,445 | ||||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 26,875,015 | 27,434,744 | |||||||||||||
Total stockholders’ equity | 33,449,748 | 30,463,853 | ||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 44,168,995 | 40,525,096 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4 |
BEYOND AIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended June 30, | 2021 | 2020 | ||||||||||||||
2020 | 2019 | For the Three Months Ended June 30, | ||||||||||||||
2021 | 2020 | |||||||||||||||
License revenues | $ | 229,161 | $ | 627,469 | ||||||||||||
License revenue | $ | - | $ | 229,161 | ||||||||||||
Operating expenses | ||||||||||||||||
Research and development | 4,331,814 | 2,323,513 | 2,741,041 | 4,331,814 | ||||||||||||
General and administrative | 2,494,014 | 2,182,558 | 3,850,265 | 2,494,014 | ||||||||||||
Operating loss | (6,596,667 | ) | (3,878,602 | ) | (6,591,306 | ) | (6,596,667 | ) | ||||||||
Other income (loss) | ||||||||||||||||
Realized and unrealized loss on marketable equity securities | - | (2,307,319 | ) | |||||||||||||
Dividend income | 14,985 | 6,410 | 706 | 14,985 | ||||||||||||
Foreign exchange gain | 1,275 | 1,724 | 9,859 | 1,275 | ||||||||||||
Interest expense | (163,240 | ) | (3,034 | ) | (162,143 | ) | (163,240 | ) | ||||||||
Other | 1,843 | - | - | 1,843 | ||||||||||||
Total other loss | (145,137 | ) | (2,302,219 | ) | (151,578 | ) | (145,137 | ) | ||||||||
Net loss | $ | (6,741,804 | ) | $ | (6,180,821 | ) | $ | (6,742,884 | ) | $ | (6,741,804 | ) | ||||
Net loss per share – basic and diluted | $ | (0.40 | ) | $ | (0.67 | ) | $ | (0.31 | ) | $ | (0.41 | ) | ||||
Weighted average number of common shares outstanding – basic and diluted | 16,529,392 | 9,201,855 | 21,945,235 | 16,529,392 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
5 |
BEYOND AIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’STOCKHOLDERS’ EQUITY
(UNAUDITED)
FOR THE THREE MONTHS ENDED JUNE 30, 2021
Number | Amount | Stock | Capital | Deficit | Equity | |||||||||||||||||||
Common Stock | Treasury | Additional Paid-in | Accumulated | Total Stockholders’ | ||||||||||||||||||||
Number | Amount | Stock | Capital | Deficit | Equity | |||||||||||||||||||
Balance as of April 1, 2021 | 21,828,244 | $ | 2,183 | $ | (25,000 | ) | $ | 110,948,477 | $ | (80,461,807 | ) | $ | 30,463,853 | |||||||||||
At-The-Market issuance of common stock, net | 1,239,405 | 124 | - | 7,481,444 | - | 7,481,568 | ||||||||||||||||||
Issuance of common stock pursuant to a Purchase Agreement, net | 200,000 | 20 | - | 1,031,280 | - | 1,031,300 | ||||||||||||||||||
Stock-based compensation | 1,215,911 | 1,215,911 | ||||||||||||||||||||||
Net loss | - | - | - | - | (6,742,884 | ) | (6,742,884 | ) | ||||||||||||||||
Balance as of June 30, 2021 | 23,267,649 | $ | 2,327 | $ | (25,000 | ) | $ | 120,677,112 | $ | (87,204,691 | ) | $ | 33,449,748 |
BEYOND AIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
FOR THE THREE MONTHS ENDED JUNE 30, 2020
Common Stock | Treasury | Additional Paid-in | Accumulated | Total Shareholders’ | Common Stock | Treasury | Additional Paid-in | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||||||||||||||
Number | Amount | Stock | Capital | Deficit | Equity | Number | Amount | Stock | Capital | Deficit | Equity | |||||||||||||||||||||||||||||||||||||
Balance as of April 1, 2020 | 16,056,360 | $ | 1,606 | $ | (25,000 | ) | $ | 75,702,915 | $ | (57,587,076 | ) | $ | 18,092,445 | 16,056,360 | $ | 1,606 | $ | (25,000 | ) | $ | 75,702,915 | $ | (57,587,076 | ) | $ | 18,092,445 | ||||||||||||||||||||||
At the market stock issuance of common stock, net | 113,712 | 11 | - | 899,529 | - | 899,540 | ||||||||||||||||||||||||||||||||||||||||||
At-The-Market issuance of common stock, net | 113,712 | 11 | - | 899,529 | - | 899,540 | ||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercise of warrants | 70,538 | 7 | 293,104 | 293,111 | 70,538 | 7 | 293,104 | 293,111 | ||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercise of stock options | 2,340 | - | - | 545 | - | 545 | 2,340 | - | - | 545 | - | 545 | ||||||||||||||||||||||||||||||||||||
Issuance of common stock pursuant to a Purchase Agreement, net | 568,605 | 57 | - | 3,641,623 | - | 3,641,680 | 568,605 | 57 | - | 3,641,623 | - | 3,641,680 | ||||||||||||||||||||||||||||||||||||
Issuance of common stock to investor relations firm | 30,000 | 3 | 242,097 | 242,100 | 30,000 | 3 | 242,097 | 242,100 | ||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | 1,813,654 | 1,813,654 | 1,813,654 | 1,813,654 | ||||||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | (6,741,804 | ) | (6,741,804 | ) | - | - | - | - | (6,741,804 | ) | (6,741,804 | ) | ||||||||||||||||||||||||||||||||
Balance as of June 30, 2020 | 16,841,555 | $ | 1,684 | $ | (25,000 | ) | $ | 82,593,467 | $ | (64,328,880 | ) | $ | 18,241,271 | 16,841,555 | $ | 1,684 | $ | (25,000 | ) | $ | 82,593,467 | $ | (64,328,880 | ) | $ | 18,241,271 |
BEYOND AIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(UNAUDITED)
FOR THE THREE MONTHS ENDED JUNE 30, 2019
Common Stock | Treasury | Additional Paid-in | Accumulated | Total Shareholders’ | ||||||||||||||||||||
Number | Amount | Stock | Capital | Deficit | Equity | |||||||||||||||||||
Balance as of April 1, 2019 | 8,714,815 | $ | 871 | $ | (25,000 | ) | $ | 41,693,578 | $ | (37,644,572 | ) | $ | 4,024,877 | |||||||||||
Issuance of common stock pursuant to a Purchase Agreement, net | 250,000 | 25 | - | 1,173,785 | - | 1,173,810 | ||||||||||||||||||
Issuance of common stock upon exercise of options | 32,122 | 3 | - | 83,854 | - | 83,857 | ||||||||||||||||||
Issuance of common stock pursuant to a private placement, net of offering cost | 1,583,743 | 159 | - | 7,839,336 | - | 7,839,495 | ||||||||||||||||||
Stock-based compensation | 919,037 | 919,037 | ||||||||||||||||||||||
Net loss | - | - | - | - | (6,180,821 | ) | (6,180,821 | ) | ||||||||||||||||
Balance as of June 30, 2019 | 10,580,680 | $ | 1,058 | $ | (25,000 | ) | $ | 51,709,590 | $ | (43,825,393 | ) | $ | 7,860,255 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6 |
BEYOND AIR, INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
2021 | 2020 | |||||||||||||||
For the Three Months Ended June 30, | For the Three Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2021 | 2020 | |||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net loss | $ | (6,741,804 | ) | $ | (6,180,821 | ) | $ | (6,742,884 | ) | $ | (6,741,804 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities | ||||||||||||||||
Depreciation and amortization | 33,650 | 17,902 | 58,347 | 33,650 | ||||||||||||
Amortization of licensed right to use technology | 9,519 | 53,680 | 9,528 | 9,519 | ||||||||||||
Stock-based compensation | 1,815,654 | 941,537 | 1,215,911 | 1,815,654 | ||||||||||||
Amortization of debt discount | 33,192 | - | 33,192 | 33,192 | ||||||||||||
Amortization of operating lease assets | 16,513 | 15,135 | ||||||||||||||
Operating lease expense | 50,608 | 1,483 | ||||||||||||||
Gain on cancellation of operating lease | (1,843 | ) | - | - | (1,843 | ) | ||||||||||
Realized and unrealized loss on marketable equity securities | - | 2,307,319 | ||||||||||||||
Foreign currency adjustment | (9,859 | ) | - | |||||||||||||
Deferred revenue | - | (229,161 | ) | |||||||||||||
Changes in: | ||||||||||||||||
Grant receivable | 425,000 | - | ||||||||||||||
Other current assets and prepaid expenses | (57,432 | ) | 243,258 | 205,032 | (57,432 | ) | ||||||||||
Accounts payable | (335,893 | ) | 388,330 | 946,648 | (335,893 | ) | ||||||||||
Accrued expenses | (12,830 | ) | (53,089 | ) | (109,701 | ) | (12,830 | ) | ||||||||
Lease payments | (15,030 | ) | (15,693 | ) | ||||||||||||
Deferred revenue | (229,161 | ) | (627,469 | |||||||||||||
Net cash used in operating activities | (5,485,465 | ) | (2,909,911 | ) | (3,918,178 | ) | (5,485,465 | ) | ||||||||
Cash flows from investing activities | ||||||||||||||||
Investment in marketable securities | - | (16,459,011 | ) | |||||||||||||
Proceeds from redemption of marketable securities | - | 9,687,121 | ||||||||||||||
Purchase of property and equipment | (243,527 | ) | (3,112 | ) | (27,055 | ) | (243,527 | ) | ||||||||
Net cash used in investing activities | (243,527 | ) | (6,775,002 | ) | (27,055 | ) | (243,527 | ) | ||||||||
Cash flows from financing activities | ||||||||||||||||
Issuance of common stock in connection with a Purchase Agreement with Lincoln Park, At the Market Offerings, private placement, net, exercise of warrants and stock options | 4,834,877 | 9,097,162 | ||||||||||||||
Issuance of common stock in connection with a Purchase Agreement with Lincoln Park, At- The Market Equity Offering, private placement, net, exercise of warrants and stock options | 8,512,867 | 4,834,877 | ||||||||||||||
Payment of loan | (125,779 | ) | (116,366 | ) | (207,349 | ) | (125,779 | ) | ||||||||
Net cash provided by financing activities | 4,709,098 | 8,980,796 | 8,305,518 | 4,709,098 | ||||||||||||
Decrease in cash, cash equivalents and restricted cash | (1,019,894 | ) | (704,117 | ) | ||||||||||||
Increase (decrease) in cash, cash equivalents and restricted cash | 4,360,285 | (1,019,894 | ) | |||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 25,465,111 | 1,357,137 | 35,267,707 | 25,465,111 | ||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 24,445,217 | $ | 653,020 | $ | 39,627,992 | $ | 24,445,217 | ||||||||
Supplemental disclosure of non-investing activities | ||||||||||||||||
Right-of-use assets | $ | 236,700 | $ | 258,605 | $ | - | $ | 236,700 | ||||||||
Operating lease liability | $ | 236,700 | $ | 266,570 | $ | - | $ | 236,700 | ||||||||
Disposition of right-of-use asset | $ | (17,426 | ) | $ | 258,605 | $ | - | $ | (17,426 | ) | ||||||
Disposition of operating lease liability | $ | 19,329 | $ | - | $ | - | $ | 19,329 | ||||||||
Stock issued to investor relations firm | $ | 242,100 | - | $ | - | $ | 242,100 | |||||||||
Supplemental disclosure of cash flow items: | ||||||||||||||||
Interest paid | $ | 22,298 | $ | 1,676 | $ | 136,032 | $ | 22,298 | ||||||||
Income taxes paid | $ | - | $ | - |
The accompanying notes are an integral part of these condensed consolidated financial statements.
7 |
BEYOND AIR, INC. AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 ORGANIZATION AND BUSINESS
Beyond Air, Inc. (“Beyond(together with its subsidiaries, “Beyond Air” or the “Company”) was incorporated on April 24,28, 2015. On June 25, 2019, the Company’sour name was changed to Beyond Air, Inc. from AIT Therapeutics, Inc. The Company hasWe have the following wholly-owned subsidiaries:
Beyond Air Ltd. (“BA Ltd.”) was incorporated in Israel on May 1, 2011.2011 in Israel.
Advanced Inhalation Therapies (AIT), a wholly owned subsidiary of Beyond Air, Ltd. was incorporated on August 29, 2014, in Delaware.
Beyond Air Australia Pty Ltd. was, incorporated on December 17, 2019 in Australia.
Beyond Air Ireland Limited, was incorporated on March 5, 2020 in Ireland.
The CompanyBeyond Air is a clinical-stage medical device and biopharmaceutical company focused on developing inhaled Nitric Oxide (NO) for the treatment of patients with respiratory conditions, including serious lung infections and pulmonary hypertension, and gaseous NO for the treatment of solid tumors. Since its inception, the Company has devoted substantially all of its efforts to research and development.
The Company is developing a nitric oxide (“NO”) generator and delivery system (the “LungFit™® system”) that is capable of generating NO from ambient air. The LungFit™LungFit® platform can generate NO up to 400 parts per million (“ppm”) for delivery to a patient’s lungs. The LungFit™lungs directly or via a ventilator. LungFit® can deliver NO either continuously or for a fixed amount of time at various flow rates and has the ability to either titrate dose on demand or maintain a constant dose. OurBeyond Air believes that LungFit® can be used to treat patients on ventilators that require NO, as well as patients with chronic or acute severe lung infections via delivery through a breathing mask or similar apparatus. Furthermore, the Company believes that there is a high unmet medical need for patients suffering from certain severe lung infections that the LungFit® platform can potentially address. The Company current areas of focus with the LungFit™LungFit® are persistent pulmonary hypertension of the newborn (“PPHN”)(PPHN), severe acute respiratory syndrome coronavirus 2 (SARS CoV-2),viral pneumonia (AVP) including COVID-19, bronchiolitis (“BRO”)(BRO) and nontuberculous mycobacteria (“NTM”)(NTM) lung infection. The Company’s current product candidates will be subject to premarket reviews and approvals by the U.S. Food and Drug Administration (the “FDA”), CE marking conformity assessment by a notified body in the European Union, as well as similar regulatory agencies’ reviews or the FDA,approvals, as well as similar regulatory agencies in other countries or regions. If approved, ourthe Company’s system will be marketed as a medical device initially in the United States.
Liquidity Risks and Uncertainties
The Company has incurredused cash used in operating activities of $5.5 $3.9 million for the three months ended June 30, 2020,2021, and has accumulated losses of $64.3 $87.2 million. The Company has cash,had cash, equivalents and restricted cash of $24.4 $39.6 million as of June 30, 2020.2021. Based on management’s current business plan, the Company estimates it will have enough cash and liquidity sufficient to finance its operating requirements for at least one year from the date of filing these financial statements.
The Company’s future capital needs and the adequacy of its available funds beyond one year will depend on many factors, including, but not necessarily limited to, the actual cost and time necessary for current and anticipated preclinical studies, clinical studiestrials and other actions needed to obtain regulatory approval of ourthe Company’s medical devices in development as well as the cost to launch ourthe Company’s first product for PPHN, assuming approval of our Premarketing Application (“PMA”) which is expected to be filed at the end of September 2020.
BEYOND AIR, INC. AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 ORGANIZATION AND BUSINESS (continued)
Beyond Air’s PMA. The Company willmay be required to raise additional funds through sale of equity or debt securities offerings or through strategic collaboration and/or licensing agreements in order to fund operations and continue our clinical trials until we areit is able to generate enough product or royalty revenues, if any. FinancingSuch financing may not be available on acceptable terms, or at all, and ourthe Company’s failure to raise capital when needed could have a material adverse effect on our growth plans, ourits strategic objectives, results of operations and our financial condition.
The Company’s future liquidity includes access to the following:
8 |
BEYOND AIR, INC. AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 ORGANIZATION AND BUSINESS (continued)
Liquidity Risks and Uncertainties
The Company’s access to capital and liquidity currently includes the following:
At-The-Market Equity Offering Sales Agreement (the “ATM”) for $50 million which approximately $29.9 million remained as of June 30, 2021, see Note 5. | ||
b) | A $25 million unsecured loan with certain lenders to a facility agreement dated April 2, 2020 | |
c) |
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“USU.S. GAAP”) for interim financial information and with the instructions to the Form 10-Q. Accordingly, they do not include all of the information and footnotes required to be presented for complete financial statements. The accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring items) which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. The accompanying unaudited condensed consolidated Balance Sheetbalance sheet as of March 31, 2020 has been derived from2021 (the “2021 Annual Report”), filed with the audited consolidated financial statements included in our Annual ReportU.S. Securities and Exchange Commission (the “SEC”) on Form 10-K for the year ended March 31, 2020June 10, 2021 and amended on July 23, 2021. The unaudited condensed consolidated financial statements and related disclosures have been preparedshould be read in conjunction with the assumption that users of the interim financial information have read or have access to theCompany’s audited consolidated financial statements and the related notes thereto included in the 2021 Annual Report on Form 10-K for the year ended March 31,2020 which was filed with the United States Securities and Exchange Commission, (“SEC”), on June 23, 2020.10-K.
Principles of Consolidation
These unaudited condensed consolidated financial statements include the accounts of the Company and the accounts of all of the Company’s subsidiaries. All intercompany balances and transactions have been eliminated in the accompanying financial statements.
9 |
BEYOND AIR, INC. AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES (continued)
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from those estimates. On an ongoing basis, the Company evaluates its significant estimates including accruals for expenses under consulting, licensing agreements, and clinical trials, stock-based compensation, warrant fair value, assumptions associated with revenue recognition, and the determination of deferred tax attributes and the valuation allowance thereon.
Other Risks and Uncertainties
The Company is subject to risks common to medical device and development stage companies including, but not limited to, new technological innovations, regulatory approval, dependence on key personnel, protection of proprietary technology, compliance with government regulations, product liability, uncertainty of market acceptance of products and the potential need to obtain additional financing. The Company is dependent on third partythird-party suppliers and, in some cases single-source suppliers.
There can be no assurance that the Company’s product will be accepted in the marketplace, nor can there be any assurance that any future products can be developed or manufactured at an acceptable cost and with appropriate performance characteristics, or that such products will be successfully marketed, if at all.
The Company’s products require approval or clearance from the U.S. Food and Drug AdministrationFDA prior to commencingcommencement of commercial sales in the United States. There can be no assurance that the Company’s products will receive all of the required approvals or clearances. Approvals or clearances are also required in foreign jurisdictions in which the Company may license or sell its products. If the Company is denied such approvals or clearances or such approvals or clearances are delayed, it may have a material adverse impact on the Company’s results of operations, financial position and liquidityliquidity. Further, there can be no assurance that the Company’s product will be accepted in the marketplace, nor can there be any assurance that any future products can be developed or manufactured at an acceptable cost and with appropriate performance characteristics, or that such products will be successfully marketed, if at all.
The development of ourthe Company’s product candidates could be further disrupted and adversely affected by a resurgence of the recent outbreak of COVID-19.COVID-19 pandemic. The spread of SARS CoV-2 from China to other countries has resultedCompany experienced significant delays in the Director General ofsupply chain for LungFit®due to the World Health Organization declaring COVID-19 a pandemic on March 11, 2020. We have assessedredundancy in parts and suppliers with ventilator manufacturing which has since been remedied. The Company continuously assesses the impact COVID-19 may have on ourthe Company’s business plans and ourits ability to conduct the preclinical studies and clinical trials as well as on ourthe Company’s reliance on third-party manufacturing and our supply chain. However, there can be no assurance that this analysisthe Company will enable usbe able to avoid part or all of any impact from the spread of COVID-19 or its consequences. The extent to which the COVID-19 pandemic and global efforts to contain its spread will impact our operations will depend on future developments, which are still uncertain and cannot be predicted at this time.
Concentrations
The Company’s license revenue was from two milestone payments fromconsequences if a terminated license see Note 10. The Company is reliant on two vendors for commercial manufacturing of the LungFit™ generator and delivery systems and nitrogen dioxide filters for both clinical studies and commercial supply, if regulatory approval is received.
resurgence occurs.
10 |
BEYOND AIR, INC. AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial Instruments
Financial instruments that potentially subjectThe Company considers all highly liquid investments with original maturities of three months or less at the Companydate of purchase and an investment in a U.S. government money market fund to concentrations of credit risk consist principally ofbe cash and cash equivalents and marketable securities.equivalents. The Company maintains its cash and cash equivalents in bank deposit and other interest-bearing accounts in major bankshighly rated financial institutions in Israel, Ireland and the U.S., the balances of which, at times, may exceed federally insured limits.
The Company has no off-balance-sheet concentration of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements.
Restricted Cash
As of June 30, 2020,2021 and March 31, 2021, restricted cash includes $619,000consisted of cash that is $1,019,000 and $619,000 designated for a contract manufacturer.manufacturer, respectively. This cash is expected to be used for material and parts that require a long lead time. Collateral for vehicle leases are invested in bank deposit accounts which is restricted and as of June 30, 2020 was $17,317 and as of March 31, 2020 was $16,836, respectively.
Cash equivalents are short-term highly liquid investments that are readily convertible to cash with original maturities of three months or less at acquisition. Restricted cash is collateral for vehicle leases and invested in bank deposit accounts.
The following table is the reconciliation of the presentation and disclosure of financial instruments as shown on the Company’s consolidated statements of cash flows:
SCHEDULE OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
June 30, 2020 | June 30, 2019 | June 30, 2021 | June 30, 2020 | |||||||||||||
Cash and cash equivalents | $ | 23,808,900 | $ | 636,193 | $ | 38,581,386 | $ | 23,808,900 | ||||||||
Restricted cash | 636,317 | 16,827 | 1,046,606 | 636,317 | ||||||||||||
Cash and cash equivalents and restricted cash | $ | 24,445,217 | $ | 653,020 | ||||||||||||
Total | $ | 39,627,992 | $ | 24,445,217 |
Revenue Recognition
The Company recognizes revenue when we transferit transfers promised goods or services to customers in an amount that reflects the consideration to which we expectthe Company expects to be entitled in exchange for those goods or services. To determine revenue recognition for contracts with customers we performthe Company performs the following five steps: (i) identify the contract(s) with a customer;customer, (ii) identify the performance obligation(s) in the contract;contract, (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract;contract, and (v) recognize revenue when (or as) we satisfythe Company satisfies the performance obligation(s). At contract inception, we assessthe Company assesses the goods or services promised within each contract, assessassesses whether each promised good or service is distinct, and identifyidentifies those that are performance obligationsobligations.
BEYOND AIR, INC. AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES (continued)
The Company must useuses judgment to determine: a) the number of performance obligations based on the determination under step (ii) above and whether those performance obligations are distinct from other performance obligations in the contract; b) the transaction price under step (iii) above; and c) the stand-alone selling price for each performance obligation identified in the contract for the allocation of transaction price in step (iv) above. The Company also uses judgment to determine whether milestones or other variable consideration, except for royalties, should be included in the transaction price. The transaction price is allocated to each performance obligation on an estimated stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied, see, Note 10.
satisfied. Where a portion of non-refundable up-front fees or other payments received are allocated to continuing performance obligations under the terms of a license arrangement, they are recorded as contract liabilities and recognized as revenue when (or as) the underlying performance obligation is satisfied.
11 |
BEYOND AIR, INC. AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES (continued)
Grant receivable
Under a collaboration arrangement with the Cystic Fibrosis Foundation, grant milestones are achieved subject to certain performance steps and requirements under a development program. Grant milestones are recorded as reimbursements against the applicable portion of the Company’s research and development expenses. Such reimbursements are reflected as a reduction of research and development expenses in the Company’s consolidated statements of operations, as the performance of research and development services for reimbursement is not considered to be an ongoing component or central to the Company’s operations.
Segment reportingReporting
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. To date, we have viewed ourthe Company views its operations and managed ourmanages its business as one 1segment.
Research and Development
Research and development expenses are charged to the statement of operations as incurred. Research and development expenses include salaries, benefits, stock-based compensation and costs incurred by outside laboratories, manufacturer’s,manufacturers, clinical research organizations, consultants, and accredited facilities in connection with clinical trials and preclinical studies and stock based-compensation. Research and development projects that have no alternative uses have been expensed as incurred.expenses are partially offset by the benefit of tax incentive payments for qualified research and development expenditures from the Australian tax authority (“AU Tax Rebates”). The Company does not record AU Tax Rebates until payment is received due to the uncertainty of receipt. To date, the Company has not received any AU Tax Rebates.
12 |
BEYOND AIR, INC. AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES (continued)
Foreign Exchange Transactions
BA Ltd., Beyond Air Ireland Limited, Beyond Air Australia Pty, Ltd.The Company’s subsidiaries have operations are in Israel, Ireland, and in Australia, respectively. Beyond Air’sAustralia. The Company’s operations are in the United States and the Company’s management believes that the U.S. dollar is the currency of the primary economic environment in which the Company operates and expects to continue to operate in the foreseeable future. Thus, the functionalThe Company translated its non-U.S. operations’ assets and reporting currencyliabilities denominated in foreign currencies into U.S. dollars at current rates of exchange as of the Company isbalance sheet date and income and expense items at the U.S. dollar. The Company’s transactions and balances denominated in U.S. dollars are presented at their original amounts. Non-dollar transactions and balances have been re-measured to U.S. dollars in accordance withaverage exchange rate for the Accounting Standards Board Codification Topic 830, “Foreign Currency Matters”. The translation adjustment atreporting period. Translation adjustments resulting from exchange rate fluctuations as of June 30, 20202021 and March 31, 2020 was2021 were not material. Gains or losses from foreign currency transactions are included in other income (expense) in the statement of operations as foreign currency exchange gain/(loss).
Stock-Based Compensation
The Company measures the cost of employee and non-employee services received in exchange for an award of equity instruments based on the grant-dategrant date fair value of the award. Fair value for restricted stock awards is valued using the closing price of the Company’s common stock on the date of grant. That costThe grant date fair value is recognized over the requisite service period during which an employee and non-employee is required to provide service in exchange for the award - the requisite service period.award. The grant-dategrant date fair value of employee and non-employee share options is estimated using the Black-Scholes option pricing model. The risk-free interest rate assumptions were based upon the observed interest rates appropriate for the expected term of the equity instruments. The expected dividend yield was assumed to be zero as the Company has not paid any dividends since its inception and does not anticipate paying dividends in the foreseeable future. Due to the Company’s limited trading history, the Company utilizes anweighting of its historical volatility and the implied volatility based on an aggregate of guideline companies. In 2020, the Company began to blend its historical volatility with the peer group in order to obtain expected volatility. The peer companies were based similar publicly traded peer companies. The Company routinely reviews its calculation of volatility based on, the Company’s life cycle, its peer group, and other factors. The Company uses the simplified method for share-based compensation to estimate the expected term.
BEYOND AIR, INC. AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES (continued)
Compensation expense for options and warrants granted to non-employees is determined by the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measured, and is recognized over the service period. The expense was previously adjusted to fair value at the end of each reporting period until such awards vested, and the fair value of such instruments, as adjusted, was expensed over the related vesting period. Adjustments to fair value at each reporting date resulted in income or expense, depending upon the estimate of fair value and the amount of expense recorded prior to the adjustment. In June 2018, the FASB issued ASU No. 2018-07, Stock-based Compensation: Improvements to Nonemployee Share-based Payment Accounting, which amends the existing accounting standards for share-based payments to nonemployees. This ASU aligns much of the guidance on measuring and classifying nonemployee awards with that of awards to employees. Under the new guidance, the measurement of nonemployee equity awards is fixed on the grant date. The fair value of all non-employee awards became fixed at the start of the fourth quarter of 2019.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation and accumulated amortization. Depreciation and amortization is calculated using the straight-line method over the estimated useful life of the assets as follows:
SCHEDULE OF PROPERTY AND EQUIPMENT USEFUL LIFE OF ASSETS
Three years | |
Furniture and fixtures | Seven years |
Clinical and medical equipment | Five |
Leasehold improvements | Shorter of term of lease or estimated useful life of the asset |
13 |
BEYOND AIR, INC. AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES (continued)
Licensed Right to Use Technology
Licensed right to use technology that is considered platform technology with alternative future uses is recorded as an intangible asset which resulted from the NitricGen transaction, see Note 11. The intangible asset was valued based upon the fair value of the options issued to NitricGen and the cash paid for this transaction. The license also contains two future milestone additional payments aggregating $1,800,000. The intangible asset is being amortized on a straight-line method over its estimated useful life, of determined to be thirteen years. years, see Note 14.
The expected amortization expense for the next five years and thereafter is as follows for the year ended March 31:31,:
Remainder of 2021 | $ | 28,558 | ||
2022 | 38,077 | |||
2023 | 38,077 | |||
2024 | 38,077 | |||
2025 | 38,077 | |||
Thereafter | 222,378 | |||
Total | $ | 403,244 |
BEYOND AIR, INC. AND ITS SUBSIDIARIESSCHEDULE OF FUTURE EXPECTED AMORTIZATION EXPENSE
March 31, 2021 | ||||
Remainder of 2022 | $ | 28,558 | ||
2023 | 38,077 | |||
2024 | 38,077 | |||
2025 | 38,077 | |||
2026 | 38,077 | |||
Thereafter | 184,292 | |||
Total | $ | 365,158 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)Long-Lived Assets
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES (continued)
The Company assess the impairment of long-lived assets on an ongoing basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors we consider that could triggerthe Company considers as potential triggers of an impairment review include the following:
● | significant underperformance relative to expected historical or projected future operating results, |
● | |
significant changes in the manner of | |
● | |
significant negative regulatory or economic trends, and | |
● | |
significant technological changes, which would render the platform technology, equipment, and manufacturing processes obsolete. |
14 |
BEYOND AIR, INC. AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES (continued)
Long-Lived Assets
Recoverability of assets that will continue to be used in ourthe Company’s operations is measured by comparing the carrying value to the future net undiscounted cash flows expected to be generated by the asset or asset group. Future undiscounted cash flows include estimates of future revenues, driven by market growth rates, and estimatedestimates of future costs. There were no events during the reporting periods that were deemed to be a triggering event that would require an impairment assessment.
Income Taxes
The Company accounts for income taxes using the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rate is recognized in income or expense in the period that the change is effective. Tax benefits are recognized when it is probable that the deduction will be sustained. A valuation allowance is established when it is more likely than not that all or a portion of a deferred tax asset will either expire before the Company is able to realize the benefit, or that future deductibility is uncertain. As of June 30, 2020,2021 and March 31, 2020,2021, the Company recorded a valuation allowance to the full extent of ourthe Company’s net deferred tax assets since the likelihood of realization of the benefit does not meet the more likely than notmore-likely-than-not threshold.
The Company files a U.S. Federal,federal, various state, and Internationalinternational income tax returns. Uncertain tax positions are reviewed on an ongoing basis and are adjusted in light of changing facts and circumstances. Such adjustment is reflected in the tax provision when appropriate. The Company will recognize interest and penalties, if any, related to unrecognized tax benefits in income taxes in the statements of operations. Tax years 20162017 through 20202021 remain open to examination by federal and state tax jurisdictions. The Company files tax returns in Israel for which tax years 20142015 through 20202021 remain open. In addition, the Company files tax returns in Ireland and Australia and the tax yearyears 2020 remainsand 2021 remain open.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES (continued)
Net Income (Loss) Per Share
Basic and diluted net loss per share attributable to common stockholders is computed by dividing the net loss and a deemed dividend from a warrant modification attributable to common stockholders, if any, by the weighted average number of shares of common sharesstock outstanding for the period. The dilutive effect of outstanding options, warrants, restricted stock and other stock-based compensation awards is reflected in diluted net income (loss) per share by application of the treasury stock method. The calculation of diluted net income (loss) attributed to common shareholdersstockholders per share excludes all anti-dilutive shares of common shares.stock. For periods in which the Company has reported net losses, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, because such shares of common sharesstock are not assumed to have been issued if their effect is anti-dilutive, see Note 9.
15 |
BEYOND AIR, INC. AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES (continued)
New Accounting Standards
There are no recently issued accounting standards that have been adopted in the current period or will be adopted in future periods that have had or are expected to have a material impact on ourthe Company’s consolidated financial position or results of operations.
Recently Issued Accounting Standards Not Yet Adopted
In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” as part of its initiative to reduce complexity in the accounting standards. The standard eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The standard also clarifies and simplifies other aspects of the accounting for income taxes. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. The Company does not anticipate the adoption of this guidance to have a material impact on its consolidated financial statements and related disclosures.
NOTE 3 FAIR VALUE MEASUREMENT
The Company’s financial instruments primarily include cash, cash equivalents, restricted cash, marketable securities, accounts payable, loan payable and credit facilitythe short-term loan. Due to the short-term nature of cash and accounts payable,these financial instruments, the carrying amounts of these assets and liabilities approximate their fair value. The long-term debt approximates fair value due to the prevailing market conditions for similar debt with remaining maturity and terms.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value. A fair value hierarchy has been established for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:
Level 1 - | quoted prices in active markets for identical assets or liabilities; | |
Level 2 - | inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or | |
Level 3 - | unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
BEYOND AIR, INC. AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 4 PROPERTY AND EQUIPMENT
Property and equipment consist of the following as of June 30, 2020 and March 31, 2020, respectively:following:
June 30, 2020 | March 31, 2020 | |||||||
Clinical and medical equipment | $ | 562,024 | $ | 357,795 | ||||
Computer equipment | 91,999 | 73,982 | ||||||
Furniture and fixtures | 62,995 | 53,895 | ||||||
Leasehold improvements | 17,517 | 5,336 | ||||||
734,535 | 491,008 | |||||||
Accumulated depreciation and amortization | (313,321 | ) | (279,671 | ) | ||||
$ | 421,214 | $ | 211,337 |
SCHEDULE OF PROPERTY AND EQUIPMENT
June 30, 2021 | March 31, 2021 | |||||||
Clinical and medical equipment | $ | 1,097,397 | $ | 1,074,353 | ||||
Computer equipment | 153,123 | 152,052 | ||||||
Furniture and fixtures | 136,110 | 133,170 | ||||||
Leasehold improvements | 21,840 | 21,840 | ||||||
1,408,470 | 1,381,415 | |||||||
Accumulated depreciation and amortization | (510,920 | ) | (452,573 | ) | ||||
$ | 897,550 | $ | 928,842 |
Depreciation and amortization expense related to fixed assets for the three months ended June 30, 20202021 and June 30, 20192020 was $33,650 $58,347 and $17,902.$33,650, respectively.
17 |
BEYOND AIR, INC. AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 5 SHAREHOLDER’SSTOCKHOKDERS’ EQUITY
In August 2018, the Company entered into a Stock Purchase Agreement with LPC for $20 million. The Company may sell and issue LPC and LPC was obligated to purchase up to $20 million in value of shares of common stock from time to time over three years. Under this Purchase Agreement, for the three months ended June 30, 2020 and June 30, 2019, the Company received proceeds of $ 1,958,845 and $1,173,810 from the sale of 243,605 and 250,000 shares of the Company’s stock, respectively. The average price per share sold for the three months ended June 30, 2020 and June 30, 2019 was $8.04 per share and $4.70 per share, respectively. On May 14, 2020, the Company entered into a $40 million NewStock Purchase Agreement, which replaced the former $20 million purchase agreement with LPC that replaced the existing $20 million purchase agreement.from August 2018. The NewStock Purchase Agreement provides for the issuance of up to $40 $40 million of the Company’s common stock which wethe Company may sell from time to time in ourits sole discretion to LPC over the next 36 months, provided that the closing price of the Company’s common stock is not below $0.25 $per share and subject to certain other conditions and limitations set forth in the NewStock Purchase Agreement. Pursuant toFor the New Purchase Agreement,three months ended June 30, 2021 and June 30 2020, the Company received net proceeds of $1,682,835 $1,031,300 and $3,641,800 from the sale of 325,000 shareand shares of common stock, at $8.58 per share. The Company incurred a 2.5% fee for this transaction. Atrespectively. As of June 30, 2020,2021, there is $37,211,500was $28.2 million available under thisthe Stock Purchase Agreement. The Company filed a prospectus supplement for this Purchase Agreement.
On April 2, 2020, the Company entered into an At-The-Market Equity Offering (“ATM”)ATM for $50 $50 million utilizing the Company’s shelf registration statement and filed on Form S-3. The Under the ATM, the Company may sell shares of ourits common stock having aggregate sales proceeds of up to $50,000,000$50 million from time to time in this offering,and at various prices, subject to the conditions and limitations set forth in the sales agreement. If shares of the Company’s common stock are sold, there is a three 3 percent fee paid to the sales agent. For the three months ended June 30, 2021 and June 30, 2020, the Company received net proceeds of $899,540 $7,481,567 and $899,540 from the sale of and shares of the Company’s stock. At June 30, 2020, there is $48,985,459, available under this ATM.
BEYOND AIR, INC. AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 5 SHAREHOLDER’S EQUITY (continued)
On June 3, 2019, the Company entered into a Stock Purchase Agreement (“Offering”) with investors for the issuance of 1,583,743 shares of common stock. The Company raised net proceeds was $7,839,495. The Company’s CEO participated in this offering and invested $300,000 and received 58,253 shares of common stock, or $5.15 per share.
On July 2, 2019, the SEC declared effective, the Company’s Form S3 shelf registration statement which allows the Company to sell up to $100 million of equity securities. In addition, certain directors and employees invested $610,000 for an aggregate of 118,254 shares of common stock, representing a purchase price of $5.15 per share. The Company registered these shares in June 2019 on Form S-3 and was declared effective on September 11, 2019.
Stock to be Issued to a Vendor
As of March 31, 2020, the Company was obligated to issue 30,000 shares to a vendor for services related to investor relations. In May 2020, the 30,000 shares were issued and the fair value of the liability amount was transferred to shareholders’ equity. For the three months ended June 30, 2020 and June 30, 2019 the Company recorded the fair market value of the shares to be issued and recorded stock-based compensation of $2,100 and $22,500, respectively. The fair market value of the liability asAs of June 30, 2020 and March 31, 20202021, there was $0 and $240,000, respectively.$29.9 million available under the ATM.
Issuance of Restricted SharesStock
On December 26, 2018, and December 31, 2019, the Board of directors approved the issuance of 340,000 and 390,000, shares of restricted stock, respectively, to officers, employees and consultants and theThe fair value for the restricted stock awards was valued at the closing price of the Company’s common stock on the date of grant. Restricted stock vests annually over . Stock-based compensation related to the closing pricing of the Company’sthese stock at the date of grant. Stock based compensationissuances for the three months ended June 30, 20202021 and June 30, 20192020 was $393,861 $and $151,131,$, respectively. AsA summary of the change of the Company’s restricted stock awards for the period ended June 30, 2020, there are 646,800 unvested shares with an average grant date fair value of $4.99 per share.2021 is as follows:
SCHEDULE OF CHANGE IN WARRANTS OPTIONS
Number Of Shares | Weighted Average Grant Date Fair Value | |||||||
Unvested as of April 1, 2021 | 554,200 | 5.07 | ||||||
Forfeited | ) | |||||||
Unvested as of June 30, 2021 | $ |
Stock Option Plan
The Company’s amendedThird Amended and restatedRestated 2013 Equity Incentive Option Plan (the “2013 Plan”), allows for awards to officers, directors, employees, and non-employeesconsultants of stock options, restricted stock units and restricted shares of the Company’s common stock. . The 2013 Plan has 4,100,000 shares eligibleauthorized for issuance. As of June 30, 2020, there are 69,0472021 shares were available under the 2013 Plan.
BEYOND AIR, INC. AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 5 SHAREHOLDER’SSTOCKHOLDERS’ EQUITY (continued)
Number Of Options | Weighted Price - | Weighted Average Remaining Contractual Life- Options | �� | Aggregate Intrinsic Value | ||||||||||||
Options outstanding as of April 1, 2020 | 3,053,589 | $ | 4.48 | 8.4 | $ | 2,931,535 | ||||||||||
Granted | 122,000 | 5.76 | 9.9 | 219,000 | ||||||||||||
Exercised | (2,340 | ) | 0.1 | (18,400 | ) | |||||||||||
Outstanding as of June 30, 2020 | 3,173,249 | $ | 4.77 | 8.5 | $ | 7,790,295 | ||||||||||
Exercisable as of June 30, 2020 | 1,302,374 | $ | 4.48 | 7.8 | $ | 6,633,700 |
SCHEDULE OF OPTION ACTIVITY
Number Of Options | Weighted Average Exercise Price - Options | Weighted Average Remaining Contractual Life- Options | Aggregate Intrinsic Value | |||||||||||||
Options outstanding as of April 1, 2021 | 4,185,097 | $ | 4.91 | $ | 2,609,100 | |||||||||||
Granted | 65,000 | 5.26 | ||||||||||||||
Forfeited | (25,875 | ) | 5.11 | |||||||||||||
Outstanding as of June 30, 2021 | 4,224,222 | $ | 4.93 | $ | 6,516,900 | |||||||||||
Exercisable as of June 30, 2021 | 1,901,479 | $ | 4.57 | $ | 3,597,100 |
As of June 30, 2020,2021, the Company has unrecognized stock-based compensation expense of approximately $3,845,100 $related to unvested stock options and which is expected to be expensed over the weighted average remaining service period of 2.6 years. The weighted average fair value of options granted was $5.09 $and $per share during the three months ended June 30, 2020.2021 and June 30, 2020, respectively. The following were utilized on the date of grant:
June 30, 2020 | June 30, 2019 | |||||||
Risk -free interest rate | 0.5-.07 | % | 2.3 | % | ||||
Expected volatility | 87.8-92.54 | % | 83.4 | % | ||||
Dividend yield | 0 | % | 0 | % | ||||
Expected terms (in years) | 5.28 -6.25 | 6.25 |
June 30, 2021 | June 30, 2020 | |||||||
Risk free interest rate | % | -. | % | |||||
Expected volatility | - | % | - | % | ||||
Dividend yield | % | % | ||||||
Expected terms (in years) | - |
Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | |||||||
Research and development | $ | 837,449 | $ | 149,922 | ||||
General and administrative | 978,205 | 769,115 | ||||||
Total stock-based compensation expense | $ | 1,815,654 | $ | 919,037 |
WarrantsSCHEDULE OF STOCK-BASED COMPENSATION EXPENSE
Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | |||||||
Research and development | $ | 364,551 | $ | 837,449 | ||||
General and administrative | 851,360 | 978,205 | ||||||
Total | $ | 1,215,911 | $ | 1,815,654 |
On March 4, 2021, the stockholders approved the 2021 Employee Stock Purchase Plan “the ESPP”. The purpose of the ESPP is to encourage and to enable eligible employees of the Company, through after-tax payroll deductions, to acquire proprietary interests in the Company through the purchase and ownership of shares of common stock. The ESPP is intended to benefit the Company and its stockholders by (a) incentivizing participants to contribute to the success of the Company and to operate and manage the Company’s business in a manner that will provide for the Company’s long-term growth and profitability and that will benefit its stockholders and other important stakeholders and (b) encouraging participants to remain in the employ of the Company. As of June 30, 2021 and March 31, 2021, there were shares issued under the ESPP and shares were available for future issuance under the ESPP.
Warrants
A summary of the Company’s outstanding warrants as of June 30, 2020 are2021 is as follows:
Warrant Holders | Number Of Warrants | Exercise Price | Date Of Expiration | |||||||||
January 2017 offering - investors | 1,530,282 | $ | 3.66 | January 2022 | (a) | |||||||
January 2017 offering - investors | 1,530,282 | $ | 3.66 | February 2022 | (a) | |||||||
March 2017 offering - investors | 68,330 | $ | 3.66 | March 2021 | (a) | |||||||
March 2017 offering - placement agent | 7,541 | $ | 3.66 | March 2021 | (a) | |||||||
March 2018 offering - investors | 1,586,231 | $ | 4.25 | March 2022 | ||||||||
Third-party license agreement | 208,333 | $ | 4.80 | January 2024 | ||||||||
March 2020 loan (see Note 10) | 172,187 | $ | 7.26 | March 2025 | ||||||||
Total | 5,103,186 |
SUMMARY OF COMPANY’S OUTSTANDING WARRANTS
Warrant Holders | Number Of Warrants | Exercise Price | Date of Expiration | |||||||
January 2017 offering – investors | 2,977,232 | $ | 3.66 | January 2022 (a) | ||||||
March 2017 offering – investors | 68,330 | $ | 3.66 | March 2022 (a) | ||||||
March 2017 offering - placement agent | 7,541 | $ | 3.66 | March 2022 (a) | ||||||
Third-party license agreement | 208,333 | $ | 4.80 | January 2024 | ||||||
March 2020 loan (see Note 12) | 172,187 | $ | 7.26 | March 2025 | ||||||
Total | 3,433,623 |
(a) | These warrants have down round protection. |
For the three months ended June 30, 2021, warrants were exercised. For the three months ended June 30, 2020, there were warrants exercised for $293,111 and 70,538 shares of common stock were issued at an average price per share of $4.16 per share. For the year three months ended June 30, 2019, no warrants were exercised.$293,111.
BEYOND AIR, INC. AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 6 OTHER CURRENT ASSETS PREPAID EXPENSES
A summary of current assets and prepaid expenses as of June 30, 2020 and March 31, 2020 is as follows:
June 30, 2020 | March 31, 2020 | |||||||
Research and development | $ | 667,214 | $ | 266,510 | ||||
Insurance | 337,574 | 471,182 | ||||||
Professional | 50,000 | 156,259 | ||||||
Value added tax receivable | 79,759 | 124,127 | ||||||
Other | 72,691 | 131,728 | ||||||
$ | 1,207,238 | $ | 1,149,806 |
SCHEDULE OF CURRENT ASSETS AND PREPAID EXPENSES
June 30, 2021 | March 31, 2021 | |||||||
Research and development | $ | 284,276 | $ | 271,727 | ||||
Insurance | 573,928 | 971,140 | ||||||
Professional | 113,056 | - | ||||||
Value added tax receivable | 106,210 | 41,272 | ||||||
Other | 247,594 | 245,957 | ||||||
Total | $ | 1,325,064 | $ | 1,530,096 |
NOTE 7 ACCRUED EXPENSES
A summary of the accrued expenses as of June 30, 2020 and March 31, 2020 is as follows:
June 30, 2020 | March 31, 2020 | |||||||
Vendors – research and development | $ | 256,578 | $ | 484,756 | ||||
Professional fees | 447,673 | 476,638 | ||||||
Employee salaries and benefits | 145,273 | 71,066 | ||||||
Interest expense | 126,928 | - | ||||||
Other | 108,152 | 65,074 | ||||||
Total | $ | 1,084,604 | $ | 1,097,534 |
SUMMARY OF ACCRUED EXPENSES
June 30, 2021 | March 31, 2021 | |||||||
Research and development | $ | 446,877 | $ | 584,802 | ||||
Professional fees | 710,549 | 708,800 | ||||||
Employee salaries and benefits | 398,653 | 269,787 | ||||||
Other | 139,156 | 241,549 | ||||||
Total | $ | 1,695,235 | $ | 1,804,938 |
NOTE 8 LEASES
On April 1, 2019, the Company early adopted Accounting Standards UpdateASU No. 2016-02, Leases (Topic 842) (ASU 2016-02), as amended (“ASU 2016-02”), which generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. The Company early adopted the new guidance using the modified retrospective transition approach and practical expedients to all leases existing at the date of initial application and not restating comparative periods. In June, the Company entered into a new lease and cancelled a lease, which resulted recognition of operating lease liabilities and right-of-use assets of approximately of $236,700 and $236,900, respectively The cancellation of the lease resulted in a derecognition of operating lease liabilities and right-of-use assets of approximately of $17,600 and $20,500. As a result of the cancellation, the Company recorded a gain of $1,900. The right-of use assets and operating lease liability isare as follows as of June 30, 2020 and March 31, 2020.follows:
June 30, 2020 | March 31, 2020 | |||||||
Right- of- use assets | $ | 398,102 | $ | 195,727 | ||||
Operating lease liability short-term | $ | 79,668 | $ | 69,342 | ||||
Operating lease liability long-term | 323,270 | 131,581 | ||||||
$ | 402,938 | $ | 200,923 |
SCHEDULE OF OPERATING LEASE LIABILITY
June 30, 2021 | March 31, 2021 | |||||||
Right-of-use assets | $ | 1,815,351 | $ | 1,860,885 | ||||
Operating lease liability short-term | $ | 187,288 | $ | 113,141 | ||||
Operating lease liability long-term | 1,720,389 | 1,789,461 | ||||||
Total | $ | 1,907,677 | $ | 1,902,602 |
Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. Certain adjustments to the right-of-use asset may be required for items such as prepaid or accrued rent. The interest rate implicit in ourthe Company’s leases is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate, which reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. In transition to ASC 842, the Company utilized the remaining lease term of its leases in determining the appropriate incremental borrowing rates. At June 30, 2020 and March 31,2020, the weighted average discount rate and remaining term on lease obligation is approximately, 8.3%, 8.3%, 4.7 and 3.0 years respectively at. Operating lease expense is recognized on a straight-line basis over the lease term and is included in general and administrative expenses. Amortization expense for finance (capital) leases is recognized on a straight-line basis over lease term and is included in general and administrative expenses and research development expenses. The Company has other operating lease agreements with commitments of less than one year or that are not significant. The Company elected the practical expedient option and development expenses, while interest expense for finance leases is recognized using the effective interest method.as such these lease payments are expensed as incurred.
SCHEDULE OF LEASE OTHER INFORMATION
Other Information For The Three Months Ended June 30, 2021 | ||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Cash paid | $ | 31,861 | ||
Right-of-use assets obtained in exchange for new operating lease liabilities: | - | |||
Weighted average remaining lease term — operating leases | 9.0 years | |||
Weighted average discount rate — operating leases | 8.3 | % |
SCHEDULE OF MATURITY OF LEASE LIABILITIES
Maturity of Lease Liabilities | Operating Leases | |||
Payments remaining for the year ended March 31: | ||||
2022 | $ | 234,332 | ||
2023 | 328,475 | |||
2024 | 286,786 | |||
2025 | 277,451 | |||
2026 | 284,590 | |||
Thereafter | 1,328,640 | |||
Total lease payments | 2,740,274 | |||
Less: interest | (832,597 | ) | ||
Present value of lease liabilities | $ | 1,907,677 |
BEYOND AIR, INC. AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2020 | June 30, 2019 | |||||||
Common stock warrants | 5,103,186 | 6,143,405 | ||||||
Common stock options | 3,173,249 | 2,339,215 | ||||||
Restricted shares | 646,800 | 340,000 | ||||||
Total | 8,923,235 | 8,822,620 |
SCHEDULE OF POTENTIAL ANTI-DILUTIVE SECURITIES
June 30, 2021 | June 30, 2020 | |||||||
Common stock warrants | 3,433,623 | 5,103,186 | ||||||
Common stock options | 4,224,222 | 3,173,249 | ||||||
Restricted stock | 546,200 | 646,800 | ||||||
Total | 8,204,045 | 8,923,235 |
NOTE 10 LICENSE AGREEMENT
On January 23, 2019, the Company entered into an agreement for commercial rights (the “License“Circassia Agreement”) with Circassia Limited and its affiliates (collectively, “Circassia”) for persistent pulmonary hypertension of the newborn (“PPHN”)PPHN and future related indications at concentrations of <80 ppm in the hospital setting in the United States and China. On December 18, 2019, the Company terminated the License Agreement,Circassia Agreement. On May 25, 2021, the Company made a settlement with Circassia, see Note 13. The14.
As of March 31, 2021, the Company would have received payments up to $32.55 million in up fronthas met its performance obligation under the Circassia Agreement and regulatory milestones,revenue therefrom has been previously recognized. License revenue of which $31.5 million was $0 and $229,161 associated with the U.S. market. All such payments were payable in cash or ordinary shares of Circassia, atCompany’s second performance obligation has been recognized for the discretion of Circassia, with payments in cash discounted by approximately 5%. Royalties are payable only in cash.three months ended June 30, 2021 and June 30, 2020, respectively.
This contract was evaluated under ASC 606, which was adopted by the Company during fiscal 2019. Based upon the evaluation, it was determined that the contract consists of five performance obligations with only the following two obligations required prior to the termination of the License Agreement.
BEYOND AIR, INC. AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 11 GRANT COLLABORATON AGREEMENT
On February 10, LICENSE AGREEMENT (continued)
In consideration2021, the Company received a grant for up to $2.17 million from the Cystic Fibrosis Foundation (“CFF”) to advance the clinical development of high concentration NO for the treatment of Nontuberculous Mycobacteria, or NTM pulmonary disease, which disproportionally affects cystic fibrosis (“CF”) patients. Under the terms of the rights and licenses granted to Circassia bygrant agreement, the Company, five milestones were included. The Company received the first two milestone payments in ordinary shares of Circassia
During the three months ended March 31, 2019, the Company met the first two milestones under the license agreement and received 17,572,815 ordinary shares valued at $9,987,295. This consideration wasfunding will be allocated to the first twoongoing LungFit® GO NTM pilot study. The grant provides milestones based upon the Company’s achieving performance obligations. one beingsteps and requirements under a development program. The grant provides for royalty payments to CFF upon the transfercommercialization of any product developed under the intellectual property to Circassia, which was recognizedgrant program at a point in time and was valuedrate of 10% of net sales. The royalties are capped at $7,116,232 andfour times the other beinggrant actually paid to the ongoing support associated with the PMA submission and regulatory approval by the FDA, which was valued at $2,871,063 and recorded as deferred revenue to be recognized over a period of time from the commencement of the agreement to when management expects to submit the PMA.Company. For the three months ended June 30, 20202021, the Company recognized $225,150 in reduction of research and June 30, 2019, $229,161development expenses and $627,469, respectively incurred $392,000 of such revenue associated with this second performance obligation has been recognized. As of June 30, 2020,related research and March 31, 2020, deferred revenue was $644,029 and $873,190, respectively.development costs.
BEYOND AIR, INC. AND ITS SUBSIDIARIESNOTE 12 LONG-TERM LOAN
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED
NOTE 11 FACILITY AGREEMENT LOAN
On March 17, 2020, the Company entered into a facility agreement the Facility Agreement for up to $25,000,000 with certain lenders pursuant to which the lenders shall loan to up to $25,000,000 in five tranches of $5,000,000 $5,000,000 per tranchetranche. Such tranches are at the option of the Company (“Tranches”), provided, however that the Company may only utilize tranches three through five following FDA approval of our the LungFit™LungFit® PH product. The loan(s) are unsecured with interest at 10%10% per year which is to be paid quarterly. The loans may be prepaid with certain prepayment penalties. The effective interest rate for this loan is 13.3%13.3% per year. Each tranche shall be repaid in installments commencing June 15, 2023 with all amounts outstanding under any tranche due on March 17, 2025. The Company received proceeds from the first tranche in fiscal year 2020. A lender who is over a five percent shareholder,stockholder loaned the Company $3,160,000$3,160,000 of the first tranche and, as such, related party interest expense associated with this debt for the three months ended June 30, 2021 and June 30, 2020 was $79,000 (not$79,000 and $79,000 (not including amortization of debt discount and deferred offering costs). , respectively.
In connection with the first tranche, the Company issued, in March 2020, warrants to the lenders for the purchase of 172,826 shares of the Company’s common stock at $7.26 $7.26 per share. The warrants expire in five years.years. There are additional warrant issuances associated with each tranche. If the second tranche of $5 million is utilized by the Company, the warrants that will be issued isare up to twenty five percentagepercent of itstheir commitment value divided by the five day the volume weighedfive-day volume-weighted average price “(VWAP”(“VWAP”) prior to utilization date. For tranches three to five, if any of these tranches are utilized by the Company, the warrants that will be issued isare up to ten percentagepercent of its commitment value divided by the five day thefive-day VWAP.As a result, theThe Company allocated the fair market value of the warrants at the date of grant of the warrant to stockholders’ equity and reflected a debt discount valued at $594,979 usingof $594,979. Debt discount and debt issuance costs are amortized over the Black Scholes pricing model.
As a result, the Company allocated the fair market value at the date of grantlife of the warrant to stockholders’ equity and debt discount valued at $594,979. The Black-Scholes pricing model was used with the following assumptions:loan.
BEYOND AIR, INC. AND ITS SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 12 LONG-TERM LOAN (continued)
A summary of the facility agreementlong-term loan balance as of June 30, 2020 and March 31, 2020 is as follows:
June 30, 2020 | March 31, 2020 | |||||||
Face value of loan | $ | 5,000,000 | $ | 5,000,000 | ||||
Debt discount | (594,979 | ) | (594,979 | ) | ||||
Accretion of interest expense | 37,754 | 4,562 | ||||||
Debt offering costs | (70,518 | ) | (70,518 | ) | ||||
Facility agreement loan balance – March 31, 2020 | $ | 4,372,257 | $ | 4,339,065 |
Maturity of Facility Agreement Loan | June 30, 2020 | |||
2021 | $ | - | ||
2022 | - | |||
2023 | 1,500,000 | |||
2024 | 2,750,000 | |||
2025 | 750,000 | |||
Total | $ | 5,000,000 |
SCHEDULE OF LONG-TERM LOAN
June 30, 2021 | March 31, 2021 | |||||||
Face value of loan | $ | 5,000,000 | $ | 5,000,000 | ||||
Debt discount | (594,979 | ) | (594,979 | ) | ||||
Accretion of debt discount | 156,685 | 123,493 | ||||||
Amortization of debt offering costs | 14,750 | 14,750 | ||||||
Debt offering costs | (71,063 | ) | (71,063 | ) | ||||
Total | $ | 4,505,393 | $ | 4,472,201 |
SCHEDULE OF MATURITY OF LONG-TERM LOAN
Maturity of Long-Term Loan | June 30, 2021 | |||
2022 | $ | - | ||
2023 | 500,000 | |||
2024 | 2,250,000 | |||
2025 | 2,250,000 | |||
Total | $ | 5,000,000 |
NOTE 12 13 LOAN PAYABLE
As of June 30, 2020,2021 and March 31, 2020,2021 in connection with the Company’s insurance policy, a loan was used to finance part of the premium. The following details concerning each loan is due within the year with monthly payments of $42,366 bearing interest at 4.3%. The outstanding balanceare as of June 30, 2020 and March 31, 2020 was $209,579 and $335,358, respectively.follows:
BEYOND AIR, INC. AND ITS SUBSIDIARIESSCHEDULE OF LOAN PAYABLE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2021 | March 31, 2021 | |||||||
Amount outstanding | $ | 349,165 | $ | 556,514 | ||||
Monthly payments | $ | 70,396 | $ | 70,396 | ||||
Number of monthly payments | 9 | 9 | ||||||
Interest rate | 3.2 | % | 3.2 | % | ||||
Due date | November 2021 | November 2021 |
NOTE 13 14 COMMITMENTS AND CONTINGENCIES
License and Other Agreements
On October 22, 2013, the Company entered into a patent license agreement (the “CareFusion Agreement”) with SensorMedics Corporation, a subsidiary of CareFusion Corp. (“CareFusion”), pursuant to which itthe Company agreed to pay to the third partyCareFusion a non-refundable upfront fee of $150,000$150,000 that is credited against future royalty payments, and is obligated to pay 5%5% royalties of any licensed product net sales, but at least $50,000$50,000 per annum throughduring the term of the agreement and the advance is credited against future royalties payments.agreement. As of December 31, 2019,June 30, 2021, the Company didhas not paypaid any royalties to CareFusion since the Company didhas not havereceived any revenues from this license.the technology associated with the license under the CareFusion Agreement. The term of the agreementCareFusion Agreement extends through the life of applicable patents and may be terminated by either party with 60 days’ prior written notice in the event of a breach of the agreement,CareFusion Agreement, and may be terminated unilaterally by CareFusion with 30 days’ prior written notice in the event that we dothe Company does not meet certain milestones.
In August 2015, BA Ltd. entered into an Option Agreement (the “Option Agreement”) with Pulmonox whereby BA Ltd. acquired the option to purchase certain intellectual property assets and rights (the “Option”) on September 7, 2016 for $25,000.rights. On January 13, 2017, the Company exercised the Option and paid $500,000.$500,000 to Pulmonox. The Company becomes obligated to make certain one-time development and sales milestone payments to Pulmonox, commencing with the date on which we receivethe Company receives regulatory approval for the commercial sale of the first product candidate qualifying under the agreement.Option Agreement. These milestone payments are capped at a total of $87 $87 million across three separate and distinct indications that fall under the agreement,Option Agreement, with the majority of them, approximately $83 $83 million, being related to sales related based on cumulative sales milestones for each of the three products.
On January 31, 2018, the Company and NitricGen, Inc. (“NitricGen”) entered into an agreement (“(the “NitricGen Agreement”) with NitricGen, Inc. (“NitricGen”)to acquire a global, exclusive, transferable license and associated assets including intellectual property, know-how, trade secrets and confidential information from NitricGen related to the LungFit™LungFit®. The Company acquired the licensing right to use the technology and agreed to pay NitricGen a total of $2,000,000 $2,000,000 in future payments based upon achievingthe achievement of certain milestones, as defined in the NitricGen Agreement, and royalties on sales LungFit™of LungFit®. The Company paid NitricGen $100,000 $100,000 upon the execution agreement, $100,000 of the NitricGen Agreement, $100,000 upon achieving the next milestone and issued warrants to purchase the Company’s common stock valued at $295,000 $295,000 upon executing the agreement.NitricGen Agreement. The remaining future milestone payments are $1,800,000 $1,800,000 of which $1,500,000 in$1,500,000 is due after six months after the first approval of the LungFit™ by the Food and Drug Administration or the European Medicine Evaluation Agency. approval.
Employment Agreements
Certain officer agreements between the Company and its officers contain a change of control provision for payment of severance arrangements.
Operating LeasesSupply Agreement and Purchase Order
The Company cancelled a lease in May 2020 for its location in Madison, Wisconsin. In JuneAugust 2020, the Company entered into a leasesupply agreement expiring on December 31, 2024. The agreement will renew automatically for office spacesuccessive three-year periods unless and research facility in Madison, Wisconsin. The lease agreement expires in May 2026.
In May 2018,until the Company entered into an operating lease for office space in Garden City, New York.provides twelve months’ notice of intent not to renew. In July 2020, the Company placed a non-cancellable purchase order and the outstanding amount remaining under the purchase order as of June 30, 2021 is approximately $1,054,000 with this supplier.
BEYOND AIR, INC. AND ITS SUBSIDIARIESContingencies
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 13 COMMITMENTS AND CONTINGENCIES (continued)
The Company has other operating lease agreements with commitments of less than one year or that are not significant. The Company elected the practical expedient option and as such these lease payments are expensed as incurred.
Other Information For The Three Months Ended June 30, 2020 | ||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Cash paid | $ | 19,016 | ||
Right-of-use assets obtained in exchange for new operating lease liabilities: | - | |||
Weighted-average remaining lease term — operating leases | 4.7 years | |||
Weighted-average discount rate — operating leases | 8.3 | % |
Maturity of Lease Liabilities | Three months ended June 30, | |||
Operating Leases | ||||
2021(excluding the three months ended June 30, 2020) | $ | 82,076 | ||
2022 | 111,462 | |||
2023 | 114,114 | |||
2024 | 66,689 | |||
2025 | 51,418 | |||
Thereafter | 61,207 | |||
Total lease payments | 486,966 | |||
Less: interest | (84,028 | ) | ||
Present value of lease liabilities | $ | 402,938 |
Contingencies
On March 16, 2018, Empery Asset Master, Ltd., Empery Tax Efficient, LP and Empery Tax Efficient II, LP, (collectively, “Empery”), filed a complaint in the NY Supreme Court of the State of New York,(the “NY Supreme Court”), relating to the notice of adjustment of both the exercise price of and the number of warrant shares issuable under warrants issued to Empery in January 2017.2017 (the “Empery Suit”). The Empery Suit alleges that, as a result of certain circumstances in connection with ourthe Company’s February 2018 offering, the warrants issued to Empery in January 2017 provide for adjustments to both the exercise price of the warrants and the number of warrant shares issuable upon such exercise. Empery seeks monetary damages and declaratory relief under theories of breach of contract or contract reformation predicated on mutual mistake. reformation.
While the Company believes that it has complied with the applicable protective features of the 2017 Warrants and properly adjusted the exercise price, if Empery were to prevail on all claims, the new adjusted total number of warrant shares could be as follows: 319,967 warrant shares for Empery Asset Master, Ltd., 159,869 warrant shares for Empery ITax Efficient, LP and 252,672 warrant shares for Empery Tax Efficient II, LP, and the exercise price could be reduced from $3.66$3.66 to $1.57$1.57 per share. On March 9, 2020, the Company filed a motion for summary judgment, which was denied by order of the NY Supreme Court entered on August 20, 2020, except for the second claim for relief for declaratory judgment which was dismissed as moot. On October 1, 2020, the Company filed a Notice of Appeal and appeal of the NY Supreme Court’s denial of summary judgment remains pending. Trial of this matter was conducted from April 19, 2021 to April 21, 2021, and a decision was reserved pending post-trial briefing of various issues, which was fully submitted by June 30, 2021.
While the Company hasasserted at trial and continues to asset several meritorious defenses against the claims, the ultimate resolution of the matter, if unfavorable, could result in a material loss. On March 9, 2020, we filed a motion for summary judgment, which remains pending.
On December 18, 2019,In addition to Empery, there are 1,139,220 2017 Warrants outstanding held by investors who did not participate in the Company terminatedFebruary 2018 financing transaction. Any further adjustments to the License Agreement with Circassia2017 Warrants pursuant to whichtheir antidilution provisions may result in additional dilution to the Company had granted Circassia an exclusive royalty-bearing license to distribute, market and sellinterests of the Company’s nitric oxide generatorstockholders and delivery system in the United States and China. As previously described in Note 9, Circassia had agreed to pay the Company certain milestone and royalty payments, with the remaining milestone and royalty payments payable in cash or ordinary shares of Circassia at Circassia’s option. The Company terminated the Agreement pursuant to section 13.3(b) of the Agreement, which provides for termination by either party upon the other party’s material breach or default. The Company is evaluating other options for the commercialization of its generator and delivery system. In connection the termination of the license with Circassia, we may be subject to a variety of claims. Adverse outcomes in some or all of these claims, if filed, may adversely affect ourthe market price of the Company’s common stock. The antidilution provisions may also limit the Company’s ability to conduct business and our financial condition and results of operations.obtain additional financing on terms favorable to it.
NOTE 14 SUBSEQUENT EVENTS
On August 6, 2020, the Company entered into a supply agreement expiring on December 31, 2024. The agreement will renew automatically for successive three year period(s) unless and until the Company provides twelve months’ notice of intent not to renew. In July 2020, the Company placed a non-cancellable purchase order for approximately $1,300,000 with this supplier.
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements.” Forward-lookingWe intend such forward-looking statements includeto be covered by the safe harbor provisions for forward-looking statements about our expectations, beliefs or intentionscontained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy, prospective product offerings,candidates and products, product approvals, timing of our clinical development activities, research and development costs, timing and likelihood of success, and the plans and objectives of management for future operations and future results of anticipated products are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements express or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “expect,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential”, or “continue” or the negative of these terms or other similar conditional expressions. The forward-looking statements in this Quarterly Report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations, strategies or prospects. You can identify suchoperations. These forward-looking statements by the words “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “likely,” “goal,” “assumes,” “targets” and similar expressions and/or the use of future tense or conditional constructions (such as “will,” “may,” “could,” “should” and the like) and by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or resultsspeak only as of the date such statementsof this Quarterly Report on Form 10-Q and are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertaintiesa number of important factors that could cause our actual results to differ materially from any future results expressed or implied bythose in the forward-looking statements. Manystatements, including the factors could cause our actual activities or results to differ materiallydescribed under the sections in this Quarterly Report on Form 10-Q titled “Risk Factors” and results anticipated in forward-looking statements. These forward-looking statements are only predictions“Management’s Discussion and reflect our views asAnalysis of the date they are made with respect to future eventsFinancial Condition and financial performance. We undertake no obligation to update, and we do not have a policyResults of updating or revising, these forward-looking statements, except as required by applicable law. Please seeOperations,” Item 1A “Risk Factors” contained in our most recently filed Annual Report on Form 10-K, as well as the following:
● | our status as a development-stage company and our expectation to incur losses in the future; | |
● | our future capital needs and our need to raise additional funds; | |
● | our ability to obtain FDA approval of the PMA for the LungFit® system; | |
● | our ability to build a pipeline of product candidates and develop and commercialize products; | |
● | our ability to enroll patients in clinical trials, timely and successfully complete those trials and receive necessary regulatory approvals; | |
● | our ability to maintain our existing or future collaborations or licenses; | |
● | our ability to protect and enforce our intellectual property rights; | |
● | federal, state, and foreign regulatory requirements, including the FDA regulation of our product candidates; | |
● | our ability to obtain and retain key executives and attract and retain qualified personnel; | |
● | our ability to successfully manage our growth; and | |
● | our ability to address business disruption and related risks resulting from the COVID-19 pandemic, which could have a material adverse effect on our business plan. |
Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for importantmanagement to predict all risk factors that could cause actual results to differ materially from those in the forward-looking statements.and uncertainties.
Management’s DiscussionYou should read this Quarterly Report on Form 10-Q and Analysisthe documents that we reference in this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of Financial Condition and Resultsour forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of Operationsany new information, future events, changed circumstances or otherwise.
Beyond Air, Inc. the Beyond Air logo, and other trademarks or service marks of Beyond Air, Inc. appearing in this Quarter Report on Form 10-Q are the property of Beyond Air, Inc. This Quarterly Report on Form 10-Q also includes trademarks, tradenames and service marks that are the property of other organizations. Solely for convenience, trademarks and tradenames referred to in this Quarterly Report on Form 10-Q appear without the ® and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or that the applicable owner will not assert its rights, to these trademarks and tradenames.
Introduction
We are an emerginga clinical-stage medical device and biopharmaceutical company developing a nitric oxide (“NO”) generator and delivery system (the “LungFit™ “LungFit®system”) that is capable of generating NO from ambient air. The LungFit™LungFit® platform can generate NO up to 400 parts per million (“ppm”) for delivery to a patient’s lungs. The LungFit™ lungs directly or via a ventilator. LungFit® can deliver NO either continuously or for a fixed amount of time at various flow rates and has the ability to either titrate dose on demand or maintain a constant dose. We believe that The LungFit™ LungFit®can be used to treat patients on ventilators that require NO, as well as patients with chronic or acute severe lung infections via delivery through a breathing mask or similar apparatus. Furthermore, we believe that there is a high unmet medical need for patients suffering from certain severe lung infections that the LungFit®LungFit® platform can potentially address. OurThe Company’s current areas of focus with the LungFit™ LungFit®are persistent pulmonary hypertension of the newborn (“PPHN”), severe acute respiratory syndrome coronavirus 2 (SARS CoV-2), bronchiolitis (“BRO”)PPHN, AVP including COVID-19, BRO and nontuberculous mycobacteria (“NTM”)NTM lung infection. OurThe Company’s current product candidates will be subject to premarket reviews and certifications or approvals by the U.S. Food and Drug Administration, or the FDA,(the “FDA”), as well as similar regulatory agencies in other countries or regions. If approved, ourthe Company’s system will be marketed as a medical device in the United States.
An additional focusprogram of the CompanyBeyond Air is solid tumors. For this indication the LungFit™ systemLungFit® platform is not utilized due to theneed for ultra-high concentrations of NO used.gaseous nitric oxide (“gNO”). We have developed a delivery system that can safely deliver NO concentrationsgNO in excess of 10,000 ppm directly to a solid tumor. This program is in pre-clinical development and will require approval from the FDA or similar agencyagencies in another country, approvalother countries to enter human studies. We expect to receive regulatory approval to enter a first in human trial by the end of calendar year 2021.
24 |
The LungFit® system generates NO from ambient air by simulating the electric discharge caused from a lightning strike. Beyond Air proprietary technology allows for this reaction to occur in a plasma chamber. We believe the on-demand delivery, either to a ventilator circuit or directly to a patient’s lungs, is safe due to the Company’s system design and the Company’s proprietary nitrogen dioxide (“NO2”) filter. The NO2 filter removes toxic NO2 for 12 hours when used for PPHN and shorter periods for treating other conditions that require NO concentrations of 150 ppm or more.
With respect to PPHN, ourBeyond Air’s novel the LungFit™ ® PH is designed to deliver a dosage of NO to the lungs that is consistent with current guidelines for delivery of 20 ppm NO with a range of 0.5 ppm – 80 ppm (low-concentration NO). for ventilated patients. We believe the LungFit™ hasability of LungFit® PH to generate NO from ambient air provides Beyond Air many competitive advantages over the current approvedstandard of NO delivery systems in the U.S., European Union, Japan and other markets. For example, the LungFit™LungFit® PH does not require the use of a high-pressure cylinder, does not require cumbersome purging procedures and places less burden on hospital staff in carrying out safety procedures.
OurThe Company’s novel LungFit™ systemLungFit® platform can also deliver a high concentration (>150 ppm) of NO directly to the lungs, which we believe has the potential to eliminate microbial infections including bacteria, fungi, and viruses, among other benefits.others. We believe current FDA-approved NO vasodilation treatments would have limited success in treating microbial infections given the low concentrations of NO being delivered.delivered (<100 ppm). Given that NO is produced naturally by the body as an innate immunity mechanism at a concentration of 200 ppm, supplemental high dose NO should aid in the body’s fight against infection. Based on ourthe Company’s pre-clinical and clinical studies, we believe that 150 ppm is the minimum therapeutic dose to achieve the desired pulmonary antimicrobial effect of NO. To date, neither the FDA nor equivalent regulatory agencies in other countries or regions have approved any NO formulation and/or delivery system for >80 ppm NO.
LungFit® PH for the deliverytreatment of Persistent Pulmonary Hypertension of the Newborn
In November 2020 we submitted a dosage of NO at 150 ppm or higherpremarket approval (“PMA”) application to the lungs.
FDA for the use of LungFit® PH in PPHN. There is a standard 180-day review process that starts upon FDA acknowledgement of submission, though PMA reviews oftentimes take much longer, sometimes over a year or more. Moreover, the ongoing COVID-19 pandemic and an increased volume of submissions have led to longer review times by the FDA. We plan to submit for premarket approval or (“PMA”) to theanticipate an FDA response towards the end of thecalendar third calendar quarter of 2020 for the use of the LungFit™ in PPHN.2021. We also expect to make certain regulatory filings outsidereceive CE Mark under the MDR in the European Union around the end of the U.S. later in 2020.calendar year 2021. According to the 2019most recent year-end report from Mallinckrodt Pharmaceuticals, aggregate sales of low concentration NO were $574.1 million in 2020 (up from $571.4 million in 2019) for the United States, Canada, Japan, Mexico and Australia, with >90% in the U.S. were in excess of $500 million in 2019. Sales outsideUnited States. Outside of the U.S., where there are multiple market participants sales werewhich translates to considerably lower sales than in the U.S. We believe the U.S. sales potential of the LungFit™LungFit® PH in PPHN to be greater than $300 million and worldwide sales potential to be greater than $600 million. If regulatory approval is obtained, we anticipate a product launch in both the U.S. and Israel in the fourth quarter of calendar 2021 and will continue to launch in the EU and globally throughout 2021in 2022 and beyond.
SARS CoV-2LungFit® PRO for the treatment of viral lung infections in hospitalized patients
Acute Viral Pneumonia (including COVID-19)
Viral pneumonia in adults is a global pandemic with a widespread impact across many countries. Wemost commonly caused by rhinovirus, respiratory syncytial virus (“RSV”) and influenza virus. However, newly emerging viruses (including SARS-CoV-1, SARS-CoV-2, avian influenza A, and H1N1 viruses) have receivedbeen identified as pathogens contributing to the overall burden of adult viral pneumonia. COVID-19 is an approval from the FDA to run a study in COVID-19 (theinfectious disease caused by SARS CoV-2 infections) patients using ourSARS-CoV-2, that has resulted in a global pandemic. Excluding the LungFit™ system. We have also received approval from Health Canada to run a similar study to the one approved by the FDA. We look forward to results from both of these studiespandemic, there are approximately 350,000 annual viral pneumonia hospitalizations in the summer/fall of 2020. The fact that our system does not need cylinders allows us to potentially provide a practical solution to this crisis. We have applied for grants related to COVID-19 inUS, and 16 million annual viral pneumonia hospitalizations globally. For the United States and other countries. However, no external funding is required to perform the clinical studies recently approved by FDA and Health Canada.
With respect to bronchiolitis, we initiated in the fourth quarter of 2019 a double blind, controlled trial in infants hospitalized due to bronchiolitis with three arms and 89 subjects randomized 1:1:1 to standard supportive therapy (SST), SST plus 85 ppm NO and SST plus 150 ppm NO. The trial is complete and we recently released top line data. There were no SAE’s related to NO therapy. With respect to efficacy, the 150 ppm arm was statistically significant when compared to both the control arm and the 85 ppm arm on the primary endpoint of fit for discharge from the hospital and the key secondary endpoint of hospital length of stay. The 85 ppm was no different from control on both endpoints. We believe this is an exceptional result given the low number of patients and provides compelling evidence of the value of 150 ppm in achieving the desired efficacy. The pivotal study for bronchiolitis was originally set to be performed in the 2020/21 winter, but due to the SARS CoV-2 pandemic, hospitals will not be considering any new study proposals not related to SARS CoV-2 or COVID-19. We anticipate commencing a pivotal study in the United States in the fourth quarter of 2021 and completing it late in the second quarter of 2022, depending on the pandemic situation. We expect that we will submit a PMA to the FDA about 6 months after trial completion. Regulatory filings outside of the U.S. would begin after our review process is completed in the U.S. as long as no additional trials are required. For this indication,broader AVP, we believe U.S. sales potential to be greater than $500 million$1.5 billion and worldwide salesmarket potential to be greater than $1.2$3 billion.
Over 3We initiated a pilot study in late 2020 using Beyond Air’s novel LungFit® PRO system at 150 ppm to treat patients with acute viral pneumonia (AVP), including COVID-19. The ongoing trial is a multi-center, open-label, randomized clinical trial in Israel, including patients infected with SARS-CoV-2. Patients are randomized in a 1:1 ratio to receive either inhalations of 150 ppm NO given intermittently for 40 minutes four times per day for up to seven days in addition to standard supportive treatment (“NO+SST”) or standard supportive treatment alone (“SST”). Endpoints related to safety (primary endpoint), oxygen saturation, and ICU admission, among others, will be assessed.
25 |
Beyond Air reported interim data from this ongoing trial at the American Thoracic Society or ATS International Conference 2021, which was held virtually from May 14 through May 19. At the time of the data cut off, the intent-to-treat (“ITT”) analysis population included 19 COVID-19 patients (9 NO + SST vs 10 SST). The data readout showed that 150 ppm NO treatment administered via LungFit® PRO was safe and well tolerated and demonstrated encouraging efficacy signals. From a safety perspective, there were no treatment-related, or possibly related, adverse events or severe adverse events. NO2 levels were below 4 ppm at all timepoints (trial safety threshold is 5 ppm) and methemoglobin (“MetHb”) levels were below 4% at all times (trial safety threshold is 10%). With respect to the requirement of oxygen support beyond hospital stay, 22.2% of subjects in the NO + SST group compared with 40% of control subjects had this requirement. There was an observable trend of shortening the duration of hospital stay and duration on oxygen support for treated patients. Additional detailed study results may be submitted for presentation at an upcoming scientific meeting.
Bronchiolitis (BRO)
Bronchiolitis is the leading cause of hospital admission in children less than 1 year of age. The incidence is estimated to be 150 million new cases a year worldwide, with 2-3% (over 3 million) of bronchiolitis are reported worldwide each year.them severe enough to require hospitalization. Worldwide, 95%3 of all cases occur in developing countries. In the U.S., there are approximately 130,000more than 120,000 annual bronchiolitis hospitalizations among children two years of age or younger and approximately 177,0003.2 million annual child hospitalizations among the elderly population related to RSV infection only with the number rising higher due to other viruses similar to those that cause bronchiolitis in very young children.
globally. Currently, there is no approved treatment for bronchiolitis. The treatment for acute viral lung infections that cause bronchiolitis in infants is largely supportive care and is based primarily on prolonged hospitalization during which the infant receives a constant flow of oxygen to treat hypoxemia, a reduced concentration of oxygen in the blood. In addition, systemic steroids and inhalation with bronchodilators are sometimes utilized until recovery, but we believe that these treatments do not successfully reduce hospital length of stay.
Our NTM program has produced data from four compassionate use subjects We believe the U.S. market potential for bronchiolitis to be greater than $500 million and nine patients from a multi-center pilot study completed in 2018. All patients suffered from NTM abscessus infection and had underlying cystic fibrosis. One compassion patient was treated with our nitric oxide generator at the National Heart, Lung and Blood Institute (“NHLBI”). All others were treated with our NO cylinder-based delivery system. All patients were treated with 160 ppm NO at intermittent 30-minute dosing over 21 days, except one patient who was treated over 26 days and another patient who was treated with 250 ppm NO over 28 days. We expected to begin a study by the end of 2020 (delayed about 6 months by the COVID-19 pandemic) where patients would self-administer high concentration NO at home over a period of 12 weeks with the LungFit™ We now anticipate preliminary data for this study will be available during the first half of 2021 and that a full dataset will be available in the second half of 2021. If the trial is successful, we would commence a pivotal study in 2022. For this indication, we believe U.S. salesworldwide market potential to be greater than $1 billion and worldwide sales potential$1.2 billion.
The Company’s BRO program is currently on hold due to the COVID-19 pandemic. The pivotal study for bronchiolitis was originally set to be greater than $2.5 billion.performed in the winter of 2020/21 but was delayed due to the pandemic. We have completed three successful pilot studies for bronchiolitis. A further analysis of the three previously reported pilot studies was presented at the ATS International Conference 2021, which was held virtually from May 14 – May 19. Analysis across the studies (n=198 infants, mean age 3.9 months) showed that 150 – 160 ppm NO administered intermittently was generally safe and well tolerated with adverse event rates similar among treatment groups with no reported treatment-related serious adverse events. The short course of treatments with intermittent high concentration inhaled NO was effective in shortening hospital length of stay and accelerating time to fit for discharge – a composite endpoint of clinical signs and symptoms to indicate readiness to be evaluated for hospital discharge. This treatment was also effective in accelerating time to stable oxygen saturation – measured as SpO2 ≥ 92% in room air. Additionally, NO at a dose of 85 ppm NO showed no difference compared to control for all efficacy endpoints, while 150 ppm NO showed statistical significance when compared to control.
We believe that the entirety of data at 150-160 ppm NO in both adult and infant patient populations supports further development of LungFit® PRO in a pivotal study for patients hospitalized with viral pneumonia.
LungFit® GO for the treatment of Nontuberculous mycobacteria (NTM)
NTM lung infection is a rare and serious pulmonary disease associated with increased morbidity and mortality. There is an increasing rate of lung disease caused by NTM, which is an emerging public health concern worldwide. There are approximately 50,000 patients diagnosed with NTM in the U.S., and there are an estimated additional 100,000 patients in the U.S. that have not yet been diagnosed. In Asia, the number of patients suffering from NTM surpasses what is seen in the U.S. To date we have treated only the abscessus form of NTM which comprises approximately 20-25% of all NTM. We will be treating both the abscessus and mycobacterium avium complex (MAC) forms of NTM.
Patients with NTM lung disease may experience a multitude of symptoms such as fever, weight loss, cough, lack of appetite, night sweats, blood in the sputum and fatigue. Patients with NTM lung disease, specifically Mycobacterium abscessus(M.abscessus) representing 20-25% of all NTM and other forms of NTM that are refractory to antibiotic therapy,frequently require lengthy and repeated hospital stays to manage their condition. There are no treatments specifically indicated for the treatment of NTM M. abscessus lung disease in North America, Europe or Japan.
There are approximately 50,000 to 90,000 people with NTM infections in the U.S. In Asia, the number of patients suffering from NTM surpasses what is seen in the U.S. There is one inhaled antibiotic approved in the U.S. for the treatment of refractory NTM MAC.Mycobacterium avium complex (“MAC”). Current guideline-based approaches to treat NTM lung disease involve multi-drug regimens of anti-bioticsantibiotics that may cause severe, long lasting side effects, and treatment can be as long as 18 months or more. Median survival for NTM MAC patients is approximately 13 years while median survival for patients with other variations of NTM is typically 4.6 years. The prevalence of human disease attributable to NTM has increased over the past two decades. In a study conducted between 19972007 and 2007,2016, researchers found that the prevalence of NTM in the U.S. is increasing at approximately 8%7.5% per year and that NTM patients on Medicare over the age of 65 are 40% more likely to die over the period of the study than those who did not have the disease (Adjemian et al., 2012). NTM year. M. abscessus treatment costs are estimated to be more than double that of NTM MAC. In total, a 2015 publication from co-authors from several U.S. government departments stated that prior year statistics led to a projected 181,037 national annual cases in 2014 costingcost the U.S. healthcare system approximately $1.7 billion. For this indication, we believe U.S. sales potential to be greater than $1 billion (Strollo et al., 2015).and worldwide sales potential to be greater than $2.5 billion.
26 |
For our solid tumor program,In December 2020 we released pre-clinical databegan a 12-week, multi-center, open-label clinical trial in Australia and we plan to enroll approximately 20 adult patients with chronic refractory NTM lung disease. We received a grant of up to $2.17 million from the Cystic Fibrosis Foundation to fund this study and advance the clinical development of inhaled NO to treat NTM pulmonary disease. The trial is enrolling both cystic fibrosis (“CF”) and non-CF patients infected with MAC or M. abscessus. The study consists of a run-in period followed by two treatment phases. The run-in period provides a baseline for the efficacy endpoints. The first treatment phase takes place over a two-week period and begins in the hospital setting where patients will be titrated from 150 ppm NO up to 250 ppm NO over several days. During this phase patients receive NO for 40 minutes, four times per day while MetHb levels are monitored. Patients are also trained to use LungFit® GO and subsequently discharged to complete the remaining portion of the two-week treatment period at their home at the virtual American Academyhighest tolerated NO concentration. For the second treatment phase, a 10-week maintenance phase, the administration is twice daily. The study is evaluating safety, quality of Cancer Research (AACR) showing the promise of delivering NO at concentrations of 25,000 ppm – 200,000 ppm directly to tumors. Results showed local tumor ablation with complete eradication in 5 of 30 mice. Additionally, regardless of whether the tumor was completely or partially cleared, all colon tumor bearing mice were resistant to a second challenge of colon cancer. Breast tumor bearing mice showed a 7-10 day delaylife, physical function, and bacterial load among other parameters.
We anticipate reporting interim data in the uptakefall of breast cancer post challenge. Pre-clinical workcalendar year 2021, likely at a scientific conference. We will continue throughoutrelease top-line results for the restfull data set approximately six months later. If the trial is successful, we would anticipate commencing a pivotal study in the first half of 2020 and most of 2021.calendar year 2023.
OurThe Company’s program in chronic obstructive pulmonary disease (“COPD”) is in the pre-clinical stage and will remain there, subject to our obtaining additional financing.
Ultra-High Concentration NO in solid tumors
For the Company’s solid tumor program, we have released pre-clinical data at several medical/scientific conferences showing the promise of delivering NO at concentrations of 20,000 ppm – 200,000 ppm directly to tumors. Results showed that local tumor ablation with NO conveyed anti-tumor immunity to the host. In the Company’s most recent release of data, 8 of 11 mice treated with a single administration of 25,000 ppm NO over 5 minutes were resistant to a subsequent tumor challenge and 11 of 11 mice treated with 50,000 ppm NO were resistant to a subsequent tumor challenge. Pre-clinical work will continue throughout most of 2021 with a goal of receiving regulatory approval to initiate a first-in-human trial by the end of calendar year 2021.
COVID-19
The development of ourthe Company’s product candidates could be further disrupted and adversely affected by a resurgence of the recent outbreak of COVID-19.COVID-19 pandemic. The spread of SARS CoV-2 from China to other countries has resultedCompany experienced significant delays in the Director General ofsupply chain for LungFit® due to the World Health Organization declaring COVID-19 a pandemic on March 11, 2020. We have addressedredundancy in parts and suppliers with ventilator manufacturing which has since been remedied. The Company continuously assesses the impact COVID-19 may have on ourthe Company’s business plans and ourits ability to conduct the preclinical studies and clinical trials as well as on ourthe Company’s reliance on third-party manufacturing and ourBeyond Air’s supply chain. However, there can be no assurance that this analysisthe Company will enable usbe able to avoid part or all of any impact from the spread of COVID-19 or its consequences. The extentconsequences if a resurgence occurs.
Critical Accounting Estimates and Policies
A critical accounting policy is one that is both important to which the COVID-19 pandemicportrayal of a company’s financial condition and global efforts to contain its spread will impact ourresults of operations will depend on future developments, which are still uncertain and cannot be predicted at this time. Asrequires management’s most difficult, subjective or complex judgments, often as a consequenceresult of the global pandemic, Beyond Air experienced significant delays inneed to make estimates about the supply chain for LungFit™ due to the redundancy in parts and suppliers with ventilator manufacturing. Our bronchiolitis program will experience at least a one year delay and our PPHN and NTM programseffect of matters that are estimated to experience a delay of 4-6 months.inherently uncertain.
Critical Accounting Policies
The accounting policies followed in the preparation of our condensedCompany’s unaudited consolidated financial statements appearing atare presented in accordance with U.S. GAAP, and all applicable U.S. GAAP accounting standards effective as of June 30, 2021 have been taken into consideration in preparing the beginningunaudited consolidated financial statements. The preparation of this Quarterly Report on Form 10-Q are consistent in all material respects with those included in Note 2 of our Annual Report on the Form 10-K for the year ended March 31, 2020. The unaudited condensed consolidated financial statements requires estimates and assumptions that affect the reported amounts of assets, liabilities, expenses and related disclosures. Some of those estimates are subjective and complex, and, consequently, actual results could differ from those estimates. The following accounting policies and estimates have been preparedhighlighted as significant because changes to certain judgments and assumptions inherent in accordance with generally accepted accounting principles inthese policies could affect the United States (“US GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required to be presented for complete financial statements. The accompanying condensedCompany’s consolidated financial statements reflect all adjustments (consisting only of normal recurring items) which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. The accompanying condensed consolidated Balance Sheet as of March 31, 2020 has been derived from the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2020. The condensed consolidated financial statements and related disclosures have been prepared with the assumption that users of the interim financial information have read or have access to the audited consolidated financial statements for the preceding fiscal year. Accordingly, these financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in the Annual Report on Form 10-K for the year ended March 31, 2020 which was filed with the United States Securities and Exchange Commission, (“SEC”), on June 23, 2020.statements:
● | Use of Estimates, | |
● | Research and development expenses, | |
● | Stock-based compensation expenses, and | |
● | Income Taxes |
27 |
Off-Balance SheetOff-Balance-Sheet Arrangements
As of June 30, 2020,2021, we did not have any off-balance sheetoff-balance-sheet arrangements as defined in the rules and regulations of the Securities and Exchange Commission.Commission the (“SEC”).
Results of Operations
Below are the results of operations for the three months ended June 30, 20202021 and June 30, 2019:2020:
For the Three June 30, | ||||||||
2021 | 2020 | |||||||
License revenue | $ | - | $ | 229,161 | ||||
Operating expenses | ||||||||
Research and development | 2,741,041 | 4,331,814 | ||||||
General and administrative | 3,850,265 | 2,494,014 | ||||||
Operating loss | (6,591,306 | ) | (6,596,667 | ) | ||||
Other income (loss) | ||||||||
Dividend income | 706 | 14,985 | ||||||
Foreign exchange gain | 9,859 | 1,275 | ||||||
Interest expense | (162,143 | ) | (163,240 | ) | ||||
Other | - | 1,843 | ||||||
Total other loss | (151,578 | ) | (145,137 | ) | ||||
Net loss | $ | (6,742,884 | ) | $ | (6,741,804 | ) | ||
Net loss per share – basic and diluted | $ | (0.31 | ) | $ | (0.41 | ) | ||
Weighted average number of common shares outstanding – basic and diluted | 21,945,235 | 16,529,392 |
For the Three Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
License revenues | $ | 229,161 | $ | 627,469 | ||||
Operating expenses | ||||||||
Research and development | 4,331,814 | 2,323,513 | ||||||
General and administrative | 2,494,014 | 2,182,558 | ||||||
Operating loss | (6,596,667 | ) | (3,878,602 | ) | ||||
Other income (loss) | ||||||||
Realized and unrealized loss on marketable equity securities | - | (2,307,319 | ) | |||||
Dividend income | 14,985 | 6,410 | ||||||
Foreign exchange gain | 1,275 | 1,724 | ||||||
Interest expense | (163,240 | ) | (3,034 | ) | ||||
Other | 1,843 | - | ||||||
Total other loss | (145,137 | ) | (2,302,219 | ) | ||||
Net loss | $ | (6,741,804 | ) | $ | (6,180,821 | ) | ||
Net loss per share – basic and diluted | $ | (0.40 | ) | $ | (0.67 | ) | ||
Weighted average number of common shares outstanding – basic and diluted | 16,529,392 | 9,201,855 |
Comparison of Three Months Ended June 30, 20202021 with the Three Months Ended June 30, 20192020
28 |
License revenue for the three months ended June 30, 2020 was $229,161 as compared to $627,469 for the three months ended June 30, 2019. Revenue
On January 23, 2019, the Company entered into an agreement for commercial rights (the “License“Circassia Agreement”) with Circassia Limited and its affiliates (collectively, “Circassia”) for persistent pulmonary hypertension of the newborn (“PPHN”)PPHN and future related indications at concentrations of <80 ppm in the hospital setting in the United States and China. During the year ended March 31, 2019, the Company met the first two milestones under the license agreement and received 17,572,815 ordinary shares valued at $9,987,295. This consideration was allocated to the first two performance obligations. one being the transfer of the intellectual property to Circassia, which was recognized at a point in time and was valued at $7,116,232 and the other being the ongoing support associated with the PMA submission and regulatory approval by the FDA, which was valued at $2,871,063 and recorded as deferred revenue to be recognized over a period of time from the commencement of the agreement to when management expects to submit the PMA. For the three months ended June 30, 2020, and June 30, 2019, $229,161 and $627,469, respectively of such revenue associated with this second performance obligation has been recognized. As of June 30, 2020, and March 31, 2020, deferred revenue was $644,029 and $1,635,825, respectively. On December 18, 2019, the Company terminated the License Agreement with Circassia pursuantAgreement. Prior to whichthe three month period ending June 30, 2021, the Company has met its performance obligation under the Circassia Agreement and all the revenue had granted Circassia an exclusive royalty-bearing license to distribute, marketbeen previously recognized. License revenue of $0 and sell$229,161 associated with the Company’s nitric oxide generatorsecond performance obligation has been recognized for the three months ended June 30, 2021 and delivery system in the United States and China.June 30, 2020, respectively.
Research and development expensesDevelopment Expenses
Research and development expenses for the three months ended June 30, 2020 was $4,331,8132021 were $2,741,041 as compared to $2,323,513$4,331,814 for the three months ended June 30, 2019.2020. The increasedecrease of $2,008,300$1,590,773 was primarily attributed to developmentless expenses for PPHN due to the submission of the LungFit™ System for PPHN, clinical trial for COVID-19, completionPMA in November 2020 and a decrease in non-cash compensation expense of the Bronchiolitis trial, an increase in salaries and employee benefits and an increase in stock-based compensation expense.$472,898.
General and administrative expensesAdministrative Expenses
General and administrative expenseexpenses for the three months ended June 30, 2020, was $2,494,014 as compared to the three months2021 and June 30, 2019 of $2,182,558.2020 were $3,850,265 and $2,494,014, respectively. The increase of $311,456$1,356,251 was attributed primarily attributed to anchanging legal counsel, increase stock-based compensation expense of $209,090.
Other income (loss)
Other lossin professional fees, preparation for the three months ended June 30, 2020 was $145,137 as compared $2,302,219 for the three months ended June 30, 2019. For the three months ended June 30, 2020, the Company incurred interest expense including amortization of debt discountcommercial launch, increase in salaries and deferred financing expense of approximately $164,000. Other loss for the three months ended June 30, 2019 was primarily from the realizedbenefits and unrealized loss of Circassia Pharmaceuticals plc stock of $2,307,319. insurance.
Cash Flows
Below is a summary of the Company’s cash flows activities for the three months ended June 30, 20202021 and forJune 30, 2020:
Three Months Ended | ||||||||
June 30, | ||||||||
2021 | 2020 | |||||||
Net cash provided by (used in): | ||||||||
Operating activities | $ | (3,918,178 | ) | $ | (5,485,465 | ) | ||
Investing activities | (27,055 | ) | (243,527 | ) | ||||
Financing activities | 8,305,518 | 4,709,098 | ||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 4,360,285 | $ | (1,019,894 | ) |
Operating Activities
For the three months ended June 30, 2019:
Three Months Ended | ||||||||
June 30, | ||||||||
2020 | 2019 | |||||||
Net cash provided by (used in): | ||||||||
Operating activities | $ | (5,485,465 | ) | $ | (2,909,911 | ) | ||
Investing activities | (243,527 | ) | (6,775,002 | ) | ||||
Financing activities | 4,709,098 | 8,980,796 | ||||||
Net decrease in cash, cash equivalents and restricted cash | $ | (1,019,894 | ) | $ | (704,117 | ) |
Operating Activities
2021 the net cash used in operating activities was $3,918,178 which was primarily due to the Company’s net loss of $6,742,884, offset by non-cash stock-based compensation expense of $1,215,911, cash provided from a grant receivable of $425,000, a decrease in prepaid expenses of $205,032 and an increase of $946,648 of accounts payable. For the three months ended June 30, 2020 the net cash used in operating activities was 5,484,465$5,484,465 which was primarily due to ourthe Company’s net loss of $6,741,804 and a usedecrease of cash for other current assets,$335,893 from accounts payable and accrued expense of $406,234. Therepayable. In addition, there was non-cash stock-based compensation expense of $1,815,654 and non-cash decrease foramortization of deferred revenue. revenue of $229,161.
Investing Activities
For the three months ended June 30, 2019 net cash used in operating activities $2,909,991 which was primarily due to the net loss of $6,180,8212021 and there was a non-cash decrease for deferred revenue of $627,469. Source of cash was from other current assets and accounts payable of $631,588. There were non-cash stock-based compensation expense of $941,537 and realized and unrealized loss on marketable securities of $2,307,319.
Investing Activities
For the three months ended June 30, 2020, net cashed used in investing activities was $243,537$27,055 and this$243,527, respectively, which was for the purchase of property and equipment. For
Financing Activities
Net cash provided by financing activities for the three months ended June 30, 20192021 was $8,305,518 and which was primarily from the net cash used in investing activities was $6,775,002.
Financing Activities
proceeds for the issuance of common stock related to the Stock Purchase Agreement and ATM of $8,512,867 offset by a loan payment of $207,349. Net cash provided by financing activities for the three months ended June 30, 2020 was $4,709,098 andwhich was primarily from the net proceeds forfrom the issuance of common stock issued related to the Stock Purchase Agreement with LPC, net proceeds the issuance of common stock in connection with At the Market offering,ATM and proceeds from the issuance of common stock from warrant exercises. Net cash providedexercises of $4,834,877 offset by financing activitiesa loan payment of $125,779.
Contractual Obligations
There have been no material changes to our contractual obligations since March 31, 2021. For a summary of our contractual obligations, see Item 7 of Part II of our Annual Report on Form 10-K for the three monthsyear ended March 31, 2021 (the “2021 Annual Report”), filed with the SEC on June 30, 2019 was $8,980,79610, 2021 and was primarily from the net proceeds of a private placement of $7,839,495, and the issuance and sale of $1,173,810 of common stock to LPC.amended on July 23, 2021.
29 |
Liquidity and Capital Resources
Overview
We have incurred losses and generated negative cash flows from operations since inception. To date, we have not generated any revenue from the sale of products, and we do not expect to generate revenue from sale of our products until certification or regulatory approval is received for our product candidates. Since the time the Company became public through June 30, 2020, we have funded our operations principally through the issuance of equity securities and debt. As shown in the accompanying financial statements, the Company hasWe had an operating cash flow decrease of $5.5$3.9 million for the three months ended June 30, 20202021 and we have experienced an accumulated lossesloss of $64.2 million since inception through June 30, 2020. The Company has cash, cash equivalent and restricted cash of $24.4$87.2 million as of June 30, 2020.2021. As of June 30, 2021, we had cash, cash equivalents and restricted cash of $39.6 million. We believe that our cash, cash equivalents of June 30, 2021, will enable us to fund our operating expenses and capital expenditure for at least one year from the date of filing these financial statements.
Our future capital needs and the adequacy of its available funds will depend on many factors, including, but not necessarily limited to, the cost and time necessary for the development, clinical studies and certification or regulatory approval of our other medical devices, indications as well as the commercial success of our first product candidates that receive marketing approval by the FDA. The Company may be required to raise additional funds through equity or debt securities offerings or strategic collaboration and/or licensing agreements in order to fund operations until it is able to generate enough product or royalty revenues, if any. Such financing may not be available on acceptable terms, or at all, and the Company’s failure to raise capital when needed could have a material adverse effect its strategic objectives, results of operations and financial condition.
There can be no assurance that we will be able to obtain additional equity or debt financing on terms acceptable to us, if at all.
On March 17, 2020, the Companywe entered into a facility agreement (the “Facility Agreement”) with certain lenders (“Facility Agreement”) pursuant to which the lenders shallagreed to loan to up to $25,000,000 in five tranches of $5,000,000 per tranche at theour option, of the Company (“Tranches”), provided however that the Companywe may only utilize tranches three through five following FDA approval of the LungFit™ PH product.LungFit® PH. The loan(s) are unsecured with an interest rate of 10% per annum which is paid quarterly and may be prepaid with certain prepayment penalties. The effective interest rate for this loan is 13.3% per year. Each tranche shallmust be repaid in installments commencing June 15, 2023 with all remaining amounts outstanding under any tranche due on March 17, 2025. We drew down on the first tranche of $5,000,000.
On April 2, 2020, Beyond Air, Inc.we entered into an At-The-Market Equity Offering for $50 millionSales Agreement with SunTrust Robinson Humphrey, Inc. and utilizedOppenheimer & Co. (the “ATM”). Under the Company’s shelf registration statement. The CompanyATM, we may sell shares of our common stock having aggregate sales proceeds of up to $50,000,000$50 million, from time to time in this offering.and at various prices. If shares of our common stock are sold, there is a three 3 percent fee paid to the sales agent. As of June 30, 2021, there was a balance of approximately $29.9 million available under the ATM.
On May 14, 2020, the Companywe entered into athe $40 million NewStock Purchase Agreement with LPC, that(with Lincoln Park Capital Fund, LLC (“LPC”), which replaced the existingformer $20 million purchase agreement.agreement with LPC, dated August 10, 2018. The NewStock Purchase Agreement provides for the issuance of up to $40 million of the Company’sour common stock, which we may sell from time to time in our sole discretion, to Lincoln ParkLPC over the next 36 months, subject to the conditions and limitations in the New Stock Purchase Agreement. As of June 30, 2021, there was a balance of approximately $28.2 million available under the New Stock Purchase Agreement.
Our ability to continue to operate isbeyond twelve months from the filing of this Form 10-K will be largely dependent upon the filingapproval of our PMA for the PPHN medical device, the expected timing and commercial acceptance of the Company’s launch of our product,this device, as well as obtaining Partnerspartners in other parts of the world, timing of future milestones and royalties, raising additional funds to finance our activities. Thereactivities until we are generating cash flow from operations. Further, there are no assurances that we will be successful in obtaining an adequate level of financing for the development and commercialization of our other product candidates. The Company’s ability to continue to operate is dependent upon raising additional funds to finance its activities.
30 |
There are numerous risks and uncertainties associated with the development of our NO delivery system and we are unable to estimate the amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidate.candidates.
Our future capital requirements will depend on many factors, including:
● | the effects of the COVID-19 pandemic on our business, the medical community and the global economy; | |
● | the progress and costs of our preclinical studies, clinical trials and other research and development activities; | |
● | the costs of commercializing the LungFit® system, if approved; | |
● | the scope, prioritization and number of our clinical trials and other research and development programs; | |
● | ||
the costs and timing of obtaining certification or regulatory approval for our product candidates; | ||
● | ||
the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights; | ||
● | ||
the costs of, and timing for, strengthening our manufacturing agreements for production of sufficient clinical quantities of our product candidate; | ||
● | ||
the potential costs of contracting with third parties to provide marketing and distribution services for us or for building such capacities internally; | ||
● | ||
the costs of acquiring or undertaking the development and commercialization efforts for additional, future therapeutic applications of our product | ||
● | ||
the magnitude of our general and administrative expenses; and | ||
● | ||
any cost that we may incur under current and future in-and out-licensing arrangements relating to our product |
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of foreign currency exchange rates.
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (our principal executive officerofficer) and Chief Financial Officer (our principal financial officer,officer), of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act).Act. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based upon our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures arewere effective at the reasonable assurance level as of June 30, 2020, in ensuring that material information that we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.2021.
Changes in Internal Control Over Financial Reporting
During the three months ended June 30, 2020,2021, there was no change in our internal controlcontrols over financial reporting that materially affected, or is reasonablereasonably likely to materially affect our, internal controlcontrols over financial reporting.
Item 1. Legal Proceedings
See Note 1314 to our unaudited condensed consolidated financial statements.
ITEM 1A. RISK FACTORS
There have been no material changes with respect to risk factors previously disclosed in the Company’s Form 10-K for the year ended March 31, 2021, filed with the Securities and Exchange Commission on June 10, 2021.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURE
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
**** Confidential treatment has been requested for portions of this exhibit
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
BEYOND AIR, INC. | |
/s/ Steven Lisi | |
Date: August | Steven Lisi |
President and Chief Executive Officer | |
(Principal Executive Officer) | |
/s/ Douglas Beck | |
Date: August | Douglas Beck |
Chief Financial Officer | |
(Principal Financial and Accounting Officer) |