NOTE 9 LOANS

The following is a summary of long-term debt as of March 31, 2026:

SCHEDULE OF LONG-TERM DEBT 

The following is a summary of long-term debt as of March 31, 2025:

Loan Agreement

On November 1, 2024, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) for a secured loan with certain lenders, including its former Chief Executive Officer Steven Lisi and director Robert Carey, for an aggregate principal balance of $11.5 million. The Loan Agreement was approved by each of the Company’s independent and disinterested directors, following the receipt of a recommendation from an independent investment bank. The Loan Agreement provides for the following terms: (i) principal amount of $11,500,000; (ii) ten-year term; (iii) interest of 15% per annum of which 3% shall be payable in cash and 12% payable in kind through June 30, 2026 and thereafter all in cash; (iv) a royalty interest of 8% of the Company’s net sales on a quarterly basis from July 2026 until the facility is repaid in full; (v) the Company’s obligations will be secured by substantially all of the Company’s assets and (vi) the Company issued the lenders warrants to purchase shares of the Company’s common stock at an exercise price, adjusted for the 2025 Reverse Stock Split, of $7.59 per share. On November 3, 2025, the parties entered into a waiver agreement pursuant to which the Loan Agreement lenders consented to the Company’s issuance of the Streeterville Note in exchange for reducing the exercise price from $7.59 per share to $1.95 per share.

On June 2, 2025, the Company received $2.0 million of advanced financing from a related party, director Robert Carey who is also an existing lender under its Loan Agreement (“Additional Loans”). On November 3, 2025, the Company amended and restated the original Loan Agreement (as amended, the “Amended Loan Agreement”) to provide for and finalize the terms of the $2.0 million Additional Loans and the issuance of new 5five-year warrants to purchase up to 512,821 shares of the Company’s common stock (the “Supplemental Warrants”) with an exercise price of $1.95 per share and subject to the same terms and conditions applicable to the existing warrants issued under the original Loan and Security Agreement. The amendment was accounted for as a modification under ASC 470, Debt.

As the repayments under the Amended Loan Agreement are based on a fixed percentage of future net sales, the timing and amounts of future principal payments may vary with the Company’s performance. The outstanding debt balance has been classified in the consolidated balance sheets based on the Company’s current estimate of the repayment timing.

Promissory Note

On November 4, 2025, the Company entered into and closed on a note purchase agreement (the “Note Purchase Agreement”) with Streeterville Capital LLC (“Streeterville”), which provided for the issuance of a secured promissory note in the principal amount of $12.0 million (the “Note”). The principal amount of the Note is due 24 months following the date of issuance. Interest will accrue at the rate of 15% per annum, with no interest accruing for the first 12 months following issuance; provided however, that Streeterville is guaranteed 12 months of interest, or $1.8 million, even if the Note is redeemed or prepaid prior to the maturity date. Of the total $12.0 million Note, $6.0 million was placed in a restricted account and will be accessible by the Company as the first $6.0 million is repaid.

The Note contains an embedded put feature that meet the definition of an embedded derivative in accordance with ASC 815 (Note 2).

During January 2026, Streeterville elected to purchase 1.6 million shares of common stock at an average price of $0.73 per share based on the average closing stock price during the five trading days immediately preceding delivery of the offset notice, which offset principal of approximately $1.2 million outstanding under the Note. The average fair value of the 1.6 million shares of common stock issued during January 2026 was $2.09 per share (Note 4). The difference in the principal offset and the fair value of stock issued of $2.2 million was recorded to the fair value of the embedded derivative liability and subsequent settlement of such feature (Note 2). The conversion of debt to equity through the embedded put feature is treated as a partial extinguishment of the Note, and therefore proportionate amounts of unamortized debt discount and financing costs were written-off during the year ended March 31, 2026, resulting in a loss of $0.2 million recorded within Loss on extinguishment of debt in the consolidated statement of operations and comprehensive loss. In connection with this reduction to the principal balance outstanding, approximately $0.6 million was released from restricted cash during the year ended March 31, 2026.

Pursuant to the contractual terms of the Note, the Company was charged a one-time monitoring fee (as defined within the Note) of $1.9 million that is recognized as part of the Note’s principal outstanding balance on February 4, 2026. The monitoring fee will be credited back to the Company, on a pro-rata basis, if any principal payment is made in cash and certain market conditions are met. The Company determined the monitoring fee is accounted for as an additional debt discount equivalent, with the offsetting increase to the long-term debt principal balance and will be amortized into interest expense over the remaining term of the Note under the effective interest method. If cash principal payments occur in the future, a pro-rata portion of the monitoring fee will be waived, which will reduce the obligation and a gain on extinguishment (or reduction of interest expense) will be recognized at such time.

BEYOND AIR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS