NOTE 11 INCOME TAXES

As of March 31, 2026, the Company has approximately $185.0 million, $30.9 million, $10.2 million and $3.5 million of net operating losses (“NOL”) carryforwards for U.S. federal, Israeli, Irish and Cypriot tax purposes, respectively. The U.S. federal NOL carryforwards of approximately $1.4 million, which were generated prior to March 2018 expire starting in 2035 through 2037. The NOL of approximately $183.6 million can be carried forward indefinitely but limited to offset 80% of taxable income. The entire NOL for Israel, Ireland and Australia can be carried forward indefinitely. The Company also has state NOL carryforwards in the amount of approximately $89.6 million expiring during the years from 2036 to 2043. The Tax Cuts and Jobs Act of 2017 (“TCJA”) has modified the Internal Revenue Code (“IRC”) 174 expenses related to research and development for tax years beginning after December 31, 2021. Under the TCJA, the Company must now capitalize the expenditures related to research and development activities and amortize over five years for U.S. activities and 15 years for non-U.S. activities using a mid-year convention. Therefore, the capitalization of research and development costs in accordance with IRC 174 resulted in a gross deferred tax asset of $27.2 million.

The Company also has R&D tax credits of $3.3 million expiring during the years from 2038 to 2042. The Company has not, as yet, conducted a study of R&D credit carryforwards. This study may result in an adjustment to the Company’s R&D credit carryforwards. The Company assessed its uncertain tax positions and determined that a 25% reserve on federal research and development credit is appropriate and in line with industry standards. As of March 31, 2026, the total amount of unrecognized tax benefits was $0.8 million, exclusive of interest and penalties. A full valuation allowance has been provided against the Company’s R&D credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the consolidated balance sheets and the consolidated statements of operations and comprehensive loss if an adjustment were required. No estimated interest or penalties related to unrecognized tax benefits have been recorded as of March 31, 2026.

Pursuant to Section 382 of the Internal Revenue Code, changes in the Company’s ownership may limit the amount of its NOL carryforwards that could be utilized annually to offset future taxable income, if any. This limitation would generally apply in the event of a cumulative change in ownership of the Company of more than 50% within a three-year period. The Company has performed a study as of March 31, 2021 and determined that on or around February 15, 2017 and February 15, 2020 ownership changes for purposes of Section 382 have occurred. The annual limitations caused by these prior ownership changes will no longer impact the utilizations of NOL’s after March 31, 2022. The Company has not updated the study since March 31, 2021 and therefore has not determined if any other NOL limitations exist.

The components of net loss before the provision for income taxes are as follows (in thousands):

SCHEDULE OF PROFIT (LOSS) BEFORE TAXES

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets were as follows (in thousands):

 SCHEDULE OF DEFERRED TAX ASSET/LIABILITY

BEYOND AIR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 INCOME TAXES (continued)

The following table presents the principal reasons for the difference between the effective tax rate and the U.S. federal enacted statutory income tax rate of 21% for the year ended March 31, 2026:

 SCHEDULE OF DIFFERENCE EFFECTIVE INCOME TAX RATE

A reconciliation of income tax expense calculated at the federal enacted statutory income tax rate of 21% is as follows for the year ended March 31 2025:

 SCHEDULE OF STATUTORY US FEDERAL EFFECTIVE RATE

Taxes paid across all jurisdictions were immaterial for all periods presented.

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was signed into law. The OBBBA includes significant tax provisions, including the permanent extension of certain provisions of the Tax Cuts and Jobs Act of 2017 (“TCJA”), modifications to the international tax framework, and the restoration of favorable tax treatment for certain business expenditures. The legislation contains multiple effective dates, with certain provisions effective for tax years beginning in 2025 and others phased in through 2027.

The Company has evaluated the provisions of the OBBBA and their applicability to its operations. Based on this assessment, the OBBBA did not have a material impact on the Company’s consolidated financial statements for the fiscal year ended March 31, 2026. The Company will continue to monitor regulatory guidance and assess the potential impact of provisions with future effective dates on its consolidated financial statements.

BEYOND AIR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS