NOTE 15 LEASE REVENUES

The Company leases the LungFit® PH device to customers and receives a fixed rental fee over the term of the arrangement. Contract terms (generally one1-to-three years) vary by customer and may include options to terminate the contract or options to extend the contract. The LungFit® PH lease agreements are accounted for as operating leases. The non-lease components, including consumables and device-related services are combined with the predominant lease component under the practical expedient. The fixed rental fee is recognized over the period of the lease agreement on a straight-line basis.

The Company recognized $6.2 million and $3.7 million in LungFit® PH lease revenues for the years ended March 31, 2026 and March 31, 2025, respectively, reported as revenues in the consolidated statements of operations and comprehensive loss. The Company received approximately $5.8 million and $3.2 million in cash associated with leases which the Company is the lessor for the years ended March 31, 2026 and March 31, 2025, respectively.

The following schedule presents the minimum future lease payments under the LungFit® PH lease arrangements that were in place as of March 31, 2026 (in thousands):

 SCHEDULE OF MATURITY OF FUTURE LEASE PAYMENTS

The LungFit® PH devices are included in Property and Equipment (Note 3) and have the useful life of five years. Depreciation expense related to leased LungFit® PH devices was $2.7 million and $2.3 million for the years ended March 31, 2026 and March 31, 2025, respectively.

The depreciation expense related to customer leased devices is included in the cost of revenues in the consolidated statements of operations and comprehensive loss.

Capitalized sales commissions

Sales commissions related to obtaining LungFit® PH lease agreements are accounted for as initial direct costs and are capitalized and amortized on a straight-line basis over the lease term. Total capitalized costs for the years ended March 31, 2026 and March 31, 2025 were immaterial.