ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and
analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements
and related notes appearing elsewhere in this Annual Report on Form 10-K. This discussion and other parts of this Annual Report contain
forward-looking statements that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations, intentions
and projections. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could
cause or contribute to such differences include, but are not limited to, those discussed in Item 1A “Risk Factors.”
Introduction
We are a commercial-stage medical
device and biopharmaceutical company developing a platform of nitric oxide (“NO”) generators and delivery systems (the “LungFit®
platform”) capable of generating NO from ambient air. The Company’s first device, LungFit® PH received premarket
approval (“PMA”) from the FDA in June 2022. The NO generated by the LungFit® PH system is indicated to improve
oxygenation and reduce the need for extracorporeal membrane oxygenation in term and near-term (>34 weeks gestation) neonates with hypoxic
respiratory failure associated with clinical or echocardiographic evidence of pulmonary hypertension in conjunction with ventilatory support
and other appropriate agents. This condition is commonly referred to as persistent pulmonary hypertension of the newborn (“PPHN”).
The LungFit® platform can generate NO up to 400 parts per million (“ppm”) for delivery to a patient’s
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. In July 2022, we commenced marketing LungFit®
PH in the United States for PPHN as a medical device.
On November 26, 2024, the Company received European
CE mark approval of the LungFit PH® system for the following:
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 of NO at concentrations > 100 parts per million (ppm) 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® platform can potentially address. The Company’s other areas of focus with the LungFit® platform
beyond PPHN are nontuberculous mycobacteria (“NTM”) lung infection and those with various severe lung infections with
underlying chronic obstructive pulmonary disease (“COPD”). Our current product candidates will be subject to premarket
reviews and approvals by the FDA, certification through the conduct of a conformity assessment by a notified body in the EU for the
product to be CE marked, as well as comparable foreign regulatory authorities.
In addition to the above-mentioned
programs, we have two subsidiaries that are currently engaging in novel preclinical stage pharmaceutical research, Beyond Cancer and NeuroNos.
Financial Operations Overview
Critical Accounting Estimates
Our management’s discussion
and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared
in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of our consolidated financial statements
and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities,
costs and expenses and related disclosures. Our critical accounting estimates are those estimates that involve a significant level of
uncertainty at the time the estimate was made, and changes in them have had or are reasonably likely to have a material effect on our
financial condition or results of operations. Accordingly, actual results could differ materially from our estimates. We base our estimates
on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an
ongoing basis. Our most critical accounting estimates include determining the accruals associated with third party providers supporting
research and development efforts.
Accrued Research and Development Expenses
As part of the process of preparing
our consolidated financial statements, we are required to estimate our accrued research and development expenses. This process involves
reviewing purchase orders, open contracts, reconciling payments and invoices and communicating with our personnel and suppliers to identify
services that have been performed on our behalf. It also includes the research and development vendors providing us with milestone and
percentage of completion reports on the statuses within each active purchase order and contract along with estimating the level of service
performed and the associated cost incurred for the services when we have not yet been invoiced or otherwise notified of the actual cost.
Our vendors invoice us in various ways via advance payments, as contractual milestones are met, or monthly in arrears for services performed.
We make estimates
of our accrued expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known
to us at that time. We periodically confirm the accuracy of our estimates with the service providers and adjust if necessary. The significant
estimates in our accrued research and development expenses include the costs incurred for services performed by clinical and pre-clinical
vendors in connection with research and development activities for which we have not yet been invoiced.
We contract with these vendors
to conduct clinical and pre-clinical services on our behalf. We base our expenses on our estimates of the services received and efforts
expended pursuant to quotes and contracts with the research and development vendors. The financial terms of these agreements are subject
to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to
our vendors will exceed the level of services provided and result in a prepayment of the research and development expense. In accruing
service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period.
If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or amount of
prepaid expense accordingly. Non-refundable advance payments for goods and services that will be used in future research and development
activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made.
Although we do not expect our
estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed
relative to the actual status and timing of services performed may vary and may result in us reporting amounts that are too high or too
low in any particular period. To date, there have been no material differences between our estimates of such expenses and the amounts
actually incurred.
Results of Operations and Other Comprehensive Loss
Operating expenses:
Selling, general and administrative (26,017 ) (37,337 )
Estimated contingent loss - (598 )
Dividend/investment income 705 1,739
Interest and finance expense (3,019 ) (2,912 )
Change in fair value of warrant liability 237 611
Change in fair value of derivative liability 1,314 48
Loss on extinguishment of debt (2,447 ) -
Loss on disposal/impairment of fixed assets (738 ) -
Foreign exchange (loss) (3 ) (6 )
Other income/(expense) 9 (169 )
Total other income/(expense) (3,942 ) (1,288 )
Provision for income taxes - -
Less: net loss attributable to non-controlling interest (1,854 ) (4,053 )
Net loss attributed to Beyond Air, Inc. $ (46,625 ) $ (60,242 )
Other comprehensive income:
Foreign currency translation (loss) (45 ) (68 )
Comprehensive loss attributable to Beyond Air, Inc (46,670 ) (60,310 )
Comparison of the year ended March 31, 2025
to the year ended March 31, 2024
Revenue and Cost of Revenue
$3.7
million and $1.2 revenue was recognized for the years ended March 31, 2025 and March 31, 2024 respectively. Cost of revenue of
$5.4 million and gross losses of $1.7 million
were recognized for the year ended March 31, 2025 compared to a cost of revenue of $2.5 million and gross losses of $1.3 million for the
year ended March 31, 2024.
The increase in revenue was due
to additional hospital contracts in the United States market. Cost of revenue exceeded revenue primarily driven by costs of supply chain
infrastructure required to grow revenue in future periods and depreciation of additional LungFit® devices purchased in
the year.
Research and Development Expenses
Research and
development expenses for the year ended March 31, 2025 were $16.9 million, as compared
to $24.4 million for the year ended March 31, 2024. The decrease of $7.5 million was
primarily attributed to a decrease in spend in salaries $1.5 million in Beyond Air,
stock-based compensation $4.0million ($0.7 million
in Beyond Air and $3.3 million in Beyond Cancer), pre-clinical studies $1.1 million reduced spend in Beyond
Cancer on device development costs, clinical studies $1.9 million ($1.5 million
in Beyond Air and $0.4 million in Beyond Cancer), professional fees $1.0 million
($0.6 million in Beyond Air and $0.4 million
in Beyond Cancer) and travel expenses $0.2 million.
Selling, General and Administrative Expenses
Selling, general
and administrative expenses for the year ended March 31, 2025 and March 31, 2024 were $26.0
million and $37.3 million, respectively. The decrease of $11.3 million was attributed primarily to a decrease in spend in salaries
$1.8 million ($2.7 million in Beyond Air offset by an increase of $0.9 million in Beyond Cancer), $8.3 million due to stock based
compensation cost ($2.3 million in Beyond Air and $6.0 million in Beyond Cancer),
$0.6 million professional fees ($0.8 million in Beyond Air offset by increased spend $0.1 million in Beyond Cancer and $0.1 million
in NeuroNos), $0.3 million marketing and advertising costs for Beyond Air, $0.4 million rent costs ($0.2 million in Beyond Air and
$0.2 million in Beyond Cancer), $0.4 million travel costs ($0.3 million in Beyond Air and $0.1 million in Beyond Cancer) offset by
an increase in Beyond Air of $0.4 million in legal fees and $0.2 million in royalty payments.
Other Income and Expense
Other expenses for the year ended
March 31, 2025 and March 31, 2024, was $3.9 million and of $1.3 million, respectively. The $2.6 million increase in expense is mainly
due to a loss on the extinguishment of debt of $2.4 million, a decrease in interest and dividend income from our investments in marketable
securities of $1.0 million, a loss in disposal of fixed assets of $0.2 million, an impairment of fixed assets $0.5 million and a change
in the fair value of warrant liability of $0.4 million on the Loan and Security Agreement, offset by a decrease of $0.6 million of non-product
related litigation and change in fair value of the derivative liability of $1.3 million on the Loan and Security Agreement.
Net Loss Attributable to Non-controlling Interest
Net loss attributed to non-controlling
interest for the year ended March 31, 2025, was $1.9 million for the year ended March 31, 2025, compared to $4.1 million for the year
ended March 31, 2024. Non-controlling interest represents 20% of the net loss of our Beyond Cancer subsidiary and 11.76% of the net loss
of our NeuroNos subsidiary. The year-on-year variance is due to a decrease in the net loss of Beyond Cancer partially offset by the loss
in NeuroNos, which the non-controlling interest was established in the current fiscal year.
Net Loss Attributed to Common Stockholders
Net loss attributed to common
stockholders for the year ended March 31, 2025, was $46.6 million or a loss of $0.69 per share, basic and diluted, as a result of the
foregoing. Our net loss attributed to common stockholders for the year ended March 31, 2024, was $60.3 million or a loss of $1.82 per
share, basic and diluted.
Liquidity and Capital Resources
We have generated revenue of $4.9
million from the sale of products to date. We had an operating cash flow decrease of $38.2 million for the year ended March 31, 2025 and
we have experienced an accumulated loss of $286.3 million since inception through March 31, 2025. As of March 31, 2025, we had cash, cash
equivalents and marketable securities of $6.9 million and $0.2 million in restricted cash.
The Company has recently signed agreements with TrillaMed (providing access to Department of Defense and Veterans Affairs hospitals),
Healthcare Links (expanding access to group purchasing organizations and integrated delivery networks) and Business Asia Consultants (accelerating
global expansion) which will drive increased revenues. The Company has implemented a capital conservation strategy, reducing our back
office footprint, reducing staffing levels by over 30% across the company, placing our VCAP study on hold pending future funding and adjusting
our production forecasts. The Company expects an immediate benefit from these actions.
We expect to incur net losses
and have significant cash outflows for at least the next twelve months. Management believes these factors raise substantial doubt about
the Company’s ability to meet its obligations with cash on hand and concluded that the Company will require additional funding within
one year from the date these financial statements are issued.
Management is confident that the
efforts to arrange financing as described below, while not assured, will enable them to meet the Company’s obligations.
The Company’s future capital
needs and the adequacy of its available funds will depend on many factors, including, but not necessarily limited to, the success and
costs of commercialization of the Company’s approved product and the actual cost and time necessary for current and anticipated
preclinical studies, clinical trials and other actions needed to obtain certification or regulatory approval of the Company’s product
candidates.
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 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 shall issue the lenders warrants to purchase shares of the Company’s
common stock at an exercise price of $0.3793 per share.
Subsequent
to March 31, 2025, the Company received commitments from certain lenders under the Loan Agreement to provide additional financing of
at least $2.0 million in aggregate principal. The additional loans are expected to be issued on terms and conditions that are materially
consistent with those of the Loan Agreement.
On September 26, 2024, the Company,
entered into a securities purchase agreement (the “Securities Purchase Agreement II”) with certain institutional and accredited
investors, including certain directors and officers of the Company. Pursuant to the purchase agreement, the Company sold to the investors
in a private placement offering, (i) an aggregate of 24,999,999 shares of Common Stock”, at a purchase price of $0.5043 per Share,
(ii) pre-funded warrants to purchase up to 15,848,712 shares of common stock at a purchase price of $0.5042 per pre-funded warrant and
(iii) warrants to purchase up to 40,848,711 shares of common stock, for aggregate for gross proceeds of $20.6 million (which includes
$2.0 million from related parties). Each share and each pre-funded warrant was sold with an accompanying common warrant to purchase one
share of common stock. The pre-funded warrants have an exercise price of $0.0001 per share, and the common warrants have an exercise price
of $0.3793 per share. Members of the Board of Directors and certain executives of the Company are considered related parties to this offering.
The offering closed on December 31, 2024. The Company received net proceeds of $18.9 million after deductions for placement agent commissions
and other offering costs of $1.4 million and $0.3 million, respectively. (See Note 4 to our financial statements for the fiscal year ended
March 31, 2025).
In addition, Beyond Air and Avenue
Capital Management II, L.P., Avenue Venture Opportunities Fund, L.P. and Avenue Venture Opportunities Fund II, L.P. (“collectively,
Avenue Capital”) reached an agreement to extinguish the Avenue Capital senior secured term loan for a one-time payment of $17.85
million. This agreement eliminates the debt and interest payments that would have been made to Avenue Capital from October 1, 2024 through
June 30, 2026 of $12.0 million. In connection with this agreement $5.0 million was paid on September 27, 2024 in partial settlement. The
Company remeasured the fair value of the derivative liability to $0 at September 30, 2024 as Avenue Capital did not exercise the conversion
right related to the loan agreement prior to the extinguishment of the loan agreement and the conversion price exceeded the fair market
value of the underlying securities. The final $12.85 million was paid on October 4, 2024. Avenue Capital invested $3.35 million in the
Securities Purchase Agreement II at the same terms and conditions as all other investors.
With respect to Beyond Cancer,
discussions with investors continue in parallel to the advancement to a phase 1b combination study of UNO with anti-PD1 therapy. Current
cash on hand is expected to be sufficient to complete the phase 1b study.
The recent $2.0 million funding
for NeuroNOS is still open as fundraising will continue for a period of time not to extend beyond the end of calendar 2025.
The accompanying consolidated
financial statements have been prepared assuming that the Company will continue operating as a going concern. This basis of accounting
contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business.
Our future capital needs and the
adequacy of our available funds will depend on many factors, including, but not necessarily limited to, the cost and time necessary for
the development, preclinical studies, clinical trials and certification or regulatory approval of our other medical devices, indications
as well as the commercial success of our approved product and any product candidates that receive marketing approval by the FDA. We may
be required to raise additional funds through sale of equity or debt securities or through strategic collaborations and/or licensing agreements
in order to fund operations until we are able to generate enough product or royalty revenues, if any. Financing may not be available on
acceptable terms, or at all, and our failure to raise capital when needed could have a material adverse effect on our strategic objectives,
results of operations and financial condition.
On May 25, 2021, the Company and
Circassia entered into a settlement agreement (“the Settlement Agreement”) resolving all claims by and between the parties
and mutually terminating the agreement with Circassia disclosed in Note 9 to our financial statements for the fiscal year ended March
31, 2025. Pursuant to the terms of the Settlement Agreement, the Company agreed to pay Circassia $10.5 million in three installments,
all of which has been paid. Additionally, beginning in the third fiscal quarter of 2025, Circassia will receive a quarterly royalty payment
equal to 5% of LungFit® PH net sales in the U.S. until the final $6.0 million has been paid. As of March 31, 2025, less
than $0.1 million of royalty has been paid.
On February 10, 2025, we entered
into the At-The Market Offering Sales Agreement with BTIG, Inc. (the “2025 ATM”). Under the 2025 ATM, we may sell shares of
our common stock having aggregate sales proceeds of up to $35.0 million, from time to time and at various prices. Pursuant to the “baby
shelf rules” promulgated by the SEC, if our public float is less than $75.0 million as of specified measurement periods, the number
of shares of common stock that may be offered and sold by us under a Form S-3 registration statement, including pursuant to the 2025 ATM,
in any twelve-month period is limited to an aggregate amount that does not exceed one-third of our public float. As of March 31, 2025,
due to the SEC’s “baby shelf rules,” we were permitted to sell up to $6.6 million of shares of common stock pursuant
to the 2025 ATM. We will remain subject to the “baby shelf rules” under the Form S-3 registration statement until such time
as our public float exceeds $75.0 million. If shares of our common stock are sold, there is a 2.5% fee paid to the sales agent.
Our ability to continue to operate
beyond the third fiscal quarter of 2026 will be largely dependent upon the successful commercial launch of LungFit® PH,
as well as obtaining partners in other parts of the world, and raising additional funds to finance our activities 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.
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 the completion of the research and development of our product candidates.
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 candidates.
Our future capital requirements
will depend on many factors, including:
● the costs of commercializing the LungFit® system;
● the magnitude of our general and administrative expenses; and
Comparison between Fiscal Years Ended March 31,
2025 and March 31, 2024
Cash Flows
Below is a summary of the statements
of cash flows for the years ended March 31, 2025 and March 31, 2024.
Net cash provided by (used in):
Effect of exchange rate changes on cash and cash equivalents $ (45 ) $ (77 )
Operating Activities
For the year ended March 31, 2025,
net cash used by operating activities was $38.2 million, which was primarily due to our net loss of $48.5 million which includes $9.1
million of stock-based compensation, $3.0 million of depreciation and amortization, a non-cash loss of $2.4 million on the extinguishment
of debt, an impairment of fixed assets charge $0.5 million, a $0.4 million increase in accounts receivable, a $0.4 million increase in
inventory, partially offset by a $1.0 million decrease in prepaid accounts, a decrease in accrued liabilities $6.4 million (which included
$4.5 million in payment of the final tranche of a May 2021 settlement with Circassia). For the year ended March 31, 2024, net cash used
by operating activities was $56.0 million, which was primarily due to our net loss of $64.3 million, which includes $21.3 million of stock-based
compensation, $0.4 million received in grant payments, $2.0 million of depreciation and amortization partially offset by a $1.6 million
increase in prepaid accounts, a $0.3 million increase in accounts receivable, a $1.0 million increase in inventory, ($3.5) million in
payment of the second tranche of a May 2021 settlement with Circassia, ($2.9) million for the Hudson settlement and ($7.6) million attributable
to the resolution of the Empery Suit.
Investing Activities
For the year ended March 31, 2025,
cash provided by investing activities was $14.9 million which was primarily from investments in marketable securities from net proceeds received
from the purchase and sale of marketable securities of $20.8 million in the fiscal year, and the purchase of property and equipment for
$5.9 million. For the year ended March 31, 2024, cash used in investing activities was $12.2 million which was primarily from investments
in marketable securities from net proceeds received from the purchase and sale of marketable securities of $6.5 million in the fiscal
year, and the purchase of property and equipment for $5.7 million.
Financing Activities
For the year ended March 31, 2025,
net cash provided by financing activities was $16.6 million, mainly from the issuance of securities through securities purchase agreements
which the net proceeds were $18.8 million, $11.3 million payment received on the loan agreement, and the issuance of common stock in connection
with an At-The-Market Offering Sales Agreement with Truist Securities, Inc. (the “2022 ATM”) of $0.7 million and $1.5 million
in connection with the 2025 ATM partially offset by $18.0 million from the payment of long- and short-term loans, including a $17.5 million
repayment to Avenue Capital. For the year ended March 31, 2024, net cash provided by financing activities was $43.2 million, mainly from
the Loan Agreement of which the net proceeds were $15.8 million, the issuance of common stock in connection with the 2022 ATM of $13.4
million, and the registered direct offering (the “Registered Offering”) pursuant to a securities purchase agreement dated
March 20, 2024 with Roth Capital Partners, LLC and Laidlaw & Company (UK) Ltd. of $14.6 million, the issuance of common
stock in connection with the exercise of options ($0.2 million) partially offset by $0.8 million from the payment of short-term loans.
ITEM 7A. Quantitative and Qualitative Disclosure
about Market Risk
We qualify as a smaller reporting
company, as defined by SEC Rule 229.10(f)(1) and are not required to provide the information required by this Item 7A.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
The consolidated financial statements
together with the report of our independent registered public accounting firm, required to be filed pursuant to this Item 8 are appended
to this Annual Report. An index of those consolidated financial statements is found in Part IV, Item 15 of this Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
On December 17, 2024, the Audit
Committee (“Audit Committee”) of the Board of Directors of the Company dismissed Marcum LLP (“Marcum”) as the
Company’s independent registered public accounting firm, effective immediately. The dismissal was not related to any disagreements
with Marcum on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. The reports
of Marcum on the consolidated financial statements of the Company as of and for the fiscal years ended March 31, 2024 and 2023 did not
contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting
principles except for a paragraph in the report on the consolidated financial statements of the Company as of and for the fiscal year
ended March 31, 2024 regarding substantial doubt about the Company’s ability to continue as a going concern.
During the fiscal years ended
March 31, 2024 and 2023 and the subsequent interim period through December 17, 2024, there were no disagreements within the meaning of
Item 304(a)(1)(iv) of Regulation S-K between the Company and Marcum on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, any of which, if not resolved to Marcum’s satisfaction, would have caused Marcum to
make reference thereto in their reports. During the fiscal years ended March 31, 2024 and 2023, there were no “reportable events”
(as described in Item 304(a)(1)(v) of Regulation S-K).
On December 17, 2024, the Audit
Committee approved the engagement of WithumSmith+Brown, PC (“Withum”) as the Company’s independent registered public
accounting firm for the fiscal year ending March 31, 2025, effective immediately. During the Company’s two most recent fiscal years
ended March 31, 2024 and 2023 and the subsequent interim periods, neither the Company nor anyone acting on its behalf consulted with Withum
regarding any of the matters described in Items 304(a)(2)(i) and (ii) of Regulation S-K.
ITEM 9A. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures
We performed an evaluation of
the effectiveness of our disclosure controls and procedures that are designed to ensure that information required to be disclosed in this
Annual Report and filed with the SEC is recorded, processed, summarized and reported timely within the time period specified in the SEC’s
rules and forms. 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. There can be no assurance that our disclosure controls and procedures
will detect or uncover all failures of persons within the Company to disclose information otherwise required to be set forth in our reports.
Nevertheless, our disclosure controls and procedures are designed to provide reasonable assurance of achieving the desired control objectives.
Based on our evaluation, our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial
officer) have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) of the Exchange Act)
were effective at such reasonable assurance level as of March 31, 2025.
(b) Management’s Annual
Report on Internal Control over Financial Reporting
Our management is responsible
for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under
the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management, with the participation
of our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), conducted
an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2025, based on the framework in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based
on this evaluation, management concluded that our internal control over financial reporting was effective as of March 31, 2025.
(c) Attestation Report of Registered
Public Accounting Firm
This report does not include an
attestation report of our registered public accounting firm as we are not an accelerated filer or a large accelerated filer.
(d) Changes in Internal Control
over Financial Reporting
We continued to deploy our Enterprise
Resource Planning system(“ERP”) across all new subsidiaries during the year ended March 31, 2025 and have completed deployment
to all entities where we have employees and finance professionals. There were no changes in our internal control over financial reporting,
as defined in Rules 13a-15(t) and 15d-15(f) under the Exchange Act, during the year ended March 31, 2025 that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS
THAT PREVENT INSPECTIONS
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
Directors and Executive Officers
The table below sets forth the
name, age and position of each of our directors and executive officers and as of the date of this Annual Report on Form 10-K.
Name Age Position
Steven A. Lisi 54 Chief Executive Officer and Chairman of the Board of Directors
Douglas Q. Larson 55 Chief Financial Officer
Michael Gaul 71 Chief Operating Officer
Dr. William Forbes 63 Director, Member of Nominating Committee
Robert F. Carey 66 Director, Member of Audit Committee
Robert S. Goodman 60 Director
Steven A. Lisi, Chief Executive Officer and
Chairman of the Board
Steven Lisi has served on our
Board of Directors since January 13, 2017, and has served on the Board of Directors of BA Ltd., our wholly-owned subsidiary, since June
2016. Mr. Lisi has served as our Chief Executive Officer since June 14, 2017.
Mr. Lisi was previously Senior
Vice President of Business and Corporate Development at Avadel Pharmaceuticals (AVDL) where he was instrumental in restructuring the company,
raising over $125 million and transforming it from a $100 million enterprise value to $1 billion in three years. Prior to his position
at Avadel, Mr. Lisi spent 18 years investing in the global healthcare industry at Deerfield Management, Millennium Management and SAC
Capital, amongst others. Mr. Lisi serves as Chairman of the Board of Beyond Cancer, an NO based immuno-oncology company targeting solid
tumors. He received his master’s degree in International Business from Pepperdine University.
Our Board of Directors believes
that Mr. Lisi’s experience and perspective as our Chief Executive Officer, as well as his depth of operating and senior management
experience and specific skills in the areas of general operations and financial operations, provide him with the qualifications and skills
to serve as a director.
Douglas Larson, Chief Financial
Officer
Douglas Larson has been our Chief
Financial Officer since September 2021. Mr. Larson joined the Company with over 20 years of international and operational financial leadership
experience. Most recently, he served as an independent consultant providing operational and financial consulting services from February
2021 to August 2021. Prior to that, he served as Vice President, Finance and Head of Global Controlling at DBV Technologies, Inc. (Nasdaq:
DBVT) (“DBV”), a global clinical stage biopharmaceutical company headquartered in France, from June 2017 to September 2020.
Prior to DBV, Mr. Larson served as the Chief Financial Officer of The Scotts Miracle-Gro Company’s (NYSE: SMG) International division,
based in Lyon, France from January 2001 to May 2015. Mr. Larson graduated from the Certified General Accountant’s Association of
Canada in 2001 and HEC Paris’s Executive MBA program in 2015.
Michael Gaul, Chief Operating Officer
Michael
Gaul has been our Chief Operating Officer since July 1, 2022. Mr. Gaul joined the Company in May 2020 as Senior VP, Operations, a title
he held until June 2022. Mr. Gaul has led teams in operations, sales and marketing, supply chain, distribution, quality, regulatory, human
resources, and finance. He has had P&L experience with multi-plant responsibility in both the U.S. and Asia, including roles with
Sparton Corporation (Group VP, Manufacturing & Design Services Business Unit; Group VP, Medical Business Unit), a defense contractor
for maritime defense, from September 2011 to February 2020, SynCardia Systems (COO; VP Operations), a manufacturer and provider of the
commercially approved Total Artificial Heart, from June 2005 to February 2011, Ventana Medical Systems (now known as Roche Tissue Diagnostics)
(VP & General Manager, Operations), a medical device company, from September 2003 to April 2005, and Robotic Vision Systems, Inc.
(General Manager, Vanguard Division; VP Operations, Systemation Division), a maker of machine vision systems, from September 1997 to June
2003. He also currently serves on the Board of Directors of the Ohio Life Sciences Association to support and promote Ohio’s bioscience
industry. Mr. Gaul has a BS, Business Administration from Delaware Valley University, and an MBA from Florida Institute of Technology.
Erick J. Lucera, Director
Erick J. Lucera joined our Board
of Directors in August 2017 and serves on our audit committee, compensation committee and nominating committee. DYNE THERAPEUTICS He previously
served as Executive Vice President and Chief Financial Officer of Editas Medicine, Inc., a leading gene editing company focused on developing
CRISPR medicines for people with serious diseases, from May 2023 to March 2025. Mr. Lucera previously served as Chief Financial Officer
of AVEO Pharmaceuticals, Inc., a commercial-stage biopharmaceutical company focused on targeted medicines for oncology and other unmet
medical needs, from January 2020 until March 2023, following its acquisition by LG Chem, Ltd. Since April 2023, Mr. Lucera has served
on the board of directors of SAB Biotherapeutics, Inc., a public clinical-stage biopharmaceutical company. Mr. Lucera was the Chief Financial
Officer of Valeritas Holdings, Inc., a U.S. Nasdaq traded commercial stage company developing new technology for diabetes, from 2016 to
2019. Mr. Lucera served as Chief Financial Officer, Treasurer and Secretary of Viventia Bio from 2015 to 2016. From 2012 to 2015, he was
Vice President, Corporate Development at Aratana Therapeutics, a veterinary biopharmaceutical company. While at Aratana, he helped grow
the company’s product pipeline through a series of acquisitions and in licensing transactions financed through five public and private
offerings of nearly $250 million. Before his career as a healthcare company executive, Mr. Lucera spent over 15 years in investment management
as a healthcare analyst at Eaton Vance, the portfolio manager of the Triathlon Life Sciences Fund at Intrepid Capital and as head of the
healthcare research team at Independence Investments. He has served on the board of directors of Bone Biologics, a Nasdaq traded orthobiologics
company, since October 2021. He holds a CPH from Harvard University, an MS in quantitative finance from Boston College, an MBA from Indiana
University Bloomington, and a BS in accounting from the University of Delaware. Mr. Lucera has obtained CFA, CMA, and CPA designations.
Our Board of Directors believes
that Mr. Lucera’s experience and perspective advising the Company and other life sciences companies on strategic transactions and
financings, as well as his depth of operating and senior management experience in our industry, provide him with the qualifications and
skills to serve as a director.
Yoori Lee, Director
Yoori Lee joined our Board of
Directors in January 2018. Ms. Lee serves on our compensation committee and nominating committee. She has served as Co-founder and President
of Trio Health Advisory Group, Inc. since 2013. Trio Health’s mission is to improve the quality of care in patient outcomes through
coordinating the efforts of all patient care stakeholders. Prior to Trio Health, Ms. Lee spent over 15 years at Leerink Partners LLC,
a leading healthcare investment bank, where she was Managing Director, and Director of MEDACorp Services. Additionally, she helped found
the MEDACorp network, a cadre of experts including more than 35,000 healthcare professionals in diverse areas of practice such as clinical
medicine, biomedical research, regulatory affairs, public policy, healthcare administration and healthcare information technology.
Our Board of Directors believes
that Ms. Lee’s experience and perspective advising the Company as well as her experience with Leerink Partners LLC and MEDACorp.
provide her with the qualifications and skills to serve as a director.
Dr. William Forbes, Director
Dr. William Forbes joined our
Board of Directors in August 2018 and serves on our nominating committee. He brings to our Board of Directors more than 30 years of pharmaceutical
product development experience and, working with health authorities in the U.S. and Europe, has contributed to numerous marketing approvals
spanning a diverse range of therapeutic areas. Dr. Forbes has served as the Chief Development Officer of Trevi Therapeutics, a clinical-stage
pharmaceutical company focused on serious neurologically mediated diseases since February 2021. Prior to joining Trevi, Dr. Forbes was
at Salix Pharmaceuticals as the Chief Development Officer and also Head of Medical and R&D from February 2015 to June 2015. Prior
to Salix, Dr. Forbes spent 15 years in Clinical Development & Regulatory Affairs and Clinical Research at a number of global pharmaceutical
companies.
Our Board of Directors believes
that Dr. Forbes’ experience and perspective advising the Company, as well as his depth of operating and senior management experience
in our industry, provide him with the qualifications and skills to serve as a director.
Robert F. Carey, Director
Robert Carey joined our Board
of Directors in February 2019 and serves on our audit committee. He has an extensive track record of accomplishment within the biopharmaceutical
and healthcare investment banking industry. He has assisted biotech and specialty pharma companies raise more than $10 billion in initial
public offerings, follow-on offerings, debt offerings, and private placements. He has served as a financial advisor on mergers, acquisitions,
and strategic alliance transactions with a total deal value of more than $10 billion. From July 2020 until December 2023, Mr. Carey was
co-founder and President of ACELYRIN, INC., a biopharmaceutical company developing life-changing drug therapies. Mr. Carey previously
served as Executive Vice President and Chief Business Officer at Horizon Therapeutics plc from March 2014 to September 2019, during which
Horizon Therapeutics deployed in excess of $3.5 billion to acquire or license eight commercial products and three products in development
and grew net sales from $74 million in 2013 to approximately $1.2 billion in 2018, a compound annual growth rate of 75%. Before Horizon,
he spent more than 11 years as Managing Director and Head of the Life Sciences Investment Banking Group at JMP Securities. Mr. Carey was
also Managing Director in the healthcare groups at Dresdner Kleinwort Wasserstein and Vector Securities. He received his B.B.A. in Accounting
from the University of Notre Dame. Mr. Carey currently serves on the Board of Beyond Cancer Ltd. and Sangamo Therapeutics, Inc.
Our Board of Directors
believes that Mr. Carey’s experience and perspective advising the Company and other life sciences companies in connections with
financings and strategic transactions, as well as his depth of operating and senior management experience in our industry, provide him
with the qualifications and skills to serve as a director.
Robert
Scott Goodman, Director
Robert
Scott Goodman joined our Board of Directors in June 2025. Mr. Goodman brings more than 30 years of executive commercial leadership experience
and success spanning venture-backed emerging businesses to Fortune 50 companies. Most recently, he served on the Board of Directors of
Fourth Frontier, a pioneering health tech company, where he contributed to the company’s 510k FDA device approval and supported
a successful Series B financing. Mr. Goodman served as the Chief Commercial Officer for pharmaceutical company WEP Clinical from 2023-2024,
where he helped accelerate and increase total contract values and revenue growth by over 30% YOY. Mr. Goodman served as Division President
at BioTelemetry, where he led a $2.1B sell-side transaction to Royal Philips in 2021. Mr. Goodman also has extensive executive sales
experience, serving as SVP, Sales & Marketing of Cardiocore (later acquired by BioTelemetry) from 2008-2017 and as Thermo Fisher’s
Senior Director, Head of Sales & Marketing from 2007-2008.
Our
Board of Directors believes that Mr. Goodman’s strategic insight and commercial acumen have consistently delivered value across the healthcare
and life sciences sectors, and provide him with the qualifications and skills to serve as a director.
Term of Office of Directors
Our directors are elected at each
annual meeting of stockholders and serve until their successors are elected and qualified at the next annual meeting of stockholders,
or until their prior death, resignation or removal.
Family Relationships
There are no family relationships
among any of our current or former directors or executive officers.
Involvement in Certain Legal Proceedings
Erick J. Lucera was the Chief
Financial Officer of Valeritas Holdings, Inc. until January 3, 2020. On February 9, 2020, Valeritas Holdings, Inc. filed a voluntary petition
for bankruptcy protection under Chapter 11 of Title 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District
of Delaware in order to facilitate its sale to a Denmark-based biotechnology company. The plan of liquidation was approved on June 8,
2020 and became effective on June 30, 2020.
Except as set forth above, none
of our directors, executive officers, significant employees, promoters or control persons has been involved in any legal proceeding in
the past ten years that would require disclosure under Item 401(f) of Regulation S-K promulgated under the Securities Act.
Delinquent Section 16(a) Reports
Section 16(a) of Exchange Act
requires our directors, executive officers and persons who own more than 10% of our outstanding shares of common stock (“Ten Percent
Holders”) to file with the SEC reports of their share ownership and changes in their share ownership of our common stock. Directors,
executive officers and ten percent holders are also required to furnish us with copies of all ownership reports they file with the SEC.
To our knowledge, based solely on a review of the copies of such reports furnished to us, the following directors, executive officers
and 10% holders did not comply with all Section 16(a) filing requirements as of June 18, 2025 as follows:
Board Committees
Our Board of Directors has established
four standing committees: the audit committee, the compensation committee, the nominating committee and the compliance committee. The
current members of our audit committee are Erick Lucera and Robert F. Carey with Erick Lucera serving as chairperson. The current members
of our compensation committee are Yoori Lee and Erick J. Lucera, with Yoori Lee serving as chairperson. The current members of our nominating
committee are Erick Lucera, Yoori Lee and Dr. William Forbes, with Erick Lucera serving as chairperson. The compliance committee currently
has four members.
Our Board of Directors has determined
that Erick Lucera and Robert F. Carey meet the additional test for independence for audit committee members imposed by SEC regulations
and Section 5605(c)(2)(A) of the Nasdaq Stock Market listing rules and that Erick J. Lucera and Yoori Lee meet the additional test for
independence for compensation committee members imposed by Section 5605(d)(2)(A) of the Nasdaq Stock Market listing rules.
Audit Committee
The primary purpose of our audit
committee is to assist the Board of Directors in the oversight of the integrity of our accounting and financial reporting process, the
audits of our consolidated financial statements, and our compliance with legal and regulatory requirements. It also oversees internal
controls and discusses Company policies related to risk assessment and risk management, including cybersecurity matters. Our audit committee
met five times during the fiscal year ended March 31, 2025. The functions of our audit committee include, among other things:
● reviewing and approving related-party transactions; and
● reviewing and evaluating, at least annually, our audit committee’s charter.
With respect to reviewing and
approving related-party transactions, our audit committee will review related-party transactions for potential conflicts of interests
or other improprieties. Under SEC rules, related-party transactions are those transactions to which we are or may be a party in which
the amount involved exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal
years, and in which any of our directors or executive officers or any other related person had or will have a direct or indirect material
interest, excluding, among other things, compensation arrangements with respect to employment and Board of Directors membership. Our audit
committee could approve a related-party transaction if it determines that the transaction is in our best interests. Our directors are
required to disclose to this committee or the full Board of Directors any potential conflict of interest, or personal interest in a transaction
that our Board of Directors is considering. Our executive officers are required to disclose any related-party transaction to the audit
committee. We also poll our directors on an annual basis with respect to related-party transactions and their service as an officer or
director of other entities. Any director involved in a related-party transaction that is being reviewed or approved must recuse himself
or herself from participation in any related deliberation or decision. Whenever possible, the transaction should be approved in advance
and if not approved in advance, must be submitted for ratification as promptly as practical. The Company has written policies and procedures
with respect to related person transactions for managing such situations.
The financial literacy requirements
of the SEC require that each member of our audit committee be able to read and understand fundamental financial statements. In addition,
at least one member of our audit committee must qualify as an audit committee financial expert, as defined in Item 407(d)(5) of Regulation
S-K promulgated under the Securities Act, and have financial sophistication in accordance with the Nasdaq Stock Market listing rules.
Our Board of Directors has determined that Erick Lucera qualifies as an audit committee financial expert. Mr. Lucera is independent director,
as independence for audit committee members is defined in the Nasdaq Stock Market listing rules.
Both our independent registered
public accounting firm and management periodically meet privately with our audit committee.
Compensation Committee
The primary purpose of our compensation
committee is to assist our Board of Directors in exercising its responsibilities relating to compensation of our executive officers and
employees and to administer our equity compensation and other benefit plans. In carrying out these responsibilities, this committee reviews
all components of executive officer and employee compensation for consistency with its compensation philosophy, as in effect from time
to time. Our compensation committee met one time during the year ended March 31, 2025. The functions of our compensation committee include,
among other things:
● reviewing and evaluating our compensation risk policies and procedures;
The compensation committee retains
sole authority to hire any compensation consultant, approve such consultant’s compensation, determine the nature and scope of its
services, evaluate its performance, and terminate its engagement.
The compensation committee reviews
our compensation policies and practices for all employees, including our named executive officers, as they relate to risk management practices
and risk-taking incentives to assess and determine that there are no risks arising from these policies and practices that are reasonably
likely to have a material adverse effect on us.
Nominating Committee
The primary purpose of our nominating
committee is to assist our Board of Directors in promoting the best interest of the Company and our stockholders through the implementation
of sound corporate governance principles and practices. Our nominating committee met one time during the fiscal year ended March 31, 2025.
The functions of our nominating committee include, among other things:
● determining the minimum qualifications for service on our Board of Directors;
● periodically reviewing and evaluating our nominating committee’s charter.
Compliance Committee
The primary purpose of our compliance
committee is to assist our Board of Directors with oversight of healthcare compliance risk management arising from the FDA, Office of
Inspector General, the U.S. Department of Justice and other federal, state or foreign corporate compliance requirements related to medical
devices that specifically govern the AKS, FCA, FD&C Act, FCPA, Sunshine Act and similar state laws, HIPAA, the AdvaMed Code, and similar
applicable state and local regulations and (when applicable) equivalent global requirements. Our compliance committee met one time during
the fiscal year ended March 31, 2025.
Director Candidates
Our Board of Directors has a critical
role in guiding our strategic direction and overseeing the management of our business, and accordingly, we seek to attract and retain
highly qualified directors who have sufficient time to engage in the activities of our Board of Directors and to understand and enhance
their knowledge of our industry and business plans. In evaluating the suitability of individual candidates, our Board of Directors, in
approving (and, in the case of vacancies, appointing) such candidates, may take into account many factors, including: personal and professional
integrity; ethics and values; experience in corporate management, such as serving as an officer or former officer of a publicly held company;
strong finance experience; experience relevant to our industry; experience as a board member or executive officer of another publicly
held company; relevant academic expertise or other proficiency in an area of our operations; diversity of expertise and experience in
substantive matters pertaining to our business relative to other board members; diversity of background and perspective, including, but
not limited to, with respect to age, gender, race, place of residence and specialized experience; practical and mature business judgment,
including, but not limited to, the ability to make independent analytical inquiries; and any other relevant qualifications, attributes
or skills. The core competencies of directors should address accounting or finance experience, market familiarity, business or management
experience, industry knowledge, customer-base experience or perspective, crisis response, leadership, and/or strategic planning. Our Board
of Directors evaluates each individual in the context of the Board as a whole, with the objective of assembling a group that can best
perpetuate the success of the business and represent stockholder interests through the exercise of sound judgment using its diversity
of experience in these various areas.
Since the date of our most recent
periodic report, there were no changes to the procedure by which our security holders may recommend nominees to our Board of Directors.
Stockholder Communications
Although we do not have a formal
policy regarding stockholder communications with our Board of Directors, stockholders may communicate with our Board of Directors, or
any individual director on our Board of Directors, by writing to us at the address of our principal executive offices, addressing the
communication to the attention of our Chief Executive Officer, and specifying the Board of Directors or, if applicable, the individual
member thereof as the intended recipient of the communication. Our Corporate Secretary will forward to the directors all communications
that, in his judgment, are appropriate for consideration by the directors. Examples of communications that would not be appropriate for
consideration by the directors include commercial solicitations and matters not relevant to the stockholders, to the functioning of the
Board of Directors or to the affairs of our Company. Any correspondence received that is addressed generically to the Board of Directors
will be forwarded to the Chairman of the Board of Directors.