Beyond Air, Inc. (NASDAQ:XAIR), a medical device company, has entered into a loan agreement with lenders including CEO Steven Lisi and director Robert Carey, securing an $11.5 million loan. The agreement, finalized on November 1, 2024, follows a binding term sheet dated September 27, 2024, which was recommended by an independent investment bank and approved by independent directors of the company.
The secured loan bears an annual interest rate of 15%, with 3% payable in cash and 12% in kind until June 30, 2026, after which the interest is payable entirely in cash. The principal, alongside any accrued interest, is due on October 4, 2034.
Starting October 1, 2026, Beyond Air will begin quarterly repayments based on a percentage of net sales exceeding the interest accrued. If sales are insufficient to cover the interest, a portion of the interest will be paid in cash at 3% per annum and in kind at 12% per annum.
The company's assets substantially secure the loan, and the agreement includes standard events of default with customary cure periods, after which the lender may accelerate the outstanding loan amounts.
In connection with the loan, Beyond Air issued warrants to Lisi and Carey for the purchase of 3,295,544 and 9,886,633 common stock shares, respectively, at $0.3793 per share. These warrants, exercisable within five years following shareholder approval for an increase in authorized common stock, and the underlying shares were issued in a transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2).
This financial move, detailed in a recent SEC filing, provides Beyond Air with additional capital while imposing a financial obligation secured by the company's assets. The transaction's specifics, including the loan agreement and the warrants, are documented in the exhibits attached to the Form 8-K filed by Beyond Air.
In other recent news, Beyond Air, Inc. has made significant strides in its financial structure and operations. The company reported a first-quarter revenue of $0.6 million and an operating loss of $13.5 million. Beyond Air has also retired a $17.5 million debt with Avenue Capital and established a new $11.5 million loan agreement, which is expected to support the company's operations until mid-2026.
Beyond Air's stock was upgraded to a 'Buy' rating by Roth/MKM, citing the potential of their LungFit PH system, while Piper Sandler maintained an Overweight rating but reduced its price target for Beyond Air shares. Furthermore, the company has announced a strategic partnership with Healthcare Links to expand the distribution of its LungFit® PH system in the US.
These recent developments indicate Beyond Air's efforts to strengthen its financial position and expand its market presence. As part of these endeavors, the company has set a deadline for stockholder proposals in anticipation of the 2025 Annual Meeting. It is crucial for investors to stay informed about these developments as they unfold.
InvestingPro Insights
Beyond Air's recent $11.5 million loan agreement comes at a critical time for the company, as reflected in the latest InvestingPro data. With a market capitalization of just $22.37 million, this loan represents a significant capital injection. The company's financial position is precarious, as evidenced by its negative gross profit margin of -78.3% and operating income margin of -3405.1% for the last twelve months as of Q1 2025.
InvestingPro Tips highlight that Beyond Air is "quickly burning through cash" and "not profitable over the last twelve months," which explains the need for this loan. However, there's a silver lining as analysts expect sales growth and profitability in the current year. The company also "holds more cash than debt on its balance sheet," which could provide some financial flexibility.
The stock price has taken a significant hit, falling 78.66% over the past year and 64.54% in the last six months. This decline aligns with the InvestingPro Tip noting that the "stock has taken a big hit over the last six months." Despite these challenges, the company's liquid assets exceed short-term obligations, potentially providing some stability as it navigates its financial difficulties.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Beyond Air, providing a deeper understanding of the company's financial health and market position.
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