Related Party Transactions

12 Months Ended

Dec. 31, 2024

Related Party Transactions [Abstract]

Related Party Transactions

12. Related Party Transactions

During the years ended December 31, 2024 and 2023, other than disclosed elsewhere, the Company had the following material related party and related party transactions:

Related Party

Controlling shareholders

Taiwan Carbon Nano Technology Corporation (the “TCNT”) is the controlling shareholder of the Company through its controlling interests in Ainos KY who is an immediate controlling shareholder of the Company as of December 31, 2024. The Company acquired the POCT intellectual properties from Ainos KY. TCNT manufactures COVID-19 antigen test kits sold by the Company and has a product development agreement with the Company. The Company relies on TCNT to manufacture or develop POCT products and has a concentration risk on the sole supplier.

Entity under common control

AI Nose Corporation, a wholly owned subsidiary of Ainos KY is under common control with the Company.

Related Party Transactions

Purchase

Ainos COVID-19 Test Kits Sales and Marketing Agreement with Ainos KY

On June 14, 2021, the Company entered into an exclusive agreement with Ainos KY to serve as the master sales and marketing agent for the Ainos COVID-19 Antigen Rapid Test Kit and COVID-19 Nucleic Acid Test Kit which were developed and manufactured by TCNT, a controlling shareholder of Ainos KY (the “Sales and Marketing Agreement”). On June 7, 2021, the Taiwan Food and Drug Administration (the “TFDA”) approved emergency use authorization (the “EUA”) to TCNT for the Ainos COVID-19 Antigen Rapid Test Kit sold and marketed under the “Ainos” brand name in Taiwan. On June 21, 2022, the Company began marketing the Ainos SARS-CoV-2 Antigen Rapid Self-Test (together with Ainos COVID-19 Antigen Rapid Test Kit, the “COVID-19 Antigen Rapid Test Kits”) under a separate EUA issued by the TFDA to TCNT on June 13, 2022.

The Company incurred costs associated with manufacturing COVID-19 Antigen Rapid Test Kits by TCNT pursuant to the Sales and Marketing Agreement, totaling nil and $46,635 for the years ended December 31, 2024 and 2023, respectively.

Due to the expiration of EUA to TCNT, excess materials, supplies and mode purchased by TCNT were sold back to the Company. As a result, the Company absorbed $33,002 of losses which was recorded in the cost of revenues of 2023.

Manufacturing Service Agreement with TCNT for the VELDONA Pet Supplements

On August 28, 2023, the Company entered into a manufacturing service agreement with TCNT, together with another third-party vendor, to manufacture pet supplement products. The Company incurred costs totaling nil and $38,860 for the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2024 and 2023, the accounts payable to TCNT for the above two products were nil and $323, respectively.

Product Development Agreement with TCNT

Pursuant to a five-year Product Development Agreement (the “Product Development Agreement”) with TCNT, effective August 1, 2021, the development expenses incurred were $413,324 and $368,372 for the years ended December 31, 2024 and 2023, respectively.

On January 9, 2024, the Company and TCNT entered into an addendum to the Product Development Agreement (the “Addendum Agreement”) in connection with the scope of co-development and certain terms. For products defined in the Addendum agreement, TCNT will provide facilities, equipment, mass production process technology, ISO9001 and ISO13485 related management, as well as mass production support. The procurement of parts and raw materials, rental fees, and utility expenses are excluded. The Company paid a total fee of NT$5 million (approximately USD$162,840) for a five-years development commencing from January 2024. The Company prepaid the full amount of the fee on January 10, 2024 at TCNT’s request.

As part of the Second Addendum Agreement entered on July 8, 2024, TCNT provided non-exclusive use of certain patents related to VOC and POCT technologies for a monthly fee of $95,000 (plus 5% indirect tax), with negotiable payment terms for extend another three months from July 2024 to September 2024.

As part of the Third Addendum Agreement entered into on October 16, 2024 the Company entered an Addendum Agreement with TCNT. TCNT will provide exclusive use of certain patents related to VOC, POCT and nitrogen-oxygen separation machine technologies for a monthly fee of $50,000 (plus 5% indirect tax) for twelve months from October 16, 2024, with negotiable payment terms.

As of December 31, 2024, the Company has paid $1,005,000 (plus 5% indirect tax) of license fee to TCNT.

Patent license agreement

On August 6, 2024, the Company entered into a patent license agreement (the “License Agreement”) with TCNT, as an effort to bolster the Company’s AI Nose and point-of-care testing (POCT) technologies while preserving cash. As of August 5, 2024, prior to TCNT entering into the License Agreement, TCNT controlled, via its majority interest in Ainos Inc., a Cayman Islands corporation (“Ainos KY”) which is a party to certain previously disclosed Voting Agreements, approximately 38% of the voting power of the Company. Pursuant to the License Agreement, TCNT has agreed to assign and grant, and the Company has agreed to accept, an exclusive, irrevocable, and perpetual license of certain invention patents and patent applications related to gas sensors and medical devices (the “Licensed Patents”), in exchange for 5,500,000 shares of the Company’s common stock (the “Common Stock”), at a price per share of 1.05 times the highest closing sale price of the Common Stock during the 30-trading day period preceding the effective date of the License Agreement. The License Agreement shall remain in effect until terminated by mutual written agreement of the parties, or until the expiration of the Licensed Patents, or all claims for alleged infringement of the Licensed Patents are barred by applicable laws. Following the issuance of the 5.5 million shares of stock, TCNT controls the company through its majority interest in Ainos KY, and its direct ownership in the Company.

Product sales

COVID-19 Antigen Rapid Test Kits Sales

The Company sold COVID-19 Antigen Rapid Test Kits to ASE’s affiliates, totaling nil and $33,388 for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, the accounts receivable was nil.

Miscellaneous

On April 26, 2023, the Company issued a total of 12,231 shares of common stock to Ting-Chuan Lee, a director of the Company, pursuant to a purchase and sale agreement relating to the Company’s acquisition of a vehicle. The purchase price was in the amount of $48,559.

The Company engaged Ms. Chien-Hsuan Huang as a medical device development consultant in September 2022 for one year. Ms. Huang is the spouse of one of the members of the board of directors of the Company. The R&D expense was nil and $51,143 for the years ended December 31, 2024 and 2023, respectively.