UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from____to____
Commission File No.
(Exact name of registrant as specified in its charter)
|
(State or other jurisdiction of
|
(IRS Employer Identification No.) |
(Address and telephone number, including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. ☒
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller reporting company | |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act) ☐ Yes
shares of common stock, par value $ per share, outstanding as of May 14, 2025
AINOS, INC.
INDEX
| 2 |
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Ainos, Inc.
Condensed Balance Sheets
(Unaudited)
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventory, net | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Intangible assets, net | ||||||||
| Property and equipment, net | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Contract liabilities | $ | $ | ||||||
| Convertible notes payable (including amounts of related party of and $ | ||||||||
| Accrued expenses and others current liabilities | ||||||||
| Total current liabilities | ||||||||
| Convertible notes payable - noncurrent (including amounts of related party of $ | ||||||||
| Other long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $ par value; shares authorized; issued and outstanding | ||||||||
| Common stock, $ par value; shares authorized as of March 31, 2025, and December 31, 2024, and shares issued and outstanding as of March 31, 2025, and December 31, 2024, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss - translation adjustment | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to condensed financial statements.
| 3 |
Ainos, Inc.
Condensed Statements of Operations
(Unaudited)
| Three months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenues | $ | $ | ||||||
| Cost of revenues | ( | ) | ( | ) | ||||
| Gross profit (loss) | ( | ) | ||||||
| Operating expenses: | ||||||||
| Research and development expenses (including amounts of related party of $ | ||||||||
| Selling, general and administrative expenses | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Non-operating (expenses) income, net: | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Issuance cost of senior secured convertible note measured at fair value | ( | ) | ||||||
| Fair value change for senior secured convertible note | ( | ) | ||||||
| Other income, net | ||||||||
| Total non-operating expenses, net | ( | ) | ( | ) | ||||
| Net loss before income taxes | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Net loss per common share - basic and diluted | $ | ) | $ | ) | ||||
| Weighted-average shares used in computing net loss per common share-basic and diluted | ||||||||
See accompanying notes to condensed financial statements.
| 4 |
Ainos, Inc.
Condensed Statements of Comprehensive Loss
(Unaudited)
| Three months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Other comprehensive loss: | ||||||||
| Translation adjustment | ( | ) | ( | ) | ||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ||
See accompanying notes to condensed financial statements.
| 5 |
Ainos, Inc.
Condensed Statements of Stockholders’ Equity
For the three months ended March 31, 2025 and 2024
(Unaudited)
| Preferred Stock | Common Stock | Common Stock - to be issued | Additional Paid-in | Accumulated | Accumulated Other Comprehensive | Total Stockholders’ | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Loss | Equity | |||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Issuance of stock to settle vested RSUs | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Issuance of stock to special stock award | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of common stock from at the market offering | - | | - | |||||||||||||||||||||||||||||||||||||
| Share-based compensation | - | - | - | |||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Translation adjustment | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Conversion of senior secured convertible note payable to common stock | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Issuance of stock to settle vested RSUs | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| Related party used computer equipment | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Warrants issued in connection with senior secured convertible note payable | - | - | - | |||||||||||||||||||||||||||||||||||||
| Share-based compensation | - | - | - | |||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Translation adjustment | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||
See accompanying notes to condensed financial statements.
| 6 |
Ainos, Inc.
Condensed Statements of Cash Flows
(Unaudited)
| Three months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Share-based compensation expense | ||||||||
| Stock issued for special stock bonus | ||||||||
| Issuance cost of senior secured convertible note measured at fair value | ||||||||
| Change in fair value of senior secured convertible note measured at fair value | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ||||||
| Other current assets | ||||||||
| Accrued expenses and other current and long-term liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Decrease (increase) in refundable deposits and other assets | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from senior secured convertible notes payable | ||||||||
| Proceeds from at the market offering, net of issuance costs | ||||||||
| Payments of issuance cost of senior secured convertible note measured at fair value | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Effect from foreign currency exchange | ( | ) | ( | ) | ||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Noncash financing and investing activities | ||||||||
| Conversion of senior secured convertible notes to common stock | $ | $ | ||||||
See accompanying notes to the condensed financial statements.
| 7 |
Ainos, Inc.
Notes to Condensed Financial Statements
(Unaudited)
1. Description of Business
Organization and Business
Ainos, Inc. (the “Company”), incorporated in the State of Texas in 1984, is an AI-driven healthcare and technology company pioneering scent digitization, AI-powered diagnostics, and novel therapeutics. We develop VELDONA, an oral low-dose interferon therapy targeting rare diseases, autoimmune diseases, infectious diseases, and animal health. We also develop an AI Nose technology that aims to digitize scent into Smell IDs, enabling applications in robotics, smart manufacturing, and healthcare. We are advancing commercialization primarily through strategic partnerships.
We have historically involved in the research and development of therapeutics based on VELDONA. Building on our research and development on VELDONA since inception, we are commercializing a suite of VELDONA-based product candidates. Our priority pipeline includes drug candidates for treating oral warts for human immunodeficiency virus (HIV) seropositive patients, Sjögren’s syndrome, and feline chronic gingivostomatitis (FCGS), a cat oral infection.
In 2021 and 2022, we acquired certain types of intellectual property from a controlling shareholder, Ainos Inc., a Cayman Island corporation (“Ainos KY”), to expand product portfolio into AI Nose technology and POCTs aimed to provide connected, rapid, and convenient testing for a broad range of health conditions. Pivoted from the sales of COVID-19 POCT, we aim to commercialize POCTs that detect volatile organic compounds (the “VOC”) emitted by the body, powered by our AI Nose technology platform. In 2024, we licensed certain patents and patent applications from Taiwan Carbon Nano Technology Corporation (“TCNT”), a controlling shareholder, to further expand our intellectual properties on our VOC and POCT technologies.
Underwritten Public Offering
The Company’s registration statement related to its underwritten public offering (the “Offering”) was declared effective on August 8, 2022, and the Company’s common stock and warrants began trading on the Nasdaq Capital Market (the “Nasdaq”) on August 9, 2022 under the trading symbols “AIMD” and “AIMDW”, respectively.
Reverse Stock Splits
In connection with the Offering, the Company’s
board of directors on April 29, 2022 and its shareholders on May 16, 2022 approved a
The par value of $ and authorized shares of the Company’s common stock remains the same and were not adjusted as a result of the reverse stock splits. All issued and outstanding common stock, restricted stock units (RSUs), outstanding convertible notes, warrants and options to purchase common stock and per share amounts contained in the financial statements have been retroactively adjusted to give effect to the reverse stock splits for all periods presented.
At The Market Offering Agreement
On May 31, 2024, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”), with H.C. Wainwright & Co., LLC or the Agent, pursuant to which the Company may issue and sell, from time to time, shares of its Common Stock, depending on market demand, with the Agent acting as the sales agent or principal (the “ATM Offering”). Sales of the Common Stock may be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended (the “Securities Act”), including, without limitation, sales made directly on or through the Nasdaq Capital Market. The Agent will use its commercially reasonable efforts to sell the Shares requested by the Company to be sold on its behalf, consistent with the Agent’s normal trading and sales practices, under the terms and subject to the conditions set forth in the ATM Agreement. The Company has no obligation to sell any of the Shares. The Company may instruct the Agent not to sell the Shares if the sales cannot be effected at or above the price designated by the Company from time to time and the Company may at any time suspend sales pursuant to the ATM Agreement.
| 8 |
The Company will pay the Agent placement fee of
The aggregate market value of Shares eligible for
sale in the ATM Offering and under the ATM Agreement will be subject to the limitations of General Instruction I.B.6 of Form S-3, to the
extent required under such instruction. The prospectus supplement filed with the SEC on July 11, 2024, is offering Shares having an aggregate
offering price of $
The Company intends to use the net proceeds from the offering to fund the continued development of its product candidate and for general corporate purposes and working capital. The precise amount and timing of the application of these proceeds will depend upon a number of factors, such as the timing and progress of our research and development efforts, our funding requirements and the availability and costs of other funds.
As of March 31, 2025, the Company sold an aggregate
of shares of the Company’s common stock under the ATM facility, and received $
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (the “GAAP”) and pursuant to the accounting disclosure rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed financial statements should be read in conjunction with the financial statements and notes included in the Company’s audited financial statements as of and for the year ended December 31, 2024 contained in the Annual Report on Form 10-K filed with the SEC on March 7, 2025.
In the opinion of management, the accompanying condensed financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods. The results for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for any subsequent quarter, the year ending December 31, 2025, or any other period.
There have been no material changes to the Company’s significant accounting policies as described in the audited financial statements as of December 31, 2024.
Use of Estimates
The preparation of condensed financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosures as of the date of the condensed financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on various factors, including historical experience, and on various other assumptions that are believed to be reasonable under the circumstances, when these carrying values are not readily available from other sources. Significant items subject to estimates and assumptions include useful lives of property and equipment, valuation of stock option, warrants and convertible notes measured at fair value, and impairment testing of intangible assets. Actual results may differ from these estimates.
| 9 |
Liquidity
As of March
31, 2025, the Company had cash and cash equivalents of $
On May 31, 2024, the Company entered into an At The
Market Offering Agreement, or sales agreement, with H.C. Wainwright & Co., LLC or Wainwright, pursuant to which the Company may issue
and sell, from time to time, shares of its common stock, the aggregate market value of Shares eligible for sale in the Offering and under
the ATM Agreement will be subject to the limitations of General Instruction I.B.6 of Form S-3, to the extent required under such instruction.
The prospectus supplement filed with the SEC on July 11, 2024, is offering Shares having an aggregate offering price of $
For the three
months ended March 31, 2025, the Company generated a net loss of $
The financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The
Company has incurred net operating losses since inception and has an accumulated deficit as of March 31, 2025 of $
Segments
Operating segments
are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the chief
operating decision maker (the “CODM”) in deciding how to allocate resources to an individual segment and in assessing performance.
The Company’s Chief Executive Officer is the Company’s CODM. The CODM reviews financial information prepared on the basis
of accounting policy disclosed in its annual financial statement for purposes of making operating decisions, allocating resources, and
evaluating financial performance of the Company. As such, the Company has determined that it operates as
Impairment of Intangible Assets
The Company
reviews its definite-lived intangibles and other long-lived assets for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset or asset group may not be fully recoverable. When such events occur, management determines whether
there has been impairment by comparing the anticipated undiscounted future net cash flows to the carrying value of the asset or asset
group. If impairment exists, the assets are written down to their estimated fair value.
| 10 |
Fair Value Option
ASC 825-10, Financial Instruments, provides a fair value option (the “FVO”) election that allows companies an irrevocable election to use fair value as the initial and subsequent accounting measurement attribute for certain financial assets and liabilities. ASC 825-10 permits entities to elect to measure eligible financial assets and liabilities at fair value on an ongoing basis. Unrealized gains and losses on items for which the FVO has been elected are reported in earnings, except for the effect of changes in own credit, which are recognized in other comprehensive income/loss. The decision to elect the FVO is determined on an instrument-by-instrument basis, must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to ASC 825-10 are required to be reported separately from those instruments measured using another accounting method.
Recent Accounting Pronouncements Adopted
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07, which is applicable to entities with a single reportable segment, will primarily require enhanced disclosures about significant segment expenses and enhanced disclosures in interim periods. The guidance in ASU 2023-07 will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023 and interim reporting periods in fiscal years beginning after December 31, 2024, with early adoption permitted. The Company does not expect the adoption of this standard to have a material impact on the Company’s unaudited condensed financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 is intended to improve income tax disclosure requirements by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) the disaggregation of income taxes paid by jurisdiction. The guidance makes several other changes to the income tax disclosure requirements. The guidance in ASU 2023-09 will be effective for annual reporting periods in fiscal years beginning after December 15, 2024. The Company does not expect the adoption of this standard to have a material impact on the Company’s unaudited condensed financial statements.
Accounting Standards Issued but Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which is intended to provide more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation and amortization) included in certain expense captions presented on the statement of operations. The guidance in this ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact that the adoption of ASU 2024-03 will have on its financial statements and disclosures.
3. Cash and Cash Equivalents
As
of March 31, 2025 and December 31, 2024, cash and cash equivalents consisted of cash on hand and cash in bank which is potentially
subject to concentration of credit risk. Such balance is maintained at financial institutions that management determines to be of
high-credit quality. Cash accounts at each institution are insured by the Federal Deposit Insurance Corporation in the U.S.A or
Central Deposit Insurance Corporation in Taiwan up to certain limits. At times, such deposits may be in excess of the insurance
limit. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $
| 11 |
4. Inventory
Inventory stated at cost, net of reserve, consisted of the following:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Raw materials | $ | $ | ||||||
| Work in process | ||||||||
| Finished goods | ||||||||
| Total | $ | $ | ||||||
Inventory write-downs to estimated net realizable values were for the three months ended March 31, 2025, and the three months ended March 31, 2024.
5. Convertible Notes Payable and Other Notes Payable
As of March 31, 2025 and December 31, 2024, the respective notes payable were as follows:
March 31, 2025 | December 31, 2024 | |||||||
| March 2025 Convertible Notes, related party –noncurrent (ASE Note) | $ | $ | ||||||
| March 2025 Convertible Notes, related party –current (ASE Note) | ||||||||
| March 2025 Convertible Notes –current (Lee Note) | ||||||||
| May 2027 Convertible Notes, related party – noncurrent (ASE Note) | ||||||||
| $ | $ | |||||||
May 2027 Convertible Notes and Warrant Purchase Agreement
On May 3, 2024, The Company entered into Convertible
Note and Warrant Purchase Agreement with the ASE Test, Inc. (“ASE”), a shareholder of Ainos KY, for the issuance of convertible
promissory notes with
March 2025 Convertible Notes
On March 13, 2023, the Company entered into two convertible
promissory note purchase agreements pursuant to Regulation S of the Securities Act of 1933, as amended, in the total principal amount
of $
Convertible Note Issued to ASE Test, Inc. (the “ASE Note”)
Pursuant to the one of the aforementioned agreements,
ASE Test, Inc., a shareholder of Ainos KY, committed to pay a total aggregate amount of $
On March 10, 2025, the Company entered into an amendment
to the Convertible Note (the “Convertible Note Amendment”) with ASE Test to (1) extend the maturity date to
| 12 |
Convertible Note Issued to Li-Kuo Lee (the “Lee Note”)
The Company issued a convertible note in the principal
amount of $
On March 12, 2025, the Company entered into an amendment
to the Convertible Note (the “Convertible Note Amendment”) with Li-Kuo Lee to extend the maturity date to
The March 2025 Convertible Notes bearing
interest at the rate of
The total interest expense of convertible notes payable,
other notes payable, March 2025 Convertible Notes and May 2027 Convertible Notes for the three months ended March 31, 2025 was $
6. Stockholders’ Equity
Preferred Stock
The Company increased authorized shares of preferred stock from shares to shares upon the filing of an amendment to the Company’s Certificate of Formation with the Secretary of State of Texas on November 27, 2023. shares of preferred stock were issued and outstanding as of March 31, 2025 and December 31, 2024.
Common Stock
During the three months ended March 31, 2025, the Company issued an additional shares of common stock as a result of delivering shares to settle vested RSUs, shares to settle for Special Stock Award, shares to settle for ATM transaction. As of March 31, 2025, there were shares of common stock legally issued and outstanding.
Warrants
As of March 31, 2025 and December 31, 2024, warrants issued and outstanding in connection with financing are summarized as below:
| March 31, | December 31, | |||||||
| (In number of shares) | 2025 | 2024 | ||||||
| Lind Warrant with exercise price from $ | ||||||||
| Public warrant with exercise price of $ | ||||||||
| Representative’s warrant with exercise price of $ | ||||||||
| Placement agent warrant with exercise price of $ | ||||||||
| ASE Warrant with exercise price of $ | ||||||||
| Total | ||||||||
The Company issued the Lind Warrants on September
28, 2023 in connection with the private placement of the Lind Note. The Company further issued
| 13 |
As disclosed in Note 1, the Company issued public
warrants together with common stock in connection with its underwritten public offering effective August 8, 2022. The Company further
issued private warrants to Maxim Group LLC, as representative of the underwriter pursuant to an underwriting agreement. Each warrant has
a contractual term of
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments’ specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (the “ASC480), and ASC 815, Derivatives and Hedging (the “ASC 815”). The assessment considers whether the instruments are free standing financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s own common shares and whether the instrument holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent period end date while the instruments are outstanding. Management has concluded that the warrants issued in connection with the underwritten public offering and the private placement of Lind Note qualify for equity accounting treatment and are recorded as additional paid-in capital.
In addition, the warrant issued by the Company to i2China in 2020 in exchange for consulting services is accounted for under ASC 718, Compensation – Stock Compensation (see Note 8).
As of March 31, 2025, of the warrants have been exercised nor have expired.
7. Revenue
Revenue is recognized upon shipment of products based upon contractually stated pricing at standard payment terms within 30 to 60 days. The revenue generated by product sales is recognized at point in time.
The Company generated revenue from sales of VELDONA Pet supplements in the Taiwan market through on-line platforms that were recognized after the expiration of right of return which was offered for a limited time. Revenue from sales through off-line distribution channels was recognized based on the amount of consideration that we expected to receive, reduced by estimates for return allowances, promotional discounts, and fees.
and $
The Company recognized the revenue from sales of VOC
sensing products related to NISD co-development during the three months ended March 31, 2025 and 2024 that was included in the contract
liability balance at the beginning of each period were $
Return Allowances
Return allowances, which reduce revenue and cost of sales, are estimated using historical experience. Liabilities for return allowances are included in “Accrued expenses and others current liabilities”.
Variable consideration
We record revenue from customers in an amount that reflects the transaction price we expect to be entitled to after transferring control of those goods. From time to time, we offer product sales promotions such as discounts. Variable consideration is estimated at contract inception only to the extent that it is probable that a significant reversal of revenue will not occur.
| 14 |
2023 Stock Incentive Plan
The Company effectuated an amendment to its 2021 Stock Incentive Plan, now restated as the Company 2023 Stock Incentive Plan (the “2023 SIP” or “Plan”) which includes, among other things, a change in the number of reserved shares under the Plan. Under the 2023 SIP, subject to a change in capital structure or a change in control, the aggregate number of shares which may be issued or transferred pursuant to awards under the Plan will be equal to up to twenty percent (20%) of shares of outstanding common stock of the Company existing as of December 31st of the previous calendar year (the “Plan Share Reserve”). Upon the effectiveness of the 2023 SIP on June 14, 2023, the aggregate number of shares which may be issued pursuant to awards under the Plan is shares of common stock, including shares that remained available for grant under the 2021 Stock Incentive Plan. On July 19, 2024, the Company filed Form S-8 to increase the aggregate number of shares may be issued to shares of common stock including shares that remained available for grant under the 2021 Stock Incentive Plan. As of March 31, 2025, shares have been granted under the 2023 SIP
2021 Stock Incentive Plan
On September 28, 2021, the Company’s board of directors, and on May 16, 2022, its shareholders approved the 2021 Stock Incentive Plan (the “2021 SIP”). During the period from January 1, 2023 up to the date that the prior plan was superseded by the 2023 SIP, no shares were granted under the 2021 SIP.
2021 Employee Stock Purchase Plan
On September 28, 2021, the Company’s board of directors, and on May 16, 2022, its shareholders approved the 2021 Employee Stock Purchase Plan (the “2021 ESPP”). A total of shares of common stock have made available for issuance under the ESPP. During the period from January 1, 2024 up to the date that the prior plan was superseded by the 2023 SIP, shares were granted under the 2021 ESPP.
Restricted Stock Units (“RSUs”)
RSUs entitle the recipient to be paid out an equal number of common stock shares upon vesting. The fair value of RSUs is based on market price of the underlying stock on the date of grant. A summary of the Company’s RSUs activity and related information for the three months ended March 31, 2025 and for the three months ended March 31, 2024 were as follows:
| 2025 | 2024 | |||||||||||||||
| Number of Shares | Weighted-Average Grant Date Fair Value Per Share | Number of Shares | Weighted-Average Grant Date Fair Value Per Share | |||||||||||||
| Unvested balance at January 1 | $ | $ | ||||||||||||||
| RSUs granted | $ | $ | ||||||||||||||
| RSUs vested | *( | ) | $ | ( | ) | $ | ||||||||||
| RSUs forfeited | $ | ( | ) | $ | ||||||||||||
| Unvested balance at March 31 | $ | $ | ||||||||||||||
| * |
Stock Options and Warrants
During the three months ended March 31, 2025 and 2024, shares were granted, forfeited, expired or exercised. As of March 31, 2025, there were shares in the form of stock options and shares in the form of warrants outstanding, and shares of the options and shares of the warrants are vested and exercisable.
Share-Based Compensation Expense
Shared-based compensation expense for the three months ended March 31, 2025 was $ compared to the three months ended March 31, 2024 amount of $.
As of March 31, 2025, the total unrecognized compensation cost related to outstanding RSUs, stock options and warrants was $, which the Company expects to recognize over a weighted-average period of years.
| 15 |
9. Income Taxes
The Company did not record a federal, state, or foreign income tax provision or benefit for the three months ended March 31, 2025 and 2024 due to the expected loss before income taxes to be incurred for the years ended December 31, 2025 and 2024, as well as the Company’s continued maintenance of a full valuation allowance against its net deferred tax assets due to its historical deficit.
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net loss attributable to common stockholders, basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted-average number of shares used in computing net loss per share attributable to common stockholders, basic and diluted | ||||||||
| Net loss per share attributable to common stockholders, basic and diluted | $ | ) | $ | ) | ||||
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Option and RSUs to purchase common stock | ||||||||
| Warrants to purchase common stock | ||||||||
| Convertible notes to purchase common stock | ||||||||
| Total potential shares | ||||||||
11. Related Party Transactions
The following is a summary of related party transactions that met our disclosure threshold:
Working Capital Advances
The proceeds of the KY Note and ASE Note (see Note
5) were used for working capital advances. The total interest expense incurred in related to the notes for the three months ended March
31, 2025 were $
The company paid off the KY Note during the years 2023 and 2024.
Purchase and Sales
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 Taiwan Carbon Nano Technology Corporation (the “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 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 ceased the sale of the Ainos COVID-19 antigen rapid test kits in the first quarter of 2024.
Product Co-development Agreement
Pursuant to a five-year Product Co-development Agreement
effective on August 1, 2021 (the “Product Co-Development Agreement”) with TCNT, the development expenses incurred were $
12. Commitments and Contingencies
The Company operates in an industry characterized by extensive patent litigation. Competitors may claim that the Company’s products infringe upon their intellectual property. Resolution of patent litigation or other intellectual property claims is typically time consuming and costly and can result in significant damage awards and injunctions that could prevent the manufacture and sale of the affected products or require the Company to make significant royalty payments in order to continue selling the affected products. As of March 31, 2025, there were no such commitments or contingencies.
13. Subsequent Events
On April 30, 2025, the Company has repaid Mr.
Lee the convertible notes payable in the principal amount $
| 16 |
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The unaudited condensed financial statements and this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2024 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Form 10-K for the period ended December 31, 2024 (the “2024 Annual Report”). In addition to historical information, this discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These forward-looking statements are subject to risks and uncertainties, including those set forth under “Part I. Item 1A. Risk Factors” in our 2024 Annual Report, “Part II. Item 1A. Risk Factors” in this Quarterly Report, and elsewhere in this Quarterly Report, that could cause actual results to differ materially from historical results or anticipated results.
When used in this Quarterly Report, all references to “Ainos,” the “Company,” “we,” “our” and “us” refer Ainos, Inc.
Overview
Ainos, Inc. (the “Company”), incorporated in the State of Texas in 1984, is an AI-driven healthcare and technology company pioneering scent digitization, AI-powered diagnostics, and novel therapeutics. We develop VELDONA, an oral low-dose interferon therapy targeting rare diseases, autoimmune diseases, infectious diseases, and animal health. We also develop an AI Nose technology that aims to digitize scent into Smell IDs, enabling robotics, smart manufacturing, and healthcare. We are advancing commercialization primarily through strategic partnerships. In robotics, we have established a strategic partnership with a Japanese robot developer.
We have historically involved in the research and development of therapeutics based on VELDONA. Building on our research and development on VELDONA since inception, we focus on commercializing a suite of VELDONA-based product candidates. Our priority pipeline includes drug candidates for treating oral warts for human immunodeficiency virus (HIV) seropositive patients, Sjögren’s syndrome, and feline chronic gingivostomatitis (FCGS), a cat oral infection.
In 2021 and 2022, we acquired certain intellectual properties from a controlling shareholder, Ainos Inc., a Cayman Island corporation (“Ainos KY”), to expand product portfolio into AI Nose technology and POCTs aimed to provide connected, rapid, and convenient testing for a broad range of health conditions. Pivoted from the sales of COVID-19 POCT, we aim to commercialize POCTs that detect volatile organic compounds (the “VOC”) emitted by the body, powered by our AI Nose technology platform. In 2024, we licensed certain patents and patent applications from Taiwan Carbon Nano Technology Corporation (“TCNT”), a controlling shareholder, to further expand our intellectual properties on our VOC and POCT technologies.
While our AI Nose technology was initially developed for healthcare applications, we are actively expanding its use into other sectors, including robotics and industrial environments. In March 2025, we formed a strategic partnership with ugo, Inc., a leading Japanese service robot developer, to integrate AI Nose into ugo’s autonomous robotic platform. We believe this collaboration represents a significant milestone in our strategy to digitize scent and pioneer what we believe to be the world’s first smell-enabled robots. We believe this integration has the potential to unlock new functionality in industrial safety, healthcare, security and inspection.
Our Pipeline
An integral part of our operating strategy is to create multiple revenue streams through sales of commercially ready products, out-licensing or forming strategic relationships to develop and commercialize our products. As of March 31, 2025, we have commercialized the following products:
| ● | COVID-19 Antigen Rapid Test Kit. As the first commercialized products we sell, we have marketed COVID-19 antigen rapid test kits in Taiwan under emergency use authorization (“EUA”) issued by the Taiwan Federal and Drug Administration (“TFDA”) to TCNT, the product manufacturer. We have pivoted away from this business and have ceased selling the product since the first quarter of 2024. | |
| ● | VELDONA Pet. VELDONA Pet is formulated to address a variety of health issues in dogs and cats, including skin, gum, emotion, discomfort caused by allergies, eye, and weight-related issues. We currently sell VELDONA Pet in Taiwan. |
From time to time, we assess our development plan based on available resources and market dynamics. Our current pipeline of the products, which are under development, includes the following:
| ● | VELDONA human drugs. Our programs include oral warts for human immunodeficiency virus (HIV) seropositive patients, Sjögren’s syndrome common cold, influenza, and treatment for mild COVID-19 symptoms. Except for COVID-19, we have conducted Phase 2 studies for these programs. The United States Food and Drug Administration (the “U.S. FDA”) have granted orphan drug designation for our VELDONA formulation as a potential treatment for oral warts in HIV-seropositive patients. |
| 17 |
| ● | AI Nose – NISD co-development. We are co-developing a VOC sensing platform with Nisshinbo Micro Devices Inc. (“NISD”) and Taiwan Inabata Sangyo Co. (“Taiwan Inabata”). The co-development aims to target applications including telehealth, automotive, industrial, and environmental safety. | |
| ● | AI Nose – industrial and robotics application. Our goal is to expand AI Nose applications into industrial applications. We are partnering with a Japanese service robot developer to integrate AI Nose into robots. We are also working with a semiconductor packaging and testing company to deploy AI Nose in semiconductor manufacturing setting. | |
| ● | VOC POCT – Ainos Flora. Ainos Flora, powered by AI Nose, is intended to perform a non-invasive test for female vaginal health and certain common STIs within a few minutes. A companion app is also being developed that aims to enable users to conveniently manage test results. We believe Ainos Flora can provide connected, convenient, discreet, rapid testing in a point-of-care setting. We are conducting clinical study in Taiwan and exploring strategic opportunities to commercialize the product. | |
| ● | VOC POCT – Ainos Pen. The device is intended to be a cloud-connected, multi-purpose, portable breath analyzer that is intended to monitor health conditions within minutes, powered by AI Nose. We expect consumers to be empowered to share test results with their physicians through in-person and telehealth medical consultations. | |
| ● | VOC POCT – CHS430. The CHS430 device, powered by AI Nose, is intended to provide non-invasive testing for ventilator-associated pneumonia within few minutes, as compared to current standard of care invasive culture tests that typically take more than two days to provide results. | |
| ● | Synthetic RNA (“SRNA”). We are in early-stage development of a SRNA technology platform with a long-term goal of developing next-generating precision treatments and rapid tests. |
An integral part of our operating strategy is to create multiple revenue streams through commercializing our product portfolio, forming strategic partnerships and leveraging our intellectual property patents. Our near-term development plans encompass advancing AI Nose partnerships and our lead POCT candidate, Ainos Flora. At the same time, we will advance clinical studies and actively pursue the out-licensing of VELDONA pipeline.
As of March 31, 2025, we had available cash and cash equivalents of $2,628,286. We anticipate business revenues and further potential financial support from external sources to fund our operations over the next twelve months. We have based this estimate on assumptions that may prove to be incorrect, and we could exhaust our available capital resources sooner than we expect. See “Liquidity and Capital Resources” for additional information. To finance our continuing operations, we will need to raise additional capital, which cannot be assured.
Results of Operations for Quarter Ended March 31, 2025 (“Q1 2025”) and March 31, 2024 (“Q1 2024”):
| Three months ended March 31, | Change | |||||||||||||||
| 2025 | 2024 | Amount | % | |||||||||||||
| Revenues | $ | 106,207 | $ | 20,729 | $ | 85,478 | 412 | % | ||||||||
| Cost of revenues | (18,233 | ) | (26,754 | ) | 8,521 | (32 | )% | |||||||||
| Gross profit (loss) | 87,974 | (6,025 | ) | 93,999 | (1,560 | )% | ||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development expenses | 1,724,084 | 2,084,648 | (360,564 | ) | (17 | )% | ||||||||||
| Selling, general and administrative expenses | 1,526,761 | 1,029,418 | 497,343 | 48 | % | |||||||||||
| Total operating expenses | 3,250,845 | 3,114,066 | 136,779 | 4 | % | |||||||||||
| Loss from operations | (3,162,871 | ) | (3,120,091 | ) | (42,780 | ) | 1 | % | ||||||||
| Non-operating (expenses) income, net: | ||||||||||||||||
| Interest expense | (180,445 | ) | (48,696 | ) | (131,749 | ) | 271 | % | ||||||||
| Issuance cost of senior secured convertible note measured at fair value | - | (138,992 | ) | 138,992 | (100 | )% | ||||||||||
| Fair value change for senior secured convertible note | - | (31,568 | ) | 31,568 | (100 | )% | ||||||||||
| Other income, net | 57,294 | 24,537 | 32,757 | 134 | % | |||||||||||
| Total non-operating expenses, net | (123,151 | ) | (194,719 | ) | 71,568 | (37 | )% | |||||||||
| Net loss before income taxes | (3,286,022 | ) | (3,314,810 | ) | 28,788 | (1 | )% | |||||||||
| Provision for income taxes | - | - | - | |||||||||||||
| Net loss | $ | (3,286,022 | ) | $ | (3,314,810 | ) | $ | 28,788 | (1 | )% | ||||||
| 18 |
Revenues, Cost and Gross Loss
The Company reported $106,207 and $20,729 in revenue in Q1 2025 and Q1 2024, respectively, from product sales of VELDONA pet supplements in Taiwan and VOC sensing products related to NISD co-development. The increase in revenue was due to realization of $105,942 in revenues from sales of VOC sensing products related to NISD co-development.
The cost of revenue related to product sales in Q1 2025 was $18,233 compared to $26,754 in Q1 2024. The decrease in cost of revenue was due to the difference product compositions.
The share-based compensation expense and the depreciation expense for manufacturing in Q1 2025 and Q1 2024 were nil and $4,516, respectively. When excluding these non-cash cost, cost of revenue decreased to $18,233 in Q1 2025 compared to $22,238 in Q1 2024.
Gross profit from product sales in Q1 2025 was $87,974 as compared to $6,025 gross loss from product sales in Q1 2024. The increase in gross profit was due to difference product compositions.
When excluding these non-cash costs, gross profit were $87,974 in Q1 2025 compared to $1,509 gross loss in Q1 2024.
Research and Development (R&D) Expenses
R&D expenses in Q1 2025 and Q1 2024 were $1,724,084 and $2,084,648, respectively. The decrease of $360,564 (17%) was due to decreased expenses associated with clinical trial fees, co-research for technology and product and staffing expenditures (including share-based compensation). We expect that our R&D expenses related to clinical trials will continue to grow as we further develop AI Nose, VOC POCT and VELDONA drug candidates.
The share-based compensation expense and the depreciation and amortization expense in Q1 2025 and Q1 2024 were $1,192,870 and $1,284,343, respectively. When excluding these non-cash expenses, R&D expenses decreased to $531,214 in Q1 2025 from $800,305 in Q1 2024.
Selling, General and Administrative (SG&A) Expenses
SG&A expenses were $1,526,761 and $1,029,418 in Q1 2025 and Q1 2024, respectively, reflecting an increase of $497,343 (48%) due to a significant increase in share-based compensation offset by a decrease in professional expenses.
The share-based compensation expense and the depreciation and amortization expense in Q1 2025 and Q1 2024 were $901,800 and $337,953 respectively. When excluding these non-cash expenses, SG&A expenses decreased to $624,961 in Q1 2025 compared to $691,465 in Q1 2024.
Operating Loss
The Company’s operating loss was $3,162,871 and $3,120,091 in Q1 2025 and Q1 2024, respectively, reflecting a $42,780 (1%) increase in operating loss between the reporting periods. We continued to invest resources to execute our growth strategy and product roadmap to improve our profitability.
Interest Expense and Issuance Cost of Convertible Note
In Q1 2025, interest expense was $180,445 compared to $48,696 in Q1 2024. The increase in interest expense was due to accrued interest for convertible notes issued in May 2024 has a higher principal amount compared to the same period in 2024.
| 19 |
Net Loss
Net loss was $3,286,022 in Q1 2025 compared to $3,314,810 in Q1 2024, resulting in a $28,788 (1%) decrease in net loss attributable to our shareholders of common stock. The net loss was due to an expanding operating expense. We continued to invest resources to execute our growth strategy and product roadmap to improve our profitability.
Liquidity and Capital Resources
As of March 31, 2025 and December 31, 2024, the Company had available cash of $2,628,286 and $3,892,919, respectively.
The following table summarizes our cash flow during the three months period ended March 31, 2025 and 2024:
| Three months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net cash used in operating activities | (1,224,578 | ) | (1,494,747 | ) | ||||
| Net cash used in investing activities | (20,587 | ) | (111,280 | ) | ||||
| Net cash provided by financing activities | 14,605 | 777,500 | ||||||
Operating activities:
Cash used in operating activities decreased by $270,169 during the first quarter of 2025 compared to the first quarter of 2024. Our net loss for the first quarter of 2025 decreased by $28,788 primarily due to increase of sales revenue. The operating cash outflow as a result of changes in operating assets and liabilities was mainly attributable to:
| ● | Non-cash expenses including share-based compensation, depreciation and amortization, loss on inventory write-downs, issuance cost of secured convertible note, and change in fair value of senior secured convertible note increased approximately by $297,300; | |
| ● | Working capital injected into accounts receivable, inventories and other current assets decreased by approximately $86,900; and | |
| ● | Working capital injected into accrued expenses, operating lease liabilities, contract liabilities and other current and long-term liabilities increased by approximately $31,000. |
Investing activities
Cash used for investing activities were $20,587 and $111,280 during the first quarter of 2025 and the first quarter of 2024, respectively. The decrease was due to decrease in refundable deposits and other noncurrent assets offset by increase in purchase of property and equipment.
Financing activities
Cash provided by financing activities were $14,605 and $777,500 during the first quarter of 2025 and the first quarter of 2024, respectively. The $762,895 decrease was primarily reflected by the following:
| ● | Proceeds from convertible notes and other notes payable financing decreased by $875,000; and | |
| ● | Proceeds from at the market offering, net of issuance costs increased by $14,605; and | |
| ● | Payments of issuance cost of senior secured convertible note measured at fair value increased by $97,500. |
In the near-term, we expect an increase in the pace of clinical trial spending to advance our VOC POCT and VELDONA drug candidates and expect to invest more in R&D activities. We may also increase our sales and marketing efforts.
The Company anticipates that cash reserves, business revenues, and potential debt financing through convertible and non-convertible notes will fund the Company’s operations over the next twelve months. There can be no assurance that we will be successful in our efforts to make the Company profitable. If those efforts are not successful, the Company may raise additional capital through the issuance of equity securities, debt financings or other sources to further implement its business plan. However, if such financing is not available when needed and at adequate levels, the Company will need to reevaluate its operating plan.
| 20 |
Critical Accounting Policies and Significant Management Estimates
Our management’s discussion and analysis of our financial condition and results of operations are based on our unaudited condensed financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States, or U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses.
We evaluate our estimates and judgments, including those related to inventory valuation, useful lives of property and equipment, valuation of stock option, warrants and convertible note, and impairment testing of intangible assets, on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in “Management’s Discussion and Analysis - Critical Accounting Policies and Significant Management Estimates” of our 2024 Annual Report, except for those accounting subjects discussed in the Notes, if any, to the unaudited condensed financial statements included in this Quarterly Report on Form 10-Q.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item 3.
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, have evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2025.
Changes in Internal Control over Financial Reporting
There were no changes in our internal controls over financial reporting during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. As of the date of this report, we were not aware of any material legal proceedings involving the Company.
ITEM 1A. Risk Factors
This Quarterly Report contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in this Quarterly Report. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Quarterly Report.
You should carefully consider the risk factors disclosed in our 2024 Annual Report, together with all other information in this Quarterly Report, including our unaudited condensed financial statements and notes thereto, and in our other filings with the Securities and Exchange Commission. If any such risks, including the risk set out below, or other risks not presently known to us or that we currently believe to not be significant, develop into actual events, then our business, financial condition, results of operations or prospects could be materially adversely affected. If that happens, the market price of our common stock could decline, and stockholders may lose all or part of their investment.
| 21 |
Information on risk factors can be found in Part I, Item 1A (Risk Factors) of our 2024 Annual Report. Other than the following risk factor, there have been no material changes from the risk factors previously disclosed in our 2024 Annual Report, other than the risk factor set forth below.
Fluctuating foreign currency and exchange rates may negatively impact our business, results of operations, and financial position.
Due to our foreign operations, a portion of our business is denominated in foreign currencies. As a result, fluctuations in foreign currency and exchange rates may have an impact on our business, results of operations and financial position. Foreign currency exchange rates have fluctuated and may continue to fluctuate. Significant foreign currency exchange rate fluctuations may negatively impact our international revenue, which in turn would affect our consolidated revenue. Currencies may be affected by internal factors, general economic conditions and external developments in other countries, all of which can have an adverse impact on a country’s currency. We cannot predict whether we will incur foreign exchange losses in the future. Further, significant foreign exchange fluctuations resulting in a decline in the respective local currency may decrease the value of our foreign assets, as well as decrease our revenues and earnings from our foreign subsidiaries, which would reduce our profitability and adversely affect our financial position.
Policy changes affecting international trade could adversely impact the demand for our products and our competitive position.
Changes in government policies on foreign trade and investment can affect the demand for our products and services, impact the competitive position of our products and services or prevent us from being able to sell products and services in certain countries. The implementation of more restrictive trade policies, such as more detailed inspections, higher tariffs, import or export licensing requirements, economic sanctions, anti-boycott laws, exchange controls or new barriers to entry could have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, the Trump Administration has announced tariffs on certain imports from Canada, Mexico and the EU, among others, that could affect the demand for our products. Such tariffs and any retaliatory tariffs (including those announced by China, Canada and Mexico in March 2025) may put upwards pressure on prices in other jurisdictions from which we purchase product components, which could reduce our ability to offer competitive pricing to potential customers. We cannot predict what changes to trade policy will be made by the Trump Administration, the U.S. Congress or other governments, including whether existing tariff policies will be maintained or modified or whether the entry into new bilateral or multilateral trade agreements will occur, nor can we predict the effects that any such changes would have on our business or the global economy. Changes in U.S. trade policy, or threat of such changes, have resulted and could again result in reactions from U.S. trading partners, including adopting responsive trade policies making it more difficult or costly for us to export our products or import products or product components from countries where we currently purchase products or product components or sell products or services. Such changes, or threatened changes, to trade policy or in laws and policies governing foreign trade, and any resulting negative sentiments towards the United States as a result of such changes, could materially and adversely affect our business, financial condition, results of operations and liquidity.
ITEM 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities
Recent Sales of Unregistered Equity Securities
None in this quarter.
Issuer Purchase of Equity Securities
Not applicable.
Use of Proceeds of Registered Securities
Not applicable.
ITEM 3. Defaults Upon Senior Securities
None
ITEM 4. Mine Safety Disclosures
Not applicable
ITEM 5. Other Information
None
| 22 |
ITEM 6. Exhibits
EXHIBIT INDEX
| INCORPORATED BY REFERENCE | ||||||||||||
| EXHIBIT NUMBER | DESCRIPTION |
FILED WITH THIS FORM 10-Q |
FILING DATE WITH SEC |
FORM | EXH # |
HYPERLINK TO FILINGS | ||||||
| 10.1 | Amendment to Convertible Promissory Note, dated March 10, 2025, by and between Ainos, Inc. and ASE Test, Inc. | 3/11/2025 | 8-K | 10.1 | Amendment to Convertible Promissory Note | |||||||
| 10.2 | Amendment to Convertible Promissory Note, dated March 12, 2025, by and between Ainos, Inc. and Li-Kuo Lee. | 3/14/2025 | 8-K | 10.1 | Amendment to Convertible Promissory Note | |||||||
| 31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a- 14(a) / 15d – 14(a) | x | ||||||||||
| 31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a- 14(a) / 15d – 14(a) | x | ||||||||||
| 32.1 | Certification Of Principal Executive Officer Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002 | x | ||||||||||
| 32.2 | Certification Of Principal Financial Officer Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002 | x | ||||||||||
| 100 | Inline XBRL – Related Documents | x | ||||||||||
| 101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the XBRL document. | x | ||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | x | ||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase | x | ||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase | x | ||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | x | ||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | x | ||||||||||
| 104.1 | Cover Page Interactive Data File | x | ||||||||||
The exhibits listed in the Exhibit Index are filed
or incorporated by reference as part of this filing.
| 23 |
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| AINOS, INC. | ||
| Date: May 14, 2025 | By: | /s/ Chun-Hsien Tsai |
| Chun-Hsien Tsai, Chairman of the Board, President, and Chief Executive Officer | ||
| Date: May 14, 2025 | By: | /s/ Hsin-Liang Lee |
| Hsin-Liang Lee, Chief Financial Officer | ||
| 24 |
EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO RULE 13A- 14(A) / 15D – 14(A)
UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT OF 2002
I, Chun-Hsien Tsai, certify that:
1. I have reviewed this report on Form 10-Q of Ainos, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: May 14, 2025 | /s/ Chun-Hsien Tsai |
| Chun-Hsien Tsai, Principal Executive Officer | |
| (Chairman of the Board, President, and Chief Executive Officer) |
EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO RULE 13A- 14(A) / 15D – 14(A)
UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT OF 2002
I, Hsin-Liang Lee, certify that:
1. I have reviewed this report on Form 10-Q of Ainos, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: May 14, 2025 | /s/ Hsin-Liang Lee |
| Hsin-Liang Lee, Principal Financial Officer | |
| (Chief Financial Officer) |
EXHIBIT 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Ainos, Inc. on Form 10-Q for the period ended March 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.
| AINOS, INC. | ||
| Date: May 14, 2025 | By: | /s/ Chun-Hsien Tsai |
| Chun-Hsien Tsai, Principal Executive Officer | ||
| (Chairman of the Board, President, and Chief Executive Officer) | ||
EXHIBIT 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Ainos, Inc. on Form 10-Q for the period ended March 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.
| AINOS, INC. | ||
| Date: May 14, 2025 | By: | /s/ Hsin-Liang Lee |
| Hsin-Liang Lee, Principal Financial Officer | ||
| (Chief Financial Officer) | ||
Condensed Balance Sheets (Unaudited) (Parenthetical) - USD ($) |
Mar. 31, 2025 |
Dec. 31, 2024 |
|---|---|---|
| Defined Benefit Plan Disclosure [Line Items] | ||
| Convertible notes payable current | $ 1,000,000 | $ 3,000,000 |
| Convertible notes payable noncurrent | $ 11,000,000 | $ 9,000,000 |
| Preferred stock, par value | $ 0.01 | $ 0.01 |
| Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
| Preferred stock, shares issued | 0 | 0 |
| Preferred stock, shares outstanding | 0 | 0 |
| Common stock, par value | $ 0.01 | $ 0.01 |
| Common stock, shares authorized | 300,000,000 | 300,000,000 |
| Common stock, shares issued | 17,215,164 | 15,427,385 |
| Common stock, shares outstanding | 17,215,164 | 15,427,385 |
| Related Party [Member] | ||
| Defined Benefit Plan Disclosure [Line Items] | ||
| Convertible notes payable current | $ 2,000,000 | |
| Convertible notes payable noncurrent | $ 11,000,000 | $ 9,000,000 |
Condensed Statements of Operations (Unaudited) (Parenthetical) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2025 |
Mar. 31, 2024 |
|
| Defined Benefit Plan Disclosure [Line Items] | ||
| Research and development expenses | $ 1,724,084 | $ 2,084,648 |
| Related Party [Member] | ||
| Defined Benefit Plan Disclosure [Line Items] | ||
| Research and development expenses | $ 246,260 | $ 375,193 |
Condensed Statements of Comprehensive Loss (Unaudited) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2025 |
Mar. 31, 2024 |
|
| Income Statement [Abstract] | ||
| Net loss | $ (3,286,022) | $ (3,314,810) |
| Other comprehensive loss: | ||
| Translation adjustment | (40,641) | (65,269) |
| Comprehensive loss | $ (3,326,663) | $ (3,380,079) |
Description of Business |
3 Months Ended |
|---|---|
Mar. 31, 2025 | |
| Accounting Policies [Abstract] | |
| Description of Business | 1. Description of Business
Organization and Business
Ainos, Inc. (the “Company”), incorporated in the State of Texas in 1984, is an AI-driven healthcare and technology company pioneering scent digitization, AI-powered diagnostics, and novel therapeutics. We develop VELDONA, an oral low-dose interferon therapy targeting rare diseases, autoimmune diseases, infectious diseases, and animal health. We also develop an AI Nose technology that aims to digitize scent into Smell IDs, enabling applications in robotics, smart manufacturing, and healthcare. We are advancing commercialization primarily through strategic partnerships.
We have historically involved in the research and development of therapeutics based on VELDONA. Building on our research and development on VELDONA since inception, we are commercializing a suite of VELDONA-based product candidates. Our priority pipeline includes drug candidates for treating oral warts for human immunodeficiency virus (HIV) seropositive patients, Sjögren’s syndrome, and feline chronic gingivostomatitis (FCGS), a cat oral infection.
In 2021 and 2022, we acquired certain types of intellectual property from a controlling shareholder, Ainos Inc., a Cayman Island corporation (“Ainos KY”), to expand product portfolio into AI Nose technology and POCTs aimed to provide connected, rapid, and convenient testing for a broad range of health conditions. Pivoted from the sales of COVID-19 POCT, we aim to commercialize POCTs that detect volatile organic compounds (the “VOC”) emitted by the body, powered by our AI Nose technology platform. In 2024, we licensed certain patents and patent applications from Taiwan Carbon Nano Technology Corporation (“TCNT”), a controlling shareholder, to further expand our intellectual properties on our VOC and POCT technologies.
Underwritten Public Offering
The Company’s registration statement related to its underwritten public offering (the “Offering”) was declared effective on August 8, 2022, and the Company’s common stock and warrants began trading on the Nasdaq Capital Market (the “Nasdaq”) on August 9, 2022 under the trading symbols “AIMD” and “AIMDW”, respectively.
Reverse Stock Splits
In connection with the Offering, the Company’s board of directors on April 29, 2022 and its shareholders on May 16, 2022 approved a 1-for-15 reverse stock split of the Company’s common stock that became effective on August 9, 2022. Further, to comply with Nasdaq’s minimum $ per share continued listing rules, the Company filed a Certificate of Amendment to its Restated Certificate of Formation on November 27, 2023, to apply for another reverse stock split of the Company’s common stock at a ratio of 1-for-5 which was effectuated on December 14, 2023 after receiving required approvals.
The par value of $ and authorized shares of the Company’s common stock remains the same and were not adjusted as a result of the reverse stock splits. All issued and outstanding common stock, restricted stock units (RSUs), outstanding convertible notes, warrants and options to purchase common stock and per share amounts contained in the financial statements have been retroactively adjusted to give effect to the reverse stock splits for all periods presented.
At The Market Offering Agreement
On May 31, 2024, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”), with H.C. Wainwright & Co., LLC or the Agent, pursuant to which the Company may issue and sell, from time to time, shares of its Common Stock, depending on market demand, with the Agent acting as the sales agent or principal (the “ATM Offering”). Sales of the Common Stock may be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended (the “Securities Act”), including, without limitation, sales made directly on or through the Nasdaq Capital Market. The Agent will use its commercially reasonable efforts to sell the Shares requested by the Company to be sold on its behalf, consistent with the Agent’s normal trading and sales practices, under the terms and subject to the conditions set forth in the ATM Agreement. The Company has no obligation to sell any of the Shares. The Company may instruct the Agent not to sell the Shares if the sales cannot be effected at or above the price designated by the Company from time to time and the Company may at any time suspend sales pursuant to the ATM Agreement.
The Company will pay the Agent placement fee of 3.0% of the gross sales price of the Shares sold by the Agent under the ATM Agreement. The Company has also agreed to reimburse the Agent for the fees and disbursements of its counsel, payable upon execution of the Sales Agreement, in an amount not to exceed $35,000 in addition to certain ongoing disbursements of its legal counsel up to $2,500 per calendar quarter. In addition, the Company has agreed to provide customary indemnification rights to the Agent.
The aggregate market value of Shares eligible for sale in the ATM Offering and under the ATM Agreement will be subject to the limitations of General Instruction I.B.6 of Form S-3, to the extent required under such instruction. The prospectus supplement filed with the SEC on July 11, 2024, is offering Shares having an aggregate offering price of $1,840,350.
The Company intends to use the net proceeds from the offering to fund the continued development of its product candidate and for general corporate purposes and working capital. The precise amount and timing of the application of these proceeds will depend upon a number of factors, such as the timing and progress of our research and development efforts, our funding requirements and the availability and costs of other funds.
As of March 31, 2025, the Company sold an aggregate of shares of the Company’s common stock under the ATM facility, and received $14,605 in net proceeds, after deducting commissions and expenses.
|
Summary of Significant Accounting Policies |
3 Months Ended |
|---|---|
Mar. 31, 2025 | |
| Accounting Policies [Abstract] | |
| Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (the “GAAP”) and pursuant to the accounting disclosure rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed financial statements should be read in conjunction with the financial statements and notes included in the Company’s audited financial statements as of and for the year ended December 31, 2024 contained in the Annual Report on Form 10-K filed with the SEC on March 7, 2025.
In the opinion of management, the accompanying condensed financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods. The results for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for any subsequent quarter, the year ending December 31, 2025, or any other period.
There have been no material changes to the Company’s significant accounting policies as described in the audited financial statements as of December 31, 2024.
Use of Estimates
The preparation of condensed financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosures as of the date of the condensed financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on various factors, including historical experience, and on various other assumptions that are believed to be reasonable under the circumstances, when these carrying values are not readily available from other sources. Significant items subject to estimates and assumptions include useful lives of property and equipment, valuation of stock option, warrants and convertible notes measured at fair value, and impairment testing of intangible assets. Actual results may differ from these estimates.
Liquidity
As of March 31, 2025, the Company had cash and cash equivalents of $2,628,286. The Company plans to finance its operations and development needs with its existing cash and cash equivalents, additional equity and/or debt financing arrangements. There can be no assurance that the Company will be able to obtain additional financing on terms acceptable to the Company, on a timely basis, or at all. If the Company is not able to obtain sufficient funds on acceptable terms when needed, the Company’s business, results of operations, and financial condition could be materially adversely impacted.
On May 31, 2024, the Company entered into an At The Market Offering Agreement, or sales agreement, with H.C. Wainwright & Co., LLC or Wainwright, pursuant to which the Company may issue and sell, from time to time, shares of its common stock, the aggregate market value of Shares eligible for sale in the Offering and under the ATM Agreement will be subject to the limitations of General Instruction I.B.6 of Form S-3, to the extent required under such instruction. The prospectus supplement filed with the SEC on July 11, 2024, is offering Shares having an aggregate offering price of $1,840,350. As of March 31, 2025, the Company sold shares of common stock under At The Market Offering Agreement, resulting in net proceeds of approximately $14,605.
For the three months ended March 31, 2025, the Company generated a net loss of $3,286,022. The Company expects to continue incurring development expenses for the next twelve months as the Company advances our product development plans.
The financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred net operating losses since inception and has an accumulated deficit as of March 31, 2025 of $56,035,338 and expects to incur additional losses and negative operating cash flows for at least the next twelve months. The Company’s ability to meet its obligations is dependent upon its ability to generate sufficient cash flows from operations and future financing transactions. Although management expects the Company will continue as a going concern, there is no assurance that management’s plans will be successful since the availability and amount of such funding is not certain. Accordingly, substantial doubt exists about the Company’s ability to continue as a going concern for at least one year from the issuance of these financial statements. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.
Segments
Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the chief operating decision maker (the “CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s Chief Executive Officer is the Company’s CODM. The CODM reviews financial information prepared on the basis of accounting policy disclosed in its annual financial statement for purposes of making operating decisions, allocating resources, and evaluating financial performance of the Company. As such, the Company has determined that it operates as one operating segment.
Impairment of Intangible Assets
The Company reviews its definite-lived intangibles and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be fully recoverable. When such events occur, management determines whether there has been impairment by comparing the anticipated undiscounted future net cash flows to the carrying value of the asset or asset group. If impairment exists, the assets are written down to their estimated fair value. No impairment of definite-lived intangible and long-lived assets was recorded for the three months ended March 31, 2025 and 2024.
Fair Value Option
ASC 825-10, Financial Instruments, provides a fair value option (the “FVO”) election that allows companies an irrevocable election to use fair value as the initial and subsequent accounting measurement attribute for certain financial assets and liabilities. ASC 825-10 permits entities to elect to measure eligible financial assets and liabilities at fair value on an ongoing basis. Unrealized gains and losses on items for which the FVO has been elected are reported in earnings, except for the effect of changes in own credit, which are recognized in other comprehensive income/loss. The decision to elect the FVO is determined on an instrument-by-instrument basis, must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to ASC 825-10 are required to be reported separately from those instruments measured using another accounting method.
Recent Accounting Pronouncements Adopted
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07, which is applicable to entities with a single reportable segment, will primarily require enhanced disclosures about significant segment expenses and enhanced disclosures in interim periods. The guidance in ASU 2023-07 will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023 and interim reporting periods in fiscal years beginning after December 31, 2024, with early adoption permitted. The Company does not expect the adoption of this standard to have a material impact on the Company’s unaudited condensed financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 is intended to improve income tax disclosure requirements by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) the disaggregation of income taxes paid by jurisdiction. The guidance makes several other changes to the income tax disclosure requirements. The guidance in ASU 2023-09 will be effective for annual reporting periods in fiscal years beginning after December 15, 2024. The Company does not expect the adoption of this standard to have a material impact on the Company’s unaudited condensed financial statements.
Accounting Standards Issued but Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which is intended to provide more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation and amortization) included in certain expense captions presented on the statement of operations. The guidance in this ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact that the adoption of ASU 2024-03 will have on its financial statements and disclosures.
|
Cash and Cash Equivalents |
3 Months Ended |
|---|---|
Mar. 31, 2025 | |
| Cash and Cash Equivalents [Abstract] | |
| Cash and Cash Equivalents | 3. Cash and Cash Equivalents
As of March 31, 2025 and December 31, 2024, cash and cash equivalents consisted of cash on hand and cash in bank which is potentially subject to concentration of credit risk. Such balance is maintained at financial institutions that management determines to be of high-credit quality. Cash accounts at each institution are insured by the Federal Deposit Insurance Corporation in the U.S.A or Central Deposit Insurance Corporation in Taiwan up to certain limits. At times, such deposits may be in excess of the insurance limit. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. As of March 31, 2025 and December 31, 2024, the Company had approximately $226,600 and $212,400 in excess of FDIC insured limits, respectively. The Company maintains cash in state-owned banks in Taiwan. In Taiwan, the insurance coverage of each bank is NTD$3,000,000 (approximately USD$90,350). As of March 31, 2025 and December 31, 2024, the Company had $2,025,800 and $3,311,000 cash in excess of the insured amount, respectively. The Company has not experienced any losses in such accounts.
|
Inventory |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory | 4. Inventory
Inventory stated at cost, net of reserve, consisted of the following:
Inventory write-downs to estimated net realizable values were for the three months ended March 31, 2025, and the three months ended March 31, 2024.
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Convertible Notes Payable and Other Notes Payable |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Notes Payable and Other Notes Payable | 5. Convertible Notes Payable and Other Notes Payable
As of March 31, 2025 and December 31, 2024, the respective notes payable were as follows:
May 2027 Convertible Notes and Warrant Purchase Agreement
On May 3, 2024, The Company entered into Convertible Note and Warrant Purchase Agreement with the ASE Test, Inc. (“ASE”), a shareholder of Ainos KY, for the issuance of convertible promissory notes with 6% compound interest in the aggregate principal amount of $9,000,000 (collectively the “Notes”) convertible into shares of common stock, par value $ per share, of the Company, payable three (3) years from May 3, 2024 as well as the issuance of warrants for the purchase of up to 500,000 shares of common stock at a price per share of $, exercisable until May 3, 2029. As of March 31, 2025, the Company received the full amount of the payment.
March 2025 Convertible Notes
On March 13, 2023, the Company entered into two convertible promissory note purchase agreements pursuant to Regulation S of the Securities Act of 1933, as amended, in the total principal amount of $3,000,000 with the following investors (the “March 2025 Convertible Notes” or “Notes”).
Convertible Note Issued to ASE Test, Inc. (the “ASE Note”)
Pursuant to the one of the aforementioned agreements, ASE Test, Inc., a shareholder of Ainos KY, committed to pay a total aggregate amount of $2,000,000 to the Company in exchange for convertible promissory note(s) in three tranches in the amounts of $1,000,000 (the “First Tranche”), $500,000 (the “Second Tranche”), and $500,000 (the “Third Tranche”) conditioned, among other things, on the Company achieving certain business milestones. As of March 31, 2025, the Company received the full amount of the payment.
On March 10, 2025, the Company entered into an amendment to the Convertible Note (the “Convertible Note Amendment”) with ASE Test to (1) extend the maturity date to March 12, 2027, and (2) change the conversion price from $7.50 per share (adjusted for the 1-for-5 reverse stock split of the Company’s common stock on December 14, 2023) to a price of the lower of (a) $7.50 per share and (b) the higher of (x) the average closing price per share of Common Stock for the period of thirty (30) trading days prior to the day when the noteholder exercises the conversion right or (y) $.
Convertible Note Issued to Li-Kuo Lee (the “Lee Note”)
The Company issued a convertible note in the principal amount of $1,000,000 to an unrelated party, Li-Kuo Lee, in exchange of $1,000,000 in cash. As of March 31, 2025, the Company received the full amount of the payment.
On March 12, 2025, the Company entered into an amendment to the Convertible Note (the “Convertible Note Amendment”) with Li-Kuo Lee to extend the maturity date to May 13, 2025.
The March 2025 Convertible Notes bearing interest at the rate of 6% compounded interest per annum. At any time after the issuance and before the maturity date, the Notes are convertible into the common stock of the Company at the conversion price from $4.50 to $7.50 per share, subject to anti-dilutive adjustment as set forth in the Notes. Unless previously converted, the Company shall repay the outstanding principal amount plus all accrued and unpaid interest on the maturity date. The Notes shall be an unsecured general obligation of the Company.
The total interest expense of convertible notes payable, other notes payable, March 2025 Convertible Notes and May 2027 Convertible Notes for the three months ended March 31, 2025 was $180,229 compared with the same period in year 2024 was $46,386. As of March 31, 2025 and December 31, 2024, the unpaid accrued interest expense was $831,497 and $651,268, respectively.
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Stockholders’ Equity |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders’ Equity | 6. Stockholders’ Equity
Preferred Stock
The Company increased authorized shares of preferred stock from shares to shares upon the filing of an amendment to the Company’s Certificate of Formation with the Secretary of State of Texas on November 27, 2023. shares of preferred stock were issued and outstanding as of March 31, 2025 and December 31, 2024.
Common Stock
During the three months ended March 31, 2025, the Company issued an additional shares of common stock as a result of delivering shares to settle vested RSUs, shares to settle for Special Stock Award, shares to settle for ATM transaction. As of March 31, 2025, there were shares of common stock legally issued and outstanding.
Warrants
As of March 31, 2025 and December 31, 2024, warrants issued and outstanding in connection with financing are summarized as below:
The Company issued the Lind Warrants on September 28, 2023 in connection with the private placement of the Lind Note. The Company further issued 20,666 shares of warrants with an exercise price of $8.25 per share to the placement agent as the agent fee. Each warrant has a contractual term of 5 years and can be exercised for the purchase of one share of common stock of the Company. The carrying amount of the Lind Warrant is nil after allocating proceeds to the Lind Note measured at fair value. The fair value of the placement agent warrant is estimated as $21,479 using the Black-Scholes Model.
As disclosed in Note 1, the Company issued public warrants together with common stock in connection with its underwritten public offering effective August 8, 2022. The Company further issued private warrants to Maxim Group LLC, as representative of the underwriter pursuant to an underwriting agreement. Each warrant has a contractual term of 5 years, expiring on August 8, 2027, and can be exercised for the purchase of one share of common stock of the Company.
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments’ specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (the “ASC480), and ASC 815, Derivatives and Hedging (the “ASC 815”). The assessment considers whether the instruments are free standing financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s own common shares and whether the instrument holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent period end date while the instruments are outstanding. Management has concluded that the warrants issued in connection with the underwritten public offering and the private placement of Lind Note qualify for equity accounting treatment and are recorded as additional paid-in capital.
In addition, the warrant issued by the Company to i2China in 2020 in exchange for consulting services is accounted for under ASC 718, Compensation – Stock Compensation (see Note 8).
As of March 31, 2025, of the warrants have been exercised nor have expired.
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Revenue |
3 Months Ended |
|---|---|
Mar. 31, 2025 | |
| Revenue Recognition and Deferred Revenue [Abstract] | |
| Revenue | 7. Revenue
Revenue is recognized upon shipment of products based upon contractually stated pricing at standard payment terms within 30 to 60 days. The revenue generated by product sales is recognized at point in time.
The Company generated revenue from sales of VELDONA Pet supplements in the Taiwan market through on-line platforms that were recognized after the expiration of right of return which was offered for a limited time. Revenue from sales through off-line distribution channels was recognized based on the amount of consideration that we expected to receive, reduced by estimates for return allowances, promotional discounts, and fees.
and $106,329 of contract liabilities were recorded for the cash received in advance from customers as of March 31, 2025 and December 31, 2024, respectively.
The Company recognized the revenue from sales of VOC sensing products related to NISD co-development during the three months ended March 31, 2025 and 2024 that was included in the contract liability balance at the beginning of each period were $105,942 and , offset by exchange rate fluctuation, respectively.
Return Allowances
Return allowances, which reduce revenue and cost of sales, are estimated using historical experience. Liabilities for return allowances are included in “Accrued expenses and others current liabilities”.
Variable consideration
We record revenue from customers in an amount that reflects the transaction price we expect to be entitled to after transferring control of those goods. From time to time, we offer product sales promotions such as discounts. Variable consideration is estimated at contract inception only to the extent that it is probable that a significant reversal of revenue will not occur.
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Share-Based Compensation |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Compensation |
2023 Stock Incentive Plan
The Company effectuated an amendment to its 2021 Stock Incentive Plan, now restated as the Company 2023 Stock Incentive Plan (the “2023 SIP” or “Plan”) which includes, among other things, a change in the number of reserved shares under the Plan. Under the 2023 SIP, subject to a change in capital structure or a change in control, the aggregate number of shares which may be issued or transferred pursuant to awards under the Plan will be equal to up to twenty percent (20%) of shares of outstanding common stock of the Company existing as of December 31st of the previous calendar year (the “Plan Share Reserve”). Upon the effectiveness of the 2023 SIP on June 14, 2023, the aggregate number of shares which may be issued pursuant to awards under the Plan is shares of common stock, including shares that remained available for grant under the 2021 Stock Incentive Plan. On July 19, 2024, the Company filed Form S-8 to increase the aggregate number of shares may be issued to shares of common stock including shares that remained available for grant under the 2021 Stock Incentive Plan. As of March 31, 2025, shares have been granted under the 2023 SIP
2021 Stock Incentive Plan
On September 28, 2021, the Company’s board of directors, and on May 16, 2022, its shareholders approved the 2021 Stock Incentive Plan (the “2021 SIP”). During the period from January 1, 2023 up to the date that the prior plan was superseded by the 2023 SIP, no shares were granted under the 2021 SIP.
2021 Employee Stock Purchase Plan
On September 28, 2021, the Company’s board of directors, and on May 16, 2022, its shareholders approved the 2021 Employee Stock Purchase Plan (the “2021 ESPP”). A total of shares of common stock have made available for issuance under the ESPP. During the period from January 1, 2024 up to the date that the prior plan was superseded by the 2023 SIP, shares were granted under the 2021 ESPP.
Restricted Stock Units (“RSUs”)
RSUs entitle the recipient to be paid out an equal number of common stock shares upon vesting. The fair value of RSUs is based on market price of the underlying stock on the date of grant. A summary of the Company’s RSUs activity and related information for the three months ended March 31, 2025 and for the three months ended March 31, 2024 were as follows:
Stock Options and Warrants
During the three months ended March 31, 2025 and 2024, shares were granted, forfeited, expired or exercised. As of March 31, 2025, there were shares in the form of stock options and shares in the form of warrants outstanding, and shares of the options and shares of the warrants are vested and exercisable.
Share-Based Compensation Expense
Shared-based compensation expense for the three months ended March 31, 2025 was $ compared to the three months ended March 31, 2024 amount of $.
As of March 31, 2025, the total unrecognized compensation cost related to outstanding RSUs, stock options and warrants was $, which the Company expects to recognize over a weighted-average period of years.
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Income Taxes |
3 Months Ended |
|---|---|
Mar. 31, 2025 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | 9. Income Taxes
The Company did not record a federal, state, or foreign income tax provision or benefit for the three months ended March 31, 2025 and 2024 due to the expected loss before income taxes to be incurred for the years ended December 31, 2025 and 2024, as well as the Company’s continued maintenance of a full valuation allowance against its net deferred tax assets due to its historical deficit.
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Net Loss per Common Share |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Loss per Common Share |
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Related Party Transactions |
3 Months Ended |
|---|---|
Mar. 31, 2025 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions | 11. Related Party Transactions
The following is a summary of related party transactions that met our disclosure threshold:
Working Capital Advances
The proceeds of the KY Note and ASE Note (see Note 5) were used for working capital advances. The total interest expense incurred in related to the notes for the three months ended March 31, 2025 were $164,348 compared to $31,078, for the three months ended March 31, 2024. As of March 31, 2025 and December 31, 2024, unpaid accrued interest expenses were $704,387 and $540,039, respectively.
The company paid off the KY Note during the years 2023 and 2024.
Purchase and Sales
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 Taiwan Carbon Nano Technology Corporation (the “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 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 ceased the sale of the Ainos COVID-19 antigen rapid test kits in the first quarter of 2024.
Product Co-development Agreement
Pursuant to a five-year Product Co-development Agreement effective on August 1, 2021 (the “Product Co-Development Agreement”) with TCNT, the development expenses incurred were $96,695 for the three months ended March 31,2025, compared to $90,594 for the three months ended March 31, 2024. The fee for non-exclusive use of patents were $149,566 and $ 284,599 for the three months ended March 31, 2025 and 2024, respectively. Advance payment $111,279 and $ 120,869 as of March 31, 2025 and December 31, 2024, respectively.
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Commitments and Contingencies |
3 Months Ended |
|---|---|
Mar. 31, 2025 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | 12. Commitments and Contingencies
The Company operates in an industry characterized by extensive patent litigation. Competitors may claim that the Company’s products infringe upon their intellectual property. Resolution of patent litigation or other intellectual property claims is typically time consuming and costly and can result in significant damage awards and injunctions that could prevent the manufacture and sale of the affected products or require the Company to make significant royalty payments in order to continue selling the affected products. As of March 31, 2025, there were no such commitments or contingencies.
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Subsequent Events |
3 Months Ended |
|---|---|
Mar. 31, 2025 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | 13. Subsequent Events
On April 30, 2025, the Company has repaid Mr. Lee the convertible notes payable in the principal amount $1,000,000 (see Note 5) with accrued interest of $132,650, aggregate amount $1,132,650. |
Summary of Significant Accounting Policies (Policies) |
3 Months Ended |
|---|---|
Mar. 31, 2025 | |
| Accounting Policies [Abstract] | |
| Basis of Presentation | Basis of Presentation
The accompanying condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (the “GAAP”) and pursuant to the accounting disclosure rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed financial statements should be read in conjunction with the financial statements and notes included in the Company’s audited financial statements as of and for the year ended December 31, 2024 contained in the Annual Report on Form 10-K filed with the SEC on March 7, 2025.
In the opinion of management, the accompanying condensed financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods. The results for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for any subsequent quarter, the year ending December 31, 2025, or any other period.
There have been no material changes to the Company’s significant accounting policies as described in the audited financial statements as of December 31, 2024.
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| Use of Estimates | Use of Estimates
The preparation of condensed financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosures as of the date of the condensed financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on various factors, including historical experience, and on various other assumptions that are believed to be reasonable under the circumstances, when these carrying values are not readily available from other sources. Significant items subject to estimates and assumptions include useful lives of property and equipment, valuation of stock option, warrants and convertible notes measured at fair value, and impairment testing of intangible assets. Actual results may differ from these estimates.
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| Liquidity | Liquidity
As of March 31, 2025, the Company had cash and cash equivalents of $2,628,286. The Company plans to finance its operations and development needs with its existing cash and cash equivalents, additional equity and/or debt financing arrangements. There can be no assurance that the Company will be able to obtain additional financing on terms acceptable to the Company, on a timely basis, or at all. If the Company is not able to obtain sufficient funds on acceptable terms when needed, the Company’s business, results of operations, and financial condition could be materially adversely impacted.
On May 31, 2024, the Company entered into an At The Market Offering Agreement, or sales agreement, with H.C. Wainwright & Co., LLC or Wainwright, pursuant to which the Company may issue and sell, from time to time, shares of its common stock, the aggregate market value of Shares eligible for sale in the Offering and under the ATM Agreement will be subject to the limitations of General Instruction I.B.6 of Form S-3, to the extent required under such instruction. The prospectus supplement filed with the SEC on July 11, 2024, is offering Shares having an aggregate offering price of $1,840,350. As of March 31, 2025, the Company sold shares of common stock under At The Market Offering Agreement, resulting in net proceeds of approximately $14,605.
For the three months ended March 31, 2025, the Company generated a net loss of $3,286,022. The Company expects to continue incurring development expenses for the next twelve months as the Company advances our product development plans.
The financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred net operating losses since inception and has an accumulated deficit as of March 31, 2025 of $56,035,338 and expects to incur additional losses and negative operating cash flows for at least the next twelve months. The Company’s ability to meet its obligations is dependent upon its ability to generate sufficient cash flows from operations and future financing transactions. Although management expects the Company will continue as a going concern, there is no assurance that management’s plans will be successful since the availability and amount of such funding is not certain. Accordingly, substantial doubt exists about the Company’s ability to continue as a going concern for at least one year from the issuance of these financial statements. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.
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| Segments | Segments
Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the chief operating decision maker (the “CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s Chief Executive Officer is the Company’s CODM. The CODM reviews financial information prepared on the basis of accounting policy disclosed in its annual financial statement for purposes of making operating decisions, allocating resources, and evaluating financial performance of the Company. As such, the Company has determined that it operates as one operating segment.
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| Impairment of Intangible Assets | Impairment of Intangible Assets
The Company reviews its definite-lived intangibles and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be fully recoverable. When such events occur, management determines whether there has been impairment by comparing the anticipated undiscounted future net cash flows to the carrying value of the asset or asset group. If impairment exists, the assets are written down to their estimated fair value. No impairment of definite-lived intangible and long-lived assets was recorded for the three months ended March 31, 2025 and 2024.
|
| Fair Value Option | Fair Value Option
ASC 825-10, Financial Instruments, provides a fair value option (the “FVO”) election that allows companies an irrevocable election to use fair value as the initial and subsequent accounting measurement attribute for certain financial assets and liabilities. ASC 825-10 permits entities to elect to measure eligible financial assets and liabilities at fair value on an ongoing basis. Unrealized gains and losses on items for which the FVO has been elected are reported in earnings, except for the effect of changes in own credit, which are recognized in other comprehensive income/loss. The decision to elect the FVO is determined on an instrument-by-instrument basis, must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to ASC 825-10 are required to be reported separately from those instruments measured using another accounting method.
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| Recent Accounting Pronouncements Adopted | Recent Accounting Pronouncements Adopted
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07, which is applicable to entities with a single reportable segment, will primarily require enhanced disclosures about significant segment expenses and enhanced disclosures in interim periods. The guidance in ASU 2023-07 will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023 and interim reporting periods in fiscal years beginning after December 31, 2024, with early adoption permitted. The Company does not expect the adoption of this standard to have a material impact on the Company’s unaudited condensed financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 is intended to improve income tax disclosure requirements by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) the disaggregation of income taxes paid by jurisdiction. The guidance makes several other changes to the income tax disclosure requirements. The guidance in ASU 2023-09 will be effective for annual reporting periods in fiscal years beginning after December 15, 2024. The Company does not expect the adoption of this standard to have a material impact on the Company’s unaudited condensed financial statements.
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| Accounting Standards Issued but Not Yet Adopted | Accounting Standards Issued but Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which is intended to provide more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation and amortization) included in certain expense captions presented on the statement of operations. The guidance in this ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact that the adoption of ASU 2024-03 will have on its financial statements and disclosures.
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Inventory (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Inventory | Inventory stated at cost, net of reserve, consisted of the following:
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Convertible Notes Payable and Other Notes Payable (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Notes Payable | As of March 31, 2025 and December 31, 2024, the respective notes payable were as follows:
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Stockholders’ Equity (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Warrants Issued and Outstanding | As of March 31, 2025 and December 31, 2024, warrants issued and outstanding in connection with financing are summarized as below:
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Share-Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Restricted Stock Units |
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Net Loss per Common Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Basic and Diluted Net Loss Per Share |
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| Schedule of Computations of Diluted Weighted Average Shares Outstanding |
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Description of Business (Details Narrative) - USD ($) |
1 Months Ended | 3 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Jul. 11, 2024 |
Dec. 14, 2023 |
May 16, 2022 |
May 31, 2024 |
Mar. 31, 2025 |
Mar. 31, 2024 |
Dec. 31, 2024 |
Nov. 27, 2023 |
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| Property, Plant and Equipment [Line Items] | ||||||||
| Nasdaq's minimum price per share | $ 1.00 | |||||||
| Common stock, par value | $ 0.01 | $ 0.01 | ||||||
| Number of shares sold | 29,407 | |||||||
| Net proceeds | $ 14,605 | |||||||
| ATM Agreement [Member] | ||||||||
| Property, Plant and Equipment [Line Items] | ||||||||
| Agent placement fee percentage | 3.00% | |||||||
| Legal fee | $ 35,000 | |||||||
| Aggregate offering price | $ 1,840,350 | |||||||
| Number of shares sold | 29,407 | |||||||
| ATM Agreement [Member] | Maximum [Member] | ||||||||
| Property, Plant and Equipment [Line Items] | ||||||||
| Legal fee | $ 2,500 | |||||||
| Common Stock [Member] | ||||||||
| Property, Plant and Equipment [Line Items] | ||||||||
| Reverse stock split | 1-for-5 | 1-for-15 | ||||||
Summary of Significant Accounting Policies (Details Narrative) |
3 Months Ended | |||
|---|---|---|---|---|
|
Jul. 11, 2024
USD ($)
|
Mar. 31, 2025
USD ($)
Segments
shares
|
Mar. 31, 2024
USD ($)
|
Dec. 31, 2024
USD ($)
|
|
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
| Cash and cash equivalents | $ 2,628,286 | $ 3,892,919 | ||
| Number of shares sold | shares | 29,407 | |||
| Net proceeds | $ 14,605 | |||
| Net loss | 3,286,022 | 3,314,810 | ||
| Accumulated deficit | $ 56,035,338 | $ 52,749,316 | ||
| Number of reporting segment | Segments | 1 | |||
| Impairment of intangible assets | $ 0 | $ 0 | ||
| ATM Agreement [Member] | ||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
| Aggregate offering price | $ 1,840,350 | |||
| Number of shares sold | shares | 29,407 | |||
Cash and Cash Equivalents (Details Narrative) |
Mar. 31, 2025
USD ($)
|
Mar. 31, 2025
TWD ($)
|
Dec. 31, 2024
USD ($)
|
|---|---|---|---|
| Cash and Cash Equivalents [Abstract] | |||
| Cash FDIC insured amount | $ 250,000 | $ 250,000 | |
| Excess of FDIC insured limits | 226,600 | 212,400 | |
| Cash CDIC insured amount | 90,350 | $ 3,000,000 | |
| Excess of CDIC insured limits | $ 2,025,800 | $ 3,311,000 |
Schedule of Inventory (Details) - USD ($) |
Mar. 31, 2025 |
Dec. 31, 2024 |
|---|---|---|
| Inventory Disclosure [Abstract] | ||
| Raw materials | $ 73,928 | $ 74,875 |
| Work in process | 1,116 | 1,131 |
| Finished goods | 66,787 | 67,750 |
| Total | $ 141,831 | $ 143,756 |
Inventory (Details Narrative) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2025 |
Mar. 31, 2024 |
|
| Inventory Disclosure [Abstract] | ||
| Inventory write-downs net realizable values | ||
Schedule of Notes Payable (Details) - USD ($) |
Mar. 31, 2025 |
Dec. 31, 2024 |
|---|---|---|
| Short-Term Debt [Line Items] | ||
| Convertible Notes – noncurrent | $ 11,000,000 | $ 9,000,000 |
| Convertible Notes – current | 1,000,000 | 3,000,000 |
| Convertible Notes payable | 12,000,000 | 12,000,000 |
| Related Party [Member] | ||
| Short-Term Debt [Line Items] | ||
| Convertible Notes – noncurrent | 11,000,000 | 9,000,000 |
| Convertible Notes – current | 2,000,000 | |
| Related Party [Member] | March 2025 Convertible Notes [Member] | ||
| Short-Term Debt [Line Items] | ||
| Convertible Notes – noncurrent | 2,000,000 | |
| Convertible Notes – current | 2,000,000 | |
| Related Party [Member] | May 2027 Convertible Notes [Member] | ||
| Short-Term Debt [Line Items] | ||
| Convertible Notes – noncurrent | 9,000,000 | 9,000,000 |
| Nonrelated Party [Member] | March 2025 Convertible Notes One [Member] | ||
| Short-Term Debt [Line Items] | ||
| Convertible Notes – current | $ 1,000,000 | $ 1,000,000 |
Schedule of Warrants Issued and Outstanding (Details) - shares |
Mar. 31, 2025 |
Dec. 31, 2024 |
|---|---|---|
| Class of Warrant or Right [Line Items] | ||
| Total | 1,909,810 | 1,909,810 |
| Lind Warrant [Member] | ||
| Class of Warrant or Right [Line Items] | ||
| Total | 1,201,944 | 1,201,944 |
| Public Warrant [Member] | ||
| Class of Warrant or Right [Line Items] | ||
| Total | 179,400 | 179,400 |
| Representative Warrant [Member] | ||
| Class of Warrant or Right [Line Items] | ||
| Total | 7,800 | 7,800 |
| Placement Agent Warrant [Member] | ||
| Class of Warrant or Right [Line Items] | ||
| Total | 20,666 | 20,666 |
| ASE Warrant [Member] | ||
| Class of Warrant or Right [Line Items] | ||
| Total | 500,000 | 500,000 |
Schedule of Warrants Issued and Outstanding (Details) (Parenthetical) |
Mar. 31, 2025
$ / shares
|
|---|---|
| Lind Warrant [Member] | Minimum [Member] | |
| Class of Warrant or Right [Line Items] | |
| Exercise price | $ 2.16 |
| Lind Warrant [Member] | Maximum [Member] | |
| Class of Warrant or Right [Line Items] | |
| Exercise price | 4.50 |
| Public Warrant [Member] | |
| Class of Warrant or Right [Line Items] | |
| Exercise price | 21.25 |
| Representative Warrant [Member] | |
| Class of Warrant or Right [Line Items] | |
| Exercise price | 23.375 |
| Placement Agent Warrant [Member] | |
| Class of Warrant or Right [Line Items] | |
| Exercise price | 8.25 |
| ASE Warrant [Member] | |
| Class of Warrant or Right [Line Items] | |
| Exercise price | $ 4.50 |
Revenue (Details Narrative) - USD ($) |
Mar. 31, 2025 |
Dec. 31, 2024 |
Mar. 31, 2024 |
|---|---|---|---|
| Revenue Recognition and Deferred Revenue [Abstract] | |||
| Contract liabilities current | $ 106,329 | ||
| Contract liabilities | $ 105,942 |
Schedule of Restricted Stock Units (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares |
3 Months Ended | ||||
|---|---|---|---|---|---|
Mar. 31, 2025 |
Mar. 31, 2024 |
||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
| Number of Shares, Unvested, Beginning | 89,831 | 954,306 | |||
| Weighted-Average Grant Date Fair Value Per Share, Unvested, Beginning | $ 5.51 | $ 4.39 | |||
| Number of Shares, RSUs granted | |||||
| Weighted-Average Grant Date Fair Value Per Share, RSUs granted | |||||
| Number of Shares, RSUs vested | (5,870) | [1] | (133,964) | ||
| Weighted-Average Grant Date Fair Value Per Share, RSUs vested | $ 55.50 | $ 5.74 | |||
| Number of Shares, RSUs forfeited | (5,950) | ||||
| Weighted-Average Grant Date Fair Value Per Share, RSUs forfeited | $ 3.46 | ||||
| Number of Shares, Unvested, Ending | 83,961 | 814,392 | |||
| Weighted-Average Grant Date Fair Value Per Share, Ending | $ 2.01 | $ 4.18 | |||
| |||||
Schedule of Restricted Stock Units (Details) (Parenthetical) |
3 Months Ended |
|---|---|
Mar. 31, 2025 | |
| Restricted Stock Units (RSUs) [Member] | |
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
| Reverse stock split | 2 shares difference due to previous reverse stock split |
Schedule of Basic and Diluted Net Loss Per Share (Details) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2025 |
Mar. 31, 2024 |
|
| Earnings Per Share [Abstract] | ||
| Net loss attributable to common stockholders, Basic | $ (3,286,022) | $ (3,314,810) |
| Net loss attributable to common stockholders, Diluted | $ (3,286,022) | $ (3,314,810) |
| Weighted-average number of shares used in computing net loss per share attributable to common stockholders, basic | 15,863,060 | 5,771,283 |
| Weighted-average number of shares used in computing net loss per share attributable to common stockholders, diluted | 15,863,060 | 5,771,283 |
| Net loss per share attributable to common stockholders, basic | $ (0.21) | $ (0.57) |
| Net loss per share attributable to common stockholders, diluted | $ (0.21) | $ (0.57) |
Schedule of Computations of Diluted Weighted Average Shares Outstanding (Details) - shares |
3 Months Ended | |
|---|---|---|
Mar. 31, 2025 |
Mar. 31, 2024 |
|
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total potential shares | 4,758,346 | 5,254,221 |
| Stock Options And Restricted Stock Units [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total potential shares | 91,293 | 821,724 |
| Warrant [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total potential shares | 1,915,844 | 1,415,844 |
| Convertible Debt Securities [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total potential shares | 2,751,209 | 3,016,653 |
Related Party Transactions (Details Narrative) - USD ($) |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Mar. 31, 2025 |
Mar. 31, 2024 |
Dec. 31, 2024 |
|
| Related Party Transaction [Line Items] | |||
| Unpaid accrued interest expenses | $ 704,387 | $ 540,039 | |
| Development expenses incurred | 1,724,084 | $ 2,084,648 | |
| Product Co Development Agreement [Member] | |||
| Related Party Transaction [Line Items] | |||
| Development expenses incurred | 96,695 | 90,594 | |
| Advance payment | 111,279 | $ 120,869 | |
| Product Co Development Agreement [Member] | Patents [Member] | |||
| Related Party Transaction [Line Items] | |||
| Non exclusive use of patents fee | 149,566 | 284,599 | |
| Related Party [Member] | |||
| Related Party Transaction [Line Items] | |||
| Interest expense incurred related party | 164,348 | 31,078 | |
| Development expenses incurred | $ 246,260 | $ 375,193 | |
Subsequent Events (Details Narrative) - USD ($) |
Apr. 30, 2025 |
Mar. 31, 2025 |
Dec. 31, 2024 |
|---|---|---|---|
| Subsequent Event [Line Items] | |||
| Convertible notes payable - noncurrent (including amounts of related party of $11,000,000 and $9,000,000 as of March 31,2025 and December 31, 2024, respectively) | $ 11,000,000 | $ 9,000,000 | |
| Subsequent Event [Member] | |||
| Subsequent Event [Line Items] | |||
| Convertible notes payable - noncurrent (including amounts of related party of $11,000,000 and $9,000,000 as of March 31,2025 and December 31, 2024, respectively) | $ 1,000,000 | ||
| Accrued interest | 132,650 | ||
| Aggregate amount | $ 1,132,650 |
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