Ainos, Inc 10-Q for FY2024 Q3
Ainos, Inc. (AIMD)
About this 10-Q
Ainos, Inc filed this 10-Q on November 6, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).
Headline figures
Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $3.7M
- compared with a net loss of $2.98M a year earlier
- Diluted EPS
- -$0.33
- compared with -$0.73 a year earlier
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 November 6, 2024
AINOS, INC.
INDEX
| 2 |
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Ainos, Inc.
Condensed Balance Sheets
(Unaudited)
| September 30, 2024 | December 31, 2023 | |||||||
| 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 $ | ||||||||
| Other notes payable, related party | ||||||||
| Accrued expenses and others current liabilities | ||||||||
| Total current liabilities | ||||||||
| Long term liabilities: | ||||||||
| Senior secured convertible notes measured at fair value | ||||||||
| Convertible notes payable-noncurrent (including amounts of related party of $ | ||||||||
| Other notes payable, related party-noncurrent | ||||||||
| Other long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $ par value; shares authorized; issued and outstanding as of September 30, 2024 and December 31,2023, respectively; | ||||||||
| Common stock, $ par value; shares authorized as of September 30, 2024 and December 31,2023; and shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively | ||||||||
| Common Shares to be issued shares and shares as of September 30, 2024 and December 31, 2023, 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)
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues (including amounts of related party of
and $ | $ | $ | $ | $ | ||||||||||||
| Cost of revenues (including amounts of
related party of and $ | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gross 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 expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Issuance cost of senior secured convertible note measured at fair value | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Fair value change for senior secured convertible note | ( | ) | ( | ) | ||||||||||||
| Other (expenses) income, net | ( | ) | ||||||||||||||
| Total non-operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 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)
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive (loss) income: | ||||||||||||||||
| Translation adjustment | ( | ) | ( | ) | ||||||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
See accompanying notes to condensed financial statements.
| 5 |
Ainos, Inc.
Condensed Statements of Stockholders’ Equity
For the three months ended September 30, 2024 and 2023
(Unaudited)
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Loss | Equity | |||||||||||||||||||||||||||||||
| 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 June 30, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Issuance of stock to settle vested RSUs | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| Conversion of senior secured convertible note payable to common stock | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for patent license agreement | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Share-based compensation | - | - | - | |||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Translation adjustment | - | - | - | |||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Balance at June 30, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Issue warrant to Placement agent | - | - | - | |||||||||||||||||||||||||||||||||||||
| Share-based compensation | - | - | - | |||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Translation adjustment | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance at September 30, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||
See accompanying notes to condensed financial statements.
| 6 |
Ainos, Inc.
Condensed Statements of Stockholders’ Equity
For the nine months ended September 30, 2024 and 2023
(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, 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 | - | - | - | |||||||||||||||||||||||||||||||||||||
| Issuance of common stock | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Issue common stock for patent license agreement | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Share-based compensation | - | - | - | |||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Translation adjustment | - | - | - | |||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Balance at December 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Balance | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Issuance of stock to settle vested RSUs | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Issuance of stock in exchange of vehicle | - | - | ||||||||||||||||||||||||||||||||||||||
| Conversion of convertible notes payable to common stock | - | - | ||||||||||||||||||||||||||||||||||||||
| Warrants issued in connection with senior secured convertible note payable | - | - | - | |||||||||||||||||||||||||||||||||||||
| Share-based compensation | - | - | - | |||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Translation adjustment | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance at September 30, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Balance | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||
See accompanying notes to condensed financial statements.
| 7 |
Ainos, Inc.
Condensed Statements of Cash Flows
(Unaudited)
| 2024 | 2023 | |||||||
| Nine months ended September 30 | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Loss on inventory write-downs | ||||||||
| Share-based compensation expense | ||||||||
| Issuance cost of senior secured convertible note measured at fair value | ||||||||
| Change in fair value of senior secured convertible note | ||||||||
| 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 | ( | ) | ( | ) | ||||
| Increase in refundable deposits and others | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from Financing Activities: | ||||||||
| Proceeds from convertible notes payable- noncurrent | ||||||||
| Proceeds from convertible notes payable- noncurrent, related party | ||||||||
| Proceeds from senior secured convertible notes payable | ||||||||
| Repayment of other notes payable, related party | ( | ) | ( | ) | ||||
| Repayment of senior secured convertible notes payable | ( | ) | ||||||
| Repayment of convertible notes payable, related party | ( | ) | ||||||
| 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 increase in cash and cash equivalents | ||||||||
| Cash and cash equivalents at beginning of year | ||||||||
| Cash and cash equivalents at end of year | $ | $ | ||||||
| Supplemental Cash Flow Information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Noncash financing and investing activities: | ||||||||
| Conversion of convertible notes payable to common stock and accrued interest waived by convertible notes holders | $ | $ | ||||||
| Conversion of senior secured convertible notes to common stock | $ | $ | ||||||
| Issuance of common stocks in exchange of vehicle | $ | $ | ||||||
| Account payable to purchase equipment | $ | $ | ||||||
See accompanying notes to the condensed financial statements.
| 8 |
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 a diversified healthcare company focused on the development of novel point-of-care testing (the “POCT”), therapeutics based on very low-dose interferon alpha (the “VELDONA”), and synthetic RNA-driven preventative medicine. Our product pipeline includes commercial-stage VELDONA Pet cytoprotein supplements, clinical-stage VELDONA human and animal therapeutics and telehealth-friendly POCTs powered by the AI Nose technology platform.
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 focused on commercializing a suite of VELDONA-based product candidates. Currently our priority VELDONA 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 our controlling shareholder, Ainos Inc., a Cayman Island corporation (“Ainos KY”), to expand product portfolio into POCTs aimed to provide connected, rapid, and convenient testing for a broad range of health conditions. Pivoting 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. Our AI Nose technology platform implements digital nose sensors and our proprietary algorithm to analyze and digitally profile VOCs emitted by the body. Our lead VOC POCT candidate, Ainos Flora, aims to test female vaginal health and certain common sexually transmitted infections (the “STIs”) quickly and easily.
We believe AI Nose has additional opportunities in telehealth, automotive, industrial, and environmental safety applications. To address these additional opportunities, we are codeveloping a VOC POCT solution for the elderly care market. We are also codeveloping a VOC sensing solution to address the industrial market, as our first move to expand the application of AI Nose beyond healthcare. Our vision is to leverage digital nose sensors and our proprietary VOC sensing AI algorithm, to digitize smell and ultimately become AI’s nose.
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.
| 9 |
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, 2023 contained in the Annual Report on Form 10-K filed with the SEC on March 8, 2024.
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 and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for any subsequent quarter, the year ending December 31, 2024, 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, 2023.
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 September 30, 2024, the Company had cash and cash equivalents of $
For
the nine months ended September 30, 2024, 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 September 30, 2024 of $
| 10 |
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.
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.
The Company elected to account for the senior secured convertible notes issued to Lind Global Fund II LP (the “Lind Note”) using FVO, which allows for valuing the Lind Note at fair value in its entirety versus bifurcation of the embedded derivatives (see Note 5). The fair value of the Lind Note is determined using a binomial lattice valuation model, which is widely used for valuing convertible notes. The significant assumptions used in the model is volatility of the Company’s common stock. If different assumptions are used, the fair value of the convertible notes and the change in estimated fair value could be materially different. A significant increase in the volatility of the market price of the Company’s common stock, in isolation, would result in a significantly higher fair value; and a significant decrease in volatility would result in a significantly lower fair value.
Recent Accounting Pronouncements Adopted
On January 1, 2023, the Company adopted Accounting Standards Update (the “ASU”) 2016-13 (the “ASU 2016-13”), Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which the Financial Accounting Standards Board (the “FASB”) issued in June 2016. The new standard changes the accounting for credit losses for financial assets and certain other instruments, including trade receivables and contract assets that are not measured at fair value through net income. Under legacy standards, the Company recognizes an impairment of receivables when it was probable that a loss had been incurred. Under the new standard pursuant to ASU 2016-13, the Company is required to recognize estimated credit losses expected to occur over the estimated life or remaining contractual life of an asset (which includes losses that may be incurred in future periods) using a broader range of information including reasonable and supportable forecasts about future economic conditions. The guidance is effective for smaller reporting companies (the “SRC”) as defined by the SEC for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years with early adoption permitted. The Company’s adoption of this new guidance did not have a material impact on the Company’s financial statements and related disclosure.
| 11 |
On January 1, 2023, the Company early adopted ASU 2020-06 (the “ASU 2020-06”), Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 as issued by FASB in August 2020 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it also simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for SRC’s fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. The Company’s early adoption of this new guidance did not have a material impact on its financial statements and related disclosures.
Accounting Standards Issued but Not Yet Adopted
No other new accounting pronouncement issued or effective has had, or is expected to have, a material impact on the Company’s financial statements.
3. Cash and Cash Equivalents
As
of September 30, 2024 and December 31, 2023, 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 $
4. Inventory
Inventory stated at cost, net of reserve, consisted of the following:
Schedule of Inventory
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Raw materials | $ | $ | ||||||
| Work in process | ||||||||
| Finished goods | ||||||||
| Total | $ | $ | ||||||
Inventory
write-downs to estimated net realizable values were for the three and nine months ended September 30, 2024, respectively, compared
to $
5. Convertible Notes Payable and Other Notes Payable
As of September 30, 2024 and December 31, 2023, the respective notes payable were as follows:
Schedule of Notes Payable
| September 30, 2024 | December 31, 2023 | |||||||
| Other notes payable, related party – current | $ | $ | ||||||
| Other notes payable, related party - noncurrent | ||||||||
| March 2025 Convertible Notes, related party – noncurrent (ASE Note) | ||||||||
| March 2025 Convertible Notes, related party –current (ASE Note) | ||||||||
| March 2025 Convertible Notes – noncurrent (Lee Note) | ||||||||
| March 2025 Convertible Notes –current (Lee Note) | ||||||||
| Senior secured convertible notes payable (Lind Note) - fair value | ||||||||
| May 2027 Convertible Notes, related party – noncurrent (ASE Note) | ||||||||
| Notes payable | $ | $ | ||||||
| 12 |
The
other notes payable were issued to Ainos KY, the controlling shareholder of the Company, in exchange for $
All of the aforementioned convertible promissory notes and other notes payable are unsecured and due upon maturity. Holders of convertible notes have the option to convert some or the entire unpaid principal and accrued interest to common stock of the Company.
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
$
Convertible Note Issued to Li-Kuo Lee (the “Lee Note”)
The
Company issued a convertible note in the principal amount of $
The
March 2025 Convertible Notes will mature in
The
total interest expense of convertible notes payable, other notes payable, March 2025 Convertible Notes and May 2027 Convertible Notes
and Warrant Purchase Agreement for the three and nine months ended September 30, 2024 were $
| 13 |
Senior Secured Convertible Notes Payable
On
September 25, 2023, the Company entered into a securities purchase agreement (the “SPA”) with Lind Global Fund II LP (the
“Lind”). The SPA provides for loans in an aggregate principal amount of up to $
In
2023, the Company issued and sold to Lind, in a private placement, (a) a senior secured convertible promissory note in the aggregate
principal amount of $
Subject
to the satisfaction of certain conditions, the Company has the right to request additional tranches of funding from Lind in the aggregate
amount not to exceed $
On
January 23, 2024, the Company received an Increased Funding Amount of up to $
Following
the earlier to occur of (i) 90 days from the date of the SPA or (ii) the date the resale Registration Statement is declared effective
by the SEC, the Lind Note is convertible into shares of the Company’s common stock at the option of Lind at any time with the conversion
price at lower of $
On
August 2, 2024, the Company retired its remaining senior secured convertible debt (the “Note”) with Lind Global Fund II LP,
an institutional investment fund managed by The Lind Partners (together the “Investor”), as a result of conversions by the
Investor and payments by the Company, which aggregates at a total of approximately US$
From
an accounting perspective, the Lind Note is considered a debt host instrument embedded with an issuer’s call and investor’s
contingent puts, and is issued at substantial discount. The Company elects the fair value option (the “FVO”) to account for
the Lind Note at fair value and mark to market each quarter. For the three and nine months ended September 30, 2024, the change in the
fair value of the Lind Note was recorded in the Statements of Operations in the amount of $
| 14 |
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 September 30, 2024 and December 31, 2023.
Common Stock
During the three months ended September 30, 2024, the Company issued an additional shares of common stock as a result of delivering conversion of the Lind’s Note, shares of common stock to settle vested RSUs, and shares of common stock in patent licenses agreement. As of September 30, 2024, there were shares of common stock legally issued and outstanding.
Warrants
As of September 30, 2024 and December 31, 2023, warrants issued and outstanding in connection with financing are summarized as below:
Schedule of Warrants Issued and Outstanding
| September 30, | December 31, | |||||||
| (In number of shares) | 2024 | 2023 | ||||||
| ASE Warrant with exercise price $ | ||||||||
| 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 $ | ||||||||
| Total | ||||||||
As
mentioned in Note 5, in connection with Convertible Note and Warrant Purchase Agreement with the ASE, the Company issued warrants to
ASE for purchase of up to
As
discussed in Note 5, the Company issued the Lind Warrants on September 28, 2023 in connection with the private placement of the Lind
Note. The Company further issued
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.
| 15 |
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 September 30, 2024, 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 COVID-19 Antigen Rapid Test Kits in the Taiwan market for the three and nine months ended September 30, 2023. There was no revenue recognized from performance obligation satisfied or partially satisfied in prior periods, nor were there any unsatisfied performance obligations related to the sales of COVID-19 Test Kits as of September 30, 2024 and December 31, 2023.
The Company generated revenue from sales of VELDONA Pet cytoprotein 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. of contract liabilities was recorded for the cash received in advance from distribution channels as of September 30, 2024.
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.
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 September 30, 2024, shares have been granted under the 2023 SIP.
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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”). As of September 30, 2024, shares were issued 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 and nine months ended September 30, 2024 and for the three and nine months ended September 30, 2023 were as follows:
Schedule of Restricted Stock Units
| 2024 | 2023 | |||||||||||||||
| 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 | $ | $ | ||||||||||||||
| RSUs granted | ||||||||||||||||
| RSUs vested | ( | ) | $ | |||||||||||||
| RSUs forfeited | ( | ) | $ | ( | ) | $ | ||||||||||
| Unvested balance at June 30 | $ | $ | ||||||||||||||
| RSUs granted | $ | $ | ||||||||||||||
| RSUs vested | ( | ) | $ | |||||||||||||
| RSUs forfeited | ( | ) | $ | ( | ) | $ | ||||||||||
| Unvested balance at September 30 | $ | $ | ||||||||||||||
Stock Options and Warrants
During the three and nine months ended September 30, 2024 and 2023, shares were granted, forfeited, expired or exercised. As of September 30, 2024, there were shares in the form of stock options and shares in the form of warrants outstanding are all vested and exercisable.
Share-Based Compensation Expense
Shared-based compensation expense for the three and nine months ended September 30, 2024 ware $ and $, respectively, compared to the three and nine months ended September 30, 2023 amount of $ and $, respectively.
As of September 30, 2024, 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.
| 17 |
9. Income Taxes
The Company did not record a federal, state, or foreign income tax provision or benefit for the three and nine months ended September 30, 2024 and 2023 due to the expected loss before income taxes to be incurred for the years ended December 31, 2024 and 2023, as well as the Company’s continued maintenance of a full valuation allowance against its net deferred tax assets due to its historical deficit.
Schedule of Basic and Diluted Net Loss Per Share
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 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 | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
Schedule of Computations of Diluted Weighted Average Shares Outstanding
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Option and RSUs to purchase common stock | ||||||||||||||||
| Warrants to purchase to common stock | ||||||||||||||||
| Convertible note 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 and nine months ended September 30, 2024 were $
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.
| 18 |
The
Company incurred costs associated with manufacturing COVID-19 Antigen Rapid Test Kits by TCNT pursuant to the Sales and Marketing Agreement,
totaling for the three and nine months ended September 30, 2024 compared with the amount for the three and nine months ended September
30, 2023 of and $
Manufacturing Service Agreement with TNCT for the VELDONA Pet cytoprotein supplements
On
August 28, 2023, the Company entered into a manufacturing service agreement with TCNT, together with another third-party vendor, to manufacture
pet supplement products. The Company incurred costs totaling $
As
of September 30, 2024 and December 31, 2023, the accounts payable to TCNT were and $
COVID-19 Antigen Rapid Test Kits Sales
The
Company sold COVID-19 Antigen Rapid Test Kits to affiliates of ASE Test Inc., totaling for the three and nine months ended September
30, 2024 compared with the three and nine months ended September 30, 2023 amount of $
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 $
As
part of the Addendum Agreement entered on July 8, 2024, TCNT provided non-exclusive use of certain patents related to VOC and POCT technologies
for a monthly fee of $
Patent license agreement
On
August 6, 2024, the Company entered into a patent license agreement (the “License Agreement”) with TCNT, as an effort to
bolster the Company’s AI Nose and point-of-care testing (POCT) technologies while preserving cash. As of August 5, 2024, prior
to TCNT entering into the License Agreement, TCNT controlled, via its majority interest in Ainos Inc., a Cayman Islands corporation (“Ainos
KY”) which is a party to certain previously disclosed Voting Agreements, approximately
Following
the issuance of the million shares of stock, TCNT controls the company through its majority interest in Ainos KY, and its direct
ownership in the Company. Ainos KY is a shareholder of the Company and a party to certain previously disclosed Voting Agreements, and
controls approximately
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Miscellaneous
The
Company engaged Ms. Chien-Hsuan Huang as a medical device development consultant in September 2022 for one year. Ms. Huang is the spouse
of one of the board of directors of the Company. The R&D expense was for the three and nine months ended September 30, 2024 and
$
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 September 30, 2024, there were no such commitments or contingencies.
The
company record for the cash received in advance $
13. Subsequent Events
Related Party Transaction
Extend agreements
As
part of the Addendum Agreement entered into on October 16, 2024 as disclosed in Note 11, TCNT will provide exclusive use of certain patents
related to VOC, POCT and nitrogen-oxygen separation machine technologies for a monthly fee of $
Repayment of note payable (the “KY Note”)
On
October 7, 2024, the company has repaid the remaining note payable principal amount of $
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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, 2023 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, 2023 (the “2023 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 2023 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 to Ainos, Inc.
Overview
Ainos, Inc. (the “Company”), incorporated in the State of Texas in 1984, is a diversified healthcare company focused on the development of novel point-of-care testing (the “POCT”), therapeutics based on very low-dose interferon alpha (the “VELDONA”), and synthetic RNA-driven preventative medicine. Our product pipeline includes commercial-stage VELDONA Pet cytoprotein supplements, clinical-stage VELDONA human and animal therapeutics and telehealth-friendly POCTs powered by the AI Nose technology platform.
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 focused on commercializing a suite of VELDONA-based product candidates. Currently our priority VELDONA 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 controlling shareholder, Ainos Inc., a Cayman Island corporation (“Ainos KY”), to expand product portfolio into POCTs aimed to provide connected, rapid, and convenient testing for a broad range of health conditions. Pivoting 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. Our AI Nose technology platform implements digital nose sensors and our proprietary algorithm to analyze and digitally profile VOCs emitted by the body. Our lead VOC POCT candidate, Ainos Flora, aims to test female vaginal health and certain common sexually transmitted infections (the “STIs”) quickly and easily.
We believe AI Nose has additional opportunities in telehealth, automotive, industrial, and environmental safety applications. To address these additional opportunities, we are codeveloping a VOC POCT solution for the elderly care market. We are also codeveloping a VOC sensing solution to address the industrial market, as our first move to expand the application of AI Nose beyond healthcare. Our vision is to leverage digital nose sensors and our proprietary VOC sensing AI algorithm, to digitize smell and ultimately become AI’s nose.
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 September 30, 2024, 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 cytoprotein supplement 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 market VELDONA Pet in Taiwan. |
From time to time, we assess our development plan based on available resources and market dynamics. As of September 30, 2024, our current pipeline of the products, which are under development, includes the following:
| ● | VELDONA human and animal drugs. Our human drug pipeline include oral warts for HIV seropositive patients, Sjögren’s syndrome common cold, and influenza We have conducted Phase 2 studies for these programs. Within the human drug pipeline, we are prioritizing HIV oral warts and Sjögren’s syndrome. As of the third quarter of 2024, we are in the process of initiating clinical studies for HIV oral warts and Sjögren’s syndrome in Taiwan. 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. In the second quarter of 2024 we announced a plan to initiate a clinical study for feline chronic gingivostomatitis (FCGS), a cat oral disease, as an effort to explore VELDONA’s opportunity as an animal drug. We enrolled our first subject for FCGS during the third quarter of 2024. |
| 21 |
| ● | 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. To further optimize the product for at-home testing, we are developing a next generation Ainos Flora device that implements compute unified device architecture (CUDA), a parallel computing platform for accelerated computing on graphical processing units. | |
| ● | VOC platform – 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 platform under development is intended to be used in applications including telehealth, automotive, industrial, and environmental safety. We are developing a VOC POCT solution for the elderly market and a solution for sensing VOCs in the industrial market. | |
| ● | 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 plan develop a SRNA technology platform in Taiwan 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 and leveraging our intellectual property patents. Our near-term development plans encompass advancing our flagship VOC POCT candidate, Ainos Flora, and our co-development programs. At the same time, we will advance clinical studies and actively pursue the out-licensing of VELDONA human drug candidates.
We continue to strengthen our intellectual properties. During the third quarter of 2024, we have licensed additional patents from Taiwan Carbon Nano Technology Corporation (TCNT), our shareholder and product developer, as an effort to bolster our AI Nose and POCT technologies. For VELDONA, we secured a Taiwan invention patent titled “METHOD AND COMPOSITION OF TREATMENT OR PREVENTION OF CORONAVIRUS INFECTION” and we have filed for global patent protection under the Patent Cooperation Treaty (PCT) for this patent.
As of September 30, 2024, we had available cash and cash equivalents of $5,156,606. 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.
Our operating revenue previously came from the sale of COVID-19 test kits in Taiwan under emergency use authorization, since the expiration of EUA to TCNT, the company ceased the sale of the Ainos COVID-19 antigen rapid test kits in first quarter of 2024. The company began to generate sales revenue from VELDONA Pet in the third quarter of 2023. In Taiwan, we are primarily marketing VELDONA Pet on certain e-commerce platforms.
We believe that post COVID-19, consumers have become increasingly familiar with at-home tests. Moving forward, people may seek additional at-home tests to manage other infections as quickly as possible. Home self-testing has become increasingly available for other infections such as vaginal infections or STIs. We believe this new user behavior, supported by a variety of telehealth platforms, will facilitate consumer adoption of our other POCT product candidates.
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Results of Operations for Quarter Ended September 30, 2024 (“Q3 2024”) and September 30, 2023 (“Q3 2023”):
| Three months ended September 30, | Change | |||||||||||||||
| 2024 | 2023 | Amount | % | |||||||||||||
| Revenues | $ | - | $ | 24,489 | $ | (24,489 | ) | (100 | )% | |||||||
| Cost of revenues | (547 | ) | (87,873 | ) | 87,326 | (99 | )% | |||||||||
| Gross loss | (547 | ) | (63,384 | ) | 62,837 | (99 | )% | |||||||||
| Operating expenses: | ||||||||||||||||
| Research and development expenses | 2,022,244 | 1,710,265 | 311,979 | 18 | % | |||||||||||
| Selling, general and administrative expenses | 1,015,758 | 902,017 | 113,741 | 13 | % | |||||||||||
| Total operating expenses | 3,038,002 | 2,612,282 | 425,720 | 16 | % | |||||||||||
| Loss from operations | (3,038,549 | ) | (2,675,666 | ) | (362,883 | ) | 14 | % | ||||||||
| Non-operating (expenses) income, net: | ||||||||||||||||
| Interest expense | (264,642 | ) | (44,267 | ) | (220,375 | ) | 498 | % | ||||||||
| Issuance cost of senior secured convertible note measured at fair value | (169,344 | ) | (260,967 | ) | 91,623 | (35 | )% | |||||||||
| Fair value change for senior secured convertible note | (177,212 | ) | - | (177,212 | ) | - | % | |||||||||
| Other (expense) income, net | (49,570 | ) | 5,054 | (54,624 | ) | (1,081 | )% | |||||||||
| Total non-operating expenses, net | (660,768 | ) | (300,180 | ) | (360,588 | ) | 120 | % | ||||||||
| Net loss before income taxes | (3,699,317 | ) | (2,975,846 | ) | (723,471 | ) | 24 | % | ||||||||
| Provision for income taxes | - | - | - | |||||||||||||
| Net loss | $ | (3,699,317 | ) | $ | (2,975,846 | ) | $ | (723,471 | ) | 24 | % | |||||
Revenues, Cost and Gross Loss
The Company reported nil and $24,489 in revenue in Q3 2024 and Q3 2023, respectively, from product sales of VELDONA pet cytoprotein supplements and Ainos COVID-19 Antigen Rapid Test Kits in Taiwan respectively. The Company launched its VELDONA pet cytoprotein supplement products in the third quarter of 2023; due to the expiration of EUA, the company ceased the sale of the Ainos COVID-19 antigen rapid test kits in the first quarter of 2024. Sales volume in 2024 Q3 was offset by the sales returns.
The cost of revenue related to product sales in Q3 2024 was $547 compared to $87,873 in Q3 2023. The decrease in cost of revenue was due to the decrease in sales volume.
The share-based compensation expense and the depreciation expense for manufacturing in Q3 2024 and Q3 2023 were nil and $21,715, respectively. When excluding these non-cash cost, cost of revenue was $547 in Q3 2024 compared to $66,158 in Q3 2023.
Gross loss from product sales in Q3 2024 was $547 as compared to $63,384 gross loss from product sales in Q3 2023. The decrease in gross loss was due to low sales volume for newly launched products, and a reduced cost of revenue.
When excluding these non-cash costs, gross loss decreased to $547 in Q3 2024 compared to $41,669 gross loss in Q3 2023.
Research and Development (R&D) Expenses
R&D expenses in Q3 2024 and Q3 2023 were $2,022,244 and $1,710,265, respectively. The increase of $311,979 (18%) was due to increased expenses associated with co-research for technology and product, as well as staffing expenditures (including share-based compensation), which were offset by a decrease in professional expense. We expect that our R&D expenses related to clinical trials will continue to grow as we further develop VOC POCT and VELDONA drug candidates and increase the pace of clinical trials previously delayed during the COVID-19 pandemic.
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The share-based compensation expense and the depreciation and amortization expense in Q3 2024 and Q3 2023 were $1,305,461 and $1,263,665, respectively. Excluding these non-cash expenses, R&D expenses increased to $716,783 in Q3 2024 from $446,600 in Q3 2023.
Selling, General and Administrative (SG&A) Expenses
SG&A expenses were $1,015,758 and $902,017 in Q3 2024 and Q3 2023, respectively, reflecting an increase of $113,741 (13%) due to a significant increase in staffing expenditures (including share-based compensation) and professional expenses and Nasdaq and SEC filing fees, which were offset by a decrease in public relations and investor relations fees and D&O insurance expenses. RSUs granted to officers and employees of the Company require a service period of 3 years and therefore, the total amount of the compensation expense was amortized over the service period.
The share-based compensation expense and the depreciation and amortization expense in Q3 2024 and Q3 2023 were $377,020 and $269,934, respectively. Excluding these non-cash expenses, SG&A expenses mildly increased to $638,738 in Q3 2024 compared to $632,083 in Q3 2023.
Operating Loss
The Company’s operating loss was $3,038,549 and $2,675,666 in Q3 2024 and Q3 2023, respectively, reflecting a $362,883 (14%) increase in operating loss between the reporting periods. We incurred a gross loss in product sales. We continued to invest resources to execute our growth strategy and product roadmap to improve our profitability.
Interest Expense
In Q3 2024, interest expense was $264,642 compared to $44,267 in Q3 2023. The increase in interest expense was due to accrued interest for convertible notes issued in May 2024.
Net Loss
Net loss was $3,699,317 in Q3 2024 compared to $2,975,846 in Q3 2023, resulting in a $723,471 (24%) increase 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.
Results of Operations for Nine Months Ended September 30, 2024 (“first nine months 2024”) and September 30, 2023 (“first nine months 2023”):
| Nine months ended September 30, | Change | |||||||||||||||
| 2024 | 2023 | Amount | % | |||||||||||||
| Revenues | $ | 20,729 | $ | 102,208 | $ | (81,479 | ) | (80 | )% | |||||||
| Cost of revenues | (52,674 | ) | (244,538 | ) | 191,864 | (78 | )% | |||||||||
| Gross loss | (31,945 | ) | (142,330 | ) | 110,385 | (78 | )% | |||||||||
| Operating expenses: | ||||||||||||||||
| Research and development expenses | 6,085,648 | 5,080,335 | 1,005,313 | 20 | % | |||||||||||
| Selling, general and administrative expenses | 3,090,056 | 2,282,631 | 807,425 | 35 | % | |||||||||||
| Total operating expenses | 9,175,704 | 7,362,966 | 1,812,738 | 25 | % | |||||||||||
| Loss from operations | (9,207,649 | ) | (7,505,296 | ) | (1,702,353 | ) | 23 | % | ||||||||
| Non-operating (expenses) income, net: | ||||||||||||||||
| Interest expense | (432,097 | ) | (93,852 | ) | (338,245 | ) | 360 | % | ||||||||
| Issuance cost of senior secured convertible note measured at fair value | (308,336 | ) | (260,967 | ) | (47,369 | ) | 18 | % | ||||||||
| Fair value change for senior secured convertible note | (275,624 | ) | - | (275,624 | ) | - | % | |||||||||
| Other income, net | 14,557 | 14,067 | 490 | 3 | % | |||||||||||
| Total non-operating expenses, net | (1,001,500 | ) | (340,752 | ) | (660,748 | ) | 194 | % | ||||||||
| Net loss before income taxes | (10,209,149 | ) | (7,846,048 | ) | (2,363,101 | ) | 30 | % | ||||||||
| Provision for income taxes | - | - | - | |||||||||||||
| Net loss | $ | (10,209,149 | ) | $ | (7,846,048 | ) | $ | (2,363,101 | ) | 30 | % | |||||
| 24 |
Revenues, Cost and Gross Loss
The Company reported $20,729 and $102,208 in revenue in first nine months 2024 and first nine months 2023, respectively, from product sales of VELDONA pet cytoprotein supplements and Ainos COVID-19 Antigen Rapid Test Kits in Taiwan respectively. The Company launched its VELDONA pet cytoprotein supplement products in the third quarter of 2023; due to the expiration of EUA, the company ceased the sale of the Ainos COVID-19 antigen rapid test kits in the first quarter of 2024.
The cost of revenue related to product sales in first nine months 2024 was $52,674 compared to $244,538 in first nine months 2023. The decrease in cost of revenue was due to the decrease in sales volume.
The share-based compensation expense and the depreciation expense for manufacturing in first nine months 2024 and first nine months 2023 were $9,032 and $70,069, respectively. When excluding these non-cash cost, cost of revenue decreased to $43,642 in first nine months 2024 compared to $174,469 in first nine months 2023.
Gross loss from product sales in first nine months 2024 was $31,945 as compared to $142,330 gross loss from product sales in first nine months 2023. The decrease in gross loss was due to low sales volume for newly launched products, and a lower cost of revenue.
When excluding these non-cash costs, gross loss decreased to $22,913 in first nine months 2024 compared to $72,261 gross loss in first nine months 2023.
Research and Development (R&D) Expenses
R&D expenses in first nine months 2024 and first nine months 2023 were $6,085,648 and $5,080,335, respectively. The increase of $1,005,313 (20%) was due to increased expenses associated with co-research for technology and product and staffing expenditures (including share-based compensation), which were offset by a decrease in professional expense. We expect that our R&D expenses related to clinical trials will continue to grow as we further develop VOC POCT and VELDONA drug candidates and increase the pace of clinical trials previously delayed during the COVID-19 pandemic.
The share-based compensation expense and the depreciation and amortization expense in first nine months 2024 and first nine months 2023 were $3,866,581 and $3,669,081, respectively. When excluding these non-cash expenses, R&D expenses increased to $2,219,067 in first nine months 2024 from $1,411,254 in first nine months 2023.
Selling, General and Administrative (SG&A) Expenses
SG&A expenses were $3,090,056 and $2,282,631 in first nine months 2024 and first nine months 2023, respectively, reflecting an increase of $807,425 (35%) due to a significant increase in staffing expenditures (including share-based compensation) and professional expenses, which were offset by a decrease in public relations and investor relations fees and D&O insurance expenses. RSUs granted to officers and employees of the Company require a service period of 3 years and therefore, the total amount of the compensation expense was amortized over the service period.
The share-based compensation expense and the depreciation and amortization expense in first nine months 2024 and first nine months 2023 were $1,053,642 and $597,429, respectively. When excluding these non-cash expenses, SG&A expenses increased to $2,036,414 in first nine months 2024 compared to $1,685,202 in first nine months 2023.
| 25 |
Operating Loss
The Company’s operating loss was $9,207,649 and $7,505,296 in first nine months 2024 and first nine months 2023, respectively, reflecting a $1,702,353 (23%) increase in operating loss between the reporting periods. We incurred a gross loss in product sales. 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 first nine months 2024, interest expense was $432,097 compared to $93,852 in first nine months 2023. The increase in interest expense was due to accrued interest for convertible notes issued in May 2024.
On January 23, 2024, the Company received an Increased Funding Amount and incurred an issuance cost including investor and placement agent fees, as well as legal fees. $308,336 of the issuance cost was recognized for the amendment of funding received and closed by the Company.
Net Loss
Net loss was $10,209,149 in first nine months 2024 compared to $7,846,048 in first nine months 2023, resulting in a $2,363,101 (30%) increase 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 September 30, 2024 and December 31, 2023, the Company had available cash of $5,156,606 and $1,885,628, respectively.
The following table summarizes our cash flow during the nine months period ended September 30, 2024 and 2023:
| Nine months ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Net cash used in operating activities | (4,944,036 | ) | (3,321,754 | ) | ||||
| Net cash used in investing activities | (138,577 | ) | (117,528 | ) | ||||
| Net cash provided by financing activities | 8,295,746 | 4,023,974 | ||||||
Operating activities:
Cash used in operating activities increased by $1,622,282 during the first nine months of 2024 compared to the first, nine months of 2023. Our net loss for the first nine months of 2024 increased by $2,363,101 primarily due to increase of operating expenses. 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 $794,700; | |
| ● | Working capital injected into accounts receivable, inventories and other current assets decreased by approximately $112,500; and | |
| ● | Working capital injected into accrued expenses, operating lease liabilities, contract liabilities and other current and long-term liabilities increased by approximately $58,500. |
| 26 |
Investing activities
Cash used for investing activities were $138,577 and $117,528 during the first nine months of 2024 and the first nine months of 2023, respectively. The increase was due to increase in refundable deposits and other noncurrent assets offset by decrease in purchase of property and equipment.
Financing activities
Cash provided by financing activities were $8,295,746 and $4,023,974 during the first nine months of 2024 and the first nine months of 2023, respectively. The $4,271,772 increase was primarily reflected by the following:
| ● | Repayment of convertible notes and other notes payable increased by $795,728; | |
| ● | Proceeds from convertible notes and other notes payable financing increased by $4,875,000; and | |
| ● | Payments of issuance cost of senior secured convertible note measured at fair value decreased by $192,500. |
As disclosed in Note 5 (Convertible Notes Payable and Other Notes Payable), to our accompanying condensed financial statements we received $875,000 in proceeds from the Lind Note transaction in January 2024.
As disclosed in Note 5 (Convertible Notes Payable and Other Notes Payable), to our accompanying condensed financial statements we received $9,000,000 in proceeds from the ASE Note transaction in May 2024.
As disclosed in Note 5 (Convertible Notes Payable and Other Notes Payable), to our accompanying condensed financial statements we repaid $1,439,754 in cash to retired senior secured convertible notes from the LIND Note transaction in August 2024.
As disclosed in Note 5 (Convertible Notes Payable and Other Notes Payable), to our accompanying condensed financial statements we repaid $42,000 to retire the i2China Note transaction in August 2024.
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.
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 2023 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.
| 27 |
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 September 30, 2024.
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 2023 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.
Information on risk factors can be found in Part I, Item 1A (Risk Factors) of our 2023 Annual Report. There have been no material changes from the risk factors previously disclosed in our 2023 Annual Report.
ITEM 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities
Recent Sales of Unregistered Equity Securities
During the three months ended September 30, 2024, we did not issue any securities that were either (a) unregistered pursuant to the Securities Act or (b) not previously disclosed in a Current Report on Form 8-K.
| 28 |
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
ITEM 6. Exhibits
EXHIBIT INDEX
| FILED | INCORPORATED BY REFERENCE | |||||||||||
| EXHIBIT NUMBER | DESCRIPTION | WITH FORM 10-Q |
FILING DATE WITH SEC |
FORM | EXH # | HYPERLINK TO FILINGS | ||||||
| 4.1 | Voting Agreement, dated August 15, 2024, between Ainos, Inc. and Taiwan Carbon Nano Technology Corporation | 8/20/2024 | SC 13D/A | 1 | Voting Agreement, dated August 15, 2024, between Ainos, Inc. and Taiwan Carbon Nano Technology Corporation | |||||||
| 10.1 | English Translation of Second Addendum to the Product Development Agreement, dated July 8, 2024 | 7/12/2024 | 8-K | 10.1 | Convertible Promissory Note, dated as of May 3, 2024, issued by Ainos, Inc. in favor of ASE Test, Inc. in the principal amount of US$9,000,000. | |||||||
| 10.2 | Patent License Agreement, dated August 6, 2024, by and between Ainos, Inc. and Taiwan Carbon Nano Technology Corporation. | 8/9/2024 | 8-K | 10.1 | Patent License Agreement, dated August 6, 2024, by and between Ainos, Inc. and Taiwan Carbon Nano Technology Corporation. | |||||||
| 10.3 | English Translation of Third Addendum to Product Development Agreement, dated October 16, 2024 | 10/22/2024 | 8-K | 10.1 | English Translation of Third Addendum to Product Development Agreement, dated October 16, 2024 | |||||||
| 31.1 | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 Section 302 of the Sarbanes-Oxley Act of 2002 | x | ||||||||||
| 31.2 | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 Section 302 of the Sarbanes-Oxley Act of 2002 | 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 | XBRL – Related Documents | x | ||||||||||
| 101.INS | 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 | XBRL Taxonomy Extension Schema Document | x | ||||||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase | x | ||||||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase | x | ||||||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase | x | ||||||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase | x | ||||||||||
| 104.1 | Cover Page Interactive Data File | x | ||||||||||
| 29 |
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: November 6, 2024 | By: | /s/ Chun-Hsien Tsai |
| Chun-Hsien Tsai, Chairman of the Board, President, and Chief Executive Officer | ||
| Date: November 6, 2024 | By: | /s/ Hsin-Liang Lee |
| Hsin-Liang Lee, Chief Financial Officer | ||
| 30 |
EXHIBIT 31.1
SECTION 302 CERTIFICATION
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: November 6, 2024 | /s/ Chun-Hsien Tsai |
| Chun-Hsien Tsai, Principal Executive Officer | |
| (Chairman of the Board, President, and Chief Executive Officer) |
EXHIBIT 31.2
SECTION 302 CERTIFICATION
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: November 6, 2024 | /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 September 30, 2024 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: November 6, 2024 | 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 September 30, 2024 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: November 6, 2024 | By: | /s/ Hsin-Liang Lee |
| Hsin-Liang Lee, Principal Financial Officer | ||
| (Chief Financial Officer) | ||