Ainos(AIMD) - 2025 Q1 - Quarterly Report

Filing Information This section provides the basic filing details for AINOS, INC.'s Form 10-Q for the quarterly period ended March 31, 2025, including registrant information, securities registered, and filer status - Registrant: AINOS, INC., incorporated in Texas, with principal executive offices in San Diego, CA[3] | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |---|---|---| | Common Stock, par value $0.01 per share | AIMD | The Nasdaq Stock Market LLC | | Warrants to purchase Common Stock | AIMDW | The Nasdaq Stock Market LLC | - Filer Status: Non-accelerated filer and Smaller reporting company[5] - Shares of common stock outstanding as of May 14, 2025: 20,764,225[6] PART I: FINANCIAL INFORMATION ITEM 1. Financial Statements This section presents the unaudited condensed financial statements for Ainos, Inc., including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows for the periods ended March 31, 2025, and December 31, 2024 (or March 31, 2024 for income/cash flow statements), along with detailed notes explaining significant accounting policies, liquidity, and specific financial line items Condensed Balance Sheets Condensed Balance Sheet Highlights: | Metric | March 31, 2025 | December 31, 2024 | |---|---|---| | Total Assets | $26,353,076 | $28,820,199 | | Total Liabilities | $13,231,424 | $13,303,889 | | Total Stockholders' Equity | $13,121,652 | $15,516,310 | | Cash and Cash Equivalents | $2,628,286 | $3,892,919 | - Total assets decreased by approximately $2.47 million from December 31, 2024, to March 31, 2025, primarily driven by a decrease in cash and cash equivalents and intangible assets[11] - Total stockholders' equity decreased by approximately $2.39 million, mainly due to the net loss incurred during the period[11] Condensed Statements of Operations Condensed Statements of Operations Highlights (Three Months Ended March 31): | Metric | 2025 | 2024 | Change (Amount) | Change (%) | |---|---|---|---|---| | Revenues | $106,207 | $20,729 | $85,478 | 412% | | Gross profit (loss) | $87,974 | $(6,025) | $93,999 | (1,560)% | | 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% | | Loss from operations | $(3,162,871) | $(3,120,091) | $(42,780) | 1% | | Net loss | $(3,286,022) | $(3,314,810) | $28,788 | (1)% | | Net loss per common share - basic and diluted | $(0.21) | $(0.57) | $0.36 | (63)% | - Revenue significantly increased by 412% year-over-year, leading to a positive gross profit in Q1 2025 compared to a gross loss in Q1 2024[14] - Net loss slightly decreased by 1% despite increased selling, general and administrative expenses, primarily due to higher revenue and lower R&D expenses[14] Condensed Statements of Comprehensive Loss Condensed Statements of Comprehensive Loss Highlights (Three Months Ended March 31): | Metric | 2025 | 2024 | |---|---|---| | 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) | - Total comprehensive loss decreased from $3,380,079 in Q1 2024 to $3,326,663 in Q1 2025, primarily driven by a reduction in net loss and a smaller translation adjustment[17] Condensed Statements of Stockholders' Equity - Total stockholders' equity decreased from $15,516,310 at December 31, 2024, to $13,121,652 at March 31, 2025, mainly due to the net loss incurred[19] - Common stock shares outstanding increased from 15,427,385 to 17,215,164 during Q1 2025 due to issuance for vested RSUs, special stock awards, and at-the-market offering[19] - Additional paid-in capital increased by $914,127, reflecting share-based compensation and stock issuances[19] Condensed Statements of Cash Flows Condensed Statements of Cash Flows Highlights (Three Months Ended March 31): | Activity | 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 | | Net decrease in cash and cash equivalents | $(1,264,633) | $(854,729) | | Cash and cash equivalents at end of period | $2,628,286 | $1,030,899 | - Net cash used in operating activities decreased by $270,169 in Q1 2025 compared to Q1 2024, primarily due to a decrease in net loss and changes in working capital[21][113] - Net cash provided by financing activities significantly decreased from $777,500 in Q1 2024 to $14,605 in Q1 2025, mainly due to lower proceeds from convertible notes[21][114] Notes to Condensed Financial Statements 1. Description of Business - Ainos, Inc. is an AI-driven healthcare and technology company pioneering scent digitization, AI-powered diagnostics, and novel therapeutics (VELDONA)[24][88] - The company is commercializing VELDONA-based product candidates for oral warts (HIV patients), Sjögren's syndrome, and feline chronic gingivostomatitis (FCGS)[25][89] - Ainos is expanding its AI Nose technology into robotics and industrial applications through strategic partnerships, including with a Japanese service robot developer[26][91] - An At The Market Offering Agreement was entered into on May 31, 2024, to sell common stock, with $14,605 in net proceeds received as of March 31, 2025[30][34] 2. Summary of Significant Accounting Policies - The financial statements are prepared in accordance with GAAP and SEC interim reporting rules, with certain information condensed or omitted[35] - Management makes estimates and assumptions affecting reported amounts, including useful lives of property, valuation of stock options/warrants/convertible notes, and impairment testing of intangible assets[38] - The company has an accumulated deficit of $56,035,338 as of March 31, 2025, and expects to incur additional losses, raising substantial doubt about its ability to continue as a going concern for at least one year[42] 3. Cash and Cash Equivalents Cash and Cash Equivalents: | Date | Amount | |---|---| | March 31, 2025 | $2,628,286 | | December 31, 2024 | $3,892,919 | - Cash and cash equivalents decreased by approximately $1.26 million from December 31, 2024, to March 31, 2025[11][49] - The company had approximately $226,600 in excess of FDIC insured limits in the U.S. and $2,025,800 in excess of insured amounts in Taiwan as of March 31, 2025[49] 4. Inventory Inventory, Net: | Category | March 31, 2025 | December 31, 2024 | |---|---|---| | Raw materials | $73,928 | $74,875 | | Work in process | $1,116 | $1,131 | | Finished goods | $66,787 | $67,750 | | Total | $141,831 | $143,756 | - Total inventory decreased slightly from $143,756 at December 31, 2024, to $141,831 at March 31, 2025[50] - No inventory write-downs to estimated net realizable values were recorded for the three months ended March 31, 2025, and 2024[50] 5. Convertible Notes Payable and Other Notes Payable Convertible Notes Payable: | Note Type | March 31, 2025 | December 31, 2024 | |---|---|---| | March 2025 Convertible Notes, related party (ASE Note) - noncurrent | $2,000,000 | $0 | | March 2025 Convertible Notes, related party (ASE Note) - current | $0 | $2,000,000 | | March 2025 Convertible Notes (Lee Note) - current | $1,000,000 | $1,000,000 | | May 2027 Convertible Notes, related party (ASE Note) - noncurrent | $9,000,000 | $9,000,000 | | Total | $12,000,000 | $12,000,000 | - The March 2025 Convertible Note with ASE Test, Inc. was amended to extend its maturity date to March 12, 2027, and change its conversion price, reclassifying it from current to noncurrent[55] - The March 2025 Convertible Note with Li-Kuo Lee had its maturity date extended to May 13, 2025[56] - Total interest expense for convertible notes increased significantly to $180,229 in Q1 2025 from $46,386 in Q1 2024[58] 6. Stockholders' Equity - Authorized preferred stock increased to 50,000,000 shares, but none were issued or outstanding[59] - Common stock outstanding increased by 1,787,779 shares in Q1 2025 due to RSU settlements, special stock awards, and ATM transactions, reaching 17,215,164 shares[60] Warrants Outstanding: | Warrant Type | March 31, 2025 | December 31, 2024 | |---|---|---| | Lind Warrant | 1,201,944 | 1,201,944 | | Public warrant | 179,400 | 179,400 | | Representative's warrant | 7,800 | 7,800 | | Placement agent warrant | 20,666 | 20,666 | | ASE Warrant | 500,000 | 500,000 | | Total | 1,909,810 | 1,909,810 | - All warrants are equity-classified and none have been exercised or expired as of March 31, 2025[63][65] 7. Revenue - Revenue is recognized upon product shipment, based on contractually stated pricing, with standard payment terms of 30 to 60 days[66] - The company generated revenue from VELDONA Pet supplements in Taiwan and VOC sensing products related to NISD co-development[67][68] - Contract liabilities decreased from $106,329 at December 31, 2024, to nil at March 31, 2025, as $105,942 in revenue from VOC sensing products was recognized[68] 8. Share-Based Compensation - The 2023 Stock Incentive Plan allows for up to 20% of outstanding common stock, with 1,816,632 shares granted as of March 31, 2025[71] RSU Activity (Three Months Ended March 31): | Metric | 2025 (Shares) | 2024 (Shares) | |---|---|---| | Unvested balance at January 1 | 89,831 | 954,306 | | RSUs vested | (5,870) | (133,964) | | Unvested balance at March 31 | 83,961 | 814,392 | - Share-based compensation expense decreased significantly to $55,170 in Q1 2025 from $425,703 in Q1 2024[76] 9. Income Taxes - No income tax provision or benefit was recorded for Q1 2025 and Q1 2024 due to expected losses and a full valuation allowance against net deferred tax assets[77] 10. Net Loss per Common Share Net Loss per Common Share (Three Months Ended March 31): | Metric | 2025 | 2024 | |---|---|---| | Net loss attributable to common stockholders | $(3,286,022) | $(3,314,810) | | Weighted-average shares (basic and diluted) | 15,863,060 | 5,771,283 | | Net loss per share (basic and diluted) | $(0.21) | $(0.57) | - Net loss per common share improved from $(0.57) in Q1 2024 to $(0.21) in Q1 2025, despite a higher weighted-average number of shares outstanding[78] - Potentially dilutive securities totaling 4,758,346 shares in Q1 2025 were excluded from diluted EPS calculation as they were anti-dilutive[78] 11. Related Party Transactions - Interest expense from related party convertible notes (KY Note and ASE Note) increased to $164,348 in Q1 2025 from $31,078 in Q1 2024[79] - The company ceased sales of Ainos COVID-19 antigen rapid test kits in Q1 2024, which were marketed under an exclusive agreement with Ainos KY[81] - Development expenses under the Product Co-development Agreement with TCNT were $96,695 in Q1 2025, and fees for non-exclusive patent use were $149,566[82] 12. Commitments and Contingencies - The company operates in an industry characterized by extensive patent litigation, but as of March 31, 2025, there were no material commitments or contingencies[84] 13. Subsequent Events - On April 30, 2025, the company repaid Mr. Lee the convertible notes payable in the principal amount of $1,000,000 with accrued interest of $132,650, totaling $1,132,650[85] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations for the three months ended March 31, 2025, compared to the same period in 2024, highlighting key business developments, financial performance drivers, liquidity, and critical accounting policies Overview - Ainos, Inc. is an AI-driven healthcare and technology company focused on VELDONA therapeutics and AI Nose technology for scent digitization and diagnostics[88] - The company is commercializing VELDONA-based product candidates for human and animal health and expanding AI Nose technology into robotics and industrial applications through strategic partnerships[89][90][91] - A strategic partnership was formed with ugo, Inc., a Japanese service robot developer, in March 2025 to integrate AI Nose into autonomous robotic platforms[91] Our Pipeline - The company's operating strategy involves creating multiple revenue streams through product sales, out-licensing, and strategic partnerships[92][95] - Current pipeline includes VELDONA human drugs (oral warts for HIV patients, Sjögren's syndrome, common cold, influenza, mild COVID-19), with orphan drug designation for oral warts[92] - The company has ceased selling COVID-19 Antigen Rapid Test Kits since Q1 2024[93] - VOC POCT candidates include Ainos Flora (female vaginal health/STIs), Ainos Pen (portable breath analyzer), and CHS430 (ventilator-associated pneumonia)[98] Results of Operations for Quarter Ended March 31, 2025 ("Q1 2025") and March 31, 2024 ("Q1 2024") Key Financial Results (Three Months Ended March 31): | Metric | 2025 | 2024 | Change (Amount) | Change (%) | |---|---|---|---|---| | Revenues | $106,207 | $20,729 | $85,478 | 412% | | Gross profit (loss) | $87,974 | $(6,025) | $93,999 | (1,560)% | | R&D expenses | $1,724,084 | $2,084,648 | $(360,564) | (17)% | | SG&A expenses | $1,526,761 | $1,029,418 | $497,343 | 48% | | Loss from operations | $(3,162,871) | $(3,120,091) | $(42,780) | 1% | | Interest expense | $(180,445) | $(48,696) | $(131,749) | 271% | | Net loss | $(3,286,022) | $(3,314,810) | $28,788 | (1)% | Revenues, Cost and Gross Loss - Revenue increased by 412% to $106,207 in Q1 2025, primarily due to $105,942 from VOC sensing products related to NISD co-development[100] - Cost of revenue decreased by 32% to $18,233 in Q1 2025 due to differences in product compositions[101] - Gross profit improved significantly to $87,974 in Q1 2025 from a $6,025 gross loss in Q1 2024[102] Research and Development (R&D) Expenses - R&D expenses decreased by $360,564 (17%) to $1,724,084 in Q1 2025, driven by lower clinical trial fees, co-research, and staffing expenditures[104] - Excluding non-cash expenses, R&D decreased to $531,214 in Q1 2025 from $800,305 in Q1 2024[105] - R&D expenses are expected to grow as the company further develops AI Nose, VOC POCT, and VELDONA drug candidates[104] Selling, General and Administrative (SG&A) Expenses - SG&A expenses increased by $497,343 (48%) to $1,526,761 in Q1 2025, primarily due to a significant increase in share-based compensation, partially offset by decreased professional expenses[106] - Excluding non-cash expenses, SG&A decreased to $624,961 in Q1 2025 compared to $691,465 in Q1 2024[107] Operating Loss - Operating loss slightly increased by 1% to $3,162,871 in Q1 2025, reflecting continued investment in growth strategy and product roadmap[108] Interest Expense and Issuance Cost of Convertible Note - Interest expense increased by 271% to $180,445 in Q1 2025, due to accrued interest on convertible notes issued in May 2024 with a higher principal amount[109] - Issuance costs and fair value changes for senior secured convertible notes were nil in Q1 2025, compared to $138,992 and $31,568 respectively in Q1 2024[97] Net Loss - Net loss decreased by 1% to $3,286,022 in Q1 2025, primarily due to increased sales revenue offsetting expanding operating expenses[110][113] Liquidity and Capital Resources Cash and Cash Equivalents: | Date | Amount | |---|---| | March 31, 2025 | $2,628,286 | | December 31, 2024 | $3,892,919 | Cash Flow Summary (Three Months Ended March 31): | Activity | 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 | - Cash used in operating activities decreased by $270,169 in Q1 2025, while cash provided by financing activities decreased by $762,895, mainly due to lower proceeds from convertible notes[113][114] - The company anticipates funding operations for the next twelve months through cash reserves, business revenues, and potential debt financing, but acknowledges no assurance of profitability or sufficient financing[115] Critical Accounting Policies and Significant Management Estimates - The preparation of financial statements requires estimates and assumptions for inventory valuation, useful lives of property/equipment, valuation of stock options/warrants/convertible notes, and impairment testing of intangible assets[118][119] - No material changes to critical accounting policies and estimates were reported compared to the 2024 Annual Report, except as noted in the financial statements[120] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Ainos, Inc. is not required to provide detailed quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide detailed market risk disclosures[121] ITEM 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the period - Disclosure controls and procedures were evaluated and deemed effective as of March 31, 2025[122] - No material changes in internal control over financial reporting occurred during the quarter[123] PART II: OTHER INFORMATION ITEM 1. Legal Proceedings Ainos, Inc. is not aware of any material legal proceedings as of the report date, despite operating in an industry prone to patent litigation - The company is not aware of any material legal proceedings as of the date of this report[124] - The industry is characterized by extensive patent litigation, which could result in significant costs or injunctions[84] ITEM 1A. Risk Factors This section highlights potential risks that could materially impact Ainos, Inc.'s business, financial condition, and results of operations, including new risks related to fluctuating foreign currency exchange rates and policy changes affecting international trade - Fluctuating foreign currency and exchange rates may negatively impact the company's business, results of operations, and financial position due to foreign operations[128] - Policy changes affecting international trade, such as tariffs or new barriers to entry, could adversely impact demand for products, competitive position, and financial results[129] - Readers should consider risk factors from the 2024 Annual Report and other filings[126][127] ITEM 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities Ainos, Inc. reported no unregistered sales of equity securities, no issuer purchases of equity securities, and no applicable use of proceeds from registered securities during the quarter - No unregistered sales of equity securities occurred in this quarter[130] - Issuer purchases of equity securities are not applicable[131] - Use of proceeds of registered securities is not applicable[132] ITEM 3. Defaults Upon Senior Securities Ainos, Inc. reported no defaults upon senior securities during the period - No defaults upon senior securities were reported[133] ITEM 4. Mine Safety Disclosures Mine Safety Disclosures are not applicable to Ainos, Inc - Mine Safety Disclosures are not applicable[133] ITEM 5. Other Information Ainos, Inc. reported no other information for this item - No other information was reported for this item[133] ITEM 6. Exhibits This section lists all exhibits filed or incorporated by reference as part of the Form 10-Q, including amendments to convertible promissory notes, certifications, and Inline XBRL documents - Exhibits include amendments to convertible promissory notes with ASE Test, Inc. and Li-Kuo Lee, dated March 10 and March 12, 2025, respectively[135] - Certifications from the Chief Executive Officer and Chief Financial Officer (Rule 13a-14(a)/15d-14(a) and 18 U.S.C. Section 1350) are filed[135] - Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbases, and Cover Page Interactive Data File) are included[135] Signatures The report is duly signed on behalf of AINOS, INC. by its Chairman of the Board, President, and Chief Executive Officer, Chun-Hsien Tsai, and its Chief Financial Officer, Hsin-Liang Lee, on May 14, 2025 - Report signed by Chun-Hsien Tsai, Chairman of the Board, President, and Chief Executive Officer, and Hsin-Liang Lee, Chief Financial Officer, on May 14, 2025[138]