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What changed in Ainos, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Ainos, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+221 added−224 removedSource: 10-K (2024-12-31) vs 10-K (2024-03-08)

Top changes in Ainos, Inc.'s 2024 10-K

221 paragraphs added · 224 removed · 157 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

55 edited+10 added−13 removed94 unchanged
Biggest changeIf a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications to market the same drug for the same indication for seven years from the date of such approval, except in very limited circumstances, such as if the latter product is shown to be clinically superior to the orphan product.
Biggest changeIf a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications to market the same drug for the same indication for seven years from the date of such approval, except in very limited circumstances, such as if the latter product is shown to be clinically superior to the orphan product. 13 Health Insurance Portability and Accountability Act We may be subject to compliance with the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Healthcare Information Technology for Economic and Clinical Health Act of 2009, or HIPAA, among other things, established federal protection for the privacy and security of protected health information, or PHI.
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.
In 2021 and 2022, we acquired certain types of intellectual property from a controlling shareholder, Ainos Inc., a Cayman Island corporation (“Ainos KY”), to expand product portfolio into POCTs aimed to provide connected, rapid, and convenient testing for a broad range of health conditions.
In addition, the FDA collects user fees for certain medical device submissions and annual fees and for medical device establishments. Before the FDA will accept a 510(k) submission for substantive review, the FDA will first assess whether the submission satisfies a minimum threshold of acceptability.
In addition, the FDA collects user fees for certain medical device submissions and annual fees and for medical device establishments. 9 Before the FDA will accept a 510(k) submission for substantive review, the FDA will first assess whether the submission satisfies a minimum threshold of acceptability.
The FDA also may revise or revoke an EUA if the circumstances justifying its issuance no longer exist, the criteria for its issuance are no longer met, or other circumstances make a revision or revocation appropriate to protect the public health or safety. 8 Table of Contents 510(k) Clearance Marketing Pathway To obtain 510(k) clearance for a medical device, an applicant must submit to the FDA a 510(k) submission demonstrating that the proposed device is “substantially equivalent” to a legally marketed device, known as a “predicate device.” A showing of substantial equivalence sometimes, but not always, requires clinical data.
The FDA also may revise or revoke an EUA if the circumstances justifying its issuance no longer exist, the criteria for its issuance are no longer met, or other circumstances make a revision or revocation appropriate to protect the public health or safety. 510(k) Clearance Marketing Pathway To obtain 510(k) clearance for a medical device, an applicant must submit to the FDA a 510(k) submission demonstrating that the proposed device is “substantially equivalent” to a legally marketed device, known as a “predicate device.” A showing of substantial equivalence sometimes, but not always, requires clinical data.
Failure to comply with applicable requirements may subject a device and/or its manufacturer to a variety of administrative sanctions, such as FDA refusal to approve pending premarket applications, issuance of warning letters, mandatory product recalls, import detentions, civil monetary penalties, and/or judicial sanctions, such as product seizures, injunctions, and criminal prosecution. 7 Table of Contents FDA Premarket Clearance and Approval Requirements Unless an exemption applies, each medical device commercially distributed in the United States requires either FDA clearance of a 510(k) premarket notification, approval of a premarket approval, or PMA, or grant of a de novo request for classification.
Failure to comply with applicable requirements may subject a device and/or its manufacturer to a variety of administrative sanctions, such as FDA refusal to approve pending premarket applications, issuance of warning letters, mandatory product recalls, import detentions, civil monetary penalties, and/or judicial sanctions, such as product seizures, injunctions, and criminal prosecution. 8 FDA Premarket Clearance and Approval Requirements Unless an exemption applies, each medical device commercially distributed in the United States requires either FDA clearance of a 510(k) premarket notification, approval of a premarket approval, or PMA, or grant of a de novo request for classification.
None of our employees are represented by a labor union or are a party to a collective bargaining agreement. We plan to continue expand our manpower in research development, sales and marketing, and general operations to support our business programs.
Majority of our employees are in Taiwan. None of our employees are represented by a labor union or are a party to a collective bargaining agreement. We plan to continue expand our manpower in research development, sales and marketing, and general operations to support our business programs.
These include: · Establishment registration and device listing with the FDA; · QSR requirements, which require manufacturers and contract manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation, and other quality assurance procedures during all aspects of the design and manufacturing process; · Labeling regulations and FDA prohibitions against the promotion of investigational products, or “off-label” uses of cleared or approved products; · Clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices; · Medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; · Post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device. 10 Table of Contents The FDA has broad regulatory compliance and enforcement powers.
These include: ● Establishment registration and device listing with the FDA; ● QSR requirements, which require manufacturers and contract manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation, and other quality assurance procedures during all aspects of the design and manufacturing process; ● Labeling regulations and FDA prohibitions against the promotion of investigational products, or “off-label” uses of cleared or approved products; ● Clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices; ● Medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; ● Post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.
Please refer to Part 3 Item 10 and 11 for executive profile and compensation. 5 Table of Contents Additional Information Under our former name, Amarillo Biosciences, Inc., we completed an initial public offering on the Nasdaq SmallCap Market in August 1996 and have traded on the U.S. over-the-counter market since October 1999.
Please refer to Part 3 Item 10 and 11 for executive profile and compensation. Additional Information Under our former name, Amarillo Biosciences, Inc., we completed an initial public offering on the Nasdaq SmallCap Market in August 1996 and have traded on the U.S. over-the-counter market since October 1999.
The committee makes a recommendation to the FDA that is not binding but is generally followed. 12 Table of Contents After the FDA evaluates a BLA or NDA, it will grant marketing approval, request additional information or issue a complete response letter (CRL) outlining the deficiencies in the submission.
The committee makes a recommendation to the FDA that is not binding but is generally followed. After the FDA evaluates a BLA or NDA, it will grant marketing approval, request additional information or issue a complete response letter (CRL) outlining the deficiencies in the submission.
Information about certain clinical trials must be submitted within specific timeframes for publication on the www.clinicaltrials.gov website. 11 Table of Contents Foreign studies conducted under an IND must meet the same requirements that apply to studies being conducted in the United States.
Information about certain clinical trials must be submitted within specific timeframes for publication on the www.clinicaltrials.gov website. Foreign studies conducted under an IND must meet the same requirements that apply to studies being conducted in the United States.
On October 31, 2013, we filed a voluntary petition for reorganization under Chapter 11 of the United States bankruptcy code. We emerged from bankruptcy on January 23, 2015. We established a Taiwan branch office in 2017. We renamed as Ainos, Inc in April 2021.
On October 31, 2013, we filed a voluntary petition for reorganization under Chapter 11 of the United States bankruptcy code. We emerged from bankruptcy on January 23, 2015. We established a Taiwan branch office in 2017.
Our VOC sensing technology aims to detect the target VOCs within few minutes. AI Nose, the key enabler of our VOC sensing, consists of three key technologies: 1) a “digital nose” detects the target VOCs; 2) a trained artificial intelligence (“AI”) algorithm analyzes the target VOCs; 3) a “Smell ID” stores the VOC’s digital profile in the cloud.
AI Nose, the key enabler of our VOC sensing, consists of three key technologies: 1) a “digital nose” detects the target VOCs; 2) a trained artificial intelligence (“AI”) algorithm analyzes the target VOCs; 3) a “Smell ID” stores the VOC’s digital profile in the cloud.
On August 9, 2022, our common stock and warrants began trading on the Nasdaq Capital Market under the trading symbols “AIMD” and “AIMDW,” respectively. We effectuated a 1-for-15 reverse stock split of our common stock on August 8, 2022, and a 1-for-5 reverse stock split on December 14, 2023.
We renamed as Ainos, Inc in April 2021. 6 On August 9, 2022, our common stock and warrants began trading on the Nasdaq Capital Market under the trading symbols “AIMD” and “AIMDW,” respectively. We effectuated a 1-for-15 reverse stock split of our common stock on August 8, 2022, and a 1-for-5 reverse stock split on December 14, 2023.
Of the issued patents, thirty-two (32) are invention patents, fourteen (14) are utility model patents and eight (8) are design patents. Of our issued patents, five (5) shall expire between 2026 and 2029; twenty-two (22) between 2030 and 2034, twenty-seven (27) between 2035 and 2046.
Of the issued patents, forty-three (43) are invention patents, fourteen (14) are utility model patents and eight (8) are design patents. Of our issued patents, five (5) shall expire between 2026 and 2029; twenty-two (22) between 2030 and 2034, thirty-eight (38) between 2035 and 2046.
At the same time, safety and further pharmacokinetic and pharmacodynamic information is collected, possible adverse effects and safety risks are identified, and a preliminary evaluation of efficacy is conducted. · Phase 3 clinical trials generally involve a large number of disease-affected patients at multiple sites and are designed to provide the data necessary to demonstrate the effectiveness of the investigational medicine for its intended use, its safety in use and to establish the overall benefit/risk relationship of the investigational medicine, and provide an adequate basis for product labeling.
At the same time, safety and further pharmacokinetic and pharmacodynamic information is collected, possible adverse effects and safety risks are identified, and a preliminary evaluation of efficacy is conducted. ● Phase 3 clinical trials generally involve a large number of disease-affected patients at multiple sites and are designed to provide the data necessary to demonstrate the effectiveness of the investigational medicine for its intended use, its safety in use and to establish the overall benefit/risk relationship of the investigational medicine, and provide an adequate basis for product labeling. 12 The FDA may also require post-approval Phase 4 non-registrational studies to explore scientific questions to further characterize safety and efficacy during commercial use of a drug.
We believe the studies demonstrate VELDONA’s therapeutic or preventive effect via the oral mucosa and shows VELDONA modulates systemic and mucosal immunity without serious side effects. We have researched VELDONA for a broad range of human disease indications.
We believe the studies demonstrate VELDONA’s therapeutic or preventive effect via the oral mucosa and shows VELDONA modulates systemic and mucosal immunity without serious side effects. We are developing VELDONA for a broad range of human and animal health conditions.
An IND sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and plans for clinical studies, among other things, to the FDA as part of an IND.
The conduct of preclinical studies is subject to federal regulations and requirements, including GLP regulations for safety/toxicology studies. An IND sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and plans for clinical studies, among other things, to the FDA as part of an IND.
If the FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions: · untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; · customer notifications for repair, replacement, refunds; · recall, withdrawal, administrative detention, or seizure of our test kits; · operating restrictions or partial suspension or total shutdown of production; · refusal of or delay in granting our requests for 510(k) clearance or PMA approval of new test kits or modified test kits; · withdrawing 510(k) clearance or PMA approvals that are already granted; · refusal to grant export approval for our test kits; or · criminal prosecution.
If the FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions: ● untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; ● customer notifications for repair, replacement, refunds; ● recall, withdrawal, administrative detention, or seizure of our test kits; ● operating restrictions or partial suspension or total shutdown of production; ● refusal of or delay in granting our requests for 510(k) clearance or PMA approval of new test kits or modified test kits; ● withdrawing 510(k) clearance or PMA approvals that are already granted; ● refusal to grant export approval for our test kits; or ● criminal prosecution. 11 U.S. drug and biological product development In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act (FDCA) and its implementing regulations and biologics under the FDCA, the Public Health Service Act (PHSA), and their implementing regulations.
We are pivoting away from this business. · VELDONA Pet. VELDONA Pet is formulated to address a variety of health issues in dogs and cats, including skin, gum, emotion, discomfort caused by allergies, eye, and weight-related issues. We launched VELDONA Pet in Taiwan in the second quarter of 2023.
We discontinued selling this product in the first quarter of 2024. ● VELDONA Pet supplement. VELDONA Pet is formulated to address a variety of health issues in dogs and cats, including skin, gum, emotion, discomfort caused by allergies, eye, and weight-related issues. We launched VELDONA Pet supplement in Taiwan in the second quarter of 2023.
As of December 31, 2023, 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.
As of December 31, 2024, we have commercialized the following products: ● COVID-19 Antigen Rapid Test Kit . Our first commercialized product line was COVID-19 antigen rapid test kits marketed in Taiwan under emergency use authorization (EUA) issued by the Taiwan Food and Drug Administration (TFDA) to TCNT, the product manufacturer.
When the FDA grants a de novo request for classification, the device is granted marketing authorization and further can serve as a predicate for future devices of that type, through a 510(k) premarket notification. As of December 31, 2023, we are not currently seeking a de novo classification for any device in development.
When the FDA grants a de novo request for classification, the device is granted marketing authorization and further can serve as a predicate for future devices of that type, through a 510(k) premarket notification.
We own a registered trademark for VELDONA as well as certain trademarks for our VELDONA Pet supplement in Taiwan. We also have several trademark applications for certain countries outside of Taiwan. Employees As of December 31, 2023, we had 46 full-time employees, of which 26 are in research and development. Majority of our employees are in Taiwan.
We own a registered trademark for VELDONA in Taiwan, Europe, Japan and China, as well as certain trademarks for our VELDONA Pet supplement in Taiwan. We have trademark applications for certain countries outside of Taiwan. Employees As of December 31, 2024, we had 44 full-time employees, of which 23 are in research and development.
Currently we prioritize developing products based on VOC sensing. We intend to evaluate our lateral flow and nucleic acid test technologies for potential applications for other disease indication. VOC Sensing Powered by AI Nose We believe the analysis of VOC is a powerful, non-invasive option for disease detection and health monitoring.
We intend to evaluate our lateral flow and nucleic acid test technologies for potential applications for other disease indication. VOC Sensing Powered by AI Nose We believe the analysis of VOC is a powerful, non-invasive option for disease detection and health monitoring. Our VOC sensing technology aims to detect the target VOCs within few minutes.
We believe the following attributes differentiate us from other diversified life science companies: - intuitive, telehealth-friendly point-of-care testing - AI-powered VOC testing platform - decades of proprietary low-dose oral interferon clinical research - capital-efficient business model - outsourced manufacturing - global distribution relationships Our Technologies VELDONA Interferons are proteins made by host cells in response to the presence of pathogens.
In 2024, we licensed certain patents and patent applications from Taiwan Carbon Nano Technology Corporation (“TCNT”), a controlling shareholder, to further expand our intellectual properties on our VOC and POCT technologies. 3 We believe the following attributes differentiate us from other diversified life science companies: - intuitive, telehealth-friendly point-of-care testing - AI-powered VOC testing platform - decades of proprietary low-dose oral interferon clinical research - capital-efficient business model - outsourced manufacturing - global distribution relationships Our Technologies VELDONA Interferons are proteins made by host cells in response to the presence of pathogens.
Our product pipeline includes commercial-stage VELDONA Pet cytoprotein supplements, clinical-stage VELDONA human 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.
Our product pipeline includes commercial-stage VELDONA Pet supplements, clinical-stage VELDONA human therapeutics and telehealth-friendly POCTs powered by the AI Nose technology platform. Our vision for AI Nose is to digitize smell, extend application beyond healthcare, and ultimately become AI’s nose. We have historically involved in the research and development of therapeutics based on VELDONA.
We plan develop a SRNA technology platform in Taiwan with a long-term goal of developing next-generating precision treatments and rapid tests. 4 Table of Contents Our Business Model We believe our business model is capital efficient based on the following: Operation in Taiwan.
We plan develop a SRNA technology platform in Taiwan with a long-term goal of developing next-generating precision treatments and rapid tests. 5 Our Business Model We believe our business model is capital efficient based on the following: Operation in Taiwan. We have constructed our operation to be capital efficient by choosing Taiwan as our R&D and operating center.
Failure to comply with applicable U.S. requirements at any time during the product development process, approval process or following approval may subject us to administrative or judicial sanctions.
Both drugs and biologics also are subject to other federal, state and local statutes and regulations. Failure to comply with applicable U.S. requirements at any time during the product development process, approval process or following approval may subject us to administrative or judicial sanctions.
(“Inabata”), a Japanese corporation, as our non-exclusive worldwide distributor and preferred distributor for customers based in Japan. Inabata’s Taiwan subsidiary (Taiwan Inabata Sangyo Co.) coordinates business logistics and working capital for our designated programs. Topmed International Biotech Co., Ltd. ("Topmed"), a Taiwanese biotech company, is a distributor of our VELDDONA Pet supplements in Taiwan.
Distribution Relationships. We work with distributors to sell products. We appointed Inabata & Co. Ltd. (“Inabata”), a Japanese corporation, as our non-exclusive worldwide distributor and preferred distributor for customers based in Japan. Inabata’s Taiwan subsidiary (Taiwan Inabata Sangyo Co.) coordinates business logistics and working capital for our designated programs. Topmed International Biotech Co., Ltd.
Some of these state prohibitions apply to referral of recipients for healthcare products or services reimbursed by any source, not only government healthcare programs, and may apply to payments made directly by the patient. 13 Table of Contents Government officials have focused their enforcement efforts on the marketing of healthcare services and products, among other activities, and recently have brought cases against companies, and certain individual sales, marketing and executive personnel, for allegedly offering unlawful inducements to potential or existing customers in an attempt to procure their business.
Government officials have focused their enforcement efforts on the marketing of healthcare services and products, among other activities, and recently have brought cases against companies, and certain individual sales, marketing and executive personnel, for allegedly offering unlawful inducements to potential or existing customers in an attempt to procure their business.
We believe that there will continue to be proposals by legislators at both the federal and state levels, regulators and third-party payors to reduce costs and potentially affect individual healthcare benefits.
In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. We believe that there will continue to be proposals by legislators at both the federal and state levels, regulators and third-party payors to reduce costs and potentially affect individual healthcare benefits.
Our VELDONA product candidates for human use must be approved by the FDA through a BLA or new drug application (NDA), or supplemental BLA or supplemental NDA, process before they may be legally marketed in the United States. Preclinical studies Before any of our development candidates may be tested in humans, the development candidate must undergo rigorous preclinical testing.
Our VELDONA product candidates for human use must be approved by the FDA through a BLA or new drug application (NDA), or supplemental BLA or supplemental NDA, process before they may be legally marketed in the United States. As of December 31, 2024, none of our VELDONA candidates have been approved by the FDA.
From time to time, we assess our development plan based on available resources and market dynamics. Our current pipeline of the products, which are under development, includes the following: · VELDONA human drugs. Our high-priority programs include oral warts for human immunodeficiency virus (HIV) seropositive patients, common cold, influenza, Sjögren’s syndrome and treatment for mild COVID-19 symptoms.
From time to time, we assess our development plan based on available resources and market dynamics. Our pipeline of the products, which are under development, includes the following: ● VELDONA human and animal drugs. Our human drug pipeline includes treatments for oral warts in HIV-seropositive patients, Sjögren’s syndrome, common cold, and influenza. The United States Food and Drug Administration (U.S.
The competent authorities with licensing and enforcement authority under the Veterinary Drugs Control Act include the Council of Agriculture of the central government, the municipal government of a special municipality, or a local city or county.
The competent authorities with licensing and enforcement authority under the Veterinary Drugs Control Act include the Council of Agriculture of the central government, the municipal government of a special municipality, or a local city or county. As of December 31, 2024, our VELDONA FCGA candidate has not been approved to sell by TFDA.
Many medical device manufacturers and healthcare companies have reached substantial financial settlements with the federal government for a variety of alleged improper activities and have entered into corporate integrity agreements with OIG, under which the companies undertake certain compliance, certification and reporting obligations, to avoid exclusion from federal health care program.
Many medical device manufacturers and healthcare companies have reached substantial financial settlements with the federal government for a variety of alleged improper activities and have entered into corporate integrity agreements with OIG, under which the companies undertake certain compliance, certification and reporting obligations, to avoid exclusion from federal health care program. 14 Our activities, including those relating to the reporting of discount and rebate information and other information affecting federal, state and third-party reimbursement of our test kits (once approved) and the sale and marketing of our test kits (once approved), may be subject to scrutiny under the federal Anti-Kickback Statute and the FCA.
We also intend to conduct clinical studies in Taiwan for the treatment of feline chronic gingivostomatitis (FCGS). 3 Table of Contents Point-of-Care Tests (POCTs) Our POCT technologies aim to provide a simple, effective and telehealth-friendly tests that can deliver results within minutes. Our POCT detection technologies consists of VOC sensing, lateral flow immunochromatographic assay and nucleic acid.
Point-of-Care Tests (POCTs) Our POCT technologies aim to provide a simple, effective and telehealth-friendly tests that can deliver results within minutes. Our POCT detection technologies consists of VOC sensing, lateral flow immunochromatographic assay and nucleic acid. Currently we prioritize developing products based on VOC sensing.
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 lead VOC POCT candidate, Ainos Flora, aims to test female vaginal health and certain common sexually transmitted infections (the “STIs”) quickly and easily.
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.
Forty-seven (47) of the issued patents relate to acquired VOC and POCT technologies, four (4) relate to interferon technologies and three (3) relate to our smart drug injection technology. Forty-seven (47) of the issued patents are foreign patents and seven (7) are U.S. patents. Two (2) issued patents are licensed patents.
Fifty-seven (57) of the issued patents relate to acquired VOC and POCT technologies, five (5) relate to interferon technologies and three (3) relate to our smart drug injection technology. Fifty-six (56) of the issued patents are foreign patents and nine (9) are U.S. patents. Eleven (11) issued patents are licensed patents.
Clinical Trials Clinical trials are typically required to support a PMA, oftentimes for a de novo request for classification, and are sometimes required to support a 510(k) submission.
As of December 31, 2024, we were not seeking a de novo classification for any device in development. 10 Clinical Trials Clinical trials are typically required to support a PMA, oftentimes for a de novo request for classification, and are sometimes required to support a 510(k) submission.
The FDA may also require post-approval Phase 4 non-registrational studies to explore scientific questions to further characterize safety and efficacy during commercial use of a drug. The FDA or the clinical trial site may suspend or terminate a clinical trial at any time on various grounds, including a finding that the patients are being exposed to an unacceptable health risk.
The FDA or the clinical trial site may suspend or terminate a clinical trial at any time on various grounds, including a finding that the patients are being exposed to an unacceptable health risk.
Additionally, similar reporting requirements have also been enacted on the state level domestically, and an increasing number of countries worldwide either have adopted or are considering similar laws requiring transparency of interactions with healthcare professionals. 14 Table of Contents Foreign Corrupt Practices Act The Foreign Corrupt Practices Act of 1977, or FCPA, prohibits any U.S. individual or business from paying, offering or authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business.
Foreign Corrupt Practices Act The Foreign Corrupt Practices Act of 1977, or FCPA, prohibits any U.S. individual or business from paying, offering or authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business.
Preclinical studies include laboratory evaluation of product chemistry and formulation, as well as in vitro and animal studies to assess the potential for adverse events and in some cases to establish a rationale for therapeutic use. The conduct of preclinical studies is subject to federal regulations and requirements, including GLP regulations for safety/toxicology studies.
Preclinical studies Before any of our development candidates may be tested in humans, the development candidate must undergo rigorous preclinical testing. Preclinical studies include laboratory evaluation of product chemistry and formulation, as well as in vitro and animal studies to assess the potential for adverse events and in some cases to establish a rationale for therapeutic use.
The cost containment measures that payors and providers are instituting and the effect of any healthcare reform initiative implemented in the future could impact our revenue from the sale of our test kits once approved.
The cost containment measures that payors and providers are instituting and the effect of any healthcare reform initiative implemented in the future could impact our revenue from the sale of our test kits once approved. 15 The implementation of the Affordable Care Act in the United States, for example, has changed healthcare financing and delivery by both governmental and private insurers substantially, and affected medical device manufacturers significantly.
However, we may in the future develop devices which will require the approval of a PMA. De novo Classification Medical device types that the FDA has not previously classified as Class I, II or III are automatically classified into Class III regardless of the level of risk they pose.
As of December 31, 2024, we have not made any 510(k) submission for our POCT candidates. De novo Classification Medical device types that the FDA has not previously classified as Class I, II or III are automatically classified into Class III regardless of the level of risk they pose.
We believe maintaining operations in Taiwan, at least in the near-term, allows us to access high-caliber talent while staying cost effective, enabling us to develop high quality, affordable, consumer-friendly products. Outsourced Manufacturing. We believe our outsourced manufacturing strategy potentially saves us the time and resources required to establish our own infrastructure.
We believe Taiwan has been a key center of the global technology supply chain and it is also home to high-caliber engineers, scientists and healthcare professionals. We believe maintaining operations in Taiwan, at least in the near-term, allows us to access high-caliber talent while staying cost effective, enabling us to develop high quality, affordable, consumer-friendly products. Outsourced Manufacturing.
We intend to prioritize advancing the following candidates: oral warts for HIV-seropositive patients, Sjogren’s Syndrome, mid COVID-19 syndromes, common cold, influenza, aphthous stomatitis, and chemotherapy-induced stomatitis. The United States Food and Drug Administration (the “U.S. FDA”) have granted Orphan Drug Designation (“ODD”) for our VELDONA formulation as a potential treatment for oral warts in HIV-seropositive patients.
Our planned drug pipeline includes: oral warts for HIV-seropositive patients, Sjogren’s Syndrome, mid COVID-19 syndromes, common cold, influenza, aphthous stomatitis, chemotherapy-induced stomatitis and FCGS. Our priorities are HIV-seropositive patients, Sjogren’s Syndrome and FCGS. The United States Food and Drug Administration (the “U.S.
We outsource manufacturing of our POCT product candidates to Taiwan Carbon Nano Technology (“TCNT”). We outsource manufacturing of VELDONA drugs for human-use to Swiss Pharmaceutical Co., Ltd., a Taiwan-based company. We outsource manufacturing of VELDONA Pet supplements to a Taiwan-based third party and to TCNT. Distribution Relationships. We work with distributors to sell products. We appointed Inabata & Co. Ltd.
We believe our outsourced manufacturing strategy potentially saves us the time and resources required to establish our own infrastructure. We outsource manufacturing of our POCT product candidates to TCNT. We outsource manufacturing of VELDONA drugs for human-use to Swiss Pharmaceutical Co., Ltd., a Taiwan-based company. We outsource manufacturing of VELDONA Pet supplements to a Taiwan-based third party and to TCNT.
The platform under development is intended to be used in applications including telehealth, automotive, industrial, and environmental safety. · 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.
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.
Any company engaging in medical devices business may be additionally subject to ten times the criminal fines for each violation made by its authorized representative and/or employees. 6 Table of Contents Personal Data Protection Laws in Taiwan Under the Taiwan Personal Data Protection Act (“ PDPA ”), each individual or governmental or non-governmental agencies, including our affiliate in Taiwan, should be subject to certain requirements and restrictions for collecting, processing or using personal data.
Any company engaging in medical devices business may be additionally subject to ten times the criminal fines for each violation made by its authorized representative and/or employees.
While health testing is our near-term focus, we believe we can broaden VOC sensing powered by AI Nose to other applications including telehealth, automotive, industrial, and environmental safety. 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.
Our vision is to leverage digital nose sensors and our proprietary VOC sensing AI algorithm, to digitize smell and ultimately become AI’s nose. 4 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.
Intellectual Property We own a portfolio of patents covering various aspects of our core technologies. As of December 31, 2023, we had fifty-four (54) patents issued and sixteen (16) pending patent applications.
(“Topmed”), a Taiwanese biotech company, is a distributor of our VELDDONA Pet supplements in Taiwan. Intellectual Property We own a portfolio of patents covering various aspects of our core technologies. As of December 31, 2024, we had sixty-five (65) issued patents and nineteen (19) pending patent applications.
We believe Ainos Flora can provide connected, convenient, discreet, rapid testing in a point-of-care setting. We are conducting clinical study in Taiwan and exploring strategic opportunities to commercialize the product. · VOC 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”).
To enhance at-home testing, we are developing a second generation Ainos Flora device with CUDA technology. We are conducting clinical studies in Taiwan, and we are also exploring commercialization opportunities. ● VOC platform – NISD co-development. We are collaborating with Nisshinbo Micro Devices Inc. (“NISD”) and Taiwan Inabata Sangyo Co.
Leveraging our VELDONA technology, we have launched a series of health supplements for dogs and cats under the brand name “VELDONA Pet” in Taiwan since the second quarter of 2023 and we intend to explore international sales and marketing opportunities.
FDA”) have granted Orphan Drug Designation (“ODD”) for our VELDONA formulation as a potential treatment for oral warts in HIV-seropositive patients. We marketed a series of health supplements for dogs and cats under the brand name “VELDONA Pet” in Taiwan in 2024.
As with 510(k) submissions, unless an exemption applies, PMA submissions are subject to user fees.
As with 510(k) submissions, unless an exemption applies, PMA submissions are subject to user fees. We intend to position Ainos Flora, our lead POCT candidate, as Class II device. As of December 31, 2024, our Ainos Flora, has not been approved to sell by the FDA.
Building on our research and development on VELDONA since inception, we are focused on commercializing a suite of VELDONA-based products including VELDONA Pet cytoprotein supplements and human related VELDONA therapeutics.
Building on our research and development on VELDONA since inception, we are focused on commercializing a suite of VELDONA-based product candidates. Our priority pipeline includes drug candidates for treating oral warts for human immunodeficiency virus (HIV) seropositive patients, Sjögren’s syndrome, and feline chronic gingivostomatitis (FCGS), a cat oral infection.
Except for COVID-19, we have conducted Phase 2 studies for these programs. · 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 enables users to conveniently manage test results.
Ainos Flora, powered by AI Nose technology, is designed to offer a quick, non-invasive test for female vaginal health and common STIs. We are also developing a companion app for managing test results. We aim to provide fast, private, and convenient testing at the point of care.
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Our VELDONA Pet product line is formulated to address a variety of health issues, including skin, gum, emotion, discomfort caused by allergies, eye, and weight-related issues.
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While health testing is our near-term focus, we believe we can broaden VOC sensing powered by AI Nose to other applications including telehealth, automotive, industrial, and environmental safety. To address these additional opportunities, we are codeveloping a VOC POCT solution for the elderly care market.
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We expect consumers to be empowered to share test results with their physicians through in-person and telehealth medical consultations. · VOC POCT – CHS430.
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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.
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We have constructed our operation to be capital efficient by choosing Taiwan as our R&D and operating center. We believe Taiwan has been a key center of the global technology supply chain and it is also home to high-caliber engineers, scientists and healthcare professionals.
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FDA) has granted orphan drug designation for our VELDONA formulation as a potential treatment for oral warts in HIV-seropositive patients. We have completed Phase 2 studies for these programs. Within the human drug pipeline, we are prioritizing treatments for HIV oral warts and Sjögren’s syndrome.
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PMA Approval Pathway A PMA must be submitted to the FDA if the device cannot be cleared through the 510(k) process. The PMA must be supported by extensive data, including data from pre-clinical studies and clinical trials. Review may take anywhere from 180 days to several years.
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As of December 31, 2024, we were in the process of initiating clinical studies for HIV oral warts and Sjögren’s syndrome in Taiwan. In 2024, we also initiated a clinical study for FCGS to explore further opportunities for VELDONA in the animal drug market. ● VOC POCT – Ainos Flora.
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An advisory panel of experts from outside the FDA may be convened to review and evaluate the application and provide recommendations to the FDA as to the approvability of the device. The FDA may or may not accept the panel’s recommendation.
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(“Taiwan Inabata”) to develop a VOC sensing platform based on AI Nose. This platform is designed for applications in telehealth, automotive, industrial, and environmental safety sectors. We are co-developing a VOC POCT solution for elderly care and a VOC sensing solution for industrial use. ● VOC POCT – Ainos Pen.
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In addition, the FDA will generally conduct a pre-approval inspection of the applicant or its third-party manufacturers’ or suppliers’ manufacturing facility or facilities to ensure compliance with the QSR.
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We also have exclusive use of twenty three (23) patents and patent applications related to VOC, POCT and nitrogen-oxygen separation technologies for twelve months from October 16, 2024, pursuant to Product Development Agreement, effective August 1, 2021, as amended on January 9, 2024, July 8, 2024, and October 16, 2024, with TCNT. Please refer to “Part III, Item 13”.
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The FDA will approve the new device for commercial distribution if it determines that the data and information in the PMA constitute valid scientific evidence and that there is reasonable assurance that the device is safe and effective for its intended use(s).
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As of December 31, 2024, Ainos Fora, our lead POCT candidate, has not been approved to sell by the TFDA. 7 Personal Data Protection Laws in Taiwan Under the Taiwan Personal Data Protection Act (“ PDPA ”), each individual or governmental or non-governmental agencies, including our affiliate in Taiwan, should be subject to certain requirements and restrictions for collecting, processing or using personal data.
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The FDA may approve a PMA with post-approval conditions, it may also condition PMA approval on some form of post-market surveillance. Failure to comply with the conditions of approval can result in material adverse enforcement action, including withdrawal of the approval. 9 Table of Contents As of December 31, 2023, none of our test kits were approved under a PMA.
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The FDA has broad regulatory compliance and enforcement powers.
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U.S. drug and biological product development In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act (FDCA) and its implementing regulations and biologics under the FDCA, the Public Health Service Act (PHSA), and their implementing regulations. Both drugs and biologics also are subject to other federal, state and local statutes and regulations.
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Many states have adopted laws similar to the federal Anti-Kickback Statute. Some of these state prohibitions apply to referral of recipients for healthcare products or services reimbursed by any source, not only government healthcare programs, and may apply to payments made directly by the patient.
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Health Insurance Portability and Accountability Act We may be subject to compliance with the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Healthcare Information Technology for Economic and Clinical Health Act of 2009, or HIPAA, among other things, established federal protection for the privacy and security of protected health information, or PHI.
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Additionally, similar reporting requirements have also been enacted on the state level domestically, and an increasing number of countries worldwide either have adopted or are considering similar laws requiring transparency of interactions with healthcare professionals.
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Many states have adopted laws similar to the federal Anti-Kickback Statute.
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Our activities, including those relating to the reporting of discount and rebate information and other information affecting federal, state and third-party reimbursement of our test kits (once approved) and the sale and marketing of our test kits (once approved), may be subject to scrutiny under the federal Anti-Kickback Statute and the FCA.
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The implementation of the Affordable Care Act in the United States, for example, has changed healthcare financing and delivery by both governmental and private insurers substantially, and affected medical device manufacturers significantly. In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAny disruption in our research and development facility could adversely affect our business, financial condition and results of operations. Our facility may be affected by natural or man-made disasters. We are vulnerable to damage from other types of disasters, including power loss, attacks from extremist organizations, fires, floods, and similar events.
Biggest changeEven if our agreements with current or future collaborators entitle us to indemnification against losses, such indemnification may not be available or adequate should any claim arise. 24 Any disruption in our research and development facility could adversely affect our business, financial condition and results of operations. Our facility may be affected by natural or man-made disasters.
We currently have limited marketing capabilities. If we are unable to expand sales and marketing capabilities on our own or through third parties, or are delayed in establishing these capabilities, we will be unable to successfully commercialize our product candidates, if approved, or generate product revenue. We currently have limited marketing capabilities.
If we are unable to expand sales and marketing capabilities on our own or through third parties, or are delayed in establishing these capabilities, we will be unable to successfully commercialize our product candidates, if approved, or generate product revenue. We currently have limited marketing capabilities.
In other jurisdictions, for instance, in Taiwan, there is a similar risk regarding the acceptability of clinical trial data conducted outside of that jurisdiction. Our long-term prospects depend in part upon discovering, developing and commercializing additional products, including POCT and VELDONA candidates, which may fail in development or suffer delays that adversely affect their commercial viability.
In other jurisdictions, for instance, in Taiwan, there is a similar risk regarding the acceptability of clinical trial data conducted outside of that jurisdiction. 21 Our long-term prospects depend in part upon discovering, developing and commercializing additional products, including POCT and VELDONA candidates, which may fail in development or suffer delays that adversely affect their commercial viability.
These fluctuations may occur due to a variety of factors, many of which are outside of our control and may be difficult to predict, including: · the scalability of our product sales, which is difficult to predict · the timing and cost of, and level of investment in, research, development and commercialization activities, which may change from time to time; · the timing and status of enrollment for our clinical trials; · the timing of regulatory approvals, if any, in the United States and internationally; · the timing of expanding our operational, financial and management systems and personnel, including personnel to support our clinical development, quality control, manufacturing and commercialization efforts and our operations as a public company; 18 Table of Contents · the cost of manufacturing, as well as building out our supply chain, which may vary depending on the quantity produced, and the terms of any agreements we enter into with third-party suppliers; · the timing and amount of any milestone, royalty or other payments due under any current or future collaboration or license agreement; · coverage and reimbursement policies with respect to any future approved products, and potential future drugs that compete with our products; · the timing and cost to establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any products for which we may obtain marketing approval and intend to commercialize on our own or jointly with current or future collaborators; · expenditures that we may incur to acquire, develop or commercialize additional products and technologies; · the level of demand for any future approved products, which may vary significantly over time; · future accounting pronouncements or changes in accounting principles or our accounting policies; and · the timing and success or failure of nonclinical studies and clinical trials for our product candidates or competing product candidates, or any other change in the competitive landscape of our industry, including consolidation among our competitors or collaboration partners.
These fluctuations may occur due to a variety of factors, many of which are outside of our control and may be difficult to predict, including: ● the scalability of our product sales, which is difficult to predict ● the timing and cost of, and level of investment in, research, development and commercialization activities, which may change from time to time; ● the timing and status of enrollment for our clinical trials; ● the timing of regulatory approvals, if any, in the United States and internationally; ● the timing of expanding our operational, financial and management systems and personnel, including personnel to support our clinical development, quality control, manufacturing and commercialization efforts and our operations as a public company; ● the cost of manufacturing, as well as building out our supply chain, which may vary depending on the quantity produced, and the terms of any agreements we enter into with third-party suppliers; ● the timing and amount of any milestone, royalty or other payments due under any current or future collaboration or license agreement; ● coverage and reimbursement policies with respect to any future approved products, and potential future drugs that compete with our products; ● the timing and cost to establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any products for which we may obtain marketing approval and intend to commercialize on our own or jointly with current or future collaborators; ● expenditures that we may incur to acquire, develop or commercialize additional products and technologies; ● the level of demand for any future approved products, which may vary significantly over time; ● future accounting pronouncements or changes in accounting principles or our accounting policies; and ● the timing and success or failure of nonclinical studies and clinical trials for our product candidates or competing product candidates, or any other change in the competitive landscape of our industry, including consolidation among our competitors or collaboration partners.
Government authorities and third-party payors, such as private health insurers and health maintenance organizations, and establish reimbursement levels. It is difficult to predict at this time what government authorities and third-party payors may decide with respect to coverage and reimbursement for our programs (if approved). A primary trend in the U.S. healthcare industry and elsewhere is cost containment.
Government authorities and third-party payors, such as private health insurers and health maintenance organizations, and establish reimbursement levels. It is difficult to predict at this time what government authorities and third-party payors may decide with respect to coverage and reimbursement for our programs (if approved). 23 A primary trend in the U.S. healthcare industry and elsewhere is cost containment.
Even if we are able to generate revenues from the sale of any approved product candidates, we may not become profitable and may need to obtain additional funding to continue operations. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.
Even if we are able to generate revenues from the sale of any approved product candidates, we may not become profitable and may need to obtain additional funding to continue operations. 17 Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.
In addition, we also face intense competition from other companies that develop or already have molecular tests, whether at point-of-care or at-home, as well as companies that have or are developing antigen and antibody tests. To remain competitive, we will need to develop improvements to our products and other offerings.
In addition, we also face intense competition from other companies that develop or already have molecular tests, whether at point-of-care or at-home, as well as companies that have or are developing antigen and antibody tests. 34 To remain competitive, we will need to develop improvements to our products and other offerings.
If we fail to maintain the favorable perception of our brands, our business, financial condition and results of operations could be negatively impacted. Our business, operations, clinical development plans and timelines, and supply chain could be adversely affected by the effects of epidemics , including but not limited to COVID-19.
If we fail to maintain the favorable perception of our brands, our business, financial condition and results of operations could be negatively impacted. 35 Our business, operations, clinical development plans and timelines, and supply chain could be adversely affected by the effects of epidemics , including but not limited to COVID-19.
These products may compete with our product candidates and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. We may not have patent rights in certain foreign countries in which a market may exist in the future.
These products may compete with our product candidates and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. 27 We may not have patent rights in certain foreign countries in which a market may exist in the future.
As a result, our business and results of operations may be materially and adversely affected. Risks related to our business We will need to increase the size of our Company and may not effectively manage our growth. Our success will depend upon growing our business and our employee base.
As a result, our business and results of operations may be materially and adversely affected. 32 Risks related to our business We will need to increase the size of our Company and may not effectively manage our growth. Our success will depend upon growing our business and our employee base.
Accordingly, we cannot provide assurances that we will be able to generate sufficient revenue through the sale of products to continue our business. Clinical product development involves a lengthy and expensive process, with uncertain outcomes.
Accordingly, we cannot provide assurances that we will be able to generate sufficient revenue through the sale of products to continue our business. 20 Clinical product development involves a lengthy and expensive process, with uncertain outcomes.
The degree of market acceptance of any product candidate, if approved for commercial sale, will depend on a number of factors, including: · efficacy and potential advantages compared to alternative tools; · the ability to offer our products, if approved, for sale at competitive prices; · convenience and ease of use; · the willingness of the target market to adopt new technologies; and · the strength of marketing and distribution support. 22 Table of Contents The total addressable market opportunity for our current and future products may be much smaller than we estimate.
The degree of market acceptance of any product candidate, if approved for commercial sale, will depend on a number of factors, including: ● efficacy and potential advantages compared to alternative tools; ● the ability to offer our products, if approved, for sale at competitive prices; ● convenience and ease of use; ● the willingness of the target market to adopt new technologies; and ● the strength of marketing and distribution support. 22 The total addressable market opportunity for our current and future products may be much smaller than we estimate.
We may find it impractical or undesirable to enforce our intellectual property against some third parties. 29 Table of Contents If we were to initiate legal proceedings against a third party to enforce a patent directed to our product candidates, or one of our future product candidates, the defendant could counterclaim that our patent is invalid or unenforceable.
We may find it impractical or undesirable to enforce our intellectual property against some third parties. 29 If we were to initiate legal proceedings against a third party to enforce a patent directed to our product candidates, or one of our future product candidates, the defendant could counterclaim that our patent is invalid or unenforceable.
We have not declared or paid any cash dividends on our capital stock in 2023, and we do not intend to pay any cash dividends in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our Board of Directors and may be restricted by the terms of any then-current credit facility.
We have not declared or paid any cash dividends on our capital stock in 2024, and we do not intend to pay any cash dividends in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our Board of Directors and may be restricted by the terms of any then-current credit facility.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects. 31 Table of Contents We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of our competitors or are in breach of non-competition or non-solicitation agreements with our competitors.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects. We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of our competitors or are in breach of non-competition or non-solicitation agreements with our competitors.
Our product candidates will require additional clinical, manufacturing, and non-clinical development, regulatory approval, commercial manufacturing arrangements, establishment of a commercial organization, significant marketing efforts, and further investment before we generate significant product sales. 16 Table of Contents We cannot assure you that we will meet our timelines for our development programs, which may be delayed or not completed for a number of reasons.
Our product candidates will require additional clinical, manufacturing, and non-clinical development, regulatory approval, commercial manufacturing arrangements, establishment of a commercial organization, significant marketing efforts, and further investment before we generate significant product sales. We cannot assure you that we will meet our timelines for our development programs, which may be delayed or not completed for a number of reasons.
If reimbursement is not available or is available only to limited levels, we may not be able to successfully commercialize any product candidate for which we obtain marketing approval. 23 Table of Contents If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of any approved products.
If reimbursement is not available or is available only to limited levels, we may not be able to successfully commercialize any product candidate for which we obtain marketing approval. If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of any approved products.
Any increase in resources devoted to research and product development without a corresponding increase in our operational, financial and management systems could have a material adverse effect on our business, financial condition, and results of operations. 32 Table of Contents Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel.
Any increase in resources devoted to research and product development without a corresponding increase in our operational, financial and management systems could have a material adverse effect on our business, financial condition, and results of operations. Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel.
Expansion into markets served by our competitors and entry of new competitors or expansion of existing competitors into our markets could materially adversely affect our business, financial condition and results of operations. 33 Table of Contents The point-of-care testing (“POCT”) market is extremely competitive and rapidly evolving, making it difficult to evaluate our business and future prospects.
Expansion into markets served by our competitors and entry of new competitors or expansion of existing competitors into our markets could materially adversely affect our business, financial condition and results of operations. The point-of-care testing (“POCT”) market is extremely competitive and rapidly evolving, making it difficult to evaluate our business and future prospects.
We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. 27 Table of Contents Many foreign countries, including some EU countries, India, Japan, and China, have compulsory licensing laws under which a patent owner may be compelled under specified circumstances to grant licenses to third parties.
We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Many foreign countries, including some EU countries, India, Japan, and China, have compulsory licensing laws under which a patent owner may be compelled under specified circumstances to grant licenses to third parties.
We may also experience numerous unforeseen events prior to, during, or as a result of our nonclinical studies or clinical trials that could delay or prevent our ability to receive marketing approval or commercialize the product candidates we develop, including: · regulators, Institutional Review Boards (“IRBs”) or ethics committees may not authorize us to conduct the clinical study; · we may experience delays due to challenges with third-party contractors and contract research organizations (“CROs”), including negotiating agreement terms, compliance with regulatory requirements, compliance with clinical trial protocols; · it may be difficult to enroll a sufficient number of suitable patients, or enrollment may be slower than we anticipate or participants may drop out of these clinical trials or fail to return for post-treatment follow-up at a higher rate than we anticipate; · the supply or quality of materials for product candidates we develop or other materials necessary to conduct clinical trials may be insufficient or inadequate; and · we may experience disruptions by man-made or natural disasters or public health pandemics or epidemics or other business interruptions, including any future significant outbreaks of diseases similar to the COVID-19 pandemic. 20 Table of Contents We could encounter delays if a current or future clinical trial is suspended or terminated by us, by the TFDA, FDA or other regulatory authorities and/or review boards.
We may also experience numerous unforeseen events prior to, during, or as a result of our nonclinical studies or clinical trials that could delay or prevent our ability to receive marketing approval or commercialize the product candidates we develop, including: ● regulators, Institutional Review Boards (“IRBs”) or ethics committees may not authorize us to conduct the clinical study; ● we may experience delays due to challenges with third-party contractors and contract research organizations (“CROs”), including negotiating agreement terms, compliance with regulatory requirements, compliance with clinical trial protocols; ● it may be difficult to enroll a sufficient number of suitable patients, or enrollment may be slower than we anticipate or participants may drop out of these clinical trials or fail to return for post-treatment follow-up at a higher rate than we anticipate; ● the supply or quality of materials for product candidates we develop or other materials necessary to conduct clinical trials may be insufficient or inadequate; and ● we may experience disruptions by man-made or natural disasters or public health pandemics or epidemics or other business interruptions, including any future significant outbreaks of diseases similar to the COVID-19 pandemic.
We may be required to expend significant resources to obtain regulatory approval and to comply with ongoing regulations in these jurisdictions. 19 Table of Contents The success of our current and future product candidates will depend on many factors, which may include the following: · sufficiency of our financial and other resources to complete the necessary nonclinical studies and clinical trials, and our ability to raise any additional required capital on acceptable terms, or at all; · the timely and successful completion of our nonclinical studies and clinical trials for which the TFDA, FDA, or any comparable foreign regulatory authority, agree with the design, endpoints, or implementation; · receipt of regulatory approvals or authorizations to conduct future clinical trials or other studies beyond those planned to support approval of our product candidates; · successful enrollment and completion of clinical trials; · successful data from our clinical program that supports an acceptable risk-benefit profile of our product candidates in the intended populations; · timely receipt and maintenance of marketing approvals from applicable regulatory authorities; · establishing, scaling up and scaling out, either alone or with third-party manufacturers, cGMP (Current Good Manufacturing Practice) compliant manufacturing capabilities of clinical supply for our clinical trials and commercial manufacturing (including licensure), if any of our product candidates are approved; · entry into collaborations to further the development of our product candidates in select indications or geographies; · obtaining and maintaining regulatory exclusivity for our product candidates as well as establishing competitive positioning amongst other therapies; and · successfully launching commercial sales of our product candidates and obtaining and maintaining healthcare coverage and reimbursement from third party payors, if approved.
The success of our current and future product candidates will depend on many factors, which may include the following: ● sufficiency of our financial and other resources to complete the necessary nonclinical studies and clinical trials, and our ability to raise any additional required capital on acceptable terms, or at all; ● the timely and successful completion of our nonclinical studies and clinical trials for which the TFDA, FDA, or any comparable foreign regulatory authority, agree with the design, endpoints, or implementation; ● receipt of regulatory approvals or authorizations to conduct future clinical trials or other studies beyond those planned to support approval of our product candidates; ● successful enrollment and completion of clinical trials; ● successful data from our clinical program that supports an acceptable risk-benefit profile of our product candidates in the intended populations; ● timely receipt and maintenance of marketing approvals from applicable regulatory authorities; ● establishing, scaling up and scaling out, either alone or with third-party manufacturers, cGMP (Current Good Manufacturing Practice) compliant manufacturing capabilities of clinical supply for our clinical trials and commercial manufacturing (including licensure), if any of our product candidates are approved; ● entry into collaborations to further the development of our product candidates in select indications or geographies; ● obtaining and maintaining regulatory exclusivity for our product candidates as well as establishing competitive positioning amongst other therapies; and ● successfully launching commercial sales of our product candidates and obtaining and maintaining healthcare coverage and reimbursement from third party payors, if approved.
We had cash and cash equivalents of approximately $1.9 million as of December 31, 2023, and we will need to continue to seek capital from time to time to capitalize the development and commercialization of our product candidates and to acquire and develop other product candidates. Our actual capital requirements will depend on many factors.
We had cash and cash equivalents of approximately $3.9 million as of December 31, 2024, and we will need to continue to seek capital from time to time to capitalize the development and commercialization of our product candidates and to acquire and develop other product candidates. Our actual capital requirements will depend on many factors.
If we fail to maintain the patents and patent applications covering our product or procedures, we may not be able to stop a competitor from marketing products that are the same as or similar to our product and technologies. 30 Table of Contents Patents have a limited lifespan.
If we fail to maintain the patents and patent applications covering our product or procedures, we may not be able to stop a competitor from marketing products that are the same as or similar to our product and technologies. Patents have a limited lifespan.
On January 5, 2023, the Company received a deficiency letter from the Nasdaq Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, for the last 30 consecutive business days, the closing bid price for the Company’s common stock has been below the minimum $1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).
On July 15, 2024, the Company received a deficiency letter from the Nasdaq Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, for the last 30 consecutive business days, the closing bid price for the Company’s common stock has been below the minimum $1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).
We may be delayed if we need to change the manufacturing process used by our manufacturers. Further, if we change an approved manufacturing process, then we may be delayed if the FDA or a comparable foreign authority needs to review the new manufacturing process before it may be used.
Further, if we change an approved manufacturing process, then we may be delayed if the FDA or a comparable foreign authority needs to review the new manufacturing process before it may be used.
Any failure to maintain effective internal control over financial reporting could harm us. Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. generally accepted accounting principles.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. generally accepted accounting principles.
Even after a third-party manufacturer has gained significant experience in manufacturing our product and product candidates or even if we believe we have succeeded in optimizing the manufacturing process, there can be no assurance that such manufacturer will produce sufficient quantities for us in a timely manner or continuously over time, or at all.
Even after a third-party manufacturer has gained significant experience in manufacturing our product and product candidates or even if we believe we have succeeded in optimizing the manufacturing process, there can be no assurance that such manufacturer will produce sufficient quantities for us in a timely manner or continuously over time, or at all. 25 We may be delayed if we need to change the manufacturing process used by our manufacturers.
We do not own or operate manufacturing facilities. Our current strategy is to outsource all manufacturing of our product and product candidates to other companies, including Taiwan Carbon Nano Technology (“TCNT”), our affiliate and product co-developer, and Swiss Pharmaceutical Co., Ltd.
We do not own or operate manufacturing facilities. Our current strategy is to outsource all manufacturing of our product and product candidates to other companies, including TCNT, our affiliate and product co-developer, and Swiss Pharmaceutical Co., Ltd.
We may need to raise additional capital through equity and debt financings in order to fund our operations. If we raise capital through equity financings in the future, that will result in dilution to all other stockholders. We also expect to grant equity awards to employees, directors, and consultants under our 2023 Stock Incentive Plan.
If we raise capital through equity financings in the future, that will result in dilution to all other stockholders. We also expect to grant equity awards to employees, directors, and consultants under our 2023 Stock Incentive Plan.
Our current product candidates, and any future product candidates we develop, will require additional nonclinical and clinical development, management of clinical, nonclinical and manufacturing activities, marketing approval in the United States and other markets, obtaining sufficient manufacturing supply for both clinical development and commercial production, building of a commercial organization, and substantial investment and significant marketing efforts before we generate any revenues from product sales.
Our current product candidates, and any future product candidates we develop, will require additional nonclinical and clinical development, management of clinical, nonclinical and manufacturing activities, marketing approval in the United States and other markets, obtaining sufficient manufacturing supply for both clinical development and commercial production, building of a commercial organization, and substantial investment and significant marketing efforts before we generate any revenues from product sales. 19 As a company, we have limited experience in preparing, submitting and prosecuting regulatory filings.
Our common stock and public warrants are currently quoted on the Nasdaq Capital Market. 36 Table of Contents The trading market for our common stock in the future could be subject to wide fluctuations in response to several factors, including, but not limited to: · actual or anticipated variations in our results of operations; · our ability or inability to generate revenues or profit; · the number of shares in our public float; and · increased competition.
The trading market for our common stock in the future could be subject to wide fluctuations in response to several factors, including, but not limited to: ● actual or anticipated variations in our results of operations; ● our ability or inability to generate revenues or profit; ● the number of shares in our public float; and ● increased competition.
Our operating results may fluctuate significantly, which will make our future results difficult to predict and could cause our results to fall below expectations. Our quarterly and annual operating results may fluctuate significantly, which will make it difficult for us to predict our future results.
Our quarterly and annual operating results may fluctuate significantly, which will make it difficult for us to predict our future results.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, financial condition, results of operations, stock price and prospects, including the imposition of significant fines or other sanctions.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, financial condition, results of operations, stock price and prospects, including the imposition of significant fines or other sanctions. 26 We may form or seek strategic partnerships in the future, and we may not realize the benefits of such alliances or licensing arrangements.
If we fail to integrate our patent assets into our operations, or if we fail to properly evaluate other acquisitions or investments, we may not achieve the anticipated benefits of any such acquisitions, we may incur costs in excess of what we anticipate, and management resources and attention may be diverted from other necessary or valuable activities.
If we fail to integrate our patent assets into our operations, or if we fail to properly evaluate other acquisitions or investments, we may not achieve the anticipated benefits of any such acquisitions, we may incur costs in excess of what we anticipate, and management resources and attention may be diverted from other necessary or valuable activities. 37 Any failure to maintain effective internal control over financial reporting could harm us.
As a company, we have limited experience in preparing, submitting and prosecuting regulatory filings. We have no prior experience in developing or securing regulatory approvals for veterinary drugs or treatments. If we do not receive regulatory approvals for current or future product candidates, we may not be able to continue our operations.
We have no prior experience in developing or securing regulatory approvals for veterinary drugs or treatments. If we do not receive regulatory approvals for current or future product candidates, we may not be able to continue our operations.
These operating losses have adversely affected and are likely to continue to adversely affect our working capital, total assets and stockholders’ equity. We have generated operating losses of $13,206,396 and $13,976,212 in the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, we had cumulative losses of $37,886,155 and $24,115,606, respectively.
These operating losses have adversely affected and are likely to continue to adversely affect our working capital, total assets and stockholders’ equity. We have generated operating losses of $13,841,204 and $13,206,396 in the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, we had cumulative losses of $52,749,316 and $37,886,155, respectively.
We are focused on product development and have generated $102,256 and $3,519,627 in revenues from COVID-19 antigen rapid test kit sales in 2023 and 2022, respectively. We expect to continue to incur operating losses until we are able to commercialize or license our other products.
We are focused on product development and have generated $20,321 and $256 in revenues from pet supplements sales and $408 and $102,256 in revenues from COVID 19 antigen rapid test kits in 2024 and 2023, respectively. We expect to continue to incur operating losses until we are able to commercialize or license our other products.
We have generated very little revenue from product sales and may never become profitable. Our ability to generate product sales and achieve profitability depends on our ability, alone or with collaborative partners, to successfully complete the development of, and obtain the regulatory approvals necessary to commercialize our current and future product candidates.
Our ability to generate product sales and achieve profitability depends on our ability, alone or with collaborative partners, to successfully complete the development of, and obtain the regulatory approvals necessary to commercialize our current and future product candidates.
If we are unable to remediate the deficiencies identified adequately or otherwise fail to maintain adequate financial and management personnel, processes and controls, we may not be able to manage our business effectively or accurately report our financial performance on a timely basis, which could cause a decline in our common stock price and adversely affect our results of operations and financial condition. 37 Table of Contents Our issuance of additional capital stock in connection with financings, acquisitions, investments, our 2023 Stock Incentive Plan or otherwise will dilute all other stockholders.
If we are unable to remediate the deficiencies identified adequately or otherwise fail to maintain adequate financial and management personnel, processes and controls, we may not be able to manage our business effectively or accurately report our financial performance on a timely basis, which could cause a decline in our common stock price and adversely affect our results of operations and financial condition.
Our failure to become and remain profitable would decrease the value of the Company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations.
Our failure to become and remain profitable would decrease the value of the Company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value of our Company also could cause you to lose all or part of your investment.
These and similar, and perhaps more severe, disruptions in our operations could negatively impact our business, operating results and financial condition. 35 Table of Contents Our business activities are subject to the Foreign Corrupt Practices Act, or the FCPA, and similar anti-bribery and anti-corruption laws of other countries in which we operate, including Taiwan, as well as U.S. and certain foreign export controls, trade sanctions, and import laws and regulations.
Our business activities are subject to the Foreign Corrupt Practices Act, or the FCPA, and similar anti-bribery and anti-corruption laws of other countries in which we operate, including Taiwan, as well as U.S. and certain foreign export controls, trade sanctions, and import laws and regulations.
Moreover, under certain of our license or collaboration agreements, we may not have the right to control the preparation, filing, prosecution and maintenance of patent applications, or to maintain the rights to patents licensed to or from third parties. 28 Table of Contents Although we enter into confidentiality agreements with parties who have access to confidential or patentable aspects of our research and development output, such as our employees, collaborators, CROs, contract manufacturers, consultants, advisors and other third parties, any of these parties may breach these agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent protection.
Although we enter into confidentiality agreements with parties who have access to confidential or patentable aspects of our research and development output, such as our employees, collaborators, CROs, contract manufacturers, consultants, advisors and other third parties, any of these parties may breach these agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent protection.
The risks of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign governments and cyber-terrorists, have increased significantly and are becoming increasingly difficult to detect. 24 Table of Contents If a failure, accident or security breach were to occur and cause interruptions in our operations, or the operations of our partners or third-party providers, it could result in a misappropriation of confidential information, including our intellectual property or financial information or clinical trial participant personal data, a material disruption or delay in our drug development programs, and/or significant monetary losses.
If a failure, accident or security breach were to occur and cause interruptions in our operations, or the operations of our partners or third-party providers, it could result in a misappropriation of confidential information, including our intellectual property or financial information or clinical trial participant personal data, a material disruption or delay in our drug development programs, and/or significant monetary losses.
Should any third party with which we enter into any of these arrangements not comply with the applicable regulatory requirements, we or they may be subject to regulatory enforcement action and we or they may be delayed or prevented from obtaining marketing approval for the applicable product candidate. 26 Table of Contents In addition, we face significant competition in seeking appropriate strategic partners and the negotiation process is time-consuming and complex.
Should any third party with which we enter into any of these arrangements not comply with the applicable regulatory requirements, we or they may be subject to regulatory enforcement action and we or they may be delayed or prevented from obtaining marketing approval for the applicable product candidate.
If securities analysts or investors perceive those results to be negative, it could cause the price of shares of our common stock to decline. Any of the foregoing events could harm our business, financial condition, results of operation and prospects. Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time.
Any of the foregoing events could harm our business, financial condition, results of operation and prospects. 30 Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time.
If our facilities are affected by a natural or man-made disaster, we may be forced to curtail our operations and/or rely on third-parties to perform some or all of our research and development activities.
We are vulnerable to damage from other types of disasters, including power loss, attacks from extremist organizations, fires, floods, and similar events. If our facilities are affected by a natural or man-made disaster, we may be forced to curtail our operations and/or rely on third-parties to perform some or all of our research and development activities.
We are a company primarily focused on product development and our product revenues may not be sufficient to fund our operations. Until, and if, we receive approval from the TFDA, FDA and other regulatory authorities for our product candidates, our revenues generated from products may be limited.
Until, and if, we receive approval from the TFDA, FDA and other regulatory authorities for our product candidates, our revenues generated from products may be limited.
If a product candidate fails to develop as expected, or we experience additional and/or unforeseen development costs and/or delays, we could face additional costs and/or loss of expected future revenue, which would adversely affect our current financial position and future prospects may be adversely affected. 21 Table of Contents Even if we complete the necessary nonclinical studies and clinical trials, the marketing approval process is expensive, time consuming and uncertain, which may prevent us or any of our future collaboration partners from obtaining approvals for the commercialization of our current product candidates and any other product candidate we develop.
Even if we complete the necessary nonclinical studies and clinical trials, the marketing approval process is expensive, time consuming and uncertain, which may prevent us or any of our future collaboration partners from obtaining approvals for the commercialization of our current product candidates and any other product candidate we develop.
Further, it is possible that domestic or foreign companies, some with greater experience in the pet health and wellness industry or greater financial resources than we possess, will seek to provide products or services that compete directly or indirectly with ours in the future.
Further, it is possible that domestic or foreign companies, some with greater experience in the pet health and wellness industry or greater financial resources than we possess, will seek to provide products or services that compete directly or indirectly with ours in the future. 33 Many of our competitors may have longer operating histories, greater brand recognition, larger fulfillment infrastructures, greater technical capabilities, significantly greater financial, marketing and other resources and larger customer bases than we do.
Our competitors may develop and commercialize competing or alternative products or services and improvements faster than we are able to do so, which would negatively affect our ability to increase or sustain our revenue or achieve profitability and could materially adversely affect our future growth prospects. 34 Table of Contents Research and development of drug candidates as VELDONA is extremely expensive and complex and its difficult to evaluate the likelihood of the outcome of clinical trials, regulatory approvals, and our business and future prospects.
Our competitors may develop and commercialize competing or alternative products or services and improvements faster than we are able to do so, which would negatively affect our ability to increase or sustain our revenue or achieve profitability and could materially adversely affect our future growth prospects.
In addition, our trade secrets may be independently developed by others in a manner that could prevent us from receiving legal recourse. If any of our confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or if any of that information was independently developed by a competitor, our competitive position could be harmed.
If any of our confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or if any of that information was independently developed by a competitor, our competitive position could be harmed. 31 In addition, courts inside and outside the United States are sometimes less willing or unwilling to protect trade secrets.
In addition, if we are not able to obtain adequate supplies of our product candidates or the substances used to manufacture them, it will be more difficult for us to develop our product candidates and compete effectively. 25 Table of Contents Our current and anticipated future dependence upon others for the manufacture of our product candidates may adversely affect our future profit margins and our ability to develop product candidates and commercialize any products that receive marketing approval on a timely and competitive basis.
Our current and anticipated future dependence upon others for the manufacture of our product candidates may adversely affect our future profit margins and our ability to develop product candidates and commercialize any products that receive marketing approval on a timely and competitive basis. We currently have limited marketing capabilities.
We may not be able to obtain these licenses on acceptable or commercially reasonable terms, if at all, or these licenses may be non-exclusive, which could result in our competitors using the same intellectual property.
We may not be able to obtain these licenses on acceptable or commercially reasonable terms, if at all, or these licenses may be non-exclusive, which could result in our competitors using the same intellectual property. 28 We seek to protect our proprietary positions by, among other things, filing patent applications in the United States and in relevant foreign jurisdictions related to our current product candidates and other future product candidates that we may identify.
If we are able to consummate a financing arrangement, the amount raised may not be sufficient to meet our future needs. If adequate funds are not available on acceptable terms, or at all, our business, results of operations, financial condition and our continued viability will be materially adversely affected.
If adequate funds are not available on acceptable terms, or at all, our business, results of operations, financial condition and our continued viability will be materially adversely affected. 18 Our operating results may fluctuate significantly, which will make our future results difficult to predict and could cause our results to fall below expectations.
Because of the risks and uncertainties associated with product development, we are unable to predict the extent of any future losses, whether we will ever generate significant revenues or if we will ever achieve or sustain profitability. 15 Table of Contents We believe that our cash on hand, along with the anticipated net proceeds from products sales and additional financing, will enable us to fund our operations over the short and medium terms based on our current plan.
We believe that our cash on hand, along with the anticipated net proceeds from products sales and additional financing, will enable us to fund our operations over the short and medium terms based on our current plan.
In addition, courts inside and outside the United States are sometimes less willing or unwilling to protect trade secrets. If we choose to go to court to stop a third party from using any of our trade secrets, we may incur substantial costs and we cannot guarantee a successful outcome.
If we choose to go to court to stop a third party from using any of our trade secrets, we may incur substantial costs and we cannot guarantee a successful outcome. Even if we are successful, these types of lawsuits may consume significant amounts of our time and other resources.
An active trading market for our common stock may not develop and the market price of our common stock and warrants could be volatile.
Any decreased use of our products or limitation on our ability to export or sell access to our products would likely adversely affect our business. 36 An active trading market for our common stock may not develop and the market price of our common stock and warrants could be volatile.
A decline in the value of our Company also could cause you to lose all or part of your investment. 17 Table of Contents We need to raise additional capital to operate our business. If we fail to obtain the capital necessary to fund our operations, we will be unable to continue or complete our product development.
We need to raise additional capital to operate our business. If we fail to obtain the capital necessary to fund our operations, we will be unable to continue or complete our product development. We are a company primarily focused on product development and our product revenues may not be sufficient to fund our operations.
Similar challenges to obtaining coverage and reimbursement will apply to companion POCTs that we or our collaborators may develop. Even if our agreements with current or future collaborators entitle us to indemnification against losses, such indemnification may not be available or adequate should any claim arise.
Similar challenges to obtaining coverage and reimbursement will apply to companion POCTs that we or our collaborators may develop.
We rely on our partners and third-party providers to implement effective security measures and identify and correct for any such failures, deficiencies or breaches.
We rely on our partners and third-party providers to implement effective security measures and identify and correct for any such failures, deficiencies or breaches. The risks of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign governments and cyber-terrorists, have increased significantly and are becoming increasingly difficult to detect.
On December 29, 2023, Nasdaq Staff informed the Company that it has determined that for the last 10 consecutive business days, the closing bid price of the Company’s common stock has been at $1.00 per share or greater. Accordingly, the Company has regained compliance with Listing Rule 5550(a)(2).
If at any time before January 13, 2025, the bid price of the Company’s common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, the Staff will provide written confirmation that the Company has achieved compliance.
There can be no assurance that we will continue to maintain compliance with the requirements for listing our common stock on Nasdaq.
However, there can be no assurance that the Company will be able to regain compliance with the Minimum Bid Price Requirement or will otherwise be in compliance with other Nasdaq Listing Rules.
Removed
Food and Drug Administration, or FDA, and similar foreign regulatory authority laws and regulations. Our revenue for the fiscal year of 2023 was almost exclusively dependent on sales of the Ainos COVID-19 antigen rapid test kits and we ceased the sale of the Ainos COVID-19 antigen rapid test kits in early 2024.
Added
Because of the risks and uncertainties associated with product development, we are unable to predict the extent of any future losses, whether we will ever generate significant revenues or if we will ever achieve or sustain profitability.
Removed
We anticipate that VELDONA Pet will serve as our primary source of our future revenue until we can develop, obtain regulatory clearance or other appropriate authorization for, and commercialize additional product candidates.
Added
Food and Drug Administration, or FDA, and similar foreign regulatory authority laws and regulations. 16 We have generated very little revenue from product sales and may never become profitable.
Removed
Our revenue for the fiscal year of 2023 was almost exclusively dependent on sales of the Ainos COVID-19 antigen rapid test kits and we ceased the sale of the Ainos COVID-19 antigen rapid test kits in early 2024.
Added
If we are able to consummate a financing arrangement, the amount raised may not be sufficient to meet our future needs.
Removed
Until such time as we can commercialize additional products, the discontinuation of sales of the Ainos COVID-19 antigen rapid test kits may adversely affect our business, operating results, and financial condition.
Added
We may be required to expend significant resources to obtain regulatory approval and to comply with ongoing regulations in these jurisdictions.
Removed
Starting from the year 2024, we anticipate VELDONA Pet to serve as a key source of our future revenue until we can develop, obtain regulatory clearance, or secure other appropriate authorization for additional product candidates and commercialize them.
Added
We could encounter delays if a current or future clinical trial is suspended or terminated by us, by the TFDA, FDA or other regulatory authorities and/or review boards.
Removed
The sales of VELDONA Pet will depend on several factors, including, but not limited to, sales and marketing strategies, affordability, and ease of use compared to other products and competitors of VELDONA Pet. If we cannot expand our customer base or improve our sales and marketing strategies, we may not be able to increase our revenue.
Added
If a product candidate fails to develop as expected, or we experience additional and/or unforeseen development costs and/or delays, we could face additional costs and/or loss of expected future revenue, which would adversely affect our current financial position and future prospects may be adversely affected.
Removed
We may form or seek strategic partnerships in the future, and we may not realize the benefits of such alliances or licensing arrangements.
Added
In addition, if we are not able to obtain adequate supplies of our product candidates or the substances used to manufacture them, it will be more difficult for us to develop our product candidates and compete effectively.
Removed
We seek to protect our proprietary positions by, among other things, filing patent applications in the United States and in relevant foreign jurisdictions related to our current product candidates and other future product candidates that we may identify.
Added
In addition, we face significant competition in seeking appropriate strategic partners and the negotiation process is time-consuming and complex.
Removed
Even if we are successful, these types of lawsuits may consume significant amounts of our time and other resources.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−1 removed3 unchanged
Biggest changeWe promote a company-wide culture of cybersecurity risk management. 38 Table of Contents Risks from Cybersecurity Threats We have not encountered cybersecurity challenges that have materially impaired our operations or financial standing during the financial year ended December 31, 2023. Governance Our board of directors is responsible for monitoring and assessing strategic risk exposure.
Biggest changeWe monitor and test our safeguards and train our employees on these safeguards, in collaboration with human resources, IT, and management. We promote a company-wide culture of cybersecurity risk management. Risks from Cybersecurity Threats We have not encountered cybersecurity challenges that have materially impaired our operations or financial standing during the fiscal year ended December 31, 2024.
Our cybersecurity coordinator is responsible for assessing and managing our material risks from cybersecurity threats, in close collaboration with our IT team and report to our CEO. This ensures that the senior management are kept abreast of the cybersecurity posture and potential risks faced by the Company. ITEM 2. DESCRIPTION OF PROPERTY.
Our internal cybersecurity coordinator is responsible for assessing and managing our material risks from cybersecurity threats, in close collaboration with our IT team and report to our CEO. This ensures that the senior management are kept abreast of the cybersecurity posture and potential risks faced by the Company. ITEM 2. DESCRIPTION OF PROPERTY.
Our administrative offices are located at San Diego, California and in Taiwan. Our product development facility is in Taiwan. ITEM 3. LEGAL PROCEEDINGS . There are currently no legal proceedings involving the Company. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 39 Table of Contents PART II
Our administrative offices are located at San Diego, California and in Taiwan. Our product development facility is in Taiwan. ITEM 3. LEGAL PROCEEDINGS . There are currently no legal proceedings involving the Company. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 39 PART II
Our board of directors administers its cybersecurity risk oversight function directly as a whole, as well as through the audit committee. Our executive management team inform the Audit Committee on cybersecurity risks on a regular basis, with a minimum frequency of once per year.
Governance Our board of directors is responsible for monitoring and assessing strategic risk exposure. Our board of directors administers its cybersecurity risk oversight function directly as a whole, as well as through the Audit Committee. Our executive management team inform the Audit Committee on cybersecurity risks on a regular basis, with a minimum frequency of once per year.
Removed
We monitor and test our safeguards and train our employees on these safeguards, in collaboration with human resources, IT, and management.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+0 added−1 removed8 unchanged
Biggest changeFuture determinations as to the declaration and payment of dividends, if any, will be at the discretion of our board of directors and will depend on then-existing conditions, including our operating results, financial condition, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant.
Biggest changeFuture determinations as to the declaration and payment of dividends, if any, will be at the discretion of our board of directors and will depend on then-existing conditions, including our operating results, financial condition, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant. 40 Securities Authorized for Issuance Under Equity Compensation Plans The information required by this Item regarding equity compensation plans is incorporated by reference to the information set forth in Part III, Item 12 of this Annual Report.
Holders of Common Stock As of March 7, 2024, there were approximate 254 shareholders of record of the Company’s common stock based upon the records of the shareholders provided by the Company’s transfer agent.
Holders of Common Stock As of March 7, 2025, there were approximate 241 shareholders of record of the Company’s common stock based upon the records of the shareholders provided by the Company’s transfer agent.
Removed
Securities Authorized for Issuance Under Equity Compensation Plans The information required by this Item regarding equity compensation plans is incorporated by reference to the information set forth in Part III, Item 12 of this Annual Report. 40 Table of Contents ITEM 6. [RESERVED]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

33 edited+32 added−38 removed15 unchanged
Biggest changeThe Reverse Stock Split was effectuated on December 14, 2023 and all the shares and per share dollar information within this Annual Report on Form 10-K has been reflected the Reverse Stock Split. 42 Table of Contents Results of Operations The following table summarizes our results of operations for the years ended December 31, 2023 and 2022: Years ended December 31, Change 2023 2022 Amount % Revenues $ 122,112 $ 3,519,627 $ (3,397,515 ) (97 %) Cost of revenues (375,845 ) (2,114,284 ) 1,738,439 (82 %) Gross (loss) Profit (253,733 ) 1,405,343 (1,659,076 ) (118 %) Operating expenses: Research and development expenses 7,317,388 6,845,964 471,424 7 % Selling, general and administrative expenses 5,635,275 8,535,591 (2,900,316 ) (34 %) Total operating expenses 12,952,663 15,381,555 (2,428,892 ) (16 %) Loss from operating (13,206,396 ) (13,976,212 ) 769,816 (6 %) Non-operating (expenses) income Interest expense (144,193 ) (53,528 ) (90,665 ) 169 % Issuance cost of senior secured convertible note measured at fair value (525,643 ) - (525,643 ) - Fair value change for senior secured convertible note 94,207 - 94,207 - Other income, net 12,276 23,050 (10,774 ) (47 %) Total non-operating expenses, net (563,353 ) (30,478 ) (532,875 ) 1748 % Net loss before income taxes (13,769,749 ) (14,006,690 ) 236,941 (2 %) Provision for income taxes 800 - 800 - Net loss $ (13,770,549 ) $ (14,006,690 ) $ 236,141 (2 %) Revenues, Cost and Gross Profit (Loss) The Company reported $122,112 of revenues for the year ended December 31, 2023, as compared to $3,519,627 for the year ended December 31, 2022 from the sales of Ainos COVID-19 Antigen Rapid Test Kits in Taiwan.
Biggest changeResults of Operations The following table summarizes our results of operations for the years ended December 31, 2024 and 2023: Years ended December 31, Change 2024 2023 Amount % Revenues $ 20,729 $ 122,112 $ (101,383 ) (83 )% Cost of revenues (52,595 ) (375,845 ) 323,250 (86 )% Gross loss (31,866 ) (253,733 ) 221,867 (87 )% Operating expenses: Research and development expenses 8,413,923 7,317,388 1,096,535 15 % Selling, general and administrative expenses 5,395,415 5,635,275 (239,860 ) (4 )% Total operating expenses 13,809,338 12,952,663 856,675 7 % Loss from operating (13,841,204 ) (13,206,396 ) (634,808 ) 5 % Non-operating (expenses) income Interest expense (616,467 ) (144,193 ) (472,274 ) 328 % Issuance cost of senior secured convertible note measured at fair value (308,336 ) (525,643 ) 217,307 (41 )% Fair value change for senior secured convertible note (275,624 ) 94,207 (369,831 ) (393 )% Other income, net 179,270 12,276 166,994 1,360 % Total non-operating expenses, net (1,021,157 ) (563,353 ) (457,804 ) 81 % Net loss before income taxes (14,862,361 ) (13,769,749 ) (1,092,612 ) 8 % Provision for income taxes 800 800 - - Net loss $ (14,863,161 ) $ (13,770,549 ) $ (1,092,612 ) 8 % Revenues, Cost and Gross Loss The Company reported $20,729 of revenues for the year ended December 31, 2024, as compared to $122,112 for the year ended December 31, 2023 from the sales of in Taiwan.
There can be no assurance that we will be successful in our efforts to make the Company profitable. If those efforts are not successful, we may raise additional capital through the issuance of equity securities, debt financings or other sources to further implement its business plan.
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.
Our products pipeline include commercial-stage VELDONA Pet cytoprotein supplements, clinical-stage VELDONA human therapeutics and telehealth-friendly POCTs powered by the AI Nose technology platform. Please refer to “Business” in Part I, Item 1 for description of our business.
Our products pipeline include commercial-stage VELDONA Pet supplements, clinical-stage VELDONA human therapeutics and telehealth-friendly POCTs powered by the AI Nose technology platform. Please refer to “Business” in Part I, Item 1 for description of our business.
During the fourth quarter of 2023, we reassessed our short-term and long-term commercial plans for the VOC POCT related products which is identified as an asset group being assigned the major intangible assets and identified that an impairment testing is warranted for the intangible assets.
During the fourth quarter of 2024, we reassessed our short-term and long-term commercial plans for the VOC POCT related products which is identified as an asset group being assigned the major intangible assets and identified that an impairment testing is warranted for the intangible assets.
(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.
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.
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 2023 and 2022 were $5,252,730 and $4,711,028, respectively.
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 2024 and 2023 were $5,600,037 and $5,252,730, respectively.
The increase in interest expense was due to accrued interest for convertible notes issued in March 2023 bearing a higher interest rate as compared with those interest bearing debts in 2022.
The increase in interest expense was due to accrued interest for convertible notes issued in May 2024 bearing a higher interest rate as compared with those interest bearing debts in 2023.
As disclosed in Note 6 Debts to our accompanying financial statements, we received $3,000,000 in proceeds from the March 2025 convertible note financing and $3,000,000 in proceeds from the Lind Note financing in September and December of 2023 out of total of $10 million financing agreement.
As disclosed in Note 6 Debts to our accompanying financial statements, we received $3,000,000 in proceeds from the March 2025 convertible note financing, $3,875,000 in proceeds from the Lind Note financing in September and December of 2023 and January 2024 out of total of $10 million financing agreement and $9,000,000 in proceeds from the May 2027 convertible note financing.
We continued to invest resources to execute our growth strategy and product roadmap to improve our profitability. Non-operating expenses The interest expense was $144,193 and $53,528 during the years ended December 31, 2023 and 2022, respectively.
We continued to invest resources to execute our growth strategy and product roadmap to improve our profitability. Non-operating expenses The interest expense was $616,467 and $144,193 during the years ended December 31, 2024 and 2023, respectively.
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 have become increasingly available for other infections such as vaginal infections or sexually transmitted infections (STIs).
We believe that consumers have become increasingly familiar with at-home tests, and people may seek additional at-home tests to manage other infections. Home self-testing have become increasingly available for other infections such as vaginal infections or sexually transmitted infections (STIs).
The forecasted cash flows were based on the Company's most recent strategic plan and for periods beyond the strategic plan, our estimates were based on assumed growth rates expected as of the measurement date.
The forecasted cash flows were based on the Company’s most recent strategic plan and for periods beyond the strategic plan, our estimates were based on assumed growth rates expected as of the measurement date. We believe our assumptions were consistent with the strategic plans and business goals.
We also plan to allocate sales and marketing efforts for VELDONA Pet. 45 Table of Contents For future liquidity consideration, we expect primary uses of cash are to fund our operations as we continue to grow our business. We may require a significant amount of cash to fund working capital and capital expenditures as we grow our commercial infrastructure.
For future liquidity consideration, we expect primary uses of cash are to fund our operations as we continue to grow our business. We may require a significant amount of cash to fund working capital and capital expenditures as we grow our commercial infrastructure.
Gross (loss) profit from product sales for the year ended December 31, 2023 was $(253,733) as compared to $1,405,343 for the year ended December 31, 2022.
Gross loss from product sales for the year ended December 31, 2024 was $31,866 as compared to $253,733 for the year ended December 31, 2023.
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.
As of December 31, 2024, we had available cash and cash equivalents of $3,892,919. 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.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K.
The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K, as well as the Risk Factors contained in Part I, Item 1A of this Annual Report on Form 10-K, and other information provided from time to time in our other filings with the SEC.
Contractual Obligations and Commitments For a discussion of our contractual obligations and commitments, refer to Part II, Item 8, Note 13, “Commitments and Contingencies” to the financial statements in this Annual Report on Form 10-K.
We may also have cash requirements related to capital expenditures to support the planned growth of our business, including investments in corporate facilities and equipment. 46 Contractual Obligations and Commitments For a discussion of our contractual obligations and commitments, refer to Part II, Item 8, Note 13, “Commitments and Contingencies” to the financial statements in this Annual Report on Form 10-K.
Operating Loss The Company’s operating loss was $13,206,396 and $13,976,212 during the years ended December 31, 2023 and 2022, respectively, reflecting a $769,816 (6%) decrease in operating losses between the years. We incurred a gross loss in product sales but reduced the share-based compensation expense in 2023.
Operating Loss The Company’s operating loss was $13,841,204 and $13,206,396 during the years ended December 31, 2024 and 2023, respectively, reflecting a $634,808 increase in operating losses between the years. We incurred a gross loss in product sales but reduced the professional expense and material expenses in 2024.
Liquidity and Capital Resources As of December 31, 2023 and 2022, the Company had available cash and cash equivalents of $1,885,628 and $1,853,362, respectively. 44 Table of Contents The following table summarizes our cash flow during the years ended December 31, 2023 and 2022: Years ended December 31, Change 2023 2022 Amount % Net cash used in operating activities $ (4,694,668 ) $ (3,040,737 ) $ (1,653,931 ) 54 % Net cash used in investing activities $ (101,525 ) $ (630,178 ) $ (528,653 ) 84 % Net cash provided by financing activities $ 4,923,673 $ 3,850,799 $ 1,072,874 28 % Operating activities Net cash used in operating activities increased by $1,653,931 during the year of 2023 compared to the year of 2022.
Liquidity and Capital Resources As of December 31, 2024 and 2023, the Company had available cash and cash equivalents of $3,892,919 and $1,885,628, respectively. 44 The following table summarizes our cash flow during the years ended December 31, 2024 and 2023: Years ended December 31, Change 2024 2023 Amount % Net cash used in operating activities $ (5,808,267 ) $ (4,694,668 ) $ (1,113,599 ) 24 % Net cash used in investing activities $ (125,292 ) $ (101,525 ) $ (23,767 ) 23 % Net cash provided by financing activities $ 8,025,746 $ 4,923,673 $ 3,102,073 63 % Operating activities Net cash used in operating activities increased by $1,113,599 during the year of 2024 compared to the year of 2023.
However, if such financing is not available when needed and at adequate levels, we will need to reevaluate our operating plan. Uses of Liquidity 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.
Uses of Liquidity 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 also plan to allocate sales and marketing efforts for VELDONA Pet.
The increase in cash used in operations primarily resulted from our net loss for the year of 2023 due to the slow down of the sales of COVID-19 antigen test kits but partially offset by cash inflow contributed by the operating assets and liabilities.
The increase in cash used in operations primarily resulted from our net loss for the year of 2024 due to swift product but offset by cash inflow contributed by the operating assets and liabilities. Investing activities Net cash used in investing activities during the year of 2024 was $125,292 compared to $101,525 during the year of 2023.
This project underscores our commitment to digitizing smell by pioneering VOC sensing’s potential across diverse industries, thereby broadening our addressable market. The progress of this co-development may affect our business, at least in the near-term. As of December 31, 2023, we had available cash and cash equivalents of $1,885,628.
This project underscores our commitment to digitizing smell by pioneering VOC sensing’s potential across diverse industries, thereby broadening our addressable market. Under this program, we are developing solutions for the elderly care market and for industrial use-case. The progress may affect our business, at least in the near-term.
Going forward, our near-term priorities include sales and marketing of VELDONA Pet, advancing our lead VOC POCT candidate, Ainos Flora, co-developing VOC sensing platform with our Japan partners, as well as advancing clinical studies and pursuing out-licensing of VELDONA human drug candidates. We are currently marketing VELDONA Pet in Taiwan and intend to explore overseas commercial opportunities.
In 2024 our business activities focused on sales and marketing of VELDONA Pet, advancing our lead VOC POCT candidate, Ainos Flora, co-developing VOC sensing platform with our Japan partners, as well as advancing clinical studies and pursuing out-licensing of VELDONA human drug candidates. Through our marketing of VELDONA Pet, we gathered insights into the behavior of pet owners.
Key Developments in 2023 The following highlights major corporate milestones in 2023 that we believe will serve as catalysts for us to develop and commercialize our product pipeline over the next several years: In December 2023, we initiated the second phase of co-development of a VOC sensing platform, powered by AI Nose technology, in collaboration with Nisshinbo Micro Devices Inc.
Key Developments in 2024 The following highlights major corporate milestones in 2024 that we believe will serve as catalysts for us to develop and commercialize our product pipeline over the next several years: In December 2024, we announced the signing of a Memorandum of Understanding (MOU) with Taiwan Tanabe Seiyaku Co., Ltd.
The $1,072,874 increase was primarily reflected by the following: · Proceeds from private placements by issuing convertible notes or non-convertible notes increased by $3,800,000; and · Proceeds from public offering in 2022 decreased by $1,780,000; and · Repayment of convertible notes and other notes payable increased by $557,000; and · Payment of issuance cost of senior secured convertible note measured at fair value increased by $390,000.
The $3,102,073 increase was primarily reflected by the following: ● Repayment of convertible notes and other notes payable increased by $1,065,728; ● Proceeds from convertible notes and other notes payable financing increased by $3,875,000; and ● Payments of issuance cost of senior secured convertible note measured at fair value decreased by $292,801.
The cost of revenues relating to product sales for the year ended December 31, 2023 was $375,845 compared to $2,114,284 for the year ended December 31, 2022.
The cost of revenues relating to product sales for the year ended December 31, 2024 was $52,595 compared to $375,845 for the year ended December 31, 2023. The decrease of cost of revenues primarily caused by the decline in sales volume of COVID-19 Antigen Rapid Test Kits.
As of the date of this report, we further drew down an additional $875,000 of funding from Lind Note. We anticipate that cash reserves, business revenues, and potential debt financing through convertible and non-convertible notes will fund our operations over the next twelve months.
We anticipate that cash reserves, business revenues, and potential debt financing through convertible and non-convertible notes will fund our operations over the next twelve months. There can be no assurance that we will be successful in our efforts to make the Company profitable.
Financing activities Cash received from financing activities were $4,923,673 and $3,850,799 during the years of 2023 and 2022, 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 received from financing activities were $8,025,746 and $4,923,673 during the years of 2024 and 2023, respectively.
("Topmed") for distribution of VELDONA Pet cytoprotein supplements in Taiwan. 41 Table of Contents Factors Affecting Our Business We are pivoting away from sale of COVID-19 antigen rapid test kits, which were the main source of our revenues in 2023.
In May 2024, we initiated a Taiwan clinical study to evaluate VELDONA’s clinical efficacy in treating feline chronic gingivostomatitis (“FCGS”), a chronic painful oral disease characterized by inflammation or abnormal proliferation in the oral cavity. 41 Factors Affecting Our Business We have pivoted away from sale of COVID-19 antigen rapid test kits, which were the main source of our revenues in 2023.
The gross loss was due to a decrease in sales volume and selling price as well as recognition of inventory loss in 2023. 43 Table of Contents Research and Development (R&D) Expenses R&D expenses for the years ended December 31, 2023 and 2022 were $7,317,388 and $6,845,964, respectively.
Research and Development (R&D) Expenses R&D expenses for the years ended December 31, 2024 and 2023 were $8,413,923 and $7,317,388, respectively. The increase $1,096,535 (15%) was due to increased staffing expenditures (including share-based compensation) and co-research expenses, but offset by a decrease in impairment loss and material expenses.
The decrease of revenue in 2023 was primarily caused by the decline of both per unit selling price and sales volume of Ainos COVID-19 Antigen Rapid Test Kits in 2023 due to substantial slowdown of COVID-19 infection in Taiwan.
The decrease of revenue in 2024 was primarily caused by COVID-19 Antigen Rapid Test Kits in lower sales volume and was offset by the exchange rate fluctuations. We generated $20,321 and $256 in revenues from pet supplements and $408 and $102,256 in revenues from COVID-19 Antigen Rapid Test Kits in 2024 and 2023, respectively.
To finance our continuing operations, we will need to raise additional capital, which cannot be assured.
See “Liquidity and Capital Resources” for additional information. To finance our continuing operations, we will need to raise additional capital, which cannot be assured. Recent Financing On May 03, 2024, The Company entered into Convertible Note and Warrant Purchase Agreement with the ASE Test, Inc.
Net Loss Net loss was $13,770,549 in 2023 compared to $14,006,690 in 2022, resulting in a $236,141 (2%) decrease in net loss attributable to common stockholders due to the decrease in share-based compensation expense despite of a gross loss in product sales.
Net Loss Net loss was $14,863,161 in 2024 compared to $13,770,549 in 2023, resulting in a $1,092,612 (8%) increase in net loss attributable to common stockholders due to the increase in non-exclusive use of certain patents related to VOC and POCT technologies despite offset by the decrease in professional expenses.
The share-based compensation expense and the depreciation and amortization expense in 2023 and 2022 were $2,886,216 and $6,473,546, respectively. When excluding these non-cash expenses, SG&A expenses increased to $2,749,059 in 2023 compared to $2,062,045 in 2022 mainly due to increased professional expenses and expenditures to maintain the listing requirement as a public company after uplisting in August 2022.
When excluding these non-cash expenses, SG&A expenses slight decreased to $2,570,672 in 2024 compared to $2,749,059 in 2023 mainly due to decreased professional expenses, expenditures to public relations and investor relations fees, and D&O insurance expenses.
Removed
Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K contains forward-looking statements that involve substantial risks and uncertainties. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
Added
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Removed
There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicated by forward-looking statements. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements.
Added
(“Taiwan Tanabe”), a subsidiary of Mitsubishi Tanabe Pharma Corporation in Japan. The parties may work under the terms of the MOU to further define the partnership for manufacturing and Taiwan market promotion of our Sjögren’s syndrome drug based on VELDONA.
Removed
Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make.
Added
In September 2024, we announced a plan to conduct a Taiwan clinical study for VELDONA in 2025 on treating human immunodeficiency virus (HIV)-related oral warts. We also announced a plan to conduct a Taiwan clinical study in 2025 for VELDONA on treating Sjögren’s syndrome.
Removed
We have included important factors in the cautionary statements included in this Annual Report on Form 10-K, particularly in the section entitled “Risk Factors” in Part I, Item 1A that could cause actual results or events to differ materially from the forward-looking statements that we make.
Added
We were also granted an invention patent in Taiwan and has filed for global patent protection under the Patent Cooperation Treaty (PCT) for treatment and prevention of coronavirus infection based on VELDONA. In August 2024, we announced that our VOC co-development program, initiated in 2023, with Nisshinbo Micro Devices Inc. (“NISD”) and Taiwan Inabata Sangyo Co.
Removed
Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments that we may make.
Added
(“Taiwan Inabata”) achieved several key milestones. First, we have developed a solution targeting the elderly care market. Second, we marked a key milestone in expanding AI Nose application in industrial use-case, with our solution delivering 79% accuracy in 22 different volatile organic compounds (VOCs) in semiconductor factories.
Removed
You should read this Annual Report on Form 10-K and the documents that we have filed as exhibits to this Annual Report on Form 10-K completely and with the understanding that our actual future results may be materially different from what we expect.
Added
We secured an exclusive, perpetual license of 10 invention patents and patent applications related to gas sensors and medical devices, covering the U.S., Germany, China, Japan and Taiwan.
Removed
The forward-looking statements contained in this Annual Report on Form 10-K are made as of the date of this Annual Report on Form 10-K, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Overview Ainos, Inc.
Added
In June 2024, we announced that our Taiwan clinical studies for Ainos Flora have tested 75 cases with meaningful insights, laying ground for development of second-generation Ainos Flora intended to be optimized for at-home testing. We have implemented CUDA to accelerate development.
Removed
(“NISD”) and Taiwan Inabata Sangyo Co. (“Taiwan Inabata”). First announced in August 2023, Ainos, NISD and Taiwan Inabata plan to co-develop a VOC sensing platform, leveraging our intellectual properties surrounding AI Nose, for applications including telehealth, automotive, industrial, and environmental safety. Inabata will provide business logistics for the program and liaise between Ainos and NISD.
Added
These insights have influenced our choice to allocate resources toward developing animal drugs. We identified a market opportunity in FCGS, a cat oral disease currently facing limited treatment options. In 2024, we started a clinical study in Taiwan for our FCGS program. Its success could impact our business plan.
Removed
This project underscores our commitment to digitizing smell by pioneering VOC sensing’s potential across diverse industries, thereby broadening our addressable market. In November 2023, our contract manufacturer, Swiss Pharmaceutical Co., Ltd. ("Swiss Pharma"), has completed manufacturing of a Good Manufacturing Practice ("GMP") clinical batch of VELDONA investigational new drugs.
Added
For our VELDONA human drug development, we prioritize HIV oral warts and Sjogren’s syndrome due to limited treatment options for these conditions. In 2024, we prepared for clinical studies in Taiwan expected to commence in 2025. We have also progressed in out-licensing our drug candidates through a MOU with Taiwan Tanabe. These developments may affect our business.
Removed
In November 2023, we announced that based on top-line data reported from three clinical studies for VELDONA formulation as a potential treatment for oral warts in HIV-seropositive patients, we plan to pursue a pre-IND meeting with the United States Food and Drug Administration (the "U.S. FDA") for our planned Phase III clinical studies. U.S.
Added
(“ASE”), a shareholder of Ainos KY, for the issuance of convertible promissory notes with 6% compound interest in the aggregate principal amount of $9,000,000 (collectively the “Notes”) convertible into shares of common stock, par value $0.01 per share, of the Company, payable three (3) years from May 03, 2024 as well as the issuance of warrants for the purchase of up to 500,000 shares of Common Stock at a price per share of $4.50, exercisable until May 03, 2029.
Removed
FDA has granted Orphan Drug Designation ("ODD") for our VELDONA formulation as a potential treatment for oral warts in HIV-seropositive patients. In the third quarter of 2023, we commenced shipping VELDONA Pet cytoprotein supplements in Taiwan.
Added
As of December 31, 2024, the Company received the full amount of the payment.
Removed
Launched in the second quarter of 2023, our VELDONA Pet product line is formulated to address a variety of health issues in dogs and cats, including skin, gum, emotion, discomfort caused by allergies, eye, and weight-related issues. In March 2023, we signed a distribution agreement with Topmed International Biotech Co., Ltd.
Added
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$1.67 million.
Removed
We have offered VELDONA Pet on certain Taiwanese e-commerce platforms. Offline, we are exploring opportunities in channels such as pet supply stores, chain drugstores and convenience stores. Pet food and supplement industry is highly competitive. Our ability to effectively compete may affect our business, at least in the near-term.
Added
The repayment was made with $1,439,754 in cash and $224,842 through the issuance of 382,384 shares of Common Stock, valued at $0.588 per share.
Removed
Recent Financing On September 25, 2023, we entered into a securities purchase agreement with Lind Global Fund II LP (“Lind) to issue and sell the initial $3 million tranche of a total anticipated $10 million private placement with $2 million funded at closing and $1 million at conditions specified in the agreement.
Added
On August 16, 2024, the Company repaid the remaining note payable principal amount of $42,000 with accrued interest to i2China Management Group, LLC (“i2China”). 42 On October 7, 2024, the Company repaid the remaining note payable principal amount of $270,000 with accrued interest to Ainos KY, the controlling shareholder of the Company.
Removed
The investment is in the form of a senior secured convertible promissory note, convertible into shares of the Company’s common stock at the lower of $7.50 per share reverse-stock-split adjusted, or 90.0% of the average of the three lowest daily volume weighted average price (“VWAP") of the common stock during the 20 trading days prior to conversion, subject to certain adjustments.
Added
The share-based compensation expense and the depreciation expense for manufacturing in the year ended December 31, 2024 and 2023 were $9,032 and $80,655, respectively. When excluding these non-cash cost, cost of revenue decreased to $43,563 during the year ended December 31, 2024 compared to $295,190 for the same period in 2023.
Removed
We also issued Lind warrants to purchase 691,244 shares of common stock giving effect to the 1-for-5 reverse stock split on December 14, 2023, at an initial exercise price of $4.50 per share reverse-stock-split adjusted, subject to certain adjustments. On January 24, 2024, we announced an additional financing with Lind.
Added
The gross loss was due to a low sales volume for newly launched products, and a lower cost of revenue. 43 When excluding these non-cash costs, gross loss decreased to $(22,834) during the year ended December 31, 2024 compared to $(173,078) for the same period in 2023.
Removed
The funding amount is up to $1.75 million, with $875,000 funded at closing and $875,000 to be funded subject to effective registration statement and conditions specified in the agreement. In connection with additional funding, we issued Lind a warrant to purchase 1,021,400 shares at an exercise price of $2.16 per share.
Added
When excluding these non-cash expenses, R&D expenses increased to $2,813,886 in 2024 from that of $2,064,658 in 2023 primarily caused by increasing in non-exclusive use of certain patents related to VOC and POCT technologies. Selling, General and Administrative (SG&A) Expenses SG&A expenses were $5,395,415 and $5,635,275 for the years ended December 31, 2024 and 2023, respectively.
Removed
On March 13, 2023, we issued and sold two convertible promissory notes in a principal amount of $3 million to certain investors. The note will mature in two years following the issuance, bearing interest at the rate of 6% per annum, convertible to Company’s common stock at $7.50 per share reverses-stock-split adjusted.
Added
The $239,860 (4%) slight decrease was due to decreased professional expenses, public relations and investor relations fees, and D&O insurance expenses, but offset by staffing expenditures (including share-based compensation). The share-based compensation expense and the depreciation and amortization expense in 2024 and 2023 were $2,824,743 and $2,886,216, respectively.
Removed
Reverse Stock Split On December 12, 2023, the Company announced that, as previously authorized by its shareholders, it is implementing a consolidation (reverse stock split) of its outstanding shares of common stock on the basis of one (1) new share of common stock for every five (5) currently outstanding shares.
Added
As disclosed in Note 6 (Debt) to our accompanying financial statements, we received $875,000 in proceeds from the Lind Note transaction in January 2024. As disclosed in Note 6 (Debt) to our accompanying financial statements, we received $9,000,000 in proceeds from the ASE Note transaction in May 2024.
Removed
The decrease of cost of revenues was due to the decrease in sales volume of Ainos COVID-19 Antigen Rapid Test Kits but offset by an increase of $235,047 in loss of excess and obsolete inventory in 2023.
Added
As disclosed in Note 6 (Debt) to our accompanying 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 6 (Debt) to our accompanying financial statements, we repaid $42,000 to retire the i2China Note transaction in August 2024.
Removed
The slight increase $471,424 (7%) was due to $286,777 of impairment loss recognized for equipment related to COVID-19 POCT and increased staffing expenditures (including share-based compensation), but offset by a decrease in clinical trial fees.
Added
As disclosed in Note 6 (Debt) to our accompanying financial statements, we repaid $270,000 to retire the KY Note transaction in October 2024. 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.
Removed
When excluding these non-cash expenses, R&D expenses slightly decreased to $2,064,658 in 2023 from that of $2,134,936 in 2022 due to limitations on recruiting patients for clinical trials for VOC POCT and human related VELDONA drug candidates in 2023.
Added
However, if such financing is not available when needed and at adequate levels, the Company will need to reevaluate its operating plan. At The Market Offering Agreement On May 31, 2024, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”), with H.C.
Removed
Selling, General and Administrative (SG&A) Expenses SG&A expenses were $5,635,275 and $8,535,591 for the years ended December 31, 2023 and 2022, respectively.
Added
Wainwright & Co., LLC or the Agent, pursuant to which the Company may issue and sell, from time to time, shares of its Common Stock, depending on market demand, with the Agent acting as the sales agent or principal (the “ATM Offering”).
Removed
The $2,900,316 (34%) decrease was largely due to decreased expenses associated with share-based compensation as the Company granted RSUs that were immediately vested to officers in 2022 and fully recorded the total compensation expense in the same period; however, the decrease was partially offset by the special stock bonus issued in 2023 with expense was fully recorded.

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