Ainos Inc

Previous wording

When used in this Quarterly Report, all references to “Ainos,” the “Company,” “we,” “our” and “us” refer Ainos, Inc.

Current wording

When used in this Quarterly Report, all references to “Ainos,” the “Company,” “we,” “our” and “us” refer to Ainos, Inc.

Previous wording

Ainos, Inc. (the “Company”), incorporated in the State of Texas in 1984, is a diversified healthcare company focused on the development of novel point-of-care testing (the “POCT”), therapeutics based on very low-dose interferon alpha (the “VELDONA”), and synthetic RNA-driven preventative medicine. Our product pipeline includes commercial-stage VELDONA Pet cytoprotein supplements, clinical-stage VELDONA human therapeutics and telehealth-friendly POCTs powered by the AI Nose technology platform.

Current wording

Ainos, Inc. (the “Company”), incorporated in the State of Texas in 1984, is a diversified healthcare company focused on the development of novel point-of-care testing (the “POCT”), therapeutics based on very low-dose interferon alpha (the “VELDONA”), and synthetic RNA-driven preventative medicine. Our product pipeline includes commercial-stage VELDONA Pet cytoprotein supplements, clinical-stage VELDONA human and animal therapeutics and telehealth-friendly POCTs powered by the AI Nose technology platform.

Previous wording

An integral part of our operating strategy is to create multiple revenue streams through commercializing our product portfolio and leveraging our intellectual property patents. We plan to continue our strategic pivot away from the sale of COVID-19 antigen rapid test kits. In line with this transition, our near-term development plans encompass advancing our flagship VOC POCT candidate, Ainos Flora, and co-developing a VOC sensing platform with our partners. At the same time, we will advance clinical studies and actively pursue the out-licensing of VELDONA human drug candidates and we are developing opportunities in the animal drug market.

Current wording

An integral part of our operating strategy is to create multiple revenue streams through commercializing our product portfolio and leveraging our intellectual property patents. Our near-term development plans encompass advancing our flagship VOC POCT candidate, Ainos Flora, and co-developing a VOC sensing platform with our partners. At the same time, we will advance clinical studies and actively pursue the out-licensing of VELDONA human drug candidates and we are developing opportunities in the animal drug market.

Previous wording

As of March 31, 2024, we had available cash and cash equivalents of $1,030,899. We anticipate business revenues and further potential financial support from external sources to fund our operations over the next twelve months. We have based this estimate on assumptions that may prove to be incorrect, and we could exhaust our available capital resources sooner than we expect. See “Liquidity and Capital Resources” for additional information. To finance our continuing operations, we will need to raise additional capital, which cannot be assured.

Current wording

As of June 30, 2024, we had available cash and cash equivalents of $8,014,098. We anticipate business revenues and further potential financial support from external sources to fund our operations over the next twelve months. We have based this estimate on assumptions that may prove to be incorrect, and we could exhaust our available capital resources sooner than we expect. See “Liquidity and Capital Resources” for additional information. To finance our continuing operations, we will need to raise additional capital, which cannot be assured.

Previous wording

The cost of revenue related to product sales in Q1 2024 was $26,754 compared to $100,848 in Q1 2023. The decrease in cost of revenue was due to the decrease in sales volume.

Current wording

The cost of revenue related to product sales in Q2 2024 was $25,373 compared to $55,817 in Q2 2023. The decrease in cost of revenue was due to the decrease in sales volume.

Previous wording

The share-based compensation expense and the depreciation expense for manufacturing in Q1 2024 and Q1 2023 were $4,516 and $23,988, respectively. When excluding these non-cash cost, cost of revenue decreased to $22,238 in Q1 2024 compared to $76,860 in Q1 2023.

Current wording

The share-based compensation expense and the depreciation expense for manufacturing in Q2 2024 and Q2 2023 were $4,516 and $24,366, respectively. When excluding these non-cash cost, cost of revenue decreased to $20,857 in Q2 2024 compared to $31,451 in Q2 2023.

Previous wording

The share-based compensation expense and the depreciation and amortization expense in Q1 2024 and Q1 2023 were $1,284,343 and $1,194,984, respectively. When excluding these non-cash expenses, R&D expenses increased to $800,305 in Q1 2024 from $503,899 in Q1 2023.

Current wording

The share-based compensation expense and the depreciation and amortization expense in Q2 2024 and Q2 2023 were $1,276,777 and $1,210,429, respectively. Excluding these non-cash expenses, R&D expenses increased to $701,979 in Q2 2024 from $460,758 in Q2 2023.

Previous wording

The share-based compensation expense and the depreciation and amortization expense in Q1 2024 and Q1 2023 were $337,953 and $206,470, respectively. When excluding these non-cash expenses, SG&A expenses increased to $691,465 in Q1 2024 compared to $555,995 in Q1 2023.

Current wording

The share-based compensation expense and the depreciation and amortization expense in Q2 2024 and Q2 2023 were $338,669 and $121,025, respectively. Excluding these non-cash expenses, SG&A expenses increased to $706,211 in Q2 2024 compared to $497,124 in Q2 2023.

Previous wording

The Company’s operating loss was $3,120,091 and $2,513,032 in Q1 2024 and Q1 2023, respectively, reflecting a $607,059 (24%) increase in operating loss between the reporting periods. We incurred a gross loss in product sales. We continued to invest resources to execute our growth strategy and product roadmap to improve our profitability.

Current wording

The Company’s operating loss was $3,049,009 and $2,316,598 in Q2 2024 and Q2 2023, respectively, reflecting a $732,411 (32%) increase in operating loss between the reporting periods. We incurred a gross loss in product sales. We continued to invest resources to execute our growth strategy and product roadmap to improve our profitability.

Previous wording

In Q1 2024, interest expense was $48,696 compared to $9,273 in Q1 2023. The increase in interest expense was due to accrued interest for convertible notes issued in March 2023 bearing a higher interest rate compared to 2023.

Current wording

In Q2 2024, interest expense was $118,759 compared to $40,311 in Q2 2023. The increase in interest expense was due toaccrued interest for convertible notes issued in May 2024.

Previous wording

Net loss was $3,314,810 in Q1 2024 compared to $2,520,475 in Q1 2023, resulting in a $794,335 (32%) increase in net loss attributable to our shareholders of common stock. The net loss was due to an expanding operating expense. We continued to invest resources to execute our growth strategy and product roadmap to improve our profitability.

Current wording

Net loss was $3,195,022 in Q2 2024 compared to $2,349,727 in Q2 2023, resulting in a $845,295 (36%) increase in net loss attributable to our shareholders of common stock. The net loss was due to an expanding operating expense. We continued to invest resources to execute our growth strategy and product roadmap to improve our profitability.

Previous wording

The Company reported $20,729 and $49,164 in revenue in Q1 2024 and Q1 2023, respectively, from product sales of VELDONA pet cyprotein supplements and Ainos COVID-19 Antigen Rapid Test Kits in Taiwan respectively. The Company launched its VELDONA pet cyprotein supplement products in the third quarter of 2023; due to the expiration of EUA, the company ceased the sale of the Ainos COVID-19 antigen rapid test kits in the first quarter of 2024.

Current wording

The Company reported $20,729 and $77,719 in revenue in H1 2024 and H1 2023, respectively, from product sales of VELDONA pet cytoprotein supplements and Ainos COVID-19 Antigen Rapid Test Kits in Taiwan respectively. The Company launched its VELDONA pet cytoprotein supplement products in the third quarter of 2023; due to the expiration of EUA, the company ceased the sale of the Ainos COVID-19 antigen rapid test kits in the first quarter of 2024.

Previous wording

Gross loss from product sales in Q1 2024 was $6,025 as compared to $51,684 gross loss from product sales in Q1 2023. The decrease in gross loss was due to low sales volume for newly launched products, and a lower cost of revenue.

Current wording

Gross loss from product sales in H1 2024 was $31,398 as compared to $78,946 gross loss from product sales in H1 2023. The decrease in gross loss was due to low sales volume for newly launched products, and a lower cost of revenue.

Previous wording

When excluding these non-cash costs, gross loss decreased to $1,509 in Q1 2024 compared to $27,696 gross loss in Q1 2023.

Current wording

When excluding these non-cash costs, gross loss decreased to $22,366 in H1 2024 compared to $30,592 gross loss in H1 2023.

Previous wording

R&D expenses in Q1 2024 and Q1 2023 were $2,084,648 and $1,698,883, respectively. The increase of $385,765 (23%) was due to increased expenses associated with clinical trial fees, co-research for technology and product and staffing expenditures (including share-based compensation), which were offset by a decrease in professional expense. We expect that our R&D expenses related to clinical trials will continue to grow as we further develop VOC POCT and VELDONA drug candidates and increase the pace of clinical trials previously delayed during the COVID-19 pandemic.

Current wording

R&D expenses in H1 2024 and H1 2023 were $4,063,404 and $3,370,070, respectively. The increase of $693,334 (21%) was due to increased expenses associated with co-research for technology and product and staffing expenditures (including share-based compensation), which were offset by a decrease in professional expense. We expect that our R&D expenses related to clinical trials will continue to grow as we further develop VOC POCT and VELDONA drug candidates and increase the pace of clinical trials previously delayed during the COVID-19 pandemic.

Previous wording

SG&A expenses were $1,029,418 and $762,465 in Q1 2024 and Q1 2023, respectively, reflecting an increase of $266,953 (35%) due to a significant increase in share-based compensation and professional expenses. RSUs granted to officers and employees of the Company require a service period of 3 years and therefore, the total amount of the compensation expense was amortized over the service period.

Current wording

SG&A expenses were $2,074,298 and $1,380,614 in H1 2024 and H1 2023, respectively, reflecting an increase of $693,684 (50%) due to a significant increase in staffing expenditures (including share-based compensation) and professional expenses. RSUs granted to officers and employees of the Company require a service period of 3 years and therefore, the total amount of the compensation expense was amortized over the service period.

Previous wording

As of March 31, 2024 and December 31, 2023, the Company had available cash of $1,030,899 and $1,885,628, respectively.

Current wording

As of June 30, 2024 and December 31, 2023, the Company had available cash of $8,014,098 and $1,885,628, respectively.

Previous wording

Cash used in operating activities increased by $62,518 during the first quarter of 2024 compared to the first quarter of 2023. Our net loss for the first quarter of 2024 increased by $794,335 primarily due to increase of operating expenses. The operating cash outflow as a result of changes in operating assets and liabilities was mainly attributable to:

Current wording

Cash used in operating activities decreased by $890,439 during the H1 of 2024 compared to the H1 of 2023. Our net loss for the H1 of 2024 increased by $1,639,630 primarily due to increase of operating expenses. The operating cash outflow as a result of changes in operating assets and liabilities was mainly attributable to:

Previous wording

Cash used for investing activities were $111,280 and $72,483 during the first quarter of 2024 and the first quarter of 2023, respectively. The increase was due to increase in refundable deposits and other noncurrent assets offset by decrease in purchase of property and equipment.

Current wording

Cash used for investing activities were $119,792 and $71,262 during the H1 of 2024 and the H1 of 2023, respectively. The increase was due to increase in refundable deposits and other noncurrent assets offset by decrease in purchase of property and equipment.

Previous wording

Cash provided by financing activities were $777,500 and $800,000 during the first quarter of 2024 and the first quarter of 2023, respectively. The $22,500 decrease was primarily reflected by the following:

Current wording

Cash provided by financing activities were $9,777,500 and $2,185,974 during the H1 of 2024 and the H1 of 2023, respectively. The $7,591,526 increase was primarily reflected by the following: