Ainos, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; comparative period is Q1 2023. Ainos is a development-stage healthcare company focused on VELDONA products and therapeutics, point-of-care tests using its AI Nose VOC platform, and synthetic RNA. The company sells VELDONA Pet supplements in Taiwan and is developing Ainos Flora and other candidates. It ceased COVID-19 test-kit sales in Q1 2024 after the related emergency authorization expired.
Financial performance and liquidity
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | $20,729 | $49,164 |
| Cost of revenue | $26,754 | $100,848 |
| Gross loss | $6,025 | $51,684 |
| Research and development | $2,084,648 | $1,698,883 |
| Selling, general and administrative | $1,029,418 | $762,465 |
| Operating loss | $3,120,091 | $2,513,032 |
| Net loss | $3,314,810 | $2,520,475 |
| Basic and diluted loss per share | $0.57 | $0.63 |
| Cash used in operating activities | $1,494,747 | $1,432,229 |
- Revenue fell 58% year over year as COVID-19 kit sales ended; Q1 2024 revenue came from VELDONA Pet. Gross loss narrowed as cost of revenue declined, but product sales remained below cost.
- Operating expenses increased 27%, including higher clinical-trial, co-research, staffing, share-based compensation, and professional expenses. Net loss increased 32% year over year.
- Cash and cash equivalents were $1,030,899 at March 31, 2024, down from $1,885,628 at December 31, 2023. Investing cash outflow was $111,280; financing provided $777,500, including $875,000 funded under the Lind arrangement, partly offset by issuance costs.
- At March 31, current assets were $1.51 million and current liabilities were $4.71 million. Total assets were $29.75 million, total liabilities $7.08 million, and stockholders’ equity $22.68 million.
- Debt disclosures include $3.0 million of March 2025 convertible notes, a Lind secured convertible note carried at fair value of $2.37 million (reported principal outstanding $2.79 million), and $312,000 of current related-party notes. The balance-sheet note lines and the notes-payable schedule do not appear to reconcile clearly; see investor verification items below.
Material changes, outlook, and risks
- R&D spending is expected to rise as the company advances Ainos Flora and human VELDONA candidates through clinical development. Management also expects possible increases in sales and marketing spending.
- Management expects cash reserves, business revenue, and potential financing to support operations over the next 12 months, but says additional capital is needed and may not be available on acceptable terms. The filing states that substantial doubt exists about the company’s ability to continue as a going concern for at least one year from issuance; losses and negative operating cash flows are expected to continue.
- On May 3, 2024, after quarter-end, the company entered into an agreement with ASE Test for $9.0 million of 6% compound-interest convertible notes due in three years, plus warrants for up to 500,000 shares at $4.50 per share. Funding terms and completion should be checked in subsequent filings.
- The Lind note permits conversion at a price linked to the lower of a stated price or a market-price formula, and related warrants and other securities create potential dilution. As of March 31, 1.41 million warrants were outstanding; 5.25 million potential shares were excluded from diluted EPS as anti-dilutive. Common shares outstanding were 6,144,506 at quarter-end and 6,284,300 as of May 13.
- Most company assets, subject to specified exceptions, secure the Lind note. A default could expose assets to foreclosure and disrupt clinical trials or commercialization. Management also identifies financing availability, clinical and regulatory development, commercialization, and intellectual-property litigation as risks. No material legal proceedings were reported.
- Management reported disclosure controls and procedures were effective as of March 31, 2024, with no material changes in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Reconcile the convertible-note balances and classifications: the balance sheet lists two $3.0 million current convertible-note lines, while the note schedule describes $3.0 million of March 2025 notes and reports total notes payable of $5.68 million.
- Confirm the conditions, timing, and actual proceeds under the May 2024 ASE $9.0 million financing agreement, and assess its conversion and warrant dilution.
- Review the Lind note’s remaining principal, conversion-price mechanics, collateral terms, and any additional funding conditions; verify whether the company can meet obligations and fund its development plan.
- Track VELDONA Pet sales and margins, Ainos Flora clinical progress, regulatory milestones, and the pace of cash use against the going-concern disclosure.