# Ainos, Inc.: Form 10-Q for the period ended Sep 30, 2024

- Company: [Ainos, Inc.](/companies/aimd.md) (CIK 1014763)
- Form: 10-Q
- Filed: 2024-11-06
- Accepted by EDGAR: Nov 6, 2024, 21:15 ET
- Period: 2024-09-30
- Accession: 0001493152-24-043832
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1014763/000149315224043832/form10-q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1014763/000149315224043832/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 9 months, 2024-01-01 to 2024-09-30 | $20.7k | us-gaap:Revenues |
| Cost of revenue | 3 months, 2024-07-01 to 2024-09-30 | $547 | us-gaap:CostOfRevenue |
| Cost of revenue | 9 months, 2024-01-01 to 2024-09-30 | $52.7k | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2024-07-01 to 2024-09-30 | −$547 | us-gaap:GrossProfit |
| Gross profit | 9 months, 2024-01-01 to 2024-09-30 | −$31.9k | us-gaap:GrossProfit |
| Research and development | 3 months, 2024-07-01 to 2024-09-30 | $2.0m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2024-01-01 to 2024-09-30 | $6.1m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2024-07-01 to 2024-09-30 | $1.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2024-01-01 to 2024-09-30 | $3.1m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-07-01 to 2024-09-30 | −$3.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-01-01 to 2024-09-30 | −$9.2m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-07-01 to 2024-09-30 | $264.6k | us-gaap:InterestExpenseNonoperating |
| Interest expense | 9 months, 2024-01-01 to 2024-09-30 | $432.1k | us-gaap:InterestExpenseNonoperating |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | −$3.7m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | −$10.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.33 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | −$1.30 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.33 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | −$1.30 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 11,279,220 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 7,868,997 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | −$4.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-01-01 to 2024-09-30 | $20.4k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-09-30 | $5.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-09-30 | $5.6m | us-gaap:AssetsCurrent |
| Total assets | at 2024-09-30 | $31.4m | us-gaap:Assets |
| Current liabilities | at 2024-09-30 | $4.1m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-09-30 | $13.3m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-09-30 | $18.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 27,261 characters.

*The unaudited condensed financial statements and this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2023 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Form 10-K for the period ended December 31, 2023 (the “2023 Annual Report”). In addition to historical information, this discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These forward-looking statements are subject to risks and uncertainties, including those set forth under “Part I. Item 1A. Risk Factors” in our 2023 Annual Report, “Part II. Item 1A. Risk Factors” in this Quarterly Report, and elsewhere in this Quarterly Report, that could cause actual results to differ materially from historical results or anticipated results.*

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

### Overview

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

We have historically involved in the research and development of therapeutics based on VELDONA. Building on our research and development on VELDONA since inception, we are focused on commercializing a suite of VELDONA-based product candidates. Currently our priority VELDONA pipeline includes drug candidates for treating oral warts for human immunodeficiency virus (HIV) seropositive patients, Sjögren’s syndrome, and feline chronic gingivostomatitis (FCGS), a cat oral infection.

In 2021 and 2022, we acquired certain types of intellectual property from controlling shareholder, Ainos Inc., a Cayman Island corporation (“Ainos KY”), to expand product portfolio into POCTs aimed to provide connected, rapid, and convenient testing for a broad range of health conditions. Pivoting from the sales of COVID-19 POCT, we aim to commercialize POCTs that detect volatile organic compounds (the “VOC”) emitted by the body, powered by our AI Nose technology platform. Our AI Nose technology platform implements digital nose sensors and our proprietary algorithm to analyze and digitally profile VOCs emitted by the body. Our lead VOC POCT candidate, Ainos Flora, aims to test female vaginal health and certain common sexually transmitted infections (the “STIs”) quickly and easily.

We believe AI Nose has additional opportunities in telehealth, automotive, industrial, and environmental safety applications. To address these additional opportunities, we are codeveloping a VOC POCT solution for the elderly care market. We are also codeveloping a VOC sensing solution to address the industrial market, as our first move to expand the application of AI Nose beyond healthcare. Our vision is to leverage digital nose sensors and our proprietary VOC sensing AI algorithm, to digitize smell and ultimately become AI’s nose.

### Our Pipeline

An integral part of our operating strategy is to create multiple revenue streams through sales of commercially ready products, out-licensing or forming strategic relationships to develop and commercialize our products. As of September 30, 2024, we have commercialized the following products:

- **COVID-19 Antigen Rapid Test Kit**. As the first commercialized products we sell, we have marketed COVID-19 antigen rapid test kits in Taiwan under emergency use authorization (“EUA”) issued by the Taiwan Federal and Drug Administration (“TFDA”) to TCNT, the product manufacturer. We have pivoted away from this business and have ceased selling the product since the first quarter of 2024.
- **VELDONA Pet.** VELDONA Pet is cytoprotein supplement formulated to address a variety of health issues in dogs and cats, including skin, gum, emotion, discomfort caused by allergies, eye, and weight-related issues. We currently market VELDONA Pet in Taiwan.

From time to time, we assess our development plan based on available resources and market dynamics. As of September 30, 2024, our current pipeline of the products, which are under development, includes the following:

- **VELDONA human and animal drugs.** Our human drug pipeline include oral warts for HIV seropositive patients, Sjögren’s syndrome common cold, and influenza We have conducted Phase 2 studies for these programs. Within the human drug pipeline, we are prioritizing HIV oral warts and Sjögren’s syndrome. As of the third quarter of 2024, we are in the process of initiating clinical studies for HIV oral warts and Sjögren’s syndrome in Taiwan. The United States Food and Drug Administration (the “U.S. FDA”) have granted orphan drug designation for our VELDONA formulation as a potential treatment for oral warts in HIV-seropositive patients. In the second quarter of 2024 we announced a plan to initiate a clinical study for feline chronic gingivostomatitis (FCGS), a cat oral disease, as an effort to explore VELDONA’s opportunity as an animal drug. We enrolled our first subject for FCGS during the third quarter of 2024.
- **VOC POCT – Ainos Flora**. Ainos Flora, powered by AI Nose, is intended to perform a non-invasive test for female vaginal health and certain common STIs within a few minutes. A companion app is also being developed that aims to enable users to conveniently manage test results. We believe Ainos Flora can provide connected, convenient, discreet, rapid testing in a point-of-care setting. We are conducting clinical study in Taiwan and exploring strategic opportunities to commercialize the product. To further optimize the product for at-home testing, we are developing a next generation Ainos Flora device that implements compute unified device architecture (CUDA), a parallel computing platform for accelerated computing on graphical processing units.
- **VOC platform – NISD co-development.** We are co-developing a VOC sensing platform with Nisshinbo Micro Devices Inc. (“NISD”) and Taiwan Inabata Sangyo Co. (“Taiwan Inabata”). The platform under development is intended to be used in applications including telehealth, automotive, industrial, and environmental safety. We are developing a VOC POCT solution for the elderly market and a solution for sensing VOCs in the industrial market.
- **VOC POCT – Ainos Pen.** The device is intended to be a cloud-connected, multi-purpose, portable breath analyzer that is intended to monitor health conditions within minutes, powered by AI Nose. We expect consumers to be empowered to share test results with their physicians through in-person and telehealth medical consultations.
- **VOC POCT – CHS430.** The CHS430 device, powered by AI Nose, is intended to provide non-invasive testing for ventilator-associated pneumonia within few minutes, as compared to current standard of care invasive culture tests that typically take more than two days to provide results.
- **Synthetic RNA (“SRNA”).** We plan develop a SRNA technology platform in Taiwan with a long-term goal of developing next-generating precision treatments and rapid tests.

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

We continue to strengthen our intellectual properties. During the third quarter of 2024, we have licensed additional patents from Taiwan Carbon Nano Technology Corporation (TCNT), our shareholder and product developer, as an effort to bolster our AI Nose and POCT technologies. For VELDONA, we secured a Taiwan invention patent titled “METHOD AND COMPOSITION OF TREATMENT OR PREVENTION OF CORONAVIRUS INFECTION” and we have filed for global patent protection under the Patent Cooperation Treaty (PCT) for this patent.

As of September 30, 2024, we had available cash and cash equivalents of $5,156,606. We anticipate business revenues and further potential financial support from external sources to fund our operations over the next twelve months. We have based this estimate on assumptions that may prove to be incorrect, and we could exhaust our available capital resources sooner than we expect. See “Liquidity and Capital Resources” for additional information. To finance our continuing operations, we will need to raise additional capital, which cannot be assured.

Our operating revenue previously came from the sale of COVID-19 test kits in Taiwan under emergency use authorization, since the expiration of EUA to TCNT, the company ceased the sale of the Ainos COVID-19 antigen rapid test kits in first quarter of 2024. The company began to generate sales revenue from VELDONA Pet in the third quarter of 2023. In Taiwan, we are primarily marketing VELDONA Pet on certain e-commerce platforms.

We believe that post COVID-19, consumers have become increasingly familiar with at-home tests. Moving forward, people may seek additional at-home tests to manage other infections as quickly as possible. Home self-testing has become increasingly available for other infections such as vaginal infections or STIs. We believe this new user behavior, supported by a variety of telehealth platforms, will facilitate consumer adoption of our other POCT product candidates.

### Results of Operations for Quarter Ended September 30, 2024 (“Q3 2024”) and September 30, 2023 (“Q3 2023”):

|  | Three months ended September 30, 2024 | 2023 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Revenues | $- | $24,489 | $(24,489) | (100)% |
| Cost of revenues | (547) | (87,873) | 87,326 | (99)% |
| Gross loss | (547) | (63,384) | 62,837 | (99)% |
| Operating expenses: |  |  |  |  |
| Research and development expenses | 2,022,244 | 1,710,265 | 311,979 | 18% |
| Selling, general and administrative expenses | 1,015,758 | 902,017 | 113,741 | 13% |
| Total operating expenses | 3,038,002 | 2,612,282 | 425,720 | 16% |
| Loss from operations | (3,038,549) | (2,675,666) | (362,883) | 14% |
| Non-operating (expenses) income, net: |  |  |  |  |
| Interest expense | (264,642) | (44,267) | (220,375) | 498% |
| Issuance cost of senior secured convertible note measured at fair value | (169,344) | (260,967) | 91,623 | (35)% |
| Fair value change for senior secured convertible note | (177,212) | - | (177,212) | -% |
| Other (expense) income, net | (49,570) | 5,054 | (54,624) | (1,081)% |
| Total non-operating expenses, net | (660,768) | (300,180) | (360,588) | 120% |
| Net loss before income taxes | (3,699,317) | (2,975,846) | (723,471) | 24% |
| Provision for income taxes | - | - | - |  |
| Net loss | $(3,699,317) | $(2,975,846) | $(723,471) | 24% |

### Revenues, Cost and Gross Loss

The Company reported nil and $24,489 in revenue in Q3 2024 and Q3 2023, respectively, from product sales of VELDONA pet cytoprotein supplements and Ainos COVID-19 Antigen Rapid Test Kits in Taiwan respectively. The Company launched its VELDONA pet cytoprotein supplement products in the third quarter of 2023; due to the expiration of EUA, the company ceased the sale of the Ainos COVID-19 antigen rapid test kits in the first quarter of 2024. Sales volume in 2024 Q3 was offset by the sales returns.

The cost of revenue related to product sales in Q3 2024 was $547 compared to $87,873 in Q3 2023. The decrease in cost of revenue was due to the decrease in sales volume.

The share-based compensation expense and the depreciation expense for manufacturing in Q3 2024 and Q3 2023 were nil and $21,715, respectively. When excluding these non-cash cost, cost of revenue was $547 in Q3 2024 compared to $66,158 in Q3 2023.

Gross loss from product sales in Q3 2024 was $547 as compared to $63,384 gross loss from product sales in Q3 2023. The decrease in gross loss was due to low sales volume for newly launched products, and a reduced cost of revenue.

When excluding these non-cash costs, gross loss decreased to $547 in Q3 2024 compared to $41,669 gross loss in Q3 2023.

### Research and Development (R&D) Expenses

R&D expenses in Q3 2024 and Q3 2023 were $2,022,244 and $1,710,265, respectively. The increase of $311,979 (18%) was due to increased expenses associated with co-research for technology and product, as well as staffing expenditures (including share-based compensation), which were offset by a decrease in professional expense. We expect that our R&D expenses related to clinical trials will continue to grow as we further develop VOC POCT and VELDONA drug candidates and increase the pace of clinical trials previously delayed during the COVID-19 pandemic.

The share-based compensation expense and the depreciation and amortization expense in Q3 2024 and Q3 2023 were $1,305,461 and $1,263,665, respectively. Excluding these non-cash expenses, R&D expenses increased to $716,783 in Q3 2024 from $446,600 in Q3 2023.

### Selling, General and Administrative (SG&A) Expenses

SG&A expenses were $1,015,758 and $902,017 in Q3 2024 and Q3 2023, respectively, reflecting an increase of $113,741 (13%) due to a significant increase in staffing expenditures (including share-based compensation) and professional expenses and Nasdaq and SEC filing fees, which were offset by a decrease in public relations and investor relations fees and D&O insurance expenses. RSUs granted to officers and employees of the Company require a service period of 3 years and therefore, the total amount of the compensation expense was amortized over the service period.

The share-based compensation expense and the depreciation and amortization expense in Q3 2024 and Q3 2023 were $377,020 and $269,934, respectively. Excluding these non-cash expenses, SG&A expenses mildly increased to $638,738 in Q3 2024 compared to $632,083 in Q3 2023.

### Operating Loss

The Company’s operating loss was $3,038,549 and $2,675,666 in Q3 2024 and Q3 2023, respectively, reflecting a $362,883 (14%) increase in operating loss between the reporting periods. We incurred a gross loss in product sales. We continued to invest resources to execute our growth strategy and product roadmap to improve our profitability.

### Interest Expense

In Q3 2024, interest expense was $264,642 compared to $44,267 in Q3 2023. The increase in interest expense was due to accrued interest for convertible notes issued in May 2024.

### Net Loss

Net loss was $3,699,317 in Q3 2024 compared to $2,975,846 in Q3 2023, resulting in a $723,471 (24%) increase in net loss attributable to our shareholders of common stock. The net loss was due to an expanding operating expense. We continued to invest resources to execute our growth strategy and product roadmap to improve our profitability.

### Results of Operations for Nine Months Ended September 30, 2024 (“first nine months 2024”) and September 30, 2023 (“first nine months 2023”):

|  | Nine months ended September 30, 2024 | 2023 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Revenues | $20,729 | $102,208 | $(81,479) | (80)% |
| Cost of revenues | (52,674) | (244,538) | 191,864 | (78)% |
| Gross loss | (31,945) | (142,330) | 110,385 | (78)% |
| Operating expenses: |  |  |  |  |
| Research and development expenses | 6,085,648 | 5,080,335 | 1,005,313 | 20% |
| Selling, general and administrative expenses | 3,090,056 | 2,282,631 | 807,425 | 35% |
| Total operating expenses | 9,175,704 | 7,362,966 | 1,812,738 | 25% |
| Loss from operations | (9,207,649) | (7,505,296) | (1,702,353) | 23% |
| Non-operating (expenses) income, net: |  |  |  |  |
| Interest expense | (432,097) | (93,852) | (338,245) | 360% |
| Issuance cost of senior secured convertible note measured at fair value | (308,336) | (260,967) | (47,369) | 18% |
| Fair value change for senior secured convertible note | (275,624) | - | (275,624) | -% |
| Other income, net | 14,557 | 14,067 | 490 | 3% |
| Total non-operating expenses, net | (1,001,500) | (340,752) | (660,748) | 194% |
| Net loss before income taxes | (10,209,149) | (7,846,048) | (2,363,101) | 30% |
| Provision for income taxes | - | - | - |  |
| Net loss | $(10,209,149) | $(7,846,048) | $(2,363,101) | 30% |

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### Revenues, Cost and Gross Loss

The Company reported $20,729 and $102,208 in revenue in first nine months 2024 and first nine months 2023, respectively, from product sales of VELDONA pet cytoprotein supplements and Ainos COVID-19 Antigen Rapid Test Kits in Taiwan respectively. The Company launched its VELDONA pet cytoprotein supplement products in the third quarter of 2023; due to the expiration of EUA, the company ceased the sale of the Ainos COVID-19 antigen rapid test kits in the first quarter of 2024.

The cost of revenue related to product sales in first nine months 2024 was $52,674 compared to $244,538 in first nine months 2023. The decrease in cost of revenue was due to the decrease in sales volume.

The share-based compensation expense and the depreciation expense for manufacturing in first nine months 2024 and first nine months 2023 were $9,032 and $70,069, respectively. When excluding these non-cash cost, cost of revenue decreased to $43,642 in first nine months 2024 compared to $174,469 in first nine months 2023.

Gross loss from product sales in first nine months 2024 was $31,945 as compared to $142,330 gross loss from product sales in first nine months 2023. The decrease in gross loss was due to low sales volume for newly launched products, and a lower cost of revenue.

When excluding these non-cash costs, gross loss decreased to $22,913 in first nine months 2024 compared to $72,261 gross loss in first nine months 2023.

### Research and Development (R&D) Expenses

R&D expenses in first nine months 2024 and first nine months 2023 were $6,085,648 and $5,080,335, respectively. The increase of $1,005,313 (20%) was due to increased expenses associated with co-research for technology and product and staffing expenditures (including share-based compensation), which were offset by a decrease in professional expense. We expect that our R&D expenses related to clinical trials will continue to grow as we further develop VOC POCT and VELDONA drug candidates and increase the pace of clinical trials previously delayed during the COVID-19 pandemic.

The share-based compensation expense and the depreciation and amortization expense in first nine months 2024 and first nine months 2023 were $3,866,581 and $3,669,081, respectively. When excluding these non-cash expenses, R&D expenses increased to $2,219,067 in first nine months 2024 from $1,411,254 in first nine months 2023.

### Selling, General and Administrative (SG&A) Expenses

SG&A expenses were $3,090,056 and $2,282,631 in first nine months 2024 and first nine months 2023, respectively, reflecting an increase of $807,425 (35%) due to a significant increase in staffing expenditures (including share-based compensation) and professional expenses, which were offset by a decrease in public relations and investor relations fees and D&O insurance expenses. RSUs granted to officers and employees of the Company require a service period of 3 years and therefore, the total amount of the compensation expense was amortized over the service period.

The share-based compensation expense and the depreciation and amortization expense in first nine months 2024 and first nine months 2023 were $1,053,642 and $597,429, respectively. When excluding these non-cash expenses, SG&A expenses increased to $2,036,414 in first nine months 2024 compared to $1,685,202 in first nine months 2023.

### Operating Loss

The Company’s operating loss was $9,207,649 and $7,505,296 in first nine months 2024 and first nine months 2023, respectively, reflecting a $1,702,353 (23%) increase in operating loss between the reporting periods. We incurred a gross loss in product sales. We continued to invest resources to execute our growth strategy and product roadmap to improve our profitability.

### Interest Expense and Issuance Cost of Convertible Note

In first nine months 2024, interest expense was $432,097 compared to $93,852 in first nine months 2023. The increase in interest expense was due to accrued interest for convertible notes issued in May 2024.

On January 23, 2024, the Company received an Increased Funding Amount and incurred an issuance cost including investor and placement agent fees, as well as legal fees. $308,336 of the issuance cost was recognized for the amendment of funding received and closed by the Company.

### Net Loss

Net loss was $10,209,149 in first nine months 2024 compared to $7,846,048 in first nine months 2023, resulting in a $2,363,101 (30%) increase in net loss attributable to our shareholders of common stock. The net loss was due to an expanding operating expense. We continued to invest resources to execute our growth strategy and product roadmap to improve our profitability.

### Liquidity and Capital Resources

As of September 30, 2024 and December 31, 2023, the Company had available cash of $5,156,606 and $1,885,628, respectively.

The following table summarizes our cash flow during the nine months period ended September 30, 2024 and 2023:

|  | Nine months ended September 30, 2024 | 2023 |
| --- | ---: | ---: |
| Net cash used in operating activities | (4,944,036) | (3,321,754) |
| Net cash used in investing activities | (138,577) | (117,528) |
| Net cash provided by financing activities | 8,295,746 | 4,023,974 |

### Operating activities:

Cash used in operating activities increased by $1,622,282 during the first nine months of 2024 compared to the first, nine months of 2023. Our net loss for the first nine months of 2024 increased by $2,363,101 primarily due to increase of operating expenses. The operating cash outflow as a result of changes in operating assets and liabilities was mainly attributable to:

- Non-cash expenses including share-based compensation, depreciation and amortization, loss on inventory write-downs, issuance cost of secured convertible note, and change in fair value of senior secured convertible note increased approximately by $794,700;
- Working capital injected into accounts receivable, inventories and other current assets decreased by approximately $112,500; and
- Working capital injected into accrued expenses, operating lease liabilities, contract liabilities and other current and long-term liabilities increased by approximately $58,500.

26

### Investing activities

Cash used for investing activities were $138,577 and $117,528 during the first nine months of 2024 and the first nine months of 2023, respectively. The increase was due to increase in refundable deposits and other noncurrent assets offset by decrease in purchase of property and equipment.

### Financing activities

Cash provided by financing activities were $8,295,746 and $4,023,974 during the first nine months of 2024 and the first nine months of 2023, respectively. The $4,271,772 increase was primarily reflected by the following:

- Repayment of convertible notes and other notes payable increased by $795,728;
- Proceeds from convertible notes and other notes payable financing increased by $4,875,000; and
- Payments of issuance cost of senior secured convertible note measured at fair value decreased by $192,500.

As disclosed in Note 5 (Convertible Notes Payable and Other Notes Payable), to our accompanying condensed financial statements we received $875,000 in proceeds from the Lind Note transaction in January 2024.

As disclosed in Note 5 (Convertible Notes Payable and Other Notes Payable), to our accompanying condensed financial statements we received $9,000,000 in proceeds from the ASE Note transaction in May 2024.

As disclosed in Note 5 (Convertible Notes Payable and Other Notes Payable), to our accompanying condensed financial statements we repaid $1,439,754 in cash to retired senior secured convertible notes from the LIND Note transaction in August 2024.

As disclosed in Note 5 (Convertible Notes Payable and Other Notes Payable), to our accompanying condensed financial statements we repaid $42,000 to retire the i2China Note transaction in August 2024.

In the near-term, we expect an increase in the pace of clinical trial spending to advance our VOC POCT and VELDONA drug candidates and expect to invest more in R&D activities. We may also increase our sales and marketing efforts.

The Company anticipates that cash reserves, business revenues, and potential debt financing through convertible and non-convertible notes will fund the Company’s operations over the next twelve months. There can be no assurance that we will be successful in our efforts to make the Company profitable. If those efforts are not successful, the Company may raise additional capital through the issuance of equity securities, debt financings or other sources to further implement its business plan. However, if such financing is not available when needed and at adequate levels, the Company will need to reevaluate its operating plan.

### Critical Accounting Policies and Significant Management Estimates

Our management’s discussion and analysis of our financial condition and results of operations are based on our unaudited condensed financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States, or U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses.

We evaluate our estimates and judgments, including those related to inventory valuation, useful lives of property and equipment, valuation of stock option, warrants and convertible note, and impairment testing of intangible assets, on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in “Management’s Discussion and Analysis - Critical Accounting Policies and Significant Management Estimates” of our 2023 Annual Report, except for those accounting subjects discussed in the Notes, if any, to the unaudited condensed financial statements included in this Quarterly Report on Form 10-Q.

## Market risk

As filed, 165 characters.

We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item 3.

## Controls and procedures

As filed, 800 characters.

### Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, have evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2024.

### Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 1,261 characters.

*This Quarterly Report contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in this Quarterly Report. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Quarterly Report.*

*You should carefully consider the risk factors disclosed in our 2023 Annual Report, together with all other information in this Quarterly Report, including our unaudited condensed financial statements and notes thereto, and in our other filings with the Securities and Exchange Commission. If any such risks, including the risk set out below, or other risks not presently known to us or that we currently believe to not be significant, develop into actual events, then our business, financial condition, results of operations or prospects could be materially adversely affected. If that happens, the market price of our common stock could decline, and stockholders may lose all or part of their investment.*

Information on risk factors can be found in Part I, Item 1A (Risk Factors) of our 2023 Annual Report. There have been no material changes from the risk factors previously disclosed in our 2023 Annual Report.

Filed Nov 6, 2024.
Source: SEC EDGAR, the filing index for accession 0001493152-24-043832. Last ingested by Listed: Oct 24, 2026, 15:02 ET. No prices; not investment advice.