Ainos (NASDAQ: AIMD) deepens AI Nose push amid $7.1M H1 loss
Ainos, Inc., a Texas-based developer of AI-enabled olfactory sensing (AI Nose) and immune therapeutics, reported very limited revenue while remaining deeply loss-making for the quarter and six months ended June 30, 2026. Revenue was $152 in Q2 2026 and $313 in H1 2026, down sharply from $4,663 and $110,870 a year earlier as the company reduced VELDONA pet supplement sales and shifted AI Nose efforts toward industrial rather than healthcare-adjacent applications.
Net loss totaled $4.6M for Q2 2026 and $7.1M for H1 2026, compared with $4.1M and $7.4M in the prior-year periods, as operating expenses eased to $6.7M from $7.0M. Basic and diluted net loss per share was $0.62 for Q2 and $1.05 for H1 2026. Cash and cash equivalents increased to $1.4M at June 30, 2026 from $0.4M at December 31, 2025, mainly driven by a $2.8M short-term loan from ASE Test, Inc. and $0.6M of net equity raised under an at-the-market offering.
Total assets were $19.6M, while stockholders’ equity fell to $3.3M from $7.6M. Current liabilities rose to $16.3M, including $11.0M of convertible notes now classified as current and the new loan payable. With an accumulated deficit of $74.6M, ongoing operating losses, and dependence on external financing, the company states that substantial doubt exists about its ability to continue as a going concern. Operationally, Ainos continued to advance AI Nose deployments and validation in semiconductor manufacturing, robotics, industrial infrastructure, and healthcare environments, including work tied to an initial $2.1M backend semiconductor commercial arrangement, while progressing its VELDONA interferon programs selectively and pursuing partnering and out-licensing opportunities.
Positive
- None.
Negative
- Going concern risk: accumulated deficit of $74.6M, continued losses, and reliance on new financing lead management to state substantial doubt about the company’s ability to continue as a going concern.
- Revenue collapse: H1 2026 revenue fell to just $313 from $110,870 a year earlier, reflecting minimal commercial traction relative to the company’s expense base.
- Heavy short-term obligations: current liabilities reached $16.3M versus $1.4M of cash, including $11.0M in convertible notes and a $2.8M one-year loan, increasing refinancing and liquidity pressure.
Filing Explained
At June 30, 2026, issued shares had expanded materially, while most of the ASE loan’s repayment was deferred to July 31, 2027.
Ainos filed an unaudited Form 10-Q covering the six months ended
During the first half, Ainos issued
An ATM program permits gradual sales into the market rather than one priced transaction. Ainos reports aggregate ATM sales of
Of the loan outstanding from ASE Test,
Key Figures
Key Terms
Smell language model technical
At-the-Market Offering Agreement financial
reverse stock split financial
going concern financial
restricted stock units financial
fair value option financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from____to____
Commission
File No.
(Exact name of registrant as specified in its charter)
| (State
or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
(Address and telephone number, including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. ☒
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller
reporting company | |
| Emerging
growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) ☐ Yes
As
of August 3, 2026, there were issued 8,544,073 shares and outstanding
AINOS, INC.
INDEX
PAGE NO. | |||
| PART I: | FINANCIAL INFORMATION | 3 | |
| ITEM 1. | Financial Statements | 3 | |
| Condensed Consolidated Balance Sheets – June 30, 2026 (unaudited) and December 31, 2025 | 3 | ||
| Condensed Consolidated Statements of Operations – Three and six Months Ended June 30, 2026 and 2025 (unaudited) | 4 | ||
| Condensed Consolidated Statements of Comprehensive Loss – Three and six Months Ended June 30, 2026 and 2025 (unaudited) | 5 | ||
| Condensed Consolidated Statements of Stockholders’ Equity– Three Months Ended June 30, 2026 and 2025 (unaudited) | 6 | ||
| Condensed Consolidated Statements of Stockholders’ Equity– Six Months Ended June 30, 2026 and 2025 (unaudited) | 7 | ||
| Condensed Consolidated Statements of Cash Flows – Six Months Ended June 30, 2026 and 2025 (unaudited) | 8 | ||
| Notes to Condensed Consolidated Financial Statements (unaudited) | 9 | ||
| ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 20 | |
| ITEM 3. | Quantitative and Qualitative Disclosures About Market Risk | 27 | |
| ITEM 4. | Controls and Procedures | 27 | |
| PART II: | OTHER INFORMATION | 27 | |
| ITEM 1. | Legal Proceedings | 27 | |
| ITEM 2. | Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities | 28 | |
| ITEM 3. | Defaults Upon Senior Securities | 28 | |
| ITEM 4. | Mine Safety Disclosures | 28 | |
| ITEM 5. | Other Information | 28 | |
| ITEM 6. | Exhibits | 29 | |
| Signatures | 30 | ||
| 2 |
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Ainos, Inc.
Condensed Consolidated Balance Sheets
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | - | |||||||
| Inventory, net | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Intangible assets, net | ||||||||
| Property and equipment, net | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Contract liabilities | $ | $ | ||||||
| Convertible notes payable | - | |||||||
| Loan payable | - | |||||||
| Accrued expenses and other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Convertible notes payable - noncurrent | - | |||||||
| Other long-term liabilities | - | |||||||
| Total liabilities | ||||||||
| Commitments and contingencies | - | - | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $ | - | - | ||||||
| Common stock, $ | ||||||||
| Treasury stock, at cost ( | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 3 |
Ainos, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gross profit (loss) | ( | ) | ||||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development (including amounts of related party of $ | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Non-operating (expenses) income, net: | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income, net | ( | ) | ( | ) | ||||||||||||
| Total non-operating expenses, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per common share - basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted-average shares used in computing net loss per common share-basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 4 |
Ainos, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(Unaudited)
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive loss: | ||||||||||||||||
| Translation adjustment | ||||||||||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes are an integral part of these consolidated financial statements.
| 5 |
Ainos, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
For the three months ended June 30, 2026 and 2025
(Unaudited)
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Loss | (Deficit) | |||||||||||||||||||||||||||||||
| Accumulated | Total | |||||||||||||||||||||||||||||||||||||||
| Additional | Other | Stockholders’ | ||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Treasury Stock | Paid-in | Accumulated | Comprehensive | Equity | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Loss | (Deficit) | |||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | - | $ | - | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| Issuance of stock to settle vested RSUs | - | - | - | - | ( | ) | - | - | - | |||||||||||||||||||||||||||||||
| Issuance of common stock for paying consulting fee | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Share-based compensation | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||
| Translation adjustment | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | - | $ | - | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| Balance at March 31, 2025 | - | $ | - | $ | - | $ | - | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||
| Issuance of stock to settle vested RSUs | - | - | - | - | ( | ) | - | - | - | |||||||||||||||||||||||||||||||
| Issuance of common stock from at-the-market offering | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Issuance of common stock for paying consulting fee | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Fractional shares paid out in cash for the reverse stock split | - | - | ( | ) | ( | ) | - | - | ( | ) | - | - | ( | ) | ||||||||||||||||||||||||||
| Share-based compensation | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||
| Translation adjustment | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | - | $ | - | $ | - | $ | - | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 6 |
Ainos, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
For the six months ended June 30, 2026 and 2025
(Unaudited)
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Loss | (Deficit) | |||||||||||||||||||||||||||||||
| Accumulated | Total | |||||||||||||||||||||||||||||||||||||||
| Additional | Other | Stockholders’ | ||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Treasury Stock | Paid-in | Accumulated | Comprehensive | Equity | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Loss | (Deficit) | |||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | - | $ | - | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| Issuance of stock to settle vested RSUs | - | - | - | - | ( | ) | - | - | - | |||||||||||||||||||||||||||||||
| Issuance of common stock from at-the-market offering | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Issuance of common stock for paying consulting fee | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Share-based compensation | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||
| Translation adjustment | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | - | $ | - | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| Balance at December 31, 2024 | - | $ | - | $ | - | $ | - | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||
| Balance | - | $ | - | $ | - | $ | - | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||
| Issuance of stock to settle vested RSUs | - | - | - | - | ( | ) | - | - | - | |||||||||||||||||||||||||||||||
| Issuance of stock to special stock bonus | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Issuance of common stock from at-the-market offering | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Issuance of common stock for paying consulting fee | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Fractional shares paid out in cash for the reverse stock split | - | - | ( | ) | ( | ) | - | - | ( | ) | - | - | ( | ) | ||||||||||||||||||||||||||
| Share-based compensation | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||
| Translation adjustment | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | - | $ | - | $ | - | $ | - | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||
| Balance | - | $ | - | $ | - | $ | - | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 7 |
Ainos, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| 2026 | 2025 | |||||||
| Six months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Share-based compensation expense | ||||||||
| Stock issued for special stock bonus | - | |||||||
| Issuance of common stock for paying consulting fee | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ( | ) | ( | ) | ||||
| Other current assets | ( | ) | ( | ) | ||||
| Accrued expenses and other current and long-term liabilities | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Proceeds from disposal of equipment | - | |||||||
| Decrease in refundable deposits and other assets | ||||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from Loan agreement | - | |||||||
| Proceeds from at-the-market offering, net of issuance costs | ||||||||
| Repayment of convertible notes payable | - | ( | ) | |||||
| Fractional shares paid out in cash for the reverse stock split | - | ( | ) | |||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Effect from foreign currency exchange | ||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 8 |
Ainos, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Description of Business
Organization and Business
Ainos, Inc. (the “Company”) was incorporated in the State of Texas in 1984. The Company is a dual-platform company engaged in the development of artificial intelligence-enabled olfactory sensing technologies, which we refer to as “SmellTech” or “Smell AI”, and related applications, as well as the development of immune therapeutics.
Our core technology platform, AI Nose, is an AI-based electronic olfaction system that integrates gas sensor arrays with proprietary artificial intelligence models, which we refer to as a smell language model (“SLM”), to digitize scent and volatile organic compound (“VOC”) signals into Smell ID, a machine-readable data format. AI Nose is initially developed in healthcare-related settings, including point-of-care testing (“POCT”). These early healthcare applications shaped the platform’s sensor architecture, data models, and system calibration.
Building on this foundation, we are expanding the application of AI Nose into industrial environments, where we believe real-time environmental sensing, anomaly detection, and operational monitoring are important. Current and planned use cases include applications across semiconductor manufacturing, robotics, healthcare infrastructure and smart manufacturing settings. We believe the underlying scent digitization architecture of AI Nose is adaptable across a range of industrial and non-industrial verticals, and we continue to evaluate additional application opportunities based on partner engagement and deployment experience.
We are advancing the AI Nose platform through partner-led deployments, with a strategy focused on platform scalability, data-driven performance improvement, and integration into existing industrial ecosystems. Our approach emphasizes expanding the role of scent as a machine-readable data modality alongside vision and sound, while maintaining flexibility to address diverse operational requirements.
Separately, we continue to develop VELDONA®, our low-dose oral interferon platform, targeting selected rare, autoimmune, and infectious disease indications. Our VELDONA® programs include candidates for the treatment of oral warts in HIV-positive patients, Sjögren’s syndrome, and feline chronic gingivostomatitis (“FCGS”). We have conducted research and development activities related to VELDONA® since our inception.
Reverse Stock Splits
In
connection with the Offering, the Company’s board of directors on April 29, 2022 and its shareholders on May 16, 2022 approved
a
The
par value of $
| 9 |
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. Wainwright & Co., LLC(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”). Sales of the Common Stock may be made by any method permitted by law deemed to be an “at-the-market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended (the “Securities Act”), including, without limitation, sales made directly on or through the Nasdaq Capital Market. The Agent will use its commercially reasonable efforts to sell the Shares requested by the Company to be sold on its behalf, consistent with the Agent’s normal trading and sales practices, under the terms and subject to the conditions set forth in the ATM Agreement. The Company has no obligation to sell any of the Shares. The Company may instruct the Agent not to sell the Shares if the sales cannot be effected at or above the price designated by the Company from time to time and the Company may at any time suspend sales pursuant to the ATM Agreement.
The
Company will pay the Agent placement fee of
The
aggregate market value of Shares eligible for sale in the ATM Offering and under the ATM Agreement will be subject to the limitations
of General Instruction I.B.6 of Form S-3, to the extent required under such instruction. The prospectus supplement filed with the SEC
on July 11, 2024, is offering Shares having an aggregate offering price of $
The Company intends to use the net proceeds from the offering to fund the continued development of its product candidate and for general corporate purposes and working capital. The precise amount and timing of the application of these proceeds will depend upon a number of factors, such as the timing and progress of our research and development efforts, our funding requirements and the availability and costs of other funds.
On
September 5, 2025, the Company filed a prospectus supplement to amend the Prospectus to update the amount of shares the Company is eligible
to sell pursuant to such prospectus. The Company increased the amount of shares of Common Stock it may offer and sell under the Sales
Agreement to an aggregate offering price of up to $
For
the first half of the year 2026, the Company sold
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (the “GAAP”) and pursuant to the accounting disclosure rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed financial statements should be read in conjunction with the financial statements and notes included in the Company’s audited financial statements as of and for the year ended December 31, 2025 contained in the Annual Report on Form 10-K filed with the SEC on March 30, 2026.
| 10 |
In the opinion of management, the accompanying condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods. The results for the six months ended June 30, 2026 are not necessarily indicative of the results to be expected for any subsequent quarter, the year ending December 31, 2026, or any other period.
There have been no material changes to the Company’s significant accounting policies as described in the audited financial statements as of December 31, 2025.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosures as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on various factors, including historical experience, and on various other assumptions that are believed to be reasonable under the circumstances, when these carrying values are not readily available from other sources. Significant items subject to estimates and assumptions include useful lives of property and equipment, valuation of stock option, warrants and convertible notes measured at fair value, and impairment testing of intangible assets. Actual results may differ from these estimates.
Liquidity
As
of June 30, 2026, the Company had cash and cash equivalents of $
On
May 31, 2024, the Company entered into an At-the-Market Offering Agreement, or sales agreement, with H.C. Wainwright & Co., LLC or
Wainwright, pursuant to which the Company may issue and sell, from time to time, shares of its common stock, the aggregate market value
of Shares eligible for sale in the Offering and under the ATM Agreement will be subject to the limitations of General Instruction I.B.6
of Form S-3, to the extent required under such instruction. The prospectus supplement filed with the SEC on July 11, 2024, is offering
Shares having an aggregate offering price of $
On
September 5, 2025, the Company filed a prospectus supplement to amend the Prospectus to update the amount of shares the Company is eligible
to sell pursuant to such prospectus. The Company increased the amount of shares of Common Stock it may offer and sell under the Sales
Agreement to an aggregate offering price of up to $
For
the first half of the year 2026, the Company sold
For
the six months ended June 30, 2026, the Company generated a net loss of $
The
financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company has incurred net operating losses since inception and has an accumulated deficit
as of June 30, 2026 of $
| 11 |
Segments
Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the chief operating decision maker (the “CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s Chief Executive Officer is the Company’s CODM. The CODM reviews financial information prepared on the basis of accounting policy disclosed in its annual financial statement for purposes of making operating decisions, allocating resources, and evaluating financial performance of the Company. As such, the Company has determined that it operates as one operating segment.
Impairment of Intangible Assets
The
Company reviews its definite-lived intangibles and other long-lived assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset or asset group may not be fully recoverable. When such events occur, management determines
whether there has been impairment by comparing the anticipated undiscounted future net cash flows to the carrying value of the asset
or asset group. If impairment exists, the assets are written down to their estimated fair value.
Fair Value Option
ASC 825-10, Financial Instruments, provides a fair value option (the “FVO”) election that allows companies an irrevocable election to use fair value as the initial and subsequent accounting measurement attribute for certain financial assets and liabilities. ASC 825-10 permits entities to elect to measure eligible financial assets and liabilities at fair value on an ongoing basis. Unrealized gains and losses on items for which the FVO has been elected are reported in earnings, except for the effect of changes in own credit, which are recognized in other comprehensive income/loss. The decision to elect the FVO is determined on an instrument-by-instrument basis, must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to ASC 825-10 are required to be reported separately from those instruments measured using another accounting method.
Recent Accounting Pronouncements Adopted
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07, which is applicable to entities with a single reportable segment, will primarily require enhanced disclosures about significant segment expenses and enhanced disclosures in interim periods. The guidance in ASU 2023-07 will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023 and interim reporting periods in fiscal years beginning after December 31, 2024, with early adoption permitted. The Company adopted the ASU for the fiscal year ended December 31, 2025 on a retrospective basis for all prior periods presented in the financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 is intended to improve income tax disclosure requirements by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) the disaggregation of income taxes paid by jurisdiction. The guidance makes several other changes to the income tax disclosure requirements. The guidance in ASU 2023-09 will be effective for annual reporting periods in fiscal years beginning after December 15, 2024. The Company adopted the ASU for the fiscal year ended December 31, 2025 on a retrospective basis for all prior periods presented in the financial statements.
| 12 |
Accounting Standards Issued but Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which is intended to provide more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation and amortization) included in certain expense captions presented on the statement of operations. The guidance in this ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact that the adoption of ASU 2024-03 will have on its financial statements and disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) (“ASU 2025-06”). ASU 2025-06 updates the accounting guidance for internal-use software by eliminating references to software development project stages, thereby requiring companies to start capitalizing software costs when (i) management has authorized and committed to funding the project, and (ii) it is probable the project will be completed and the software will be used as intended. ASU 2025-06 is effective for annual periods beginning after December 15, 2027, with early adoption permitted. Amendments can be applied either (i) prospectively, (ii) through a modified transition approach based on the status projects and whether software costs were capitalized before the date of adoption, or (iii) retrospectively. The Company is currently evaluating the impact of ASU 2025-06 on the Company’s financial condition and results of operations.
In December 2025, the FASB issued ASU 2025-10 to provide specific authoritative guidance about the recognition, measurement, and presentation of a grant received by a business entity from a government. The amendments in this guidance require that a government grant received by a business entity should not be recognized until (1) it is probable that a business entity will comply with the conditions attached to the grant and the grant will be received and (2) a business entity meets the recognition guidance for a grant related to an asset or a grant related to income. Adoption of this standard is required using either a modified prospective, modified retrospective, or a retrospective approach. This standard is effective for the Company for both interim and annual reporting for the year ended December 31, 2029. The Company is currently evaluating the impact of ASU 2025-10 on the Company’s financial condition and results of operations.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows.
3. Cash and Cash Equivalents
As
of June 30, 2026 and December 31, 2025, cash and cash equivalents consisted of cash on hand and cash in bank which is potentially subject
to concentration of credit risk. Such balance is maintained at financial institutions that management determines to be of high credit
quality. Cash accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC) in the U.S.A or Central Deposit
Insurance Corporation in Taiwan up to certain limits. At times, such deposits may be in excess of the insurance limit. Accounts are guaranteed
by the FDIC up to $
4. Inventory
Inventory stated at cost, net of reserve, consisted of the following:
Schedule of Inventory
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Raw materials | $ | $ | ||||||
| Work in process | ||||||||
| Finished goods | ||||||||
| Total | $ | $ | ||||||
| 13 |
5. Convertible Notes Payable and Loan Payable
As of June 30, 2026 and December 31, 2025, the respective notes payable were as follows:
Schedule of Notes Payable
June 30, 2026 | December 31, 2025 | |||||||
| March 2025 Convertible Notes – noncurrent (ASE Note) | $ | - | $ | |||||
| March 2025 Convertible Notes – current (ASE Note) | - | |||||||
| May 2027 Convertible Notes – current (ASE Note) | - | |||||||
| Convertible Notes – current | - | |||||||
| May 2027 Convertible Notes – noncurrent (ASE Note) | - | |||||||
| Convertible Notes – noncurrent | - | |||||||
| Convertible Notes payable | $ | $ | ||||||
On
May 3, 2024, The Company entered into Convertible Note and Warrant Purchase Agreement with the ASE Test, Inc. (“ASE”), for
the issuance of convertible promissory notes with
March 2025 Convertible Notes
On
March 13, 2023, the Company entered into two convertible promissory note purchase agreements pursuant to Regulation S of the Securities
Act of 1933, as amended, in the total principal amount of $
Convertible Note Issued to Li-Kuo Lee (the “Lee Note”)
The
Company issued a convertible note in the principal amount of $
On
March 12, 2025, the Company entered into an amendment to the Convertible Note (the “Lee Convertible Note Amendment”) with
Li-Kuo Lee to extend the maturity date to
On
April 30, 2025, the Company repaid the full principal with accrued interest aggregate amount of $
Convertible Note Issued to ASE Test, Inc. (the “ASE Note”)
Pursuant
to one of the aforementioned agreements, ASE Test, Inc., committed to pay a total aggregate amount of $
On
March 10, 2025, the Company entered into an amendment to the Convertible Note (the “ASE Convertible Note Amendment”) with
ASE Test to (1) extend the maturity date to
| 14 |
The
March 2025 Convertible Notes bear interest at the rate of
The
total interest expense of convertible notes payable and other notes payable for the three and six months ended June 30, 2026 was $
March 2026 Loan agreement
On
March 27, 2026, the Company entered into a loan agreement with ASE Test, Inc., pursuant to which ASE Test, Inc. agreed to lend the Company
an aggregate principal amount of NT$
The
Loan bears interest at a rate of
The
total interest expense on the loan was $
6. Stockholders’ Equity
Reverse Stock Splits
To
comply with Nasdaq’s minimum $
Preferred Stock
The
Company increased authorized shares of preferred stock from
Common Stock
During
the six months ended June 30, 2026, the Company issued an additional
Warrants
Warrants issued and outstanding in connection with financing as of June 30, 2026 and December 31, 2025 are summarized as below:
Schedule of Warrants Issued and Outstanding
| June 30, | December 31, | |||||||
| (In number of shares) | 2026 | 2025 | ||||||
| Lind Warrant with exercise price from $ | ||||||||
| Public warrant with exercise price of $ | ||||||||
| Representative’s warrant with exercise price of $ | ||||||||
| Placement agent warrant with exercise price of $ | ||||||||
| ASE Warrant with exercise price of $ | ||||||||
| Total | ||||||||
| Warrants issued and outstanding | ||||||||
| 15 |
The
Company issued the Lind Warrants on September 28, 2023 in connection with the private placement of the Lind Note. The Company further
issued
The
Company issued public warrants together with common stock in connection with its underwritten public offering effective August 8, 2022.
The Company further issued private warrants to Maxim Group LLC as representative of the underwriter pursuant to an underwriting agreement.
Each warrant has a contractual term of
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments’ specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (the “ASC 480”), and ASC 815, Derivatives and Hedging (the “ASC 815”). The assessment considers whether the instruments are free standing financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s own common shares and whether the instrument holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent period end date while the instruments are outstanding. Management has concluded that the warrants issued in connection with the underwritten public offering and the private placement of Lind Note qualify for equity accounting treatment and are recorded as additional paid-in capital.
As
of June 30, 2026,
7. Revenue
Revenue is recognized upon shipment of products based upon contractually stated pricing at standard payment terms within 30 to 60 days. The revenue generated by product sales is recognized at a point in time.
The Company generated revenue from sales of VELDONA Pet supplements in the Taiwan market through online platforms that were recognized after the expiration of right of return which was offered for a limited time. Revenue from sales through off-line distribution channels was recognized based on the amount of consideration that we expected to receive, reduced by estimates for return allowances, promotional discounts, and fees.
$
The
Company recognized nil revenue from sales of AI Nose programs that was included in the contract liability balance at the first half of
the year 2026, compared with $
Return Allowances
Return allowances, which reduce revenue and cost of sales, are estimated using historical experience. Liabilities for return allowances are included in “Accrued expenses and other current liabilities”.
Variable Consideration
We record revenue from customers in an amount that reflects the transaction price we expect to be entitled to after transferring control of those goods. From time to time, we offer product sales promotions such as discounts. Variable consideration is estimated at contract inception only to the extent that it is probable that a significant reversal of revenue will not occur.
| 16 |
8. Share-Based Compensation
2023 Stock Incentive Plan
The
Company effectuated an amendment to its 2021 Stock Incentive Plan, now restated as the Company 2023 Stock Incentive Plan (the “2023
SIP” or “Plan”), which includes, among other things, a change in the number of reserved shares under the Plan. Under
the 2023 SIP, subject to a change in capital structure or a change in control, the aggregate number of shares which may be issued or
transferred pursuant to awards under the Plan will be equal to up to twenty percent (
Restricted Stock Units (“RSUs”)
RSUs entitle the recipient to be paid out an equal number of common stock shares upon vesting. The fair value of RSUs is based on market price of the underlying stock on the date of grant. A summary of the Company’s RSUs activity and related information for the three and six months ended June 30, 2026 and for the three and six months ended June 30, 2025 were as follows:
Schedule of Restricted Stock Units
| 2026 | 2025 | |||||||||||||||
| Number of Shares | Weighted- Average Grant Date Fair Value Per Share | Number of Shares | Weighted- Average Grant Date Fair Value Per Share | |||||||||||||
| Unvested balance at January 1 | - | $ | - | $ | ||||||||||||
| RSUs granted | - | $ | - | - | $ | - | ||||||||||
| RSUs vested | - | $ | - | ( | ) | $ | ||||||||||
| RSUs forfeited | - | $ | - | - | $ | - | ||||||||||
| Unvested balance at March 31 | - | $ | - | $ | ||||||||||||
| RSUs granted | $ | $ | ||||||||||||||
| RSUs vested | ( | ) | $ | ( | ) | $ | ||||||||||
| RSUs forfeited | - | $ | - | - | $ | - | ||||||||||
| Unvested balance at June 30 | $ | $ | ||||||||||||||
Stock Options and Warrants
During
the three and six months ended June 30, 2026 and 2025,
| 17 |
Share-Based Compensation Expense
Shared-based
compensation expense for the three and six months ended June 30, 2026 was $
As
of June 30, 2026, the total unrecognized compensation cost related to outstanding RSUs, stock options and warrants was $
9. Income Taxes
The Company did not record a federal, state, or foreign income tax provision or benefit for the six months ended June 30, 2026 and 2025 due to the expected loss before income taxes to be incurred for the years ended December 31, 2026 and 2025, as well as the Company’s continued maintenance of a full valuation allowance against its net deferred tax assets due to its historical deficit.
10. Net Loss per Common Share
The following table sets forth the computation of the basic and diluted net loss per share attributable to common stockholders:
Schedule of Basic and Diluted Net Loss Per Share
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net loss attributable to common stockholders, basic and diluted | $ | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
| Weighted-average number of shares used in computing net loss per share attributable to common stockholders, basic and diluted | ||||||||||||||||
| Net loss per share attributable to common stockholders, basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The following potentially dilutive securities have been excluded from the computations of diluted weighted average shares outstanding because they would be anti-dilutive:
Schedule of Computations of Diluted Weighted Average Shares Outstanding
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Option and RSUs to purchase common stock | ||||||||||||||||
| Warrants to purchase common stock | ||||||||||||||||
| Convertible notes to purchase common stock | ||||||||||||||||
| Total potential shares | ||||||||||||||||
| 18 |
11. Related Party Transactions
The following is a summary of related party transactions that met our disclosure threshold:
Product Co-development Agreement
Pursuant
to a five-year Product Co-development Agreement effective on August 1, 2021 (the “Product Co-Development Agreement”) with
Taiwan Carbon Nano Technology Corporation (“TCNT”), the development expenses incurred were $
Manufacturing Service Agreement with TCNT for the AI Nose hardware products
On
November 14, 2025, the Company entered into a manufacturing service agreement with TCNT to manufacture AI Nose hardware products. A deposit
equal to
Lease agreement with director
The Company lease its office in Taiwan
with a director of the Company for NT$
12. Commitments and Contingencies
The Company operates in an industry characterized by extensive patent litigation. Competitors may claim that the Company’s products infringe upon their intellectual property. Resolution of patent litigation or other intellectual property claims is typically time consuming and costly and can result in significant damage awards and injunctions that could prevent the manufacture and sale of the affected products or require the Company to make significant royalty payments in order to continue selling the affected products. As of June 30, 2026, there were no such commitments or contingencies.
13. Subsequent Events
As
previously disclosed, on March 27, 2026, the Company entered into a loan agreement with ASE Test, Inc., pursuant to which ASE Test,
Inc. agreed to lend the Company an aggregate principal amount of NT$
| 19 |
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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, 2025 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, 2025 (the “2025 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 2025 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 Ainos, Inc.
Overview
Ainos, Inc. (the “Company”) was incorporated in the State of Texas in 1984. The Company is a dual-platform company engaged in the development of artificial intelligence-enabled olfactory sensing technologies, which we refer to as “SmellTech” or “Smell AI”, and related applications, as well as the development of immune therapeutics.
The Company’s principal operating focus is the commercialization of AI Nose, its proprietary scent digitization platform. AI Nose is designed to convert scent and volatile organic compound signals into structured, machine-readable data, which the Company refers to as “Smell ID,” using gas sensor arrays and proprietary artificial intelligence models, which we refer to as smell language model (“SLM”). The Company is advancing AI Nose commercialization across selected industrial, environmental, robotics, and healthcare-related applications.
In parallel, the Company continues to develop VELDONA®, its low-dose oral interferon program, with an emphasis on selective advancement, capital-efficient execution, and strategic partnerships.
Our Execution Priorities for 2026
In 2026, the Company’s operating priorities are focused on advancing AI Nose commercialization activities while managing VELDONA® and other healthcare-related programs selectively and in a capital-efficient manner. Following initial industrial expansion activities in 2025, the Company’s current priorities include partner-led deployments, continued generation of scent-related data to support model refinement, and further advancement of commercial opportunities that may include hardware and service-based offerings, which we refer to as “SmellTech-As-A-Service”. The Company may adjust the timing, scope, and prioritization of these activities based on available capital, regulatory developments, market conditions, partner execution, and other factors.
| 20 |
During the first half of 2026, the Company continued to advance AI Nose deployment, validation, and research activities across semiconductor manufacturing, industrial infrastructure, and healthcare-related environments. These activities included work relating to environmental monitoring, equipment and facility safety, emergency care environments, and research involving the analysis of exhaled breath patterns. These efforts remain at varying stages of deployment, validation, research, and commercialization.
AI Nose Operating Priorities
| ● | Continue commercialization activities in selected applications. | |
| ● | Continue semiconductor deployment and validation efforts. | |
| ● | Support commercialization through channel and integration partners. | |
| ● | Continue development of SLM and Smell ID datasets using deployment and pilot data. | |
| ● | Continue robotics-related pilot and deployment activities. | |
| ● | Continue evaluating healthcare-adjacent applications. |
VELDONA Operating Priorities
| ● | Continue clinical activities in Taiwan, subject to study progress, regulatory review, and available resources. | |
| ● | Continue pursuing partnering and out-licensing opportunities. |
Factors Affecting Our Business
Our business activities continue to be influenced primarily by our emphasis on advancing AI Nose commercialization activities and managing healthcare-related programs selectively and in a capital-efficient manner. The timing, extent, and financial impact of these activities remain subject to a number of known trends and uncertainties, including the following:
Industrial and infrastructure-oriented applications.
We continue to prioritize AI Nose activities across industrial environments, including semiconductor manufacturing, robotics, smart manufacturing, and hospital infrastructure settings. Recent progress includes initial commercial activity in backend semiconductor manufacturing, front-end semiconductor validation efforts through industry partners, robotics-related development initiatives and activities in hospital infrastructure environments. During the first half of 2026, the Company continued AI Nose deployment and validation activities across certain facility monitoring, safety, ventilation, equipment, and chemical handling applications. These activities remain at varying stages of deployment, validation, and commercialization. The timing and extent of partner execution, customer adoption, and conversion of pilot and initial commercial activities into broader commercial arrangements may affect the timing of revenue and our near-term operating results.
Component supply and manufacturing.
The commercialization of AI Nose depends on the timely availability of components, electronic parts, and other materials from third-party suppliers. Changes in component availability, lead times, pricing, or broader supply chain conditions could increase costs, delay customer deployments, and adversely affect our commercialization activities, operating results, and financial condition.
| 21 |
Near-threshold technology development and system capabilities.
As part of our ongoing deployment and validation activities, we continue to develop AI Nose capabilities across different operating conditions and application environments. These efforts include the detection and interpretation of gas signal variations and the potential application of such capabilities in anomaly detection, environmental sensing, and operational monitoring. We are also developing AI Nose for near-threshold detection scenarios, meaning the detection of signal variations at or near traditional detection thresholds. If validated, such capabilities may support certain early-stage anomaly detection applications. We continue to develop these near-threshold detection capabilities with a focus on reliability, repeatability, and scalability across different environments, which remain subject to ongoing validation. Expanded deployments may provide additional conditions for evaluating system performance and environmental pattern recognition.
Data-driven platform development.
AI Nose deployments are expected to generate Smell ID data across different operating environments, and we continue to use this data to refine models, improve classification performance, and expand the range of detectable patterns. Continued deployment of AI Nose is also expected to result in further accumulation of scent-related data, which may support model improvement, broaden detectable patterns, and enhance system adaptability across different operating environments. During the first half of 2026, the Company expanded data-generation activities across industrial and healthcare-related settings, including environmental signals, facility conditions, and exhaled breath patterns. While we expect these efforts to support ongoing performance improvements, the timing and extent to which they contribute to broader commercial adoption or commercial outcomes may vary, and their benefits may take time to be reflected in revenue or operating results.
Healthcare-adjacent opportunities.
We continue to develop AI Nose applications in senior care and other healthcare-adjacent settings, including environments where non-invasive and continuous sensing may support hygiene monitoring, environmental control, and hospital operations. During the first half of 2026, the Company expanded research and validation activities in hospital infrastructure, emergency care, and exhaled breath analysis. These activities remain research- and validation-stage and are not intended to provide individual patient diagnosis. The timing and extent of these activities may be affected by regulatory requirements, partner engagement, operational validation, and resource allocation decisions.
VELDONA® program management.
We continue to focus VELDONA® on selected indications with unmet medical needs, including oral warts in HIV-seropositive patients, Sjögren’s syndrome, and feline chronic gingivostomatitis. The timing and direction of these programs may be affected by clinical outcomes, regulatory progress, partner interest, and available resources. We also continue to pursue strategic partnerships and out-licensing opportunities, the timing and outcome of which remain uncertain.
As of June 30, 2026, we had available cash and cash equivalents of $1,422,912. We anticipate business revenues and external financing options, if necessary, 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.
Recent Development
During the first half of the year 2026, we advanced AI Nose-related activities within industrial applications, with a focus on semiconductor and robotics environments. These activities included
| ● | Advancing deployments associated with an initial $2.1 million commercial arrangement in backend semiconductor manufacturing environments; | |
| ● | Continuing pilot programs in selected front-end semiconductor environments; | |
| ● | Expanding AI Nose deployments and validation activities into industrial and healthcare infrastructure environments; | |
| ● | Expanding research activities involving emergency care environments; | |
| ● | Supporting use-case expansion through channel and integration partnerships; |
| 22 |
These activities are intended to support continued development, capacity development and potential commercial expansion of AI Nose across industrial environments.
As previously disclosed, on March 27, 2026, the Company entered into a loan agreement with ASE Test, Inc., pursuant to which ASE Test, Inc. agreed to lend the Company an aggregate principal amount of NT$90 million (approximately US$2,812,940) (the “Loan”). The Loan was scheduled to mature on March 27, 2027. On July 10, 2026, the parties agreed to extend the maturity date of NT$62 million (approximately US$1,937,800) of the outstanding principal amount of the Loan to July 31, 2027. The maturity date of the balance of the loan, an aggregate principal amount of NT$28 million (approximately US$875,140), remains March 27, 2027.
Results of Operations for Quarter Ended June 30, 2026 (“Q2 2026”) and June 30, 2025 (“Q2 2025”):
| The three months ended June 30, | Change | |||||||||||||||
| 2026 | 2025 | Amount | % | |||||||||||||
| Revenues | $ | 152 | $ | 4,663 | $ | (4,511 | ) | (97 | )% | |||||||
| Cost of revenues | (53 | ) | (937 | ) | 884 | (94 | )% | |||||||||
| Gross profit | 99 | 3,726 | (3,627 | ) | (97 | )% | ||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development expenses | 1,850,409 | 1,911,800 | (61,391 | ) | (3 | )% | ||||||||||
| Selling, general and administrative expenses | 2,548,776 | 1,837,613 | 711,163 | 39 | % | |||||||||||
| Total operating expenses | 4,399,185 | 3,749,413 | 649,772 | 17 | % | |||||||||||
| Loss from operations | (4,399,086 | ) | (3,745,687 | ) | (653,399 | ) | 17 | % | ||||||||
| Non-operating income (expenses), net | ||||||||||||||||
| Interest expenses | (200,162 | ) | (177,957 | ) | (22,205 | ) | 12 | % | ||||||||
| Other income (expenses), net | 4,517 | (161,346 | ) | 165,863 | (103 | )% | ||||||||||
| Total non-operating expenses, net | (195,645 | ) | (339,303 | ) | 143,658 | (42 | )% | |||||||||
| Net loss before income taxes | (4,594,731 | ) | (4,084,990 | ) | (509,741 | ) | 12 | % | ||||||||
| Provision for income taxes | - | - | - | - | % | |||||||||||
| Net loss | $ | (4,594,731 | ) | $ | (4,084,990 | ) | $ | (509,741 | ) | 12 | % | |||||
Revenues, Cost and Gross Loss
The Company reported $152 and $4,663 in revenue in Q2 2026 and Q2 2025, respectively. The decrease of revenue in Q2, 2026 was primarily caused by lower sales volume on VELDONA pet supplements during the reporting period, as the Company shifts operational focus to AI Nose platform.
The cost of revenue related to product sales in Q2 2026 was $53 compared to $937 in Q2 2025. The decrease in cost of revenue was caused by the aforementioned lower produce volume for VELDONA pet supplements during the reporting period.
Gross profit from product sales in Q2 2026 was $99 as compared to $3,726 gross profit from product sales in Q2 2025. The decrease in gross profit was due to aforementioned lower sale volume.
Research and Development (R&D) Expenses
R&D expenses in Q2 2026 and Q2 2025 were $1,850,409 and $1,911,800, respectively. The decrease of $61,391 (3%) was due to reduced expenses in share-based compensation and expenses associated with co-research for technology partially offset by increased experimental material fees. We expect that our R&D investments may continue to grow as we further develop our technologies.
The share-based compensation expense and the depreciation and amortization expense in Q2 2026 and Q2 2025 were $1,180,756 and $1,209,343, respectively. When excluding these non-cash expenses, R&D expenses decreased to $669,653 in Q2 2026 from $702,457 in Q2 2025.
| 23 |
Selling, General and Administrative (SG&A) Expenses
SG&A expenses were $2,548,776 and $1,837,613 in Q2 2026 and Q2 2025, respectively, reflecting a increase of $711,163 (39%) due to a significant increase in share-based compensation and professional fees, offset by a decrease in advertisement fees and public relations and investor relations fees.
The share-based compensation expense and the depreciation and amortization expense in Q2 2026 and Q2 2025 were $2,018,095 and $1,309,358 respectively. When excluding these non-cash expenses, SG&A expenses increased to $530,681 in Q2 2026 compared to $528,255 in Q2 2025.
Operating Loss
The Company’s operating loss was $4,399,086 and $3,745,687 in Q2 2026 and Q2 2025, respectively, reflecting a $653,399 (17%) increase in operating loss between the reporting periods. We continued to invest resources to execute our growth strategy and product roadmap to improve our profitability.
Interest Expense
In Q2 2026, interest expense was $200,162 compared to $177,957 in Q2 2025. The increase in interest expense was due to a new loan agreement in the first quarter of the year 2026.
Net Loss
Net loss was $4,594,731 in Q2 2026 compared to $4,084,990 in Q2 2025, resulting in an $509,741 (12%) increase in net loss attributable to our shareholders of common stock. The net loss was due to expanding operating expense as we continued to invest resources to execute our growth strategy and product roadmap to improve our profitability.
Results of Operations for first half of the year Ended June 30, 2026 (“H1 2026”) and June 30, 2025 (“H1 2025”):
| The six months ended June 30, | Change | |||||||||||||||
| 2026 | 2025 | Amount | % | |||||||||||||
| Revenues | $ | 313 | $ | 110,870 | $ | (110,557 | ) | (100 | )% | |||||||
| Cost of revenues | (816 | ) | (19,170 | ) | 18,354 | (96 | )% | |||||||||
| Gross profit (loss) | (503 | ) | 91,700 | (92,203 | ) | (101 | )% | |||||||||
| Operating expenses: | ||||||||||||||||
| Research and development expenses | 3,540,269 | 3,635,884 | (95,615 | ) | (3 | )% | ||||||||||
| Selling, general and administrative expenses | 3,141,961 | 3,364,374 | (222,413 | ) | (7 | )% | ||||||||||
| Total operating expenses | 6,682,230 | 7,000,258 | (318,028 | ) | (5 | )% | ||||||||||
| Loss from operations | (6,682,733 | ) | (6,908,558 | ) | 225,825 | (3 | )% | |||||||||
| Non-operating income (expenses), net | ||||||||||||||||
| Interest expenses | (377,038 | ) | (358,402 | ) | (18,636 | ) | 5 | % | ||||||||
| Other income (expenses), net | 5,240 | (104,052 | ) | 109,292 | (105 | )% | ||||||||||
| Total non-operating expenses, net | (371,798 | ) | (462,454 | ) | 90,656 | (20 | )% | |||||||||
| Net loss before income taxes | (7,054,531 | ) | (7,371,012 | ) | 316,481 | (4 | )% | |||||||||
| Provision for income taxes | - | - | - | - | % | |||||||||||
| Net loss | $ | (7,054,531 | ) | $ | (7,371,012 | ) | $ | 316,481 | (4 | )% | ||||||
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Revenues, Cost and Gross Loss
The Company reported $313 and $110,870 in revenue in H1 2026 and H1 2025, respectively. The decrease of revenue in H1, 2026 was primarily caused by lower sales volume on AI Nose related programs in healthcare adjacent applications. This decrease was partly attributable to a strategic shift in focus from healthcare-adjacent applications toward industrial deployments, which are currently at earlier stages of commercialization. The Company generated nil and $105,942 in revenues from AI Nose related programs, and $313 and $4,928 from pet supplements in H1 2026 and H1 2025, respectively.
The cost of revenue related to product sales in H1 2026 was $816 compared to $19,170 in H1 2025. The decrease in cost of revenue was caused by the aforementioned lower produce volume for AI Nose related programs during the reporting period.
Gross loss from product sales in H1 2026 was $503 as compared to $91,700 gross profit from product sales in H1 2025. The decrease in gross profit was due to aforementioned lower sale volume.
Research and Development (R&D) Expenses
R&D expenses in H1 2026 and H1 2025 were $3,540,269 and $3,635,884, respectively. The decrease of $95,615 (3%) was due to reduced expenses in share-based compensation and expenses associated with co-research for technology partially offset by increased staffing expenditures and experimental material fees. We expect that our R&D investments may continue to grow as we further develop our technologies.
The share-based compensation expense and depreciation and amortization expense in H1 2026 and H1 2025 were $2,342,023 and $2,402,213, respectively. When excluding these non-cash expenses, R&D expenses decreased to $1,198,246 in H1 2026 from $1,233,671 in H1 2025.
Selling, General and Administrative (SG&A) Expenses
SG&A expenses were $3,141,961 and $3,364,374 in H1 2026 and H1 2025, respectively, reflecting a decrease of $222,413 (7%) due to a significant decrease in share-based compensation and public relations and investor relations fees, offset by an increase in professional related fees.
The share-based compensation expense and the depreciation and amortization expense in H1 2026 and H1 2025 were $2,030,903 and $2,211,158 respectively. When excluding these non-cash expenses, SG&A expenses decreased to $1,111,058 in H1 2026 compared to $1,153,216 in H1 2025.
Operating Loss
The Company’s operating loss was $6,682,733 and $6,908,558 in H1 2026 and H1 2025, respectively, reflecting a $225,825 (3%) decrease in operating loss between the reporting periods. We continued to invest resources to execute our growth strategy and product roadmap to improve our profitability.
Interest Expense
In H1 2026, interest expense was $377,038 compared to $358,402 in H1 2025. The increase in interest expense was due to the company processing a new loan agreement in the first quarter of the year 2026.
Net Loss
Net loss was $7,054,531 in H1 2026 compared to $7,371,012 in H1 2025, resulting in an $316,481 (4%) decrease in net loss attributable to our shareholders of common stock. The net loss was due to expanding operating expense as we continued to invest resources to execute our growth strategy and product roadmap to improve our profitability.
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Liquidity and Capital Resources
As of June 30, 2026 and December 31, 2025, the Company had available cash of $1,422,912 and $417,353, respectively.
The following table summarizes our cash flow during the six months ended June 30, 2026 and 2025:
| For the six months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Net cash used in operating activities | (2,431,754 | ) | (2,575,000 | ) | ||||
| Net cash provided (used) in investing activities | 7,297 | (18,045 | ) | |||||
| Net cash provided (used)by financing activities | 3,414,540 | (280,902 | ) | |||||
Operating activities:
Cash used in operating activities decreased by $143,246 during the first half of the year 2026 compared to the first half of the year 2025. Our net loss for the first half of the year 2026 decreased by $316,481 primarily due to the company lower operating expense. 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, issuance cost of secured convertible note, and change in fair value of senior secured convertible note, issuance common stock for paying consulting fees decreased approximately by $165,400; | |
| ● | Working capital injected into accounts receivable, inventories and other current assets increased by approximately $9,600; and | |
| ● | Working capital injected into accrued expenses, operating lease liabilities, contract liabilities and other current and long-term liabilities decreased by approximately $17,500. |
Investing activities
Cash provided (used) for investing activities were $7,297 and ($18,045) during the first half of the year 2026 and the first half of the year 2025, respectively. The increase was due to a reduction in refundable deposits and other noncurrent assets and decrease in purchases of property and equipment and increase in proceeds from disposal of property and equipment.
Financing activities
Cash provided by (used in) financing activities were $3,414,540 and $(280,902) during the first half of the year 2026 and the first half of the year 2025, respectively. The $3,695,442 increase was primarily reflected by the following:
| ● | Proceeds from loan payable financing increased by $2,812,940; and | |
| ● | Proceeds from at-the-market offering, net of issuance costs decreased by $117,758; and | |
| ● | Repayments of convertible note decreased by $1,000,000; and | |
| ● | Fractional shares paid out in cash for the reverse stock split decrease by $260 |
In the near-term, we expect to invest in our product development and clinical trial activities to advance our product pipeline. 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.
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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 2025 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.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
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.
ITEM 4. Controls and Procedures
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 June 30, 2026.
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.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. As of the date of this report, we were not aware of any material legal proceedings involving the Company.
ITEM 1A. Risk Factors
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 2025 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.
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Information on risk factors can be found in Part I, Item 1A (Risk Factors) of our 2025 Annual Report. Other than the following risk factor, there have been no material changes from the risk factors previously disclosed in our 2025 Annual Report, other than the risk factor set forth below.
Fluctuating foreign currency and exchange rates may negatively impact our business, results of operations, and financial position.
Due to our foreign operations, a portion of our business is denominated in foreign currencies. As a result, fluctuations in foreign currency and exchange rates may have an impact on our business, results of operations and financial position. Foreign currency exchange rates have fluctuated and may continue to fluctuate. Significant foreign currency exchange rate fluctuations may negatively impact our international revenue, which in turn would affect our consolidated revenue. Currencies may be affected by internal factors, general economic conditions and external developments in other countries, all of which can have an adverse impact on a country’s currency. We cannot predict whether we will incur foreign exchange losses in the future. Further, significant foreign exchange fluctuations resulting in a decline in the respective local currency may decrease the value of our foreign assets, as well as decrease our revenues and earnings from our foreign subsidiaries, which would reduce our profitability and adversely affect our financial position.
Policy changes affecting international trade could adversely impact the demand for our products and our competitive position.
Changes in government policies on foreign trade and investment can affect the demand for our products and services, impact the competitive position of our products and services or prevent us from being able to sell products and services in certain countries. The implementation of more restrictive trade policies, such as more detailed inspections, higher tariffs, import or export licensing requirements, economic sanctions, anti-boycott laws, exchange controls or new barriers to entry could have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, the Trump Administration has announced tariffs on certain imports from Canada, Mexico and the EU, among others, that could affect the demand for our products. Such tariffs and any retaliatory tariffs (including those announced by China, Canada and Mexico) may put upwards pressure on prices in other jurisdictions from which we purchase product components, which could reduce our ability to offer competitive pricing to potential customers. We cannot predict what changes to trade policy will be made by the Trump Administration, the U.S. Congress or other governments, including whether existing tariff policies will be maintained or modified or whether the entry into new bilateral or multilateral trade agreements will occur, nor can we predict the effects that any such changes would have on our business or the global economy. Changes in U.S. trade policy, or threat of such changes, have resulted and could again result in reactions from U.S. trading partners, including adopting responsive trade policies making it more difficult or costly for us to export our products or import products or product components from countries where we currently purchase products or product components or sell products or services. Such changes, or threatened changes, to trade policy or in laws and policies governing foreign trade, and any resulting negative sentiments towards the United States as a result of such changes, could materially and adversely affect our business, financial condition, results of operations and liquidity.
ITEM 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities
Recent Sales of Unregistered Equity Securities
As of June 30, 2026, the Company has issued 39,062 unregistered securities to pursue a marketing service agreement.
Unless otherwise stated above, the issuances of these securities were made in reliance upon exemptions provided by Section 4(a)(2) of the Securities Act, Regulation D promulgated thereunder, or Securities Act Rule 701 for the offer and sale of securities not involving a public offering.
Issuer Purchase of Equity Securities
Not applicable.
Use of Proceeds of Registered Securities
Not applicable.
ITEM 3. Defaults Upon Senior Securities
None
ITEM 4. Mine Safety Disclosures
Not applicable
ITEM 5. Other Information
None
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ITEM 6. Exhibits
EXHIBIT INDEX
| INCORPORATED BY REFERENCE | ||||||||||||
| EXHIBIT NUMBER | DESCRIPTION | FILED WITH THIS FORM 10-Q |
FILING DATE WITH SEC |
FORM | EXH # | HYPERLINK TO FILINGS | ||||||
| 10.1 | Loan Agreement by and between Ainos, Inc. and ASE Test, Inc., dated July 10, 2026 | x | ||||||||||
| 10.2 | English Translation of General Agreement for Omnibus Credit Lines, dated July 3, 2026 | 07/09/2026 | 8-K | 10.1 | General Agreement for Omnibus Credit Lines | |||||||
| 31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a- 14(a) / 15d – 14(a) | x | ||||||||||
| 31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a- 14(a) / 15d – 14(a) | x | ||||||||||
| 32.1 | Certification Of Principal Executive Officer Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002 | x | ||||||||||
| 32.2 | Certification Of Principal Financial Officer Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002 | x | ||||||||||
| 100 | Inline XBRL – Related Documents | x | ||||||||||
| 101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the XBRL document. | x | ||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | x | ||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase | x | ||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase | x | ||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | x | ||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | x | ||||||||||
| 104.1 | Cover Page Interactive Data File | x | ||||||||||
The exhibits listed in the Exhibit Index are filed or incorporated by reference as part of this filing.
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SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| AINOS, INC. | ||
| Date: August 3, 2026 | By: | /s/ Chun-Hsien Tsai |
| Chun-Hsien Tsai, Chairman of the Board, President, and Chief Executive Officer | ||
| Date: August 3, 2026 | By: | /s/ Hsin-Liang Lee |
| Hsin-Liang Lee, Chief Financial Officer | ||
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