UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 10-Q
___________________
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from____to____ from ____ to ____
Commission File No. 0-20791
___________________
AINOS, INC. | ||
(Exact name of registrant as specified in its charter) |
___________________
Texas | 75-1974352 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
8880 Rio San Diego Drive, Ste. 800, San Diego, CA 92108 (858) 869-2986 | ||||
(Address and telephone number, including area code, of | ||||
___________________
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. [√]☒ Yes [ ]No
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). [√]☒ Yes [ ]No
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“large accelerated filer," "accelerated” “accelerated filer," "smaller” “smaller reporting company,"” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-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. D
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) [ ]☐ Yes [√]☒ No
142,442,215 shares of common stock, par value $0.01 per share, outstanding as of August 12, 2020
AINOS, INC.
INDEX
PAGE NO. | ||||
3 | ||||
Balance Sheets– June 30, | 3 | |||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
14 | ||||
24 | ||||
24 | ||||
26 | ||||
29 | ||||
29 | ||||
29 | ||||
29 | ||||
31 | ||||
32 |
| Table of Contents |
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Ainos, Inc.
Balance Sheets
(Unaudited)
June 30, 2020 | December 31, 2019 | |||||||
| Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 172,802 | $ | 409,039 | ||||
Accounts receivable | 751 | - | ||||||
Inventory | 3,675 | 4,131 | ||||||
Prepaid expense and other current assets | 14,583 | 32,125 | ||||||
Total current assets | 191,811 | 445,295 | ||||||
Patents, net | 141,257 | 146,263 | ||||||
Property and equipment, net | 3,904 | 5,068 | ||||||
Total assets | $ | 336,972 | $ | 596,626 | ||||
| Liabilities and Stockholders' Equity (Deficit) | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 292,241 | $ | 208,727 | ||||
Advances from investors | 10,000 | 100,000 | ||||||
Convertible notes payable – related party | 578,664 | 444,581 | ||||||
Total current liabilities | 880,905 | 753,308 | ||||||
Total liabilities | 880,905 | 753,308 | ||||||
| Stockholders' equity (deficit) | ||||||||
Preferred stock, $0.01 par value: | ||||||||
Authorized shares - 10,000,000, | ||||||||
| Issued and outstanding shares – 0 at June 30, 2020 and December 31, 2019 | - | - | ||||||
Common stock, $0.01 par value: | ||||||||
Authorized shares - 100,000,000, | ||||||||
| Issued and outstanding shares –40,916,351 and 40,516,351 at June 30, 2020 and December 31, 2019, respectively | 409,164 | 405,164 | ||||||
Additional paid-in capital | 4,495,380 | 4,207,786 | ||||||
Accumulated deficit | (5,448,477 | ) | (4,769,632 | ) | ||||
Total stockholders’ equity (deficit) | (543,933 | ) | (156,682 | ) | ||||
Total liabilities and stockholders’ equity (deficit) | $ | 336,972 | $ | 596,626 | ||||
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||
Assets |
|
|
|
|
|
| ||
Current assets: |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 606,638 |
|
| $ | 22,245 |
|
Accounts receivable |
|
| 139,747 |
|
|
| 0 |
|
Inventory |
|
| 0 |
|
|
| 3,024 |
|
Prepaid expense and other current assets |
|
| 123,085 |
|
|
| 51,144 |
|
Total current assets |
|
| 869,470 |
|
|
| 76,413 |
|
Patents, net |
|
| 19,668,879 |
|
|
| 180,628 |
|
Property and equipment, net |
|
| 22,923 |
|
|
| 3,249 |
|
Right of Use Asset |
|
| 61,100 |
|
|
| 0 |
|
Total assets |
| $ | 20,622,372 |
|
| $ | 260,290 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity (Deficit) |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
| $ | 310,481 |
|
| $ | 145,567 |
|
Contract liability |
|
| 333,763 |
|
|
| 0 |
|
Convertible and other notes payable – related parties |
|
| 1,526,420 |
|
|
| 805,001 |
|
Convertible and other notes payable |
|
| 185,000 |
|
|
| 148,000 |
|
Lease obligation – current |
|
| 20,568 |
|
|
| 0 |
|
Total current liabilities |
|
| 2,376,232 |
|
|
| 1,098,568 |
|
Lease obligation – non-current |
|
| 40,583 |
|
|
| 0 |
|
Total liabilities |
|
| 2,416,815 |
|
|
| 1,098,568 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity (deficit) |
|
|
|
|
|
|
|
|
Preferred stock, $0.01 par value, 10 million shares authorized, 0 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively |
|
| 0 |
|
|
| 0 |
|
Common stock, $0.01 par value, 300 million shares authorized, 142,271,815 and 42,066,172 shares outstanding at June 30, 2021 and December 31, 2020, respectively |
|
| 1,422,718 |
|
|
| 420,662 |
|
Additional paid-in capital |
|
| 24,286,874 |
|
|
| 4,961,315 |
|
Accumulated deficit |
|
| (7,504,035 | ) |
|
| (6,220,255 | ) |
Total stockholders’ equity (deficit) |
|
| 18,205,557 |
|
|
| (838,278 | ) |
Total liabilities and stockholders’ equity (deficit) |
| $ | 20,622,372 |
|
| $ | 260,290 |
|
See accompanying notes to financial statements.
Statements of Operations
(Unaudited)
| Three months ended June 30 | Six months ended June 30 | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Revenues | $ | 484 | $ | 606 | $ | 15,684 | $ | 4,682 | ||||||||
| Cost of revenues | (292 | ) | (563 | ) | (11,098 | ) | (3,281 | ) | ||||||||
| Gross margin | 192 | 43 | 4,586 | 1,401 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development expenses | 389 | 50,124 | 389 | 52,510 | ||||||||||||
| Selling, general and administrative expenses | 300,472 | 404,958 | 680,740 | 794,493 | ||||||||||||
| Total operating expenses | (300,861 | ) | (455,082 | ) | (681,129 | ) | (847,003 | ) | ||||||||
| Operating income (loss) | (300,669 | ) | (455,039 | ) | (676,543 | ) | (845,602 | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest income (expense), net | (1,297 | ) | 1,522 | (2,302 | ) | 637 | ||||||||||
| Net income (loss) | (301,966 | ) | (453,517 | ) | (678,845 | ) | (844,965 | ) | ||||||||
| Basic and diluted net loss per average share available to common shareholders | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||||
| Weighted average common shares outstanding – basic and diluted | 40,516,351 | 39,624,247 | 40,516,351 | 39,444,456 | ||||||||||||
|
| Three months ended June 30 |
|
| Six months ended June 30 |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenues |
| $ | 202,992 |
|
| $ | 484 |
|
| $ | 205,113 |
|
| $ | 15,684 |
|
Cost of revenues |
|
| (69,508 | ) |
|
| (292 | ) |
|
| (70,757 | ) |
|
| (11,098 | ) |
Gross margin |
|
| 133,484 |
|
|
| 192 |
|
|
| 134,356 |
|
|
| 4,586 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses |
|
| 0 |
|
|
| 389 |
|
|
| 0 |
|
|
| 389 |
|
Selling, general and administrative expenses |
|
| 860,030 |
|
|
| 300,472 |
|
|
| 1,383,011 |
|
|
| 680,740 |
|
Total operating expenses |
|
| (860,030 | ) |
|
| (300,861 | ) |
|
| (1,383,011 | ) |
|
| (681,129 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
| (726,546 | ) |
|
| (300,669 | ) |
|
| (1,248,655 | ) |
|
| (676,543 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on sale of fixed assets |
|
| (2,247 | ) |
|
| 0 |
|
|
| (2,247 | ) |
|
| 0 |
|
Interest expense, net |
|
| (20,981 | ) |
|
| (1,297 | ) |
|
| (32,879 | ) |
|
| (2,302 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before income tax |
|
| (749,774 | ) |
|
| (301,966 | ) |
|
| (1,283,781 | ) |
|
| (678,845 | ) |
Less: Income tax |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Net loss |
|
| (749,774 | ) |
|
| (301,966 | ) |
|
| (1,283,781 | ) |
|
| (678,845 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per average share available to common shareholders |
| $ | (0.01 | ) |
| $ | (0.02 | ) |
| $ | (0.02 | ) |
| $ | (0.02 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding – basic and diluted |
|
| 124,644,759 |
|
|
| 40,516,351 |
|
|
| 83,583,583 |
|
|
| 40,516,351 |
|
See accompanying notes to financial statements.
| Amarillo Biosciences, Inc. | ||||||||||||||||||||||||||||
| Statements of Stockholders’ Equity (Deficit) | ||||||||||||||||||||||||||||
For the six months ended June 30, 2020 and 2019 (Unaudited) | ||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid in Capital | Accumulated Deficit | Total Stockholders’ Equity (Deficit) | ||||||||||||||||||||||||
| Shares | Par Value | Shares | Par Value | |||||||||||||||||||||||||
| Balance December 31, 2019 | - | $ | - | 40,516, 351 | $ | 405,164 | $ | 4,207,786 | $ | (4,769,632 | ) | $ | (156,682 | ) | ||||||||||||||
| Issuance of stock for compensation | - | - | - | - | ||||||||||||||||||||||||
| Issuance of stock for cash | 400,000 | 4,000 | 96,000 | 100,000 | ||||||||||||||||||||||||
| Issuance of stock for debt | - | - | - | - | - | |||||||||||||||||||||||
| Warrant expense | 10,218 | 10,218 | ||||||||||||||||||||||||||
| Option expense | 181,376 | 181,376 | ||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | (678,845 | ) | (678,845 | ) | |||||||||||||||||||
| Balance June 30, 2020 | - | $ | - | 40,916,351 | $ | 409,164 | $ | 4,495,380 | $ | (5,448,477 | ) | $ | (543,933 | ) | ||||||||||||||
| Balance December 31, 2018 | - | $ | - | 39,117,524 | $ | 391,175 | $ | 3,527,238 | $ | (3,188,334 | ) | $ | 730,079 | |||||||||||||||
| Compensation – i2china (Q4 2018 accrual) | - | - | 40,170 | 401.70 | 11,598 | - | 12,000 | |||||||||||||||||||||
| Compensation – Cohen and Chen (Q4 2018 accrual) | - | - | 191,505 | 1,915.05 | 55,585 | - | 57,500 | |||||||||||||||||||||
| Subscription Issuance – Hen Vai Wu | - | - | 200,000 | 2,000 | 48,000 | - | 50,000 | |||||||||||||||||||||
| Finder’s fee issuance – Hen Vai Wu | 115,000 | 1,150 | 22,600 | 23,750 | ||||||||||||||||||||||||
| Warrant expense | - | - | - | - | 18,992 | - | 18,992 | |||||||||||||||||||||
| Option expense | - | - | 192,298 | - | 192,298 | |||||||||||||||||||||||
| Net loss for the period ended June 30, 2019 | - | - | - | - | - | (844,965 | ) | (844,965 | ) | |||||||||||||||||||
| Balance June 30, 2019 | - | $ | - | 39,664,199 | $ | 396,642 | $ | 3,876,311 | $ | (4,033,299 | ) | $ | (239,654 | ) | ||||||||||||||
| 4 |
| Table of Contents |
Ainos, Inc.
Statements of Stockholders’ Equity (Deficit)
For the three months ended June, 2021 and 2020
(Unaudited)
|
| Preferred Stock |
|
| Common Stock |
|
| Additional Paid in |
|
| Accumulated |
|
| Total Stockholders’ Equity |
| |||||||||||||
|
| Shares |
|
| Par Value |
|
| Shares |
|
| Par Value |
|
| Capital |
|
| Deficit |
|
| (Deficit) |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Balance at March 31, 2021 |
|
| - |
|
| $ | 0 |
|
|
| 42,066,172 |
|
| $ | 420,662 |
|
| $ | 5,055,420 |
|
| $ | (6,754,261 | ) |
| $ | (1,278,179 | ) |
Issuance of stock for compensation |
|
| - |
|
|
| 0 |
|
|
| 205,643 |
|
|
| 2,056 |
|
|
| 137,349 |
|
|
| 0 |
|
|
| 139,405 |
|
Issuance of stock for acquisition of patents |
|
| - |
|
|
| 0 |
|
|
| 100,000,000 |
|
|
| 1,000,000 |
|
|
| 19,000,000 |
|
|
| 0 |
|
|
| 20,000,000 |
|
Warrant expense |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 3,417 |
|
|
| 0 |
|
|
| 3,417 |
|
Option expense |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 90,688 |
|
|
| 0 |
|
|
| 90,688 |
|
Net loss for the 2nd-quarter |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| (749,774 | ) |
|
| (749,774 | ) |
Balance at June 30, 2021 |
|
| - |
|
| $ | 0 |
|
|
| 142,271,815 |
|
| $ | 1,422,718 |
|
| $ | 24,286,874 |
|
| $ | (7,504,035 | ) |
| $ | 18,205,557 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2020 |
|
| - |
|
|
| 0 |
|
|
| 40,516,351 |
|
| $ | 405,164 |
|
| $ | 4,307,970 |
|
| $ | (5,146,511 | ) |
| $ | (433,377 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of stock for cash |
|
| - |
|
|
| 0 |
|
|
| 400,000 |
|
|
| 4,000 |
|
|
| 96,000 |
|
|
| 0 |
|
|
| 100,000 |
|
Warrant expense |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 722 |
|
|
| 0 |
|
|
| 722 |
|
Option expense |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 90,688 |
|
|
| 0 |
|
|
| 90,688 |
|
Net loss for the 2nd-quarter |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| (301,966 | ) |
|
| (301,966 | ) |
Balance at June 30, 2020 |
|
| - |
|
| $ | 0 |
|
|
| 40,916,351 |
|
| $ | 409,164 |
|
| $ | 4,495,380 |
|
| $ | (5,448,477 | ) |
| $ | (543,933 | ) |
See accompanying notes to financial statements.
Statements of Cash Flows
For the six months ended June, 2021 and 2020
(Unaudited)
| Six months ended June 30, | ||||||||
| 2020 | 2019 | |||||||
Net cash used in operating activities | $ | (244,967 | ) | $ | (539,076 | ) | ||
Cash flows from investing activities | ||||||||
| Investment in patents | (1,270 | ) | (1,637 | ) | ||||
| Net cash used in investing activities | (1,270 | ) | (1,637 | ) | ||||
Cash flows from financing activities | ||||||||
| Payments on convertible notes | - | (37,500 | ) | |||||
Advances from shareholder | 10,000 | - | ||||||
Proceeds from private placement offering | - | 25,000 | ||||||
| Net cash used in financing activities | 10,000 | (12,500 | ) | |||||
Net change in cash | (236,237 | ) | (553,213 | ) | ||||
Cash and cash equivalents at beginning of period | 409,039 | 1,276,654 | ||||||
Cash and cash equivalents at end of period | $ | 172,802 | $ | 723,441 | ||||
Supplemental Cash Flow Information | ||||||||
Cash paid for interest | $ | - | $ | 203 | ||||
Cash paid for income taxes | $ | - | $ | - | ||||
Non-Cash Transactions | ||||||||
| Stock issued for accrued liabilities | $ | - | $ | 93,250 | ||||
| Stock issued for advances from investors | $ | 100,000 | $ | 25,000 | ||||
|
| Preferred Stock |
|
| Common Stock |
|
| Additional Paid in |
|
| Accumulated |
|
| Total Stockholders’ Equity |
| |||||||||||||
|
| Shares |
|
| Par Value |
|
| Shares |
|
| Par Value |
|
| Capital | Deficit | (Deficit) |
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Balance at December 31, 2020 |
|
| - |
|
| $ | 0 |
|
|
| 42,066,172 |
|
| $ | 420,662 |
|
| $ | 4,961,315 |
|
| $ | (6,220,255 | ) |
| $ | (838,278 | ) |
Issuance of stock for compensation |
|
| - |
|
|
| 0 |
|
|
| 205,643 |
|
|
| 2,056 |
|
|
| 137,349 |
|
|
| 0 |
|
|
| 139,405 |
|
Issuance of stock for acquisition of patents |
|
| - |
|
|
| 0 |
|
|
| 100,000,000 |
|
|
| 1,000,000 |
|
|
| 19,000,000 |
|
|
| 0 |
|
|
| 20,000,000 |
|
Warrant expense |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 6,835 |
|
|
| 0 |
|
|
| 6,835 |
|
Option expense |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 181,376 |
|
|
| 0 |
|
|
| 181,376 |
|
Net loss for the 1st half year |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| (1,283,781 | ) |
|
| (1,283,781 | ) |
Balance at June 30, 2021 |
|
| - |
|
| $ | 0 |
|
|
| 142,271,815 |
|
| $ | 1,422,718 |
|
| $ | 24,286,874 |
|
| $ | (7,504,035 | ) |
| $ | 18,205,557 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2019 |
|
| - |
|
|
| 0 |
|
|
| 40,516,351 |
|
| $ | 405,164 |
|
| $ | 4,207,786 |
|
| $ | (4,769,632 | ) |
| $ | (156,682 | ) |
Issuance of stock for cash |
|
| - |
|
|
| 0 |
|
|
| 400,000 |
|
|
| 4,000 |
|
|
| 96,000 |
|
|
| 0 |
|
|
| 100,000 |
|
Warrant expense |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 10,218 |
|
|
| 0 |
|
|
| 10,218 |
|
Option expense |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 181,376 |
|
|
| 0 |
|
|
| 181,376 |
|
Net loss for the 1st half year |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
|
|
|
|
| (678,845 | ) |
|
| (678,845 | ) |
Balance at June 30, 2020 |
|
| - |
|
| $ | 0 |
|
|
| 40,916,351 |
|
| $ | 409,164 |
|
| $ | 4,495,380 |
|
| $ | (5,448,477 | ) |
| $ | (543,933 | ) |
See accompanying notes to financial statements.
Condensed Statements of Cash Flows
(Unaudited)
|
| Six months ended June 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
|
|
|
|
|
|
| ||
Net cash used in operating activities |
| $ | (44,726 | ) |
| $ | (244,967 | ) |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Investment in patents |
|
| 0 |
|
|
| (1,270 | ) |
Purchase of fixed assets |
|
| (23,276 | ) |
|
| 0 |
|
Net cash used in investing activities |
| $ | (23,276 | ) |
| $ | (1,270 | ) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Advances from shareholder |
|
| 0 |
|
|
| 10,000 |
|
Proceeds from private placement offering, net |
|
| 0 |
|
|
| 0 |
|
Proceeds from convertible note payable-related party |
|
| 652,395 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities |
|
| 652,395 |
|
|
| 10,000 |
|
|
|
|
|
|
|
|
|
|
Net change in cash |
|
| 584,393 |
|
|
| (236,237 | ) |
Cash and cash equivalents at beginning of period |
|
| 22,245 |
|
|
| 409,039 |
|
Cash and cash equivalents at end of period |
| $ | 606,638 |
|
| $ | 172,802 |
|
Supplemental Cash Flow Information |
|
|
|
|
|
|
|
|
Cash paid for interest |
| $ | 132 |
|
| $ | 25 |
|
Cash paid for income taxes |
| $ | 0 |
|
| $ | 0 |
|
Non-Cash Transactions |
|
|
|
|
|
|
|
|
Stock issued for acquisition of patents |
| $ | 20,000,000 |
|
| $ | 0 |
|
Stock issued for compensation, warrant and option expense |
| $ | 224,711 |
|
| $ | 194,690 |
|
Stock issued for advances from investors |
| $ | 0 |
|
| $ | 100,000 |
|
ROU Leased assets |
| $ | 62,846 |
|
| $ | 0 |
|
Lease Obligation |
| $ | 62,846 |
|
| $ | 0 |
|
See accompanying notes to financial statements.
| 7 |
| Table of Contents |
Ainos, Inc.
Notes to Financial Statements
(Unaudited)
1. | Organization and Business. Ainos, Inc., formerly known as Amarillo Biosciences, Inc. (the "Company" |
2. | The Company primarily operates through three divisions: Pharmaceutical, Medical and Consumer. The Pharmaceutical division leverages |
3. | Basis of presentation. The accompanying consolidated financial statements, which should be read in conjunction with the audited financial statements and footnotes included in the Company's Form 10-K for the year ended December 31, |
4. | Financial Condition. These financial statements have been prepared in accordance with United States generally accepted accounting principles, |
While the Company has recurring losses and |
| 8 |
| Table of Contents |
Pursuant with the securities purchase agreement, the Company has introduced new management team members and board directors. On June 14, 2021, the Company became the master sales and marketing agent for the Ainos SARS-CoV-2 Antigen Rapid Test Kit (“Covid-19 Test Kit”). Since June, sales of the Covid-19 Test Kit in Taiwan have begun generating revenues. The Company’s revenues for the first six months of 2021 increased to $205,113 from $15,684 in the As of June 30, 2021, the Company’s financial improvement includes the following: 1. An increase of cash and cash equivalents to $606,638 as of June 30, 2021 from $22,245 as of December 31, 2020. 2. An increase of account receivables to $139,747 as of June 30, 2021 from $0 as of December 31, 2020. 3. An increase of current liability to $2,355,665 as of June 30, 2021 from $1,098,568 as of December 31, 2020. A prepaid revenue of $333,763 will be recognized as sales revenues when the Company completes the shipping of product to its customers. The Company 4. Total stockholders’ equity of $18,205,607 at the end of June 30, 2021 compared to a negative total stockholders’ equity of $838,278 as of December 31, 2020. The Company anticipates business revenues and potential financial support to fund the Company’s operations The Company intends to explore capital raise activities to further bolster its There can be no assurance that capital will be available as necessary to meet the Company’s working capital requirements or, if the capital is available, that it will be on terms acceptable to the Company. The issuances of additional equity securities by the Company may result in dilution in the equity interests of its current stockholders. Obtaining commercial loans will increase the Company’s liabilities and future cash commitments to the extent such loans would be |
5. | Common Stock. The shareholders have authorized |
We have not paid any dividends to our common stock shareholders to date, and have no plans to do so in the immediate future. |
| 9 |
| Table of Contents |
6. | Convertible Notes Payable |
Note #. |
| Conversion Rate |
|
| Interest Rate |
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||||
Note 1 - Chen |
| $ | 0.1680 |
|
|
| 0.75 | % |
| $ | 114,026 |
|
| $ | 114,026 |
|
Note 2 - Chen |
| $ | 0.1875 |
|
|
| 0.65 | % |
| $ | 262,500 |
|
| $ | 262,500 |
|
Note 3.19 - Chen |
| $ | 0.25 |
|
|
| 1.85 | % |
| $ | 39,620 |
|
| $ | 39,620 |
|
Note 4.19 - Chen |
| $ | 0.25 |
|
|
| 1.61 | % |
| $ | 14,879 |
|
| $ | 14,879 |
|
Note 5.19 – i2China |
| $ | 0.25 |
|
|
| 1.85 | % |
| $ | 16,000 |
|
| $ | 16,000 |
|
Note 6.20 - Chen |
| $ | 0.25 |
|
|
| 1.85 | % |
| $ | 216,600 |
|
| $ | 216,600 |
|
Note 7.20 - Chen |
| $ | 0.25 |
|
|
| 1.60 | % |
| $ | 23,366 |
|
| $ | 23,366 |
|
Note 8.20a – i2China |
| $ | 0.25 |
|
|
| 1.85 | % |
| $ | 48,000 |
|
| $ | 48,000 |
|
Note 8.20b – i2China |
|
| N/A |
|
|
| 1.85 | % |
| $ | 84,000 |
|
| $ | 84,000 |
|
Note 9.21 - Chen |
|
| N/A |
|
|
| 0.13 | % |
| $ | 279,405 |
|
| $ | 134,010 |
|
Note 10.21 – Chen |
| $ | 0.25 |
|
|
| 1.85 | % |
| $ | 59,025 |
|
|
| 0 |
|
Note 11 – i2China |
| $ | 0.25 |
|
|
| 1.85 | % |
| $ | 37,000 |
|
|
| 0 |
|
Note 11.21 – Chen |
| $ | 0.25 |
|
|
| 1.85 | % |
| $ | 10,000 |
|
|
| 0 |
|
Note 12.21 - AinosKY |
| $ | 0.20 |
|
|
| 1.85 | % |
| $ | 15,000 |
|
|
| 0 |
|
Note 13.21 - AinosKY |
| $ | 0.20 |
|
|
| 1.85 | % |
| $ | 20,000 |
|
|
| 0 |
|
Note 14.21 - AinosKY |
| $ | 0.20 |
|
|
| 1.85 | % |
| $ | 30,000 |
|
|
| 0 |
|
Note 15.21 - AinosKY |
| $ | 0.20 |
|
|
| 1.85 | % |
| $ | 35,000 |
|
|
| 0 |
|
Note 16.21 - AinosKY |
| $ | 0.20 |
|
|
| 1.85 | % |
| $ | 300,000 |
|
|
| 0 |
|
Note 17.21 - AinosKY |
| $ | 0.20 |
|
|
| 1.85 | % |
| $ | 107,000 |
|
|
| 0 |
|
Total Notes Payable Principal– Related Party and Others |
|
|
|
|
|
|
|
|
| $ | 1,711,421 |
|
| $ | 953,001 |
|
Dr. Stephen T. Chen and i2China Management Group, LLC elected to defer cash compensation during a period of development and fundraising. The parties received both convertible and non-convertible promissory notes in consideration of the deferrals. Ainos KY provided working capital to the Company and received convertible promissory notes in consideration of the working capital loans. On January 1, 2021, the Company issued Note #10.21 for deferred compensation to Dr. Stephen T. Chen in the amount of $59,025. The Note is payable on April 1, 2021, or on demand and bears interest at the AFR short-term rate of 1.85% up to maturity, then an annual interest rate of 10.00% per annum upon maturity. The note is an advancing note with a maximum limit of $59,025 whereby the Company promises to repay the aggregate Principal Amount advanced to date up to the stated maximum amount at Maturity. The Company may request and the payee shall advance up to $9,025 on the 15th and last day of each month until the note matures. The Note may be convertible in whole or in part at a conversion price of $0.25 per share into the Company’s common voting stock. |
| Note #. | Conversion Rate | Interest Rate | June 30, 2020 | December 31, 2019 | ||||||||||||
| Note 1 - Chen | $ | 0.1680 | 0.75 | % | $ | 117,861 | $ | 117,433 | ||||||||
| Note 2 - Chen | $ | 0.1875 | 0.65 | % | $ | 267,134 | $ | 266,281 | ||||||||
| Note 3.19 - Chen | $ | 0.2500 | 1.85 | % | $ | 39,986 | $ | 39,620 | ||||||||
| Note 4.19 - Chen | $ | 0.2500 | 1.61 | % | $ | 12,550 | $ | 12,453 | ||||||||
| Note 5.19 – i2China | $ | 0.2500 | 1.85 | % | $ | 16,401 | $ | 16,253 | ||||||||
| Note 6.20 - Chen | $ | 0.2500 | 1.85 | % | $ | 109,051 | $ | - | ||||||||
| Note 7.20 - Chen | $ | 0.2500 | 1.60 | % | $ | 8,421 | $ | - | ||||||||
| Note 8.20 – i2China | $ | 0.2500 | 1.85 | % | $ | 24,167 | $ | - | ||||||||
| Total Convertible Notes (including accrued Interest) – Related Party | $ | 595,571 | $ | 452,040 | ||||||||||||
| Table of Contents |
On January 1, 2021, the Company issued Note #11 for deferred compensation to i2China Management Group, LLC in the amount of $37,000. The Note is payable on April 1, 2021, or on demand and bears interest at the AFR short-term rate of 1.85% up to maturity, then an annual interest rate of 10.00% per annum upon maturity. The note is an advancing note with a maximum limit of $37,000 whereby the Company promises to repay the aggregate Principal Amount advanced to date up to the stated maximum amount at Maturity. The Company may request and the payee shall advance up to $11,000 on the last day of each month until the note matures. The Note may be convertible in whole or in part at a conversion price of $0.25 per share. On April 1, 2021, the Company issued Note #11.21 for deferred compensation to Dr. Stephen T. Chen in the amount of $18,050. The Note is payable on May 1, 2021, or on demand and bears interest at the AFR short-term rate of 1.85% up to maturity, then an annual interest rate of 10.00% per annum upon maturity. The note is an advancing note with a maximum limit of $18,050 whereby the Company promises to repay the aggregate Principal Amount advanced to date up to the stated maximum amount at Maturity. The Company may request and the payee shall advance up to $9,025 on the 15th and last day of each month until the note matures. The Note may be convertible in whole or in part at a conversion price of $0.25 per share into the Company’s common voting stock. On April 27, 2021, the Company issued Note #12.21 for a short-term loan for working capital purposes from Ainos KY in the amount of $15,000. The Note is payable on October 27, 2021, or on demand and bears interest at the AFR short-term rate of 1.85%. The note has a maximum limit of $15,000 whereby the Company promises to repay the aggregate Principal Amount to date up to the stated maximum amount at Maturity. The Note may be convertible in whole or in part at a conversion price of $0.20 per share. On May 5, 2021, the Company issued Note #13.21 for a short-term loan for working capital purposes from Ainos KY in the amount of $20,000. The Note is payable on November 5, 2021, or on demand and bears interest at the AFR short-term rate of 1.85%. The note has a maximum limit of $20,000 whereby the Company promises to repay the aggregate Principal Amount to date up to the stated maximum amount at Maturity. The Note may be convertible in whole or in part at a conversion price of $0.20 per share. On May 25, 2021, the Company issued Note #14.21 for a short-term loan for working capital purposes from Ainos KY in the amount of $30,000. The Note is payable on November 25, 2021, or on demand and bears interest at the AFR short-term rate of 1.85%. The note has a maximum limit of $30,000 whereby the Company promises to repay the aggregate Principal Amount to date up to the stated maximum amount at Maturity. The Note may be convertible in whole or in part at a conversion price of $0.20 per share. On May 28, 2021, the Company issued Note #15.21 for a short-term loan for working capital purposes from Ainos KY in the amount of $35,000. The Note is payable on November 28, 2021, or on demand and bears interest at the AFR short-term rate of 1.85%. The note has a maximum limit of $35,000 whereby the Company promises to repay the aggregate Principal Amount to date up to the stated maximum amount at Maturity. The Note may be convertible in whole or in part at a conversion price of $0.20 per share. On June 9, 2021, the Company issued Note #16.21 for a short-term loan for working capital purposes from Ainos KY in the amount of $300,000. The Note is payable on December 9, 2021, or on demand and bears interest at the AFR short-term rate of 1.85%. The note has a maximum limit of $300,000 whereby the Company promises to repay the aggregate Principal Amount to date up to the stated maximum amount at Maturity. The Note may be convertible in whole or in part at a conversion price of $0.20 per share. |
| 11 |
| Table of Contents |
On June 21, 2021, the Company issued Note #17.21 for a short-term loan for working capital purposes from Ainos KY in the amount of $107,000. The Note is payable on December 21, 2021, or on demand and bears interest at the AFR short-term rate of 1.85%. The note has a maximum limit of $107,000 whereby the Company promises to repay the aggregate Principal Amount to date up to the stated maximum amount at Maturity. The Note may be convertible in whole or in part at a conversion price of $0.20 per share. All of the aforementioned convertible and non-convertible promissory notes are un-secured and are due on demand. All shares issued on conversion are to be restricted subject to Rule 144 promulgated under the U.S. Securities Act of 1933. The Company may prepay the notes in whole or in part at any time without penalty. The promissory notes due to Dr. Stephen T. Chen and Ainos KY are related party notes. | |
7. | Other Related Party Transactions. |
On April 7, 2021, the On April 7, 2021, the Company issued 5,769 voting common stock of the Company to Bernard Cohen (“Cohen”) as partial compensation payable for the period January 1, 2021 through March 31, 2021 under that certain Employment Agreement by and between the Company and Cohen effective January 1, 2021 (“Cohen Agreement”). On April 7, 2021, the Company issued 11,538 voting common stock of the Company to Lawrence Lin (“Lin”) as compensation payable for the period January 1, 2021 through March 31, 2021 under that certain Consulting Agreement by and between the Company and Lin’s company, i2China Management Group, LLC, effective April 15, 2018 (“Lin Agreement”), as amended and made effective on January 1, 2020 (“Lin Amendment”). On April 7, 2021, the Company issued 109,038 voting common stock of the Company to John Junyong Lee (“Lee”) as compensation payable for the period January 1, 2021 through March 31, 2021 under that certain Legal Retainer Agreement by and between the Company and Lee effective June 21, 2019 (“Lee Agreement”). On April 15, 2021, the Company consummated its Securities Purchase Agreement dated December 24, 2020 (“Ainos Agreement”) with a strategic investor, Ainos KY. Pursuant to the Ainos Agreement, the Company issued 100,000,000 shares of common stock at $0.20 per share to Investor in exchange for certain patent assignments. |
| 12 |
| Table of Contents |
On May 28, 2021, the Company Taiwan branch office entered into an office lease contract with Ting-Chuan Lee, a Company board director. The lease term is from June 2021 to May 2024 and the rental is $1,785 per month. On June 30, On June 30, 2021, the Company issued 107 voting common stock of the Company to Bernard Cohen (“Cohen”) as compensation payable for the period April1, 2021 through April 5, 2021 under that certain Employment Agreement by and between the Company and Cohen effective January 1, 2021, as amended by Amendment No. 1 that extended the termination date to April 5, 2021(“Cohen Agreement”). On June 30, 2021, the Company issued 3,846 voting common stock of the Company to Lawrence Lin (“Lin”) as compensation payable for the period April 1, 2021 through June 30, 2021 under that certain Consulting Agreement by and between the Company and Lin’s company, i2China Management Group, LLC, effective April 15, 2018 (“Lin Agreement”), as amended and made effective on January 1, 2020 (“Lin Amendment”). On June 30, 2021, the Company issued 21,926 voting common stock of the Company to John Junyong Lee (“Lee”) as compensation payable for the period April 1, 2021 through June 30, 2021 under that certain Legal Retainer Agreement by and between the Company and Lee effective June 21, 2019 (“Lee Agreement”). |
8. | Subsequent |
On July 2, 2021, the Company issued Note #18.21 for a short-term loan for working capital purposes from Ainos KY in the amount of $54,000. The Note is payable on January 2, 2022, or on demand and bears interest at the AFR short-term rate of 1.85%. The note has a maximum limit of $54,000 whereby the Company promises to repay the aggregate Principal Amount to date up to the stated maximum amount at Maturity. The Note may be convertible in whole or in part at a conversion price of $0.20 per share. On July 30, 2021, the Company issued 20,000 shares of common stock to Ya-Ju (Maggie Wang), previously a branch manager of the Company’s Taiwan branch office. The Company received payment of $7,600 ($0.38 per share) in accordance to a Stock Option Agreement associated with the Company’s 2018 Employee Stock Option Plan. On July 30, 2021, the Company issued 150,400 shares of common stock to Daniel Fisher, previously a Company board director. The Company received payment of $57,152 ($0.38 per share) in accordance to a Stock Option Agreement associated with the Company’s 2018 Employee Stock Option Plan. On August 11, 2021, the Company Board of Directors approved the resignation of Mr. Chun-Hsien Tsai as Chief Financial Officer (CFO) and the vacancy was filled by his successor, Ms. Hui-Lan (Celia) Wu, who was elected to serve as the CFO of the Company. Note #18.21 is un-secured and due on demand. All shares issued on conversion are to be restricted subject to Rule 144 promulgated under the U.S. Securities Act of 1933. The Company may prepay the notes in whole or in part at any time without penalty. The convertible promissory note due to Ainos KY is a related party note. |
| 13 |
| Table of Contents |
ITEM 2.
The following discussion should be read in conjunction with our financial statements and the notes thereto which appear elsewhere in this report. The results shown herein are not necessarily indicative of the results to be expected in any future periods.
OVERVIEW
The Company is also dependent upon a broad range of general economic and financial risks, such as possible increases in the costs of employing and/or retaining qualified personnel and consultants and possible inflation which might affect the Company's ability to remain within its budget forecasts. The principal uncertainties to which the Company is presently subject are its inability to ensure that the results of trials performed by the Company will be sufficiently favorable to ensure eventual regulatory approval for commercial sales, its inability to accurately budget at this time the possible costs associated with hiring and retaining of additional personnel, uncertainties regarding the terms and timing of one or more commercial partner agreements and its ability to continue as a going concern.
Ainos, Inc. (the "Company” or “ABI”“Company”) is a Texas corporation formedincorporated in 1984 engaged in developing biologicsthe discovery and development of pharmaceutical and biotech products.
The Company currently has offices in the United States and Taiwan. The Company operates in Taiwan under the name AMARILLO BIOSCIENCES, INC. TAIWAN BRANCH and has updated its registration application to rename its branch office as AINOS, INC. TAIWAN BRANCH.
Our Divisions
A. | Our Pharmaceutical Division is dedicated to the research and development of drug therapeutics that support the human immune system and address persistent diseases. |
VELDONA (Very Low-Dose Oral Interferon Alpha)
We seek to leverage our extensive library of clinical research by applying the Company’s research in the use of low-dose non-injectable interferon (IFN) for the treatment of humanneoplastic, viral, and animalfibrotic diseases. Our current focus is research aimed atThe company’s core pharmaceutical drug development program, VELDONA (Very Low-Dose Oral Interferon Alpha), boasts the treatmentmost comprehensive library of human disease indications, particularly influenza, hepatitis C, thrombocytopenia, and other indications usingscientific clinical data for low-dose non-injectable interferon, alpha that is administered in a proprietary low dose oral form. In addition to its core technology ABI is working to expand the Company’s current focus into a diversified healthcare business portfolio in order to generate new revenue streams.
VELDONA is a late stage drug development program based on over 30 years of clinical trial research on low-dose orally administerednon-injectable interferon including two phase 3 clinical trials.
Interferons are a treatment for a varietyfamily of disease indications. ABI owns a proprietary library of over thirty years of scientific and clinical data onnatural occurring proteins that can be used to treat many diseases that involve the human and animal applications of low-dose oral interferon. Through the Pharmaceutical Division, ABI seeks to out-license or leverage in other ways its core technology by forming partnerships to develop current and new discoveries and commercialize the resulting products.
| 14 |
| Table of Contents |
Since interferons enhance the immune system in both number and dose of drugs seen across a patient’s lifetime. Generally one or more oral hypoglycemic drugsmany ways, they are used for months or years until a combinationmany diseases that involve the immune system. For example:
· | Interferon alfa-2a (Roferon-A) is approved by the U.S. FDA to treat hairy cell leukemia, AIDS-related Kaposi’s sarcoma, and chronic myelogenous leukemia; | |
· | Interferon alfa-2b is approved by the U.S. FDA for the treatment of hairy cell leukemia, malignant melanoma, condylomata acuminata, AIDS-related Kaposi’s sarcoma, chronic hepatitis C, and chronic hepatitis B; | |
· | Ribavirin is also combined with interferon alfa-2b, interferon alfacon-1 (Infergen), pegylated interferon alfa-2b, or pegylated interferon alpha-2a, all are approved by the U.S. FDA for the treatment of chronic hepatitis C.: and | |
· | Interferon beta-1a, currently in use to treat multiple sclerosis, and interferon alfa-2b are both under investigation as potential treatments for people with COVID-19 coronavirus disease, the deadly respiratory pandemic caused by the SARS-nCoV-2 virus. |
In respect to its VELDONA program, the Company owns three (3) patents issued in the U.S. and one (1) issued in Taiwan as follows:
· | “Treatment of Thrombocytopenia Using Orally Administered Interferon” as described and claimed in U.S. Patent No. 9,526,694 B2 issued December 27, 2016, Owned. Expiration: April 2033. | |
· | “Treatment of Thrombocytopenia Using Orally Administered Interferon” as described and claimed in U.S. Patent No. 9,750,786 B2 issued September 5, 2017, Owned. Expiration: April 2033. | |
· | “Treatment of Thrombocytopenia Using Orally Administered Interferon” as described and claimed in U.S. Patent No. 9,839,672 B2 issued December 12, 2017, Owned. Expiration: April 2033. | |
· | “Treatment of Thrombocytopenia Using Orally Administered Interferon” as described and claimed in TAIWAN Patent No. I592165 issued July 21, 2017, Owned. Expiration: May 2033. |
The Company continues to seek to expand its patent licensing and commercialization opportunities for VELDONA with global partners. The Company’s licensing, development and commercialization of shortits VELDONA patents and long-acting insulin is requiredresearch library are subject to keepapproval by the patient’s blood glucose within normal limits. Unfortunately, once a patient’s pancreas is exhaustedFDA and they are finally forcedother regulatory agencies in the U.S., and other regulatory agencies for use and marketing in other countries.
| 15 |
| Table of Contents |
B. | Our Medical Division focuses on research and development of novel therapy protocols and medical devices. |
SMART (Simultaneous Metabolic Activation & Restoration Therapy)
Current diabetes treatments aim to go on insulin, they require insulin for the rest of their lives. And even more unfortunate is that even with fairly well-controlledcontrol blood glucose levels, diabetics will face one or more undesirable complications with poor outcomes from cardiovascular, eye, nerve, or kidney disease secondarybut do not address the underlying metabolic features of the disease. We believe that diabetes treatment must go beyond “glucose control.” Our SMART therapy focuses on a protocol-based pulsatile insulin infusion (PII) treatment that mimics the normal pancreas’ functions in stimulating the liver and essentially all cells in the body to their diabetes. This unsuccessful model of diabetes care is not satisfactory.
In May 2016, the Company has focusedestablished a diabetes research center in Taiwan to test and accumulate valuable clinical and patient data results from pulsatile insulin infusion therapy (PII), a promising tool for diabetes management currently being commercially developed in the U.S. by various operators. Since then the Company made significant improvements to the original PII protocol to enhance overall efficacy and results. From 2016 to 2017, the diabetes research center conducted a pilot of its proprietary PII protocol involving 20 diabetes patients ranging from early stage to a 30-year diabetic patient with only 20% renal function. Preliminary results demonstrated clinical improvement or stabilization of the pilot patient’s diabetic symptoms.
Based on the clinical data derived from its research efforts towardspilot testing, the development ofCompany developed a proprietary infusion therapy and a novel pulsatile insulin infusion therapypump in Taiwan that consists of delivering insulin intravenously by pump in pulses, as opposed to the typical subcutaneous route of administration, in order to more closely imitate how the pancreas secretes insulin in healthy non-diabetics.
· | SMART Initial Patient Screening for HbA1c, fasting blood glucose, pro-insulin, insulin, hsCRP, and adiponectin levels and assessment of diabetic complications- peripheral neuropathy, nephropathy, retinopathy as part of a comprehensive diagnostics, health history, genetic and physical examinations; | |
· | SMART Pancreas Rescue Protocol involving doses of Insulin glargine Pioglitazone +/- GLP-1 agonist or SGLT-2 inhibitor if needed for weight loss; | |
· | SMART Pulsatile Insulin Therapy consisting of applying its pulsatile pump for out-patient users along with certain IV supplement for metabolic efficiency; and | |
· | SMART Lifestyle Coaching that encourages physical activity through training and monitoring, and involves nutritional counseling. |
In respect to its SMART Pulsatile Pump, the liver receives insulinCompany owns three (3) patents issued in discreet pulses, it appearsTaiwan and China and two (2) of its patent applications in China and the U.S. are pending:
· | “SMART DRUG INJECTION DEVICE” as described and claimed in TAIWAN invention patent application number 108137797, Owned, Issued: November 27, 2020, Expiration: October 18, 2039. | |
· | “SMART DRUG INJECTION DEVICE” as described and claimed in TAIWAN design utility model patent application number 108213819, Owned, Issued: December 12, 2019, Expiration: November 11, 2038. |
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· | “SMART DRUG INJECTION DEVICE” as described and claimed in CHINA design utility model patent application number 201921808292.6, Owned, Issued: July 28, 2020, Expiration: June 27, 2039. | |
· | “SMART DRUG INJECTION DEVICE” as described and claimed in CHINA invention patent application number 201911024619.5, Pending. | |
· | “SMART DRUG INJECTION DEVICE” as described and claimed in US invention patent application number 17/069,418, Pending. |
The Company expects to continue pilot testing of its Pulsatile Pump and proprietary diabetes therapies as preparation for FDA and regulatory approvals in Taiwan. Currently the SMART medical device and SMART therapies have not been approved by the Taiwan FDA and other regulatory agencies and for use and marketing in other countries.
Ainos SARS-CoV-2 Antigen Rapid Test Kit (“Covid-19 Test Kit”)
The Company entered into an exclusive agreement on June 14, 2021 to serve as the master sales and marketing agent for the Ainos SARS-CoV-2 Antigen Rapid Test Kit (“Covid-19 Test Kit”) developed by Taiwan Carbon Nano Corporation (“TCNT”).
On June 7th, the Taiwan Food and Drug Administration (“TFDA”) granted emergency use authorization to TCNT for the Ainos Covid-19 Test Kit that will be better ablesold and marketed under the “Ainos” brand in the Republic of China (“Taiwan”). Once TCNT secures regulatory authorizations from foreign regulatory agencies, Ainos expects to regulate blood glucose levels. Patients sufferingpartner with regional distributors to promote sales in other strategic markets. TCNT intends to submit an application for authorization or approval of the test kit product to the U.S. Food and Drug Administration in the future.
The Covid-19 Test Kit uses an antigen rapid test technology jointly developed by Taiwan’s National Health Research Institutes (“NHRI”), National Defense Medical Center (“NDMC”), and TCNT. The medical device includes a lateral flow immunoassay intended for the qualitative detection of SARS-CoV-2 directly from peripheral neuropathiessamples of both nasopharyngeal (“NPS”) and nasal swab (“NS”) specimens. Test results are available within 15 minutes and are reported to have reported less numbnesshigh sensitivity and pain after receiving pulsatile insulin infusion treatments for several weeks or months. Pulsatile-insulin treatments given once or twice a week for a number of months show promise in lessening the incidence and severity of microvascular complications of diabetes such as retinopathy, neuropathy, and nephropathy. specificity.
Other Point-of-care Testing (“POCT”) Rapid Test Kit Products
In addition certain endpoints such as reductionto the Ainos COVID-19 (SARS CoV2 Antigen Rapid Test), the Company plans to jointly develop, sell, and/or market other rapid test kit products with a focus on diagnostic medical devices to detect pneumonia, vaginal infection and helicobacter pylori (H. pylori) bacterial infection.
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We expect that the following five (5) Patent Assets assigned to the Company by Ainos KY at the consummation of patient medicationsthe Ainos transaction will form the basis for the next generation of the Company’s rapid test kit products:
· | A GAS SENSOR AND MANUFACTURE METHOD THEREOF as described and claimed in TAIWAN invention patent number I565944. | |
· | MEDICAL VENTILATOR CAPABLE OF ANALYZING INFECTION AND BACTERIA OF PNEUMONIA VIA GAS IDENTIFICATION as described and claimed in TAIWAN invention patent number I565945. | |
· | GAS DETECTOR as described and claimed in TAIWAN invention patent number D183554. | |
· | MEDICAL VENTILATOR CAPABLE OF ANALYZING INFECTION AND BACTERIA OF PNEUMONIA VIA GAS IDENTIFICATION as described and claimed in Japan Patent No.: JP 6392811 B2. The Company is granted exclusive license rights in Japan from January 1, 2021 to December 31, 2028. | |
· | GAS DETECTOR as described and claimed in CHINA invention patent number CN 304042244 S. The Company is granted exclusive license rights in China from January 1, 2021 to December 31, 2028. |
The Company’s development and avoidancecommercialization of worsening kidney function leadingits rapid test kit products are subject to kidney dialysis can be achieved. ABI’s Medical Division has developed a proprietary insulin infusion pump dedicated for administering its pulsatile insulin therapyapproval by the FDA and is currentlyother regulatory agencies in the process of obtaining patentsU.S., and medical device approvals, including 510k FDA clearance.
C. | Our Consumer Division is dedicated to sales and marketing of consumer health products and internet-based and smart phone-based health monitoring applications |
Liposomal Nutraceuticals
We intend to target Taiwan first as an R&D base and demonstration platform in Greater China, then subsequently establish a licensing platform for clinics in China. The Consumer Product Division is presently focused oncontinue our sales activities of liposomal nutraceuticals and food supplements that include Vitamin C, Glutathione, CoQ10, Curcumin/Resveratrol, DHA, and a Multi-Vitamin.
The Company has elected to discontinue its prior efforts in developing oral health supplements in order to allocate resources to more commercially profitable consumer health products and has not extended the opportunityfollowing patent: “COMPOSITION AND METHOD FOR PROMOTING ORAL HEALTH” as described and claimed in U.S. Patent No. 6,656,920 B2 issued December 2003, Owned. Expiration: April 2021.
Ainos Smartphone Monitoring App
The Company has developed a consumer-friendly, smartphone-based tracking function that can be used in conjunction with the Ainos SARS-CoV-2 Antigen Rapid Test Kit. Our application enables test results from our rapid test kits to capitalizebe accessible through a QR code. The QR Code scans the test kit and stores each test kit’s unique ID. We expect this easy to use feature will assist consumers with monitoring, tracking, and validation of their health status, while assisting government public health authorities with data collection and surveillance of outbreaks.
Ainos, Inc. Securities Purchase Agreement
On December 24, 2020, the Company entered into a Securities Purchase Agreement (“Ainos Agreement”) with Ainos, Inc., a Cayman Islands corporation (“Ainos KY”) and certain principal shareholders of the Company including (i) Stephen T. Chen, individually and as Trustee of the Stephen T. Chen and Virginia M. Chen Living Trust, dated April 12, 2018, (ii) Virginia M. Chen, individually and as Trustee of the Stephen T. Chen and Virginia M. Chen Living Trust, dated April 12, 2018, and (iii) Hung Lan Lee (collectively, “Principal Shareholders”).
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Pursuant to the Ainos Agreement, the Company acquired certain patent assets (the “Patent Assets”) by issuing 100,000,000 shares of common stock (the “Shares”) valued at $0.20 to Ainos KY. The Patent Assets encompass technologies relating to development and manufacturing of point-of-care testing rapid test kit products that include diagnostics for COVID-19 (SARS CoV2 Antigen Rapid Test), pneumonia, vaginal infection and helicobacter pylori (H. pylori) bacterial infection. As of the April 15, 2021 closing of the Ainos Agreement, Ainos KY owns approximately 70.30% of the issued and outstanding shares of common stock of the Company and its designated officer and directors manage the Company. The Ainos Agreement provides for certain registration rights to Ainos KY regarding the Shares.
The foregoing description of the Ainos Agreement is not complete and is qualified in its entirety by the text of the agreement, which is included as Exhibit 2.1 to the Form 8-K filed by the Company with the SEC on December 30, 2020, which is incorporated herein by reference.
On December 18, 2020, the Company Board, and on January 25, 2021, the holders owning a majority of the shares of common stock of the Company as of the record date of January 22, 2021 approved certain Company actions required under the Ainos Agreement. The Company filed a Form 14-C definitive information statement regarding the majority stockholder approval of the Company actions required for closing the Ainos transaction on March 19, 2021, which is incorporated herein by reference, and completed mailing of the information statements to its relationship channels in the Asian markets to explore sources of raw materials, capital, production facilities,shareholders on March 26, 2021. The Ainos transaction closed on April 15, 2021.
Patents and to target a significant and growing sales market.
Since inception, the companyCompany has worked to build an extensive patent portfolio for low dose orally administered interferon.the medical diagnosis and treatment of persistent diseases. This portfolio consists of patents with claims that encompass method of use or treatment, and/or composition of matter and manufacturing. As listed below,in this Overview section, the Company presently owns eleven (11) issued patents with two patents pending and license rights in Japan and China for two (2) patents under patent licensing agreements. There are no current patent litigation proceedings involving the Company.
Cost of Compliance with Environmental Regulations
The Company incurred no costs to comply with environment regulations during the timeframe of this report.
United States Regulation
Before products with health claims can be marketed in the United States, they must receive approval from the U.S. Food and Drug Administration (“FDA”). To receive this approval, any drug must undergo rigorous preclinical testing and clinical trials that demonstrate the product candidate’s safety and effectiveness for each indicated use. This extensive regulatory process controls, among other things, the development, testing, manufacture, safety, efficacy, record keeping, labeling, storage, approval, advertising, promotion, sale, and distribution of pharmaceutical products.
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In general, before any ethical pharmaceutical product can be marketed in the United States, the FDA will require the following process:
• | Preclinical laboratory and animal tests; |
• | Submission of an investigational new drug application, or IND, which must become effective before human clinical trials may begin; |
• | Adequate and well-controlled human clinical trials to establish the safety and efficacy of the proposed drug for its intended use; |
• | Pre-approval inspection of manufacturing facilities and selected clinical investigators; |
• | Submission of a New Drug Application (NDA) to the FDA; and |
• | FDA approval of an NDA, or of an NDA supplement (for subsequent indications or other modifications, including a change in location of the manufacturing facility). |
Substantial financial resources are necessary to fund the research, clinical trials, and related activities necessary to satisfy FDA requirements or licenses five issued patents.
505(b)(2)
The Company has historically followed and will continue to follow the traditional approval process for New Drugs as set out in Section 505(b)(1) of the Federal Food, Drug, and Cosmetic Act. If an alternative path to FDA approval for new or improved formulations of previously approved products is scientifically and economically feasible and beneficial to the Company and the public, the Company may choose to follow this alternative path as established by section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act. This section of the Act permits the applicant to rely on certain preclinical or clinical studies conducted for an approved product as some of the information required for approval and for which the applicant has not obtained a right of reference. The process of approval under 505(b)(2) will be followed as judiciously as 505(b)(1) or any regulation.
Orphan Drug Designation
Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States. The Company may choose to seek approval for a product satisfying the definition of an Orphan Drug if that product can be used to treat such an indication. Orphan drug designation does not convey any advantage in or shorten the duration or rigidity of the regulatory review and approval process.
Similarly, substantial financial resources are necessary to fund the research, design, testing, fabrication and related activities necessary to satisfy FDA requirements or similar requirements of state, local, and foreign regulatory agencies for medical devices. The Company may seek to obtain FDA clearance for the sales, marketing, and use of its novel pulsatile insulin pump for the U.S. Patent No. 9,526,694 B2 issued December 27, 2016, Owned. Expiration: April 2033.
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Premarket Notification 510(k)
Each person who intends to market in the U.S., a Class I, II, and III device intended for human use, for which a Premarket Approval application (“PMA”) is not required, must submit a 510(k) to FDA unless the device is exempt from 510(k) requirements of the Federal Food, Drug, and Cosmetic Act (the “FD&C Act”) and does not exceed the limitations of exemptions in .9 of the device classification regulation chapters (e.g., 21 CFR 862.9, 21 CFR 864.9).
If the Company’s novel pulsatile insulin pump is determined to be similar to one already cleared for the U.S. market, the Company will seek FDA clearance under 510(k) at least 90 days before the device is marketed. A 510(k) application requires demonstration of substantial equivalence to another legally U.S. marketed device. Substantial equivalence means that the new device is as describedsafe and claimedeffective as the predicate. Documented laboratory testing among other submissions will be required and if the Company’s device features significant alterations from predecessor devices the Company may be required to present results from clinical trials.
Premarket Approval (PMA)
Alternatively, if the Company’s device is deemed to be completely new to the U.S. market or classified as a Class III device, the Company will be required to apply for PMA approval. The Medical Device Amendments of 1976 to the FD&C Act established three regulatory classes for medical devices. The three classes are based on the degree of control necessary to assure that the various types of devices are safe and effective. The most regulated devices are in Class III. The amendments define a Class III device as one that supports or sustains human life or is of substantial importance in preventing impairment of human health or presents a potential, unreasonable risk of illness or injury.
Under Section 515 of the FD&C Act, all devices placed into Class III are subject to premarket approval requirements. Premarket approval by FDA is the required process of scientific review to ensure the safety and effectiveness of Class III devices.
Foreign Regulation
In addition to regulations in the United States, a variety of foreign regulations govern clinical trials and commercial sales and distribution of products in foreign countries. Whether or not the Company obtains FDA approval for a product, the Company must obtain approval of a product by the comparable regulatory authorities of foreign countries before the Company can commence clinical trials or market the product in those countries. The approval process varies from country to country, and the time may be longer or shorter than that required for FDA approval. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.
The policies of the FDA and foreign regulatory authorities may change and additional government regulations may be enacted which could prevent or delay regulatory approval of investigational drugs or approval of new diseases for existing products and could also increase the cost of regulatory compliance. It is not possible to predict the likelihood, nature or extent of adverse governmental regulation that might arise from future legislative or administrative action, either in the United States or abroad.
Research and Development
During the quarter ended June 30, 2021 and the first quarter of 2021, the Company did not incur research and development expenses.
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Employees and Consultants
Following the consummation of the Ainos transaction, the Company retained key personnel in its U.S. Patent No. 9,750,786 B2 issued September 5, 2017, Owned. Expiration: April 2033.
· | Lawrence Lin through his firm, i2China Management Group, LLC, continues to serve as Executive Advisor to the Company. | |
· | John Junyong Lee, Esq. continues to serve as Chief Legal Counsel and Corporate Secretary. | |
· | Chrystal Shelton continues to serves as Administration Manager. |
The Company is actively interviewing executives to assist it achieve profitability through an expansion of its product and claimed in U.S. Patent No. 9,839,672 B2 issued December 12, 2017, Owned. Expiration: April 2033.
· | Stephen T. Chen’s employment with the Company as Chief Executive Officer (CEO), President and Chief Operating Officer (COO), and Chief Financial Officer (CFO) expired on April 15, 2021, and was not renewed. Dr. Chen resigned as Chairman of the Board, and Board director on April 15, 2021. | |
· | Bernard Cohen’s employment with the Company as Vice President - Administration (VP-Admin) expired on April 5, 2021, and was not renewed. | |
· | Maggie Wang’s employment with the Company as Director of Business Development and manager of the Company’s Taiwan Branch expired on April 30, 2021, and was not renewed. |
Results of Operations for QuartersQuarter Ended June 30, 20202021 and 2019:
Revenues.
Research and Development Expenses.
Selling, General and Administrative Expenses.
Selling, general and administrative expenses wereOperating Loss.
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Interest Income and Expense.
Net Loss.
Net loss attributable to common shareholders wasResults of Operations for the Six Months Ended June 30, 20202021 and 2019:
Revenues.
The total revenue recognized from the sale of nutraceuticals and Covid-19 Test Kits in Taiwan wasCost of Revenues.
Cost of sales for the six months ended June 30,Research and Development Expenses.
There wasSelling, General and Administrative Expenses.
Selling, general and administrative expenses ofOperating Loss.
In the six month period ended June 30,Interest Income and Expense.
Net Loss.
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Liquidity and Capital Resources
As of June 30, 2020,2021, the Company had available cash of $172,802$606,638 whereas it had a cash position of 723,443$172,802 for the same period in 20192020 and $409,039$22,245 as of December 31, 2019.2020. The Company had a working capital deficit of $689,094$1,506,762 at the end of June 2020,2021, and a working capital deficit of $88,383$689,094 for the same period in 2019, a reduction2020, an increase of 622%119%. As of December 31, 2019,2020, working capital was a deficit of $308,013.$1,022,155. The average monthly burn rate in 2020,2021 was $41,000 with a 12-month trailing average of $67,500.approximately $100,000 partially attributed to additional one-time expenses related to the Securities Purchase Agreement transaction and the ensuing business development activity. Going forward, we expect that the burn rate will continue to berise in that same range.
The Company did, indeed, reduce expenses by an overall amount of $160,528 or 19%. Significant reductions were made in the areas discussed in that paragraph. A comparative review of cash flows for the six-month periods ending June 30, 2020 and 2019 reveal that cash used for operations in 2020 was $441,105 as compared to $945,598 used in 2019. In 2020, the Company used $1,270 for investing activities while investing activities provided $39,845 through the investment in patents. Financing activities provided $201,594 in 2020 and $354,540 in 2019.
There can be no assurance that we will be successful in our efforts to make the Company profitable. If those efforts are not successful, we will be forcedevaluate our need to cease operations.
ITEM 3.
Quantitative and Qualitative Disclosures About Market Risk.As a “smaller reporting company,” we are not required to provide the information under this Item 3.
ITEM 4.
Controls and ProceduresDisclosure Controls and Procedures
At the end of the period covered by the Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and this Form 10-Q Quarterly Report for the quarter ending June 30, 2020, an evaluation was carried out under the supervision of andreport, our management, with the participation of our management, including the Chief Executive Officer (“CEO”)/and Chief Financial Officer, (“CFO”), andevaluated the Consulting Accounting Manager as to the effectiveness of the design and operations of our disclosure controls and procedures (asas of June 30, 2021. The term “disclosure controls and procedures,” as defined in RuleRules 13a-15(e) and Rule 15d-15(e) under the Exchange Act). Based on that evaluation, the CEO/CFO and Accounting Manager have concluded that as of the end of the period covered by this Annual Report, our disclosureAct, means controls and other procedures were not effective in ensuring that: (i)of a company that are designed to ensure that information required to be disclosed by usa company in the reports that we fileit files or submit to the SECsubmits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in applicablethe SEC’s rules and formsforms. Disclosure controls and (ii) materialprocedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in ourthe reports filedthat it files or submits under the Exchange Act is accumulated and communicated to ourthe company’s management, including our CEO/CFOits principal executive and accounting manager,principal financial officers, as appropriate to allow for accurate and timely decisions regarding required disclosure.
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Management’s Report on Internal Controls and Procedures overControl Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, to provide reasonable assurance regardingas such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the reliabilitysupervision and with the participation of our management, including our principal executive officer and principal financial reporting and the preparationofficer, we conducted an evaluation of financial statements for external purposes in accordance with generally accepted accounting principles (“GAAP”). Management has assessed the effectiveness of our internal control over financial reporting based on the criteria set forthframework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”)Commission. Based on our evaluation under the framework inInternal Control-IntegratedControl - Integrated Framework. A material weakness, as defined by SEC rules, is a control deficiency, or combination of control deficiencies, such (2013), our management concluded that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses inour internal control over financial reporting that were identified are:
Changes in Internal Control Over Financial Reporting
We have not maintain effectiveexperienced any material impact to our internal controlcontrols over financial reporting as of June 30, 2019, basedeven though our workforce continues to primarily work-from-home due to COVID-19. We are continually monitoring and assessing the COVID-19 situation and its impact on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.
This interim report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the SEC that permit the company to provide only management'smanagement’s report in this interim report.
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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 such legal proceedings or claims against us.
ITEM 1A. Risk Factors.
Please carefully consider the Company received $100,000 forfollowing discussion of significant factors, events, and uncertainties that make an investment throughin our securities risky. The events and consequences discussed in these risk factors could, in circumstances we may or may not be able to accurately predict, recognize, or control, have a material adverse effect on our business, growth, reputation, prospects, financial condition, operating results (including components of our financial results), cash flows, liquidity, and stock price. These risk factors do not identify all risks that we face; our operations could also be affected by factors, events, or uncertainties that are not presently known to us or that we currently do not consider to present significant risks to our operations. In addition, the 2019-2 Private Placement Equity Security Offering. global economic climate amplifies many of these risks.
We Face Intense Competition
The executed Private Placement Memorandum (PPM) was not received until January 6, 2020. The equity purchase was for 400,000 ABI Common voting shares at $0.25 per share. The stock was subsequently ordered on July 20, 2020, effectively issued in June, 2020.
Our potential competitors include entities that develop and produce therapeutic agents and/or medical devices for treatment of $0.192 per share for an aggregatehuman and animal disease. These include numerous public and private academic and research organizations and pharmaceutical and biotechnology companies pursuing production of, among other things, biologics from cell cultures, genetically engineered drugs and natural and chemically synthesized drugs. Many of these potential competitors have substantially greater capital resources, research and development capabilities, manufacturing and marketing resources. Competitors may succeed in developing products or processes that are more effective or less costly or that gain regulatory approval prior to our products. The Company expects that the number of competitors and potential competitors will increase as more anti-viral and cytotoxic products receive commercial marketing approvals from the FDA or analogous foreign regulatory agencies. Any of these competitors may be more successful in manufacturing, marketing and distributing its products.
Our Expansion Places a Significant Strain on our Management, Operational, Financial, and Other Resources
Increasing our product and service offerings will require scaling our management, financial and research and development resources. The complexity of the current focus of our business on innovative biotechnologies and treatments, digital health, and diagnostic point-of-care testing can place significant strain on our management, personnel, operations, systems, technical performance, financial resources, and internal financial control and reporting functions, and our expansion increases these factors. Failure to manage growth effectively could damage our reputation, limit our growth, and negatively affect our operating results.
Our Expansion into New Products, Services, Technologies, and Geographic Regions Subjects Us to Additional Risks
We may have limited or no experience in our newer market segments, and our customers may not adopt our product or service offerings. These offerings, which can present new and difficult technology challenges, may subject us to claims if customers of these offerings experience service disruptions or failures or other quality issues. In addition, profitability, if any, in our newer activities may not meet our expectations, and we may not be successful enough in these newer activities to recoup our investments in them. Failure to realize the benefits of amounts we invest in new technologies, products, or services could result in the value of those investments being written down or written off.
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Our International Operations Expose Us to a Number of Risks
We have relatively little operating experience and may not benefit from any first-to-market advantages or otherwise succeed. It is costly to establish, develop, and maintain international operations, sales and marketing channels, and research and development and licensing capacity. Our international operations may not become profitable on a sustained basis.
In addition to risks described elsewhere in this section, our international sales and operations are subject to a number of risks, including:
· | local economic and political conditions; | |
· | government regulation (such as regulation of our product and service offerings and of competition); restrictive governmental actions (such as trade protection measures, including export duties and quotas and custom duties and tariffs); nationalization; and restrictions on foreign ownership restrictions on sales or distribution of certain products or services and uncertainty regarding liability for products, services, and content, including uncertainty as a result of less Internet-friendly legal systems, local laws, lack of legal precedent, and varying rules, regulations, and practices regarding the physical and digital distribution of media products and enforcement of intellectual property rights; | |
· | business licensing or certification requirements, such as for imports, exports, medical devices and medical treatments; | |
· | limitations on the repatriation and investment of funds and foreign currency exchange restrictions; | |
· | difficulty in staffing, developing, and managing foreign operations as a result of distance, language, and cultural differences; | |
· | compliance with the U.S. Foreign Corrupt Practices Act and other applicable U.S. and foreign laws prohibiting corrupt payments to government officials and other third parties; | |
· | laws and policies of the U.S. and other jurisdictions affecting trade, foreign investment, loans, and taxes; and | |
· | geopolitical events, including war and terrorism. |
Our Commercial Agreements, Strategic Alliances, and Other Business Relationships Expose Us to Risks
Our business growth depends on commercial agreements, strategic alliances, and business relationships. Under these agreements, we provide access to our research library and clinical data as part of licensing and sales and marketing agreements. These arrangements are complex and require substantial infrastructure capacity, personnel, and other resource commitments, which may limit the amount of $1,000,000.
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Our licensing agreements may be dependent on the volume of another company’s sales. Therefore, when the other company’s offerings are not successful, the compensation we receive may be lower than expected or the agreement may be terminated. Moreover, we may not be able to enter into additional or alternative commercial relationships and strategic alliances on favorable terms. We also may be subject to claims from businesses to which we provide these services if we are unsuccessful in implementing, maintaining, or developing these services.
We Face Significant Supply Risk
We are vulnerable to significant supply risks. The Company’s long-time human interferon producer is no longer manufacturing interferon. Plans for further clinical trials and commercialization of a low-dose interferon product are dependent upon identifying a new source of interferon. The Company is actively seeking a new manufacturing partner and exploring sourcing options. Procuring a new source of interferon may require additional studies to compare results to the Company’s research and further clinical trials may have to be performed. The Company’s inability to secure interferon supplies may adversely affect our operating results.
The Company is the master sales and marketing agent for the Ainos Covid-19 Test Kit developed by Taiwan Carbon Nano Corporation (“TCNT”), a related party. The Company sources the Ainos Covid-19 Test Kit exclusively from TCNT. TCNT currently manufactures the Covid-19 Test Kit in Taiwan. Any unexpected supply disruption by TCNT may adversely affect our business results.
We plan to develop, sell, and/or market other rapid test kit products with a focus on point-of-care diagnostic medical devices. We may continue to rely on TCNT to manufacture these devices. Any unplanned supply risk at TCNT may negatively affect our future business plan.
Government Regulation Is Evolving and Unfavorable Changes Could Harm Our Business
We are subject to general business regulations and laws, as well as regulations and laws specifically governing biologics, pharmaceuticals, and medical devices and treatments. A large number of jurisdictions regulate our operations, and the extent, nature, and scope of such regulations is evolving and expanding as the scope of our businesses expand. We are regularly subject to formal and informal reviews and investigations by governments and regulatory authorities under existing laws, regulations, or interpretations or pursuing new and novel approaches to regulate our operations. Unfavorable regulations, laws, decisions, or interpretations by government or regulatory authorities applying those laws and regulations, or inquiries, investigations, or enforcement actions threatened or initiated by them, could cause us to incur substantial costs, expose us to unanticipated civil and criminal liability or penalties (including substantial monetary fines), diminish the demand for, or availability of, our products and services, increase our cost of doing business, require us to change our business practices in a manner materially adverse to our business, damage our reputation, impede our growth, or otherwise have a material effect on our operations.
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Claims, Litigation, Government Investigations, and Other Proceedings May Adversely Affect Our Business and Results of Operations
As a company focusing on diagnostics and treatments for a wide range of human health care needs, we may be subject to actual and threatened claims, litigation, reviews, investigations, and other proceedings, including proceedings by governments and regulatory authorities, involving a wide range of issues, including patent and other intellectual property matters, taxes, labor and employment, competition and antitrust, privacy and data protection, product liability, consumer protection, commercial disputes, goods and services offered by us and by third parties, and other matters. Any of these types of proceedings can have an adverse effect on us because of legal costs, disruption of our operations, diversion of management resources, negative publicity, and other factors. The outcomes of these matters are inherently unpredictable and subject to significant uncertainties.
Our results of operations may be negatively impacted by the COVID-19 outbreak
To date the outbreak has not had a material adverse impact on our operations. The future impact of the outbreak is highly uncertain and cannot be predicted, and there is no assurance that the outbreak will not have a material adverse impact on the future results of the Company.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None
ITEM 3. Defaults Upon Senior Securities.
None
ITEM 4. Mine Safety Disclosures.
Not applicable
ITEM 5. Other Information.
Following the consummation of the Ainos Agreement and transaction, the following individuals were elected and/or appointed to their respective roles on the Board and to the Company:
· | Chun-Hsien Tsai, age 52, serves as Chairman of the Board of Directors, Chief Executive Officer, Chief Financial Officer, and director of the Company. He concurrently serves as the Chairman of the Board of Directors Ainos, Inc., a Cayman Islands corporation, the Chairman of the board of directors of Taiwan Carbon Nano Technology Co., and as the Chief Executive Officer of AI Nose Corporation. Mr. Tsai has served in each of these roles since 2012. In his capacity as the Chief Executive Officer of Taiwan Carbon Nano Technology Co., Mr. Tsai oversaw the completion of the world’s first carbon nanotube reactor. Mr. Tsai also currently serves as a member of the Taiwan Energy Storage Alliance and a member of the China Alternative Energy Association. Mr. Tsai owns more than 150 patents. |
· | Chung-Yi Tsai, age 45, serves as a director of the Company. He has served as the Executive Business Manager in the Automotive Business Unit of Maxim Integrated since November 2019, where he manages the high voltage (off battery) power management ICs for automotive ADAs & safety, information, telematics & head unit applications. From October 2013 through November 2019, Mr. Tsai served as a Senior Product Marketing Manager in the Battery & Optical Business Unit of Intersil Corporation. In such role, Mr. Tsai managed computer core power, battery charger and USB/USB power delivery product lines focused on computing and consumer markets. |
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· | Chun-Jung Tsai, age 50, serves as a director of the Company. He concurrently serves as the Executive Director of Ainos, Inc., a Cayman Islands corporation and as the Executive Director of Taiwan Carbon Nano Technology Co. Mr. Tsai has served in both of these roles since 2012. In his capacity as the Executive Director of Taiwan Carbon Nano Technology Co., Mr. Tsai oversaw the completion of the world’s first carbon nanotube reactor. | |
· | Ting-Chuan Lee, age 38, serves as a director of the Company. She has served as a director on the board of directors of Taiwan Carbon Nano Technology Co. since 2012. From 2012 to 2017, Ms. Lee served as the Chairman of the board of directors of Taiwan Carbon Nano Technology Co. Ms. Lee holds a master’s degree of science from the Nation Taiwan University and a bachelor’s of science degree from the National Cheng Kung University. | |
· | Wen-Han Chang, age 58, serves as a director of the Company. He also currently serves as the Medical Director of the Department of Emergency Medicine for Mackay Memorial Hospital in Taiwan, the President of the Taiwan Society of Health Technology and Intelligence Medicine, and the Executive Director of the Taiwan Society of Geriatric Emergency & Critical Care Medicine. In addition, Mr. Chang is an Honorary President of the Taiwan Society of Engineering Technology and Practical Medicine, a Director on the board of directors of the Taiwan Society of Emergency Medicine, a Director on the board of directors of the Taiwan Society of Emergency Management Medicine, and a Supervisor of the Emergency and Critical Care Medicine Society. From September 2015 to May 2019, Mr. Change served as a Vice President General at Mackay Memorial Hospital. | |
· | Yao-Chung Chiang, age 68, serves as a director of the Company. He is also the current Chairman of the board of directors of the Taiwan High Speed Rail Corporation. Mr. Chiang has previously served as the Chairman of the board of directors for the China Steel Chemical Corporation, Kaohsiung Rapid Transit Corporation, China Steel Corporation and China Airlines. Mr. Chiang holds a Ph.D. in Mechanical Engineering from the University of Wisconsin-Madison and a master’s degree in Mechanical Engineering from the National Cheng Kung University. | |
· | Hsiu-Chen Chiu, age 46, serves as a director of the Company and is currently an Attorney-at-Law at the Da Sheng International Law Firm, with certifications to practice law in both China and Taiwan, including Taiwan patent and trademark matters. Ms. Chiu received her Ph.D. from Tsinghua University in China and her LL.M. from the National Chengchi University in Taiwan. | |
· | John Junyong Lee, Esq., age 55, serves as a non-director, Corporate Secretary of the company and is also serving as Chief Legal Counsel. Mr. Lee has diverse experience in federal compliance and corporate governance matters in addition to extensive work in investment and transactional structuring, licensing and technology transfers, joint ventures and foreign direct investments in the U.S. and internationally. Mr. Lee received his Bachelor of Arts degree in International Relations from Claremont McKenna College, Juris Doctorate degree from the Columbus School of Law, The Catholic University of America, and is licensed to practice law in the District of Columbia. |
In addition, pursuant to the closing conditions of the Ainos Agreement and transaction, the following events occurred:
· | The Company filed a Restated Certificate of Formation with the Texas Secretary of State on April 15, 2021 that changed the name of the corporation from “Amarillo Biosciences, Inc.” to “Ainos, Inc.”, increased the authorized shares of common stock from One Hundred Million to Three Hundred Million, one-cent ($0.01) par value, changed the registered agent and registered office from Bernard Cohen to CT Corporation System, and amended the Certificate to show the names of the current Board of Directors. | |
· | On April 30, 2021, the Company closed its office location at 4134 Business Park Dr., Amarillo, TX 79110 and subsequently established an office location at 8880 Rio San Diego Drive, Suite 800, San Diego, CA 92108. The Company main office telephone number also changed from (806) 376-1741 to (858) 869-2986. | |
· | The Company filed a Statement and Designation by Foreign Stock Corporation with the California Secretary of State on May 12, 2021 registering the Company as “Ainos, Inc., which will do business in California as Ainos USA.” | |
· | FINRA approved the Company’s registration of its new corporate name as “Ainos, Inc”, CUSIP Number 00902F105, and new symbol “AIMD”. These changes were announced by FINRA on May 21, 2021 and were made effective May 24, 2021. |
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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 | ||||||
4/21/2021 | 8-K | 3.1 | https://www.sec.gov/Archives/edgar/data/0001014763/000165495421004461/amar_ex31.htm | |||||||||
3/30/2016 | 10-K | 3.ii. | Bylaws of the Company, as amended July 10, 2015. | |||||||||
8/8/1996 | SB-2 | 4.1 | Specimen Common Stock Certificate. | |||||||||
8/8/1996 | SB-2 | 4.2 | Form of Underwriter’s Warrant. | |||||||||
5/22/2008 | S-8 | 10.1(11) | 2008 Stock Incentive Plan dated May 20, 2008. | |||||||||
4/16/2019 | 10-K | 10.72 | 2018 Employee Stock Option Plan | |||||||||
4/16/2019 | 10-K | 10.73 | 2018 Officer, Directors, Employees and Consultants Nonqualified Stock Option Plan | |||||||||
4/16/2019 | 10-K | 10.74 | Stock Option Agreement – Nonqualified Stock Option | |||||||||
4/16/2019 | 10-K | 10.75 | Stock Option Agreement – Employee Plan | |||||||||
Securities Purchase Agreement between Company and Ainos, Inc., dated December 24, 2020 | 12/30/2020 | 8-K | 2.1 | https://www.sec.gov/Archives/edgar/data/1014763/000165495420014016/amar_ex2-1.htm | ||||||||
3/30/2021 | 10-K | https://www.sec.gov/Archives/edgar/data/1014763/000165495421003517/amar_10k.htm | ||||||||||
X | ||||||||||||
X | ||||||||||||
99.1 | 906 Certification | X | ||||||||||
Form 8-K reporting on the closing of the Ainos Agreement and transaction | 4/21/2021 | 8-K | https://www.sec.gov/Archives/edgar/data/1014763/000165495421004461/0001654954-21-004461-index.htm | |||||||||
Form 8-K reporting on the resignation of the Company’s Chief Operating Officer | 5/3/2021 | 8-K | https://www.sec.gov/Archives/edgar/data/1014763/000165495421005015/0001654954-21-005015-index.htm | |||||||||
8/16/2021 | 8-K | Form 8-K reporting CFO, et al | ||||||||||
101.INS | 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 | XBRL Taxonomy Extension Schema Document | X | ||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | X | ||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase | X | ||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase | X | ||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase | X | ||||||||||
104.1 | Cover Page Interactive Data File | X |
The exhibits listed in the Exhibit isIndex are filed or incorporated by reference as part of this filing.
+ Schedules (as similar attachments) have been omitted from this filing pursuant to the exhibitItem 601(a)(5) of the same number to the Company's Registration Statement on Form SB-2 filed with and declared effective by the Commission (File No. 333-4413) on August 8, 1996.
* Indicates a management contract or compensatory Plan required to be filed as an Exhibit per Item 15(b) of Form 10K.
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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 | By: | /s/ | |
Chun-Hsien Tsai, Chairman of the Board, and Chief Executive Officer | |||
Date: August 20, 2021 | By: | /s/ Hui-Lan Wu | |
Hui-Lan Wu, Chief Financial Officer | |||
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