Ainos Inc. Warrants

Company Overview

Business Model: Ainos, Inc. is a dual-platform company focused on advancing artificial intelligence–based smelltech technologies and immune therapeutics. Its primary strategic focus is the commercialization of its proprietary scent digitization platform, AI Nose, while also developing therapeutic assets based on its low-dose oral interferon program, VELDONA®. The AI Nose platform is an AI-based electronic olfaction system that integrates gas sensor arrays with proprietary artificial intelligence models, referred to as a smell language model ("SLM"), to digitize scent and volatile organic compound ("VOC") signals into Smell ID, a machine-readable data format. VELDONA® is a low-dose oral interferon alpha formulation designed to modulate immune responses. The company's operating strategy emphasizes capital efficiency through a primary geographic footprint in Taiwan, outsourced manufacturing, and third-party commercial relationships. Targeted revenue sources for AI Nose include sales of hardware systems and recurring service-based offerings.

Market Position: Ainos, Inc. is developing AI Nose to address the gap of smell as an underrepresented perception layer for machines, positioning it as a connected, trainable SmellTech sensing platform. The platform was initially developed in healthcare-related settings and is expanding into industrial environments. For VELDONA®, the U.S. Food and Drug Administration has granted orphan drug designation for its formulation as a potential treatment for oral warts in HIV-seropositive patients. The markets for point-of-care testing ("POCT") and pet health supplements, where Ainos, Inc. operates, are characterized by intense competition and rapid evolution.

Recent Strategic Developments:

• AI Nose Advancement: During 2025, Ainos, Inc. accelerated the transition of the AI Nose platform to early-stage commercialization, focusing on industrial and infrastructure-oriented applications.
  • Secured an initial commercial order totaling approximately $2.1 million over three years from a leading semiconductor packaging and testing company for the deployment of 1,400 AI Nose systems in manufacturing environments.
  • Entered a commercial arrangement with a semiconductor engineering and systems integration partner, including a contracted minimum order commitment of 600 AI Nose units for front-end wafer fabrication environments.
  • Achieved approximately 80% classification accuracy across more than 20 volatile organic compounds in validation activities conducted in Japanese semiconductor facilities.
  • Initiated pilot deployments of AI Nose across seven operational sites in Japan through a collaboration with a Japanese service robotics partner.
  • Continued to advance healthcare-adjacent applications, including senior care hygiene monitoring and women’s health applications.
• VELDONA® Program Progress: Continued development of VELDONA® for selected rare, autoimmune, and infectious disease indications, including oral warts in HIV-seropositive patients, Sjögren’s syndrome, and feline chronic gingivostomatitis ("FCGS").
  • Advanced clinical preparation and ongoing studies in Taiwan for these indications.
  • Maintained discussions with potential partners regarding out-licensing opportunities.
  • Commercialized VELDONA® Pet supplements in Taiwan on a limited scale.
• ScentAI Inc. Operations: Operates ScentAI Inc., a wholly owned subsidiary, focused on advancing the SLM algorithm, with Ainos, Inc. concentrating on hardware, deployment, and data generation.

Geographic Footprint: Ainos, Inc. operates its research and development and certain operating functions primarily in Taiwan, leveraging its position as a global technology supply chain hub with access to a skilled workforce. Administrative offices are located in Houston, Texas and Taiwan. Revenues from external customers or long-term assets are based or located in Taiwan. AI Nose deployments and validation activities have expanded to Japan.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 82.89% (2025)
• Operating Margin: -11268.9% (2025)
• Net Margin: -11900.6% (2025)

Investment in Growth:

• R&D Expenditure: $7,749,772 (6242.0% of revenue)
• Capital Expenditures: $34,561 (Purchase of property and equipment)
• Strategic Investments: Initial commercial order for 1,400 AI Nose units from a leading semiconductor packaging and testing customer (approximately $2.1 million over three years). Minimum order commitment for 600 AI Nose units with a semiconductor engineering and systems integration partner.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: Ainos, Inc. issued 1,160,000 shares of its common stock in exchange for 116,000,000 newly issued shares of ScentAI Inc., a wholly owned subsidiary. These shares are treated as treasury stock in consolidated financial statements, representing a non-cash equity restructuring within the group, valued at $1,972,000.
• Dividend Payments: Ainos, Inc. has not declared or paid any cash dividends in 2025 or 2024 and does not anticipate doing so in the foreseeable future, intending to retain all available funds for business operations and growth.
• Future Capital Return Commitments: None disclosed.

Balance Sheet Position:

• Cash and Equivalents: $417,353 (as of December 31, 2025)
• Total Debt: $11,000,000 (comprising noncurrent convertible notes payable as of December 31, 2025)
• Net Cash Position: $(10,582,647) (as of December 31, 2025)
• Debt Maturity Profile:
  • The March 2025 Convertible Note issued to Li-Kuo Lee was repaid in full on April 30, 2025.
  • The March 2025 Convertible Note issued to ASE Test, Inc. had its maturity date extended to March 12, 2027.
  • The May 2027 Convertible Notes issued to ASE Test, Inc. are payable three years from May 3, 2024 (i.e., May 3, 2027).

Cash Flow Generation:

• Operating Cash Flow: $(4,614,697) (2025)
• Free Cash Flow: $(4,649,258) (2025, estimated as operating cash flow less capital expenditures)

Operational Excellence

Production & Service Model: Ainos, Inc. employs an outsourced manufacturing model to manage capital efficiently and maintain operational flexibility. Manufacturing of AI Nose hardware products and POCT product candidates is outsourced to Taiwan Carbon Nano Technology Corp. (TCNT). VELDONA® human-use drug candidates are manufactured by Swiss Pharmaceutical Co., Ltd., and VELDONA® pet supplements by third-party manufacturers in Taiwan, including TCNT. The AI Nose platform includes recurring service-based offerings.

Supply Chain Architecture: Key Suppliers & Partners:

• Manufacturing: Taiwan Carbon Nano Technology Corp. (TCNT) for AI Nose hardware and POCT product candidates, and VELDONA® pet supplements. Swiss Pharmaceutical Co., Ltd. for VELDONA® human-use drug candidates.
• Technology & Co-development: ScentAI Inc. (wholly owned subsidiary) for advancing the SLM algorithm. TCNT for patent licensing related to VOC, POCT, and nitrogen-oxygen separation machine technologies, and co-development support.
• Commercial Relationships: Inabata & Co. Ltd., Taiwan Inabata Sangyo Co., Topco Scientific Co., Ltd., Trusval Technology Co., Ltd., Solomon Technology Corporation, Kenmec Mechanical Engineering Co., Ltd., and Topmed International Biotech Co., Ltd.

Facility Network:

• Manufacturing: Outsourced.
• Research & Development: Primarily located in Taiwan.
• Administrative: Offices in Houston, Texas and Taiwan.

Operational Metrics:

• AI Nose achieved approximately 80% classification accuracy across more than 20 volatile organic compounds in validation activities in Japanese semiconductor facilities.
• VELDONA® development has involved 68 human clinical studies (63 Phase 2) and 28 preclinical and animal studies.

Market Access & Customer Relationships

Go-to-Market Strategy: Ainos, Inc. advances its AI Nose platform through partner-led deployments and leverages third-party commercial relationships for product commercialization. VELDONA® Pet supplements are commercialized through on-line and off-line distribution channels in Taiwan.

Customer Portfolio: Enterprise Customers:

• A leading semiconductor packaging and testing company for AI Nose deployments.
• A semiconductor engineering and systems integration partner for AI Nose deployments.
• A Japanese service robotics partner for AI Nose pilot deployments.
• Customer Concentration: Product sales to three customers represented approximately 90% of total gross product revenue for the year ended December 31, 2025, with Customer A accounting for 90% of total net revenues in 2025.

Geographic Revenue Distribution: Revenues from external customers or long-term assets are primarily based or located in Taiwan. AI Nose deployments and validation activities extend to Japan.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The market for AI-powered scent detection and SmellTech solutions is nascent, with uncertain demand and growth rates. The pet health supplement industry is highly competitive, driven by product quality, brand, innovation, and price. The point-of-care testing (POCT) market is extremely competitive, rapidly evolving with technological advancements, and dominated by large, established central lab companies. Drug research and development, particularly for novel technologies like VELDONA®, is expensive, complex, and subject to high regulatory hurdles.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: In the pet health supplement industry, Ainos, Inc. faces competition from companies with lower price points, traditional retailers, and larger incumbents with greater financial resources. In the POCT market, competitors include established and new market participants, large lab companies such as Quest Diagnostics, Inc. and Laboratory Corporation of America, and developers of molecular, antigen, and antibody tests. In drug development, competition comes from numerous pharmaceutical and biotechnology companies with greater resources and expertise.

Emerging Competitive Threats: The company faces potential threats from alternative scent detection technologies, new entrants or expansion of existing competitors in its markets, disruptive technologies in POCT, and the development of new vaccines or therapeutic treatments that could impact VELDONA®'s market opportunity.

Competitive Response Strategy: Ainos, Inc. plans to scale the AI Nose platform by expanding partner-led deployments, increasing scent data volume to refine the SLM, and advancing commercialization through hardware sales and service-based offerings. VELDONA® programs are managed selectively and capital-efficiently, with an emphasis on partnerships and out-licensing. The company aims to continuously enhance its products and develop new tests to keep pace with scientific and technological advances.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics: The market for AI-enabled scent digitization and SmellTech solutions is nascent and may not develop as expected, or may adopt alternative technologies, limiting demand for AI Nose. Products may fail to achieve market acceptance by physicians, patients, and payors. Estimates of total addressable market opportunity may be inaccurate. Intense competition in the pet health supplement and POCT markets could impact profitability. Products could become obsolete if not continuously updated. Technology Disruption: The AI Nose platform's performance depends on numerous variables and may contain undetected errors, defects, or limitations, leading to inaccurate outputs, operational disruptions, or liability. Its reliance on data collection and model training may be insufficient or ineffective. Customers may face technical or cost barriers to integrating AI Nose. Expansion into industrial environments may expose the platform to new and unforeseen risks. Customer Concentration: Product sales to three customers represented approximately 90% of total gross product revenue in 2025, posing a risk if any major customer reduces orders or fails to pay.

Operational & Execution Risks

Supply Chain Vulnerabilities: Reliance on outsourced manufacturing, particularly Taiwan Carbon Nano Technology Corp. (TCNT) as a sole supplier for AI Nose products, increases the risk of insufficient quantities, unacceptable costs, and delays in development or commercialization. Manufacturers may struggle to scale capacity, and quality issues could arise. Production & Service Model: Clinical product development for POCT and VELDONA® candidates is lengthy, expensive, and uncertain, with no guarantee of regulatory approval. Ainos, Inc. has limited experience in securing regulatory approvals for veterinary drugs. Product liability claims from clinical testing or commercialization could result in substantial liabilities and reputational harm. Disruptions to the research and development facility from disasters or cyber-attacks could adversely affect operations.

Financial & Regulatory Risks

Market & Financial Risks: Ainos, Inc. has a history of operating losses and an accumulated deficit of $67,520,328 as of December 31, 2025, with continued losses expected. The company is dependent on obtaining additional capital, which may not be available on favorable terms or at all, potentially leading to delays or cessation of product development. Operating results may fluctuate significantly due to various factors. Approved products may face unfavorable pricing regulations or third-party reimbursement policies. Regulatory & Compliance Risks: AI Nose products are subject to regulatory requirements for electronic components and wireless communication (e.g., FCC, NCC, MIC). Drug and medical device candidates are subject to extensive regulatory oversight (e.g., FDA, TFDA), and VELDONA® veterinary products are subject to Taiwan's Veterinary Drugs Control Act. Compliance is costly, and failure to comply could result in fines or operational suspensions. Business activities are also subject to anti-bribery laws (e.g., FCPA) and export controls, with potential for significant penalties for violations. Issues in AI use, such as flawed algorithms or biased data, could lead to reputational harm or legal liability.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas: Ainos, Inc. focuses on its AI Nose platform for AI-based scent digitization, utilizing gas sensor arrays and proprietary smell language models (SLM). Its VELDONA® platform centers on low-dose oral interferon alpha formulations. POCT development incorporates VOC sensing, lateral flow immunochromatographic assays, and nucleic acid–based methods. Innovation Pipeline: The AI Nose pipeline includes expanding applications into industrial environments (semiconductor manufacturing, robotics, smart manufacturing) and healthcare-adjacent use cases (senior care hygiene monitoring, women’s vaginal health, selected sexually transmitted infections, hospital environmental control). The VELDONA® pipeline includes candidates for oral warts in HIV-positive patients, Sjögren’s syndrome, and feline chronic gingivostomatitis (FCGS). ScentAI Inc., a wholly owned subsidiary, is dedicated to advancing the SLM algorithm.

Intellectual Property Portfolio: Ainos, Inc. protects its technology through patents, trade secrets, and proprietary know-how. Its portfolio includes issued patents and pending applications covering AI Nose sensing technologies, POCT, and interferon-based therapeutics. Issued patents have expiration dates ranging from 2026 through 2046. The company also licenses certain patents and patent applications related to AI Nose, POCT, and other technologies from affiliated companies, such as Taiwan Carbon Nano Technology Corp. (TCNT).

Technology Partnerships: Strategic alliances include ScentAI Inc. (wholly owned subsidiary for SLM algorithm development), Taiwan Carbon Nano Technology Corp. (TCNT) for patent licensing and co-development, and collaborations with a semiconductor engineering and systems integration partner and a Japanese service robotics partner for AI Nose deployments.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: Ainos, Inc. is highly dependent on its executive officers and key personnel, and the loss of their services could impede strategic objectives. Recruiting and retaining qualified scientific, clinical, manufacturing, accounting, legal, and sales and marketing personnel is critical to success.

Board Composition: As of March 30, 2026, the Board of Directors includes Chun-Hsien Tsai, Wen-Han Chang, Yao-Chung Chiang, Pao-Sheng Wei, Ting-Chuan Lee, Chun-Jung Tsai, and Chung-Yi Tsai. Wen-Han Chang, Yao-Chung Chiang, and Pao-Sheng Wei are deemed independent under SEC and Nasdaq rules. The Audit Committee (Chairperson: Pao-Sheng Wei) and Compensation Committee (Chairperson: Wen-Han Chang) are composed solely of independent directors. Ainos, Inc. is a "controlled company" under Nasdaq rules due to Ainos KY holding more than 50% of its voting power, which provides exemptions from certain independence requirements, though the company currently maintains independent Audit and Compensation Committees.

Human Capital Strategy

Workforce Composition: As of December 31, 2025, Ainos, Inc. had 41 full-time employees, with 20 engaged in research and development. Most employees are based in Taiwan.

Talent Management: Acquisition & Retention: The company plans to expand its workforce in research and development, sales and marketing, and general operations to support business programs. Recruiting and retaining qualified personnel is critical to its success.

Regulatory Environment & Compliance

Regulatory Framework: Ainos, Inc.'s AI Nose platform products are subject to regulatory requirements governing radio frequency emissions and wireless device certification in various jurisdictions (e.g., FCC in the U.S., NCC in Taiwan, MIC in Japan). Its drug and medical device product candidates (POCT, VELDONA®) are subject to regulatory oversight by authorities such as the U.S. Food and Drug Administration (FDA) and the Taiwan Food and Drug Administration (TFDA). VELDONA® veterinary product candidates are subject to Taiwan's Veterinary Drugs Control Act and related regulations. As of December 31, 2025, medical device product candidates and VELDONA® drug candidates are in development and have not been approved for sale.

Trade & Export Controls: The company's products and technology may be subject to foreign export controls, trade sanctions, and import laws and regulations, which could limit international sales and impose compliance costs.

Legal Proceedings: As of December 31, 2025, there are no legal proceedings involving Ainos, Inc.

Tax Strategy & Considerations

Tax Profile: Ainos, Inc. reported an effective tax rate of 0% for the years ended December 31, 2025 and 2024. As of December 31, 2025, the company had approximately $52,516,177 in U.S. federal net operating loss carryforwards. Of this, $11,549,477 (generated through December 31, 2017) will expire between 2026 and 2037, while $40,966,700 (generated post-December 31, 2017) do not expire but are limited to offsetting 80% of taxable income in future utilization periods. A full valuation allowance is recorded against net deferred tax assets due to the company's operating loss history.

Insurance & Risk Transfer

Risk Management Framework: Ainos, Inc. recognizes the importance of robust cybersecurity measures and has established policies and processes for assessing, identifying, and managing material risks from cybersecurity threats. IT leadership reports to the Chief Executive Officer, and the Board of Directors, through the Audit Committee, oversees cybersecurity risk. The company believes it has adequate insurance for current operations, but acknowledges that coverage may not be sufficient for all potential losses or available on acceptable terms, particularly for product liability claims.