Ainos (AIMD) risk factors, FY2025 10-K

Risks related to our limited operating history, financial position, and need for additional capital

1. 01We have a history of operating losses that are expected to continue for the foreseeable future, and we are unable to predict the extent of future losses, or whether we will generate significant revenues or achieve or sustain profitability28% rewritten
2. 02We have generated very little revenue from product sales and may never become profitable
3. 03We need to raise additional capital to operate our business. If we fail to obtain the capital necessary to fund our operations, we will be unable to continue or complete our product development
4. 04We may be unable to access the capital markets, and even if we can raise additional funding, we may be required to do so on terms that are dilutive to you
5. 05Our operating results may fluctuate significantly, which will make our future results difficult to predict and could cause our results to fall below expectations

Risks related to product development and regulatory process

1. 06AI Nose is a developing platform, and we may be unable to successfully generate meaningful revenueNew
2. 07The market for AI-enabled scent digitization and SmellTech solutions may not develop as we expectNew
3. 08AI Nose may fail to achieve acceptable accuracy, reliability, or performance across use cases and environmentsNew
4. 09Our AI Nose platform may contain undetected errors, defects, or limitations that could impair adoption or result in liabilityNew
5. 10The performance of AI Nose depends on data collection and model training, which may be insufficient or ineffectiveNew
6. 11Customers may be unwilling or unable to integrate AI Nose into existing systems or workflowsNew
7. 12Expansion into industrial and other non-healthcare environments may expose AI Nose to new and unforeseen risksNew
8. 13Our AI Nose platform is highly technical and may contain undetected errors, which could cause harm to our reputation and adversely affect our businessNew
9. 14Any of these occurrences may harm our business, financial condition and prospects significantly. Delays in clinical product development present material uncertainty and risk with respect to our clinical trials, business, and financial condition
10. 15Our long-term prospects depend in part upon discovering, developing and commercializing additional products, including POCT and VELDONA candidates, which may fail in development or suffer delays that adversely affect their commercial viability
11. 16Even if a current or future product candidate, including AI Nose, POCT and VELDONA, receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success
12. 17The total addressable market opportunity for our current and future products may be much smaller than we estimate
13. 18We may not obtain approval for our product candidates in any jurisdictions
14. 19Even if we are able to commercialize any product candidates, such products may become subject to unfavorable pricing regulations or third-party coverage and reimbursement policies, which would harm our business
15. 20If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of any approved products
16. 21Our inability to obtain sufficient product liability insurance at an acceptable cost or at all to protect against potential product liability claims could prevent or inhibit the commercialization of products we develop, alone or with collaboration partners
17. 22Any disruption in our research and development facility could adversely affect our business, financial condition and results of operations
18. 23Our business and operations would be adversely affected in the event that our computer systems or those of our partners, contract research organizations, contractors, consultants or other third parties we work with were to suffer system failures, cyber-attacks, loss of data or other security incidents

Risks related to reliance on third parties

1. 24Our reliance on third-party components and cloud infrastructure could disrupt AI Nose operations, and any errors, disruption, performance problems, or failure in their or our operational infrastructure could adversely affect our business, financial condition, and results of operationsNew
2. 25We rely on the availability of licenses to third-party technology that may be difficult to replace or that may cause errors or delay implementation of our software and services should we not be able to continue or obtain a commercially reasonable license to such technologyNew
3. 26We do not own or operate manufacturing facilities. Our current strategy is to outsource all manufacturing of our product and product candidates to other companies, including TCNT, our affiliate and product co-developer, and Swiss Pharmaceutical Co., Ltd
4. 27If we engage additional manufacturers in the future, our use of new manufacturers increases the risk of delays in production or insufficient supplies of our product candidates
5. 28We may be delayed if we need to change the manufacturing process used by our manufacturers. Further, if we change an approved manufacturing process, then we may be delayed if the FDA or a comparable foreign authority needs to review the new manufacturing process before it may be used
6. 29Our future product candidates and any products that we may develop may compete with other product candidates and products for access to manufacturing facilities
7. 30We currently have limited marketing capabilities. If we are unable to expand sales and marketing capabilities on our own or through third parties, or are delayed in establishing these capabilities, we will be unable to successfully commercialize our product candidates, if approved, or generate product revenue
8. 31We may form or seek strategic partnerships in the future, and we may not realize the benefits of such alliances or licensing arrangements

Risks related to intellectual property, patents, and data privacy

1. 32Issues in the use of AI in our software may result in reputational harm or liabilityNew
2. 33Intellectual property rights vary across foreign jurisdictions, and we may not be able to protect our intellectual property rights throughout the world
3. 34We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time-consuming and unsuccessful, and issued patents directed towards our technology and product candidates could be found invalid or unenforceable if challenged
4. 35Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time
5. 36If we are unable to protect the confidentiality of our trade secrets, our business and competitive position could be harmed
6. 37We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of our competitors or are in breach of non-competition or non-solicitation agreements with our competitors
7. 38Changes in U.S. patent law, or laws in other countries, could diminish the value of patents in general, thereby impairing our ability to protect our product candidates

Risks related to our business

1. 39We will need to increase the size of our Company and may not effectively manage our growth
2. 40Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel
3. 41As we are actively involved in marketing VELDONA Pet supplements within a fiercely competitive industry, any inability to effectively compete may adversely impact our operational results
4. 42The point-of-care testing (“POCT”) market is extremely competitive and rapidly evolving, making it difficult to evaluate our business and future prospects
5. 43We will be required to continuously enhance our products and develop new tests to keep pace with evolving standards of care. If we do not update our products to keep pace with technological and scientific advances, our products could become obsolete and sales of our products could decline or fail to grow as expected
6. 44Research and development of drug candidates such as VELDONA is extremely expensive and complex, and it’s difficult to evaluate the likelihood of the outcome of clinical trials, regulatory approvals, and our business and future prospects
7. 45If we fail to develop and maintain our brand, or the quality of our products that customers have come to expect, our business could suffer
8. 46Our business, operations, clinical development plans and timelines, and supply chain could be adversely affected by the effects of epidemics, including but not limited to COVID-19
9. 47Our common stock and public warrants are currently quoted on the Nasdaq Capital Market
10. 48We do not intend to pay dividends for the foreseeable future, and, as a result, our ability to achieve a return on your investment will depend on appreciation in the price of our common stock
11. 49Any failure to maintain effective internal control over financial reporting could harm us
12. 50Our issuance of additional capital stock in connection with financings, acquisitions, investments, our 2023 Stock Incentive Plan or otherwise will dilute all other stockholders81% rewritten