AIMD 10-K & 10-Q changes, risk factors and insider trading

We are focused on product development and have generated $20,321$123,360 and $256nil in revenues from petAI supplementsNose salesrelated product, and $408$797 and $102,256 in$20,321 revenues from COVIDpet 19 antigen rapid test kitssupplements, in 2024the years ended December 31, 2025 and 2023,2024, respectively. We expect to continue to incur operating losses until we are able to commercialize or license our other products. These operating losses have adversely affected and are likely to continue to adversely affect our working capital, total assets and stockholders’ equity. We have generated operating losses of $13,841,204$13,990,408 and $13,206,396$13,841,204 in the years ended December 31, 20242025 and 2023,2024, respectively. As of December 31, 20242025 and 2023,2024, we had cumulative losses of $52,749,316$67,520,328 and $37,886,155,$52,749,316, respectively. We expect to make substantial expenditures and incur increasing operating costs in the future and our accumulated deficit will increase significantly as we expand development and clinical trial activities for our product candidates. Because of the risks and uncertainties associated with product development, we are unable to predict the extent of any future losses, whether we will ever generate significant revenues or if we will ever achieve or sustain profitability.

We are a company primarily focused on product development and our product revenues may not be sufficient to fund our operations. Until, and if, we deploy AI Nose at scale or receive approval from the TFDA, FDA and other regulatory authorities for our POCT and VELDONA product candidates, our revenues generated from these products may be limited. We had cash and cash equivalents of approximately $3.9$417 million thousand as of December 31, 2024,2025, and we will need to continue to seek capital from time to time to capitalize the development and commercialization of our product candidates and to acquire and develop other product candidates. Our actual capital requirements will depend on many factors. For instance, our business or operations may change in a manner that would consume available funds more rapidly than anticipated and substantial additional funding may be required to maintain operations, fund expansion, develop new or enhanced products, acquire complementary products, business or technologies or otherwise respond to competitive pressures and opportunities, such as a change in the regulatory environment or a change in disease treatment modalities. If we experience unanticipated cash requirements, we may need to seek additional sources of financing, which may not be available on favorable terms, if at all.

We may be unable to access the capital marketsmarkets, and even if we can raise additional funding, we may be required to do so on terms that are dilutive to you.

We are early in our development efforts of somePOCT ofand our productVELDONA candidates, and our business is dependent on the successful development of our our current and future productPOCT and VELDONA candidates. If we are unable to advance our current or future product candidates through clinical trials, trials, obtain marketing approval and ultimately commercialize any product candidates we develop, or experience significant delays in doing so, our business will be materially harmed.

Our productPOCT and VELDONA candidates are in different stages of clinical development. Our current and future product candidates may never achieve expected expected levels of efficacy or an acceptable safety profile. Our use of clinically validated targets to pursue treatments does not guarantee efficacy efficacy or safety or necessarily reduce the risk that our current or future product candidates will not achieve expected levels of efficacy or or an acceptable safety profile.

The success of our business, including our ability to finance our Company and generate revenue from products in the futurefuture, will depend heavily on the successful development and eventual commercialization of our productPOCT and VELDONA candidates, which may never occur. Our current productPOCT and VELDONA candidates, and any future productPOCT and VELDONA candidates we develop, will require additional nonclinical and clinical development, management of clinical, nonclinical and manufacturing activities, marketing approval in the United States and other markets, obtaining sufficient manufacturing supply for both clinical development and commercial production, building of a commercial organization, and substantial investment and significant marketing efforts before we generate any revenues from product sales.

The success of our current and future productPOCT and VELDONA candidates will depend on many factors, which may include the following:

If we are not successful with respect to one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully obtain regulatory approval of or commercialize the productPOCT and VELDONA candidates we develop, which would materially materially harm our business. If we do not receive marketing approvals for our current or future productPOCT and VELDONA candidates, we may not be able to continue our operations. Even if regulatory approvals are obtained, we may never be able to successfully commercialize any products. Accordingly, we cannot provide assurances that we will be able to generate sufficient revenue through the sale of productsPOCT and VELDONA to continue our business.

To obtain the requisite regulatory approvals to commercialize any of our productPOCT and VELDONA candidates, we must demonstrate that our products are safe and effective in humans and animals with respect to our veterinary drug candidates. Clinical trials are expensive and can take many years to complete, and their outcomes are inherently uncertain. We may experience delays in completing current and future clinical trials. trials. We may also experience numerous unforeseen events prior to, during, or as a result of our nonclinical studies or clinical trials that that could delay or prevent our ability to receive marketing approval or commercialize the productPOCT and VELDONA candidates we develop, including:

We could encounter delays if a current or future clinical trial is suspended or terminated by us, by the TFDA, FDA or other regulatory authorities and/or review boards. Such authorities may impose such a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the TFDA, FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues, failure to demonstrate a benefit from using a product, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of marketing approval of our productPOCT and VELDONA candidates.

If we experience termination or delays in the completion of any clinical trial of our productPOCT and VELDONA candidates, the commercial prospects of our product POCT and VELDONA candidates will be harmed, and our ability to generate product revenues from any of these product candidates may be delayed. In addition, any delays in completing our clinical trials will likely increase our costs, slow down our productPOCT and VELDONA candidate development and approval process and impact our ability to commence product sales and generate revenues. Significant clinical trial delays could also allow our competitors to bring products to market before we do, shorten any periods during which we may have the exclusive right to commercialize our product candidates, impair our ability to commercialize our productPOCT and VELDONA candidates and harm our business and results of operations.

Any current or future productPOCT and VELDONA candidates, including medical device products, we may develop and the activities associated with their development development and commercialization, including their design, testing, manufacture, recordkeeping, labeling, storage, approval, advertising, promotion, promotion, sale, and distribution, are subject to comprehensive regulation by the FDA and other regulatory authorities in the United States and by comparable authorities in Taiwan and other countries. Failure to obtain marketing approval for a product candidate will prevent us from commercializing the product candidate in a given jurisdiction. It is possible that some of our current or future productPOCT and VELDONA candidates will not obtain regulatory approval in the jurisdiction we are targeting. We have limited experience in filing and supporting the applications necessary to gain marketing approvals, but we expect to rely on third-party CROs or regulatory consultants to assist us in this process. Securing regulatory approval requires the submission of extensive applications to the various regulatory authorities. ProductPOCT and VELDONA candidates we develop may not be effective or may prove to have adverse characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use.

Even if a current or future product candidate, including AI Nose, POCT and VELDONA, receives marketing approval, it may fail to achieve the degree degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success.

The regulations that govern marketing approvals, pricing and reimbursement for new products vary widely from country to country. Some countries require approval of the sale price of a product before it can be marketed. In many countries, the pricing review period begins after marketing approval is granted. As a result, we might obtain marketing approval for a product candidate in a particular country,country but then be subject to price regulations that delay our commercial launch of the product candidate. Adverse pricing limitations may hinder our ability to recoup our investment in one or more product candidates, even if our product candidates obtain marketing approval. Our ability to successfully commercialize any product candidates, whether as a single agent or in combination, will also depend in part on the extent to which coverage and reimbursement for these product candidates and related treatments is available from government authorities, private health insurers and other organizations. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, and establish reimbursement levels. It is difficult to predict at this time what government authorities and third-party payors may decide with respect to coverage and reimbursement for our programs (if approved).

Research and development of drug candidates such as VELDONA is extremely expensive and complexcomplex, and itsit’s difficult to evaluate the likelihood of the outcome of clinical trials, regulatory approvals, and our business and future prospects.

An active trading market for our common stock may not developdevelop, and the market price of our common stock and warrants could be volatile.

We do not intend to pay dividends for the foreseeable futurefuture, and, as a result, our ability to achieve a return on your investment will depend depend on appreciation in the price of our common stock.

The following highlights major corporate milestonesdevelopments in 20242025 that wemanagement believebelieves willadvanced servethe as catalysts for us to developcommercialization and commercializescaling of our productplatform pipeline over the next several yearstechnologies:

The Company reported $20,729$124,157 of revenues for the year ended December 31, 2024,2025, as compared to $122,112$20,729 for the year ended December 31, 2023 from the sales of in Taiwan.2024. The decreaseincrease of revenue in 20242025 was primarily caused by a change in product mix; the Company generated $123,360 and nil in revenues from AI Nose related programs, and $797 and $20,321 from pet supplements, and nil and $408 in revenues from COVID-19 Antigen Rapid Test Kits in lower sales volume2025 and was2024, offset byrespectively. theThe exchangeCompany ratehas fluctuations.ceased Weselling generated $20,321 and $256 in revenues from pet supplements and $408 and $102,256 in revenues from COVID-19 Antigen Rapid Test KitsKit insince 2024first andquarter of 2023, respectively.2024.

The cost of revenues relating to product sales for the year ended December 31, 20242025 was $52,595$21,246 compared to $375,845$52,595 for the year ended December 31, 2023.2024. The decrease of cost of revenues was primarily caused by the declineaforementioned change in salesproduct volume of COVID-19 Antigen Rapid Test Kits.mix.

The share-based compensation expense and the depreciation expense for manufacturing in the year ended December 31, 20242025 and 20232024 were $9,032nil and $80,655,$9,032, respectively. When excluding these non-cash cost,costs, cost of revenue decreased to $43,563$21,246 during the year ended December 31, 20242025 compared to $295,190$43,563 for the same period in 2023.2024.

Gross profit (loss) from product sales for the year ended December 31, 20242025 was $31,866$102,911 as compared to $253,733$(31,866) for the year ended December 31, 2023. 2024. The gross lossprofit was due to athe lowaforementioned saleschange volumein forproduct newly launched products, and a lower cost of revenue.mix.

When excluding these non-cash costs, gross profit (loss) decreasedincreased to $(22,834)$102,911 during the year ended December 31, 20242025 compared to $(173,07822,834) for for the same period in 2023.2024.

R&D expenses for the years ended December 31, 20242025 and 20232024 were $8,413,923$7,749,772 and $7,317,388,$8,413,923, respectively. The increasedecrease $1,096,535of $664,151 (15%8%) was due to increaseddecreased staffing expenditures (including share-based compensation) and co-research expenses,expenses but offset by aan decreaseincrease in impairmentpatent lossapplication and& materialmaintenance expenses. We expect that our R&D expenses related to clinical trials will continue to grow as we further develop AI Nose programs VOC POCT and VELDONA drug candidates and increase the pace of clinical trials previously delayed during the COVID-19 pandemic.candidates.

The share-based compensation expense and the depreciation and amortization expense in 20242025 and 20232024 were $5,600,037$5,260,915 and $5,252,730,$5,600,037, respectively. When excluding these non-cash expenses, R&D expenses increaseddecreased to $2,488,857 in 2025 from that of $2,813,886 in 2024 from that of $2,064,658 in 2023 primarily caused by increasingdecreased inco-development non-exclusive use of certain patents related to VOC and POCT technologies.expenses.

SG&A expenses were $5,395,415$6,343,547 and $5,635,275$5,395,415 for the years ended December 31, 20242025 and 2023,2024, respectively. The $239,860$948,132 (4%18%) slightincrease decreasewas was due to decreasedincrease professionalin expenses,staffing expenditures (including share-based compensation), public relations and investor relations fees, and advertising expense, but offset by decreased professional expenses and D&O insurance expenses, but offset by staffing expenditures (including share-based compensation).expenses.

The share-based compensation expense and the depreciation and amortization expense in 20242025 and 20232024 were $2,824,743$3,942,820 and $2,886,216,$2,824,743, respectively. When excluding these non-cash expenses, SG&A expenses slightslightly decreased to $2,400,727 in 2025 compared to $2,570,672 in 2024 compared to $2,749,059 in 2023 mainly due to decreased professional expenses, expenditures to public relations and investor relations fees,expenses and D&O insurance expenses.

The Company’s operating loss was $13,841,204$13,990,408 and $13,206,396$13,841,204 during the years ended December 31, 20242025 and 2023,2024, respectively, reflecting a $634,808$149,204 slight increase in operating losses between the years. We incurred a gross loss in product sales but reduced the professional expense and material expenses in 2024. We continued to invest resources to execute our growth strategy and product roadmap to improve our profitability.

TheInterest interest expense was $616,467$711,903 and $144,193$616,467 during the years ended December 31, 20242025 and 2023,2024, respectively. The increase in interest expense was due to accrued interest for compounded convertible notes issued in May 20242024, bearingfor awhich higherthe interestface ratevalue as compared with those interest bearing debtsincreases in 2023.the second year due to the compounding feature.

Net loss was $14,863,161$14,771,012 in 20242025 compared to $13,770,549$14,863,161 in 2023,2024, resulting in a $1,092,612$92,149 (8%1%) increaseslight decrease in net loss attributable to common common stockholders due to the increasedecrease in non-exclusiveco-research use of certain patents related to VOCexpenses and POCTD&O technologies despite offset by the decrease in professionalinsurance expenses.

Net cash used in operating activities increaseddecreased by $1,113,599$1,193,570 during the year of 20242025 compared to the year of 2023.2024. The increasedecrease in cash used in operations primarily resulted from our net loss for the year of 20242025 due to swiftincrease product but offset byin cash inflow contributed by the operating assets and liabilities.

Net cash used in investing activities during the year of 20242025 was $125,292$2,223 compared to $101,525$125,292 during the year of 2023.2024. The increasedecrease was due due to increase in refundable deposits and other noncurrent assets offset by decrease in purchase of property and equipment.

Cash received from financing activities were $8,025,746$1,008,461 and $4,923,673$8,025,746 during the years of 20242025 and 2023,2024, respectively. The $3,102,073$7,017,285 increasedecrease was primarily reflected by the following:

On May 31, 2024, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”), with H.C. Wainwright & & Co., LLC or the Agent, pursuant to which the Company may issue and sell, from time to time, shares of its Common Stock, depending on on market demand, with the Agent acting as the sales agent or principal (the “ATM Offering”). Sales of the Common Stock may be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended (the “Securities Act”),Act, including, without limitation, sales made directly on or through the Nasdaq Capital Market. The Agent will use its commercially reasonable efforts to sell the Shares requested by the Company to be sold on its behalf, consistent with the Agent’s normal trading and sales practices, under the terms and subject to the conditions set forth in the ATM Agreement. The Company has no obligation to sell any of the Shares. The Company may instruct the Agent not to sell the Shares if the sales cannot be effected at or above the price designated by the Company from time to timetime, and the Company may at any time suspend sales pursuant to the ATM Agreement.

We continue to prioritize AI Nose activities across industrial environments, including semiconductor manufacturing, robotics, smart manufacturing, and hospital infrastructure settings. Recent progress includes initial commercial activity in backend semiconductor manufacturing, front-end semiconductor validation efforts through industry partners, robotics-related development initiatives and activities in hospital infrastructure environments. During the first half of 2026, the Company continued AI Nose deployment and validation activities across certain facility monitoring, safety, ventilation, equipment, and chemical handling applications. These activities remain at varying stages of deployment, validation, and commercialization. The timing and extent of partner execution, customer adoption, and conversion of pilot and initial commercial activities into broader commercial arrangements may affect the timing of revenue and our near-term operating results.

As part of our ongoing deployment and validation activities, we continue to develop AI Nose capabilities across different operating conditions and application environments. These efforts include the detection and interpretation of gas signal variations and the potential application of such capabilities in anomaly detection, environmental sensing, and operational monitoring. We are also developing AI Nose for near-threshold detection scenarios, meaning the detection of signal variations at or near traditional detection thresholds. If validated, such capabilities may support certain early-stage anomaly detection applications. We continue to develop these near-threshold detection capabilities with a focus on reliability, repeatability, and scalability across different environments, which remain subject to ongoing validation. Expanded deployments may provide additional conditions for evaluating system performance and environmental pattern recognition.

AI Nose deployments are expected to generate Smell ID data across different operating environments, and we continue to use this data to refine models, improve classification performance, and expand the range of detectable patterns. Continued deployment of AI Nose is also expected to result in further accumulation of scent-related data, which may support model improvement, broaden detectable patterns, and enhance system adaptability across different operating environments. During the first half of 2026, the Company expanded data-generation activities across industrial and healthcare-related settings, including environmental signals, facility conditions, and exhaled breath patterns. While we expect these efforts to support ongoing performance improvements, the timing and extent to which they contribute to broader commercial adoption or commercial outcomes may vary, and their benefits may take time to be reflected in revenue or operating results.

We continue to develop AI Nose applications in senior care and other healthcare-adjacent settings, including environments where non-invasive and continuous sensing may support hygiene monitoring, environmental control, and hospital operations. During the first half of 2026, the Company expanded research and validation activities in hospital infrastructure, emergency care, and exhaled breath analysis. These activities remain research- and validation-stage and are not intended to provide individual patient diagnosis. The timing and extent of these activities may be affected by regulatory requirements, partner engagement, operational validation, and resource allocation decisions.

As of MarchJune 31,30, 2026, we had available cash and cash equivalents of $2,841,422.$1,422,912. We anticipate business revenues and external financing options, if necessary, to fund our operations over the next twelve months. We have based this estimate on assumptions that may prove to be incorrect, and we could exhaust our available capital resources sooner than we expect. See “Liquidity and Capital Resources” for additional information. To finance our continuing operations, we will need to raise additional capital, which cannot be assured.

During the first quarterhalf of the year 2026, we advanced AI Nose-related activities within industrial applications, with a focus on semiconductor and robotics environments. These activities included

Results of Operations for Quarter Ended MarchJune 31,30, 2026 (“Q1Q2 2026”) and MarchJune 31,30, 2025 (“Q1Q2 2025”):

The cost of revenue related to product sales in Q1Q2 2026 was $763$53 compared to $18,233$937 in Q1Q2 2025. The decrease in cost of revenue was caused by by the aforementioned lower produce volume for AIVELDONA Nosepet related programssupplements during the reporting period.

Gross profit from product sales in Q1Q2 2026 was $602 gross loss$99 as compared to $87,974$3,726 gross profit from product sales in Q1Q2 2025. The decrease in gross profit was due to aforementioned lower sale volume.

R&D expenses in Q1Q2 2026 and Q1Q2 2025 were $1,689,860$1,850,409 and $1,724,084,$1,911,800, respectively. The decrease of $34,224$61,391 (2%3%) was due to reduced expenses in share-based compensation and expenses associated with co-research for technology partially offset by increased staffing expenditures and experimental material fees. We expect that our R&D investments may continue to grow as we further develop our technologies.

SG&A expenses were $593,185$2,548,776 and $1,526,761$1,837,613 in Q1Q2 2026 and Q1Q2 2025, respectively, reflecting a decreaseincrease of $933,576$711,163 (61%39%) due to a significant decreaseincrease in share-based compensation,compensation furtherand professional fees, offset by a decrease in D&Oadvertisement insurance feefees and SECpublic reportingrelations relatedand investor relations fees.

The share-based compensation expense and the depreciation and amortization expense in Q1Q2 2026 and Q1Q2 2025 were $12,808$2,018,095 and $901,800$1,309,358 respectively. respectively. When excluding these non-cash expenses, SG&A expenses decreasedincreased to $580,377$530,681 in Q1Q2 2026 compared to $624,961$528,255 in Q1Q2 2025.

The Company’s operating loss was $2,283,647$4,399,086 and $3,162,871$3,745,687 in Q1Q2 2026 and Q1Q2 2025, respectively, reflecting a $879,224$653,399 (28%17%) decreaseincrease in operating loss between the reporting periods. We continued to invest resources to execute our growth strategy and product roadmap to improve our profitability.

In Q1Q2 2026, interest expense was $176,876$200,162 compared to $180,445$177,957 in Q1Q2 2025. The decreaseincrease in interest expense was due to the company paid off Lee’s convertible note, resulting in a reductionnew loan agreement in the principalfirst amountquarter of the convertibleyear note outstanding.2026.

Net loss was $2,459,800$4,594,731 in Q1Q2 2026 compared to $3,286,022$4,084,990 in Q1Q2 2025, resulting in an $826,222$509,741 (25%12%) decreaseincrease in net loss attributable to our shareholders of common stock. The net loss was due to expanding operating expense as we continued to invest resources to execute our growth strategy and product roadmap to improve our profitability.

As of MarchJune 31,30, 2026 and December 31, 2025, the Company had available cash of $2,841,422$1,422,912 and $417,353, respectively.

The following table summarizes our cash flow during the threesix months ended MarchJune 31,30, 2026 and 2025:

Cash used in operating activities decreased by $241,157$143,246 during the first quarterhalf of the year 2026 compared to the first quarterhalf of the year 2025. Our net loss for the first quarterhalf of the year 2026 decreased by $826,222$316,481 primarily due to the company expandinglower operating expense. The operating cash cash outflow as a result of changes in operating assets and liabilities was mainly attributable to:

Cash provided (used) for investing activities were $79$7,297 and $20,587($18,045) during the first quarterhalf of the year 2026 and the first quarterhalf of the year 2025, respectively. The decrease increase was due to a reduction in refundable deposits and other noncurrent assets and decrease in purchases of property and equipment and increase in proceeds from disposal of property and equipment.

Cash provided by (used in) financing activities were $3,414,540 and $14,605$(280,902) during the first quarterhalf of the year 2026 and the first quarterhalf of the year 2025, respectively. The $3,399,935$3,695,442 increase was primarily reflected by the following: