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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion should be read in conjunction with the Consolidated Financial Statements and the Notes thereto included elsewhere in this Form 10-K. This discussion contains forward-looking statements based on current expectations, which involve uncertainties. Actual results and the timing of events could differ materially from the forward-looking statements as a result of a number of factors, including those discussed in “Item 1A. Risk Factors.”

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Overview

Our Company and Business

Ainos Inc., formerly Amarillo Biosciences, Inc. (the “Company”, “we” or “us”), is engaged in developing medical technologies for point-of-care (“POCT”) testing and safe and novel medical treatment for a broad range of disease indications. Since our inception in 1984, we have concentrated our resources on business planning, raising capital, research and clinical development activities for our programs, securing related intellectual property and commercialization of proprietary therapeutics using low-dose non-injectable interferon (“IFN”). In addition to our core IFN technology, we are committed to developing a diversified healthcare business portfolio to include medical devices and consumer healthcare products.

We have historically been involved in extensive research and development of low-dose oral interferon as a therapeutic. We continue to develop our VELDONA platform and other pharmaceutical platforms and recently have acquired intellectual properties to expand our POCT business. In 2021 and 2022, we acquired significant intellectual property from our majority shareholder, Ainos KY, to expand our potential product portfolio into Volatile Organic Compounds (“VOC”) and COVID-19 POCTs.

Key Developments in 2022

The following are highlights of major corporate milestones in 2022 that we believe will serve as catalysts for us to develop and commercialize our product pipeline over the next several years:

Impact of COVID-19 on Our Business

The COVID-19 pandemic presented us an opportunity to grow our COVID-19 antigen test business. Substantially all of our operating revenue came from the sale of the Ainos COVID-19 antigen rapid test kits in Taiwan. While in the short-term demand for rapid COVID-19 testing is expected, market conditions are unpredictable. Given our available resources, we intend continue marketing the COVID-19 test kit primarily in Taiwan.

We believe that during the COVID-19 pandemic, consumers have been increasingly familiar with at-home tests. Moving forward, people may seek additional at-home tests to manage other infections as quickly as possible. Home self-testing and self-collection have been increasingly available for other infections such as vaginal or sexually transmitted infections. We believe this new user behaviour, supported by variety of telehealth platforms, will become increasingly supportive to our other POCT products as COVID-19 becomes endemic.

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Due to evolving market dynamics with COVID testing and the current financial environment, we decided to discontinue investment in commercializing the COVID-19 nucleic acid test program. We intend to evaluate our nucleic acid test technology for potential applications for other disease indications. At the same time, we plan to prioritize our other long-term growth programs, including Ainos Flora and our VELONDA candidates. We intend to actively explore out-licensing opportunities for our VELDONA candidates to accelerate return of our investments.

We are continuing to monitor the potential impact of the pandemic, but we cannot be certain the future impact on our business, financial condition, results of operations and prospects. Depending on developments relating to the pandemic, including the emergence of new variants, the pandemic may affect our ability to initiate and complete research studies, delay the initiation of our future research studies, disrupt regulatory activities or have other adverse effects on our business, results of operations, financial condition and prospects.

Financial Summary of Fiscal Year 2022

A discussion regarding our results of operations and financial conditio for fiscal year 2022 compared to fiscal year 2021 is presented below. A discussion regarding our results of operations and financial condition for fiscal year 2021 compared to fiscal year 2020 can be found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Results of Operations

The following table summarizes our results of operations for the years ended December 31, 2022 and 2021.

Years ended December 31, Change

Operating expenses:

Non-operating income and expenses

Revenues

Net revenues for 2022 and 2021 were $3,519,627 and $594,563, respectively. In 2022, we substantially increased revenues by 492%, consistent with a corresponding increase in sales volume of our COVID-19 Antigen Self-Test Kit in Taiwan.

Costs and Gross Profits

Cost of revenues for 2022 and 2021 were $2,114,284 and $184,181, respectively, representing a 1,048% increase year-over-year. The increase was primarily attributable to increased business activity relating to the test kits.

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Gross profits rose to $1,405,343 from $410,382, an improvement of $994,961, or 242%. Gross margin rate for 2022 decreased to 40% from 69% for 2021, as a result of a shift in the Company’s revenue mix. To align with the Taiwan government’s infection control policy, we generated more revenue from the COVID-19 Antigen Self-Test Kit beginning in the third quarter of 2022. In comparison, the majority of our revenue during the comparable period had been previously generated from sales of our COVID-19 Rapid Test Kit for use by healthcare professionals. We did not sell the self-test kit in 2021.

Research and Development Expenses

Following the strategic investment by Ainos KY, since August 2021 we have increased research and development staffing to develop our product candidates including POCTs, VELDONA and SRNA research.

Research and development expenses for 2022 and 2021 were $6,845,964 and $1,920,645, an increase of $4,925,319, or 256%. The increase is associated with higher amortization of intellectual property assets, staffing, experimental materials, service fee for CRO and animal study, co-development research with the universitity lab and other companies

When excluding share-based compensation, depreciation and amortization expenses, R&D expenses increased to US$2,134,935 from US$655,706 over the year of 2022.

Selling, General and Administrative Expenses

Selling, general and administration expense increased to $8,535,591 in 2022 from $2,357,163 in 2021, an increase of $6,178,428, or 262%. which included the share-based compensation approximately $6,394,000. Aside from share-based compensation expense, SG&A expense mainly consisted of staffing, legal, audit, consulting, and professional service expenses.

When excluding share-based compensation, depreciation and amortization expenses, SG&A expenses increased to US$2,062,046 from US$1,404,811 over the year of 2022.

Operating Loss

While our gross profits improved by $994,961 in 2022 compared to $405,096 in 2021, we incurred additional operating expenses as we continue to invest resources to execute our growth strategy and product roadmap. As a result, our operating loss in 2022 increased to $13,976,212 from $3,867,426 in 2021.

Liquidity and Capital Resources

As of December 31, 2022, we had cash and cash equivalents of $1,853,362, representing an increase from $1,751,499 as of December 31, 2021. The increase is primarily attributable to revenues from sales of our Ainos COVID-19 antigen rapid test kit in Taiwan and proceeds from financing activities..

The following table summarizes our cash flows at the end of December 31, 2022 and 2021:

Year Ended December 31,

Operating activities

While our revenues grew in 2022 due to sales of Ainos COVID-19 test kits, we increased investment in staffing, activities of research and developments and working capital, resulting in a higher net operating outflow. Changes in working capital were primarily driven by increases in trade receivables and inventories due to rapid growth of revenue.

As a result, cash expenditures for operating activities in 2022 and 2021 were $3,021,183 and $1,249,977, respectively.

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Investing activities

Cash used in investing activities were $630,178 and $180,517 for the year of 2022 and 2021, respectively, attributed to the acquisition of R&D equipment and office facilities.

Financing activities

In 2022, we raised $3,831,245 from financing activities including through issuance of convertible notes, notes payable and our uplisting to the Nasdaq Capital Market; in 2021, we raised $3,154,373 which primarily from issuance of convertible notes. Refer to Note 4, 5 and 7 to the Consolidated Financial Statements of this Annual Report on Form 10-K for further discussion.

As a result of the conversion of convertible notes in conjunction with our IPO in 2022, our total liabilities decreased significantly. As of December 31, 2022 and 2021, total liabilities were $2,481,008 and $30,625,054, respectively; and debt ratios were 7% and 75%, respectively.

Sources of Liquidity

In 2023, we are prioritizing the commercialization of our lead VOC POCT candidate, Ainos Flora, and pursue outlicensing of our VELDONA candidates. In terms of expenditure, we intend to increase staffing for general administration, marketing and technology development purpose

At December 31, 2022, we had available cash and cash equivalents of $1,853,362. The Company anticipates that its business revenues and external fundraising will be sufficient to support the Company’s operations over the next twelve months.

There can be no assurance that we will be successful in our efforts to make the Company profitable. If those efforts are not successful, the Company may raise additional capital through the issuance of equity securities, debt financings or other sources, including, as required, additional external financing from our majority shareholder, in order to further implement its business plan. Based on current operating plans, the Company estimates that it will need to raise additional capital to fund its operationsproduct development activities, and planned clinical trials.. However, if such financing is not available when needed and at adequate levels, the Company will need to reevaluate its operating plan.

Uses of Liquidity

Our primary uses of cash are to fund our operations as we continue to grow our business. We may require a significant amount of cash to fund capital expenditures, inventory purchases and timing of accounts receivable as we grow our commercial infrastructure. We may continue to incur operating losses in the near term as our operating expenses will be increased to support the growth of our business. We expect that our selling, general and administrative expenses, and research and development expenses will continue to increase as we seek additional regulatory approvals and further develop test kits, increase our test kit manufacturing volume, expand our marketing efforts and increase our internal sales force to drive increased adoption of our test kits and VELDONA products. We may also have cash requirements related to capital expenditures to support the planned growth of our business, including investments in corporate facilities and equipment.

Going Concern

The Company’s consolidated financial statements have been prepared in accordance with U.S. GAAP, on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. At December 31, 2022, we had available cash and cash equivalents of $1,853,362. We anticipate business revenues and potential financial support from outside sources to fund our operations over the next twelve months.

The Company has generated revenues from sales of COVID-19 antigen test kits since the second quarter of 2021. Net revenues for 2022 and 2021 were $3,519,627 and $594,563, respectively, substantially increased revenues by 492%, which verifies the excellent detection performance of the product . However, due to the uncertainties to the progression Iof COVID-19 infection, there can be no assurance that we can continue grow the COVID-19 test business. Our ability to generate product revenue sufficient to achieve profitability will depend on further successful development and commercialization of one or more of our current or future product candidates and programs. We anticipate our POCT and VELDONA candidates to potentially generate organic cash flows to support our business operation. If we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution, and legal and regulatory compliance. We may also incur additional expenses associated with increased headcount and product development. Furthermore, we expect to incur more general and administrative expenses associated with operating as a public company, including significant legal, accounting, investor relations and other expenses.

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Until we can generate significant revenue from product sales, the Company intends to seek additional funding through equity offerings or borrowing arrangements or licensing agreements or strategic alliances to implement its business plan. The issuances of additional equity securities by the Company may result in dilution in the equity interests of its current stockholders. Obtaining commercial loans may increase the Company’s liabilities and future cash commitments.

We are unable to predict the timing or amount of unexpected expenses or when or if we will be able to increase significant revenue due to the numerous risks and uncertainties associated with product development and related legal regulatory requirements, and when we are eventually able to generate additional product sales or licensing income, those revenue may not be sufficient to become profitable. Furthermore, fundraising of emerging company is extremely challenging due to the high uncertainty of the overall economic environment at present. There can be no assurance that the revenue will be generated in time or 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.

If the company is unable to generate cash inflow from operating activities in the near future, and cannot complete fundraising with sufficient amount and acceptable terms, we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern, but the accompanying financial statements do not include any adjustments relative to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities. See the audit report for related information.

Critical Accounting Policies and Estimate

For a discussion of significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements, see Notes 1, “Organization and Summary of Significant Accounting Policies” of the Notes to the Consolidated Financial Statements included elsewhere in this document.

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America and the Company’s discussion and analysis of its financial condition and operating results requires the Company’s management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates.

We believe that the following critical policies affect our judgments and estimates used in preparation of our consolidated financial statements:

Long-Lived Asset Impairment

We regularly evaluate long-lived assets, including property, equipment, and intangible assets subject to amortization, for impairment in accordance with Accounting Codification Standards (ASC) 360-10-35-17 thru 35-35, “Accounting for the Impairment or Disposal of Long-Lived Assets,” which requires us to review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable and exceeds its fair value. ASC 360-10-35-21 provides guidelines to test long-lived assets for recoverability whenever events or circumstances indicates that its carrying value may not be recoverable. Based on our assessment of the events and circumstances, we concluded there is no impairment of our long-lived assets during the year ended December 31, 2022. If circumstances related to our long-lived assets change, we may record an impairment charge in the future.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements as of December 31, 2022.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable to a “smaller reporting company” as defined in Item 10(f)(1) of SEC Regulation.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The consolidated financial statements and notes of the Company are set forth beginning on page F-1 immediately following the signature page of this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

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ITEM 9A. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Management’s Report on Internal Control Over Financial Reporting

Management of the Company, including the principal executive and financial officers, is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended. Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the 2013 framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO Criteria”). Our internal controls are designed to provide reasonable assurance as to the reliability of our financial reporting and the preparation of the consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States and includes those policies and procedures that:

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management of the Company assessed the effectiveness of our internal control over financial reporting as of December 31, 2022 based on the 2013 framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Based on this assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2022 and that its remediation plan implemented since December 31, 2021 was effective.

Changes in Internal Control Over Financial Reporting

In 2022, we expanded our corporate operations at our Taiwan branch office. We continue to implement an ERP system in our Taiwan branch office to manage and control our operational infrastructure, and enhance the reliability of our financial data.

Additionally, in 2022 we have gradually increased the personnel resources dedicated to and the professional quality of financial report preparation. Similarly, our management team’s oversight of our reporting is supplemented by oversight of our Audit Committee. Going forward we expect to further increase our internal corporate resources focused on improving the design, implementation, and monitoring of our internal control systems.

ITEM 9B. OTHER INFORMATION

On January 5, 2023, the Company received a deficiency letter from the Nasdaq Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, for the last 30 consecutive business days, the closing bid price for the Company’s common stock has been below the minimum $1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). The Nasdaq deficiency letter has no immediate effect on the listing of the Company’s common stock, and its common stock will continue to trade on The Nasdaq Capital Market under the symbol “AIMD” at this time.

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has been given 180 calendar days, or until July 5, 2023, to regain compliance with the Minimum Bid Price Requirement. If at any time before July 5, 2023, the bid price of the Company’s common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, the Staff will provide written confirmation that the Company has achieved compliance.

If the Company does not regain compliance with the Minimum Bid Price Requirement by July 5, 2023, the Company may be afforded a second 180 calendar day period to regain compliance. To qualify, the Company would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, except for the Minimum Bid Price Requirement. In addition, the Company would be required to notify Nasdaq of its intent to cure the deficiency during the second compliance period. If the Company meets these requirements, Nasdaq will inform the Company that it has been granted an additional 180 calendar days. However, if it appears to Staff that the Company will not be able to cure the deficiency, or if the Company is otherwise not eligible, Nasdaq will provide notice that the Company’s securities are subject to delisting.

The Company intends to monitor the closing bid price of its common stock and may, if appropriate, consider available options to regain compliance with the Minimum Bid Price Requirement. However, there can be no assurance that the Company will be able to regain compliance with the Minimum Bid Price Requirement or will otherwise be in compliance with other Nasdaq Listing Rules.

On January 10, 2023 the Company filed a Form 8-K with the SEC disclosing the herein matters.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

Not applicable.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.

As of December 31, 2022, the directors and executive officers of the Company were as follows:

Name Age Position

Chun-Hsien Tsai 53 Chairman, President & Chief Executive Officer

Hui-Lan Wu 62 Chief Financial Officer

Lawrence K. Lin 54 Executive Vice President of Operations

Wen-Han Chang 59 Director

Yao-Chung Chiang 69 Director

Pao-Sheng Wei 65 Director

Ting-Chuan Lee 39 Director

Chun-Jung Tsai 51 Director

Chung-Yi Tsai 46 Director

Chun-Hsien Tsai. Mr. Tsai has served as our Chairman of the Board of Directors, President, Chief Executive Officer, and as a director since April 15, 2021. From April 15, 2021 until August 11, 2021, he also served as Chief Financial Officer. He concurrently serves as the CEO and Chairman of the Board of Directors of Ainos KY, as the Chairman of the Board of Directors of Taiwan Carbon Nano Technology Co., and as the Chief Executive Officer and director of AI Nose Corporation. Mr. Tsai has served as Chairman and CEO of Taiwan Carbon Nano Technology since July 2018, as a director and President of Ainos KY since October 2017, and in each of his other 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. Mr. Chun-Hsien Tsai is the brother of Mr. Chung-Yi Tsai and Mr. Chun-Jung Tsai. He is also the husband of Ms. Ting-Chuan Lee.

Hui-Lan Wu. Ms. Wu has served as our Chief Financial Officer since August 11, 2021. She has nearly 30 years of accounting, audit and management consulting experience. Before joining Ainos, Ms. Wu was a partner at KPMG Taiwan where she provided audit services to private and public companies in the technology, medical and chemical material sectors. She has mentored startup companies at the Center of Industry Accelerator and Patent Strategy at the National Yang Ming Chiao Tung University, and iLab Accelerator in Taiwan. Ms. Wu has devoted herself to promote impact investing in Taiwan. She received her Executive MBA from National Yang Ming Chiao Tung University and is a Certified Public Accountant in Taiwan and China.

Lawrence K. Lin. Mr. Lin has served as Executive Vice President of Operations since August 1, 2021. Prior to his appointment, Mr. Lin served as Executive Advisor to the previous CEO and chairman of the Company and provided executive management consulting for Aquahelio Resources LLC, an unaffiliated company, through i2China Management Group, LLC. Mr. Lin brings more than 30 years of global cross-border strategic management consulting and financial investment experience at leading institutional corporates, such as Andersen Consulting, Salomon Smith Barney, and Credit Suisse First Boston. Mr. Lin has managed investment assets across several geographical locations, including the U.S., China and Taiwan, and advised on many private capital and structured public equity transactions for issuers in real estate, healthcare and consumer sectors. He spent nearly 15 years as an entrepreneur managing an independent Shanghai-based advisory and merchant banking practice where he completed numerous corporate acquisition and investment financing advisory mandates. Mr. Lin has a dual MBA in Finance & International Business from New York University- Stern School of Business.

Wen-Han Chang. Mr. Chang has served as a member of the Company’s Board of Directors since April 2021. He concurrently serves as the chairperson of our Compensation Committee and a member of our Audit Committee since August 2021. He also currently serves as the President of the Health Intelligent Medical Technology Development Society, 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.

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Yao-Chung Chiang. Mr. Chiang has served as a member of the Company’s Board of Directors since April 2021. He concurrently serves as a member of our Audit Committee since August 2021. 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 Cheung Kung University.

Pao-Sheng Wei. Mr. serves as a director of the Company, Chairperson of the Audit Committee of the Board of Directors and in which he serves the Audit Committee Financial Expert, and as a member of the Compensation Committee. In addition to his roles in the Company, he also is an Independent Director of Nuvoton Technology Corporation from June 2022 to present, which is not affiliated with the Company. Prior to joining the Board, Mr. Wei was Chairman of KGI Bank, a subsidiary of China Development Financial Holding Company from September 2014 to June 2022, when he retired as Chairman. He also served as Chairman of the Taiwan offices of AIG Investments, AIG General Insurance, KGI Securities, respectively. In addition to his executive leadership in banking, securities, and insurance, Mr. Wei was a securities regulator as the Division Director of Corporate Finance of the Securities and Futures Bureau of the Financial Supervisory Commission, R.O.C. (Taiwan). Mr. Wei earned his MBA from the George Washington University in Washington D.C., USA in 1991.

Ting-Chuan Lee. Ms. Lee has served as a member of the Company’s Board of Directors since April 2021. 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 National Taiwan University and a bachelor’s of science degree from the National Cheung Kung University. Ms. Lee is the spouse of Mr. Chung-Hsien Tsai.

Chun-Jung Tsai. Mr. Tsai has served as a member of our Board of Directors since April 2021. Mr. Tsai is also a member of the board of directors of Ainos KY. 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. 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. Mr. Chun-Jung Tsai is the brother of Mr. Chun-Hsien Tsai and Mr. Chung-Yi Tsai.

Chung-Yi Tsai. Mr. Tsai has served as a member of our Board of Directors since April 2021 and of the Board of Directors of TCNT since 2012. 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. Mr. Chung-Yi Tsai is the brother of Mr. Chun-Hsien Tsai and Mr. Chun-Jung Tsai.

Officers are elected by the Board of Directors and serve at the discretion of the Board.

Audit Committee

Our Audit Committee consists of Mr. Wen-Han Chang, Mr. Yao-Chung Chiang and Pao-Sheng Wei, each of whom has been determined to be “independent” under applicable independence standards, the Board of Director’s Corporate Governance Policies and the Charter of our Audit Committee. Pao-Sheng Wei currently serves as Chairperson of our Audit Committee. Our Board has determined that each of the members of the Audit Committee is able to read and understand fundamental financial statements, including the Company’s balance sheet, statement of operations and cash flow statement.

In addition, our Board has determined that Pao-Sheng Wei, Mr. Wen-Han Chang and Mr. Yao-Chung Chiang qualify as “audit committee financial experts” as defined by applicable SEC regulations.

The duties and responsibilities of the Audit Committee are set forth in its charter, which may be found on the Corporate Governance page of our Investor Relations website, include the following:

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From time to time, the Company may engage an independent internal control auditor who consults with the Company on its existing internal controls and possible changes or augmentations to those controls.

Compensation Committee

Our Compensation Committee currently consists of Wen-Han Chang and Pao-Sheng Wei. Mr. Chang currently serves as the Chairperson of our Compensation Committee. The duties and responsibilities of the Compensation Committee are set forth in its charter, which may be on the Corporate Governance page of our Investor Relations website, include the following:

Director Independence

Ainos KY controls, and is expected to continue to control, a majority of the voting power of the Common Stock. As a result, Ainos KY is able to elect all of the directors of the Company. Our Board of Directors has determined that Mr. Chang, Mr. Chiang and Mr. Wei are “independent directors” as determined under the standards of the Nasdaq Stock Market. The Board has adopted Nasdaq’s standards as its metric for director independence.

Code of Business Conduct and Ethics

We adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer or persons performing similar functions. A copy of the code is posted on our corporate website at www.ainos.com and was filed in our Form 8-K as Exhibit 14.1 with the SEC on August 26, 2021 and is attached hereto as Exhibit 14.1 and is incorporated herein by this reference. In addition, we intend to post on our website all disclosures that are required by law or listing standards concerning any amendments to, or waivers from, any provision of the code. The information contained in, or accessible through, our website does not constitute a part of this report. We have included our website address in this report solely as an inactive textual reference.

Compliance with Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires directors and officers of the Company and persons who own more than 10% of the Company’s common stock to file with the Securities and Exchange Commission (the “Commission”) initial reports of ownership and reports of changes in ownership of the common stock. Directors, officers and more than 10% shareholders are required by the Exchange Act to furnish the Company with copies of all Section 16(a) forms they file.

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To the Company’s knowledge based solely on a review of the copies of such reports furnished to the Company, the following persons have failed to file, on a timely basis, the identified reports required by the Exchange Act during the most recent fiscal year:

Ainos KY, majority shareholder 0 0

Dr. Stephen T. Chen, Shareholder 0 0

Hung Lan Lee 0 0

Hui-Lan Wu, Chief Financial Officer* 2 0

Lawrence K. Lin, Executive Vice President 0 0

Wen-Han Chang, Director 0 0

Yao-Chung Chiang, Director 0 0

Pao-Sheng Wei, Director 0 0

Ting-Chuan Lee, Director 0 0

Chun-Jung Tsai, Director 0 0

Chung-Yi Tsai, Director 0 0

* Hui-Lan Wu, Chief Financial Officer, was appointed effective August 11, 2021, filed Form 3 on January 6, 2022 and filed Form 4 on January 6, 2022 due to delays in obtaining a Form ID and related EDGAR access code.

ITEM 11. EXECUTIVE COMPENSATION.

As a “smaller reporting company” under SEC rules, our named executive officers during the fiscal year January 1, 2022 through December 31, 2022 (collectively, the “Named Executive Officers”) were as follows:

· Mr. Chun-Hsien Tsai, Chairman, President & Chief Executive Officer;

· Ms. Hui-Lan Wu, Chief Financial Officer; and

· Mr. Lawrence K. Lin, Executive Vice President of Operations.

No other executive officers received total annual compensation during the fiscal year ended December 31, 2022 in excess of $100,000.

Summary Compensation Table

The following table provides information regarding the total compensation awarded to, earned by, and paid to our named executive officers for services rendered to us for the years set forth below. The amounts below for Stock Awards and Option Awards and reflect the grant date fair value of these awards:

Employment Arrangements

Effective April 15, 2021, our Board appointed Mr. Chun-Hsien Tsai to serve as Chief Executive Officer. Mr. Tsai will receive a monthly salary of 250,000 NT$ (equivalent to approximately $8,929), a year-end bonus of two months’ salary, and a variable compensation based on Company profit targets decided by the Company’s Compensation Committee, and payable as 10% to 100% of total annual compensation in the form of cash, securities and/or other discretionary remuneration. An initial equity grant to Mr. Tsai will be determined by the Compensation Committee at a later date. Other benefits, including labor insurance, health insurance and other benefits, will be based on local regulations and the Company’s policies.

Effective August 11, 2021, our Board appointed Ms. Hui-Lan (“Celia”) Wu to serve as Chief Financial Officer. Ms. Wu will receive a monthly salary of 230,000 NT$ (equivalent to approximately $8,214), a year-end bonus of 2 months’ salary, and a variable compensation based on Company profit targets decided by the Company’s Compensation Committee, and payable as 10% to 100% of total annual compensation in the form of cash, securities and/or other discretionary remuneration. An initial equity grant to Ms. Wu will be determined by the Compensation Committee at a later date. Other benefits, including labor insurance, health insurance and other benefits, will be based on local regulations and the Company’s policies.

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Effective August 1, 2021, we entered into an employment contract with Mr. Lawrence K. Lin in connection with his election as Executive Vice President of Operations (the “LL Agreement”). The LL Agreement is effective for three years and may be extended for an additional years on the same terms and conditions upon mutual agreement. Under the LL Agreement, Mr. Lin will receive a monthly salary of $12,000, vesting stock options for 33,333 shares in the Company’s 2018 Officers, Directors, Employees and Consultants Non-Qualified Stock Option Plan, and a bonus of 10,000 shares in the Company’s common stock upon the Company’s successful listing on a Major National Exchange (as defined in the LL Agreement), and normal and customary benefits available to the Company’s employees. Mr. Lin is the sole member of i2China Management Group, LLC (“i2China”), a consultant previously engaged by the Company. Mr. Lin indirectly owns 30,174 warrants issued on November 25, 2020 to i2China; and a non-convertible note issued to i2China on January 1, 2020 with a principal amount of $84,000.

Outstanding Equity Awards at Fiscal Year-End

The table below sets forth information regarding outstanding equity awards held by our named executive officers as of December 31, 2022. The amounts below for RSU and Options Awards reflect the grant date fair value of these awards:

Option Grants in 2022

No option grants were awarded in 2022.

Non-Employee Director Compensation for Last Fiscal Year

The following table provides information regarding the total compensation that was earned by or paid to each of our non-employee directors during the year ended December 31, 2021. Mr. Chun-Hsien Tsai, our Chief Executive Officer, did not receive any additional compensation for his service as the Chairman of the Board. The amounts below for Option Awards and Stock Awards reflect the grant date fair value of these awards:

Pursuant to the 2021-NEDCP, four non-employee directors of the Company are entitled to 22,000 Restricted Stock Units (“RSUs”) upon their appointment to the Board on April 15, 2021.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Beneficial Ownership of Certain Owners and Management

The following table sets forth certain information regarding beneficial ownership of our common stock as of December 31, 2022:

· by each of our Named Executive Officers;

· by each of our directors; and

· by all our current executive officers and directors as a group.

As of December 31, 2022, there were 20,011,602 shares of common stock issued and outstanding.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC and includes voting or investment power with respect to our common stock. Shares of common stock subject to stock options, convertible notes and debentures and warrants that are currently exercisable or convertible, or exercisable or convertible within 60 days of December 31, 2022, are deemed to be outstanding for purposes of computing the percentage ownership of that person but are not treated as outstanding for computing the percentage ownership of any other person. Unless indicated below, the persons and entities named in the table have sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable.

Except as otherwise indicated, the address of each stockholder is c/o Ainos, Inc. at 8880 Rio San Diego Drive, Suite 800, San Diego, CA, 92108.

Security Ownership of Certain Beneficial Owners:

Security Ownership of Management and Directors:

Chun-Jung Tsai - -

Ting-Chuan Lee - -

Executive officers and directors as a group - 9 persons 910,758 4.55 %

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Equity Compensation Plans Summary

1 The Board of Directors has approved all stock, stock option and stock warrant issuances.

2 As of December 31, 2022, there were 11,360 stock options that have been exercised, 36,666 stock options remain either vested or unvested, and an aggregate 285,306 stock options of the 333,333 total stock options authorized from the 2018 Employee Stock Option Plan and 2018 Officers, Directors, Employees, and Consultants Nonqualified Stock Option Plan were forfeited.

3 Effective October 6, 2021, no further stock option issuance from 2018-ESOP and 2018-NQSOP as per provision in newly adopted 2021 Stock Incentive Plan.

4 On September 26, 2019, all qualified options under the 2018-ESOP became non-qualified options as a result of the 2018-ESOP not being ratified by the Company’s shareholders within one year of adoption.

5 An aggregate 285,306 stock options forfeited from the 2018 Employee Stock Option Plan and 2018 Officers, Directors, Employees, and Consultants Nonqualified Stock Option Plan were applied to increase the 2021 Stock Incentive Plan, in accordance with the 2021 Stock Incentive Plan that was adopted by the Board of Directors on October 6, 2021.

A summary of option activity for the years ended December 31, 2021 and December 31, 2022 are presented below.

Granted 2022 - - - - -

Exercised - - - - -

Expired or Forfeited - - - - -

1 Because the 2018 Employee Stock Option Plan was not ratified by the Company’s shareholders, the qualified options became non-qualified on September 26, 2019. These totals remain separated since the two different plans are still in existence.

The Company used the Black-Scholes option pricing model to value the option awards with the following assumptions applied: (1) Volatility – 276%; (2) Term – 5 years was chosen although the full option term is 10 years to be more commensurate with the 5-year vesting portion of the plan; (3) Discount – 2.96%.

As of December 31, 2021, there is $410,022 in unrecognized option expense that will be recognized over the next 2.58 years.

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2018 Employee Stock Option Plan (the “2018-ESOP”)

On September 26, 2018, the Board adopted the Company 2018 Employee Stock Option Plan (the “2018-ESOP”), formerly referred to as the “Amarillo Biosciences, Inc., 2018 Employee Stock Option Plan” in prior filings. Effective as of October 6, 2021, with the adoption by the Board of the 2021 SIP, no further awards may be granted under the 2018-ESOP. As of December 31, 2021, options to acquire 36,666 shares of common stock remained outstanding.

2018 Officers, Directors, Employees, and Consultants Nonqualified Stock Option Plan (the “2018-NQSOP”)

On September 26, 2018, the Board adopted the Company 2018 Employee Stock Option Plan (the “2018-ESOP”), formerly referred to as the “Amarillo Biosciences, Inc., 2018 Employee Stock Option Plan” in prior filings.Effective as of October 6, 2021, with the adoption by the Board of the 2021 SIP, no further awards may be granted under the 2018-NQSOP.

2021 Employee Stock Purchase Plan (the “2021 ESPP”)

On September 28, 2021, the Board and on May 16, 2022 our shareholders, respectively, approved the 2021 Employee Stock Purchase Plan (the “2021 ESPP” or “Plan”). The purpose of the 2021 ESPP is to provide an opportunity for eligible employees of the company and its designated companies (as defined in the Plan) to purchase common stock at a discount through voluntary contributions, thereby attracting, retaining and rewarding such persons and strengthening the mutuality of interest between such persons and the Company’s stockholders. The Company intends for offerings under the Plan to qualify as an “employee stock purchase plan” under Section 423 of the Code; provided, that the Plan administrator may also authorize the grant of rights under offerings that are not intended to comply with the requirements of Section 423, pursuant to any rules, procedures, agreements, appendices, or sub-plans adopted by the administrator. Subject to adjustments as provided in the Plan, the maximum number of shares of common stock that may be issued under the Plan may not exceed 50,000 shares. The Plan will continue in effect until it expires on the tenth anniversary of the effective date of the Plan, unless terminated earlier.

2021 Stock Incentive Plan (the “2021 SIP”)

On September 28, 2021, the Board and on May 16, 2022 our shareholders, respectively, approved the 2021 Stock Incentive Plan (the “2021 SIP” or “Plan”). The purpose of the 2021 SIP is to provide a means through which the Company, and the other members of the Company Group, defined by Section 2(n) of the Plan as the Company and its subsidiaries, and any other affiliate of the Company designated as a member of the Company Group by the Committee, may attract and retain key personnel, and to provide a means whereby directors, officers, employees, consultants and advisors of the Company and the other members of the Company Group can acquire and maintain an equity interest in the Company, or be paid incentive compensation measured by reference to the value of common stock, thereby strengthening their commitment to the interests of the Company Group and aligning their interests with those of the Company’s stockholders. The types of awards that may be granted from the Plan include individually or collectively, any Incentive Stock Option, Nonqualified Stock Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Dividend Equivalent Rights and Other Equity-Based Award granted under the Plan. The expiration date of the Plan, on and after which date no awards may be granted, will be the tenth anniversary of the date of Board approval of the Plan, provided, however, that such expiration will not affect awards then outstanding, and the terms and conditions of the Plan will continue to apply to such Awards. The aggregate number of shares which may be issued pursuant to awards under the Plan is 1,333,333 shares of Common Stock (the “Plan Share Reserve”), subject to adjustments as provided in the Plan. The number of shares underlying any award granted under 2018 ESOP or 2018 NQSOP (the “Prior Plans”) that expires, terminates or is canceled or forfeited for any reason whatsoever under the terms of the Prior Plans, will increase the Plan Share Reserve. Each Award granted under the Plan will reduce the Plan Share Reserve by the number of shares underlying the award. No more than 666,666 shares may be issued in the aggregate pursuant to the exercise of incentive stock options granted under the Plan. The maximum number of shares subject to awards granted during a single fiscal year to any non-employee director, taken together with any cash fees paid to such director during the fiscal year, will not exceed $600,000 in total value (calculating the value of any such awards based on their grant date fair value for financial reporting purposes).

Restricted Stock Units

RSUs entitle the recipient to be paid out an equal number of common stock upon vesting. The fair value of RSUs is based on market price of the underlying stock on the date of grant. A summary of the Company’s RSU activity and related information for the year ended December 31, 2022 is as follows:

Number of RSUs Weighted-Average Grant Date Fair Value Per RSU

Balance as of December 31, 2021 - $ N/A

RSUs canceled - $ N/A

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The grant date fair value of RSUs awards that vested in the year ended December 31, 2022 was $5.9 million, and the fair value as of the respective vesting dates of RSU was $1 million for 2022.

Non-Employee Director Compensation Policy (the “2021 NEDCP”)

On September 28, 2021, the Company’s Board of Directors adopted the Company’s Non-Employee Director Compensation Policy (the “2021 NEDCP” or “Policy”). On appointment to the Board, and without any further action of the Board or Compensation Committee of the Board, at the close of business on the day of such appointment, each Non-Employee Director will automatically receive an award of 22,000 restricted stock units (“RSUs”) over Common Stock (the “Appointment Grant”). The Appointment Grant shall vest in three equal annual installments, with the first installment vesting on the last day of the six-month period commencing on the grant date and each subsequent installment vesting on the last day of the six-month period commencing on the next two subsequent anniversaries of the grant date, subject to the Director’s continuous service with us on each applicable vesting date. The RSUs shall be granted pursuant to the Company’s 2021 Stock Incentive Plan and shall be subject to such other provisions set forth in the agreement evidencing the award of the RSUs, in the form adopted from time to time by the Board or the Compensation Committee of the Board.

In addition to the RSU grants, each member of the Board of who is not an employee of the Company or any of subsidiaries will receive the cash compensation set forth below for service on the Board. The annual cash compensation amounts will be payable in equal quarterly installments, in arrears following the end of each quarter in which the service occurred, pro-rated for any partial months of service. All annual cash fees are vested upon payment.

Annual Board Service Retainer:

All Eligible Directors: $ 12,000

Chairperson of the Board: $ 14,000

Annual Committee Chair Service Retainer:

Chairperson of the Audit Committee: $ 7,000

Chairperson of the Compensation Committee: $ 4,500

Annual Committee Member Service Retainer:

Member of the Audit Committee: $ 4,000

Member of the Compensation Committee: $ 3,000

Share-Based Compensation

The share-based compensation for the year ended December 31, 2022 and 2021 were $258,977 and ($218,216), respectively; and compensation for the year ended December 31, 2022 and 2021 were $6,421,879 and ($10,6833), respectively.

As of December 31, 2022, the total unrecognized compensation cost related to outstanding RSUs, stock options and warrant was $1,197,230, which the Company expects to recognize over a weighted-average period of 1.61 years.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The following is a summary of related party transactions in 2022 and 2021 to which we have been a participant in which the amount involved exceeded or will exceed the lesser of $120,000 or 1% of the average of our total assets as of December 31, 2022 and 2021, and in which any of our directors, executive officers or holders of more than 5% of our capital stock, or any of our directors, executive officers or holders of more than 5% of our outstanding capital stock, or any immediate family member of, or person sharing the household with, any of these individuals or entities, had or will have a direct or indirect material interest, other than compensation arrangements which are described in Part II, Item 5 “Market for the Registrant’s Common Equity and Related Shareholder Matters, and Issuer Purchases of Equity Securities, and Part III, Item 11 “Executive Compensation.”

Name of the related party Relationship Description

Purchase of intangible assets and equipment

Securities Purchase Agreement

On April 15, 2021, we consummated the Securities Purchase Agreement in the amount of $20,000,000 with Ainos KY. Pursuant to the Securities Purchase Agreement, we issued 6,666,666 shares of common stock at $3.00 per share to Ainos KY in exchange for certain patent assignments, increased its authorized common stock to 300,000,000 shares, and changed the Company’s name to “Ainos, Inc.” Immediately after the consummation of the transaction Ainos KY owned approximately 70.30% of the Company’s issued and outstanding shares of common stock. See Note 3 for the related information of the transaction.

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Asset Purchase Agreement

Ainos KY and the Company entered into an Asset Purchase Agreement dated as of November 18, 2021 (the “Asset Purchase Agreement”), as modified by an Amended and Restated Asset Purchase Agreement dated as of January 29, 2022 (the “Amended Asset Purchase Agreement”).

Pursuant to the Asset Purchase Agreement, we acquired certain intellectual property assets and certain manufacturing, testing, and office equipment for a total purchase price of $26,000,000 that included $24,886,023 for intangible intellectual property assets and $1,113,977 for equipments. As consideration we issued to Ainos KY a Convertible Promissory Note in the principal amount of $26,000,000 upon closing on January 30, 2022 (the “APA Convertible Note”).

As part of the Asset Purchase Agreement, we agreed to hire certain employees of Ainos KY who are responsible for research and development of the IP Assets and/or Equipment on terms at least equal to the compensation arrangements undertaken by Ainos KY. From and after the closing, we will have no responsibility, duty or liability with respect to any employee benefit plans of Ainos KY.

We closed the transaction on January 30, 2022 and issued a convertible note to Ainos KY for the payment. See Notes 2, 3, 5 and 11 for the related information of the transaction.

Working Capital Advances

Except for $26,000,000 issued for the payment of “Amended Asset Purchase Agreement, all other convertible and other notes payable were issued either as a result of financing or deferred compensation provided by shareholders.

In the 2022 and 2021, Ainos KY provided working capital advances in the form of convertible note and non-convertible note financing in the aggregate amount of $800,000 and $3,000,000, respectively. As of December 31, 2022 and 2021, the convertible and non-convertible notes payable for Ainos KY totaled $800,000 and $3,000,000, respectively.

ASE Test, Inc. (the “ASE”), an affiliate of the Company, provided a working capital advance in the form of a convertible note financing in the principal amount of $500,000 in 2022.

The convertible notes and related accrued interest of Ainos KY and ASE as of August 8, 2022 in the aggregate total amount of $29,542,959 were converted to common stock upon the uplisting to Nasdaq on August 9, 2022.

In the 2022 and 2021, Dr. Stephen T. Chen provided working capital advances in the form of convertible note and non-convertible note financing in the aggregate amount of $0 and $214,420, respectively; and were redeemed for cash in the aggregate amount of $150,000 and $129,405, respectively. As of December 31, 2022 and, 2021, the convertible and non-convertible notes payable to Dr. Stephen T. Chen were $376,526 and $505,931, respectively.

Refer to Notes 4, 5 and 7 for more information regarding above convertible notes and other notes payable .

Purchase and Sales

Ainos COVID-19 Test Kits Sales and Marketing Agreement with Ainos KY

On June 14, 2021, we entered into an exclusive agreement to serve as the master sales and marketing agent for the Ainos COVID-19 Antigen Rapid Test Kit and COVID-19 Nucleic Acid Test Kit with Ainos KY (the “Sales and Marketing Agreement”) which was developed by Taiwan Carbon Nano Technology Corporation (the “TCNT”), an affiliate of the Company. On June 7, 2021, the Taiwan Food and Drug Administration (the “TFDA”) approved emergency use authorization to TCNT for the Ainos COVID-19 Antigen Rapid Test Kit that will be sold and marketed under the “Ainos” brand in Taiwan. On June 21, 2022, we began marketing the Ainos SARS-CoV-2 Antigen Rapid Self-Test (“COVID-19 Antigen Self-Test Kit”) under a separate EUA issued by the TFDA to TCNT on June 13, 2022. As TCNT secures regulatory authorizations from foreign regulatory agencies, the Company expects to partner with regional distributors to promote sales in other strategic markets.

We incurred costs associated with finished goods, raw materials and manufacturing fees for Covid-19 antigen rapid test kits from TCNT pursuant to the Sales and Marketing Agreement, totaling $1,968,291 and $183,444 for the year ended December 31, 2022 and 2021, respectively. As of December 31, 2022 and 2021, the accounts payable to TCNT were $24,365 and $0, respectively.

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COVID-19 Antigen Rapid Test Kits Sales

We sold Covid-19 antigen rapid test kits to ASE Technology Holding, an affiliate of the Company, totaling $2,855,205 and $209,468 for the year ended December 31, 2022 and 2021, respectively. As of December 31, 2022 and 2021, the accounts receivable to ASE Technology Holding were $177,795 and $0, respectively.

Product Co-development Agreement

Pursuant to the five-year product co-development agreement (the “Product Co-Development Agreement”) with TCNT, effective on August 1, 2021 we incurred development expenses totaling $618,522 and $205,583 for the years ended December 31, 2022 and 2021 included in the Research and Development expense in the Statement of Operations. As of December 31, 2022 and 2021, the accrued payables were $70,113 and $65,156, respectively.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

Audit Fees

On October 4, 2021, we engaged PricewaterhouseCoopers, Taiwan (“PWC”) as independent accountants of Ainos Inc. Taiwan Branch (“Audit Engagement”). The Audit Engagement covers audit services for the years ending December 31, 2021 and 2022 and PWC will issue interfirm audit reports for group reporting purposes to the Company’s group audit firm, PWR CPA, LLP (“PWR”).

The aggregate fees billed by our independent auditors for professional services rendered for the audit of our annual financial statements, and for the review of quarterly financial statements for the fiscal years ended December 31, 2022 and 2021, were:

Audit fees incurred by the Company were pre-approved by the Board of Directors.

Audit Related Fees: None.

Tax Fees

We have engaged Johnson & Sheldon, PLLC as our certified public accountant for corporate tax preparation and filing, with the incurred fees of $9,220 in 2022 and $5,975 in 2021, respectively.

The Company engaged PWC under separate agreements dated October 4, 2021 in respect to compliance with Taiwan corporate income tax requirements for the tax years ending December 31, 2022 and 2021 (“Taiwan Tax Engagement”). The incurred fees for the Taiwan Tax Engagement billed by PWC in 2022 were $6,000.

All Other Fees: None.

We do not use the auditors for financial information system design and implementation. Such services, which include designing or implementing a system that aggregates source data underlying the financial statements or that generates information that is significant to our financial statements, are provided internally or by other service providers. We do not engage the auditors to provide compliance outsourcing services.

The Company engaged PWC under separate agreements dated October 4, 2021 for PWC to render advisory services in connection to the Company’s internal controls over financial reporting as required under section 404 of the Sarbanes-Oxley Act (“SOX Engagement”).

The Board of Directors has considered the nature and amount of fees billed by PWR and PWC and believes that the provision of services for activities unrelated to the audit is compatible with maintaining PWR and PWC’s independence.

Accountant Approval Policy

Before an accountant is engaged by the Company to perform audit or non-audit services, the accountant must be approved by the Company’s Audit Committee or the Executive Committee in the absence of an Audit Committee. We filed the Charter of the Audit Committee of the Board of Directors in our Form 10-Q with the SEC on November 15, 2021 which describes the committee’s pre-approval policies and procedures, attached hereto as Exhibit 99(ii) and is incorporated by this reference.

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

Report of Independent Registered Public Accounting Firm F-2

Consolidated Balance Sheets as of December 31, 2022 and 2021 F-4

Statements of Cash Flows for the years ended December 31, 2022 and 2021 F-8

Notes to Financial Statements for the years ended December 31, 2022 and 2021 F-9

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EXHIBIT INDEX

INCORPORATED BY REFERENCE

4.1(a) Form of Common Stock Certificate X

4.1(b) Form of Underwriter’s Warrant Form of Warrant

23.1 Consent of PWR CPA LLP, independent registered accounting firm X

24(i) Power of Attorney 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 Index are filed or incorporated by reference as part of this filing.

+ Schedules (as similar attachments) have been omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K.

* Indicates a management contract or compensatory plan or arrangement.

ITEM 16. FORM 10-K SUMMARY.

None.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the 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: March 31, 2023 By: /s/ Chun-Hsien Tsai

Chun-Hsien Tsai, Chairman of the Board,

Chief Executive Officer

By: /s/ Hui-Lan Wu

Hui-Lan Wu, Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature Title Date

Chun-Hsien Tsai

/s/ Hui-Lan Wu Chief Financial Officer March 31, 2023

Hui-Lan Wu

/s/ Wen-Han Chang Director March 31, 2023

Wen-Han Chang