What changed in this filing

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Item 1. Business

2025-03-31 compared with 2024-04-15 · 402 added, 415 removed, 188 unchanged (81% of the section changed)

We are dedicated

to developing and delivering innovative, transformative, precision diagnostics and clinical laboratory services.

Our main strategy is

to acquire ownership or license rights in precision diagnostic assets, genetic testing and clinical laboratory companies through joint

ventures, share ownership structures or distribution rights.

We plan to play a leading role in the innovation of diagnostic testing, utilizing

proprietary technology to deliver precise, genetics-driven results.

We have the following

areas of focus:

We are a commercial-stage

company dedicated to developing and delivering precision diagnostic consumer products.

We are currently marketing the Keto Air breathalyzer

device and plan to develop additional diagnostic uses of the breathalyzer technology.

We also provided laboratory services in 2024 and

2023, offering a broad portfolio of diagnostic tests, including drug testing, toxicology, and a broad array of test services, from general

bloodwork to anatomic pathology, and urine toxicology.

We completed an acquisition of a 40% membership interest in Laboratory Services

MSO, LLC (“Lab Services MSO”), which closed in February 2023.

During 2025, to preserve cash, the Company entered into discussions

with Lab Services MSO for the potential redemption of our investment and on February 26, 2025, we and Lab Services MSO entered into a

Redemption and Abandonment Agreement, whereby Lab Services MSO redeemed the 40% equity interest in Lab Services MSO held by us.

beginning in February 2025, we no longer offer laboratory services.

initiated sales of our first diagnostic consumer product, Keto Air, a device that tests ketosis levels.

We had the following areas of focus in 2024 and 2023:

Laboratory Acquisitions

We have embarked on a laboratory

rollup strategy focused on forming joint ventures and acquiring laboratories that are accretive to our commercial strategy.

9, 2023, we entered into and closed an Amended and Restated Membership Interest Purchase Agreement (the “Amended MIPA”), by

and among Avalon Laboratory Services, Inc., our wholly owned subsidiary (“Avalon Laboratory Services”), SCBC Holdings LLC,

Laboratory Services MSO, LLC (“Lab Services MSO”), the Zoe Family Trust, Bryan Cox and Sarah Cox.

The Amended MIPA amended

and restated, in its entirety, that certain Membership Interest Purchase Agreement, dated November 7, 2022 (the “Original MIPA”).

Under the Amended MIPA, we acquired from SCBC Holdings LLC through our

subsidiary Avalon Laboratory Services, forty percent (40%) of all the issued and outstanding equity interests of Lab Services MSO, free

and clear of all liens (the “Laboratory Services MSO Acquisition”).

As part of the consideration for the Laboratory Services

MSO Acquisition, we issued shares of our newly designated Series B Convertible Preferred Stock, stated value $1,000 per share (“the

Series B Preferred Stock”).

Further, Avalon Laboratory Services paid SCBC Holdings LLC $20,666,667 for 40% of all the issued and

outstanding equity interests of Lab Services MSO, which comprised of (i) $9,000,000 in cash, (ii) $11,000,000 pursuant to the issuance

of the Series B Preferred Stock, and (iii) a $666,667 cash payment on February 29, 2024.

Services MSO is focused on delivering high quality services related to toxicology and wellness

testing and provides a broad portfolio of diagnostic tests, including drug testing, toxicology,

and a broad array of test services, from general bloodwork to anatomic pathology, and urine

Specific capabilities include STAT blood testing, qualitative drug screening,

genetic testing, urinary testing, and sexually transmitted disease testing.

MSO tests for the thyroid panel, comprehensive metabolic panel, kidney profile, liver function

tests, and other individual tests.

Through Lab Services MSO, we use fast, accurate, and efficient

equipment to provide practitioners with the tools to quickly determine if a patient is following

their designated treatment plan.

In most instances, we are able to provide a practitioner

with qualitative drug class results the same day a sample is received.

Lab Services MSO provides

a menu of extensive chemistry tests that physicians can use to obtain information to better

treat their patients and maintain their overall wellness.

Lab Services MSO has developed

a premier reputation for customer service and fast turnaround times.

● Lab Services MSO is also focused on commercialization of genetic-based proprietary testing.

area of focus in this area is confirmatory genetic testing during toxicology screening and genetic testing to screen for addictive propensity.

Lab Services MSO plans to focus on diagnostic testing utilizing proprietary technology to deliver precise genetic driven results.

● In the third quarter of 2023, Lab Services MSO acquired Merlin Technologies, Inc., a retail medical equipment

We had embarked on a laboratory rollup strategy focused on forming joint ventures and acquiring laboratories that were accretive to our

commercial strategy.

As a first step, in February 2023, we acquired a 40% membership interest in Lab Services MSO.

Among other things,

Lab Services MSO provides toxicology and wellness testing services, a broad portfolio of diagnostic tests, and a broad array of test services.

During 2025, to preserve cash, the Company entered into discussions with Lab Services MSO for the potential redemption of our investment

and on February 26, 2025, we and Lab Services MSO entered into a Redemption and Abandonment Agreement, whereby Lab Services MSO redeemed

the 40% equity interest in Lab Services MSO held by us.

Accordingly, beginning in February 2025, we no longer offer laboratory services.

Research and Development

We are focused on bringing

forward intellectual property through joint patent filings with the Massachusetts Institute of Technology (MIT).

We completed a sponsored

research and co-development project with MIT, led by Professor Shuguang Zhang as Principal Investigator.

Using the unique QTY code protein

design platform, six water-soluble variant cytokine receptors have been successfully designed and tested to show binding affinity to the

respective cytokines.

We currently are focused on bringing forward the intellectual property associated with this program through joint

patent submissions.

Commercialization

We have begun work on

the commercialization and development of a versatile breathalyzer system.

We were granted exclusive

distributorship rights for the KetoAir from Qi Diagnostics in Hong Kong for the following territories:

We are focused on bringing forward intellectual property through joint

patent filings with the Massachusetts Institute of Technology (“MIT”).

We completed a sponsored research and co-development

project with MIT led by Professor Shuguang Zhang as Principal Investigator.

Using the unique QTY code protein design platform, six water-soluble

variant cytokine receptors have been successfully designed and tested to show binding affinity to the respective cytokines.

are focused on bringing forward the intellectual property associated with this program through joint patent submissions, new research

and development has been suspended.

Product Commercialization

We have begun the commercialization

and development of a versatile breathalyzer system.

We were granted

exclusive distributorship rights for the KetoAir from Qi Diagnostics for the following territories:

North America, South America,

the EU and the UK.

We had a pilot launch and exhibition of the KetoAir in this year’s KetoCon conference in Austin, Texas (April

21-23, 2023).

For our commercialization strategy, we intend to target the diabetes and obesity markets.

We are evaluating options for

commercialization, including identifying distribution partners or distributing the KetoAir ourselves.

The KetoAir breathalyzer

system (the “KetoAir”) is a handheld device that allows the user to detect acetone levels in exhaled breath.

The acetone level

is in concentration units (ppm, part-per-million) such that the user will know his/her real-time ketosis status:

inadequate ketosis (0-3.99

ppm), mild ketosis (4-9.99 ppm), optimal ketosis (10-40 ppm), or alarming level (> 40 ppm).

The breathalyzer is registered with the

United States Food and Drug Administration (“FDA”) as a Class I medical device.

The device is also paired with an “AI

Nutritionist” software program (via Bluetooth connection) which is downloadable from Google Play (for Android mobile phones, approved)

and iPhone (the app is currently being reviewed by Apple iOS AppStore).

It helps users monitor and manage their ketogenic diet and related

We believe the KetoAir can be an essential tool to help diabetic patients adhere to their therapeutic programs and optimize

their ketogenic dietary management.

order to preserve cash and focus on our core laboratory rollup strategy and product commercialization, we have currently suspended all

research and development efforts related to cellular therapy (except for our joint patent filing with MIT as noted above) in order to

redirect our funding efforts to our core business strategies outlined above.

Corporate and Available Information

We are incorporated in Delaware.

Our website is located at http://www.avalon-globocare.com.

On our website, investors can obtain, free of charge, a copy of our

Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, our Code of Conduct and Business Ethics, including

disclosure related to any amendments or waivers thereto, other reports and any amendments thereto filed or furnished pursuant to Section

13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable

after we file such material electronically with, or furnish it to, the Securities and Exchange Commission (the “SEC”).

of the information posted on our website is incorporated by reference into this Annual Report.

The SEC also maintains a website at http://www.sec.gov

that contains reports, proxy and information statements and other information regarding us and other companies that file materials with

the SEC electronically.

product through the KetoAir website and social media.

We believe the KetoAir device has some competitive advantages to other methods

for measuring ketosis.

The KetoAir device is

a handheld device that allows the user to detect acetone levels in exhaled breath.

The acetone level is in concentration units (ppm, part-per-million)

such that the user will know his/her real-time ketosis status:

inadequate ketosis (0-3.99 ppm), mild ketosis (4-9.99 ppm), optimal ketosis

(10-40 ppm), or alarming level (> 40 ppm).

The KetoAir is registered with the United States Food and Drug Administration as a Class

I medical device.

The device is also paired with an “AI Nutritionist” software program (via Bluetooth connection) which is

downloadable from Google Play (for Android mobile phones, approved) and iPhone It helps users monitor and manage their ketogenic diet

and related programs.

We believe the KetoAir can be an essential tool to help diabetic patients adhere to their therapeutic programs and

optimize their ketogenic dietary management.

In order to preserve

cash and focus on our core laboratory rollup strategy and product commercialization, we have currently suspended all research and development

efforts related to cellular therapy in order to redirect our funding efforts to our core business strategies outlined above.

China Operations

Due to the winding down of

the medical related consulting services segment, in November 2022, we decided to cease all operations in the People’s Republic of

China (the “PRC”) with the exception of a small administrative office, in Beijing.

We, through our Nevada Subsidiary Avactis

Biosciences Inc., will continue to own Avactis Nanjing Biosciences Ltd., which only owns a patent and is not considered an operating entity.

In addition, we reconstituted our Board of Directors (the “Board”) in December 2022 at our annual meeting of stockholders

and our directors who were citizens of China did not stand for re-election at our annual meeting.

We do not expect nor do we plan that

we will further operate in the PRC or generate revenue from PRC operations for the foreseeable future.

Due to the winding down of the medical related consulting services

segment, in November 2022, we decided to cease all operations in the People’s Republic of China (the “PRC”) with the

exception of a small administrative office, in Beijing.

We do not expect nor do we plan

that we will further operate in the PRC or generate revenue from PRC operations for the foreseeable future.

The accompanying consolidated financial statements

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Name of Subsidiary

Place and Date of

Incorporation

2 unchanged sentences

Avalon Healthcare System, Inc.

Delaware May 18, 2015

100% held by Company

8 unchanged sentences

100% held by AHS

Ceased operations and is not considered an operating entity

Is not considered an operating entity

Genexosome Technologies Inc.

4 unchanged sentences

Avactis Biosciences Inc.

Nevada July 18, 2018

July 18, 2018

60% held by Company

Patent holding company

is in process of being dissolved

Avactis Nanjing Biosciences Ltd.

(“Avactis Nanjing”)

PRC May 8, 2020

100% held by Avactis

Owns a patent and is not considered an operating entity

is in process of being dissolved

Avalon Laboratory Services, Inc.

(“Avalon Lab”)

Delaware October 14, 2022

October 14, 2022

100% held by Company

Laboratory holding company with a 40% membership interest in Lab Services MSO

Laboratory holding company with a 40% membership interest in Lab Services MSO as of December 31, 2024 (1)

Q&A Distribution LLC

(“Q&A Distribution”)

100% held by Company

Distributes KetoAir device

(1) On February 26, 2025, we and Lab Services MSO entered into a Redemption and Abandonment Agreement, whereby

Lab Services MSO redeemed the 40% equity interest in Lab Services MSO held by us.

Sales and Marketing

Laboratory Services

We seek to develop new business

through relationships driven by our senior management, which have extensive contacts throughout the healthcare system.

Our senior management

will be seeking opportunities for joint ventures, strategic relationships and acquisitions in consulting, biomedical innovations, laboratory,

and medical device companies.

In addition, through our membership interest in Lab Services MSO, we plan to generate revenue from toxicology

and wellness laboratory testing.

We also intend to seek opportunities to expand the operations of Lab Services MSO and our wholly owned

subsidiary, Avalon Laboratory Services, through the acquisition of additional lab companies and through the opening of new lab locations.

Breathalyzer System (KetoAir)

We are in the process of launching sales of the KetoAir in the US.

We have retained a marketing expert to assist us to bring this product to market through social media, influencer promotion and our website.

We will also be launching this product at the 2024 “KetoCon” convention taking place May 31, 2024 in Austin Texas, where we

plan to begin taking orders for this product.

We launched sales of the KetoAir in the U.S.

We have retained a marketing expert to assist us to bring this product to market through social media, influencer promotion and

We launched this product at the 2024 “KetoCon” convention which took place May 31, 2024 in Austin Texas.

Laboratory Services

Through our membership interest

in Lab Services MSO, we are focused on delivering high quality services related to toxicology and wellness testing.

We use fast, accurate,

and efficient equipment to provide practitioners with the tools to quickly determine if a patient is following their designated treatment

In most instances, we are able to provide a practitioner with qualitative drug class results the same day the sample is received.

We provide an extensive chemistry test menu that gives physicians the information to better treat their patients and maintain their overall

The panels that we test for are thyroid panel, comprehensive metabolic panel, kidney profile, liver function tests, and other

During 2024 and 2023 and until February 2025,

through our membership interest in Lab Services MSO, we were focused on delivering high quality services related to toxicology and wellness

The panels that we tested for were thyroid panel, comprehensive metabolic panel, kidney profile, liver function tests, and other

individual tests.

We are currently offering

our laboratory services in California, Texas and Arizona.

We offered our laboratory services in California,

Texas and Arizona.

During 2025, to preserve cash, the Company entered into discussions with Lab Services MSO for the potential redemption

of our investment and on February 26, 2025, we and Lab Services MSO entered into a Redemption and Abandonment Agreement, whereby Lab Services

MSO redeemed the 40% equity interest in Lab Services MSO held by us.

Accordingly, beginning in February 2025, we no longer offer laboratory

Breathalyzer System (KetoAir)

Our current area of focus

for the launch of the KetoAir is within the United States (“US”).

We are focused on the population within the US that is using

the Keto Diet approach to weight loss and diabetic management.

Our current area of focus for the launch of the

KetoAir is within the U.S.

We are focused on the population within the U.S.

that is using the Keto Diet approach to weight loss and diabetic

Avalon RT 9 Properties, LLC

In May 2017, we acquired commercial

property located in Freehold, New Jersey.

This property serves as our corporate headquarters and contains several commercial tenants that

generate revenue through rental income.

We own commercial property located in Freehold,

This property serves as our corporate headquarters and contains several commercial tenants that generate revenue through rental

Strategic Development

Through our wholly owned subsidiary

Avalon Laboratory Services and through our membership interest in Lab Services MSO, we plan to execute on a rollup acquisition strategy

of small to medium size laboratories accretive to our strategy and complimentary to our membership interest in Lab Services MSO.

intend to pursue the acquisition and development of healthcare related technologies for cell related diagnostics and therapeutics through

acquisition, licensing or joint ventures with major universities and biotech companies seeking laboratory or medical device acquisitions.

In late 2024, we launched an initiative seeking

transformational merger candidates.

The Company determined that it had limited access to cash and it was in the best interest of shareholders

to seek a strategic merger.

Intellectual Property

Our goal is to obtain, maintain

and enforce patent rights for our products, formulations, processes, methods of use and other proprietary technologies, preserve our trade

Our goal is to obtain, maintain and enforce

patent rights for our products, formulations, processes, methods of use and other proprietary technologies, preserve our trade

secrets, and operate without infringing on the proprietary rights of other parties, both in the United States and abroad.

Our policy is

to actively seek to obtain, where appropriate, the broadest intellectual property protection possible for our current product candidates

and any future product candidates, proprietary information and proprietary technology through a combination of contractual arrangements

and patents, both in the United States and abroad.

Even patent protection, however, may not always afford us with complete protection

against competitors who seek to circumvent our patents.

If we fail to adequately protect or enforce our intellectual property rights or

secure rights to patents of others, the value of our intellectual property rights would diminish.

To this end, we require all of our employees,

consultants, advisors and other contractors to enter into confidentiality agreements that prohibit the disclosure and use of confidential

information and, where applicable, require disclosure and assignment to us of the ideas, developments, discoveries and inventions relevant

to our technologies and important to our business.

Laboratory Services

While there has been consolidation

in the diagnostic information services industry in recent years, the laboratory testing industry is fragmented and highly competitive.

We primarily compete with three types of clinical testing providers:

commercial clinical laboratories IDN-affiliated laboratories and

physician-office laboratories.

Our largest commercial clinical laboratory competitors are Quest Diagnostic Laboratories and Laboratory

Corporation of America.

In addition, we compete with many smaller regional and local commercial clinical laboratories, specialized advanced

laboratories and providers of consumer-initiated testing.

There also has been a trend among physician practices to establish their own

histology laboratory capabilities and/or bring pathologists into their practices, thereby reducing referrals from these practices and

increasing the competitive position of these practices.

In addition, we believe that

consolidation in the diagnostic information services industry will continue.

A significant portion of clinical testing is likely to continue

to be performed by independent delivery networks (including hospitals and hospital health systems) (“IDNs”), which generally

have affiliations with community clinicians and may have more, or more convenient, locations in a particular market.

As a result, we compete

against these affiliated laboratories primarily on the basis of service capability, quality and pricing.

In addition, market activity

may increase the competitive environment.

For example, IDN ownership of physician practices may enhance the ties of the clinicians to

IDN-affiliated laboratories, enhancing the competitive position of IDN-affiliated laboratories.

The diagnostic information

services industry is faced with changing technology, new product introductions and new service offerings.

Competitors may compete using

advanced technology, including technology that enables more convenient or cost-effective testing.

Digital pathology, still in an emerging

state, is an example of this.

Competitors also may compete on the basis of new service offerings.

Competitors also may offer testing to

be performed outside of a commercial clinical laboratory, such as (1) point-of-care testing that can be performed by physicians in their

(2) testing that can be performed by IDNs in their own laboratories;

and (3) home testing that can be carried out without requiring

the services of outside providers.

The development and commercialization

of new drug products is highly competitive.

We expect that we will continue to face significant competition from major pharmaceutical

companies, specialty pharmaceutical companies and biotechnology companies worldwide with respect to our product candidates that we may

seek to develop or commercialize in the future.

Specifically, due to the large unmet medical need, global demographics and relatively

attractive reimbursement dynamics, the markets in which we are seeking to develop products are fiercely competitive and there are a number

of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of product

candidates similar to ours.

Our competitors may succeed in developing, acquiring or licensing technologies and drug products that are

more effective, have fewer or more tolerable side effects or are less costly than any product candidates that we are currently developing

or that we may develop, which could render our product candidates obsolete and noncompetitive.

Our commercial opportunity

could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less

severe side effects, are more convenient or are less expensive than any products that we may develop.

Our competitors also may obtain

FDA or other marketing approval for their products before we are able to obtain approval for ours, which could result in our competitors

establishing a strong market position before we are able to enter the market.

Many of our existing and potential

future competitors have significantly greater financial resources and expertise in lab services and operations, research and development,

manufacturing, preclinical testing, conducting clinical studies, obtaining marketing approvals and marketing approved products than we

Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among

is to actively seek to obtain, where appropriate, the broadest intellectual property protection possible for our current product

candidates and any future product candidates, proprietary information and proprietary technology through a combination of

contractual arrangements and patents, both in the United States and abroad.

Even patent protection, however, may not always afford

us with complete protection against competitors who seek to circumvent our patents.

If we fail to adequately protect or enforce our

intellectual property rights or secure rights to patents of others, the value of our intellectual property rights would diminish.

this end, we require all of our employees, consultants, advisors and other contractors to enter into confidentiality agreements that

prohibit the disclosure and use of confidential information and, where applicable, require disclosure and assignment to us of the

ideas, developments, discoveries and inventions relevant to our technologies and important to our business.

Many of our existing and potential future competitors

have significantly greater financial resources and expertise in operations, research and development, manufacturing, obtaining marketing

approvals and marketing approved products than we do.

Mergers and acquisitions may result in even more resources being concentrated among

a smaller number of our competitors.

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These competitors also compete with us in recruiting and retaining qualified

scientific and management personnel and establishing clinical study sites and patient registration for clinical studies, as well as in

acquiring technologies complementary to, or necessary for, our programs.

We expect that our ability

to compete effectively will depend upon our ability to:

successfully operate and expand our lab services and locations;

successfully and rapidly complete adequate and well-controlled clinical studies that demonstrate statistically significant safety and efficacy and to obtain all requisite regulatory approvals in a cost-effective manner;

maintain a proprietary position for our manufacturing processes and other technology;

produce our products in accordance with FDA and international regulatory guidelines;

scientific and management personnel, as well as in acquiring technologies complementary to, or necessary for, our programs.

We expect that our ability to compete effectively

will depend upon our ability to:

● maintain a proprietary position

for our manufacturing processes and other technology;

● produce our products in accordance

with FDA and international regulatory guidelines;

● attract and retain key personnel;

build or access an adequate sales and marketing infrastructure for any approved products.

● build or access an adequate

sales and marketing infrastructure for any approved products.

Failure to do one or more of these activities

1 unchanged sentence

Avalon RT 9 Properties, LLC

Our executive commercial building

in Freehold, New Jersey is located on a major highway and is one of the largest buildings in the surrounding areas.

We own commercial property located in Freehold,

This property serves as our corporate headquarters and contains several commercial tenants that generate revenue through rental

The property is located on a major highway and is one of the largest buildings in the surrounding areas.

It is centrally located

3 unchanged sentences

offices are limited and as such, we expect to continue to maintain high occupancy in the near term.

As of March 29, 2024, we employed

five employees, four of which are full time employees.

None of our employees are represented by a collective bargaining arrangement.

As of March 31, 2025, we employed five employees,

four of which are full time employees.

None of our employees is represented by a collective bargaining arrangement.

Government Regulation

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and (2) Hong Kong, a Special Administrative Region of the PRC, because of a position taken by one or more authorities in Hong Kong.

Avalon’s auditor is Marcum LLP (“Marcum”),

based in New York, New York.

Marcum is registered with the PCAOB and is subject to laws in the United States pursuant to which the PCAOB

conducts regular inspections to assess their compliance with the applicable professional standards.

Since Marcum is located in the United

States, the PCAOB has been able to conduct inspections of Marcum.

In addition, Marcum is not among the PCAOB registered public accounting

firms registered in mainland China or Hong Kong that are subject to PCAOB’s determination on December 16, 2021.

Drug Approval Process

The research, development, testing, manufacture,

labeling, promotion, advertising, distribution and marketing, among other things, of our product candidates are extensively regulated

by governmental authorities in the United States and other countries.

In the United States, the FDA regulates drugs under the Federal

Food, Drug, and Cosmetic Act, or the FDCA, and its implementing regulations.

Failure to comply with the applicable U.S.

requirements may

subject us to administrative or judicial sanctions, such as the FDA’s refusal to approve a pending new drug application, or NDA,

or a pending biologics license application, or BLA, warning letters, product recalls, product seizures, total or partial suspension of

production or distribution, injunctions and/or criminal prosecution.

Pharmaceutical products such as ours may not be

commercially marketed without prior approval from the FDA and comparable regulatory agencies in other countries.

In the United States,

the process to receiving such approval is long, expensive and risky, and includes the following steps:

pre-clinical laboratory tests, animal studies, and formulation studies;

submission to the FDA of an IND for human clinical testing, which must become effective before human clinical trials may begin;

adequate and well-controlled human clinical trials to establish the safety and efficacy of the drug for each indication;

submission to the FDA of an NDA or BLA;

satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current good manufacturing practices, or cGMPs;

a potential FDA audit of the preclinical and clinical trial sites that generated the data in support of the NDA or BLA;

the ability to obtain clearance or approval of companion diagnostic tests, if required, on a timely basis, or at all;

FDA review and approval of the NDA or BLA.

Regulation by U.S.

and foreign governmental authorities

is a significant factor affecting our ability to commercialize any of our products, as well as the timing of such commercialization and

our ongoing research and development activities.

The commercialization of drug products requires regulatory approval by governmental agencies

prior to commercialization.

Various laws and regulations govern or influence the research and development, non-clinical and clinical testing,

manufacturing, processing, packing, validation, safety, labeling, storage, record keeping, registration, listing, distribution, advertising,

sale, marketing and post-marketing commitments of our products.

The lengthy process of seeking these approvals, and the subsequent compliance

with applicable laws and regulations, require expending substantial resources.

The results of pre-clinical testing, which include

laboratory evaluation of product chemistry and formulation, animal studies to assess the potential safety and efficacy of the product

and its formulations, details concerning the drug manufacturing process and its controls, and a proposed clinical trial protocol and other

information must be submitted to the FDA as part of an IND that must be reviewed and become effective before clinical testing can begin.

The study protocol and informed consent information for patients in clinical trials must also be submitted to an independent Institutional

Review Board, or IRB, for approval covering each institution at which the clinical trial will be conducted.

Once a sponsor submits an

IND, the sponsor must wait 30 calendar days before initiating any clinical trials.

If the FDA has comments or questions within this 30-day

period, the issue(s) must be resolved to the satisfaction of the FDA before clinical trials can begin.

In addition, the FDA, an IRB or

the Company may impose a clinical hold on ongoing clinical trials due to safety concerns.

If the FDA imposes a clinical hold, clinical

trials can only proceed under terms authorized by the FDA.

Our pre-clinical and clinical studies must conform to the FDA’s Good

Laboratory Practice, or GLP, and Good Clinical Practice, or GCP, requirements, respectively, which are designed to ensure the quality

and integrity of submitted data and protect the rights and well-being of study patients.

Information for certain clinical trials also

must be publicly disclosed within certain time limits on the clinical trial registry and results databank maintained by the NIH.

Typically, clinical testing involves a three-phase

however, the phases may overlap or be combined:

Phase I clinical trials typically are conducted in a small number of volunteers or patients to assess the early tolerability and safety profile, and the pattern of drug absorption, distribution and metabolism;

Phase II clinical trials typically are conducted in a limited patient population with a specific disease in order to assess appropriate dosages and dose regimens, expand evidence of the safety profile and evaluate preliminary efficacy;

Phase III clinical trials typically are larger scale, multicenter, well-controlled trials conducted on patients with a specific disease to generate enough data to statistically evaluate the efficacy and safety of the product, to establish the overall benefit-risk relationship of the drug and to provide adequate information for the registration of the drug.

A therapeutic product candidate being studied

in clinical trials may be made available for treatment of individual patients, in certain circumstances.

Pursuant to the 21st Century

Cures Act (Cures Act), which was signed into law in December 2016.

The manufacturer of an investigational product for a serious disease

or condition is required to make available, such as by posting on its website, its policy on evaluating and responding to requests for

individual patient access to such investigational product.

The results of the pre-clinical and clinical testing,

chemistry, manufacturing and control information, proposed labeling and other information are then submitted to the FDA in the form of

either an NDA or BLA for review and potential approval to begin commercial sales.

In responding to an NDA or BLA, the FDA may grant marketing

approval, request additional information in a Complete Response Letter, or CRL, or deny the approval if it determines that the NDA or

BLA does not provide an adequate basis for approval.

A CRL generally contains a statement of specific conditions that must be met in order

to secure final approval of an NDA or BLA and may require additional testing.

If and when those conditions have been met to the FDA’s

satisfaction, the FDA will typically issue an approval letter, which authorizes commercial marketing of the product with specific prescribing

information for specific indications, and sometimes with specified post-marketing commitments and/or distribution and use restrictions

imposed under a Risk Evaluation and Mitigation Strategy program.

Any approval required from the FDA might not be obtained on a timely

basis, if at all.

Among the conditions for an NDA or BLA approval

is the requirement that the manufacturing operations conform on an ongoing basis with cGMPs.

In complying with cGMPs, we must expend time,

money and effort in the areas of training, production and quality control within our own organization and at our contract manufacturing

A successful inspection of the manufacturing facility by the FDA is usually a prerequisite for final approval of a pharmaceutical

Following approval of the NDA or BLA, we and our manufacturers will remain subject to periodic inspections by the FDA to assess

compliance with cGMPs requirements and the conditions of approval.

We will also face similar inspections coordinated by foreign regulatory

Disclosure of Clinical Trial Information

Sponsors of certain clinical trials of FDA-regulated

products are required to register and disclose certain clinical trial information.

Information related to the product, patient population,

phase of investigation, trial sites and investigators, and other aspects of the clinical trial are then made public as part of the registration.

Sponsors are also obligated to disclose the results of their clinical trials after completion.

Disclosure of the results of these trials

can be delayed in certain circumstances for up to two years after the date of completion of the trial.

Competitors may use this publicly

available information to gain knowledge regarding the progress of development programs.

Expedited Development and Review Programs

The FDA has a Fast Track program that is intended

to expedite or facilitate the process for reviewing new drugs and biological products that meet certain criteria.

Specifically, new drugs

and biological products are eligible for Fast Track designation if they are intended to treat a serious or life-threatening condition

and demonstrate the potential to address unmet medical needs for the condition.

Fast Track designation applies to the combination of the

product and the specific indication for which it is being studied.

The sponsor of a new drug or biologic may request the FDA to designate

the drug or biologic as a Fast Track product at any time during the clinical development of the product.

Unique to a Fast Track product,

the FDA may consider for review sections of the marketing application on a rolling basis before the complete application is submitted,

if the sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application

and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the

Any product submitted to the FDA for marketing,

including under a Fast Track program, may be eligible for other types of FDA programs intended to expedite development and review, such

as priority review and accelerated approval.

Under the Breakthrough Therapy program, products intended to treat a serious or life-threatening

disease or condition may be eligible for the benefits of the Fast Track program when preliminary clinical evidence demonstrates that such

product may have substantial improvement on one or more clinically significant endpoints over existing therapies.

Additionally, FDA will

seek to ensure the sponsor of a breakthrough therapy product receives timely advice and interactive communications to help the sponsor

design and conduct a development program as efficiently as possible.

Any product is eligible for priority review if it has the potential

to provide safe and effective therapy where no satisfactory alternative therapy exists or a significant improvement in the treatment,

diagnosis or prevention of a disease compared to marketed products.

The FDA will attempt to direct additional resources to the evaluation

of an application for a new drug or biological product designated for priority review in an effort to facilitate the review.

Additionally,

a product may be eligible for accelerated approval.

Drug or biological products studied for their safety and effectiveness in treating

serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated

approval, which means that they may be approved on the basis of adequate and well-controlled clinical studies establishing that the product

has an effect on a surrogate endpoint that is reasonably likely to predict a clinical benefit, or on the basis of an effect on a clinical

endpoint other than survival or irreversible morbidity.

As a condition of approval, the FDA may require that a sponsor of a drug or biological

product receiving accelerated approval perform adequate and well-controlled post-marketing clinical studies.

In addition, the FDA currently

requires as a condition for accelerated approval the pre-approval of promotional materials, which could adversely impact the timing of

the commercial launch of the product.

Fast Track designation, Breakthrough Therapy designation, priority review and accelerated approval

do not change the standards for approval but may expedite the development or approval process.

Regenerative Medicine Advanced Therapies

(RMAT) Designation

The FDA has established a Regenerative Medicine

Advanced Therapy, or RMAT, designation as part of its implementation of the 21st Century Cures Act, or Cures Act.

The RMAT designation

program is intended to fulfill the Cures Act requirement that the FDA facilitate an efficient development program for, and expedite review

of, any drug that meets the following criteria:

(1) it qualifies as a RMAT, which is defined as a cell therapy, therapeutic tissue engineering

product, human cell and tissue product, or any combination product using such therapies or products, with limited exceptions;

intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition;

and (3) preliminary clinical evidence

indicates that the drug has the potential to address unmet medical needs for such a disease or condition.

Like breakthrough therapy designation,

RMAT designation provides potential benefits that include more frequent meetings with FDA to discuss the development plan for the product

candidate, and eligibility for rolling review and priority review.

Products granted RMAT designation may also be eligible for accelerated

approval on the basis of a surrogate or intermediate endpoint reasonably likely to predict long-term clinical benefit, or reliance upon

data obtained from a meaningful number of sites, including through expansion to additional sites.

RMAT-designated products that receive

accelerated approval may, as appropriate, fulfill their post-approval requirements through the submission of clinical evidence, clinical

studies, patient registries, or other sources of real world evidence (such as electronic health records);

through the collection of larger

confirmatory data sets;

or via post-approval monitoring of all patients treated with such therapy prior to approval of the therapy.

Post-Approval Requirements

Oftentimes, even after a drug has been approved

by the FDA for sale, the FDA may require that certain post-approval requirements be satisfied, including the conduct of additional clinical

If such post-approval requirements are not satisfied, the FDA may withdraw its approval of the drug.

In addition, holders of

an approved NDA or BLA are required to report certain adverse reactions to the FDA, comply with certain requirements concerning advertising

and promotional labeling for their products, and continue to have quality control and manufacturing procedures conform to cGMPs after

The FDA periodically inspects the sponsor’s records related to safety reporting and/or manufacturing facilities;

latter effort includes assessment of compliance with cGMPs.

Accordingly, manufacturers must continue to expend time, money, and effort

in the area of production and quality control to maintain cGMPs compliance.

Avalon’s auditor is M&K CPAS PLLC (M&K”), based

M&K is registered with the PCAOB and is subject to laws in the United States pursuant to which the PCAOB conducts regular

inspections to assess their compliance with the applicable professional standards.

Since M&K is located in the United States, the

PCAOB has been able to conduct inspections of M&K.

In addition, M&K is not among the PCAOB registered public accounting firms

registered in mainland China or Hong Kong that are subject to PCAOB’s determination on December 16, 2021.

Other Healthcare Fraud and Abuse Laws

106 unchanged sentences

if any, may be.

Recent Developments

Mortgage and Security

On March 27, 2024, the Company entered into a Mortgage and Security

Agreement (the “Mast Hill Mortgage”) with Mast Hill Fund L.P.

(“Mast Hill”) to secure the payment performance

and obligation under certain follow-up financing agreements described below.

In March 2024, the Company entered into follow-up financing agreements

with Mast Hill, which included the issuance of 13% senior secured promissory notes totaling $700,000 convertible into common stock, as

well as the issuance of up to 7,000 shares of common stock as a commitment fee, and warrants for the purchase of up to 8,750 shares of

common stock at an initial price per share of $30.00, and common share purchase warrants for the purchase of up to 8,077 shares of common

stock at an initial price per share of $19.50, with a total purchase price of $665,000 (the “2024 Financing Agreements”).

These agreements were made under the same terms and conditions of the prior rounds of convertible note financing in October 2023 and May

2023 (the “2023 Financing Agreements”).

On March 27, 2024, the Company also entered into a Mortgage and Security

Agreement (the “Firstfire Mortgage”) with Firstfire Global Opportunities Fund, LLC (“Firstfire”) to secure the

payment performance and obligation under the 2023 Financing Agreements.

Convertible Note

Financing and Mortgage and Security Agreement

On June 5, 2024, the Company entered into securities purchase agreements

(the “ Securities Purchase Agreements ”) with Mast Hill for the issuance of 13% senior secured promissory notes in the

aggregate principal amount of $2,845,000 (collectively, the “Notes”) convertible into shares of the Company’s common

stock, as well as the issuance of up to 26,800 shares of common stock as a commitment fee and warrants for the purchase of up to 146,667

shares of common stock (the “Convertible Note Financing”).

The Company and its subsidiaries entered into those certain security

agreements (the “Security Agreements”), creating a security interest in certain property of the Company and its subsidiaries

to secure the prompt payment, performance and discharge in full of all of the Company’s obligations under the Notes.

The transaction

closed on June 5, 2024.

Mast Hill acquired the Notes with principal amount of $2,845,000

and paid the purchase price of $2,702,750 after an original issue discount of $142,250, with a conversion price of $11.25, subject to

adjustment as provided in Notes.

Also on June 5, 2024, the Company issued (i) a warrant to purchase 66,667 shares of common stock with

an exercise price of $9.75 exercisable until June 5, 2029 (the “First Warrant”), (ii) a warrant to purchase 80,000 shares

of common stock with an exercise price of $7.50 exercisable until June 5, 2029, which warrant shall be cancelled and extinguished against

payment of the Notes (the “Second Warrant” and collectively with the First Warrant, the “Warrants”), and (iii)

26,800 shares of common stock to Mast Hill as additional consideration for the purchase of the Note ( the “Commitment Shares”),

which were earned in full as of June 5, 2024.

On the closing date, the Company delivered such duly executed Notes, warrants and common

stock to Mast Hill against delivery of such purchase price.

The Company used the

proceeds from the Convertible Note Financing to pay off all previously issued convertible notes to Mast Hill and Firstfire.

On June 5, 2024, the Company also entered into a Mortgage and Security

Agreement (the “Mortgage”) with Mast Hill to secure the payment, performance, and obligations under the above-mentioned Convertible

Note Financing.

As of June 5, 2024, the Company was indebted to Mast Hill in the combined principal sum of $2,845,000.

15, 2024, the Company and Mast Hill entered into that certain consent, acknowledgement, and waiver agreement, pursuant to which Mast Hill

waived all amortization payments required to be made under the Note, the Company paid a waiver fee of $150,000 to Mast Hill, and the Company

issued to Mast Hill a common stock purchase warrant for the purchase of up to 150,000 shares of the Company’s common stock.

At-the-Market

In June 2023, the Company entered

into a sales agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (“Roth”) under which the Company

could offer and sell from time to time shares of its common stock having an aggregate offering price of up to $3.5 million.

July 1, 2023 to August 16, 2024, we sold an aggregate of 312,285 shares of our common stock at an average price of $11.19 per share to

investors pursuant to the Sales Agreement, and received net cash proceeds of $3,388,251, net of cash paid for Roth’s commissions

and other fees of $104,992.

Reverse Stock Split & Decrease in Authorized

On October 23, 2024,

the Company filed a certificate of amendment (the “Amendment”) to its Certificate of Incorporation with the Secretary of State

of the State of Delaware to effectuate a reverse stock split of the Company’s common stock at a ratio of 1-for-15 (the “Reverse

Stock Split”), as well as the decrease in the number of shares of common stock authorized for issuance from 490,000,000 to 100,000,000.

The Amendment became effective at 5:00 p.m.

ET on October 25, 2024.

Series C Convertible Preferred Stock

On December 13, 2024,

the Company filed a certificate of designations of preferences, rights, and limitations of Series C Convertible Preferred Stock (the “Series

C Certificate of Designations”) with the State of Delaware which provides for the designation of 10,000 shares of Series C preferred

stock of the Company, par value $0.0001 per share, upon the terms and conditions as set forth in the Series C Certificate of Designations.

Each share of Series C Preferred Stock has a stated value of $1,000 (the “Stated Value”).

The Series C Preferred

Stock shall rank (i) senior to the Company’s common stock (the “Common Stock”) and any other class or series of capital

stock of the Company created hereafter, the terms of which specifically provide that such class or series shall rank junior to the Series

C Preferred Stock, (ii) pari passu with any class or series of capital stock of the Company created hereafter specifically ranking, by

its terms, on par with the Series C Preferred Stock, (iii) pari passu with Series B Convertible Preferred Stock of the Company (the “Series

B Preferred Stock”) with respect to its rights, preferences and restrictions, and (iv) subordinate to the Series A Convertible Preferred

Stock of the Company (the “Series A Preferred Stock”).

Holders of the Series

C Preferred Stock shall be entitled to receive, and the Company shall pay, dividends on shares of Series C Preferred Stock equal (on an

as-if-converted-to-common-stock basis, disregarding for such purpose any conversion limitations hereunder) to and in the same form as

dividends actually paid on shares of the common stock when, as and if such dividends are paid on shares of the common stock.

Holders of the Series

C Preferred Stock have no voting power except as otherwise required by the Delaware General Corporation Law.

Upon any liquidation,

dissolution or winding-up of the Company, whether voluntary or involuntary (a “Liquidation”), the holders of the Series C

Preferred Stock shall be entitled to receive out of the assets available for distribution to stockholders, (i) after and subject to the

payment in full of all amounts required to be distributed to the holders of another class or series of stock of the Company ranking on

liquidation prior and in preference to the Series C Preferred Stock, including the Series A Preferred Stock, (ii) ratably with any class

or series of stock ranking on liquidation on parity with the Series C Preferred Stock and (iii) in preference and priority to the holders

of the shares of common stock, an amount equal to 100% of the Stated Value of the Series C Preferred Stock, in proportion to the full

and preferential amount that all shares of the Series C Preferred Stock are entitled to receive.

Each share of Series

C Preferred Stock shall be convertible into common stock (the “Conversion Shares”) at a conversion per share equal to $2.41,

at the option of the holder, at any time after the later of (i) the date of the shareholder approval of the issuance of the Conversion

Shares pursuant to the rules of the Nasdaq Stock Market and (ii) the one year anniversary of the date of the first issuance of any shares

of the Series C Preferred Stock.

In addition, the holder shall not have the right to convert any portion of the Series C Preferred Stock

if, after giving effect to the conversion, such holder (together with its affiliates) would beneficially own in excess of 19.99% of the

number of shares of the common stock outstanding immediately after giving effect to the issuance of the respective Conversion Shares.

York Sun Securities

Purchase Agreement

On December 19, 2024,

the Company entered into that certain securities purchase agreement (the “Securities Purchase Agreement”), with an accredited

investor, York Sun Investment Holding Limited (the “Investor”), pursuant to which the Company agreed to issue and sell to

the Investor, upon the terms and conditions set forth in the Securities Purchase Agreement, up to 7,000 shares of Series C Convertible

Preferred Stock for up to an aggregate of $7,000,000 (the “Purchase Price”), which is equal to $1,000 per share.

closing occurred on December 24, 2024, with respect to the Investor’s purchase of 3,500 shares of Series C Convertible Preferred

Stock in exchange for $3,500,000.

The Investor shall also

have a right of first refusal during the period beginning on the date of the Securities Purchase Agreement and continuing until such shareholder

approval is obtained, on all issuances of convertible preferred stock of the Company, excluding agreements that are in place prior to

the date of the Securities Purchase Agreement and issuances of new classes of convertible preferred stock in exchange for existing classes

of convertible preferred stock.

Additionally, the Investor has the right, pursuant to the Securities Purchase Agreement to appoint one

member to, or to replace one member of, the Company’s board of directors, subject to all applicable Nasdaq rules.

The Investor’s

purchase of the remaining 3,500 shares of Series C Convertible Preferred Stock under the Securities Purchase Agreement in exchange for

an additional $3,500,000 is required to occur within 120 calendar days of the date of the Securities Purchase Agreement, subject to the

satisfaction of customary closing conditions.

Series D Convertible Preferred Stock

On January 6, 2025, the

Company filed a certificate of designations of preferences, rights, and limitations of Series D Convertible Preferred Stock (the “Series

D Certificate of Designations”) with the Department of State, Division of Corporations, of the State of Delaware, which provides

for the designation of 5,000 shares of Series D Preferred Stock of the Company, par value $0.0001 per share, upon the terms and conditions

as set forth in the Series D Certificate of Designations.

Each share of Series D Preferred Stock has a stated value of $1,000 (the “Stated

The Series D Preferred

Stock shall rank (i) senior to the Company’s common stock and any other class or series of capital stock of the Company created

hereafter, the terms of which specifically provide that such class or series shall rank junior to the Series D Preferred Stock, (ii) pari

passu with any class or series of capital stock of the Company created hereafter specifically ranking, by its terms, on par with the Series

D Preferred Stock, (iii) pari passu with the Series B Convertible Preferred Stock of the Company (the “Series B Preferred Stock”)

with respect to its rights, preferences and restrictions, and (iv) pari passu with the Series C Convertible Preferred Stock of the Company

(the “Series C Preferred Stock”).

Holders of the Series

D Preferred Stock have no voting power except as otherwise required by the Delaware General Corporation Law.

Upon any liquidation,

dissolution or winding-up of the Company, whether voluntary or involuntary (a “Liquidation”), the holders of the Series D

Preferred Stock shall be entitled to receive out of the assets available for distribution to stockholders, (i) after and subject to the

payment in full of all amounts required to be distributed to the holders of another class or series of stock of the Company ranking on

liquidation prior and in preference to the Series D Preferred Stock, including the Series A Preferred Stock, (ii) ratably with any class

or series of stock ranking on liquidation on parity with the Series D Preferred Stock and (iii) in preference and priority to the holders

of the shares of Common Stock, an amount equal to 100% of the Stated Value of the Series D Preferred Stock, in proportion to the full

and preferential amount that all shares of the Series D Preferred Stock are entitled to receive.

Each share of Series

D Preferred Stock shall be convertible into common stock (the “Conversion Shares”) at a conversion per share equal to $2.41,

at the option of the holder, at any time after the Company has obtained shareholder approval for the issuance of the Conversion Shares

pursuant to the rules of the Nasdaq Stock Market.

In addition, the holder shall not have the right to convert any portion of the Series

D Preferred Stock if, after giving effect to the conversion, such holder (together with its affiliates) would beneficially own in excess

of 4.99% of the number of shares of the common stock outstanding immediately after giving effect to the issuance of the respective Conversion

Wenzhao Lu Exchange Agreement

9, 2025, the Company entered into an exchange agreement with Wenzhao Lu, the Chairman of the Board of Directors of the Company, pursuant

Lu exchanged 9,000 shares of Series A Preferred Stock of the Company for 5,000 shares of Series D Preferred Stock of the

Company pursuant to an exemption from registration under Section 3(a)(9) of the Securities Act of 1933, as amended (the “Exchange”).

Upon consummation of the Exchange, there were no shares of Series A Preferred Stock of the Company outstanding.

Redemption Agreement

During 2025, to preserve

cash, the Company entered into discussions with Lab Services MSO for the potential redemption of our investment and on February 26, 2025,

the Company, Avalon Lab, Laboratory Services MSO, and the other parties signatory thereto, entered into a Redemption and Abandonment Agreement

(the “Redemption Agreement”), whereby Laboratory Services MSO redeemed the 40% equity interest in Laboratory Services MSO

held by Avalon Lab for cash and the surrender of its Series B Convertible Preferred Stock having a carrying value of $11,000,000 (the

“Redemption”).

The aggregate cash amount to Avalon Lab for the Redemption was $1,745,000, to be paid as follows:

of $95,000 at the closing of the Redemption and, beginning in March 2025, monthly payments of $75,000 until December 2026.

pursuant to the terms of the Redemption Agreement, all shares of Avalon’s Series B Convertible Preferred Stock previously issued

to SCBC Holdings LLC as partial consideration for the equity interests of Laboratory Services MSO, were permanently surrendered and relinquished

to Avalon for no additional consideration.

As a result of the Redemption, beginning in February 2025, we no longer offer laboratory services.

Agreement and Plan

On March 7, 2025, the

Company, Nexus MergerSub Limited, a wholly owned subsidiary of the Company (“Merger Sub”), and YOOV Group Holding Limited

(“YOOV”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which Merger Sub will

merge with and into YOOV, with YOOV surviving the merger and becoming a direct, wholly owned subsidiary of the Company (the “Merger”).

The Merger is expected to be completed in the third quarter of 2025, subject to customary closing conditions.

Subject to the terms

and conditions of the Merger Agreement, immediately prior to the effective time of the Merger (the “Effective Time”), each

then-outstanding share of YOOV preferred shares, par value $0.10 per share, will either automatically be converted into shares of YOOV

ordinary shares, par value $0.10 per share (the “YOOV Ordinary Shares”) or canceled and cease to exist in accordance with

At the Effective Time, each then-outstanding YOOV Ordinary Share (other than any shares held in treasury and Dissenting Shares

(as defined in the Merger Agreement)) will be automatically converted into a number of shares of the Company’s common stock equal

to the Exchange Ratio.

The “Exchange Ratio” will be the ratio (rounded to four decimal places), determined as follows:

the closing price of the Company’s common stock on Nasdaq on the second trading day immediately preceding the Effective Time is

(x) less than or equal to $5.00, the Exchange Ratio shall be 60,000,000 divided by the Company Outstanding Shares (as defined in the Merger

or (y) greater than $5.00, the Exchange Ratio shall be 54,000,000 divided by the Company Outstanding Shares.

Pursuant to the terms

of the Merger Agreement, (i) each then-outstanding share of the Company’s common stock will remain issued and outstanding after

the Effective Time and (ii) each then-outstanding option to purchase Company common stock, whether or not vested, will remain issued and

outstanding after the Effective Time.

The then-outstanding shares of Series C Convertible Preferred Stock and Series D Convertible Preferred

Stock will remain outstanding in accordance with their terms.

Additionally, at the Effective Time, the Company’s name will be changed

to “YOOV, Inc.”

In connection with the

Merger, the Company will seek approval of its stockholders to, among other things, (i) approve the issuance of the shares of the Company’s

common stock to be issued to YOOV shareholders in connection with the Merger pursuant to the rules of Nasdaq and (ii) amend the Company’s

certificate of incorporation to effect a reverse stock split of the Company’s common stock to the extent the Company and YOOV mutually

agree implementing such reverse stock split is necessary to meet Nasdaq’s listing requirements (collectively, the “Avalon

Stockholder Matters”).

Each of the Company

and YOOV have made customary representations, warranties and covenants in the Merger Agreement, including, among other things,

covenants relating to (i) obtaining the requisite approval of its respective stockholders, (ii) non-solicitation or facilitation of

any Takeover Proposal or Superior Proposal (as each is defined in the Merger Agreement), (iii) the conduct of its respective

business during the period between the signing of the Merger Agreement and the closing of the Merger, and (iv) the Company filing

with the SEC and causing to become effective a registration statement on Form S-4 (the “Registration Statement”) to

Consummation of the Merger

is subject to certain closing conditions, including, among other things, (i) approval of the Avalon Stockholder Matters by the requisite

stockholders of the Company, (ii) adoption and approval of the Merger Agreement, and the transactions contemplated thereby, by the requisite

YOOV shareholders, (iii) the effectiveness of the Registration Statement and (iv) the listing of the Company’s common stock issuable

in connection with the Merger on Nasdaq.

Each party’s obligation to consummate the Merger is also subject to other specified customary

conditions, including regarding the accuracy of the representations and warranties of the other party, subject to the applicable materiality

standard, and the performance in all material respects by the other party of its obligations under the Merger Agreement required to be

performed on or prior to the Effective Time.

The Merger Agreement

contains certain termination rights for both the Company and YOOV, including the right to terminate the Merger Agreement at any time before

the Effective Time, whether before or after the Avalon Stockholder Matters have been approved, by mutual written consent of the parties.

In addition, the Merger Agreement may be terminated at any time by either party if the Merger is not consummated on or before March 7,

2026 (the “End Date”), provided that the End Date may be extended by either party for up to 60 days in the event that the

SEC has not declared effective the Registration Statement by the date which is 60 days prior to the End Date.

Upon termination of the

Merger Agreement under specified circumstances, the Company may be required to pay YOOV a termination fee of $1.0 million;

however, YOOV

is not required to pay the Company a termination fee.

At the Effective Time,

the Company’s board of directors (the “Avalon Board”) is expected to consist of seven members, five of whom will be

designated by YOOV and two of whom will be designated by the Company, as provided in the Merger Agreement.

Voting and Support

Concurrently with the

execution of the Merger Agreement, (i) the officers, directors and certain shareholders of YOOV (solely in their respective capacities

as YOOV shareholders) have entered into voting and support agreements with the Company and YOOV, pursuant to which such YOOV shareholders

agree, among other things to, (a) not transfer their capital stock of YOOV, subject to certain limited exceptions and (b) vote all of

their shares of capital stock of YOOV in favor of the adoption and approval of the Merger Agreement and the transactions contemplated

thereby and against, among other things, any Takeover Proposals (the “YOOV Voting Agreement”) and (ii) the officers, directors

and certain stockholders of the Company (solely in their respective capacities as the Company stockholders) have entered into voting and

support agreements with the Company and YOOV, pursuant to which such Company stockholders agree, among other things to, (a) not transfer

their capital stock of the Company, subject to certain limited exceptions and (b) vote all of their shares of Company capital stock in

favor of, among other things, the Avalon Stockholder Matters and against, among other things, any Takeover Proposals (the “Avalon

Voting Agreement”).

Lock-Up Agreements

Concurrently with the

execution of the Merger Agreement, certain directors, officers and stockholders of each of the Company and YOOV have entered into lock-up

agreements (the “Lock-Up Agreement”), pursuant to which, subject to specified exceptions, they have agreed not to transfer

their shares of the Company’s common stock during the 180-day period following the Effective Time.

Certificates of Elimination

On March 7, 2025, the

Company filed a Certificate of Elimination relating to each of the Series A Preferred Stock and the Series B Preferred Stock (the “Eliminations

of Designation”) with the Secretary of State of the State of Delaware, thereby terminating the designations of the Series A Preferred

Stock and the Series B Preferred Stock.

The Eliminations of Designation were effective upon filing and eliminated from the Company’s

Amended and Restated Certificate of Incorporation all matters set forth in the previously-filed Certificates of Designations with respect

to the previously designated Series A Preferred Stock and Series B Preferred Stock.

Bylaws Amendment

On March 7, 2025, the

Board approved and adopted an amendment (the “Amendment”) to the Company’s Amended and Restated Bylaws (the “Bylaws”).

Amendment reduces the quorum at any meeting of stockholders, except as otherwise required by law or by the Company’s Amended and

Restated Certificate of Incorporation or the Bylaws, to one-third of the voting power of the shares of capital stock outstanding and entitled

to vote at the meeting, present in person, present by remote communication, if applicable, or represented by proxy.

Corporate and Available Information

We were incorporated in Delaware.

is located at http://www.avalon-globocare.com.

On our website, investors can obtain, free of charge, a copy of our Annual Reports

on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, our Code of Conduct and Business Ethics, including disclosure

related to any amendments or waivers thereto, and other reports and any amendments thereto filed or furnished pursuant to Section 13(a)

or 15(d) of the Exchange Act as soon as reasonably practicable after we file such material electronically with, or furnish it to, the

None of the information posted on our website is incorporated by reference into this Annual Report on Form 10-K.

The SEC also maintains

a website at http://www.sec.gov that contains reports, proxy and information statements and other information regarding us and

other companies that file materials with the SEC electronically.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business