What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-13 compared with 2024-11-12 · 377 added, 591 removed, 55 unchanged (95% of the section changed)

2 unchanged sentences

This Quarterly Report on Form 10-Q contains

forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 under

Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange

Act of 1934, as amended (the “Exchange Act”).

Forward-looking statements include statements with respect to our beliefs,

plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions and future performance, and involve known and

unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance

or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking

All statements other than statements of historical fact are statements that could be forward-looking statements.

identify these forward-looking statements through our use of words such as “may,” “will,” “can,”

“anticipate,” “assume,” “should,” “indicate,” “would,” “believe,”

“contemplate,” “expect,” “seek,” “estimate,” “continue,” “plan,”

“point to,” “project,” “predict,” “could,” “intend,” “target,”

“potential” and other similar words and expressions of the future.

Accordingly, factors that may affect our results include,

but are not limited to:

our dependence on product

candidates that are still in an early development stage;

our ability to successfully

complete research and further development, including preclinical and clinical studies;

our anticipated timing

for preclinical development, regulatory submissions, commencement and completion of clinical trials and product approvals;

our ability to negotiate

strategic partnerships, where appropriate, for our product candidates;

our ability to manage multiple

clinical trials for a variety of product candidates at different stages of development;

the cost, timing, scope

and results of ongoing preclinical and clinical testing;

our expectations of the

attributes of our product and development candidates, including pharmaceutical properties, efficacy, safety and dosing regimens;

the cost, timing and uncertainty

of obtaining regulatory approvals for our product candidates;

the availability, cost,

delivery and quality of clinical management services provided by our clinical research organization partners;

the availability, cost,

delivery and quality of clinical and commercial-grade materials produced by our own manufacturing facility or supplied by contract

manufacturers, suppliers and partners;

our ability to commercialize

our product candidates and the growth of the markets for those product candidates;

our ability to develop

and commercialize products before competitors that are superior to the alternatives developed by such competitors;

our ability to develop

technological capabilities, including identification of novel and clinically important targets, exploiting our existing technology

platforms to develop new product candidates and expand our focus to broader markets for our existing targeted therapeutics;

our ability to raise sufficient

capital to fund our preclinical and clinical studies and to meet our long-term liquidity needs, on terms acceptable to us, or at

If we are unable to raise the funds necessary to meet our long-term liquidity needs, we may have to delay or discontinue the

development of one or more programs, discontinue or delay ongoing or anticipated clinical trials, discontinue or delay our commercial

manufacturing efforts, discontinue or delay our efforts to expand into additional indications for our product candidates, license

out programs earlier than expected, raise funds at significant discount or on other unfavorable terms, if at all, or sell all or

part of our business;

our ability to protect

our intellectual property rights and our ability to avoid intellectual property litigation, which can be costly and divert management

time and attention;

our ability to develop

and commercialize products without infringing upon the intellectual property rights of third parties;

heightened competition

from commercial clinical testing companies, IDNs, physicians and others;

increased pricing pressure

from customers, including payers and patients, and changing relationships with customers, payers, suppliers or strategic partners;

impact of changes in payment

mix, including increased patient financial responsibility and any shift from fee-for-service to discounted, capitated or bundled

fee arrangements;

adverse actions by the

government, including healthcare reform that focuses on reducing healthcare costs but does not recognize the value and importance

to healthcare of clinical testing or innovative solutions, unilateral reduction of fee schedules payable to us, unilateral recoupment

of amounts allegedly owed and competitive bidding;

the impact of increased

prior authorization programs;

adverse results from pending

or future government investigations, lawsuits or private actions, which include in particular, monetary damages, loss or suspension

of licenses or criminal penalties;

the impact of the COVID-19

pandemic on our business or on the economy generally;

a decline in economic conditions,

including the impact of an inflationary environment.

forward-looking statements are expressly qualified in their entirety by this cautionary notice.

You are cautioned not to place undue

reliance on any forward-looking statements, which speak only as of the filing date of this Quarterly Report on Form 10-Q or the date

of the document incorporated by reference into this Quarterly Report on Form 10-Q.

We have no obligation, and expressly disclaim any

obligation, to update, revise or correct any of the forward-looking statements, whether as a result of new information, future events

or otherwise.

We have expressed our expectations, beliefs and projections in good faith, and we believe they have a reasonable basis.

However, we cannot assure you that our expectations, beliefs or projections will result or be achieved or accomplished.

following discussion and analysis of our financial condition and results of operations for the three and nine months ended September

30, 2024 and 2023 should be read in conjunction with our condensed consolidated financial statements and related notes to those condensed

consolidated financial statements that are included elsewhere in this Quarterly Report on Form 10-Q.

are a commercial stage company dedicated to developing and delivering innovative, transformative, precision diagnostics and clinical

laboratory services.

We are working toward establishing a leading role in the innovation of diagnostic testing, utilizing proprietary

technology to deliver precise, genetics-driven results.

As a first step into the laboratory market, we completed an acquisition of a

40% membership interest in Laboratory Services MSO, LLC (“Lab Services MSO”), which closed in February 2023.

have the following areas of focus:

have embarked on a laboratory rollup strategy focused on forming joint ventures and acquiring laboratories that are accretive to our

commercial strategy.

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

Lab 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 toxicology.

Specific capabilities include STAT blood testing, qualitative drug screening, genetic testing, urinary testing, and sexually transmitted

disease testing.

The panels that Lab Services MSO tests for are 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 the 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

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.

The first area of focus in this area is confirmatory genetic testing

during toxicology screening and genetic testing to screen for addictive propensity.

Lab Services MSO laboratory 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., which is a medical equipment retail company.

and Development

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.

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

have begun the commercialization and development of a versatile breathalyzer system.

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

North America, South

America, the EU and the UK.

forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 under Section

27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934,

as amended (the “Exchange Act”).

Forward-looking statements include statements with respect to our beliefs, plans, objectives,

goals, expectations, anticipations, assumptions, estimates, intentions and future performance, and involve known and unknown risks, uncertainties

and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially

different from future results, performance or achievements expressed or implied by such forward-looking statements.

All statements other

than statements of historical fact are statements that could be forward-looking statements.

You can identify these forward-looking statements

through our use of words such as “may,” “will,” “can,” “anticipate,” “assume,”

“should,” “indicate,” “would,” “believe,” “contemplate,” “expect,”

“seek,” “estimate,” “continue,” “plan,” “point to,” “project,”

“predict,” “could,” “intend,” “target,” “potential” and other similar words

and expressions of the future.

Accordingly, factors that may affect our results include, but are not limited to:

● our ability to commercialize our product candidates and the growth of the markets for those product candidates;

● our ability to develop and commercialize products before competitors that are superior to the alternatives

developed by such competitors;

● a decline in economic conditions, including the impact of an inflationary environment and tariffs.

All forward-looking statements

are expressly qualified in their entirety by this cautionary notice.

You are cautioned not to place undue reliance on any forward-looking

statements, which speak only as of the filing date of this Quarterly Report on Form 10-Q or the date of the document incorporated by reference

into this Quarterly Report on Form 10-Q.

We have no obligation, and expressly disclaim any obligation, to update, revise or correct any

of the forward-looking statements, whether as a result of new information, future events or otherwise.

We have expressed our expectations,

beliefs and projections in good faith, and we believe they have a reasonable basis.

However, we cannot assure you that our expectations,

beliefs or projections will result or be achieved or accomplished.

The following discussion

and analysis of our financial condition and results of operations for the three months ended March 31, 2025 and 2024 should be read in

conjunction with our condensed consolidated financial statements and related notes to those condensed consolidated financial statements

that are included elsewhere in this Quarterly Report on Form 10-Q.

We are a commercial-stage company dedicated to

developing and delivering precision diagnostic consumer products and the advancement of intellectual property in cellular therapy.

are currently marketing the KetoAir™ breathalyzer device and plan to develop additional diagnostic uses of the breathalyzer technology.

The KetoAir TM is registered with the U.S.

Food and Drug Administration as a Class I medical device.

In addition, we own and

operate commercial real estate at our headquarters in Freehold, NJ.

We had the following

areas of focus in the three months ended March 31, 2025 and 2024:

Research and Development

We are focused on bringing

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

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.

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

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

We plan to sell

the product through the KetoAir website and social media.

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

for measuring ketosis and expect initial sales to occur in the United States.

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 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 (the app is currently being

reviewed by Apple iOS AppStore).

We sell the 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 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 (the app is currently being reviewed by Apple iOS AppStore).

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.

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.

Company is a commercial stage company dedicated to developing and delivering innovative, transformative, precision diagnostics and clinical

laboratory services.

The Company is working to establish a leading role in the innovation of diagnostic testing, utilizing proprietary

technology to deliver precise, genetics-driven results.

The Company also provides laboratory services through its 40% equity investment

in Lab Services MSO, 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 believe the KetoAir can be an essential tool to help diabetic

patients adhere to their therapeutic programs and optimize their ketogenic dietary management.

Laboratory Acquisitions

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

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.

the first quarter of 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

In order to preserve

cash and focus on 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.

Going Concern

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.

addition, we own commercial real estate that houses our headquarters in Freehold, New Jersey.

We also have income from equity method

investment through our 40% interest in Lab Services MSO.

These condensed consolidated financial statements have been prepared assuming

that we will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities

in the normal course of business.

As reflected in the accompanying condensed consolidated financial statements,

we had working capital deficit of approximately $10,935,000 at September 30, 2024 and had incurred recurring net losses and generated

negative cash flow from operating activities of approximately $5,179,000 and $3,891,000 for the nine months ended September 30, 2024,

respectively.

These condensed consolidated financial

statements have been prepared assuming that we will continue as a going concern, which contemplates, among other things, the realization

of assets and the satisfaction of liabilities in the normal course of business.

As reflected in the accompanying

condensed consolidated financial statements, we had working capital deficit of approximately $11,655,000 at March 31, 2025 and had incurred

recurring net losses and generated negative cash flow from operating activities of approximately $2,482,000 and $1,802,000 for the three

months ended March 31, 2025, respectively.

have a limited operating history and our continued growth is dependent upon the continuation of generating rental revenue from our income-producing

real estate property in New Jersey and income from equity method investment through our 40% interest in Lab Services MSO and obtaining

additional financing to fund future obligations and pay liabilities arising from ordinary course business operations.

In addition, the

current cash balance cannot be projected to cover our operating expenses for the next twelve months from the release date of this Quarterly

Report on Form 10-Q.

These matters raise substantial doubt about our ability to continue as a going concern.

Our ability to continue

as a going concern is dependent on our ability to raise additional capital, implement our business plan, and generate sufficient revenues.

There are no assurances that we will be successful in our efforts to generate sufficient revenues, maintain sufficient cash balance or

report profitable operations or to continue as a going concern.

We plan on raising capital through the sale of equity to implement our

business plan.

However, there is no assurance these plans will be realized and that any additional financings will be available to us

on satisfactory terms and conditions, or at all.

accompanying condensed consolidated financial statements do not include any adjustments related to the recoverability or classification

of asset-carrying amounts or the amounts and classification of liabilities that may result should we be unable to continue as a going

real estate property in New Jersey, generating revenue for selling of Keto Air, and obtaining additional financing to fund future obligations

and pay liabilities arising from ordinary course business operations.

In addition, the current cash balance cannot be projected to cover

our operating expenses for the next twelve months from the release date of this Quarterly Report on Form 10-Q.

These matters raise substantial

doubt about our ability to continue as a going concern.

Our ability to continue as a going concern is dependent on our ability to raise

additional capital, implement our business plan, and generate sufficient revenues.

There are no assurances that we will be successful

in our efforts to generate sufficient revenues, maintain sufficient cash balance or report profitable operations or to continue as a going

We plan on raising capital through the sale of equity to implement our business plan.

However, there is no assurance these plans

will be realized and that any additional financings will be available to us on satisfactory terms and conditions, or at all.

The accompanying condensed

consolidated financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts

or the amounts and classification of liabilities that may result should we be unable to continue as a going concern.

Accounting Policies

preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United

States of America (“U.S.

GAAP”) requires management to make 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 revenues and expenses during the reporting period.

Changes in these estimates and assumptions may have a material impact on the condensed

consolidated financial statements and accompanying notes.

Use of Estimates

The preparation of the

condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America

GAAP”) requires management to make 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 revenues and expenses

during the reporting period.

Changes in these estimates and assumptions may have a material impact on the condensed consolidated financial

statements and accompanying notes.

Making estimates requires management to exercise significant judgment.

at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date

of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more

future confirming events.

Accordingly, the actual results could differ significantly from those estimates.

Significant estimates during the three and nine months ended September

30, 2024 and 2023 include the useful life of investment in real estate and intangible assets, the assumptions used in assessing impairment

of long-term assets, the valuation of deferred tax assets and the associated valuation allowances, the valuation of stock-based compensation,

the assumptions used to determine fair value of warrants and embedded conversion features of convertible note payable, and the fair value

of the consideration given and assets acquired in the purchase of our equity interest in Lab Services MSO.

in Unconsolidated Company

use the equity method of accounting for our investment in, and earning or loss of, company that we do not control but over which we do

exert significant influence.

We apply the equity method by initially recording these investments at cost, as equity method investments,

subsequently adjusted for equity in earnings and cash distributions.

consider whether the fair value of our equity method investment has declined below its carrying value whenever adverse event or change

in circumstance indicates that recorded value may not be recoverable.

If we consider any decline to be other than temporary (based on

various factors, including historical financial results and the overall health of the investee), then a write-down would be recorded

to estimated fair value.

Impairment of equity method investment amounted to $259,579 for the nine months ended September 30, 2024.

classify distributions received from equity method investments using the cumulative earnings approach.

Distributions received are considered

returns on the investment and classified as cash inflows from operating activities.

If, however, the investor’s cumulative distributions

received, less distributions received in prior periods determined to be returns of investment, exceeds cumulative equity in earnings

recognized, the excess is considered a return of investment and is classified as cash inflows from investing activities.

Property Rental

have determined that the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”)

606 does not apply to rental contracts, which are within the scope of other revenue recognition accounting standards.

income from operating leases is recognized on a straight-line basis under the guidance of ASC 842.

Lease payments under tenant leases

are recognized on a straight-line basis over the term of the related leases.

The cumulative difference between lease revenue recognized

under the straight-line method and contractual lease payments are included in rent receivable on the condensed consolidated balance sheets.

It is at least reasonably possible

that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements,

which management considered in formulating its estimate, could change in the near term due to one or more future confirming events.

the actual results could differ significantly from those estimates.

Significant estimates

during the three months ended March 31, 2025 and 2024 include the useful life of investment in real estate and intangible assets, the

assumptions used in assessing impairment of long-term assets, the valuation of deferred tax assets and the associated valuation allowances,

the valuation of stock-based compensation, and the assumptions used to determine fair value of warrants and embedded conversion features

of convertible note payable.

Real Property Rental

We have determined that

the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 606 does not

apply to rental contracts, which are within the scope of other revenue recognition accounting standards.

Rental income from operating

leases is recognized on a straight-line basis under the guidance of ASC 842.

Lease payments under tenant leases are recognized on a straight-line

basis over the term of the related leases.

The cumulative difference between lease revenue recognized under the straight-line method and

contractual lease payments are included in rent receivable on the condensed consolidated balance sheets.

are governed by the income tax laws of China and the United States.

6 unchanged sentences

rates that have been enacted or substantively enacted by the balance sheet date.

tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the

carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of assessable

In principle, deferred tax liabilities are recognized for all taxable temporary differences, and deferred tax assets are

recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can

tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled.

tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which

case the deferred tax is changed to equity.

Deferred tax assets and liabilities are offset when they related to income taxes levied by

the same taxation authority and we intend to settle its current tax assets and liabilities on a net basis.

Accounting Standards

Deferred tax is accounted

for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount

of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of assessable tax profit.

In principle, deferred tax liabilities are recognized for all taxable temporary differences, and deferred tax assets are recognized to

the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized.

Deferred tax is calculated

using tax rates that are expected to apply to the period when the asset is realized or the liability is settled.

Deferred tax is charged

or credited in the income statement, except when it is related to items credited or charged directly to equity, in which case the deferred

tax is changed to equity.

Deferred tax assets and liabilities are offset when they related to income taxes levied by the same taxation

authority and we intend to settle its current tax assets and liabilities on a net basis.

Recent Accounting

For details of applicable new accounting standards, please, refer to Recent Accounting Standards

in Note 3 of our condensed consolidated financial statements accompanying this Quarterly Report on Form 10-Q.

OF OPERATIONS

of Results of Operations for the Three and Nine Months Ended September 30, 2024 and 2023

Property Rental Revenue

the three months ended September 30, 2024, we had real property rental revenue of $345,159, as compared to $331,290 for the three months

ended September 30, 2023, an increase of $13,869, or 4.2%.

For the nine months ended September 30, 2024, we had real property rental

revenue of $987,634, as compared to $934,360 for the nine months ended September 30, 2023, an increase of $53,274, or 5.7%.

was primarily attributable to the increase in the number of tenants occupying the building in the three and nine months ended September

30, 2024 as compared to the three and nine months ended September 30, 2023.

We expect that our revenue from real property rent will remain

at its current quarterly level with minimal increase in the near future.

Property Operating Expenses

property operating expenses consist of property management fees, property insurance, real estate taxes, depreciation, repairs and maintenance

fees, utilities and other expenses related to our rental properties.

the three months ended September 30, 2024, our real property operating expenses amounted to $245,528, as compared to $288,083 for the

three months ended September 30, 2023, a decrease of $42,555, or 14.8%.

The decrease was primarily due to a decrease in repairs and maintenance

fee of approximately $30,000, and a decrease in utilities of approximately $14,000, offset by an increase in other miscellaneous items

of approximately $1,000.

the nine months ended September 30, 2024, our real property operating expenses amounted to $794,142, as compared to $781,931 for the

nine months ended September 30, 2023, an increase of $12,211, or 1.6%.

The increase was primarily due to an increase in utilities of

approximately $13,000, offset by a decrease in other miscellaneous items of approximately $1,000.

Property Operating Income

real property operating income for the three months ended September 30, 2024 was $99,631, representing an increase of $56,424, or 130.6%,

as compared to $43,207 for the three months ended September 30, 2023.

The increase was primarily attributable to an increase in real

property rental revenue and a decrease in real property operating expenses as described above.

Our real property operating income for

the nine months ended September 30, 2024 was $193,492, representing an increase of $41,063, or 26.9%, as compared to $152,429 for the

nine months ended September 30, 2023.

The increase was primarily attributable to the increase in real property rental revenue as described

We expect our real property operating income will remain at its current quarterly level with minimal increase in the near future.

income from Equity Method Investment – Lab Services MSO

the three months ended September 30, 2024, we had loss from our investment in Lab Services MSO of $447,909, which consists of our share

of Lab Services MSO’s net loss of $21,597, and amortization of identifiable intangible assets acquired from Lab Services MSO acquisition

of $166,733, and impairment of goodwill acquired from Lab Services MSO acquisition of $259,579, which was primarily attributable to Lab

Services MSO’s lower revenues and net incomes than anticipated and the decline in our stock price and market capitalization.

the three months ended September 30, 2023, we had income from our investment in Lab Services MSO of $354,500, which consists of our share

of Lab Services MSO’s net income of $558,244 and amortization of identifiable intangible assets acquired from Lab Services MSO

acquisition of $203,744.

the nine months ended September 30, 2024, we had loss from our investment in Lab Services MSO of $669,777, which consists of our share

of Lab Services MSO’s net income of $90,001, and amortization of identifiable intangible assets acquired from Lab Services MSO

acquisition of $500,199, and impairment of goodwill acquired from Lab Services MSO acquisition of $259,579, which was primarily attributable

to Lab Services MSO’s lower revenues and net incomes than anticipated and the decline in our stock price and market capitalization.

the nine months ended September 30, 2023, we had income from our investment in Lab Services MSO of $370,060, which consists of our share

of Lab Services MSO’s net income of $913,378 and amortization of identifiable intangible assets acquired from Lab Services MSO

acquisition of $543,318.

purchased 40% of Lab Services MSO on February 9, 2023.

In the third quarter of 2023, Lab Services MSO acquired Merlin Technologies, Inc.

which is a medical equipment retail company.

Lab Services MSO has also opened a new laboratory, Veritas Laboratories LLC (“Veritas”).

Veritas is a CLIA-certified and COLA-accredited laboratory located in Scottsdale, Arizona that offers a wide range of high-quality testing,

including drug testing, genetic testing, urinary testing and COVID-19 PCR testing.

We expect to continue to receive income from our investment

in Lab Services MSO in the near future.

Operating Expenses

the three and nine months ended September 30, 2024 and 2023, other operating expenses consisted of the following:

Three Months Ended

September 30,

Nine Months Ended

September 30,

RESULTS OF OPERATIONS

Comparison of Results of Operations for the

Three Months Ended March 31, 2025 and 2024

Real Property Rental

the three months ended March 31, 2025, we had real property rental revenue of $349,800, as

compared to $314,588 for the three months ended March 31, 2024, an increase of $35,212, or 11.2%.

The increase was primarily attributable

to the increase in the number of tenants occupying the building in the three months ended March 31, 2025 as compared to the three months

ended March 31, 2024.

We expect that our revenue from real property rent will remain at its current level with minimal increase in the

Real Property Operating

Real property operating

expenses consist of property management fees, property insurance, real estate taxes, depreciation, repairs and maintenance fees, utilities

and other expenses related to our rental properties.

For the three months

ended March 31, 2025, our real property operating expenses amounted to $280,390, as compared to $263,126 for the three months ended March

31, 2024, an increase of $17,264, or 6.6%.

The increase was primarily attributable to an increase in utilities of approximately $23,000,

offset by a decrease in other miscellaneous items of approximately $6,000.

Real Property Operating

real property operating income for the three months ended March 31, 2025 was $69,410, representing an increase of $17,948, or 34.9%, as

compared to $51,462 for the three months ended March 31, 2024.

The increase was primarily attributable to the increase in real property

rental revenue as described above.

We expect our real property operating income will remain at its current level with minimal increase

in the near future.

Income from Equity

Method Investment – Lab Services MSO

three months ended March 31, 2025, we had income from our investment in Lab Services MSO of $392,677, which consists of our share of Lab

Services MSO’s net income of $503,833 and amortization of identifiable intangible assets acquired from Lab Services MSO acquisition

We sold our ownership of 40% of Lab Services MSO on February 26, 2025.

the three months ended March 31, 2024 , we had income from our investment in Lab Services

MSO of $107,469, which consists of our share of Lab Services MSO’s net income of $274,202 and amortization of identifiable intangible

assets acquired from Lab Services MSO acquisition of $166,733.

Other Operating Expenses

the three months ended March 31, 2025 and 2024, other operating expenses consisted of the

Three Months Ended March 31,

Advertising and marketing expenses

2 unchanged sentences

Miscellaneous taxes

Research and development

Directors’ and officers’ liability insurance premium

2 unchanged sentences

Other general and administrative

the three months ended September 30, 2024, advertising

and marketing expenses decreased by $293,016, or 66.9%, as compared to the three months ended

September 30, 2023.

For the nine months ended September 30, 2024, advertising and marketing

expenses decreased by $1,382,326, or 84.6%, as compared to the nine months ended September

The decrease was primarily due to decreased advertising activities in the three

and nine months ended September 30, 2024.

We expect that our advertising and marketing expenses

will decrease in the near future as we conserve cash .

● Professional

fees primarily consisted of accounting fees, audit fees, legal service fees, consulting fees,

investor relations service charges, valuation service fees and other fees.

For the three

months ended September 30, 2024, professional fees decreased by $131,812, or 30.3%, as compared

to the three months ended September 30, 2023, which was primarily attributable to a decrease

in legal service fees of approximately $155,000, mainly due to the decreased legal services

related to our acquisition of Lab Services MSO, offset by an increase in other miscellaneous

items of approximately $23,000.

For the nine months ended September 30, 2024, professional

fees decreased by $1,469,770, or 55.3%, as compared to the nine months ended September 30,

2023, which was primarily attributable to a decrease in consulting fees of approximately

$547,000, mainly due to the decrease in use of consulting service providers related to our

acquisition of Lab Services MSO, a decrease in audit fees of approximately $126,000, due

to the decreased audit services related to our acquisition of Lab Services MSO, a decrease

in accounting fees of approximately $454,000, mainly due to the decreased accounting services

related to our acquisition of Lab Services MSO, a decrease in legal service fees of approximately

$409,000, mainly due to the decreased legal services related to our acquisition of Lab Services

MSO, and a decrease in other miscellaneous items of approximately $61,000, offset by an increase

in valuation fee for our equity method investment on Lab Services MSO of $127,000.

that our professional fees will likely remain at their current quarterly level with minimal

increase in the near future.

the three months ended September 30, 2024, compensation and related benefits decreased by

$126,599, or 26.9%, as compared to the three months ended September 30, 2023.

months ended September 30, 2024, compensation and related benefits decreased by $321,473,

or 23.4%, as compared to the nine months ended September 30, 2023.

The decrease was primarily

attributable to the decreased compensation for two of our named executive officers, David

Jin and Meng Li.

We expect that our compensation and related benefits will remain relatively

steady, with minimal increase, in the near future .

the three months ended September 30, 2024, miscellaneous taxes increased by $3,040, or 33.9%,

as compared to the three months ended September 30, 2023.

For the nine months ended September

30, 2024, miscellaneous taxes increased by $217,207, or 440.7%, as compared to the nine months

ended September 30, 2023.

The increase was primarily attributable to increased Delaware state

franchise tax.

We expect that our miscellaneous taxes will decrease in the near future.

the three months ended September 30, 2024 and 2023, we did not incur any research and development

For the nine months ended September 30, 2024, research and development expenses

decreased by $110,160, or 100.0%, as compared to the nine months ended September 30, 2023.

In the nine months ended September 30, 2024, we did not incur any activity with respect to

research and development projects as we redirected our funding efforts to our core business

strategies discussed above.

the three months ended September 30, 2024, Directors and Officers’ Liability Insurance

premium decreased by $34,067, or 46.8%, as compared to the three months ended September 30,

For the nine months ended September 30, 2024, Directors and Officers’ Liability

Insurance premium decreased by $103,057, or 36.7%, as compared to the nine months ended September

The decrease was mainly due to our switching to a different insurance provider,

resulting in a lower premium.

three months ended September 30, 2024, travel and entertainment expense decreased by $27,842,

or 45.2%, as compared to the three months ended September 30, 2023.

For the nine months ended

September 30, 2024, travel and entertainment expense decreased by $101,385, or 56.5%, as

compared to the nine months ended September 30, 2023.

The decrease was mainly due to decreased

business travel activities in the three and nine months ended September 30, 2024 as compared

to the corresponding periods in 2023.

the three months ended September 30, 2024, rent and

related utilities expenses increased by $426, or 2.8%, as compared to the three months ended

September 30, 2023.

For the nine months ended September 30, 2024, rent and related utilities

expenses decreased by $1,829, or 3.8%, as compared to the nine months ended September 30,

The decrease was attributable to decreased rental rate in the nine months ended September

general and administrative expenses mainly consisted

of NASDAQ listing fee, office supplies, and other miscellaneous items.

For the three months

ended September 30, 2024, other general and administrative expenses decreased by $7,290,

or 19.6%, as compared to the three months ended September 30, 2023, due to our efforts at

stricter controls on corporate expenditure.

For the nine months ended September 30, 2024,

other general and administrative expenses decreased by $71,426, or 48.6%, as compared to

the nine months ended September 30, 2023, which was mainly attributable to a decrease in

fees paid to government agencies and Financial Industry Regulatory Authority of approximately

$31,000, a decrease in office supplies of approximately $16,000, and a decrease in other

miscellaneous items of approximately $24,000 due to our efforts at stricter controls on corporate

from Operations

a result of the foregoing, for the three months ended September 30, 2024, loss from operations amounted to $1,269,961, as compared to

$1,141,136 for the three months ended September 30, 2023, representing an increase of $128,825, or 11.3%.

a result of the foregoing, for the nine months ended September 30, 2024, loss from operations amounted to $3,617,386, as compared to

$5,962,831 for the nine months ended September 30, 2023, representing a decrease of $2,345,445, or 39.3%.

(Expense) Income

(expense) income mainly includes third party and related party interest expense, change in fair value of derivative liability, impairment

of equity method investment on Epicon, and other miscellaneous expense.

Other expense, net, totaled $409,239 for the three months ended September

30, 2024, as compared to $343,939 for the three months ended September 30, 2023, an increase of $65,300, or 19.0%, which was primarily

attributable to an increase in third party interest expense of approximately $108,000, mainly driven by the increase in amortization of

debt discount and debt issuance costs of approximately $80,000 and the increased interest expense of approximately $28,000 from third

party debts, a decrease in other income of approximately $39,000, offset by an increase in gain from change in fair value of derivative

liability of approximately $82,000.

Other expense, net, totaled $1,561,353 for the nine months ended September

30, 2024, as compared to $1,189,045 for the nine months ended September 30, 2023, an increase of $372,308, or 31.3%, which was primarily

attributable to an increase in third party interest expense of approximately $1,024,000, mainly driven by the increase in amortization

of debt discount and debt issuance costs of approximately $825,000 and the increased interest expense of approximately $199,000 from third

party debts, an increase in interest expense – related party of approximately $9,000, and an increase in other expense of approximately

$56,000, offset by an increase in gain from change in fair value of derivative liability of approximately $252,000, a decrease in impairment

of equity method investment on Epicon of approximately $464,000.

did not have any income taxes expense for the three and nine months ended September 30, 2024 and 2023 since we incurred losses in these

As a result of the factors described

above, our net loss was $1,679,200 for the three months ended September 30, 2024, as compared to $1,485,075 for the three months ended

September 30, 2023, an increase of $194,125, or 13.1%.

As a result of the factors described

above, our net loss was $5,178,739 for the nine months ended September 30, 2024, as compared to $7,151,876 for the nine months ended September

30, 2023, a decrease of $1,973,137, or 27.6%.

Loss Attributable to Avalon GloboCare Corp.

● For the three months ended March 31, 2025, advertising and marketing

expenses increased by $26,150, or 58.1%, as compared to the three months ended March 31, 2024.

The increase was primarily due to increased

advertising activities in the three months ended March 31, 2025.

We expect that our advertising and marketing expenses will likely remain

at their current level with minimal increase in the near future.

● Professional fees primarily consisted of accounting fees, audit

fees, legal service fees, consulting fees, investor relations service charges, fairness opinion charge, valuation service fees and other

For the three months ended March 31, 2025, professional fees increased by $1,249,244 or 282.4%, as compared to the three months

ended March 31, 2024, which was primarily attributable to an increase in consulting fees of approximately $717,000, mainly due to the

increase in use of consulting service providers related to our potential merger with YOOV Group Holding Limited, a business company incorporated

in the British Virgin Islands (“YOOV”), an increase in legal service fees of approximately $498,000, mainly due to the increased

legal services related to our potential merger with YOOV, an increase in fairness opinion charge of approximately $129,000 resulting from

the increased fairness opinion services related to our potential merger with YOOV, offset by a decrease in other miscellaneous items of

approximately $95,000.

We expect that our professional fees will decrease in the near future.

● For the three months ended March 31, 2025, compensation and related

benefits decreased by $13,151, or 3.7%, as compared to the three months ended March 31, 2024.

The decrease was primarily attributable

to the decreased compensation for our executive officer, David Jin.

We expect that our compensation and related benefits will increase

in the near future.

● For the three months ended March 31, 2025, miscellaneous taxes increased by $10,904, or 37.2%, as compared

to the three months ended March 31, 2024.

The increase was primarily attributable to increased Delaware state franchise tax.

that our miscellaneous taxes will remain relatively steady, with minimal increase, in the near future.

● For the three months ended March 31, 2025, directors’ and

officers’ liability insurance premium decreased by $33,790, or 48.8%, as compared to the three months ended March 31, 2024.

decrease was mainly due to our switching to a different insurance provider, resulting in a lower premium.

● For the three months ended March 31, 2025, travel and entertainment

expense increased by $22,338, or 100.1%, as compared to the three months ended March 31, 2024.

The increase was mainly due to increased

business travel activities in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

● For the three months ended March 31, 2025, rent and related utilities

expenses decreased by $265, or 1.7%, as compared to the three months ended March 31, 2024.

● Other general and administrative expenses mainly consisted of NASDAQ

listing fee, office supplies, and other miscellaneous items.

For the three months ended March 31, 2025, other general and administrative

expenses increased by $5,439, or 22.2%, as compared to the three months ended March 31, 2024, which was mainly attributable to an increase

in service fee related to setting up our British Virgin Islands company for our potential merger with YOOV of approximately $4,000, and

an increase in other miscellaneous items of approximately $1,000.

Loss from Operations

As a result of the foregoing,

for the three months ended March 31, 2025, loss from operations amounted to $1,806,775, as compared to $843,062 for the three months ended

March 31, 2024, representing an increase of $963,713, or 114.3%.

Other (Expense)

Other (expense) income

mainly includes third party and related party interest expense, change in fair value of derivative liability, and other miscellaneous

Other expense, net, totaled

$675,336 for the three months ended March 31, 2025, as compared to $524,451 for the three months ended March 31, 2024, an increase of

$150,885, or 28.8%, which was primarily attributable to an increase in third party interest expense of approximately $52,000, mainly driven

by the increase in amortization of debt discount and debt issuance costs of approximately $42,000 and the increased interest expense of

approximately $10,000 from third party debts, a decrease in gain from change in fair value of derivative liability of approximately $146,000,

offset by a decrease in interest expense – related party of approximately $11,000, and a decrease in other expense of approximately

We did not have any income

taxes expense for the three months ended March 31, 2025 and 2024 since we incurred losses in these periods.

a result of the factors described above, our net loss was $2,482,111 for the three months ended March 31, 2025, as compared to $1,367,513

for the three months ended March 31, 2024, an increase of $1,114,598, or 81.5%.

Net Loss Attributable to Avalon GloboCare

Common Shareholders

loss attributable to our common shareholders was $1,679,200, or $1.82 per share (basic and diluted), for the three months ended September

30, 2024, as compared to $1,485,075, or $2.06 per share (basic and diluted), for the three months ended September 30, 2023, an increase

of $194,125, or 13.1%.

The net loss attributable to

our common shareholders was $5,178,739, or $6.45 per share (basic and diluted), for the nine months ended September 30, 2024, as compared

to $7,151,876, or $10.34 per share (basic and diluted), for the nine months ended September 30, 2023, a decrease of $1,973,137, or 27.6%.

Currency Translation Adjustment

reporting currency is the U.S.

The functional currency of our parent company, AHS, Avalon RT 9, and Avalon Lab is the U.S.

and the functional currency of Avalon Shanghai is the Chinese Renminbi (“RMB”).

loss attributable to our common shareholders (after taking into effect $162,473 in deemed contribution) was $2,319,638, or $1.43 per share

(basic and diluted), for the three months ended March 31, 2025, as compared to $1,367,513, or $1.86 per share (basic and diluted), for

the three months ended March 31, 2024, an increase of $952,125, or 69.6%.

Foreign Currency Translation Adjustment

Our reporting currency

The functional currency of our parent company, AHS, Avalon RT 9, Avalon Lab, and Q&A Distribution is the U.S.

dollar and the functional currency of Avalon Shanghai is the Chinese Renminbi (“RMB”).

The financial statements of our subsidiary

5 unchanged sentences

As a result of foreign currency translations, which are

a non-cash adjustment, we reported a foreign currency translation gain of $3,043 and a foreign currency translation loss of $8,685 for

the three months ended September 30, 2024 and 2023, respectively.

As a result of foreign currency translations, which are a non-cash

adjustment, we reported a foreign currency translation gain of $2,829 and a foreign currency translation loss of $16,026 for the nine

months ended September 30, 2024 and 2023, respectively.

a non-cash adjustment, we reported a foreign currency translation gain of $279 and a foreign currency translation loss of $2,920 for the

three months ended March 31, 2025 and 2024, respectively.

This non-cash gain/loss had the effect of decreasing/increasing our reported

comprehensive loss in each respective period.

Comprehensive

As a result of our foreign currency translation adjustment, we had

comprehensive loss of $1,676,157 and $1,493,760 for the three months ended September 30, 2024 and 2023, respectively.

As a result of our foreign currency translation adjustment, we had

comprehensive loss of $5,175,910 and $7,167,902 for the nine months ended September 30, 2024 and 2023, respectively.

and Capital Resources

Comprehensive Loss

As a result of our foreign

currency translation adjustment, we had comprehensive loss of $2,481,832 and $1,370,433 for the three months ended March 31, 2025 and

2024, respectively.

Liquidity and Capital Resources

have a limited operating history and our continued growth is dependent upon the continuation of generating rental revenue from our income-producing

real estate property in New Jersey and income from equity method investment through our equity interest in Lab Services MSO, as well

as obtaining additional financing to fund future obligations and pay liabilities arising from ordinary course business operations.

addition, the current cash balance cannot be projected to cover our operating expenses for the next twelve months from the release date

of this Quarterly Report on Form 10-Q.

These matters raise substantial doubt about our ability to continue as a going concern.

to continue as a going concern is dependent on our ability to raise additional capital, implement our business plan, and generate sufficient

There are no assurances that we will be successful in our efforts to generate sufficient revenues, maintain sufficient cash

balance or report profitable operations or to continue as a going concern.

As described below, we have raised additional capital through

the sale of equity and debt and we plan to raise additional capital in the future through the sale of equity or debt to implement our

business plan.

However, there is no assurance these plans will be realized and that any additional financings will be available to us

on satisfactory terms and conditions, if at all.

is the ability of a company to generate funds to support its current and future operations, satisfy its obligations as they come due

and otherwise operate on an ongoing basis.

At September 30, 2024 and December 31, 2023, we had a cash balance of approximately $1,024,000

and $285,000, respectively.

real estate property in New Jersey, generating revenue for selling of Keto Air, as well as obtaining additional financing to fund future

obligations and pay liabilities arising from ordinary course business operations.

In addition, the current cash balance cannot be projected

to cover our operating expenses for the next twelve months from the release date of this report.

These matters raise substantial doubt

about our ability to continue as a going concern.

Our ability to continue as a going concern is dependent on our ability to raise additional

capital, implement our business plan, and generate sufficient revenues.

There are no assurances that we will be successful in our efforts

to generate sufficient revenues, maintain sufficient cash balance or report profitable operations or to continue as a going concern.

plan to raise capital in the future through the sale of equity or debt to implement our business plan.

However, there is no assurance

these plans will be realized and that any additional financings will be available to us on satisfactory terms and conditions, if at all.

is the ability of a company to generate funds to support its current and future operations, satisfy its obligations as they come due and

otherwise operate on an ongoing basis.

At March 31, 2025 and December 31, 2024, we had a cash balance of approximately $1,370,000 and

$2,856,000, respectively.

These funds are kept in financial institutions located as follows:

September 30, 2024

December 31, 2023

United States

following table sets forth a summary of changes in our working capital deficit from December 31, 2023 to September 30, 2024:

September 30,

The following table sets

forth a summary of changes in our working capital deficit from December 31, 2024 to March 31, 2025:

Working capital deficit:

5 unchanged sentences

$ (1,009,038 )

Our working capital deficit increased by $5,023,533 to $10,935,352

at September 30, 2024 from $5,911,819 at December 31, 2023.

The increase in working capital deficit was primarily attributable to a decrease

in rent receivable of approximately $120,000 driven by collection efforts in the nine months ended September 30, 2024, an increase in

accrued liabilities and other payables of $288,000 mainly due to the increase in accrued Delaware state franchise tax in the nine months

ended September 30, 2024, an increase in accrued liabilities and other payables – related parties of approximately $507,000 mainly

due to our equity method investment payable paid by a related party on our behalf, a significant increase in advance from pending sale

of noncontrolling interest – related party of approximately $2,022,000 resulting from advance received in connection with the membership

interest purchase agreement entered into in November 2023 in the nine months ended September 30, 2024, an increase in note payable, net,

of approximately $4,719,000, which was attributable to the reclassification of note payable from non-current to current, and an increase

in convertible note payable, net, of approximately $211,000, offset by an increase in cash of approximately $739,000, a decrease in accrued

professional fees of approximately $1,191,000 resulting from payments made to our professional service providers in the nine months ended

September 30, 2024, a decrease in accrued payroll liability and compensation of approximately $201,000, and a decrease in equity method

investment payable of approximately $667,000 resulting from payment of $100,000 made to investee and payment of approximately $567,000

made by a related party on our behalf in the nine months ended September 30, 2024.

the exchange rate conversion is different for the condensed consolidated balance sheets and the condensed consolidated statements of

cash flows, the changes in assets and liabilities reflected on the condensed consolidated statements of cash flows are not necessarily

Our working capital deficit

increased by $1,009,038 to $11,655,095 at March 31, 2025 from $10,646,057 at December 31, 2024.

The increase in working capital deficit

was primarily attributable to a decrease in cash of approximately $1,487,000, an increase in accrued professional fees of approximately

$373,000 which was mainly attributable to the increase in professional services related to our potential merger with YOOV, an increase

in advance from pending sale of noncontrolling interest – related party of approximately $220,000 resulting from advance received

in connection with the membership interest purchase agreement entered into in November 2023 in three months ended March 31, 2025, and

an increase in convertible note payable, net, of approximately $284,000 driven by the amortization of debt discount and debt issuance

costs of approximately $284,000 in the three months ended March 31, 2025, offset by an increase in current portion of receivable from

sale of equity method investment of $975,000 resulting from execution of the Redemption Agreement signed on February 26, 2025 as described

elsewhere in this report, and a decrease in accrued liabilities and other payables – related parties of approximately $633,000 which

was extinguished upon our sale of equity method investment in the first quarter of 2025.

the exchange rate conversion is different for the condensed consolidated balance sheets and the condensed consolidated statements of cash

flows, the changes in assets and liabilities reflected on the condensed consolidated statements of cash flows are not necessarily

identical with the comparable changes reflected on the condensed consolidated balance sheets.

Flows for the Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023

following table summarizes the key components of our cash flows for the nine months ended September 30, 2024 and 2023:

Nine Months Ended

September 30,

Cash Flows for the Three Months Ended March

31, 2025 Compared to the Three Months Ended March 31, 2024

The following summarizes the key components of

our cash flows for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

Net cash used in operating activities

$ (1,801,926 )

$ (5,708,402 )

Net cash used in investing activities

Net cash provided by investing activities

Net cash provided by financing activities

Effect of exchange rate on cash

Net increase (decrease) in cash

Net (decrease) increase in cash

$ (1,486,723 )

Net cash flow used in operating

activities for the nine months ended September 30, 2024 was $3,890,993, which primarily reflected our consolidated net loss of approximately

$5,179,000, and the non-cash items adjustment, primarily consisting of change in fair market value of derivative liability of approximately

$381,000, and the changes in operating assets and liabilities, primarily consisting of a decrease in accrued liabilities and other payables

of approximately $1,176,000 resulting from payments made to our vendors in the nine months ended September 30, 2024, offset by a decrease

in rent receivable of approximately $132,000 driven by our collection efforts, and the non-cash items adjustment, primarily consisting

of depreciation of approximately $133,000, stock-based compensation and service expense of approximately $255,000, loss from equity method

investment of approximately $670,000 which was mainly attributable to the amortization of

identifiable intangible assets acquired from Lab Services MSO acquisition of approximately $500,000 and the impairment of goodwill acquired

from Lab Services MSO acquisition of approximately $260,000, resulting from Lab Services MSO’s lower revenues and net incomes

than anticipated and the decline in our stock price and market capitalization, distribution of earnings

from equity method investment of approximately $612,000, and amortization of debt issuance costs and debt discount of approximately $1,115,000.

cash flow used in operating activities for the nine months ended September 30, 2023 was $5,708,402, which primarily reflected our consolidated

net loss of approximately $7,152,000, and the changes in operating assets and liabilities, primarily consisting of a decrease in accrued

liabilities and other payables of approximately $140,000 due to payments made to vendors in the nine months ended September 30, 2023,

and the non-cash items adjustment, primarily consisting of income from equity method investment of approximately $351,000 resulting from

our purchase of a 40% equity interest in Lab Services MSO in February 2023, and change in fair market value of derivative liability of

approximately $129,000, offset by depreciation of approximately $167,000, stock-based compensation and service expense of approximately

$1,056,000, impairment of equity method investment of approximately $464,000, and amortization of debt issuance costs and debt discount

of approximately $291,000.

expect our cash used in operating activities to increase in the next 12 months due to the following:

development and commercialization of new products;

increase in public relations and/or sales promotions for existing and/or new brands as we

expand within existing markets or enter new markets.

cash flow used in investing activities was $100,000 for the nine months ended September 30, 2024, as compared to $22,171 for the nine

months ended September 30, 2023.

During the nine months ended September 30, 2024, we paid $100,000 for the acquisition of a 40% interest

in Lab Services MSO.

During the nine months ended September 30, 2023, we made payment for purchase of property and equipment of approximately

cash flow provided by financing activities was $4,726,942 for the nine months ended September 30, 2024, as compared to $4,091,323 for

the nine months ended September 30, 2023.

During the nine months ended September 30, 2024, we received net proceeds from the issuance

of convertible debts and warrants of approximately $3,085,000 (net of original issue discount of approximately $177,000 and cash paid

for convertible note issuance costs of approximately $283,000), an advance from the pending sale of a noncontrolling interest in a subsidiary

of approximately $2,022,000, and net proceeds from equity offering of approximately $2,719,000 (net of cash paid for commission and other

offering costs of approximately $138,000), offset by repayments made for convertible debt of $3,100,000.

During the nine months ended

September 30, 2023, we received proceeds from related party borrowings of $850,000, and net proceeds from issuance of convertible debt

and warrants of approximately $1,690,000 (net of original issue discount of $100,000 and cash paid for convertible note issuance costs

of approximately $211,000), and net proceeds from issuance of balloon promissory note of approximately $936,000 (net of cash paid for

promissory note issuance costs of approximately $64,000), and net proceeds from equity offering of approximately $616,000 (net of cash

paid for commission and other offering costs of approximately $19,000).

following trends are reasonably likely to result in a material decrease in our liquidity over the near to long term:

an increase in working

capital requirements to finance our current business;

the use of capital for

acquisitions and the development of business opportunities;

the cost of being a public

2019 Credit Facility

the third quarter of 2019, we entered into a $20 million credit facility (the “Line of Credit”) provided by our Chairman

of the Board and a significant (and our largest) stockholder, Wenzhao Lu.

The Line of Credit bears interest at a rate of 5% and provides

for maturity on drawn loans 36 months after funding.

As of September 30, 2024, we had used approximately $6.8 million of the Line of

Credit and had approximately $13.2 million remaining available under the Line of Credit.

June 2023, we entered into a sales agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (“Roth”)

under which we may offer and sell from time to time shares of our common stock having an aggregate offering price of up to $3.5 million.

From 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.

2024 Convertible Note Financing

March 2024, we entered into a security purchase agreement with a lender (the “March 2024 Lender”) and closed on the issuance

of a 13.0% senior secured convertible promissory note in the principal amount of $700,000 (the “March 2024 Convertible Note”),

as well as the issuance of 7,000 shares of common stock as a commitment fee and warrants for the purchase of up to 16,827 shares of our

common stock.

We and our subsidiaries also entered into security agreements in connection with issuance of the March 2024 Convertible

Note, 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 our obligations under the March 2024 Convertible Note.

2024 Convertible Note Financing

June 2024, we entered into a security purchase agreement with a lender (the “June 2024 Lender”) and closed on the issuance

of a 13.0% senior secured convertible promissory note in the principal amount of $2,845,000 (the “June 2024 Convertible Note”),

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

our common stock.

We and our subsidiaries also entered into security agreements in connection with issuance of the June 2024 Convertible

Note, 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 our obligations under the June 2024 Convertible Note.

estimate that, based on current plans and assumptions, our available cash will be insufficient to satisfy our cash requirements under

our present operating expectations through cash flow provided by operations, and cash available under the Line of Credit and sales of

Other than funds received as described above and cash resources generated from our operations, we presently have no other significant

alternative source of working capital.

We have used these funds to fund our operating expenses, pay our obligations and grow our company.

We will need to raise significant additional capital to fund our operations and to provide working capital for our ongoing operations

and obligations.

Therefore, our future operation is dependent on our ability to secure additional financing.

Financing transactions may

include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms.

However, the trading price

of our common stock and a downturn in the U.S.

equity and debt markets could make it more difficult to obtain financing through the issuance

of equity or debt securities.

Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and

expenses or experience unexpected cash requirements that would force us to seek alternative financing.

Furthermore, if we issue additional

equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences

or privileges senior to those of existing holders of our common stock.

The inability to obtain additional capital may restrict our ability

to grow and may reduce our ability to continue to conduct business operations.

If we are unable to obtain additional financing, we will

be required to cease our operations.

To date, we have not considered this alternative, nor do we view it as a likely occurrence.

Currency Exchange Rate Risk

cash flow used in operating activities for the three months ended March 31, 2025 was $1,801,926,

which primarily reflected our consolidated net loss of approximately $2,482,000, and the non-cash item adjustments, primarily consisting

of income from equity method investment of approximately $393,000, offset by amortization of debt issuance costs and debt discount of

approximately $314,000, and change in fair market value of derivative liability of approximately $114,000, and the changes in operating

assets and liabilities, primarily consisting of an increase in accrued liabilities and other payables of approximately $556,000, mainly

due to the increase in services related to our potential merger with YOOV in the three months ended March 31, 2025.

cash flow used in operating activities for the three months ended March 31, 2024 was $915,709, which primarily reflected our consolidated

net loss of approximately $1,368,000, and the non-cash items adjustment, primarily consisting of income from equity method investment

of approximately $107,000, offset by distribution of earnings from equity method investment of approximately $161,000, and amortization

of debt issuance costs and debt discount of approximately $272,000, and the changes in operating assets and liabilities, primarily consisting

of a decrease in rent receivable of approximately $113,000 driven by our collection efforts.

We expect our cash used

in operating activities to increase in the next 12 months due to the following:

● the development and commercialization of new products;

● an increase in public relations and/or sales promotions for existing and/or new brands as we expand within

existing markets or enter new markets.

Net cash flow provided

by investing activities was $95,000 for the three months ended March 31, 2025, as compared to $0 for the three months ended March 31,

During the three months ended March 31, 2025, we received proceeds from sale of equity method investment of $95,000.

investing activity during the three months ended March 31, 2024.

Net cash flow provided

by financing activities was $219,972 for the three months ended March 31, 2025, as compared to $936,772 for the three months ended March

During the three months ended March 31, 2025, we received advance from sale of noncontrolling interest in subsidiary of approximately

During the three months ended March 31, 2024, we received net proceeds from issuance of convertible debt and warrants of approximately

$592,000 (net of original issue discount of $35,000 and cash paid for convertible note issuance costs of approximately $73,000), and advance

from sale of noncontrolling interest in subsidiary of approximately $1,210,000, offset by repayments made for convertible debt of $866,000.

The following trends

are reasonably likely to result in a material decrease in our liquidity over the near to long term:

an increase in working capital requirements to finance our current business;

the use of capital for acquisitions and the development of business opportunities;

the cost of being a public company.

In addition, the impact

that the imposition of tariffs and changes to global trade policies could have on our results of operations is uncertain.

We estimate that, based

on current plans and assumptions, our available cash will be insufficient to satisfy our cash requirements under our present operating

expectations through cash flow provided by operations and sales of equity.

Other than funds received as described above and cash resources

generated from our operations, we presently have no other significant alternative source of working capital.

We have used these funds

to fund our operating expenses, pay our obligations and grow our company.

We will need to raise significant additional capital to fund

our operations and to provide working capital for our ongoing operations and obligations.

Therefore, our future operation is dependent

on our ability to secure additional financing.

Financing transactions may include the issuance of equity or debt securities, obtaining

credit facilities, or other financing mechanisms.

However, there can be no assurance that financing will be available in amounts or on

terms acceptable to the Company.

Additionally, the trading price of our common stock and a downturn in the U.S.

equity and debt markets

could make it more difficult to obtain financing through the issuance of equity or debt securities.

Even if we are able to raise the funds

required, it is possible that we could incur unexpected costs and expenses or experience unexpected cash requirements that would force

us to seek alternative financing.

Furthermore, if we issue additional equity or debt securities, stockholders may experience additional

dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock.

The inability to obtain additional capital may restrict our ability to grow and may reduce our ability to continue to conduct business

If we are unable to obtain additional financing, we will be required to cease our operations.

To date, we have not considered

this alternative, nor do we view it as a likely occurrence.

Foreign Currency

Exchange Rate Risk

ceased all operations in China in 2022, with the exception of a small administrative office.

We did not during the nine months ended

September 30, 2024, and do not expect in the foreseeable future, to generate any additional revenue from PRC operations.

Thus, exchange

rate fluctuations between the RMB and the U.S.

dollar do not have a material effect on us.

For the three months ended September 30, 2024

and 2023, we had an unrealized foreign currency translation gain of approximately $3,000 and an unrealized foreign currency translation

loss of approximately $9,000, respectively, because of changes in the exchange rate.

For the nine months ended September 30, 2024 and

2023, we had an unrealized foreign currency translation gain of approximately $3,000 and an unrealized foreign currency translation loss

of approximately $16,000, respectively, because of changes in the exchange rate.

effect of inflation on our revenues and operating results was not significant for the three and nine months ended September 30, 2024

We did not during the three months ended March 31, 2025, and do not expect in the foreseeable future, to generate any additional revenue

from PRC operations.

Thus, exchange rate fluctuations between the RMB and the U.S.

dollar do not, and are not expected to, have a material

effect on us.

For the three months ended March 31, 2025 and 2024, we had an unrealized foreign currency translation gain of approximately

$300 and an unrealized foreign currency translation loss of approximately $3,000, respectively, because of changes in the exchange rate.

effect of inflation on our revenues and operating results was not significant for the three

months ended March 31, 2025 and 2024.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by

As a smaller reporting

company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this Item.

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-Q

Item 2. Management’s Discussion and Analysis