What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-14 compared with 2025-05-13 · 365 added, 297 removed, 135 unchanged (83% of the section changed)

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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.

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 six months ended June 30, 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.

are developer of precision diagnostic consumer products and the advancement of intellectual property in cellular therapy.

We are currently

marketing the KetoAir™ breathalyzer device, which is owned and manufactured by Qi Diagnostics Limited, 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:

Food and Drug Administration as a

Class I medical device.

We also continue to focus on advancing our intellectual property portfolio through existing patent applications.

In addition, we own and operate commercial real estate at our headquarters in Freehold, NJ.

had the following areas of focus in the three and six months ended June 30, 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.

We are focused on bringing forward the existing patent applications previously

filed 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 in a laboratory to show binding affinity to the respective cytokines.

We currently are focused on bringing forward the existing patent applications previously filed as part of this program.

We also continue

to bring forward the existing patent application previously filed with Arbele related to CAR-T cellular therapy technologies.

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

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.

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

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).

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

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.

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

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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.

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.

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.

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.

reflected in the accompanying condensed consolidated financial statements, we had working capital deficit of approximately $14,132,000

at June 30, 2025 and had incurred recurring net losses and generated negative cash flow from operating activities of approximately $15,941,000

and $3,028,000 for the six months ended June 30, 2025, respectively .

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

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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

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.

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.

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

Accounting Policies

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.

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.

Making estimates requires management to exercise significant judgment.

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.

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 .

estimates during the three and six months ended June 30, 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 allowance for credit loss, 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.

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 .

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

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

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.

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 be utilized .

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 .

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.

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 .

RESULTS OF OPERATIONS

Comparison of Results of Operations for the

Three Months Ended March 31, 2025 and 2024

Three and Six Months Ended June 30, 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

For the three months

ended June 30, 2025, we had real property rental revenue of $350,406, as compared to $327,887 for the three months ended June 30, 2024,

representing an increase of $22,519, or 6.9%.

For the six months ended June 30, 2025, we had real property rental revenue of $700,206,

as compared to $642,475 for the six months ended June 30, 2024, representing an increase of $57,731, or 9.0%.

The increase was primarily

attributable to the increase in the number of tenants occupying the building in the three and six months ended June 30, 2025, as compared

to the three and six months ended June 30, 2024.

We expect that our revenue from real property rental will remain at its current level

with minimal increase in the near future .

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.

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.

ended June 30, 2025, our real property operating expenses amounted to $251,077, as compared to $285,488 for the three months ended June

30, 2024, representing a decrease of $34,411, or 12.1%.

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

of approximately $36,000, offset by an increase in other miscellaneous items of approximately $2,000.

For the six months ended

June 30, 2025, our real property operating expenses amounted to $531,467, as compared to $548,614 for the six months ended June 30, 2024,

representing a decrease of $17,147, or 3.1%.

The decrease was primarily attributable to a decrease in repairs and maintenance of approximately

$47,000, offset by an increase in utilities of approximately $9,000, an increase in building cleaning fee of approximately $7,000, and

an increase in other miscellaneous items of approximately $14,000.

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.

real property operating income for the three months ended June 30, 2025 was $99,329, representing an increase of $56,930, or 134.3%, as

compared to $42,399 for the three months ended June 30, 2024.

Our real property operating income for the six months ended June

30, 2025 was $168,739, representing an increase of $74,878, or 79.8%, as compared to $93,861 for the six months ended June 30, 2024.

increase was primarily attributable to the increase in real property rental revenue and the decrease in real property operating expenses

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.

As a result of the sale of our ownership of 40%

of Lab Services MSO on February 26, 2025, for the three months ended June 30, 2025, we had no income from our investment in Lab Services

For the six months ended June 30, 2025, we had

income from our investment in Lab Services MSO of $392,677, which consisted 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 of $111,156.

We sold our ownership of 40%

of Lab Services MSO on February 26, 2025 .

the three months ended June 30, 2024, we had loss from our investment in Lab Services MSO of $329,337, which consisted of our share

of Lab Services MSO’s net loss of $162,604 and amortization of identifiable intangible assets acquired from Lab Services MSO acquisition

of $166,733 .

the six months ended June 30, 2024, we had loss from our investment in Lab Services MSO of $221,868 which consisted of our share

of Lab Services MSO’s net income of $111,598 and amortization of identifiable intangible assets acquired from Lab Services MSO acquisition

of $333,466 .

Other Operating Expenses

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

Three Months Ended March 31,

the three and six months ended June 30, 2025 and 2024, other operating expenses consisted

of the following:

Three Months Ended

Six Months Ended

Advertising and marketing expenses

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Compensation and related benefits

Credit loss expense

Miscellaneous taxes

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Other general and administrative

● 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

the three months ended June 30, 2025, advertising and

marketing expenses increased by $259,892, or 414.8%, as compared to the three months ended

June 30, 2024.

For the six months ended June

30, 2025, advertising and marketing expenses increased by $286,042, or 265.7%, as compared

to the six months ended June 30, 2024.

The increase was primarily due to increased advertising

activities in the three and six months ended June 30, 2025.

We expect that our advertising

and marketing expenses will likely remain at its current quarterly level with minimal 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.

● 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

For the three months ended June 30, 2025, professional fees increased by $1,031,555, or 232.1%, as compared to the three months

ended June 30, 2024, which was primarily attributable to an increase in consulting fees of approximately $499,000, 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 accounting fees of approximately $392,000, mainly due to the increased

accounting services related to our potential merger with YOOV, and an increase in legal service fees of approximately $165,000, mainly

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

For the six months ended June 30, 2025, professional fees increased by $2,280,799, or 257.2%, as compared to the six months ended

June 30, 2024, which was primarily attributable to an increase in consulting fees of approximately $1,216,000, mainly due to the increase

in use of consulting service providers related to our potential merger with YOOV, an increase in accounting fees of approximately $417,000,

mainly due to the increased accounting services related to our potential merger with YOOV, an increase in legal service fees of approximately

$664,000, mainly due to the increased legal services related to our potential merger with YOOV, and 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 audit fees of approximately $114,000, mainly due to our switching to a different audit service provider, resulting in a

lower audit fee, and a decrease in other miscellaneous items of approximately $31,000.

We expect that our professional fees will decrease

in the near future .

● For the three months ended June 30, 2025, compensation and

related benefits decreased by $33,206, or 9.3%, as compared to the three months ended June 30, 2024.

the six months ended June 30, 2025, compensation and related benefits decreased by $46,357, or 6.5%, as compared to the six months

ended June 30, 2024.

The decrease was primarily attributable to the decreased compensation for our executive officer, David Jin.

that our compensation and related benefits will likely remain at its current quarterly level with minimal increase in the near future.

● For the three and six months ended June 30, 2025, we recorded credit

loss expense of $1,650,000.

Based on our periodic review of receivable from sale of equity method investment balance, we adjusted the

allowance for credit loss after considering management’s evaluation of the collectability of the receivable balance, including the

analysis of subsequent collection, age of the balance, Lab Services MSO’s collection history, and recent economic events.

three and six months ended June 30, 2024, we did not record any credit loss expense.

● For the three months ended June 30, 2025, miscellaneous taxes decreased by $180,289, or 80.1%, as compared

to the three months ended June 30, 2024.

For the six months ended June 30, 2025, miscellaneous taxes decreased by $169,385, or 66.6%,

as compared to the six months ended June 30, 2024.

The decrease was primarily attributable to decreased Delaware state franchise tax.

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

● For the three months ended June 30, 2025, directors’

and officers’ liability insurance premium decreased by $33,338, or 48.1%, as compared to the three months ended June 30, 2024.

the six months ended June 30, 2025, directors’ and officers’ liability insurance premium decreased by $67,128, or 48.4%, as

compared to the six months ended June 30, 2024.

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

in a lower premium .

● For the three months ended June 30, 2025, travel and

entertainment expense increased by $16,235, or 73.5%, as compared to the three months ended June 30, 2024.

six months ended June 30, 2025, travel and entertainment expense increased by $38,573, or 86.9%, as compared to the six months ended June

The increase was mainly due to increased business travel activities in the three and six months ended June 30, 2025 as compared

to the corresponding periods in 2024 .

● For the three months ended June 30, 2025, rent and related utilities expenses decreased by $4,745, or 30.8%, as compared to the three

months ended June 30, 2024 .

For the six months ended June 30, 2025, rent and related utilities

expenses decreased by $5,010, or 16.2%, as compared to the six months ended June 30, 2024 .

was attributable to decreased rental rate in the three and six months ended June 30, 2025 as compared to the comparable periods in 2024.

Other general and administrative expenses mainly consisted of NASDAQ listing fee, SEC registration fees, office supplies, and other miscellaneous items.

For the three months ended June 30, 2025, other general and administrative expenses increased by $63,787, or 302.2%, as compared to the three months ended June 30, 2024, which was mainly attributable to an increase in SEC registration fees of approximately $48,000 related to our registration statements on Form S-4 and Form S-3, and an increase in other miscellaneous items of approximately $16,000 .

For the six months ended June 30, 2025, other general and administrative expenses increased by $69,226, or 151.7%, as compared to the six months ended June 30, 2024, which was mainly attributable to an increase in SEC registration fees of approximately $48,000 related to our registration statements on Form S-4 and Form S-3, and an increase in other miscellaneous items of approximately $21,000 .

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%.

for the three months ended June 30, 2025, loss from operations amounted to $3,887,987, as compared to $1,504,363 for the three months

ended June 30, 2024, representing an increase of $2,383,624, or 158.4%.

As a result of the foregoing, for the six months ended June

30, 2025, loss from operations amounted to $5,694,762, as compared to $2,347,425 for the six months ended June 30, 2024, representing

an increase of $3,347,337, or 142.6%.

Other (Expense)

Other (expense) income

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

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

extinguishment of debt, and other miscellaneous income (expense) .

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%.

$9,570,611 for the three months ended June 30, 2025, as compared to $627,663 for the three months ended June 30, 2024, representing an

increase of $8,942,948, or 1,424.8%, which was primarily attributable to an increase in third party interest expense of approximately

$260,000, mainly driven by the increase in amortization of debt discount and debt issuance costs of approximately $246,000 and the increased

interest expense of approximately $14,000 from third party debts, and an increase in loss on extinguishment of debt of approximately $9,077,000

resulted from the reduction in the conversion price, offset by an increase in gain from change in fair value of derivative liability of

approximately $381,000, a decrease in interest expense – related party of approximately $10,000, and a decrease in other expense

of approximately $3,000.

Other expense, net,

totaled $10,245,947 for the six months ended June 30, 2025, as compared to $1,152,114 for the six months ended June 30, 2024, representing

an increase of $9,093,833, or 789.3%, which was primarily attributable to an increase in third party interest expense of approximately

$312,000, mainly driven by the increase in amortization of debt discount and debt issuance costs of approximately $287,000 and the increased

interest expense of approximately $25,000 from third party debts, and an increase in loss on extinguishment of debt of approximately

$9,077,000 resulted from the reduction in the conversion price, offset by an increase in gain from change in fair value of derivative

liability of approximately $235,000, a decrease in interest expense – related party of approximately $21,000, and a decrease in

other expense of approximately $39,000.

did not have any income taxes expense for the three and six months ended June 30, 2025 and 2024 since we incurred losses in these periods .

As a result of the factors

described above, our net loss was $13,458,598 for the three months ended June 30, 2025, as compared to $2,132,026 for the three months

ended June 30, 2024, representing an increase of $11,326,572, or 531.3%.

As a result of the factors

described above, our net loss was $15,940,709 for the six months ended June 30, 2025, as compared to $3,499,539 for the six months ended

June 30, 2024, representing an increase of $12,441,170, or 355.5%.

Net Loss Attributable to Avalon GloboCare

Common Shareholders

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%.

The net loss attributable to our common shareholders

was $13,458,598, or $6.22 per share (basic and diluted), for the three months ended June 30, 2025, as compared to $2,132,026, or $2.85

per share (basic and diluted), for the three months ended June 30, 2024, representing an increase of $11,326,572, or 531.3%.

The net loss attributable to our common shareholders

(after taking into effect $162,473 in deemed contribution) was $15,778,236, or $8.33 per share (basic and diluted), for the six months

ended June 30, 2025, as compared to $3,499,539, or $4.72 per share (basic and diluted), for the six months ended June 30, 2024, representing

an increase of $12,278,697, or 350.9%.

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.

reporting currency is the U.S.

The functional currency of our parent company, AHS, Avalon RT 9, Avalon Lab, and Q&A Distribution

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

The financial statements of our subsidiary

whose functional currency is the RMB are translated to U.S.

dollars using period end rate of exchange for assets and liabilities, average

rate of exchange for revenues, costs, and expenses and cash flows, and at historical exchange rate for equity.

Net gains and losses resulting

from foreign exchange transactions are included in the results of operations.

As a result of foreign currency translations, which are

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 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

The financial statements

of our subsidiary whose functional currency is the RMB are translated to U.S.

dollars using period end rate of exchange for assets

and liabilities, average rate of exchange for revenues, costs, and expenses and cash flows, and at historical exchange rate for equity.

Net gains and losses resulting from foreign exchange transactions are included in the results of operations.

As a result of foreign currency

translations, which are a non-cash adjustment, we reported a foreign currency translation gain of $104 and $2,706 for the three months

ended June 30, 2025 and 2024, respectively.

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

a foreign currency translation gain of $383 and a foreign currency translation loss of $214 for the six months ended June 30, 2025 and

2024, respectively.

This non-cash gain/loss had the effect of decreasing/increasing our reported comprehensive loss in each respective

Comprehensive Loss

a result of our foreign currency translation adjustment, we had comprehensive loss of $13,458,494 and $2,129,320 for the three months

ended June 30, 2025 and 2024, respectively .

a result of our foreign currency translation adjustment, we had comprehensive loss of $15,940,326 and $3,499,753 for the six months ended

June 30, 2025 and 2024, respectively .

Liquidity and Capital Resources

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

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 June 30, 2025 and December 31, 2024, we had a cash balance of approximately $202,000

and $2,856,000, respectively.

These funds are kept in financial institutions located as follows :

United States

The following table sets

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

following table sets forth a summary of changes in our working capital deficit from December 31, 2024 to June 30, 2025 :

Working capital deficit:

Total current assets

$ (2,303,410 )

Total current liabilities

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$ (3,486,262 )

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.

working capital deficit increased by $3,486,262 to $14,132,319 at June 30, 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 $2,655,000, an increase in accrued professional

fees of approximately $972,000 which was mainly attributable to the increase in professional services related to our potential merger

with YOOV, an increase in accrued payroll liability and compensation of approximately $232,000, an increase in advance from pending sale

of noncontrolling interest – related party of approximately $150,000 resulting from advance received in connection with the membership

interest purchase agreement entered into in November 2023 in six months ended June 30, 2025, an increase in stock subscription liability

of $150,000 resulting from the securities purchase agreement signed in June 2025, and an increase in convertible note payable, net, of

approximately $323,000 driven by the amortization of debt discount and debt issuance costs of approximately $443,000 in the six months

ended June 30, 2025 which was offset by the conversion of principal of approximately $120,000 into our common stock in the six months

ended June 30, 2025, offset by an increase in prepaid expense and other current assets of approximately $347,000 mainly due to the increase

in prepaid professional fees of approximately $271,000 and the increase in deferred offering costs of approximately $85,000, a decrease

in accrued liabilities and other payables of approximately $128,000 driven by payments made to our vendors in the six months ended June

30, 2025, 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

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

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,

Cash Flows for the Six Months Ended June 30,

2025 Compared to the Six Months Ended June 30, 2024

following summarizes the key components of our cash flows for the six months ended June 30, 2025 and 2024:

Six Months Ended

Net cash used in operating activities

$ (3,027,822 )

Net cash provided by investing activities

$ (1,997,616 )

Net cash provided by (used in) investing activities

Net cash provided by financing activities

Effect of exchange rate on cash

Net (decrease) increase in cash

Net decrease in cash

$ (2,654,777 )

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:

cash flow used in operating activities for the six months ended June 30, 2025 was $3,027,822, which primarily reflected our consolidated

net loss of approximately $15,941,000, and the non-cash item adjustments, primarily consisting of income from equity method investment

of approximately $393,000, and change in fair market value of derivative liability of approximately $447,000, and the changes in

operating assets and liabilities, primarily consisting of an increase in prepaid expense and other

assets of approximately $255,000 which was mainly due to the increase in prepaid professional fees of approximately $237,000, offset

by an increase in accrued liabilities and other payables of approximately $1,221,000 which was mainly driven by the increase in professional

services related to our potential merger with YOOV in the six months ended June 30, 2025, and the non-cash item adjustments, primarily

consisting of credit loss provision of $1,650,000 due to the increase in allowance for credit loss related to our receivable from sale

of equity method investment in the second quarter of 2025 as discussed in elsewhere in this report, stock-based compensation and service

expense of approximately $762,000, amortization of debt issuance costs and debt discount of approximately $1,124,000, and loss on extinguishment

of debt of approximately $9,077,000 resulted from the reduction in the conversion price.

cash flow used in operating activities for the six months ended June 30, 2024 was $1,997,616, which primarily reflected our consolidated

net loss of approximately $3,500,000, and the non-cash items adjustment, primarily consisting of change in fair market value of derivative

liability of approximately $212,000, and the changes in operating assets and liabilities, primarily consisting of a decrease in accrued

liabilities and other payables of approximately $151,000 resulting from payments made to our vendors in the first half of 2024, offset

by a decrease in rent receivable of approximately $113,000 driven by our collection efforts, and the non-cash items adjustment, primarily

consisting of stock-based compensation and service expense of approximately $150,000, loss from equity method investment of approximately

$222,000, distribution of earnings from equity method investment of approximately $473,000, and amortization of debt issuance costs and

debt discount of approximately $837,000 .

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;

1 unchanged sentence

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:

cash flow provided by investing activities was $95,000 for the six months ended June 30, 2025, as compared to net cash flow used in investing

activities of $100,000 for the six months ended June 30, 2024.

During the six months ended June 30, 2025, we received proceeds from sale

of equity method investment of $95,000.

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

in Lab Services MSO .

cash flow provided by financing activities was $277,636 for the six months ended June 30, 2025, as compared to $2,010,577 for the six

months ended June 30, 2024.

During the six months ended June 30, 2025, we received proceeds from stock subscription of $150,000 and received

advance from sale of noncontrolling interest in subsidiary of approximately $150,000, offset by payments made for offering costs of approximately

During the six months ended June 30, 2024, we received net proceeds from the issuance of convertible debts and warrants of approximately

$3,110,000 (net of original issue discount of approximately $177,000 and cash paid for convertible note issuance costs of approximately

$258,000), and an advance from the pending sale of a noncontrolling interest in a subsidiary of approximately $2,001,000, offset by repayments

made for convertible debt of $3,100,000 .

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;

1 unchanged sentence

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.

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

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.

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

6 unchanged sentences

Exchange Rate Risk

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

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.

We ceased all operations in

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

We did not during the three and six months ended June 30, 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 June 30, 2025 and

2024, we had an unrealized foreign currency translation gain of approximately $100 and $2,700, respectively, because of changes in the

exchange rate .

For the six months ended June 30, 2025 and 2024, we had an unrealized foreign

currency translation gain of approximately $400 and an unrealized foreign currency translation loss of approximately $200, respectively,

because of changes in the exchange rate .

The effect of inflation

on our revenues and operating results was not significant for the three and six months ended June 30, 2025 and 2024 .

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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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