What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-14 compared with 2025-08-14 · 411 added, 363 removed, 137 unchanged (85% of the section changed)

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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 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.

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

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 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.

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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.

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, 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 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.

Food and Drug Administration as a Class I medical

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 :

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

had the following areas of focus in the three and nine months ended September 30, 2025 and 2024 :

Research and Development

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.

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.

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

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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).

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 .

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

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.

We believe the KetoAir can be an essential tool to help

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

Cessation of Laboratory

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 services .

In order to preserve

cash and focus on product commercialization, we have suspended all research and development efforts related to cellular therapy.

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

Going Concern

These condensed consolidated

Our 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 .

As reflected in the

accompanying condensed consolidated financial statements, we had working capital deficit of approximately $11,515,000 at September 30,

2025 and had incurred recurring net losses and generated negative cash flow from operating activities of approximately $16,195,000 and

$4,389,000 for the nine months ended September 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 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.

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

Critical Accounting

Use of Estimates

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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

estimates during the three and nine months ended September 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

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

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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 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 .

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

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Comparison of Results of Operations for the

Three and Six Months Ended June 30, 2025 and 2024

Real Property Rental

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

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.

Three and Nine Months Ended September 30, 2025 and 2024

Real Property

Rental Revenue

the three months ended September 30, 2025, we had real property rental revenue of $350,099, as compared to $345,159 for the three

months ended September 30, 2024, representing an increase of $4,940, or 1.4%.

For the nine months ended September 30, 2025, we had real

property rental revenue of $1,050,305, as compared to $987,634 for the nine months ended September 30, 2024, representing an increase

of $62,671, or 6.3%.

The increase was primarily attributable to the increase in the number of tenants occupying the building in the three

and nine months ended September 30, 2025, as compared to the three and nine months ended September 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

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 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 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.

ended September 30, 2025, our real property operating expenses amounted to $234,366, as compared to $245,528 for the three months ended

September 30, 2024, representing a decrease of $11,162, or 4.5%.

The decrease was primarily attributable to a decrease in repairs and

maintenance of approximately $19,000, offset by an increase in other miscellaneous items of approximately $8,000.

For the nine months

ended September 30, 2025, our real property operating expenses amounted to $765,833, as compared to $794,142 for the nine months ended

September 30, 2024, representing a decrease of $28,309, or 3.6%.

The decrease was primarily attributable to a decrease in repairs and

maintenance of approximately $66,000, offset by an increase in utilities of approximately $10,000, an increase in building cleaning fee

of approximately $11,000, and an increase in other miscellaneous items of approximately $17,000.

Real Property

Operating Income

Our real property operating

income for the three months ended September 30, 2025 was $115,733, representing an increase of $16,102, or 16.2%, as compared to $99,631

for the three months ended September 30, 2024.

Our real property operating income for the nine months ended September 30, 2025 was $284,472,

representing an increase of $90,980, or 47.0%, as compared to $193,492 for the nine months ended September 30, 2024.

The increase was

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

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

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 .

(Loss) income

from Equity Method Investment – Lab Services MSO

a result of the sale of our ownership of 40% of Lab Services MSO on February 26, 2025, for the three months ended September 30, 2025,

we had no income from our investment in Lab Services MSO.

For the nine months ended September 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.

For 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.

For 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.

Other Operating Expenses

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

of the following:

the three and nine months ended September 30, 2025 and 2024, other operating expenses consisted of the following:

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Advertising and marketing expenses

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Compensation and related benefits

Credit loss expense

Credit loss recovery

Miscellaneous taxes

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Other general and administrative

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 September 30, 2025, advertising

and marketing expenses increased by $104,287, or 72.1%, as compared to the three months ended September 30, 2024.

For the nine months

ended September 30, 2025, advertising and marketing expenses increased by $390,329, or 154.7%, as compared to the nine months ended September

The increase was primarily due to increased advertising activities in the three and nine months ended September 30, 2025.

expect that our advertising and marketing expenses will likely remain at its current quarterly level with minimal increase in the near

● 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.

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

and other fees.

For the three months ended September 30, 2025, professional fees increased by $945,150, or 311.6%, as compared to the

three months ended September 30, 2024, which was primarily attributable to an increase in consulting fees of approximately $782,000,

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”), and an increase in legal service fees of approximately

$253,000, mainly due to the increased legal services related to our potential merger with YOOV, offset by a decrease in other miscellaneous

items of approximately $90,000.

For the nine months ended September 30, 2025, professional fees increased by $3,225,949, or 271.1%, as

compared to the nine months ended September 30, 2024, which was primarily attributable to an increase in consulting fees of approximately

$1,998,000, 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 $383,000, mainly due to the increased accounting services related to our potential merger with YOOV,

an increase in legal service fees of approximately $917,000, 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 $142,000, 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 $59,000.

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

● For the three months ended September 30, 2025, compensation

and related benefits decreased by $112,976, or 32.9%, as compared to the three months ended September 30, 2024.

For the nine months ended

September 30, 2025, compensation and related benefits decreased by $159,333, or 15.1%, as compared to the nine months ended September

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 .

We expect that

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

● For the three months ended September

30, 2025, we recorded credit loss recovery 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.

After unsuccessful collection efforts during the second quarter of 2025, management had decided to write off the

On or about July 22, 2025, we filed a lawsuit against Lab Services MSO.

We and Lab Services MSO entered into a Confidential

Settlement Agreement and Mutual Release dated August 26, 2025 whereby Lab Services MSO agreed to pay us in the aggregate of $1,722,000,

of which $600,000 was paid on August 29, 2025 and $1,122,000 to be paid on or before the first business day of each month, beginning September

2025 and ending August 2026, in monthly installments of $93,500.

The parties provided a mutual release, as well.

The suit was dismissed

in August 2025.

As a result, for the three months ended September 30, 2025, we recorded a credit loss recovery of $1,650,000

to reinstate the receivable which was written-off in the second quarter of 2025.

For the nine months ended September 30, 2025, our credit

loss recovery, net, was $0.

For the three and nine months ended September 30, 2024, we did not record any credit loss recovery.

● For the three months ended September 30, 2025, miscellaneous

taxes increased by $31,600, or 263.3%, as compared to the three months ended September 30, 2024, which was primarily attributable to

the increase in Delaware state franchise tax in the third quarter of 2025.

For the nine months ended September 30, 2025, miscellaneous

taxes decreased by $137,785, or 51.7%, as compared to the nine months ended September 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 September 30, 2025, directors’

and officers’ liability insurance premium decreased by $4,541, or 11.7%, as compared to the three months ended September 30, 2024.

For the nine months ended September 30, 2025, directors’ and officers’ liability insurance premium decreased by $71,669,

or 40.4%, as compared to the nine months ended September 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 September 30, 2025, travel

and entertainment expense decreased by $12,680, or 37.5%, as compared to the three months ended September 30, 2024, which was primarily

attributable to decreased business travel activities in the third quarter of 2025.

For the nine months ended September 30, 2025, travel

and entertainment expense increased by $25,893, or 33.1%, as compared to the nine months ended September 30, 2024, which was primarily

attributable to increased business travel activities in the nine months ended September 30, 2025 as compared to the corresponding period

● For the three months ended September 30, 2025, rent and related

utilities expenses decreased by $13,768, or 87.3%, as compared to the three months ended September 30, 2024.

For the nine months ended

September 30, 2025, rent and related utilities expenses decreased by $18,778, or 40.1%, as compared to the nine months ended September

The decrease was mainly due to the decreased monthly rent driven by decreased office space.

● 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 September 30,

2025, other general and administrative expenses decreased by $16,829, or 56.2%, as compared to the three months ended September 30, 2024,

which was mainly attributable to a decrease in NASDAQ listing fee of approximately $3,000, and a decrease in other miscellaneous items

of approximately $14,000.

For the nine months ended September 30, 2025, other general and administrative expenses increased by $52,397,

or 69.3%, as compared to the nine months ended September 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 $4,000.

Loss from Operations

As a result of the foregoing,

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

for the three months ended September 30, 2025, loss from operations amounted to $76,193, as compared to $1,269,961 for the three months

ended September 30, 2024, representing a decrease of $1,193,768, or 94.0%.

As a result of the foregoing, for the nine months ended September

30, 2025, loss from operations amounted to $5,770,955, as compared to $3,617,386 for the nine months ended September 30, 2024, representing

an increase of $2,153,569, or 59.5%.

Other (Expense)

(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

$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) 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).

expense, net, totaled $178,075 for the three months ended September 30, 2025, as compared to $409,239 for the three months ended September

30, 2024, representing a decrease of $231,164, or 56.5%, which was primarily attributable to a decrease in third party interest expense

of approximately $269,000, mainly driven by the decrease in amortization of debt discount and debt issuance costs of approximately $247,000

mainly due to the maturity of our June 2024 Convertible Note in June 2025 and the decreased interest expense of approximately $22,000

from third party debts, a decrease in interest expense – related party of approximately $11,000, and a decrease in other expense

of approximately $95,000 mainly due to the gain from litigation settlement, offset by a decrease in gain from change in fair value of

derivative liability of approximately $144,000 .

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 .

totaled $10,424,022 for the nine months ended September 30, 2025, as compared to $1,561,353 for the nine months ended September 30, 2024,

representing an increase of $8,862,669, or 567.6%, which was primarily attributable to an increase in third party interest expense of

approximately $43,000, mainly driven by the increase in amortization of debt discount and debt issuance costs of approximately $40,000

and the increased interest expense of approximately $3,000 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 of our June 2024 Convertible Note, offset by an increase

in gain from change in fair value of derivative liability of approximately $91,000, a decrease in interest expense – related party

of approximately $32,000, and a decrease in other expense of approximately $134,000 mainly due to the gain from litigation settlement.

We did not have any

income taxes expense for the three and nine months ended September 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%.

described above, our net loss was $254,268 for the three months ended September 30, 2025, as compared to $1,679,200 for the three months

ended September 30, 2024, representing a decrease of $1,424,932, or 84.9%.

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%.

described above, our net loss was $16,194,977 for the nine months ended September 30, 2025, as compared to $5,178,739 for the nine months

ended September 30, 2024, representing an increase of $11,016,238, or 212.7%.

Net Loss Attributable to Avalon GloboCare

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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%.

was $254,268, or $0.06 per share (basic and diluted), for the three months ended September 30, 2025, as compared to $1,679,200, or $1.82

per share (basic and diluted), for the three months ended September 30, 2024, representing a decrease of $1,424,932, or 84.9%.

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%.

(after taking into effect $162,473 in deemed contribution) was $16,032,504, or $6.10 per share (basic and diluted), for the nine months

ended September 30, 2025, as compared to $5,178,739, or $6.45 per share (basic and diluted), for the nine months ended September 30,

2024, representing an increase of $10,853,765, or 209.6%.

Foreign Currency Translation Adjustment

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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.

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.

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 $271 and $3,043 for the three months

ended June 30, 2025 and 2024, respectively.

ended September 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

a foreign currency translation gain of $654 and $2,829 for the nine months ended September 30, 2025 and 2024, respectively.

This non-cash

gain had the effect of decreasing our reported comprehensive loss in each respective period.

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 .

As a result of our foreign

currency translation adjustment, we had comprehensive loss of $253,997 and $1,676,157 for the three months ended September 30, 2025 and

2024, respectively.

a result of our foreign currency translation adjustment, we had comprehensive loss of $16,194,323 and $5,175,910 for the nine months

ended September 30, 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, 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

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.

We 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, 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.

We 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.

Liquidity 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, 2025 and December 31, 2024, we had a cash balance of approximately $334,000 and $2,856,000, respectively.

These funds are kept in financial institutions located as follows:

September 30, 2025

December 31, 2024

United States

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

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

September 30,

Working capital deficit:

5 unchanged sentences

$ (10,646,057 )

$ (3,486,262 )

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

working capital deficit increased by $868,585 to $11,514,642 at September 30, 2025 from $10,646,057 at December 31, 2024.

in working capital deficit was primarily attributable to a decrease in cash of approximately $2,522,000, an increase in accrued professional

fees of approximately $709,000 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

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

with YOOV, an increase in accrued payroll liability and compensation of approximately $326,000, and an increase in stock subscription

liability of $150,000 resulting from the securities purchase agreement signed in June 2025, offset by an increase in receivable from

sale of equity method investment of approximately $1,029,000 resulting from execution of the Redemption Agreement signed on February

26, 2025 and the Confidential Settlement Agreement and Mutual Release signed on August 26, 2025 as described elsewhere in this report,

an increase in prepaid expense and other current assets of approximately $340,000 mainly due to the increase in prepaid professional

fees of approximately $351,000, a decrease in accrued liabilities and other payables of approximately $ 233,000 driven by payments

made to our vendors in the nine months ended September 30, 2025, 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, and

a decrease in convertible note payable, net, of approximately $754,000 mainly due to the conversion of our June 2024 Convertible Note

in the principal amount of approximately $1,379,000 into our common stock in the nine months ended September 30, 2025 and the increase

in debt discount of approximately $27,000 resulting from our issuance of the July 2025 Convertible Note in the third quarter of 2025,

which was offset by our issuance of the July 2025 Convertible Note with principal of $200,000 in the third quarter of 2025 and the amortization

of debt discount and debt issuance costs for our convertible note of approximately $452,000 (excluding the initial fair value of the

Second Warrant of $621,353) in the nine months ended September 30, 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 .

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

Cash Flows for the Nine Months Ended September

30, 2025 Compared to the Nine Months Ended September 30, 2024

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

Nine Months Ended

September 30,

Net cash used in operating activities

4 unchanged sentences

Effect of exchange rate on cash

Net decrease in cash

Net (decrease) increase in cash

$ (2,522,378 )

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 .

cash flow used in operating activities for the nine months ended September 30, 2025 was $ 4,388,557, which primarily reflected

our consolidated net loss of approximately $16,195,000, and the non-cash item adjustments, consisting of income from equity method investment

of approximately $393,000, and change in fair market value of derivative liability of approximately $472,000, and the changes in operating

assets and liabilities, primarily consisting of an increase in prepaid expense and other assets of approximately $185,000 mainly due

to the increase in prepaid professional fees which were paid by cash of approximately $175,000, offset by an increase in accrued liabilities

and other payables of approximately $985,000 which was mainly driven by the increase in professional services related to our potential

merger with YOOV in the nine months ended September 30, 2025, and the non-cash item adjustments, primarily consisting of depreciation

of approximately $133,000, stock-based compensation and service expense of approximately $1,423,000, amortization of debt issuance costs

and debt discount of approximately $1,155,000, and loss on extinguishment of debt of approximately $9,077,000 resulted from the reduction

in the conversion price of our June 2024 Convertible Note.

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 item adjustments, 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 item adjustments, 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.

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.

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 .

● 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.

cash flow provided by investing activities was $752,635 for the nine months ended September 30, 2025, as compared to net cash flow used

in investing activities of $100,000 for the nine months ended September 30, 2024.

During the nine months ended September 30, 2025, we

received proceeds from sale of equity method investment of approximately $789,000, offset by payments made for improvement of commercial

real estate of approximately $36,000.

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

interest in Lab Services MSO.

Net cash flow provided

by financing activities was $1,112,871 for the nine months ended September 30, 2025, as compared to $4,726,942 for the nine months ended

September 30, 2024.

During the nine months ended September 30, 2025, we received proceeds from issuance of July 2025 Convertible Note

of $200,000, proceeds from stock subscription of $150,000, an advance from pending sale of noncontrolling interest in subsidiary of approximately

$50,000, net proceeds from the issuance of convertible preferred stock of $290,000 (net of cash paid for convertible preferred stock

issuance costs of $10,000), and proceeds from issuance of common stock and warrants approximately $476,000, offset by payments made for

offering costs of approximately $53,000.

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.

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.

increase in working capital requirements to finance our current business;

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

cost of being a public company.

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

4 unchanged sentences

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.

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

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 .

To date, we have not

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

Foreign Currency

Exchange Rate Risk

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.

We ceased all operations

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

We did not during the three and nine months ended September 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 .

For the three months ended September

30, 2025 and 2024, we had an unrealized foreign currency translation gain of approximately $300 and $3,000, respectively, because of

changes in the exchange rate.

For the nine months ended September 30, 2025 and 2024, we had an unrealized foreign currency translation

gain of approximately $700 and $2,800, 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 .

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

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis