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Item 7. Management’s Discussion and Analysis

2026-03-30 compared with 2025-03-31 · 327 added, 416 removed, 119 unchanged (86% of the section changed)

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion

and analysis of our financial condition and results of operations for the years ended December 31, 2024 and 2023 should be read in conjunction

with our consolidated financial statements and related notes to those consolidated financial statements that are included elsewhere in

Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve

risks and uncertainties.

following discussion and analysis of our financial condition and results of operations for the years ended December 31, 2025 and 2024

should be read in conjunction with our consolidated financial statements and related notes to those consolidated financial statements

that are included elsewhere in this report.

Certain information contained in the discussion and analysis set forth below includes forward-looking

statements that involve risks and uncertainties.

Special Note Regarding

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those set forth under the risk factors and business sections in this Annual Report on Form 10-K.

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.

In addition, we own commercial real estate that

houses our headquarters in Freehold, New Jersey.

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

Laboratory Acquisitions

We 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

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

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

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

Accordingly, beginning in February 2025, we no longer

offer laboratory services.

We are a technology-focused company developing

and acquiring innovative artificial intelligence platforms.

Through our AI-driven subsidiary, we are advancing next-generation AI systems,

including automated video generation, enterprise documentation, and workflow automation solutions.

We are also expanding our intellectual

property portfolio in cellular therapy and generative AI publishing and software.

In addition, we are marketing the KetoAir™ breathalyzer

device, which is registered with the U.S.

Food and Drug Administration as a Class I medical device, and plan to pursue additional diagnostic

applications for the technology.

In addition, we owned and operated commercial real estate at our headquarters in Freehold, NJ through

February 2026.

We had the following

areas of focus in 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 UK.

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

product through the KetoAir website and social media.

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

for measuring ketosis.

The KetoAir is a handheld

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

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

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

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

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

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

I medical device.

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

downloadable from Google Play (for Android mobile phones, approved) and iPhone (the app is currently being reviewed by Apple iOS AppStore).

It helps users monitor and manage their ketogenic diet and related programs.

We believe the KetoAir can be an essential tool to help diabetic

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

In order to preserve

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

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

We have begun the commercialization and development

of a versatile breathalyzer system.

We were granted 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.

the KetoAir device has some competitive advantages to other methods for measuring ketosis.

The KetoAir is a handheld device that allows the

user to detect acetone levels in exhaled breath.

The acetone level is in concentration units (ppm, part-per-million) such that the user

will know his/her real-time ketosis status:

inadequate ketosis (0-3.99 ppm), mild ketosis (4-9.99 ppm), optimal ketosis (10-40 ppm), or

alarming level (> 40 ppm).

The KetoAir is registered with the United States Food and Drug Administration as a Class I medical device.

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

Google Play (for Android mobile phones, approved) and iPhone (the app is currently being reviewed by Apple iOS AppStore).

It helps users

monitor and manage their ketogenic diet and related programs.

We believe the KetoAir can be an essential tool to help diabetic patients

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

Cessation of Laboratory Services

During 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.

Acquisition of an AI Generated Publishing Company

On December 12, 2025, we acquired RPM Interactive,

Inc., a Nevada corporation (“RPM”).

As a result of the acquisition, effective December

12, 2025, we are advancing next-generation AI systems, including automated video generation, enterprise documentation, and workflow automation

In order to preserve cash and focus on product

commercialization, we have suspended all research and development efforts related to cellular therapy.

We are redirecting 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 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

consolidated financial statements, we had working capital deficit of approximately $10,646,000 at December 31, 2024 and had incurred recurring

net losses and generated negative cash flow from operating activities of approximately $7,903,000 and $4,969,000 for the year ended December

31, 2024, 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 and obtaining additional financing to fund future obligations and pay liabilities arising from ordinary course

business operations.

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

from the release date of this report.

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

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

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

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

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.

Our 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 consolidated

financial statements, we had working capital deficit of approximately $12,651,000 at December 31, 2025 and had incurred recurring net

losses from continuing operations and generated negative cash flow from operating activities of continuing operations of approximately

$17,519,000 and $4,581,000 for the year ended December 31, 2025, respectively.

We have a limited operating history and our continued

growth is dependent upon the continuation of generating revenue for selling of Keto Air, generating revenue from advanced Agentic AI systems,

including automated video generation and workflow automation, and obtaining additional financing to fund future obligations and pay liabilities

arising from ordinary course business operations.

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

for the next twelve months from the release date of this Annual Report on Form 10-K.

These matters raise substantial doubt about our ability

to continue as a going concern.

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

our business plan, and generate sufficient revenues.

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

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

We plan on raising capital

through the sale of equity to implement our business plan.

However, there is no assurance these plans will be realized and that any additional

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

The accompanying consolidated financial statements

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Accounting Policies

The preparation of

the 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

consolidated financial statements and accompanying notes.

The preparation of the 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 consolidated financial statements and accompanying notes.

Making estimates requires management to exercise significant judgment.

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.

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

Significant estimates

during the years ended December 31, 2024 and 2023 include the useful life of investment in real estate and intangible assets, the assumptions

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

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

note payable, and the fair value of the consideration given and assets acquired in the purchase of our equity interest in Lab Services

Investment in Unconsolidated

We use the equity method

of accounting for our investment in, and earning or loss of, company that we do not control but over which we do exert significant influence.

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

in earnings and cash distributions.

We consider whether the

fair value of our equity method investment has declined below its carrying value whenever adverse event or change in circumstance indicates

that recorded value may not be recoverable.

If we consider any decline to be other than temporary (based on various factors, including

historical financial results and the overall health of the investee), then a write-down would be recorded to estimated fair value.

of equity method investment amounted to $259,579 and $9,651,361 for the years ended December 31, 2024 and 2023, respectively.

We classify distributions

received from equity method investments using the cumulative earnings approach.

Distributions received are considered returns on the investment

and classified as cash inflows from operating activities.

If, however, the investor’s cumulative distributions received, less distributions

received in prior periods determined to be returns of investment, exceeds cumulative equity in earnings recognized, the excess is considered

a return of investment and is classified as cash inflows from investing activities.

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 consolidated balance sheets.

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

Income taxes are accounted for pursuant to ASC 740 “Accounting

for Income Taxes,” which is an asset and liability approach that requires the recognition of deferred tax assets and liabilities

for the expected future tax consequences of events that have been recognized in our financial statements or tax returns.

The charge for

taxes is based on the results for the period as adjusted for items, which are non-assessable or disallowed.

It is calculated using tax

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 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.

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.

Accordingly, the actual results could

differ significantly from those estimates.

Significant estimates during the years ended December

31, 2025 and 2024 include the useful life of 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, the valuation of Series D convertible preferred stock (“Series D Preferred Stock”), the fair value of the consideration

given in the purchase of RPM, the fair value of assets acquired and liabilities assumed in acquisition, and the assumptions used to determine

fair value of warrants and embedded conversion features of convertible note payable.

We are governed by the income tax laws of China

and the United States.

Income taxes are accounted for pursuant to ASC 740 “Accounting for Income Taxes,” which is an asset

and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of

events that have been recognized in our financial statements or tax returns.

The charge for taxes is based on the results for the period

as adjusted for items, which are non-assessable or disallowed.

It is calculated using tax 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

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 Standards

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Years Ended December 31, 2025 and 2024

Property Rental Revenue

the year ended December 31, 2024, we had real property rental revenue of $1,333,403, as compared to $1,255,681 for the year ended December

31, 2023, an increase of $77,722, or 6.2%.

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

the building in the year ended December 31, 2024 as compared to the year ended December 31, 2023.

We expect that our revenue from real

property rent will remain at its current level with minimal increase in the near future.

Real Property Operating

Real property operating

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

and other expenses related to our rental properties.

For the year ended December

31, 2024, our real property operating expenses amounted to $1,065,574, as compared to $1,017,493 for the year ended December 31, 2023,

an increase of $48,081, or 4.7%.

The increase was primarily attributable to an increase in electric fee of approximately $40,000 and an

increase in other miscellaneous items of approximately $8,000.

Real Property Operating

Our real property operating

income for the year ended December 31, 2024 was $267,829, representing an increase of $29,641, or 12.4%, as compared to $238,188 for the

year ended December 31, 2023.

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.

Loss from Equity

Method Investment – Lab Services MSO

For the year ended December

31, 2024, we had loss from our investment in Lab Services MSO of $846,588, which consists of our share of Lab Services MSO’s net

income of $79,923, and amortization of identifiable intangible assets acquired from Lab Services MSO acquisition of $666,932, 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.

Income (Loss) from

Equity Method Investment – Lab Services MSO

For the year ended December 31, 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 year ended December

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Miscellaneous taxes

Research and development

Directors’ and officers’ liability insurance premium

3 unchanged sentences

Other general and administrative

● For the year ended December 31, 2024, advertising and marketing expenses decreased by $1,429,050, or 85.7%,

● For the year ended December 31, 2025, advertising and marketing expenses increased by $605,826, or 254.9%,

as compared to the year ended December 31, 2024.

The decrease was primarily due to decreased advertising activities in the year ended

The increase was primarily due to increased advertising activities in the year ended

December 31, 2025.

We expect that our advertising and marketing expenses will decrease in the near future as we conserve cash.

● Professional fees primarily consisted of accounting fees, audit

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

For the year ended

December 31, 2024, professional fees decreased by $1,254,372, or 40.8%, as compared to the year ended December 31, 2023, which was primarily

attributable to a decrease in consulting fees of approximately $352,000, mainly due to the decrease in use of consulting service providers

related to our acquisition of Lab Services MSO, a decrease in audit fees of approximately $174,000, due to the decreased audit services

related to our acquisition of Lab Services MSO, a decrease in accounting fees of approximately $431,000, mainly due to the decreased accounting

services related to our acquisition of Lab Services MSO, a decrease in legal service fees of approximately $385,000, mainly due to the

decreased legal services related to our acquisition of Lab Services MSO, and a decrease in other miscellaneous items of approximately

$47,000, offset by an increase in valuation fee for our equity method investment on Lab Services MSO of $135,000.

We expect that our professional

fees will likely remain at their current level with minimal increase in the near future.

We expect that our advertising and marketing expenses will likely remain at its 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 fees.

For the year ended December 31, 2025, professional fees increased by $3,663,939, or 230.4%, as compared to the year ended December 31, 2024, which was primarily attributable to an increase in consulting fees of approximately $2,099,000, mainly due to the increase in use of consulting service providers related to capital markets advisory and services related to our potential merger with YOOV, an increase in accounting fees of approximately $537,000, mainly due to the increased accounting services related to our potential merger with YOOV, an increase in legal service fees of approximately $1,049,000, 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 $93,000, 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 $57,000.

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

● For the year ended December 31, 2025, compensation and related benefits

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The decrease was primarily attributable to the decreased

compensation for two of our executive officers, David Jin and Meng Li.

We expect that our compensation and related benefits will remain

relatively steady, with minimal increase, in the near future .

● For the year ended December 31, 2024, miscellaneous taxes increased by $176,198, or 307.6%, as compared

to the year ended December 31, 2023.

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

We expect that

our miscellaneous taxes will decrease in the near future.

● For the year ended December 31, 2024, research and development expenses

decreased by $109,618, or 100.0%, as compared to the year ended December 31, 2023.

In the year ended December 31, 2024, we did not incur

any activity with respect to research and development projects as we redirected our funding efforts to our core business strategies discussed

● For the year ended December 31,

2024, directors’ and officers’ liability insurance premium decreased by $136,847, or 39.1%, as compared to the year ended

December 31, 2023.

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

compensation for our former executive officer, David Jin.

We expect that our compensation and related benefits will likely remain at its

current level with minimal increase in the near future.

● For the year ended December 31, 2025, miscellaneous taxes decreased by $19,857, or 8.5%, as compared to

the year ended December 31, 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 year ended December 31, 2025, directors’ and officers’

liability insurance premium decreased by $73,082, or 34.3%, as compared to the year ended December 31, 2024.

The decrease was mainly due

to our switching to a different insurance provider, resulting in a lower premium.

● For the year ended December 31, 2025, travel and entertainment expense

decreased by $57,677, or 34.6%, as compared to the year ended December 31, 2023.

The decrease was mainly due to decreased business travel

activities in the year ended December 31, 2024 as compared to the year ended December 31, 2023.

● For the year ended December 31, 2024, rent and related utilities

expenses decreased by $1,855, or 2.9%, as compared to the year ended December 31, 2023.

increased by $18,224, or 16.7%, as compared to the year ended December 31, 2024, which was primarily attributable to increased business

travel activities in the year ended December 31, 2025 as compared to the year ended December 31, 2024.

● For the year ended December 31, 2025, amortization expense increased by $93,833, or 100.0%, as compared

to the year ended December 31, 2024, which was attributable to increased amortization of identifiable intangible assets acquired, representing

developed technology and trade name, from December 12, 2025 (the date of acquisition) to December 31, 2025.

There was no comparable amortization

prior to the date of acquisition.

● For the year ended December 31, 2025, rent and related utilities expenses decreased by $34,175, or 54.9%,

as compared to the year ended December 31, 2024.

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

● In December 2024, we assessed our laboratory equipment for any impairment and concluded that there were

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● Other general and administrative expenses mainly consisted of NASDAQ

listing fee, office supplies, and other miscellaneous items.

For the year ended December 31, 2024, other general and administrative expenses

decreased by $31,942, or 19.9%, as compared to the year ended December 31, 2023, which was mainly attributable to a decrease in office

supplies of approximately $12,000, and a decrease in other miscellaneous items of approximately $20,000 due to our efforts at stricter

controls on corporate expenditure.

listing fee, SEC registration fees, office supplies, and other miscellaneous items.

For the year ended December 31, 2025, other general

and administrative expenses increased by $52,979, or 41.1%, as compared to the year ended December 31, 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 $5,000.

Loss from Operations

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for the year ended December 31, 2025, loss from operations amounted to $7,591,359, as compared to $4,841,250 for the year ended December

31, 2023, representing a decrease of $10,825,951, or 68.7%.

31, 2024, representing an increase of $2,750,109, or 56.8%.

Other (Expense)

Other (expense) income

mainly includes third party and related party interest expense, debt modification charge, change in fair value of derivative liability,

impairment of equity method investment on Epicon, gain on debts extinguishment, and other miscellaneous expense.

Other expense, net, totaled

$2,975,662 for the year ended December 31, 2024, as compared to $953,327 for the year ended December 31, 2023, an increase of $2,022,335,

or 212.1%, which was primarily attributable to an increase in third party interest expense of approximately $1,077,000, mainly driven

by the increase in amortization of debt discount and debt issuance costs of approximately $867,000 and the increased interest expense

of approximately $210,000 from third party debts, an increase in interest expense – related party of approximately $9,000, an increase

in debt modification charge of approximately $839,000, a decrease in gain on debts extinguishment of approximately $683,000, and an increase

in other expense of approximately $56,000, offset by an increase in gain from change in fair value of derivative liability of approximately

$186,000, a decrease in impairment of equity method investment on Epicon of approximately $455,000.

Other (expense) income mainly includes third party

and related party interest expense, debt modification charge, change in fair value of derivative liability, loss on extinguishment of

debt, and other miscellaneous income (expense).

Other expense, net, totaled $9,927,514 for the

year ended December 31, 2025, as compared to $2,198,354 for the year ended December 31, 2024, representing an increase of $7,729,160,

or 351.6%, which was primarily attributable to 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 a decrease in third party interest expense of approximately

$161,000, mainly driven by the decrease in amortization of debt discount and debt issuance costs of approximately $155,000, a decrease

in related party interest expense of approximately $42,000, a decrease in debt modification charge of approximately $839,000, an increase

in gain from change in fair value of derivative liability of approximately $164,000, and a decrease in other expense of approximately

$142,000 mainly due to the gain from litigation settlement.

have any income taxes expense for the years ended December 31, 2025 and 2024 since we incurred losses in these periods.

a result of the factors described above, our net loss was $7,903,394 for the year ended December 31, 2024, as compared to $16,707,010

for the year ended December 31, 2023, a decrease of $8,803,616, or 52.7%.

Net Loss from Continuing

As a result of the factors described above, our

net loss from continuing operations was $17,518,873 for the year ended December 31, 2025, as compared to $7,039,604 for the year ended

December 31, 2024, representing an increase of $10,479,269, or 148.9%.

Net Loss from Discontinued

Our net loss from discontinued operations was

$742,103 for the year ended December 31, 2025, as compared to $863,790 for the year ended December 31, 2024, representing a decrease of

$121,687, or 14.1%.

As a result of the factors described above, our

net loss was $18,260,976 for the year ended December 31, 2025, as compared to $7,903,394 for the year ended December 31, 2024, representing

an increase of $10,357,582, or 131.1%.

Net Loss Attributable

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Common Shareholders

net loss attributable to our common shareholders was $7,903,394, or $8.44 per share (basic and diluted), for the year ended December 31,

2024, as compared to $16,707,010, or $23.80 per share (basic and diluted), for the year ended December 31, 2023, a decrease of $8,803,616,

The net loss attributable to our common shareholders

(after taking into effect $162,473 in deemed contribution) was $18,098,503, or $5.64 per share (basic and diluted), for the year ended

December 31, 2025, as compared to $7,903,394, or $8.44 per share (basic and diluted), for the year ended December 31, 2024, representing

an increase of $10,195,109, or 129.0%.

Foreign Currency

Translation Adjustment

Our reporting currency is the

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

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.

Our reporting currency

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

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

1 unchanged sentence

As a result of foreign currency translations, which are

a non-cash adjustment, we reported a foreign currency translation loss of $273 and $18,590 for the years ended December 31, 2024 and 2023,

a non-cash adjustment, we reported a foreign currency translation loss of $9,402 and $273 for the year ended December 31, 2025 and 2024,

respectively.

1 unchanged sentence

Comprehensive Loss

of our foreign currency translation adjustment, we had comprehensive loss of $7,903,667 and $16,725,600 for the years ended December 31,

2024 and 2023, respectively.

As a result of our foreign currency translation

adjustment, we had comprehensive loss of $18,270,378 and $7,903,667 for the year ended December 31, 2025 and 2024, respectively.

Liquidity and Capital

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, 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

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.

As described below, we have raised additional

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

implement our business plan.

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

to us on satisfactory terms and conditions, if at all.

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.

We have a limited operating history and our continued

growth is dependent upon the continuation of generating revenue for selling of Keto Air, generating revenue from advanced Agentic AI systems,

including automated video generation and workflow automation, 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 December 31, 2025 and 2024, we had a cash balance of approximately $109,000 and $2,658,000, respectively.

funds are kept in financial institutions located as follows:

These funds are kept in financial

institutions located as follows:

December 31, 2025

5 unchanged sentences

Total current assets

$ (1,740,621 )

Total current liabilities

3 unchanged sentences

$ (2,005,180 )

Our working capital deficit increased

by $4,734,238 to $10,646,057 at December 31, 2024 from $5,911,819 at December 31, 2023.

The increase in working capital deficit was primarily

attributable to a decrease in rent receivable of approximately $117,000 driven by collection efforts in the year ended December 31, 2024,

an increase in accrued liabilities and other payables of $161,000 mainly due to the increase in accrued Delaware state franchise tax in

the year ended December 31, 2024, an increase in accrued liabilities and other payables – related parties of approximately $526,000

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

sale of noncontrolling interest – related party of approximately $2,622,000 resulting from advance received in connection with the

membership interest purchase agreement entered into in November 2023 in the year ended December 31, 2024, an increase in derivative liability

of approximately $103,000, an increase in note payable, net, of approximately $5,715,000, which was attributable to the reclassification

of note payable from non-current to current, and an increase in convertible note payable, net, of approximately $189,000, offset by n

increase in cash of approximately $2,571,000, a decrease in accrued professional fees of approximately $1,193,000 resulting from payments

made to our professional service providers in the year ended December 31, 2024, a decrease in operating lease obligation of approximately

$119,000, and a decrease in equity method investment payable of approximately $667,000 resulting from payment of $100,000 made to investee

and payment of approximately $567,000 made by a related party on our behalf in the year ended December 31, 2024.

the exchange rate conversion is different for the consolidated balance sheets and the consolidated statements of cash flows, the changes

in assets and liabilities reflected on the consolidated statements of cash flows are not necessarily identical with the comparable changes

reflected on the consolidated balance sheets.

Our working capital deficit increased by $2,005,180

to $12,651,237 at December 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 $2,549,000, an increase in accrued professional fees of approximately $1,221,000 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 $571,000, an increase in stock subscription liability of $150,000 resulting from the securities purchase

agreement signed in June 2025, and an increase in bridge loan payable, net, of approximately $197,000 driven by our bridge loan financing

in December 2025, offset by an increase in receivable from sale of equity method investment of $748,000 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, 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 $1,377,000 mainly due to the conversion of our June 2024 Convertible Note in the principal amount of approximately

$2,011,000 into our common stock in the year ended December 31, 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 $461,000 (excluding the initial fair value of the Second Warrant of $621,353) in the year ended December 31, 2025.

Because the exchange rate conversion is different

for the consolidated balance sheets and the consolidated statements of cash flows, the changes in assets and liabilities reflected on

the consolidated statements of cash flows are not necessarily identical with the comparable changes reflected on the consolidated balance

Flows for the Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024

1 unchanged sentence

Years Ended December 31,

Net cash used in operating activities

Net cash used in operating activities from continuing operations

$ (4,580,620 )

$ (4,668,458 )

Net cash used in investing activities

Net cash provided by financing activities

Net cash provided by (used in) investing activities from continuing operations

Net cash provided by financing activities from continuing operations

Net cash flows used in discontinued operations

Effect of exchange rate on cash

Net increase (decrease) in cash

Net (decrease) increase in cash

$ (2,549,091 )

cash flow used in operating activities for the year ended December 31, 2024 was $4,969,205, which primarily reflected our

consolidated net loss of approximately $7,903,000, and the non-cash item adjustment, consisting of change in fair market value of

derivative liability of approximately $374,000, and the changes in operating assets and liabilities, primarily consisting of a

decrease in accrued liabilities and other payables of approximately $1,165,000 resulting from payments made to our vendors in the

year ended December 31, 2024, and a decrease in operating lease obligation of approximately $123,000, offset by a decrease in rent

receivable of approximately $131,000 driven by our collection efforts, and the non-cash items adjustment, primarily consisting of

depreciation of approximately $178,000, amortization of operating lease right-of-use asset of approximately $123,000, stock-based

compensation and service expense of approximately $522,000, loss from equity method investments of approximately $847,000 which was

mainly attributable to the amortization of identifiable intangible assets acquired from Lab Services MSO acquisition of

approximately $667,000 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, amortization of debt

issuance costs and debt discount of approximately $1,411,000, impairment of laboratory equipment of approximately $111,000, and debt

modification charge of approximately $689,000.

flow used in operating activities for the year ended December 31, 2023 was $6,504,718, which primarily reflected our consolidated net

loss of approximately $16,707,000, and the changes in operating assets and liabilities, primarily consisting of a decrease in operating

lease obligation of approximately $113,000, and the non-cash items adjustment, consisting of change in fair market value of derivative

liability of approximately $188,000, and gain on debts extinguishment of approximately $683,000, offset by depreciation of approximately

$212,000, amortization of operating lease right-of-use asset of approximately $118,000, stock-based compensation and service expense of

approximately $1,180,000, loss from equity method investments of approximately $8,590,000 mainly due to the impairment of goodwill acquired

from Lab Services MSO acquisition resulting from Lab Services MSO’s lower revenues and net incomes than anticipated and the decline

in our stock price and market capitalization, impairment of equity method investment - Epicon of approximately $455,000 due to Epicon’s

series of operating losses and the joint venture partner unable to obtain funds to commence operations, and amortization of debt issuance

costs and debt discount of approximately $544,000 resulting from our outstanding convertible debt and note payable, and the changes in

operating assets and liabilities, primarily consisting of an increase in accrued liabilities and other payables – related parties

of approximately $106,000 driven by the increased accrued interest for related party.

Net cash flow used in

operating activities from continuing operations for the year ended December 31, 2025 was $4,580,620, which primarily reflected our consolidated

net loss from continuing operations of approximately $17,519,000, 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 $538,000, offset

by stock-based compensation and service expense of approximately $1,816,000, amortization of debt issuance costs and debt discount of

approximately $1,136,000, 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, and the changes in operating assets and liabilities, primarily consisting of an increase in accrued

liabilities and other payables of approximately $1,750,000 which was mainly driven by the increase in accrued professional fees of approximately

$1,221,000 related to our potential merger with YOOV in the year ended December 31, 2025 and the increase in accrued payroll liability

and compensation of approximately $571,000.

flow used in operating activities from continuing operations for the year ended December 31, 2024 was $4,668,458, which primarily reflected

our consolidated net loss from continuing operations of approximately $7,040,000, and the non-cash item adjustment, consisting of change

in fair market value of derivative liability of approximately $374,000, and the changes in operating assets and liabilities, primarily

consisting of an increase in prepaid expense and other assets of approximately $107,000 mainly due to the increase in finished goods of

approximately $92,000, a decrease in accrued liabilities and other payables of approximately $1,206,000 resulting from payments made to

our vendors in the year ended December 31, 2024, and a decrease in operating lease obligation of approximately $123,000, offset by the

non-cash items adjustment, primarily consisting of amortization of operating lease right-of-use asset of approximately $123,000, stock-based

compensation and service expense of approximately $522,000, loss from equity method investments of approximately $847,000 which was mainly

attributable to the amortization of identifiable intangible assets acquired from Lab Services MSO acquisition of approximately $667,000

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, amortization of debt issuance costs and debt discount of approximately $1,292,000,

impairment of laboratory equipment of approximately $111,000, and debt modification charge of approximately $689,000.

We expect our cash used

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

● the development and

commercialization of new products;

● an increase

in public relations and/or sales promotions for existing and/or new brands as we expand within existing markets or enter new markets.

cash flow used in investing activities was $100,000 for the year ended December 31, 2024, as compared to $22,159 for the year ended December

During the year ended December 31, 2024, we paid $100,000 for the acquisition of a 40% interest in Lab Services MSO.

the year ended December 31, 2023, we made payment for purchase of property and equipment of approximately $22,000.

cash flow provided by financing activities was $7,638,667 for the year ended December 31, 2024, as compared to $4,825,337 for the year

ended December 31, 2023.

During the year ended December 31, 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 $2,122,000,

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

$138,000), and proceeds from issuance of convertible preferred stock of $3,500,000, offset by repayments made for loan payable –

related party of $400,000, and made for convertible debts of approximately $3,388,000.

During the year ended December 31, 2023, we received

proceeds from related party borrowings of $850,000, and net proceeds from issuance of convertible debt and warrants of approximately $2,238,000

(net of original issue discount of $135,000 and cash paid for convertible note issuance costs of approximately $327,000), and net proceeds

from issuance of balloon promissory note of approximately $936,000 (net of cash paid for promissory note issuance costs of approximately

$64,000), and net proceeds from equity offering of approximately $616,000 (net of cash paid for commission and other offering costs of

approximately $19,000), and advance from pending sale of noncontrolling interest in subsidiary of approximately $486,000, offset by repayments

made for convertible debt of $300,000.

● the development and commercialization of new products;

● an increase in public relations and/or sales promotions for

existing and/or new brands as we expand within existing markets or enter new markets.

Net cash flow provided by investing activities

from continuing operations was $1,083,026 for the year ended December 31, 2025, as compared to net cash flow used in investing activities

from continuing operations of $100,000 for the year ended December 31, 2024.

During the year ended December 31, 2025, we received proceeds

from sale of equity method investment of $1,069,000 and acquired cash on acquisition of approximately $14,000.

During the year ended December

31, 2024, we paid $100,000 for the acquisition of a 40% interest in Lab Services MSO.

Net cash flow provided by financing activities

from continuing operations was $1,400,820 for the year ended December 31, 2025, as compared to $7,638,667 for the year ended December

During the year ended December 31, 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), proceeds from the issuance of bridge loan of $300,000, and proceeds from issuance of common stock and warrants approximately

$476,000, offset by payments made for offering costs of approximately $65,000.

During the year ended December 31, 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 $2,122,000, net proceeds from equity offering of approximately $2,719,000 (net of cash paid

for commission and other offering costs of approximately $138,000), and proceeds from issuance of convertible preferred stock of $3,500,000,

offset by repayments made for loan payable – related party of $400,000, and made for convertible debts of approximately $3,388,000.

The following trends

3 unchanged sentences

● the cost of being a public company.

August 2019 Credit

In the third quarter

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

significant (and our largest) stockholder, Wenzhao Lu.

The Line of Credit allowed us to request loans thereunder and to use the proceeds

of such loans for working capital and operating expense purposes until the facility matured on December 31, 2024.

At-the-Market Offering

In June 2023, we entered

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

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

From July 1, 2023 to August

16, 2024, we sold an aggregate of 312,285 shares of our common stock at an average price of $11.19 per share to investors pursuant to

the Sales Agreement, and received net cash proceeds of $3,388,251, net of cash paid for Roth’s commissions and other fees of $104,992.

March 2024 Convertible

Note Financing

In March 2024, we entered

into a security purchase agreement with a lender (the “March 2024 Lender”) and closed on the issuance of a 13.0% senior secured

convertible promissory note in the principal amount of $700,000 (the “March 2024 Convertible Note”), as well as the issuance

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

June 2024 Convertible

Note Financing

In June 2024, we entered

into a security purchase agreement with a lender (the “June 2024 Lender”) and closed on the issuance of a 13.0% senior secured

convertible promissory note in the principal amount of $2,845,000 (the “June 2024 Convertible Note”), as well as the issuance

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

our subsidiaries also entered into security agreements in connection with issuance of the June 2024 Convertible Note, creating a security

interest in certain property of the Company and its subsidiaries to secure the prompt payment, performance and discharge in full of all

of our obligations under the June 2024 Convertible Note.

Series C Convertible

Preferred Stock Sold Pursuant to Securities Purchase Agreement

On December 19, 2024,

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

investor, York Sun Investment Holding Limited, a British Virgin Islands company (the “Investor”), pursuant to which the Company

agreed to issue and sell to the Investor, upon the terms and conditions set forth in the Securities Purchase Agreement, up to 7,000 shares

of Series C Convertible Preferred Stock for up to an aggregate of $7,000,000 (the “Purchase Price”), which is equal to $1,000

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

Convertible Preferred Stock in exchange for $3,500,000.

Each share of Series

C Convertible Preferred Stock is convertible into common stock of the Company (the “Conversion Shares”) at a conversion per

share equal to $2.41, at the option of the holder, at any time after the later of (i) the date of the shareholder approval of the issuance

of the Conversion Shares pursuant to the rules of the Nasdaq Stock Market (the “Shareholder Approval”) and (ii) the one year

anniversary of the date of the first issuance of any shares of the Series C Convertible Preferred Stock.

The Company shall not be required

to issue any Conversion Shares until the Shareholder Approval is obtained by the Company.

The Investor shall also have a right of first

refusal during the period beginning on the date of the Securities Purchase Agreement and continuing until such shareholder approval is

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

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

preferred stock.

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

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

The Investor’s

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

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

satisfaction of customary closing conditions.

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

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.

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.

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

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 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.

Foreign Currency Exchange Rate Risk

11 unchanged sentences

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

As a smaller reporting company,

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

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

3 unchanged sentences

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

What changed 10-K

Item 7. Management’s Discussion and Analysis