Change Agents Corporation.

Previous wording

The following discussion and analysis of our financial condition and results of operations for the three and nine months ended September 30, 2024 and 2023 should be read in conjunction with our condensed consolidated financial statements and related notes to those condensed consolidated financial statements that are included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

The following discussion and analysis of our financial condition and results of operations for the three months ended March 31, 2025 and 2024 should be read in conjunction with our condensed consolidated financial statements and related notes to those condensed consolidated financial statements that are included elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

We have the following areas of focus:

Current wording

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

Previous wording

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. We plan to sell the product through the KetoAir website and social media. We believe the KetoAir device has some competitive advantages to other methods for measuring ketosis and expect initial sales to occur in the United States.

Current wording

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. We sell the product through the KetoAir website and social media. We believe the KetoAir device has some competitive advantages to other methods for measuring ketosis.

Previous wording

We have embarked on a laboratory rollup strategy focused on forming joint ventures and acquiring laboratories that are accretive to our commercial strategy. As a first step, in February 2023, we acquired a 40% membership interest in Lab Services MSO.

Current wording

We had embarked on a laboratory rollup strategy focused on forming joint ventures and acquiring laboratories that were accretive to our commercial strategy. As a first step, in February 2023, we acquired a 40% membership interest in Lab Services MSO. Among other things, Lab Services MSO provides toxicology and wellness testing services, a broad portfolio of diagnostic tests, and a broad array of test services. During 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.

Previous wording

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.

Current wording

In order to preserve cash and focus on and product commercialization, we have currently suspended all research and development efforts related to cellular therapy in order to redirect our funding efforts to our core business strategies outlined above.

Previous wording

In addition, we own commercial real estate that houses our headquarters in Freehold, New Jersey. We also have income from equity method investment through our 40% interest in Lab Services MSO. These condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business.

Current wording

In addition, we owncommercial real estate that houses our headquarters in Freehold, New Jersey. These condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business.

Previous wording

As reflected in the accompanying condensed consolidated financial statements, we had working capital deficit of approximately $10,935,000 at September 30, 2024 and had incurred recurring net losses and generated negative cash flow from operating activities of approximately $5,179,000 and $3,891,000 for the nine months ended September 30, 2024, respectively.

Current wording

As reflected in the accompanying condensed consolidated financial statements, we had working capital deficit of approximately $11,655,000 at March 31, 2025 and had incurred recurring net losses and generated negative cash flow from operating activities of approximately $2,482,000 and $1,802,000 for the three months ended March 31, 2025, respectively.

Previous wording

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 income from equity method investment through our 40% interest in Lab Services MSO and obtaining additional financing to fund future obligations and pay liabilities arising from ordinary course business operations. In addition, the current cash balance cannot be projected to cover our operating expenses for the next twelve months from the release date of this Quarterly Report on Form 10-Q. These matters raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to raise additional capital, implement our business plan, and generate sufficient revenues. There are no assurances that we will be successful in our efforts to generate sufficient revenues, maintain sufficient cash balance or report profitable operations or to continue as a going concern. We plan on raising capital through the sale of equity to implement our business plan. However, there is no assurance these plans will be realized and that any additional financings will be available to us on satisfactory terms and conditions, or at all.

Current wording

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, and obtaining additional financing to fund future obligations and pay liabilities arising from ordinary course business operations. In addition, the current cash balance cannot be projected to cover our operating expenses for the next twelve months from the release date of this Quarterly Report on Form 10-Q. These matters raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to raise additional capital, implement our business plan, and generate sufficient revenues. There are no assurances that we will be successful in our efforts to generate sufficient revenues, maintain sufficient cash balance or report profitable operations or to continue as a going concern. We plan on raising capital through the sale of equity to implement our business plan. However, there is no assurance these plans will be realized and that any additional financings will be available to us on satisfactory terms and conditions, or at all.

Previous wording

Significant estimates during the three and nine months ended September 30, 2024 and 2023 include the useful life of investment in real estate and intangible assets, the assumptions used in assessing impairment of long-term assets, the valuation of deferred tax assets and the associated valuation allowances, the valuation of stock-based compensation, the assumptions used to determine fair value of warrants and embedded conversion features of convertible note payable, and the fair value of the consideration given and assets acquired in the purchase of our equity interest in Lab Services MSO.

Current wording

Significant estimates during the three months ended March 31, 2025 and 2024 include the useful life of investment in real estate and intangible assets, the assumptions used in assessing impairment of long-term assets, the valuation of deferred tax assets and the associated valuation allowances, the valuation of stock-based compensation, and the assumptions used to determine fair value of warrants and embedded conversion features of convertible note payable.

Previous wording

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

Current wording

Comparison of Results of Operations for the Three Months Ended March 31, 2025 and 2024

Previous wording

For the three months ended September 30, 2024, we had real property rental revenue of $345,159, as compared to $331,290 for the three months ended September 30, 2023, an increase of $13,869, or 4.2%. For the nine months ended September 30, 2024, we had real property rental revenue of $987,634, as compared to $934,360 for the nine months ended September 30, 2023, an increase of $53,274, or 5.7%. 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, 2024 as compared to the three and nine months ended September 30, 2023. We expect that our revenue from real property rent will remain at its current quarterly level with minimal increase in the near future.

Current wording

For the three months ended March 31, 2025, we had real property rental revenue of $349,800, as compared to $314,588 for the three months ended March 31, 2024, an increase of $35,212, or 11.2%. The increase was primarily attributable to the increase in the number of tenants occupying the building in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. We expect that our revenue from real property rent will remain at its current level with minimal increase in the near future.

Previous wording

For the nine months ended September 30, 2024, our real property operating expenses amounted to $794,142, as compared to $781,931 for the nine months ended September 30, 2023, an increase of $12,211, or 1.6%. The increase was primarily due to an increase in utilities of approximately $13,000, offset by a decrease in other miscellaneous items of approximately $1,000.

Current wording

For the three months ended March 31, 2025, our real property operating expenses amounted to $280,390, as compared to $263,126 for the three months ended March 31, 2024, an increase of $17,264, or 6.6%. The increase was primarily attributable to an increase in utilities of approximately $23,000, offset by a decrease in other miscellaneous items of approximately $6,000.

Previous wording

Our real property operating income for the three months ended September 30, 2024 was $99,631, representing an increase of $56,424, or 130.6%, as compared to $43,207 for the three months ended September 30, 2023. The increase was primarily attributable to an increase in real property rental revenue and a decrease in real property operating expenses as described above. Our real property operating income for the nine months ended September 30, 2024 was $193,492, representing an increase of $41,063, or 26.9%, as compared to $152,429 for the nine months ended September 30, 2023. The increase was primarily attributable to the increase in real property rental revenue as described above. We expect our real property operating income will remain at its current quarterly level with minimal increase in the near future.

Current wording

Our real property operating income for the three months ended March 31, 2025 was $69,410, representing an increase of $17,948, or 34.9%, as compared to $51,462 for the three months ended March 31, 2024. The increase was primarily attributable to the increase in real property rental revenue as described above. We expect our real property operating income will remain at its current level with minimal increase in the near future.

Previous wording

(Loss) income from Equity Method Investment – Lab Services MSO

Current wording

Income from Equity Method Investment – Lab Services MSO

Previous wording

For the nine months ended September 30, 2023, we had income from our investment in Lab Services MSO of $370,060, which consists of our share of Lab Services MSO’s net income of $913,378 and amortization of identifiable intangible assets acquired from Lab Services MSO acquisition of $543,318.

Current wording

For the three months ended March 31, 2025, we had income from our investment in Lab Services MSO of $392,677, which consists of our share of Lab Services MSO’s net income of $503,833 and amortization of identifiable intangible assets acquired from Lab Services MSO acquisition of $111,156. We sold our ownership of 40% of Lab Services MSO on February 26, 2025.

Previous wording

For the three months ended September 30, 2023, we had income from our investment in Lab Services MSO of $354,500, which consists of our share of Lab Services MSO’s net income of $558,244 and amortization of identifiable intangible assets acquired from Lab Services MSO acquisition of $203,744.

Current wording

For the three months ended March 31, 2024, we had income from our investment in Lab Services MSO of $107,469, which consists of our share of Lab Services MSO’s net income of $274,202 and amortization of identifiable intangible assets acquired from Lab Services MSO acquisition of $166,733.

Previous wording

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

Current wording

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

Previous wording

As a result of the foregoing, for the three months ended September 30, 2024, loss from operations amounted to $1,269,961, as compared to $1,141,136 for the three months ended September 30, 2023, representing an increase of $128,825, or 11.3%.

Current wording

As a result of the foregoing, for the three months ended March 31, 2025, loss from operations amounted to $1,806,775, as compared to $843,062 for the three months ended March 31, 2024, representing an increase of $963,713, or 114.3%.

Previous wording

Other (expense) income mainly includes third party and related party interest expense, change in fair value of derivative liability, impairment of equity method investment on Epicon, and other miscellaneous expense.

Current wording

Other (expense) income mainly includes third party and related party interest expense, change in fair value of derivative liability, and other miscellaneous expense.

Previous wording

Other expense, net, totaled $409,239 for the three months ended September 30, 2024, as compared to $343,939 for the three months ended September 30, 2023, an increase of $65,300, or 19.0%, which was primarily attributable to an increase in third party interest expense of approximately $108,000, mainly driven by the increase in amortization of debt discount and debt issuance costs of approximately $80,000 and the increased interest expense of approximately $28,000 from third party debts, a decrease in other income of approximately $39,000, offset by an increase in gain from change in fair value of derivative liability of approximately $82,000.

Current wording

Other expense, net, totaled $675,336 for the three months ended March 31, 2025, as compared to $524,451 for the three months ended March 31, 2024, an increase of $150,885, or 28.8%, which was primarily attributable to an increase in third party interest expense of approximately $52,000, mainly driven by the increase in amortization of debt discount and debt issuance costs of approximately $42,000 and the increased interest expense of approximately $10,000 from third party debts, a decrease in gain from change in fair value of derivative liability of approximately $146,000, offset by a decrease in interest expense – related party of approximately $11,000, and a decrease in other expense of approximately $36,000.

Previous wording

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

Current wording

We did not have any income taxes expense for the three months ended March 31, 2025 and 2024 since we incurred losses in these periods.

Previous wording

As a result of the factors described above, our net loss was $1,679,200 for the three months ended September 30, 2024, as compared to $1,485,075 for the three months ended September 30, 2023, an increase of $194,125, or 13.1%.

Current wording

As a result of the factors described above, our net loss was $2,482,111 for the three months ended March 31, 2025, as compared to $1,367,513 for the three months ended March 31, 2024, an increase of $1,114,598, or 81.5%.

Previous wording

The net loss attributable to our common shareholders was $1,679,200, or $1.82 per share (basic and diluted), for the three months ended September 30, 2024, as compared to $1,485,075, or $2.06 per share (basic and diluted), for the three months ended September 30, 2023, an increase of $194,125, or 13.1%.

Current wording

The net loss attributable to our common shareholders (after taking into effect $162,473 in deemed contribution) was $2,319,638, or $1.43 per share (basic and diluted), for the three months ended March 31, 2025, as compared to $1,367,513, or $1.86 per share (basic and diluted), for the three months ended March 31, 2024, an increase of $952,125, or 69.6%.

Previous wording

Our reporting currency is the U.S. dollar. The functional currency of our parent company, AHS, Avalon RT 9, and Avalon Lab is the U.S. dollar and the functional currency of Avalon Shanghai is the Chinese Renminbi (“RMB”). The financial statements of our subsidiary whose functional currency is the RMB are translated to U.S. dollars using period end rate of exchange for assets and liabilities, average rate of exchange for revenues, costs, and expenses and cash flows, and at historical exchange rate for equity. Net gains and losses resulting from foreign exchange transactions are included in the results of operations. As a result of foreign currency translations, which are a non-cash adjustment, we reported a foreign currency translation gain of $3,043 and a foreign currency translation loss of $8,685 for the three months ended September 30, 2024 and 2023, respectively. As a result of foreign currency translations, which are a non-cash adjustment, we reported a foreign currency translation gain of $2,829 and a foreign currency translation loss of $16,026 for the nine months ended September 30, 2024 and 2023, respectively. This non-cash gain/loss had the effect of decreasing/increasing our reported comprehensive loss in each respective period.

Current wording

Our reporting currency is the U.S. dollar. The functional currency of our parent company, AHS, Avalon RT 9, Avalon Lab, and Q&A Distribution is the U.S. dollar and the functional currency of Avalon Shanghai is the Chinese Renminbi (“RMB”). The financial statements of our subsidiary whose functional currency is the RMB are translated to U.S. dollars using period end rate of exchange for assets and liabilities, average rate of exchange for revenues, costs, and expenses and cash flows, and at historical exchange rate for equity. Net gains and losses resulting from foreign exchange transactions are included in the results of operations. As a result of foreign currency translations, which are a non-cash adjustment, we reported a foreign currency translation gain of $279 and a foreign currency translation loss of $2,920 for the three months ended March 31, 2025 and 2024, respectively. This non-cash gain/loss had the effect of decreasing/increasing our reported comprehensive loss in each respective period.

Previous wording

As a result of our foreign currency translation adjustment, we had comprehensive loss of $1,676,157 and $1,493,760 for the three months ended September 30, 2024 and 2023, respectively.

Current wording

As a result of our foreign currency translation adjustment, we had comprehensive loss of $2,481,832 and $1,370,433 for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

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 income from equity method investment through our equity interest in Lab Services MSO, as well as obtaining additional financing to fund future obligations and pay liabilities arising from ordinary course business operations. In addition, the current cash balance cannot be projected to cover our operating expenses for the next twelve months from the release date of this Quarterly Report on Form 10-Q. These matters raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to raise additional capital, implement our business plan, and generate sufficient revenues. There are no assurances that we will be successful in our efforts to generate sufficient revenues, maintain sufficient cash balance or report profitable operations or to continue as a going concern. 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.

Current wording

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.

Previous wording

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, 2024 and December 31, 2023, we had a cash balance of approximately $1,024,000 and $285,000, respectively. These funds are kept in financial institutions located as follows:

Current wording

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 March 31, 2025 and December 31, 2024, we had a cash balance of approximately $1,370,000 and $2,856,000, respectively. These funds are kept in financial institutions located as follows:

Previous wording

Our working capital deficit increased by $5,023,533 to $10,935,352 at September 30, 2024 from $5,911,819 at December 31, 2023. The increase in working capital deficit was primarily attributable to a decrease in rent receivable of approximately $120,000 driven by collection efforts in the nine months ended September 30, 2024, an increase in accrued liabilities and other payables of $288,000 mainly due to the increase in accrued Delaware state franchise tax in the nine months ended September 30, 2024, an increase in accrued liabilities and other payables – related parties of approximately $507,000 mainly due to our equity method investment payable paid by a related party on our behalf, a significant increase in advance from pending sale of noncontrolling interest – related party of approximately $2,022,000 resulting from advance received in connection with the membership interest purchase agreement entered into in November 2023 in the nine months ended September 30, 2024, an increase in note payable, net, of approximately $4,719,000, which was attributable to the reclassification of note payable from non-current to current, and an increase in convertible note payable, net, of approximately $211,000, offset by an increase in cash of approximately $739,000, a decrease in accrued professional fees of approximately $1,191,000 resulting from payments made to our professional service providers in the nine months ended September 30, 2024, a decrease in accrued payroll liability and compensation of approximately $201,000, and a decrease in equity method investment payable of approximately $667,000 resulting from payment of $100,000 made to investee and payment of approximately $567,000 made by a related party on our behalf in the nine months ended September 30, 2024.

Current wording

Our working capital deficit increased by $1,009,038 to $11,655,095 at March 31, 2025 from $10,646,057 at December 31, 2024. The increase in working capital deficit was primarily attributable to a decrease in cash of approximately $1,487,000, an increase in accrued professional fees of approximately $373,000 which was mainly attributable to the increase in professional services related to our potential merger with YOOV, an increase in advance from pending sale of noncontrolling interest – related party of approximately $220,000 resulting from advance received in connection with the membership interest purchase agreement entered into in November 2023 in three months ended March 31, 2025, and an increase in convertible note payable, net, of approximately $284,000 driven by the amortization of debt discount and debt issuance costs of approximately $284,000 in the three months ended March 31, 2025, offset by an increase in current portion of receivable from sale of equity method investment of $975,000 resulting from execution of the Redemption Agreement signed on February 26, 2025 as described elsewhere in this report, and a decrease in accrued liabilities and other payables – related parties of approximately $633,000 which was extinguished upon our sale of equity method investment in the first quarter of 2025.

Previous wording

Because 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.

Current wording

Because 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 reflectedon the condensed consolidated statements of cash flows are not necessarily identical with the comparable changes reflected on the condensed consolidated balance sheets.

Previous wording

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

Current wording

Cash Flows for the Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024

Previous wording

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

Current wording

The following summarizes the key components of our cash flows for the three months ended March 31, 2025 and 2024:

Previous wording

Net cash flow used in operating activities for the nine months ended September 30, 2023 was $5,708,402, which primarily reflected our consolidated net loss of approximately $7,152,000, and the changes in operating assets and liabilities, primarily consisting of a decrease in accrued liabilities and other payables of approximately $140,000 due to payments made to vendors in the nine months ended September 30, 2023, and the non-cash items adjustment, primarily consisting of income from equity method investment of approximately $351,000 resulting from our purchase of a 40% equity interest in Lab Services MSO in February 2023, and change in fair market value of derivative liability of approximately $129,000, offset by depreciation of approximately $167,000, stock-based compensation and service expense of approximately $1,056,000, impairment of equity method investment of approximately $464,000, and amortization of debt issuance costs and debt discount of approximately $291,000.

Current wording

Net cash flow used in operating activities for the three months ended March 31, 2025 was $1,801,926, which primarily reflected our consolidated net loss of approximately $2,482,000, and the non-cash item adjustments, primarily consisting of income from equity method investment of approximately $393,000, offset by amortization of debt issuance costs and debt discount of approximately $314,000, and change in fair market value of derivative liability of approximately $114,000, and the changes in operating assets and liabilities, primarily consisting of an increase in accrued liabilities and other payables of approximately $556,000, mainly due to the increase in services related to our potential merger with YOOV in the three months ended March 31, 2025.

Previous wording

Net cash flow used in operating activities for the nine months ended September 30, 2024 was $3,890,993, which primarily reflected our consolidated net loss of approximately $5,179,000, and the non-cash items adjustment, primarily consisting of change in fair market value of derivative liability of approximately $381,000, and the changes in operating assets and liabilities, primarily consisting of a decrease in accrued liabilities and other payables of approximately $1,176,000 resulting from payments made to our vendors in the nine months ended September 30, 2024, offset by a decrease in rent receivable of approximately $132,000 driven by our collection efforts, and the non-cash items adjustment, primarily consisting of depreciation of approximately $133,000, stock-based compensation and service expense of approximately $255,000, loss from equity method investment of approximately $670,000 which wasmainly attributable to theamortization 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.

Current wording

Net cash flow used in operating activities for the three months ended March 31, 2024 was $915,709, which primarily reflected our consolidated net loss of approximately $1,368,000, and the non-cash items adjustment, primarily consisting of income from equity method investment of approximately $107,000, offset by distribution of earnings from equity method investment of approximately $161,000, and amortization of debt issuance costs and debt discount of approximately $272,000, and the changes in operating assets and liabilities, primarily consisting of a decrease in rent receivable of approximately $113,000 driven by our collection efforts.

Previous wording

Net cash flow provided by financing activities was $4,726,942 for the nine months ended September 30, 2024, as compared to $4,091,323 for the nine months ended September 30, 2023. During the nine months ended September 30, 2024, we received net proceeds from the issuance of convertible debts and warrants of approximately $3,085,000 (net of original issue discount of approximately $177,000 and cash paid for convertible note issuance costs of approximately $283,000), an advance from the pending sale of a noncontrolling interest in a subsidiary of approximately $2,022,000, and net proceeds from equity offering of approximately $2,719,000 (net of cash paid for commission and other offering costs of approximately $138,000), offset by repayments made for convertible debt of $3,100,000. During the nine months ended September 30, 2023, we received proceeds from related party borrowings of $850,000, and net proceeds from issuance of convertible debt and warrants of approximately $1,690,000 (net of original issue discount of $100,000 and cash paid for convertible note issuance costs of approximately $211,000), and net proceeds from issuance of balloon promissory note of approximately $936,000 (net of cash paid for promissory note issuance costs of approximately $64,000), and net proceeds from equity offering of approximately $616,000 (net of cash paid for commission and other offering costs of approximately $19,000).

Current wording

Net cash flow provided by financing activities was $219,972 for the three months ended March 31, 2025, as compared to $936,772 for the three months ended March 31, 2024. During the three months ended March 31, 2025, we received advance from sale of noncontrolling interest in subsidiary of approximately $220,000. During the three months ended March 31, 2024, we received net proceeds from issuance of convertible debt and warrants of approximately $592,000 (net of original issue discount of $35,000 and cash paid for convertible note issuance costs of approximately $73,000), and advance from sale of noncontrolling interest in subsidiary of approximately $1,210,000, offset by repayments made for convertible debt of $866,000.

Previous wording

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 cash available under the Line of Credit 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. 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.

Current wording

We estimate that, based on current plans and assumptions, our available cash will be insufficient to satisfy our cash requirements under our present operating expectations through cash flow provided by operations and sales of equity. Other than funds received as described above and cash resources generated from our operations, we presently have no other significant alternative source of working capital. We have used these funds to fund our operating expenses, pay our obligations and grow our company. We will need to raise significant additional capital to fund our operations and to provide working capital for our ongoing operations and obligations. Therefore, our future operation is dependent on our ability to secure additional financing. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, there can be no assurance that financing will be available in amounts or on terms acceptable to the Company. Additionally, the trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital may restrict our ability to grow and may reduce our ability to continue to conduct business 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.

Previous wording

We ceased all operations in China in 2022, with the exception of a small administrative office. We did not during the nine months ended September 30, 2024, and do not expect in the foreseeable future, to generate any additional revenue from PRC operations. Thus, exchange rate fluctuations between the RMB and the U.S. dollar do not have a material effect on us. For the three months ended September 30, 2024 and 2023, we had an unrealized foreign currency translation gain of approximately $3,000 and an unrealized foreign currency translation loss of approximately $9,000, respectively, because of changes in the exchange rate. For the nine months ended September 30, 2024 and 2023, we had an unrealized foreign currency translation gain of approximately $3,000 and an unrealized foreign currency translation loss of approximately $16,000, respectively, because of changes in the exchange rate.

Current wording

We ceased all operationsin China in 2022, with the exception of a small administrative office. We did not during the three months ended March 31, 2025, and do not expect in the foreseeable future, to generate any additional revenue from PRC operations. Thus, exchange rate fluctuations between the RMB and the U.S. dollar do not, and are not expected to, have a material effect on us. For the three months ended March 31, 2025 and 2024, we had an unrealized foreign currency translation gain of approximately $300 and an unrealized foreign currency translation loss of approximately $3,000, respectively, because of changes in the exchange rate.

Previous wording

The effect of inflation on our revenues and operating results was not significant for the three and nine months ended September 30, 2024 and 2023.

Current wording

The effect of inflation on our revenues andoperating results was not significant for the three months ended March 31, 2025 and 2024.