UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2025
OR
☐ TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE EXCHANGE ACT
Commission file number: 001-38728
AVALON GLOBOCARE CORP.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Freehold, New Jersey 07728
(Address of principal executive offices) (Zip Code)
(732)780-4400
(Registrant’s telephone number, including
area code)
Securities registered pursuant to Section 12(b)
of the Act:
Title of each Class: Trading Symbol Name of Each Exchange
Common Stock, par value $0.0001 per share ALBT The Nasdaq Capital Market
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☐
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. Yes ☐ No ☒
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of June 30, 2025, the last business day of
the registrant’s most recently completed second fiscal quarter, the market value of our common stock held by non-affiliates was
approximately $5,482,000.
The number of shares of our common stock, $0.0001
par value per share, outstanding as of March 25, 2026, was 8,023,609.
Documents incorporated by reference: Portions
of the registrant’s definitive proxy statement for the annual stockholder meeting to be held in 2026 are incorporated by reference
into Part III of this Annual Report on Form 10-K as noted herein. The registrant intends to file its proxy statement within 120 days
after its fiscal year end.
TABLE OF CONTENTS
Page
PART I
Item 1. Business 1
Item 1A. Risk Factors 8
Item 1B. Unresolved Staff Comments 15
Item 1C. Cybersecurity 15
Item 2. Properties 15
Item 3. Legal Proceedings 15
Item 4. Mine Safety Disclosures 15
PART II
Item 6. [Reserved] 16
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 24
Item 8. Financial Statements and Supplementary Data 24
Item 9A. Controls and Procedures 25
Item 9B. Other Information 26
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 26
PART III
Item 10. Directors, Executive Officers and Corporate Governance 27
Item 11. Executive Compensation 27
Item 14. Principal Accounting Fees and Services 28
PART IV
Signatures 42
i
Cautionary Statement
Regarding Forward-Looking Statements
Certain statements in
this Annual Report on Form 10-K for the year ended December 31, 2025 may constitute “forward-looking” statements within
the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), or the Private Securities Litigation Reform Act of 1995. All statements,
other than statements of historical facts, included herein and public statements by our officers or representatives, that address activities,
events or developments that our management expects or anticipates will or may occur in the future are forward-looking statements, including
but not limited to such things as future business strategy, plans and goals, competitive strengths and expansion and growth of our business.
The words “estimate,” “plan,” “anticipate,” “expect,” “intend,” “believe,”
“target,” “budget,” “may,” “can,” “will,” “would,” “could,”
“should,” “seeks,” or “scheduled to” and similar words or expressions, or negatives of these terms
or other variations of these terms or comparable language or any discussion of strategy or intention identify forward-looking statements.
Forward-looking statements address activities, events or developments that the Company expects or anticipates will or may occur in the
future and are based on current expectations and assumptions.
These statements involve
known and unknown risks, uncertainties, assumptions and other factors which may cause our actual results, performance or achievements
to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements. See
our other reports filed with the Securities and Exchange Commission (the “SEC”) for more information about these and other
risks. You are cautioned against attributing undue certainty to forward-looking statements. Although we have attempted to identify important
factors that could cause actual results to differ materially from those described in forward-looking statements, there may be other factors
that cause results not to be as anticipated, estimated or intended. Although these forward-looking statements were based on assumptions
that the Company believes are reasonable when made, you are cautioned that forward-looking statements are not guarantees of future performance
and that actual results, performance or achievements may differ materially from those made in or suggested by the forward-looking statements
contained in this Annual Report on Form 10-K. In addition, even if our results, performance, or achievements are consistent with the forward-looking
statements contained in this Annual Report on Form 10-K, those results, performance or achievements may not be indicative of results,
performance or achievements in subsequent periods. Given these risks and uncertainties, you are cautioned not to place undue reliance
on these forward-looking statements. Any forward-looking statements made in this Annual Report on Form 10-K speak only as of the date
of those statements, and we undertake no obligation to update those statements or to publicly announce the results of any revisions to
any of those statements to reflect future events or developments. For information identifying important factors that could cause actual
results to differ materially from those anticipated in the forward-looking statements, see Item 1A. Risk Factors in this Annual Report
on Form 10-K.
Unless otherwise indicated, references to “we,”
“us,” “our,” “Company,” or “Avalon” mean Avalon GloboCare Corp. and its subsidiaries,
and references to “fiscal” mean the Company’s fiscal year ended December 31.
ii
PART I
ITEM 1. BUSINESS
Overview
We are a technology-innovation company with a
strategic focus on developing innovative products and services that serve growing consumer health and technology markets. Throughout our
operating history, we have maintained our corporate identity, management team and original mission while strategically evolving our business
in response to market conditions and commercial opportunities, with each such evolution being the product of deliberate decisions. We
are actively seeking complementary bolt-on AI acquisitions that could generate near-term revenue to supplement our current operations
as both segments continue to develop. We believe our diverse and evolving portfolio of commercial activities reflects our ongoing commitment
to identifying and building value-oriented technology businesses for the benefit of its stockholders.
Current Business Operations
We currently operates through two business segments:
(i) a consumer health technology segment, through which we distributes the Keto Air breathalyzer device — a non-invasive consumer
breathalyzer that measures ketosis levels and is sold in North America, bearing an FDA registration number; and (ii) an artificial intelligence
content technology segment, through which we develop and commercialize an AI-driven, short-form video generation platform operated by
Avalon Quantum AI, LLC, our wholly owned subsidiary formed in connection with our acquisition of RPM Interactive, Inc. in December 2025.
Each segment is described in full below.
Consumer Health Technology Segment - Keto-Air
Breathalyzer
Overview
Our consumer health technology segment is centered
on the Keto Air breathalyzer device, a non-invasive consumer health product that allows users to determine whether they are in a state
of nutritional ketosis, and at what level, by exhaling into a compact, pen-like breathalyzer. Ketosis is a metabolic state in which the
body burns fat for fuel rather than carbohydrates, and is widely associated with low-carbohydrate and ketogenic dietary regimens. The
Keto Air device represents a meaningful improvement over prior methods of measuring ketosis, such as urine test strips or earlier-generation
breathalyzers that required cartridge replacements, offering users a convenient, reusable, and non-invasive testing experience.
We entered into an exclusive North American distribution
agreement for the Keto-Air technology and device in 2024. Pursuant to this agreement, we have exclusive distribution rights in the United
States, Canada and Mexico through July of 2025 and since that time, we continue to be the only distributor in North America. We believe
this provides us with a meaningful competitive advantage in the North American ketosis monitoring market for the duration of the agreement.
We previously had a THC breathalyzer device under development. In March
2026, we discontinued development of that product due to a lack of available funding. The discontinuation of the THC breathalyzer does
not affect our Keto Air operations or sales of the Keto Air device..
Market Opportunity
Our commercial sales strategy for Keto Air utilizes
two primary channels: social media influencer relationships and a commercial relationship with the Law Enforcement Association of America,
which was developed through one of our consultants. We believe the Law Enforcement Association of America relationship is particularly
well-suited to the Keto Air product given the relevance of metabolic health monitoring to the wellness programs of law enforcement personnel
and their families.
We are currently in an early-stage commercial
testing phase, during which we are assessing broader market demand, refining our distribution and marketing approach, and evaluating the
most effective channels for scaling sales. We are continuing to assess the future strategic direction of our Keto Air product line in
light of its commercial performance and our overall business portfolio.
1
Regulatory Status
The Keto Air device bears an FDA registration
number, which is required for the commercial sale of such devices in the United States. The device is classified as a consumer product
and is not a regulated medical device requiring FDA pre-market approval, and accordingly may be sold directly to any consumer without
a prescription or other regulatory authorization. We believe this regulatory profile provides us with a straightforward commercial pathway
to market in the United States and across North America.
Artificial Intelligence Content Technology
Segment — Avalon Quantum AI, LLC / RPM Interactive
Overview
Our artificial intelligence content technology segment is operated
through Avalon Quantum AI, LLC, a wholly owned subsidiary of our company organized in the State of Nevada and formed in connection with
our acquisition of RPM Interactive, Inc. ("RPM") in December 2025. RPM merged with and into Avalon Quantum AI, LLC pursuant
to the merger, and Avalon Quantum AI, LLC continues to operate as our wholly owned subsidiary.
The RPM Platform — Phase 1
The RPM platform is an AI-driven, short-form video
generation software. In its current Phase 1 form, the platform enables content creators — with an initial focus on the podcasting
market — to input a topic of their choosing, after which the platform automatically scrapes the internet for relevant videos, identifies
the most-viewed or most-discussed content on that topic, and generates a structured, three-minute video featuring an AI-generated avatar
of the creator that replicates their voice and likeness. Each generated video consists of three segments: an introduction delivered by
the creator's AI avatar, the featured video clip sourced by the platform, and a concluding statement also delivered by the AI avatar.
The core appeal of the RPM platform to content
creators is efficiency: the software automates the time-consuming process of identifying and sourcing video content, writing scripts,
and producing recordings, enabling creators to generate daily content at scale and drive increased views, clicks, and subscriber engagement
across their platforms. We believe the demand for automated, high-quality content generation tools among the creator economy is substantial
and growing, and that the RPM platform is well-positioned to address this demand.
The platform is currently in beta testing with
a limited number of content creators. We are using this beta period to refine the platform's AI avatar generation capabilities, test the
content sourcing and curation algorithms, and gather user feedback in advance of a broader commercial launch.
Phase 2 Development
Phase 2 of the RPM platform is currently in development and is expected
to launch in Q3 of 2026. Phase 2 is expected to expand the platform's user base beyond podcasters to a substantially broader range of content creators
and marketers, including social media influencers and individuals or businesses engaged in product marketing and e-commerce. Phase 2 will
also feature a more refined AI avatar generation system, with enhanced voice and likeness replication capabilities designed to produce
higher-quality, more personalized content at scale.
We believe the expansion of the platform's addressable
market from podcasters to the broader creator and marketer economy in Phase 2 represents a significant step toward the commercial scaling
of the RPM platform, and we intend to pursue a phased commercial launch strategy following the completion of Phase 2 development.
While we continue to develop and complete Phase 2, we continue to evaluate
possible AI acquisitions that we believe could generate near-term revenue to supplement our current operations while the RPM platform
continues through its development and commercial launch phases. We have not entered into any definitive agreement with respect to any
such acquisition as of the date of this Annual Report, and there can be no assurance that we will identify, complete, or successfully
integrate any such acquisition.
2
History of Operations
Wind-Down of China Operations (2022–2023)
Our initial commercial strategy was focused on
the cellular therapy sector, where we sought to advance innovative cellular therapy technologies in both the United States and China.
Beginning in 2022 and continuing through 2023, our Board of Directors determined to wind down our operations in the People's Republic
of China and to divest all assets, subsidiaries, and relationships associated with our China-based activities. This decision reflected
both the changed commercial and regulatory landscape applicable to our cellular therapy program and our inability to secure the capital
necessary to advance the program at the scale required to achieve commercial viability. By November 2022, we had ceased all active operations
in the PRC, and the wind-down was completed during 2023.
Laboratory Services Strategy (2023–2025)
In February 2023, through our subsidiary Avalon Lab, LLC, we acquired
a 40% equity interest in Laboratory Services MSO, LLC, a California-based clinical laboratory company, for total consideration of approximately
$20.7 million, comprised of approximately $9.0 million in cash, 11,000 shares of our Series B Convertible Preferred Stock, and an additional
$666,667 cash payment made in February 2024. On February 26, 2025, we exited the investment entirely pursuant to a Redemption and Abandonment
Agreement, receiving cash proceeds of $1,745,000 and surrendering our Series B Preferred Stock.
Search for Strategic Acquisitions and YOOV
Merger Agreement (2024–2025)
In early 2024, our Board made a strategic determination to focus our
acquisition efforts on YOOV Group Holding Limited ("YOOV"), a Hong Kong-based company. We conducted extensive due diligence,
engaging on-site due diligence meetings with the YOOV management team. On March 7, 2025, we entered into an Agreement and Plan of Merger
with YOOV and Nexus MergerSub Limited, pursuant to which YOOV would have become a direct, wholly owned subsidiary of our company. During
our continued review of YOOV's financial statements for the fiscal year ended December 31, 2024, our Board of Directors determined that
it was not in the best interests of our stockholders to proceed with the transaction. We terminated the merger agreement with YOOV effective
January 21, 2026.
Acquisition of RPM Interactive, Inc. and
Formation of Avalon Quantum AI, LLC (December 2025)
On December 15, 2025, we completed the acquisition of RPM Interactive,
Inc. ("RPM"), a generative artificial intelligence software company, through a subsidiary merger whereby RPM merged with and
into Avalon Quantum AI, LLC, a newly formed, wholly owned subsidiary of our company organized in the State of Nevada. Avalon Quantum AI,
LLC is the surviving entity and continues as our wholly owned subsidiary. We, as the surviving listed parent entity, continue to operate
under our existing Nasdaq listing, and neither our corporate identity, our Nasdaq listing, nor our principal executive offices were altered
as a result of the acquisition. The acquisition was effected as an all-stock transaction pursuant to which we issued 19,500 shares of
our Series E Non-Voting Convertible Preferred Stock to RPM's former stockholders at a stated value of $1,000 per share, for a total stated
purchase price of $19.5 million. Each share of Series E Preferred Stock is convertible into shares of our common stock at a conversion
price of $1.50 per share, subject to: (i) a beneficial ownership cap of 4.99% per holder; (ii) an exchange cap preventing issuance in
excess of applicable Nasdaq thresholds (the "Exchange Cap"); and (iii) stockholder approval required under Nasdaq Listing Rule
5635, which we intend to seek at our 2026 annual meeting of stockholders. The Series E Preferred Stock is non-voting prior to conversion.
In connection with the acquisition, we appointed Michael Mathews to our Board of Directors. A full description of our RPM platform and
Phase 2 development plans is set forth in Item 1.B above.
3
Intellectual Property
Cellular Therapy Patent Portfolio
We hold a portfolio of patents developed during
our cellular therapy operating period. This portfolio includes patents that are co-owned with the Massachusetts Institute of Technology
("MIT"), arising from a prior joint research agreement between our company and MIT, as well as patents co-owned with Arbelli,
a Hong Kong-based company that collaborated with us during our cellular therapy research activities. We regard the MIT co-ownership as
a material component of our patent portfolio, and we disclose it accordingly.
Although we have ceased all active research and
development activities related to cellular therapy, we have made a deliberate decision to continue actively maintaining, or "prosecuting,"
these patents rather than allowing them to lapse or be abandoned. We believe the patents may have potential future value — whether
through licensing, sale, or the resumption of activity in the cellular therapy space — and we intend to continue maintaining them
for so long as we consider it commercially reasonable to do so. Any decisions regarding the licensing or enforcement of co-owned patents
are subject to the terms of our co-ownership arrangements with MIT and Arbelli, which may limit our ability to license or enforce such
patents unilaterally without the consent of our co-owners.
Artificial Intelligence Platform —
Provisional Patent Applications
In connection with our acquisition of RPM Interactive,
Inc. and the development of our generative AI content platform operated through Avalon Quantum AI, LLC, we have filed three provisional
patent applications relating to aspects of the RPM platform's technology. Provisional applications establish an early filing date and
provide a twelve-month period during which we may file corresponding non-provisional patent applications. We intend to evaluate the commercial
and strategic value of converting these provisional applications into non-provisional applications during the applicable filing window.
There can be no assurance that any patents will issue from these applications, or that any issued patents will provide meaningful competitive
protection.
General Intellectual Property Policy
Our general policy is to seek, where appropriate,
broad intellectual property protection for our current and future products, technologies, and proprietary information through a combination
of patents, trade secrets, contractual arrangements, and other available means, both in the United States and internationally. We require
all employees, consultants, advisors, and contractors to enter into confidentiality agreements that prohibit the disclosure and unauthorized
use of our confidential information and, where applicable, require the disclosure and assignment to us of ideas, developments, discoveries,
and inventions relevant to our technologies and important to our business. We also rely on trade secret protection for certain aspects
of our proprietary technology and business processes, including aspects of the RPM platform's content sourcing and curation algorithms
that we have determined are better protected as trade secrets than through patent disclosure.
Competition
We operate in two distinct and competitive markets,
each with its own competitive dynamics. We face competition in both our consumer health technology segment and our artificial intelligence
content technology segment, as described below.
Consumer Health Technology — Keto
Air Breathalyzer
The market for consumer ketosis monitoring products
is competitive and includes a range of products at varying price points and technology levels. Our primary competitors in this space include
manufacturers and distributors of urine-based ketone test strips, which represent the most widely used and lowest-cost method of ketosis
measurement and are available through a broad range of retail and online channels. We also compete with other breath-based ketone monitoring
devices, including earlier-generation breathalyzers that required consumable cartridge replacements and more recent reusable breath ketone
monitors that have been introduced to the market by consumer health technology companies.
We believe the Keto Air device competes favorably
on the basis of its reusable design, ease of use, and the convenience of non-invasive breath-based testing relative to urine strip alternatives.
As we are currently the only one selling the device in North America, we believe this provides us with a meaningful structural advantage
relative to other distributors of similar products in our territory.. However, many of our actual and potential competitors in this space
have significantly greater financial resources, brand recognition, established retail distribution networks, and marketing infrastructure
than we do, and we may not be able to compete effectively with them over the long term.
Artificial Intelligence Content Technology
— Avalon Quantum AI, LLC / RPM Platform
The market for AI-driven content creation tools
is rapidly evolving, highly competitive, and characterized by continuous technological development and the frequent entry of new participants.
We compete with a broad range of companies offering AI-powered video generation, content automation, and creator economy tools, including
both established technology companies with significant resources and early-stage companies developing competing generative AI platforms.
4
Key competitive factors in this market include
the quality and realism of AI-generated content, the breadth of the platform's addressable user base, the speed and automation of content
generation workflows, the sophistication of voice and likeness replication technology, integration with major social media and content
distribution platforms, and the ability to scale rapidly to meet growing creator demand. We believe our RPM platform competes on the basis
of its end-to-end automation of the video content creation process — from topic input through content sourcing, curation, avatar
generation, and final video production — which we believe meaningfully reduces the time and technical burden on content creators
relative to less automated alternatives.
However, many of our actual and potential competitors
in the generative AI space have substantially greater financial resources, research and development capabilities, engineering talent,
data assets, and market presence than we do. Several large technology companies are actively investing in AI-generated content tools and
avatar technology, and we expect competition in this market to intensify significantly as the technology matures and the creator economy
continues to grow. Smaller and early-stage companies may also prove to be significant competitors, particularly those that secure strategic
partnerships with established platform operators or content networks.
Employees
As of March 25, 2026, we employed two full time
employees and several independent contractors. None of our employees is represented by a collective bargaining arrangement.
Regulatory Environment
Our business is subject to a variety of laws and
regulations in the United States and, to the extent we expand internationally, abroad. The principal regulatory frameworks applicable
to our two current operating segments are described below. We anticipate that the regulatory environment applicable to our business —
particularly with respect to artificial intelligence and consumer data privacy — will continue to evolve rapidly, and we intend
to monitor legislative and regulatory developments and adapt our compliance programs accordingly.
Consumer Health Technology — FDA Regulatory
Framework Applicable to Keto Air
The Keto Air breathalyzer device is subject to
the regulatory authority of the U.S. Food and Drug Administration ("FDA") under the Federal Food, Drug, and Cosmetic Act ("FD&C
Act"). The device is currently classified as a consumer product bearing an FDA registration number, which is required for the lawful
commercial sale of such devices in the United States. The Keto Air device is not classified as a regulated medical device requiring FDA
pre-market approval or clearance under Section 510(k) of the FD&C Act, and accordingly may be sold directly to consumers without a
prescription or other regulatory authorization.
We are required to maintain the device's FDA registration
on an annual basis and to comply with applicable FDA general controls, including labeling requirements and prohibitions on the promotion
of the device for uses beyond its registered classification. We do not make any medical claims with respect to the Keto Air device, and
our marketing materials are reviewed to ensure compliance with FDA labeling and advertising standards. We are also subject to applicable
Consumer Product Safety Commission regulations governing the safety of consumer products sold in the United States.
We note that the regulatory classification of
consumer health and wellness devices is subject to ongoing FDA review and interpretation, and there can be no assurance that the FDA will
not, in the future, subject the Keto Air device or similar products to more stringent regulatory requirements, including pre-market approval
or clearance obligations. Any such reclassification could materially affect our ability to sell the Keto Air device in the United States.
See Item 1A — Risk Factors for a further discussion of regulatory risks applicable to our consumer health technology segment.
Artificial Intelligence Content Technology
— AI-Specific Regulatory Landscape
The regulatory environment applicable to our artificial
intelligence content technology segment is rapidly evolving and subject to significant uncertainty. The RPM platform generates AI-driven
short-form video content featuring AI-generated avatars that replicate the voice and likeness of content creators. This functionality
implicates a range of existing and emerging regulatory frameworks, each of which is described below.
5
Right of Publicity and Name and Likeness Laws
The RPM platform's AI avatar feature — which
replicates the voice and likeness of a content creator based on input data provided by or about that creator — implicates state
right of publicity laws in the United States, which protect individuals against the unauthorized commercial use of their name, image,
voice, and likeness. Right of publicity laws vary significantly across states, with particularly robust statutory frameworks in California,
New York, and Texas, among others. Several states have recently enacted or are actively considering legislation specifically addressing
the use of artificial intelligence to generate synthetic media replicating an individual's voice or likeness. We are actively monitoring
developments in this area and have structured our platform's onboarding process to require content creators to affirmatively authorize
the creation of their AI avatar as a condition of use. There can be no assurance, however, that our current practices will be sufficient
to satisfy the requirements of all applicable state laws as they continue to evolve.
Federal Trade Commission Regulation
The Federal Trade Commission ("FTC")
has broad authority to regulate unfair or deceptive acts and practices under Section 5 of the FTC Act, and has increasingly focused its
enforcement activity on the use of artificial intelligence in commercial contexts. The FTC has issued guidance requiring clear and conspicuous
disclosure of AI-generated content in advertising and commercial communications, and has signaled that the use of AI-generated endorsements,
testimonials, or representations of real individuals without adequate disclosure may constitute an unfair or deceptive trade practice.
We intend to comply with applicable FTC disclosure guidance in connection with the commercial deployment of the RPM platform and will
include appropriate disclosures in our platform's terms of service and content labeling practices.
Platform Content Policies
The RPM platform is designed to generate content
for distribution across major social media and content platforms, including YouTube, TikTok, Instagram, and others. Each of these platforms
maintains its own content policies governing the disclosure and permissibility of AI-generated content, synthetic media, and avatar-based
representations of real individuals. These policies are subject to frequent revision and vary across platforms. Failure to comply with
applicable platform content policies could result in the removal of content generated through the RPM platform, the suspension or termination
of creator accounts on those platforms, or other restrictions that could adversely affect the utility and commercial appeal of our platform
to content creators.
Evolving Federal AI Regulation
The U.S. Congress and various federal agencies
are actively considering comprehensive federal legislation and regulatory frameworks governing the development, deployment, and commercial
use of artificial intelligence technologies. While no comprehensive federal AI law has been enacted as of the date of this Annual Report,
we anticipate that federal AI regulation will develop in the near to medium term and may impose disclosure, transparency, accountability,
or other obligations on companies operating AI-powered content generation platforms such as ours. We are monitoring these legislative
and regulatory developments and intend to engage with applicable regulatory processes as they evolve.
International Regulatory Considerations
To the extent the RPM platform is accessed by
users located outside the United States, we may become subject to international AI regulatory frameworks, including the European Union
Artificial Intelligence Act (the "EU AI Act"), which entered into force in 2024 and establishes a tiered risk-based regulatory
framework for AI systems deployed in the European Union. AI systems that generate synthetic audio or video content depicting real individuals
may be subject to specific transparency and disclosure obligations under the EU AI Act. We are evaluating the extent to which our current
and planned platform activities may implicate obligations under the EU AI Act and other international AI regulatory frameworks.
6
Data Privacy and Security
Our business activities involve the collection,
storage, and processing of certain personal information, including consumer data collected through Keto Air device sales and email communications,
and content creator data — including voice and likeness data — collected through the RPM platform's beta program. We are subject
to a range of federal, state, and international data privacy and security laws and regulations governing the collection, use, sharing,
protection, and retention of personal data.
At the federal level, the FTC continues to apply
its general consumer protection authority under Section 5 of the FTC Act to commercial data practices, including data security failures
and unfair or deceptive privacy practices. At the state level, we are subject to the California Consumer Privacy Act, as amended by the
California Privacy Rights Act ("CPRA"), which establishes transparency obligations, restricts certain uses of personal information
of California residents, and provides California residents with rights to access, correct, and delete their personal information and to
opt out of the sale or sharing of their personal information. Similar state privacy laws have been enacted in a growing number of states,
and we are monitoring and evaluating our compliance obligations under each applicable framework. All U.S. states have enacted data breach
notification laws requiring notification to affected individuals and state regulators in the event of certain unauthorized access to or
disclosure of personal information.
The collection and processing of voice and likeness
data through the RPM platform's avatar generation feature may implicate additional obligations under state biometric data privacy laws,
including the Illinois Biometric Information Privacy Act ("BIPA") and similar statutes in other states, which impose specific
consent, retention, and data security requirements on the collection and use of biometric identifiers, including voiceprints. We are actively
evaluating our obligations under applicable biometric data privacy laws in connection with the commercial deployment of the RPM platform.
The scope and interpretation of applicable data
privacy laws continue to evolve rapidly, and we anticipate that our compliance obligations will increase as our platform scales and as
new laws are enacted. See Item 1A — Risk Factors and Item 1C — Cybersecurity for a further discussion of data privacy and
cybersecurity risks.
Corporate and Available Information
We were incorporated in Delaware. Our website
is located at http://www.avalon-globocare.com. On our website, investors can obtain, free of charge, a copy of our Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, our Code of Conduct and Business Ethics, including disclosure
related to any amendments or waivers thereto, and other reports and any amendments thereto filed or furnished pursuant to Section 13(a)
or 15(d) of the Exchange Act as soon as reasonably practicable after we file such material electronically with, or furnish it to, the
SEC. None of the information posted on our website is incorporated by reference into this Annual Report on Form 10-K. The SEC also maintains
a website at http://www.sec.gov that contains reports, proxy and information statements and other information regarding us and
other companies that file materials with the SEC electronically.
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ITEM 1A. RISK FACTORS
An investment in our securities involves a
high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this
Annual Report, before making an investment decision. Our business, financial condition, results of operations, and future prospects could
be materially and adversely affected by any of the following risks. The trading price of our common stock could decline due to any of
these risks, and you may lose all or part of your investment. The risks described below are not the only risks facing our company. Additional
risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect
our business operations.
Risks Relating to Our Business and Operations
We have a limited operating history in our
current business segments, which makes it difficult to evaluate our business and future prospects.
We have a limited operating history in our current
businesses. We were initially pursuing a biotech platform and, through our acquisition of RPM in December 2025, have pivoted to primarily
operating as an AI company. Because of this limited history, it is difficult to evaluate our proposed business and future prospects, including
our ability to plan for and model future growth, and there is no guarantee that our AI platform or Keto Air businesses will result in
profit or growth. Investors should consider the risks, expenses, and difficulties frequently encountered by companies in the early stage
of development. There can be no assurance that we will successfully address any of these risks.
We have a history of net losses and an
accumulated deficit, which raises substantial doubt about our ability to continue as a going concern.
Our results of operations have not resulted in
profitability. We incurred net losses from continuing operations of approximately $17.5 million and $7.0 million for the years ended
December 31, 2025 and 2024, respectively. As of December 31, 2025, we had an accumulated deficit of approximately $105.9 million. There
is no assurance that we will be successful in executing our business plan or that we will be able to curtail our losses. There is substantial
doubt about our ability to continue as a going concern. Our independent registered public accounting firm has included an explanatory
paragraph in its audit report expressing substantial doubt about our ability to continue as a going concern. Our ability to continue
as a going concern depends on our ability to obtain additional equity or debt financing, attain further operating efficiencies, reduce
expenditures, and ultimately generate revenue.
We have not generated sustainable revenue since
inception, and we may not be able to generate sufficient revenue to achieve or maintain profitability.
We have not yet developed a meaningful customer
base and have not generated sustainable revenue since inception. We are subject to the substantial risk of failure facing businesses seeking
to develop and commercialize new products and technologies, and maintaining and improving our platform will require significant capital.
Our Keto Air product has generated minimal revenue to date, and we anticipate that it will take approximately one year from the date of
this Annual Report for us to begin generating meaningful revenue from our RPM platform. There can be no assurance that we will generate
revenue at the levels we anticipate, or at all, and our failure to do so could have a material adverse effect on our business, financial
condition, and results of operations.
We may not be successful in commercializing
our AI platform or our Keto Air product, either of which would materially harm our business.
We may not be successful in our AI vodcasting
and podcasting platform businesses or our sales of Keto Air. Market acceptance of AI-driven offerings is uncertain, and we will rely on
other companies, developers, and partners to build our product offerings. Additionally, evolving laws and regulations in areas such as
privacy, intellectual property, safety, competition, content regulation, and consumer protection may delay or impede the development of
our products and services. Our Keto Air product is currently operating as an early-stage commercial activity, and we are continuing to
evaluate the future strategic direction of the Keto Air product line as we assess its commercial performance. There can be no assurance
that either of our current business segments will achieve market acceptance or commercial viability.
Our RPM platform is in an early stage of
development and is based on new and evolving AI technologies, which are subject to significant uncertainty.
Our Catch-Up Vodcast and Podcast Platform is
currently under development and is based on new and evolving AI systems and technologies. This exposes us to risks including failure
to gain market acceptance, inability to secure sufficient intellectual property rights, proprietary rights of third parties limiting
our marketing efforts, failure to obtain sufficient user exposure, superior competing products, and the unpredictability of AI
technology. Our platform is currently in beta testing with a limited number of users, and Phase 2 of the platform — which will
expand our addressable market beyond podcasters — is currently in development and expected to launch in Q3 of 2026. There can be no assurance that Phase 2 will be completed on schedule or that it will achieve the
commercial results we anticipate.
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We face intense competition in both of our
business segments, and many of our competitors have substantially greater resources than we do.
We face intense competition from numerous technology
companies seeking to enter the generative AI-powered vodcasting and podcasting businesses. Many of our current and potential competitors
have significantly larger market presence, greater name recognition, access to more potential customers, and substantially greater financial,
technical, sales, marketing, management, support, and other resources than we do. In our consumer health technology segment, we compete
with manufacturers and distributors of urine-based ketone test strips and other breath-based ketone monitoring devices, many of which
have established retail distribution networks and marketing infrastructure that we currently lack. Our failure to compete effectively
in either segment could have a material adverse effect on our business, financial condition, and results of operations.
Our business is subject to rapid technological
change, and if we fail to adapt, our business may be negatively impacted.
Our industry is subject to rapid technological
change, and if we do not adapt to and appropriately allocate resources among emerging technologies and business models, our business may
be negatively impacted. Competitors may adapt to emerging technologies or business models more quickly or effectively than we do. The
generative AI industry in particular is evolving at an exceptionally rapid pace, and technologies, platforms, and distribution channels
that are relevant to our business today may be superseded or disrupted in ways that we cannot currently anticipate.
We may encounter difficulties associated
with early-stage companies that could adversely affect our operations.
We may encounter numerous difficulties frequently
encountered by early-stage companies, including implementing our growth strategy, countering competitors, pursuing new users, maintaining
adequate expense control, attracting and retaining qualified personnel, reacting to user preferences, successfully launching products,
and maintaining regulatory compliance. Failure to address any of these factors could have a material adverse effect on our business, financial
condition, results of operations, and future prospects.
Our success depends on the continued services
of our key personnel, the loss of whom could materially harm our business.
Our success depends on the continuing
services of Wenzhao Lu, our Chairman, Meng Li, Luisa Ingargiola, our Chief Financial Officer, our other executive officers, and
Michael Mathews, the Chief Executive Officer of RPM. The loss of any of these individuals could have a material and adverse effect
on our business operations. The supply of qualified technical, professional, managerial, and other personnel is currently
constrained, and competition for qualified employees is intense. In particular, our former Chief Executive Officer, David Jin, was
instrumental in sourcing our Keto Air distribution rights through his personal industry relationships, and the loss of his services
could adversely affect the continuation and development of that segment.
Our strategy of continuing to evaluate
additional possible acquisitions to supplement our operations involves significant risks, and we may not be able to identify, complete,
or successfully integrate any such acquisitions.
We are actively evaluating complementary possible artificial intelligence
acquisitions that we believe could generate near-term revenue to supplement our current operations. Strategic transactions, including
mergers, acquisitions, joint ventures, and investments, involve risks including the ability to integrate personnel, labor models, financial,
information technology, and other systems successfully; disruption of ongoing business; distraction of management; and the possibility
of material impairments of goodwill or other assets. We may not realize the anticipated benefits from such transactions and may be exposed
to additional liabilities of any acquired business. We have previously pursued and terminated multiple acquisition transactions, including
our proposed merger with YOOV Group Holding Limited, and there can be no assurance that future acquisition efforts will result in completed
transactions or, if completed, that such transactions will deliver the anticipated strategic or financial benefits.
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We depend on third parties for supplies
and services critical to our Keto Air business, and any disruption could adversely affect our operations.
We depend on third parties to provide supplies
and services critical to our Keto Air business and are heavily reliant on third-party ground and air travel for transport of supplies.
Disruptions to supply and services could have a material adverse effect on our Keto Air business. We source the Keto Air device from a
single Hong Kong-based technology group pursuant to an exclusive distribution agreement, and any disruption to that supply relationship
— whether due to manufacturing issues, geopolitical developments, shipping disruptions, or other factors — could impair our
ability to fulfill customer orders and sustain revenue from this segment.
The termination of our proposed merger with
YOOV Group Holding Limited may continue to adversely affect our business, financial condition, and stock price.
The termination of the proposed merger with YOOV
Group Holding Limited may adversely affect our stock price, business, financial condition, and ability to raise capital; result in unrecoverable
costs; harm our reputation and relationships with investors, business partners, customers, vendors, and employees; create strategic uncertainty;
and expose us to potential litigation or regulatory proceedings. The three-year non-disparagement covenant in the Mutual Termination and
Release Agreement may also limit certain communications relating to the proposed merger and its termination.
Risks Relating to Artificial Intelligence and
Technology
The use of AI in our platform may give rise
to legal liability, reputational harm, and regulatory scrutiny.
Our use of AI in our vodcasting and podcasting
platform may give rise to risks related to harmful content, inaccuracies, discrimination, intellectual property infringement or misappropriation,
defamation, data privacy, and cybersecurity. We intend to deploy open-source third-party AI systems that are relatively new to the commercial
market and may at times generate inaccurate or low-quality content, which could lead to reputational harm and legal liability. Unintended
consequences of AI tools may negatively affect human rights, privacy, employment, or other social concerns, resulting in claims, lawsuits,
brand or reputational harm, and increased regulatory scrutiny.
Our RPM platform's AI avatar feature, which
replicates individual voices and likenesses, exposes us to significant legal risks under right of publicity, biometric privacy, and related
laws.
The RPM platform generates AI-produced video content
featuring avatars that replicate the voice and likeness of content creators. This functionality implicates state right of publicity laws
across the United States, which protect individuals against the unauthorized commercial use of their name, image, voice, and likeness.
Laws governing AI-generated synthetic media depicting real individuals vary significantly across states and are rapidly evolving, with
particularly robust statutory frameworks in California, New York, and Texas, among others. Several states have recently enacted or are
actively considering legislation specifically addressing AI-generated synthetic media and voice cloning.
Additionally, the collection and processing of
voice and likeness data through our platform's avatar generation feature may implicate obligations under state biometric data privacy
laws, including the Illinois Biometric Information Privacy Act ("BIPA") and similar statutes in other states, which impose specific
consent, notice, retention, and data security requirements on the collection and use of biometric identifiers, including voiceprints.
Failure to comply with applicable right of publicity or biometric privacy laws could result in significant legal liability, regulatory
enforcement actions, and reputational harm. There can be no assurance that the consent and authorization process we have implemented for
our platform's beta users will be sufficient to satisfy all applicable legal requirements as such laws continue to develop.
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The content generated by our platform may
infringe the intellectual property rights of third parties, which could expose us to significant liability.
Our platform's content sourcing feature automatically
scrapes and curates video content from the internet for inclusion in AI-generated videos. This process may result in the reproduction
or republication of content that is protected by copyright or other intellectual property rights of third parties. While we intend to
implement appropriate content identification and licensing measures, there can be no assurance that all content sourced by our platform
will be free of third-party intellectual property claims. If third parties claim that we infringe their intellectual property, it may
result in costly litigation. We may not be able to adequately protect our proprietary technology, and competitors may be able to offer
similar products and services. Any such claims, regardless of their merit, could result in significant legal costs, distract management,
and adversely affect our business.
We may not be able to protect our intellectual
property rights, which could impair our competitive position.
We may face uncertainty and difficulty in obtaining
and enforcing our patents and other proprietary rights. Patent applications may not result in issued patents, and even if issued, they
may not provide meaningful protection. The Leahy-Smith America Invents Act introduced procedures that may make it easier for third parties
to challenge issued patents. Filing, prosecuting, and defending patents in all countries would be prohibitively expensive, and intellectual
property rights in some countries outside the United States may be less extensive. We have filed three provisional patent applications
in connection with our RPM platform, and there can be no assurance that any patents will issue from these applications, or that any issued
patents will provide meaningful competitive protection. Additionally, certain patents in our cellular therapy portfolio are co-owned with
MIT and Arbelli, and our ability to license or enforce such patents unilaterally may be limited by the terms of our co-ownership arrangements.
Laws and regulations governing artificial
intelligence are rapidly evolving, and compliance may be costly and uncertain.
Laws and regulations affecting AI are continually
evolving. Compliance with new laws can be costly and time-consuming, and we could be subject to regulatory enforcement actions or litigation
if we fail to comply. There is substantial uncertainty about the nature, direction, severity, and granularity of future AI regulation.
Government bodies have implemented laws and are considering further regulating AI and machine learning, which could negatively impact