As filed with the Securities and Exchange Commission on April 24, 2025

Registration Statement No. 333-                   

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

AVALON GLOBOCARE CORP.

(Exact Name of Registrant as Specified in Its Charter)

4400 Route 9 South, Suite 3100

Freehold, New Jersey 

(732) 780-4400

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Avalon GloboCare Corp.

Luisa Ingargiola

Chief Financial Officer

4400 Route 9 South, Suite 3100

Freehold, New Jersey 07728

Tel: (732) 780-4400

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective and on completion of the business combination described in the enclosed proxy statement/prospectus.

If the securities being registered on this Form are to be offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.

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 to Section 7(a)(2)(B) of the Securities Act. ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this proxy statement/prospectus is not complete and may be changed. These securities described herein may not be sold until the registration statement filed with the U.S. Securities and Exchange Commission is declared effective. This proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

PRELIMINARY PROXY STATEMENT/PROSPECTUS

SUBJECT TO COMPLETION, DATED APRIL 24, 2025

AVALON GLOBOCARE CORP.

4400 Route 9 South, Suite 3100

Freehold, New Jersey 07728

To the Stockholders of Avalon GloboCare Corp. and YOOV Group Holding Limited,

On behalf of the Avalon GloboCare Corp. (“Avalon”) board of directors, we are pleased to enclose the proxy statement/prospectus for the Merger (as defined below) and the related facilitating transactions.

As previously announced, Avalon, Nexus MergerSub Limited, a business company incorporated in the British Virgin Islands and a wholly owned subsidiary of Avalon (“Merger Sub”) and YOOV Group Holding Limited, a business company incorporated in the British Virgin Islands (“YOOV”), entered into an Agreement and Plan of Merger, dated March 7, 2025 (the “Merger Agreement”), pursuant to which Merger Sub will merge with and into YOOV, with YOOV surviving the merger (the “Surviving Corporation”) and becoming a wholly owned direct subsidiary of Avalon (the “Merger”). The Merger will result in a publicly-traded company focused on empowering organizations of all sizes to optimize operations, reduce costs, and enhance service delivery through Artificial Intelligence-as-a-Service (AIaaS) solutions, specializing in intelligent business automation.

Subject to the terms and conditions of the Merger Agreement, immediately prior to the closing of the Merger, each then-outstanding YOOV preferred share, par value $0.10 per share (the “YOOV Preferred Shares”), will either automatically be converted into YOOV Ordinary Shares or canceled and cease to exist in accordance with their terms, and, at the closing of the Merger, each then-outstanding ordinary share, par value $0.10 per share, of YOOV (the “YOOV Ordinary Shares”) (other than shares held in treasury and Dissenting Shares (as defined below)) will be converted into and become exchangeable for a number of shares of common stock, par value $0.0001 per share, of Avalon (the “Avalon Common Stock”) equal to the Exchange Ratio (as defined below).

As a result of the Merger, existing equityholders of Avalon will own approximately 2.7% to 3.0% of the common stock of the Combined Company (as defined below) and the existing equityholders of YOOV would own approximately 97.0% to 97.3% of the common stock of the Combined Company. See the section entitled “The Merger Agreement” on page 2 of the attached proxy statement/prospectus for further information on the consideration being paid to the equityholders of YOOV. The Avalon Common Stock is currently listed on The Nasdaq Capital Market, under the symbol “ALBT.” After completion of the Merger, Avalon will be renamed “YOOV, Inc.” and it is expected that the common stock of the Combined Company will trade on The Nasdaq Capital Market under the symbol “YOOV”.

The consummation of the Merger is conditioned on, among other things, the listing approval for the Merger Shares (as defined below) on The Nasdaq Capital Market. Pursuant to the Merger Agreement, Avalon agreed, subject to Avalon stockholder approval pursuant to the attached proxy statement/prospectus, to effect the Reverse Stock Split (as defined below), if needed, to ensure the Avalon Common Stock will be able to meet the $4.00 minimum bid price initial listing requirement.

On April 22, 2025, the last trading day before the date of this proxy statement/prospectus, the closing sale price of Avalon Common Stock was $3.20 per share.

Avalon will seek the stockholder approvals necessary to complete the Merger and other matters at its special meeting of stockholders (the “Special Meeting”). The Special Meeting will be held via the internet at [  ] on [  ], 2025, at [   ], Eastern time, unless postponed or adjourned to a later date. At the Special Meeting, Avalon will ask its stockholders to, among other things, approve the issuance of shares of Avalon Common Stock as consideration in the Merger, approve effecting the reverse stock split of Avalon Common Stock at a ratio in the range from 1-for-2 to 1-for-20, with such specific ratio to be determined solely by the Avalon board of directors following the Special Meeting, each as described in this proxy statement/prospectus.

The consummation of the Merger is also conditioned on, among other things, the approval of the Merger by YOOV shareholders. As described in this proxy statement/prospectus, the officers and directors of Avalon entered into voting agreements with YOOV and Avalon whereby such stockholders agreed to vote all of their shares of Avalon Common Stock in favor of approving the proposals described in this proxy statement/prospectus. Additionally, as further described in this proxy statement/prospectus, certain shareholders of YOOV entered into a voting agreement with YOOV and Avalon whereby such stockholders agreed to vote all of their YOOV Ordinary Shares in favor of approving the Merger.

After careful consideration, the Avalon and YOOV boards of directors have each unanimously approved the Merger Agreement and the related transactions and the Avalon board of directors has approved the other proposals described in this proxy statement/prospectus, and determined that it is advisable and in the best interests of its stockholders to consummate the Merger. The Avalon board of directors recommends that its stockholders vote “FOR” the proposals described in this proxy statement/prospectus.

More information about Avalon, YOOV and the Merger and related transactions is contained in this proxy statement/prospectus. We urge you to read the accompanying proxy statement/prospectus, including the financial statements and annexes and other documents referred to herein, carefully and in their entirety. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER “RISK FACTORS” BEGINNING ON PAGE 16 OF THIS PROXY STATEMENT/PROSPECTUS.

On behalf of the board of directors, we thank you for your support and look forward to the successful completion of the Merger.

The accompanying proxy statement/prospectus is dated   , 2025 and is first being mailed to the stockholders of Avalon on or about that date.

NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS OR ANY OF THE SECURITIES TO BE ISSUED IN THE MERGER, PASSED UPON THE MERITS OR FAIRNESS OF THE MERGER OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.

AVALON GLOBOCARE CORP.

4400 Route 9 South, Suite 3100
Freehold, NJ 07728

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON [  ], 2025

To the Stockholders of Avalon GloboCare Corp.:

NOTICE IS HEREBY GIVEN that a special meeting of stockholders (the “Special Meeting”) of Avalon GloboCare Corp., a Delaware corporation (“Avalon,” “we,” “our” or “us”), will be held on [ ], 2025, at [ ], Eastern time. The Special Meeting will be held via the Internet. Avalon stockholders will be able to listen to the meeting live, submit questions and vote online regardless of location via the Internet at [  ]. You will be able to attend the Special Meeting by first registering at [  ]. You will receive a meeting invitation by e-mail with your unique join link along with a password prior to the meeting date. You will not be able to attend the Special Meeting in person. Only stockholders who hold shares of common stock, $0.0001 par value per share of Avalon (“Avalon Common Stock”) at the close of business on [ ], 2025, the record date for the Special Meeting, are entitled to vote at the Special Meeting and any adjournments or postponements of the Special Meeting.

The Special Meeting is being held for the following purposes:

After careful consideration, the Avalon Board has unanimously determined that the form, terms and provisions of the Merger Agreement, including the Merger, are advisable and in the best interests of Avalon and its stockholders, and unanimously recommends you vote “FOR” Proposals No. 1 through 8, as well as the Adjournment Proposal.

Avalon will transact no other business at the Special Meeting, except such business as may properly be brought before the Special Meeting or any adjournment or postponement thereof. Please refer to the proxy statement/prospectus of which this notice is a part for further information with respect to the business to be transacted at the Special Meeting.

A quorum of Avalon’s stockholders is necessary to hold a valid meeting. The holders of at least one-third (1/3) of the voting power of the shares of capital stock outstanding and entitled to vote at the meeting, as of the record date, present in person, present by remote communication, if applicable, or represented by proxy, will constitute a quorum for the transaction of business at the Special Meeting. Avalon will include proxies marked as abstentions and broker non-votes to determine the number of shares present at the Special Meeting.

The approval of each of the Nasdaq Proposal, the Reverse Stock Split Proposal, the Equity Plan Increase Proposal, the Series C Preferred Stock Proposal, Series D Preferred Stock Proposal, the Increase in Authorized Shares Proposal, the Golden Parachute Proposal (on an advisory (non-binding) basis) and the Adjournment Proposal requires the affirmative vote of a majority of the total votes properly cast by the Avalon Stockholders at the Special Meeting. Accordingly, abstentions and broker non-votes, if any, will have no effect on the outcome of the Nasdaq Proposal, the Reverse Stock Split Proposal, the Equity Plan Increase Proposal, the Series C Preferred Stock Proposal, Series D Preferred Stock Proposal, the Increase in Authorized Shares Proposal, the Golden Parachute Proposal and the Adjournment Proposal.

Completion of the Merger is conditioned upon, among other things, approval of the Nasdaq Proposal, the Reverse Stock Split Proposal, if necessary, and any other proposals Avalon and YOOV mutually agree is necessary or desirable to consummate the transactions contemplated by the Merger Agreement. Further, the consummation of the Merger is conditioned on, among other things, the adoption of the Merger Agreement by the YOOV shareholders.

Your attention is directed to the proxy statement/prospectus accompanying this notice (including the financial statements and annexes attached thereto) for a more complete description of the proposed Merger and related transactions and each of the proposals to be presented at the Special Meeting. We encourage you to read this proxy statement/prospectus carefully in its entirety. In particular, we urge you to read carefully the section entitled “Risk Factors” beginning on page 16 of the accompanying proxy statement/prospectus. If you have any questions or need assistance voting your shares, please contact Avalon at: Avalon GloboCare Corp., 400 Route 9 South, Suite 3100, Freehold, NJ 07728, Attn.: Secretary, or by phone at (732) 780-4400. 

Your vote is very important, regardless of the number of shares of Avalon Common Stock. Even if you plan to attend the Special Meeting, we request that you complete, sign, date and return the enclosed proxy card in the envelope provided, or submit your proxy by telephone or the Internet prior to the Special Meeting, and thus ensure that your shares will be represented and voted at the Special Meeting if you later become unable to attend. If your shares are held in a stock brokerage account or by a bank or other nominee, please follow the instructions that you receive from your broker, bank or other nominee to vote your shares.

REFERENCES TO ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information about Avalon GloboCare Corp. that is not included in or delivered with this document. You may obtain this information without charge through the SEC website at www.sec.gov or upon your written or oral request by contacting Avalon GloboCare Corp., 400 Route 9 South, Suite 3100, Freehold, NJ 07728, Attn.: Secretary, or by phone at (732) 780-4400.

To ensure timely delivery of these documents, any request for additional copies of materials should be made prior to the Special Meeting.

For additional details about where you can find information about Avalon, see the section entitled “Where You Can Find More Information” of this proxy statement/prospectus.

ABOUT THIS PROXY STATEMENT/PROSPECTUS

This document, which forms part of a registration statement on Form S-4 filed with the SEC, by Avalon GloboCare Corp. (the “Registration Statement”), constitutes a prospectus of Avalon under Section 5 of the Securities Act of 1933, as amended, with respect to the shares of Avalon Common Stock to be issued if the Merger described below is consummated. This document also constitutes a notice of meeting and a proxy statement under Section 14(a) of the Securities Exchange Act of 1934, as amended, with respect to the Special Meeting at which Avalon stockholders will be asked to consider and vote upon the proposals contained in this proxy statement/prospectus and certain other related matters.

You should rely only on the information contained in this proxy statement/prospectus. Avalon has not authorized anyone to provide you with information that is different from that contained in this proxy statement/prospectus. This proxy statement/prospectus is dated as of the date set forth above on the cover page of this proxy statement/prospectus, and you should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than such date. Neither the mailing of this proxy statement/prospectus to Avalon stockholders nor the issuance by Avalon of shares of Avalon Common Stock as consideration pursuant to the Merger Agreement will create any implication to the contrary.

This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

The information concerning Avalon contained in this proxy statement/prospectus has been provided by Avalon, and the information concerning YOOV contained in this proxy statement/prospectus has been provided by YOOV.

TABLE OF CONTENTS

FREQUENTLY USED TERMS

In this document:

“AI” means artificial intelligence.

“AIaaS” means AI as a service which is commonly referred to a cloud-based delivery model that allows businesses to access and integrate AI capabilities into their business operations.

“Avalon” means, as the context requires Avalon GloboCare Corp., a Delaware corporation.

“Avalon Board” means the board of directors of Avalon.

“Avalon Bylaws” means the Amended and Restated Bylaws of Avalon, as amended.

“Avalon Charter” means the Amended and Restated Certificate of Incorporation of Avalon, as amended.

“Avalon Common Stock” means the common stock, par value $0.0001 per share, of Avalon.

“Avalon Preferred Stock” means the Avalon Series C Preferred Stock and the Avalon Series D Preferred Stock.

“Avalon Series C Preferred Stock” means the Series C Convertible Preferred Stock, par value $0.0001 per share, of Avalon.

“Avalon Series D Preferred Stock” means the Series D Convertible Preferred Stock, par value $0.0001 per share, of Avalon.

“Avalon Stock Options” means the options to purchase Avalon Common Stock outstanding immediately prior to the Effective Time, whether vested or unvested.

“Avalon Transfer Agent” means Vstock Transfer LLC, the transfer agent and registrar for Avalon Common Stock.

“Avalon Voting Agreement” means the Voting Agreement, dated as of March 7, 2025, by and among Avalon, YOOV and the Key Avalon Stockholders.

“Avalon Warrants” means the warrants to purchase Avalon Common Stock outstanding immediately prior to the Effective Time.

“BVI Companies Act” means the BVI Business Companies Act, 2004 (as revised).

“Closing” means the consummation of the Merger.

“Closing Date” means the date on which the Closing occurs.

“Code” means the Internal Revenue Code of 1986, as amended.

“Combined Company” means, as the context requires, Avalon and its subsidiaries following the Closing.

“DGCL” means the Delaware General Corporation Law.

“Dissenting Shares” means, collectively, any YOOV Ordinary Shares or YOOV Preferred Shares for which the holder thereof (i) has not voted in favor of the Merger or consented in writing and (ii) has validly exercised the rights to dissent from the Merger in accordance with, and has complied in all respects with, the BVI Companies Act.

“Effective Time” means the effective time of the Merger.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“Exchange Ratio” means the ratio (rounded to four decimal places), determined as follows: if the closing price of the Avalon Common Stock on Nasdaq on the second (2^nd) trading day immediately preceding the Effective Time is (x) less than or equal to $5.00, the Exchange Ratio shall be 60,000,000 divided by the YOOV Outstanding Shares; or (y) greater than $5.00, the Exchange Ratio shall be 54,000,000 divided by the YOOV Outstanding Shares.

“GAAP” means United States generally accepted accounting principles.

“Key Avalon Stockholders” means the officers, directors and certain 5% or greater stockholders of Avalon who, in their capacity as stockholders of Avalon, executed the Avalon Voting Agreement.

“Key YOOV Shareholders” means the officers, directors and certain 5% or greater shareholders of YOOV who, in their capacity as shareholders of YOOV, executed the YOOV Voting Agreement. The Key YOOV Shareholders are the only YOOV shareholders necessary to approve the Merger.

“Merger” means, pursuant to the Merger Agreement, the merging of Merger Sub with and into YOOV, with YOOV surviving the Merger as a wholly owned subsidiary of Avalon.

“Merger Agreement” means the Agreement and Plan of Merger, dated as of March 7, 2025, as may be amended from time to time, by and among Avalon, YOOV and Merger Sub.

“Merger Shares” means the number of shares of Avalon Common Stock equal to the Exchange Ratio for which such YOOV Ordinary Shares will be converted into and exchanged for at the Effective Time.

“Merger Sub” means Nexus MergerSub Limited, a business company incorporated in the British Virgin Islands and wholly owned subsidiary of Avalon.

“Nasdaq” means The Nasdaq Stock Market LLC.

“SEC” means the U.S. Securities and Exchange Commission.

“Securities Act” means the U.S. Securities Act of 1933, as amended.

“Special Meeting” means the special meeting of Avalon stockholders to consider and vote upon the proposals set forth herein and any adjournment or postponement thereof.

“YOOV” means YOOV Group Holding Limited, a British Virgin Islands company.

“YOOV Board” means the board of directors of YOOV.

“YOOV Ordinary Shares” means the common stock, par value $0.10 per share, of YOOV.

“YOOV Outstanding Shares” means the total number of YOOV Ordinary Shares outstanding immediately prior to the Effective Time expressed on a fully diluted and as-converted to YOOV Ordinary Share basis, assuming, without limitation or duplication, and calculated using the treasury stock method (i) the conversion of each YOOV Preferred Share into YOOV Ordinary Shares immediately prior to the Effective Time and in accordance with YOOV’s memorandum and articles of association; (ii) the conversion of any YOOV Ordinary Share purchase warrants or other securities convertible or exchangeable into YOOV Ordinary Shares; and (iii) the issuance of YOOV Ordinary Shares in respect of all other rights to receive such shares that will be outstanding immediately after the Effective Time, in each case pursuant to the instruments governing such securities.

“YOOV Preferred Shares” means the preferred shares, par value $0.10 per share, of YOOV outstanding immediately prior to the Closing.

“YOOV Voting Agreement” means the Voting Agreement, dated as of March 7, 2025, by and among YOOV, Avalon and the Key YOOV Shareholders.  

QUESTIONS AND ANSWERS ABOUT THE MERGER

The following questions and answers briefly address some commonly asked questions regarding the proposed Merger and about the proposals to be presented at the Special Meeting including with respect to the proposed Merger. The following questions and answers may not include all the information that is important to Avalon stockholders. Stockholders are urged to read carefully this entire proxy statement/prospectus, including the financial statements and annexes attached hereto and the other documents referred to herein. Except where indicated, the information in this proxy statement/prospectus does not give effect to the proposed Reverse Stock Split of Avalon Common Stock, as described in this proxy statement/prospectus.

Avalon GloboCare Corp.

400 Route 9 South, Suite 3100

Freehold, NJ 07728

Telephone: (732) 780-4400

Attention: Secretary

RISK FACTORS

The Combined Company will face a market environment that cannot be predicted and that involves significant risks, many of which will be beyond its control. In addition to the other information contained in this proxy statement/prospectus, you should carefully consider the material risks described below before deciding how to vote your shares of stock. In addition, you should consider the risks associated with the business of Avalon and YOOV because these risks may also affect the Combined Company. You should also read and consider the other information in this proxy statement/prospectus. Please see the section entitled “Where You Can Find More Information.”

Risks Related to the Merger

Failure to complete the Merger could negatively impact the stock price and the future business and financial results of Avalon.

The parties’ respective obligations to complete the Merger are subject to the satisfaction or waiver of a number of conditions set forth in the Merger Agreement. There can be no assurance that the conditions to completion of the Merger will be satisfied or waived or that the Merger will be completed. If the Merger is not completed for any reason, the ongoing businesses of Avalon and YOOV may be materially and adversely affected and, without realizing any of the benefits of having completed the Merger, Avalon and YOOV would be subject to a number of risks, including the following:

In addition, each of Avalon and YOOV could be subject to litigation related to any failure to complete the Merger or related to any proceeding to specifically enforce Avalon’s and YOOV’s obligations under the Merger Agreement.

If any of these risks materialize, they may materially and adversely affect Avalon’s and YOOV’s business, financial condition, financial results and stock prices.

For a description of the circumstances under which a termination fee is payable, please see the section entitled “The Merger Agreement—Termination and Termination Fee.”

Avalon and YOOV will be subject to business uncertainties and contractual restrictions while the Merger is pending.

Uncertainty about the effect of the Merger on employees, vendors and customers may have an adverse effect on Avalon or YOOV and consequently on the Combined Company after the Closing. These uncertainties may impair Avalon’s and YOOV’s ability to retain and motivate key personnel and could cause customers and others that deal with Avalon and YOOV, as applicable, to defer or decline entering into contracts with Avalon or YOOV, as applicable, or making other decisions concerning Avalon or YOOV, as applicable, or seek to change existing business relationships with Avalon or YOOV, as applicable. In addition, if key employees depart because of uncertainty about their future roles and the potential complexities of the Merger, Avalon’s and YOOV’s businesses could be harmed. Furthermore, the Merger Agreement places certain restrictions on the operation of Avalon’s and YOOV’s businesses prior to the Closing, which may delay or prevent Avalon and YOOV from undertaking certain actions or business opportunities that may arise prior to the consummation of the Merger. Please see the section entitled “The Merger Agreement—Covenants; Conduct of Business Pending the Merger” for a description of the restrictive covenants applicable to Avalon and YOOV.

Third parties may terminate or alter existing contracts or relationships with Avalon or YOOV.

Each of Avalon and YOOV has contracts with customers, vendors and other business partners which may require Avalon or YOOV, as applicable, to obtain consents from these other parties in connection with the Merger. If these consents cannot be obtained, the counterparties to these contracts and other third parties with which Avalon and/or YOOV currently have relationships may have the ability to terminate, reduce the scope of or otherwise materially adversely alter their relationships with either party in anticipation of the Merger, or with the Combined Company following the Merger. The pursuit of such rights may result in Avalon and YOOV suffering a loss of potential future revenue, incurring liabilities in connection with a breach of such agreements or losing rights that are material to their businesses. Any such disruptions could limit the Combined Company’s ability to achieve the anticipated benefits of the Merger. The adverse effect of such disruptions could also be exacerbated by a delay in the completion of the Merger or the termination of the Merger.

The Merger is subject to a number of closing conditions and, if these conditions are not satisfied, the Merger Agreement may be terminated in accordance with its terms and the Merger may not be completed. In addition, the parties have the right to terminate the Merger Agreement under other specified circumstances, in which case the Merger would not be completed.

The Merger is subject to a number of closing conditions and, if these conditions are not satisfied or waived (to the extent permitted by law), the Merger will not be completed.

These conditions include, among others: (i) the absence of certain legal impediments, (ii) effectiveness of this registration statement on Form S-4 relating to the Merger, (iii) obtaining all governmental authorizations, (iv) obtaining the Avalon Stockholder Approval, (v) the approval of the Merger Agreement and the Merger by YOOV shareholders and (vi) the approval of the Nasdaq listing application and the listing of the Merger Shares on The Nasdaq Capital Market. In addition, each party’s obligation to complete the Merger is subject to the accuracy of the other parties’ representations and warranties in the Merger Agreement, the other parties’ compliance, in all material respects, with their respective covenants and agreements in the Merger Agreement.

The conditions to the Closing may not be fulfilled and, accordingly, the Merger may not be completed. In addition, if the Merger is not completed by March 7, 2026, any party may choose not to proceed with the Merger. Moreover, the parties can mutually decide to terminate the Merger Agreement at any time prior to the consummation of the Merger, before or after receipt of the Avalon Stockholder Approval and the approval of the Merger Agreement and the Merger by YOOV shareholders and each party may elect to terminate the Merger Agreement in certain other circumstances, as described in the section entitled “The Merger Agreement—Termination of the Merger Agreement.” If the Merger Agreement is terminated, Avalon or YOOV, as applicable, may incur substantial fees and expenses in connection with termination of such Agreement and neither of them will realize the anticipated benefits of the Merger. In addition, if the Merger is not completed, Avalon may not have sufficient capital to continue to operate its business in the long term and may become insolvent and be required to seek the protection of the bankruptcy courts and, without additional funding or a strategic transaction, we would likely be delisted from Nasdaq. For a description of the circumstances under which a termination fee is payable, please see the section entitled “The Merger Agreement—Termination and Termination Fee.”

Avalon or YOOV may waive one or more of the closing conditions to the Merger without re-soliciting stockholder approval.

Each of Avalon and YOOV has the right to waive certain of the closing conditions to the Merger. Any such waiver may not require re-solicitation of stockholders, in which case stockholders of Avalon and shareholders of YOOV will not have the chance to change their votes as a result of any such waiver and Avalon and YOOV will have the ability to complete the Merger without seeking further stockholder approval. Any determination whether to waive any condition to the Merger, whether stockholder approval would be re-solicited as a result of any such waiver or whether this proxy statement/prospectus would be amended as a result of any waiver will be made Avalon or YOOV, as applicable, at the time of such waiver based on the facts and circumstances as they exist at that time, and any such waiver could have an adverse effect on the Combined Company.

Both Avalon’s stockholders and YOOV’s shareholders will have a reduced ownership and voting interest after the Merger and will exercise less influence over management.

The number of shares of Avalon Common Stock that YOOV shareholders will receive as consideration in the Merger is not fixed. Based on the closing price of Avalon Common Stock on Nasdaq of $3.20 on April 22, 2025, the latest practicable trading day prior to the date of this proxy statement/prospectus, and on the number of shares of YOOV Outstanding Shares on such date, the Exchange Ratio will be approximately 121.8. Upon completion of the Merger, the current Avalon stockholders are expected to own approximately 2.7% to 3.0% of the common stock of the Combined Company and the YOOV shareholders are expected to own approximately 97.0% to 97.3% of the common stock of the Combined Company. The Exchange Ratio is an estimate only, and the actual Exchange Ratio and relative ownership interests of Avalon stockholders and YOOV shareholders in the Combined Company immediately following the Merger will depend on the market price of Avalon’s Common Stock two (2) trading days prior to the Merger and the number of YOOV Outstanding Shares on the Closing Date.

Consequently, Avalon stockholders, as a group, and YOOV shareholders, as a group, will each have reduced ownership and voting power in the Combined Company compared to their current ownership and voting power in Avalon and YOOV, respectively. In particular, upon consummation of the Merger, Avalon stockholders, as a group, will have less than a majority of the ownership and voting power of Avalon. In addition, YOOV shareholders, as a group, and Avalon stockholders, as a group, will be able to exercise less collective influence over the management and policies of Avalon than they currently exercise over the management and policies of their respective company.

The Merger Agreement limits Avalon’s and YOOV’s ability to pursue alternatives to the Merger.

The Merger Agreement contains provisions that make it more difficult for Avalon and YOOV to enter into alternative transactions. The Merger Agreement contains certain provisions that restrict Avalon’s and YOOV’s ability to solicit or facilitate proposals from third parties with respect to transactions involving the financing or sale of Avalon or YOOV, as applicable, or provide non-public information to, or otherwise participate or engage in discussions or negotiations with, third parties or take certain other actions that would reasonably be expected to lead to a third-party acquisition proposal. Further, there are only limited exceptions to Avalon’s and YOOV’s agreement that its board of directors will not change its recommendation in favor of the adoption of the Merger Agreement. However, at any time prior to the receipt of the Avalon Stockholder Approval and the approval of the Merger Agreement and the Merger by YOOV shareholders, in response to an unsolicited superior proposal made by a third party, Avalon’s and YOOV’s board of directors, as applicable, may make an adverse recommendation change, and terminate the Merger Agreement to enter into an alternative acquisition agreement, if it concludes in good faith, after consultation with their respective outside financial advisors and outside legal counsel, that the failure to take such action would be inconsistent with the fiduciary duties of Avalon’s or YOOV’s board of directors under the circumstances and under applicable law. Please see the section entitled “The Merger Agreement—Non-Solicitation.”

As described above, Avalon may be required to pay a termination fee of $1,000,000 to YOOV if the Merger is not consummated under specified circumstances. Please see the section entitled “The Merger Agreement—Termination and Termination Fee”, including as described above, for a description of the circumstances under which such a termination fee is payable. Upon obtaining the Avalon Stockholder Approval, Avalon’s right to terminate the Merger Agreement in response to a superior proposal will cease.

In addition, upon adoption of the Merger Agreement by YOOV’s shareholders, YOOV’s right to terminate the Merger Agreement in response to a superior proposal will cease.

While Avalon and YOOV believe these provisions are reasonable, customary and not preclusive of other offers, the provisions might discourage a third party that has an interest in acquiring all or a significant part of Avalon or YOOV from considering or proposing such an acquisition, even if such party were prepared to pay consideration with a higher per-share value than the currently proposed merger consideration or if such party were prepared to enter into an agreement that may be more favorable to Avalon or YOOV or their respective stockholders.

The Projections considered by Avalon and Roth may not be realized, which may adversely affect the market price of Avalon Common Stock following the completion of the Merger.

In performing its financial analyses and rendering its opinion related to the Merger, Roth relied on, among other things, certain information, including the Projections. Please see the sections entitled “The Merger— YOOV Management Unaudited Prospective Financial Information.” The Projections were prepared by, or at the direction of, the management of YOOV. None of these projections or forecasts were prepared with a view towards public disclosure or compliance with the published guidelines of the SEC, U.S. GAAP or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts. These projections and forecasts are inherently based on various estimates and assumptions that are subject to the judgment of those preparing them. These projections and forecasts are also subject to significant economic, competitive, industry and other uncertainties and contingencies, all of which are difficult or impossible to predict and many of which are beyond the control of Avalon. There can be no assurance that YOOV’s financial condition, including its cash flows or results of operations will be consistent with those set forth in such projections and forecasts, which could have an adverse impact on the market price of Avalon Common Stock or the financial position of the Combined Company following the Closing.

Executive officers and directors of Avalon and YOOV may have interests in the Merger that are different from, or in addition to, the rights of their respective stockholders.

Executive officers of Avalon and YOOV negotiated the terms of the Merger Agreement and the Avalon Board and the YOOV Board each approved the Merger Agreement and the Merger and recommend that each stockholder vote in favor of the proposals presented at the Special Meeting or in the written consent, as applicable. These executive officers and directors may have interests in the Merger that are different from, or in addition to, the Avalon or YOOV shareholders. These interests include the continued employment of certain executive officers of YOOV as executive officers of the Combined Company following the Merger, the continued service of certain directors Avalon and YOOV as directors of the Combined Company following the Merger, the indemnification of Avalon and YOOV executive officers and directors by Avalon. Stockholders should be aware of these interests when they consider their board of directors’ recommendations that stockholders vote in favor of the Merger. For a description of the interests of Avalon’s executive officer and directors in the Merger, please see the section entitled “The Merger—Interests of Avalon’s Directors and Officer in the Merger.” For a description of the interests of YOOV’s executive officers and directors in the Merger, please see the section entitled “The Merger—Interests of YOOV’s Directors and Officers in the Merger.”

Avalon, YOOV and, subsequently, the Combined Company may have difficulty attracting, motivating and retaining executives and other key employees in light of the proposed Merger.

The Combined Company’s success after the Merger will depend in part on each of Avalon’s and YOOV’s ability to retain key executives and other employees. Uncertainty about the effect of the Merger on Avalon’s and YOOV’s employees may have an adverse effect on each company separately and consequently, the Combined Company. This uncertainty may impair the Combined Company’s ability to attract, retain and motivate key personnel. Employee retention may be particularly challenging during the pendency of the Merger, as Avalon’s and YOOV’s employees may experience uncertainty about their future roles in the combined business.

Additionally, YOOV’s officers and employees hold YOOV Common Stock and, if the Merger is completed, these officers and employees will be entitled to the Avalon Common Stock in respect of such shares.

Furthermore, if any of Avalon or YOOV’s key employees depart or are at risk of departing, including because of issues relating to the uncertainty and difficulty of integration, financial security or a desire not to become employees of the combined business, Avalon or YOOV, as applicable, may have to incur significant costs in retaining such individuals or in identifying, hiring and retaining replacements for departing employees and may lose significant expertise and talent, and the Combined Company’s ability to realize the anticipated benefits of the Merger may be materially and adversely affected. No assurance can be given that the Combined Company will be able to attract or retain key employees to the same extent that Avalon or YOOV has been able to attract or retain employees in the past.

Avalon and YOOV will incur significant transaction and Merger-related transition costs in connection with the Merger.

Avalon and YOOV expect that they will incur significant, non-recurring costs in connection with consummating the Merger and integrating the operations of the two companies post-Closing. Avalon and/or YOOV may incur additional costs to retain key employees. Avalon and/or YOOV will also incur significant fees and expenses relating to financing arrangements and legal services (including any costs that would be incurred in defending against any potential class action lawsuits and derivative lawsuits in connection with the Merger if any such proceedings are brought), accounting and other fees and costs, associated with consummating the Merger. Some of these costs are payable regardless of whether the Merger is completed. In addition, Avalon may be required to pay a termination fee of $1,000,000 if the Merger Agreement is terminated under specified circumstances described in this proxy statement/prospectus. Though Avalon and YOOV continue to assess the magnitude of these costs, additional unanticipated costs may be incurred in the Merger and the integration of the businesses of Avalon and YOOV.

The opinion of Avalon’s Financial Advisor will not be updated to reflect changes in circumstances between the signing of the Merger Agreement on March 7, 2025 and the completion of the Merger.

Avalon has not obtained an updated Opinion from Roth as of the date of this proxy statement/prospectus, and Avalon does not anticipate asking Roth to update its the Opinion. Changes in the operations and prospects of Avalon and YOOV, general market and economic conditions and other factors that may be beyond the control of Avalon, and on which the Opinion was based in part, may significantly alter the prices of the shares of Avalon Common Stock by the Closing Date. The opinion does not speak as of the time the Merger will be completed or as of any date other than the date of the Opinion. Because Roth will not be updating the Opinion, which was issued in connection with the signing of the Merger Agreement on March 7, 2025, the Opinion will not address the fairness of the Exchange Ratio, from a financial point of view, to Avalon at the Closing Date. The Avalon Board’s recommendation that Avalon stockholders vote “FOR” the proposals included herein, however, is made as of the date of this proxy statement/prospectus. For a description of the Opinion that Avalon received from Roth, please see the section entitled “The Merger—Opinion of Avalon’s Financial Advisor.”

Avalon and YOOV may be the target of securities class action and stockholder lawsuits which could result in substantial costs and may delay or prevent the Merger from being completed.

Securities class action lawsuits and stockholder lawsuits are often brought against public companies that have entered into merger agreements. Even if the lawsuits are without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on Avalon’s or YOOV’s liquidity and financial condition. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Merger, then that injunction may delay or prevent the Merger from being completed, which may adversely affect Avalon’s or YOOV’s or, if the Merger is completed but delayed, the Combined Company’s business, financial position and results of operations. As of the date of this proxy statement/prospectus, no such lawsuits have been filed in connection with the Merger and the parties cannot predict whether any will be filed.

The lack of a public market for YOOV shares makes it difficult to determine the fair market value of the YOOV shares, and YOOV shareholders may receive consideration in the Merger that is less than the fair market value of the YOOV shares and/or Avalon may pay more than the fair market value of the YOOV shares.

YOOV is privately held, and its capital stock is not traded in any public market. The lack of a public market makes it extremely difficult to determine YOOV’s fair market value. Because the percentage of Avalon’s equity to be issued to YOOV shareholders was determined based on negotiations between the parties, it is possible that the value of the Avalon Common Stock to be received by YOOV shareholders will be less than the fair market value of YOOV, or Avalon may pay more than the aggregate fair market value for YOOV.

Additional Risks Relating to the Combined Company after Completion of the Merger

The Combined Company will be subject to the risks that each of Avalon and YOOV faces.

Following completion of the Merger, the Combined Company will be subject to numerous risks and uncertainties, including the risks faced by each of Avalon and YOOV, which are described in the documents that Avalon has filed with the SEC, including those set forth herein and those set forth in Avalon’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as updated by future filings after the date of this proxy statement/prospectus with the SEC by Avalon, and in the sections of this proxy statement/prospectus entitled “Risk Factors—Risks Related to YOOV” and entitled “Risk Factors—Risks Related to Avalon.” If any such risks actually occur, the business, financial condition, results of operations or cash flows of the Combined Company could be materially adversely affected.

The market price for shares of Avalon Common Stock may be affected by factors different from those affecting the market price for shares of YOOV Common Stock.

Upon completion of the Merger, holders of YOOV Common Stock will become holders of Avalon Common Stock. Avalon’s and YOOV’s respective businesses differ, and accordingly the results of operations of the Combined Company, and the market price of the common stock of the Combined Company, will be affected by factors different from those currently affecting the results of operations of Avalon and YOOV independently. For a discussion of the businesses of Avalon and YOOV and of certain factors to consider in connection with those businesses, please see the sections entitled “Information About YOOV,” “Information About Avalon,”“Risk Factors—Risks Related to YOOV” and “Risk Factors—Risks Related to Avalon.”

The market price for shares of Avalon Common Stock may decline as a result of the Merger, including as a result of some Avalon stockholders adjusting their portfolios.

The market value of Avalon Common Stock at the time of consummation of the Merger may vary significantly from the price of Avalon Common Stock on the date the Merger Agreement was executed, the date of this proxy statement/prospectus and the date of the Special Meeting. Following the consummation of the Merger, the market price of Avalon Common Stock may decline if, among other things, the operational cost estimates in connection with the operation of YOOV’s business or if the costs related to the Merger are greater than expected. The market price also may decline if Avalon does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by financial or industry analysts or if the effect of the Merger on Avalon’s financial position, results of operations or cash flows is not consistent with the expectations of financial or industry analysts.

In addition, sales of Avalon Common Stock by Avalon’s stockholders after the completion of the Merger may cause the market price of Avalon Common Stock to decrease. Based on the number of shares of Avalon Common Stock outstanding as of April 22, 2025, the latest practicable date before the date of this proxy statement/prospectus, approximately 61,651,667 shares of Avalon Common Stock are expected to be issued and outstanding immediately after the Closing, without taking into effect the contemplated Reverse Stock Split, if approved and if necessary to be effectuated for the Combined Company to meet the $4.00 minimum bid price initial listing requirement following the Closing pursuant to the rules of The Nasdaq Capital Market, prior to the Effective Time. Although certain Avalon stockholders and YOOV shareholders have entered into Lock-Up Agreements, Avalon stockholders and YOOV shareholders that are not party to such Lock-Up Agreements or those who are party to such Lock-Up Agreements when such agreements expire, may decide not to hold the shares of Avalon Common Stock that they receive in the Merger. Other Avalon stockholders, such as funds with limitations on their permitted holdings of stock in individual issuers, may be required to sell the shares of Avalon Common Stock that they receive in the Merger. Such sales of Avalon Common Stock could have the effect of depressing the market price for Avalon Common Stock and may take place promptly following the Closing.

Any of these events may make it more difficult for Avalon to sell equity or equity-related securities, dilute your ownership interest in Avalon and have an adverse impact on the price of Avalon Common Stock.

Avalon does not expect to declare any cash dividends in the foreseeable future.

After the completion of the Merger, Avalon does not anticipate declaring any cash dividends to holders of Avalon Common Stock in the foreseeable future. Consequently, investors may need to rely on sales of their shares after price appreciation, which may never occur, as the only way to realize any future gains on their investment.

The Merger may not be accretive, and may be dilutive, to the Combined Company’s earnings per share, which may negatively affect the market price of shares of Avalon Common Stock.

Avalon and YOOV currently believe the Merger will result in a number of benefits, including stronger demand for the Combined Company’s products and services, and that the Merger will be accretive to the Combined Company’s earnings. This belief is based, in part, on preliminary current estimates that may materially change. In addition, future events and conditions, including adverse changes in market conditions, additional transaction and integration-related costs and other factors such as the failure to realize some or all of the anticipated benefits of the Merger, could decrease or delay the accretion that is currently anticipated or could result in dilution. Any dilution of, or decrease in or delay of any accretion to, the Combined Company’s earnings per share could cause the price of shares of Avalon Common Stock to decline or grow at a reduced rate.

The Combined Company may incur losses for the foreseeable future and may never achieve profitability.

The Combined Company may never become profitable, even if the Combined Company is able to achieve the prior operating results of YOOV. Even if the Combined Company does achieve profitability, it may not be able to sustain or increase profitability on a quarterly or annual basis.

Following the Merger, the Combined Company may be unable to integrate successfully the businesses of Avalon and YOOV and realize the anticipated benefits of the Merger.

The Merger involves the combination of two companies which currently operate as independent companies. Following the Merger, the Combined Company will be required to devote significant management attention and resources to integrating its business practices and operations. The Combined Company may fail to realize some or all of the anticipated benefits of the Merger if the integration process takes longer than expected or is more costly than expected. Potential difficulties the Combined Company may encounter in the integration process include the following:

In addition, Avalon and YOOV have operated and, until the completion of the Merger, will continue to operate, independently. It is possible that the integration process also could result in the diversion of each company’s management’s attention, the disruption or interruption of, or the loss of momentum in, each company’s ongoing businesses or inconsistencies in standards, controls, procedures, and policies, any of which could adversely affect the Combined Company’s ability to maintain its business relationships or the ability to achieve the anticipated benefits of the Merger, or could otherwise adversely affect the business and financial results of the Combined Company.

If the Combined Company fails to attract and retain management and other key personnel, it may be unable to continue to successfully develop or commercialize its product candidates or otherwise implement its business plan.

The Combined Company’s ability to compete in the highly competitive business automation industry depends on its ability to attract and retain highly qualified managerial, legal, sales and marketing, and other personnel. The Combined Company will be highly dependent on the management and personnel of YOOV. The loss of the services of any of these individuals could impede, delay, or prevent the successful development of its AIaaS platforms and could negatively impact its ability to implement successfully its business plan. If the Combined Company loses the services of any of these individuals, it might not be able to find suitable replacements on a timely basis or at all, and its business could be harmed as a result. The Combined Company might not be able to attract or retain qualified management and other key personnel in the future due to the intense competition for qualified personnel among other businesses.

The Combined Company will need to raise additional financing in the future to fund its operations, which may not be available to it on favorable terms or at all.

The Combined Company will require substantial additional funds to support business development and research and development activities. The Combined Company’s future capital requirements will depend upon a number of factors, such as the continued development and scaling of its AIaaS platform, expansion into new markets and industries, the growth of its global customer base, and the operational needs of its subsidiaries in financial and insurance services. Raising additional capital may be costly or difficult to obtain and could, for example, through the sale of common stock or securities convertible or exchangeable into common stock, significantly dilute stockholders’ ownership interests in the Combined Company or inhibit the Combined Company’s ability to achieve its business objectives. If the Combined Company raises additional funds through public or private equity offerings, the terms of these securities may include liquidation or other preferences that adversely the rights of its common stockholders. In addition, any debt financing may subject the Combined Company to fixed payment obligations and covenants limiting or restricting its ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If the Combined Company raises additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, the Combined Company may have to relinquish certain valuable rights under the agreements with such parties. Even if the Combined Company were to obtain sufficient funding, there can be no assurance that it will be available on terms acceptable to the Combined Company or its stockholders.

The Combined Company will incur additional costs and increased demands upon management as a result of complying with the laws and regulations affecting public companies.

The Combined Company will incur significant legal, accounting, and other expenses as a public company that YOOV did not incur as a private company, including costs associated with public company reporting obligations under the Exchange Act. The Combined Company’s management team will consist of the executive officers of YOOV prior to the Merger, some of whom have not previously managed and operated a public company. These executive officers and other personnel will need to devote substantial time to gaining expertise related to public company reporting requirements and compliance with applicable laws and regulations to ensure that the Combined Company complies with all these requirements. Any changes the Combined Company makes to comply with these obligations may not be sufficient to allow it to satisfy its obligations as a public company on a timely basis, or at all. These reporting requirements, rules and regulations, coupled with the increase in potential litigation exposure associated with being a public company, could also make it more difficult for the Combined Company to attract and retain qualified persons to serve on the board of directors or on board committees or to serve as executive officers, or to obtain certain types of insurance, including directors’ and officers’ insurance, on acceptable terms.

At the Effective Time of the Merger, failure by the Combined Company to comply with the initial listing standards of Nasdaq will prevent its stock from being listed on Nasdaq.

At the Effective Time, Avalon, under the new name “YOOV, Inc.,” will be required to meet the initial listing requirements to maintain the listing and continued trading of its shares on the Nasdaq Capital Market. These initial listing requirements are more difficult to achieve than the continued listing requirements. Pursuant to the Merger Agreement, Avalon agreed to use its commercially reasonable efforts to cause the shares of Avalon Common Stock being issued in the Merger to be approved for listing on the Nasdaq Capital Market at or prior to the Effective Time of the Merger. Based on information currently available to Avalon, Avalon anticipates that its stock may be unable to meet the $4.00 (or, to the extent applicable, $3.00) minimum bid price initial listing requirement at the Closing unless it effects the Reverse Stock Split. The Avalon Board intends to effect a reverse stock split of the shares of Avalon Common Stock at a ratio of between 1-for-2 to 1-for-20. In addition, often times a reverse stock split will not result in a trading price for the affected common stock that is proportional to the ratio of the split. Following the Merger, if the Combined Company is unable to satisfy Nasdaq continued listing requirements, Nasdaq may notify the Combined Company that its shares of common stock will not continue to be listed on the Nasdaq Capital Market.

Upon a potential delisting from Nasdaq, if the common stock of the Combined Company is not then eligible for quotation on another market or exchange, trading of the shares could be conducted in the over-the-counter market or on an electronic bulletin board established for unlisted securities such as the Pink Sheets or the OTC Bulletin Board. In such event, it is likely that there would be significantly less liquidity in the trading of the common stock of the Combined Company; decreases in institutional and other investor demand for the shares, coverage by securities analysts, market making activity and information available concerning trading prices and volume; and fewer broker dealers willing to execute trades in the common stock of the Combined Company. Also, it may be difficult for the Combined Company to raise additional capital if the Combined Company’s common stock is not listed on a major exchange. The occurrence of any of these events could result in a further decline in the market price of the common stock of the Combined Company and could have a material adverse effect on the Combined Company.

If the Combined Company is no longer a smaller reporting company or otherwise no longer qualifies for applicable exemptions, the Combined Company will be subject to additional laws and regulations affecting public companies that will increase the Combined Company’s costs and the demands on management and could harm the Combined Company’s operating results and cash flows.

The Combined Company will be subject to the reporting requirements of the Exchange Act, which requires, among other things, that the Combined Company file with the SEC, annual, quarterly, and current reports with respect to the Combined Company’s business and financial condition as well as other disclosure and corporate governance requirements. Avalon and YOOV expect the Combined Company will qualify as a “smaller reporting company,” as such term is defined in Rule 12b-2 under the Exchange Act, in at least the near term, which will allow the Combined Company to take advantage of certain exemptions from disclosure requirements, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in this proxy statement/prospectus and in the Combined Company’s periodic reports and proxy statements. If the Combined Company is no longer a smaller reporting company or otherwise no longer qualifies for these exemptions, the Combined Company will be required to comply with these additional legal and regulatory requirements applicable to public companies and will incur significant legal, accounting and other expenses to do so. If the Combined Company is not able to comply with the requirements in a timely manner or at all, the Combined Company’s financial condition or the market price of the Combined Company’s common stock may be harmed. For example, if the Combined Company or its independent auditor identifies deficiencies in the Combined Company’s internal control over financial reporting that are deemed to be material weaknesses the Combined Company could face additional costs to remedy those deficiencies, the market price of the Combined Company’s stock could decline or the Combined Company could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

The unaudited pro forma financial information included in this proxy statement/prospectus is preliminary and the Combined Company’s actual financial position or results of operations after the Merger may differ materially.

The unaudited pro forma financial information in this proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what the Combined Company’s actual financial position or results of operations would have been had the Merger been completed on the dates indicated. The unaudited pro forma financial information reflects adjustments, which are based upon estimates, to allocate the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed, based on their estimated acquisition-date fair values. The purchase price allocation reflected in this document is preliminary, and a final determination of the fair value of assets acquired and liabilities assumed will be based on the actual net tangible and intangible assets and liabilities of YOOV that existed as of the date of the completion of the Merger. Accordingly, the final purchase accounting adjustments may differ materially from the pro forma information reflected in this proxy statement/prospectus. For more information, please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”

Provisions of the Combined Company Charter and the Combined Company Bylaws, and provisions under Delaware law could make an acquisition of the Combined Company more difficult and may prevent attempts by its stockholders to replace or remove its management.

Pursuant to the Merger Agreement, immediately prior to the Effective Time, the Avalon Charter shall be amended to (i) change the name of Avalon to “YOOV, Inc.”, (ii) effectuate the Reverse Stock Split, if approved and if necessary to be effectuated for the Combined Company to meet the $4.00 minimum bid price initial listing requirement following the Closing pursuant to the rules of The Nasdaq Capital Market, (iii) increase the number of authorized shares of common stock to 200,000,000 and (iv) make such other changes as shall be mutually agreed upon by Avalon and YOOV prior to the filing of such amendment (the Avalon Charter, once amended as set forth herein, the “Combined Company Charter”). Additionally, the Avalon Bylaws, immediately prior to the Effective Time, shall be amended to change the name of Avalon to “YOOV, Inc.” (the Avalon Bylaws, once amended as set forth herein, the “Combined Company Bylaws”).

Provisions that are included in the Combined Company Charter and Combined Company Bylaws may discourage, delay or prevent a merger, acquisition or other change in control of the Combined Company that stockholders may consider favorable, including transactions in which its common stockholders might otherwise receive a premium price for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of the Combined Company’s common stock, thereby depressing the market price of its common stock. In addition, because the Combined Company’s board of directors will be responsible for appointing the members of the Combined Company’s management team, these provisions may frustrate or prevent any attempts by the Combined Company’s stockholders to replace or remove its current management by making it more difficult for stockholders to replace members of the Combined Company’s board of directors. Among other things, these provisions will include the following:

Moreover, because the Combined Company will be incorporated in Delaware, it will be subject to the provisions of Section 203 of the DGCL, which generally prohibits a Delaware corporation from engaging in a business combination with an interested stockholder (which is generally defined to include any person that owns 15% or more of the corporation’s outstanding voting stock and their affiliates and associates) for three years following the time that the person becomes an “interested stockholder” unless, among other exclusions, (i) prior to the date the person becomes an interested stockholder, the board of directors approves either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder, (ii) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced (excluding certain shares), or (iii) the business combination is approved by the board of directors and by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder at a meeting and not by written consent. Although Avalon and YOOV believe these provisions collectively will provide for an opportunity to receive higher bids by requiring potential acquirors to negotiate with the Combined Company’s board of directors, they would apply even if the offer may be considered beneficial by some stockholders. In addition, these provisions may frustrate or prevent any attempts by the Combined Company’s stockholders to replace or remove then current management by making it more difficult for stockholders to replace members of the board of directors, which is responsible for appointing the members of management. For more information, please see the section entitled “Description of Avalon’s Securities–Anti-Takeover Effects of Delaware Law and the Avalon Charter and the Avalon Bylaws” 

The Combined Company Bylaws will provide that, unless the Combined Company consents in writing to the selection of an alternative forum, certain designated courts will be the sole and exclusive forum for certain legal actions between the Combined Company and its stockholders, which could limit its stockholders’ ability to obtain a favorable judicial forum for disputes with the Combined Company or its directors, officers, employees or agents.

The Combined Company Bylaws will provide that, unless it consents in writing to an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for (i) any derivative action or proceeding brought on its behalf, (ii) any action asserting a claim of or based on a breach of fiduciary duty owed by any of its current or former directors, officers, stockholder or other employee of the Combined Company to the Combined Company or its stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, the Combined Company Charter or the Combined Company Bylaws, or (iv) any action asserting a claim that is governed by the internal affairs doctrine, in each case subject to the Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein, which for purposes of this risk factor refers to herein as the “Delaware Forum Provision.” The Combined Company reserves the right to assert that the Delaware Forum Provision applies to any derivative action or proceeding to procure a judgment in the Combined Company’s favor, provided that, for the avoidance of doubt, the Delaware Forum Provision will not apply to claims arising under the Securities Act, the Exchange Act or any other claim for which the federal district courts are, as a matter of the laws of the United States, the sole and exclusive forum for determination of such a claim. It is, however, uncertain whether a court would enforce the Delaware Forum Provision with respect to a derivative action or proceeding brought by a stockholder to enforce the Combined Company’s rights under the Exchange Act. The Combined Company will not assert that the Delaware Forum Provision applies to any direct action brought by a stockholder to enforce rights under the Exchange Act or Securities Act. The Delaware Certificate of Incorporation, which will be the certificate of incorporation of Avalon-Delaware will further provide that, unless it consents in writing to an alternative forum, federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, which for purposes of this risk factor refers to herein as the “Federal Forum Provision.” It is, however, uncertain whether a court would enforce the Federal Forum Provision with respect to a proceeding brought by a stockholder to enforce its rights under the Securities Act. In addition, the Delaware Certificate of Incorporation will provide that any person or entity purchasing or otherwise acquiring any interest in shares of its capital stock is deemed to have notice of and consented to the foregoing Delaware Forum Provision and Federal Forum Provision; provided, however, that stockholders cannot and will not be deemed to have waived its compliance with the U.S. federal securities laws and the rules and regulations thereunder.

The Delaware Forum Provision and the Federal Forum Provision may impose additional litigation costs on stockholders of the Combined Company in pursuing any such claims, particularly if the stockholders do not reside in or near the State of Delaware. Additionally, such provisions may limit its stockholders’ ability to bring a claim in a judicial forum that they find favorable for disputes with the Combined Company or its directors, officers, employees or stockholders, which may discourage such lawsuits against the Combined Company and its directors, officers, employees and stockholders even though an action, if successful, might benefit its stockholders.

Avalon and YOOV do not anticipate that the Combined Company will pay any cash dividends in the foreseeable future.

The current expectation is that the Combined Company will retain its future earnings, if any, to fund the growth of the Combined Company’s business as opposed to paying dividends. As a result, capital appreciation, if any, of the common stock of the Combined Company will be your sole source of gain, if any, for the foreseeable future.

An active trading market for the Combined Company’s common stock may not develop and its stockholders may not be able to resell their shares of common stock for a profit, if at all.

Prior to the Merger, there had been no public market for shares of YOOV capital stock. An active trading market for the Combined Company’s shares of common stock may never develop or be sustained. If an active market for the Combined Company’s common stock does not develop or is not sustained, it may be difficult for its stockholders to sell their shares at an attractive price or at all.

Future sales of shares by existing stockholders could cause the Combined Company’s stock price to decline.

If existing securityholders of Avalon and YOOV sell, or indicate an intention to sell, substantial amounts of the Combined Company’s common stock in the public market after legal or contractual lock-up restrictions on resale discussed in this proxy statement/prospectus lapse, the trading price of the common stock of the Combined Company could decline. Based on shares outstanding as of March 31, 2025, after giving effect to the estimated Exchange Ratio and shares expected to be issued upon completion of the Merger, approximately 61,651,667 shares of Avalon Common Stock are expected to be issued and outstanding immediately after the Closing, without taking into effect the contemplated Reverse Stock Split prior to the Effective Time. Of such outstanding shares of common stock, approximately 32,658,345 shares will be freely tradeable upon completion of the Merger and approximately an additional 28,993,322 shares will become available for sale in the public market beginning one hundred eighty (180) days after the Closing Date as a result of the expiration of the Lock-Up Agreements between Avalon and certain securityholders of YOOV (and without giving effect to any restrictions on resale under securities laws), each without taking into effect the contemplated Reverse Stock Split prior to the Effective Time. If these shares are sold, the trading price of the Combined Company’s common stock could decline.

After completion of the Merger, the Combined Company’s executive officers, directors and principal stockholders may have the ability to control or significantly influence certain matters submitted to the Combined Company’s stockholders for approval.

Upon the completion of the Merger, it is anticipated that the Combined Company’s executive officers, directors and principal stockholders will, in the aggregate, beneficially own approximately 41.8% of the Combined Company’s outstanding shares of common stock. As a result, if these stockholders were to choose to act together, they may be able to control or significantly influence certain matters submitted to the Combined Company’s stockholders for approval, as well as the Combined Company’s management and affairs. For example, these stockholders, if they choose to act together, would control or significantly influence the election of directors and approval of any merger, consolidation or sale of all or substantially all of the Combined Company’s assets. This concentration of voting power could delay or prevent an acquisition of the Combined Company on terms that other stockholders may desire.

If equity research analysts do not publish research or reports, or publish unfavorable research or reports, about the Combined Company, its business or its market, its stock price and trading volume could decline.

The trading market for the Combined Company’s common stock will be influenced by the research and reports that equity research analysts publish about it and its business. Equity research analysts may elect to not provide research coverage of the Combined Company’s common stock after the completion of the Merger, and such lack of research coverage may adversely affect the market price of its common stock. In the event it does have equity research analyst coverage, the Combined Company will not have any control over the analysts or the content and opinions included in their reports. The price of the Combined Company’s common stock could decline if one or more equity research analysts downgrade its stock or issue other unfavorable commentary or research. If one or more equity research analysts ceases coverage of the Combined Company or fails to publish reports on it regularly, demand for its common stock could decrease, which in turn could cause its stock price or trading volume to decline.

The Combined Company will have broad discretion in the use of the cash and cash equivalents of the Combined Company and may invest or spend the proceeds in ways that may not increase the value of your investment.

The Combined Company will have broad discretion over the use of the cash and cash equivalents of the Combined Company. You may not agree with the Combined Company’s decisions, and its use of the proceeds may not yield any return on your investment. The Combined Company’s failure to apply these resources effectively could compromise its ability to pursue its growth strategy and the Combined Company might not be able to yield a significant return, if any, on its investment of these net proceeds. You will not have the opportunity to influence its decisions on how to use the Combined Company’s cash resources.

The Combined Company may be subject to adverse legislative or regulatory tax changes that could negatively impact its financial condition.

The rules dealing with U.S. federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury Department. Changes to tax laws (which changes may have retroactive application) could adversely affect the Combined Company or its stockholders. The Combined Company will assess the impact of various tax reform proposals and modifications to existing tax treaties in all jurisdictions where the Combined Company has operations to determine the potential effect on its business and any assumptions the Combined Company will make about its future taxable income. It cannot predict whether any specific proposals will be enacted, the terms of any such proposals or what effect, if any, such proposals would have on its business if they were to be enacted. For example, the United States enacted the Inflation Reduction Act of 2022, which implements, among other changes, a 1% excise tax on certain stock buybacks. In addition, beginning in 2022, the Tax Cuts and Jobs Act, P.L. 115-97 eliminated the option to deduct research and development expenditures and requires taxpayers to amortize them generally over five years. The U.S. Congress is considering legislation that would restore the current deductibility of research and development expenditures, however, there is no assurance that the provision will be repealed or otherwise modified. Such changes, among others, may adversely affect the Combined Company’s effective tax rate, results of operation and general business condition.

The Combined Company’s ability to use net operating loss carryforwards and other tax attributes may be limited, including as a result of the Merger.

Under current law, U.S. federal net operating loss carryforwards generated in taxable periods beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such net operating loss carryforwards is limited to 80% of taxable income. It is uncertain if and to what extent various states will conform to federal law. In addition, under Sections 382 and 383 of the Code, U.S. federal net operating loss carryforwards and other tax attributes may become subject to an annual limitation in the event of certain cumulative changes in ownership. An “ownership change” pursuant to Section 382 of the Code generally occurs if one or more stockholders or groups of stockholders who own at least 5% of a company’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. The Combined Company’s ability to utilize its net operating loss carryforwards and other tax attributes to offset future taxable income or tax liabilities may be limited as a result of ownership changes, including in connection with the Merger or other transactions. Similar rules may apply under state tax laws. If the Combined Company earns taxable income, such limitations could result in increased future income tax liability to the Combined Company, and the Combined Company’s future cash flows could be adversely affected. Avalon had a net operating loss carryforward as of December 31, 2024 of approximately $87.7 million, which is subject to limitations and is expected to be subject to limitation under Section 382 of the Code following the Merger.

Unfavorable global economic conditions could adversely affect the Combined Company’s business, financial condition, results of operations or cash flows.

The Combined Company’s results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. A severe or prolonged economic downturn could result in a variety of risks to the Combined Company’s business, including the Combined Company’s ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could also strain the Combined Company’s suppliers, possibly resulting in supply disruption, or cause the Combined Company’s customers to delay making payments for its services. Any of the foregoing could harm the Combined Company’s business and the Combined Company cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact its business.

Risks Related to YOOV and its Operations

Failures to retain and acquire customers may negatively impact YOOV’s recurring revenue and growth prospects.

YOOV’s success is heavily dependent on its ability to deliver value through its platform. Any failure to meet customer expectations, compounded by increased competition in the market, could lead to higher customer churn rates. Such churn would directly threaten YOOV’s recurring revenue, which is critical to its financial performance.

A substantial portion of YOOV’s revenue is derived from subscription services and long-term customer contracts. Consequently, any reduction in customer retention or subscription renewals could have a detrimental effect on YOOV’s overall revenue. Additionally, fluctuations in currency exchange rates or changes in customer payment behavior may further exacerbate these risks, potentially leading to volatility in YOOV’s financial results.

Given these factors, it is imperative for YOOV to prioritize customer satisfaction and effective acquisition strategies to mitigate risks associated with customer retention. Failure to do so or failure to acquire new customers could adversely affect its recurring revenue streams and hinder growth prospects.

YOOV faces risks related to system interruption, including failures caused or experienced by third-party service providers, and lack of redundancy and timely upgrades.

YOOV’s success depends on its ability to successfully develop and deliver its AIaaS solutions to customers and stably perform via its online platforms. If YOOV’s online platforms are inaccessible due to system interruption, or if network infrastructure are not operational or performing to its customers’ satisfaction, YOOV could lose existing customers or fail to attract new customers.

Any internet network interruptions, latency, or problems with YOOV’s online platforms’ availability could prevent customers from accessing and operating on YOOV’s online platforms, and impact customers’ business operations, which may cause customer dissatisfaction and damage its reputation and brand. YOOV has experienced brief computer system interruptions in the past, and it believes that others can occur from time to time in the future. YOOV’s systems and operations potentially are vulnerable to damage or interruption from a number of sources, including the following:

YOOV has not yet created sufficient redundancy for its information technology systems and data, and it does not presently maintain backup copies of all its data. YOOV has a limited disaster recovery plan in effect and may lack adequate insurance for losses resulting from natural disasters, catastrophic events, or the resulting business interruption. Any substantial damage to, or disruption of, YOOV’s technology infrastructure could cause interruptions, delays, data loss, or reduced system availability, which could have a material adverse effect on YOOV’s business, financial condition, and results of operations.

YOOV may be unable to accurately project traffic flow rates or timing, including any traffic increases, or successfully and cost-effectively upgrade its systems and infrastructure in a timely manner to accommodate higher traffic levels on its online platforms. If traffic volume or the number of users increases substantially, YOOV may experience unanticipated system disruptions, slower response times, reduced customer service levels, and impaired quality and delays in financial reporting.

Additionally, YOOV must continually upgrade and improve its technology and infrastructure to support business growth. Failure to do so could impede its growth. However, YOOV cannot assure successful execution of its system upgrades and improvement strategies, which could require substantial investments. During upgrades, systems may experience interruptions, and the new technologies or infrastructures may not be fully integrated with existing systems on a timely basis, or at all. If existing or future technology and infrastructure do not function properly, it could cause system disruptions and slow response times, affecting data transmission, which in turn could materially and adversely affect YOOV’s business, financial condition, and results of operations.

Natural catastrophic events and man-made problems such as power disruptions, computer viruses, global pandemics, a cyberattack or data security breaches and terrorism may disrupt YOOV’s business.

YOOV relies heavily on its network infrastructure and IT systems for its business operations. An online attack, damage as a result of civil unrest, earthquake, fire, terrorist attack, power loss, global pandemics (such as the COVID-19 pandemic), telecommunications failure, or other similar catastrophic event could cause system interruptions, delays in accessing its service, reputational harm, and loss of critical data. Such events could prevent YOOV from delivering its services to its customers. A catastrophic event that results in the destruction or disruption of YOOV’s data centers, or its network infrastructure or IT systems, including any errors, defects, or failures in third-party hardware, could affect YOOV’s ability to conduct normal business operations, and adversely affect its operating results.

In addition, as computer malware, viruses, cyberattack, computer hacking, fraudulent use attempts, and phishing attacks have become more prevalent, YOOV faces increased risk from these activities. These activities threaten the performance, reliability, security, and availability of its services. Any computer malware, viruses, computer hacking, fraudulent use attempts, phishing attacks, or other data security breaches to YOOV’s systems could, among other things, harm its reputation and ability to retain existing customers and attract new customers. It may also require YOOV to expend significant capital and other resources to alleviate problems caused by any such cybersecurity attack or other security breach or incident and implement additional security measures.

YOOV currently does not maintain cybersecurity insurance, and in the event that it seeks to obtain such insurance coverage, it may not be available on acceptable terms or may not be available in sufficient amounts to cover one or more large claims in connection with cybersecurity liabilities. Insurers could also deny coverage as to any future claim.

A cyberattack, security breach or other unauthorized access or interruption to YOOV’s information technology systems or those of its third-party service providers could delay or interrupt service to its customers and their customers, harm its reputation or subject it to significant liability.

Cybersecurity threats, privacy breaches, insider threats or other incidents and malicious Internet-based activity continue to increase, evolve in nature, and become more sophisticated. Information security risks for companies such as YOOV have significantly increased in recent years in part because of the proliferation of new technologies, the use of Internet and telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, terrorists, and other external parties, as well as nation-state and nation-state-supported actors.

Many companies that provide services similar to YOOV’s have also reported a significant increase in cyberattack activity since the beginning of the COVID-19 pandemic. In addition, because YOOV leverages service providers, including cloud, software, data center and other critical technology vendors to deliver its solutions, it relies heavily on the data security practices and policies adopted by these third-party service providers. YOOV’s ability to monitor its third-party service providers’ data security is limited. A vulnerability in YOOV’s third-party service providers’ software or systems, a failure of its third-party service providers’ safeguards, policies or procedures, or a breach of a third-party service provider’s software or systems could result in the compromise of the confidentiality, integrity or availability of YOOV’s systems or the data housed in its third-party solutions. In addition, in the event YOOV’s third-party service providers and subprocesses are subject to security breaches, privacy breaches or other cybersecurity threats, its business may be impacted. YOOV cannot guarantee that such incidents may not occur and could adversely affect its operations. YOOV and its third-party service providers may be unable to anticipate or prevent techniques used in the future to obtain unauthorized access or to sabotage systems and cannot guarantee that applicable recovery systems, security protocols, network protection mechanisms and other procedures are or will be adequate to prevent network and service interruption, system failure or data loss.

Data security breaches could also expose YOOV to liability under various laws and regulations across jurisdictions and increase the risk of litigation and governmental or regulatory investigation. Due to concerns about data security and integrity, a growing number of legislative and regulatory bodies have adopted breach notification and other requirements in the event that information subject to such laws is accessed by unauthorized persons. YOOV may need to notify governmental authorities and affected individuals with respect to such incidents. For example, some jurisdictions, including the EU, the United Kingdom, Brazil, and all 50 states in the United States, have enacted laws requiring companies to notify individuals of data security breaches involving certain types of personal information, and YOOV’s agreements with certain customers require it to notify them in the event of a security incident. Complying with such numerous and complex regulations in the event of a data security breach would be expensive and difficult, and failure to comply with these regulations could subject YOOV to regulatory scrutiny and additional liability. Such mandatory disclosures could lead to negative publicity and may cause YOOV’s customers to lose confidence in the effectiveness of its data security measures and data handling. Moreover, if a high-profile security breach occurs with respect to another business automation solution provider, customers may lose trust in the security of the business model generally, which could adversely impact YOOV’s ability to retain existing customers or attract new ones. In addition, if YOOV’s security measures fail to protect information adequately, it could be liable to its customers, their end-consumers, and consumers with whom YOOV has a direct relationship. YOOV could be subject to fines and higher transaction fees, could face regulatory or other legal action, and its customers could end their relationships with YOOV. The limitations of liability in YOOV’s contracts may not be enforceable or adequate or would otherwise protect it from any such liabilities or damages with respect to any particular claim.  

YOOV is also subject to federal, state, and foreign laws regarding cybersecurity and the protection of data. that may limit the use and adoption of its services, expose it to liability, or otherwise adversely affect its business.

Global pandemics and health crises may significantly disrupt YOOV’s business activities, render staff unavailable, and cause an integrity problem in the supply chain.

The COVID-19 pandemic showed how much harm a global health crisis can do to business in terms of operational disruption and big financial losses. If other pandemics or health emergencies occur in the future, YOOV may be impeded in providing business continuity. High levels of sickness, isolation, or movement restrictions may significantly diminish the availability of staff, causing workforce shortages that will impact operations and productivity. This may be worsened if key staff or a large proportion of staff are affected in business-critical roles. Moreover, pandemics may cause unpredictable fluctuations in customer demand. These health crises may trigger new government regulation or compliance in relation to, say, health and safety measures, that may further add to operational burdens for YOOV. Non-compliance or failure to change in good timing with the regulatory changes may result in legal liabilities and fines and may further disrupt YOOV’s operation. Due to both these factors, significant operational and financial instability may arise, greatly affecting YOOV’s reputation and long-term viability.

YOOV’s business faces intense competition. Failures to differentiate itself in the market may negatively impact on YOOV’s business, financial condition, and results of operations.

The market for business automation is intensely competitive. YOOV’s current and potential competitors include developers, resellers, and sales agents that offer a wide range of similar service categories and related services. The competition in the market for business automation is expected to intensify as companies develop new AI models and enhanced technologies, new competitors enter the market, competitors forge new business combinations or alliances, and established companies in other market segments expand into business AI and become competitive with the business of YOOV.

Many of YOOV’s current and potential competitors have larger customer and partner bases, better brand recognition, and greater financial, marketing, technical, management, and other resources than YOOV. In addition, some of YOOV’s competitors have used and may continue to use aggressive pricing or promotional strategies and may invest significantly more to their online platforms and system development than YOOV. Increased competition may lead to reduced operating margins, profitability, market share, and brand recognition for YOOV.

YOOV also faces competition in international markets it currently competes in or may enter in the future. Competitors in these markets may be well-established global and local operations with more experience and resources than YOOV, potentially impeding YOOV’s expansion and growth.

Moreover, YOOV could experience significant competitive pressure if any of its partners, resellers, or sales agents were to initiate or expand their service offerings. These entities have access to technical talents and may mimic YOOV’s business model, potentially connecting directly with YOOV’s current and potential customers. This could lead to customers choosing to purchase from these new competitors instead of YOOV. Increased competition from partners, resellers, and sales agents capable of maintaining high sales volumes could significantly reduce YOOV’s market share and adversely affect YOOV’s operating results.

There is no assurance that YOOV will be able to compete successfully against current and future competitors. Competitive pressures may have a material adverse effect on YOOV’s business, financial condition, and results of operations.

YOOV may not succeed in promoting and strengthening its YOOV brand, which may materially and adversely affect its business and results of operations.

Brand recognition is a key competitive factor in the market for business AI, automation and AIaaS, crucial for maintaining and expanding YOOV’s customer base, market position, and bargaining power with vendors. Any loss of trust in the YOOV brand could harm its reputation and result in customers, partners, vendors and other participants reducing their engagement with YOOV, which could materially reduce its profitability.

If YOOV does not, or is unable to continue to, promote and strengthen the YOOV brand, or if the brand fails to continue to be viewed favorably, YOOV may not be successful in attracting new customers, which could have a material adverse effect on its financial condition and results of operations.

Adverse publicity about YOOV may arise from time to time. Negative comments about its online platforms, services offered, or management may appear in internet postings and other media sources, and there is no assurance that other types of negative publicity of a more serious nature will not arise in the future. For example, if YOOV’s customer service representatives fail to satisfy the individual needs of the customers, disgruntled customers may disseminate negative comments about YOOV’s customer service. Any such negative publicity, regardless of veracity, may have a material adverse effect on its business, reputation and financial condition.

YOOV’s expansion into new service offerings, technologies and geographic regions subjects it to additional business, legal, financial and competitive risks.

An important element of YOOV’s business strategy is to expand into new service offerings, technologies and regions, such as its expansion into Malaysia and other regions. In pursuing these new areas, YOOV faces numerous risks and challenges, including new competitions, the increased need to develop new strategic relationships, and strain on its management, personnel, operations, systems, technical performance, financial resources, and internal financial control and reporting functions. There is no assurance that YOOV’s strategy will result in increased net sales or net income. Furthermore, growth into new business areas may require changes to its existing business model and cost structure, modifications to its infrastructure, and exposure to new regulatory and legal risks related to operating in new jurisdictions, any of which may require expertise in areas in which it has little or no experience. These risks may pose a material adverse risk to YOOV’s business, financial condition, and results of operations.

YOOV conducts marketing activities to help attract potential customers for lead generation, and if it is unable to attract these potential customers or convert them into customers in a cost-effective manner, YOOV’s business and results of operations could be harmed.

YOOV’s success relies on its ability to attract potential customers and convert them into customers in a cost-effective manner. YOOV uses search engines, social media and affiliate networks to provide content, advertising banners, and other links that direct visitors to its websites, campaign sites, and other sales channels. Approximately 60% of leads are generated from marketing activities, including paid and unpaid search engine listings and affiliate networks. In particular, YOOV depends on search engines like Google, and Yahoo! as important marketing channels. If these search engines change their search engine algorithms periodically, penalize YOOV for non-compliance with their guidelines, or if competition increases for advertisements, YOOV may struggle to drive potential customers to its websites and campaign sites cost-effectively. Additionally, YOOV sometimes pays third parties to achieve a higher ranking or to be featured in search results. If these third parties modify or terminate their relationship with YOOV, increase their fees, if YOOV’s competitors offer them greater fees for traffic, or if any free third-party platforms begin charging fees, YOOV’s expenses could rise, and traffic to its websites could decrease, resulting in harm to its operations.

YOOV’s success also depends on its ability to convert the potential customers into paying customers. YOOV’s ability to convert potential customers into paying customers depends on effectively identifying and purchasing relevant keyword search terms, providing relevant content on its online platforms, and targeting other marketing programs such as internet portal referrals, email campaigns, and affiliate programs. If YOOV cannot attract potential customers and convert them into paying customers cost-effectively, its business and financial results may be harmed.

YOOV depends on third-party AI technologies and Application Programming Interfaces (APIs) to deliver functionality on the AIaaS platform. Failures in these third-party technologies could negatively impact our business.

YOOV’s AIaaS platform relies on third-party AI technologies, such as Machine Learning (ML), Natural Language Processing (NLP) and Computer Vision, as well as APIs to deliver functionality to its customers. If any of these providers experience technical issues, service outages, or changes in licensing terms, it could disrupt YOOV’s services and affect our ability to meet customer needs. Also, YOOV has no effective means to ensure that these third parties will continue to perform these services to their satisfaction, in a manner satisfactory to its customers, or on commercially reasonable terms. Reliance on third-party technologies and APIs may limit YOOV’s ability to fully control or customize certain aspects of our platform, potentially affecting its competitive differentiation. If we are unable to maintain these relationships we would need to find alternative providers and the YOOV business may be materially impacted.

If YOOV fails to adopt new technologies or adapt its platforms and systems to changing customer requirements or emerging industry standards, its business may be materially and adversely affected.

To remain competitive, YOOV must continually enhance and improve the responsiveness, functionality and features of its online platforms. The market for business automation is characterized by rapid technological evolution, frequent introductions of new products and services embodying new technologies, the emergence of new industry standards and practices, and changes in customer requirements and preferences, any of which could render YOOV’s existing technologies and systems obsolete. YOOV may need to devote substantial resources, including financial resources, to developing proprietary technologies or license technologies, enhancing its existing platforms and systems, and developing new services and technology that address the increasingly sophisticated and varied needs of its current and prospective customers and adapting to technological advances and emerging industry and regulatory standards and practices in a cost-effective and timely manner. The development of proprietary technology entails significant technical and business risks. There is no assurance that YOOV’s efforts to develop proprietary technologies will succeed or that any technology licenses will be available on commercially reasonable terms. Substantial investments will be required to remain technologically competitive, and YOOV’s failure to do so may harm its business and results of operations.

YOOV faces the risk that its substantial investments in research and development may not yield the anticipated benefits.

YOOV allocates significant resources to enhance its online platform and to develop new features aimed at meeting the evolving needs of its customers. However, despite these efforts, there is no assurance that the outcomes will align with expectations or deliver the desired value.

The R&D process inherently involves uncertainty. Even with a well-defined strategy and a skilled team, projects can encounter unforeseen challenges that hinder progress or lead to failures. For instance, a new feature might not resonate with users, or it could fail to integrate seamlessly with existing systems, resulting in customer dissatisfaction. Such scenarios can lead to wasted investments of both time and money, diverting resources from other potentially profitable initiatives.

Moreover, if YOOV’s R&D efforts do not keep pace with market trends or technological advancements, it risks missing out on critical opportunities. Competitors may capitalize on emerging technologies or customer preferences, potentially eroding YOOV’s market share. This situation could be exacerbated in rapidly evolving sectors where agility and innovation are crucial for maintaining a competitive edge.

While YOOV’s commitment to R&D is aimed at driving growth and enhancing its offerings, YOOV may spend significant capital on R&D efforts that may be unsuccessful and materially adverse to its operations, results and financial condition.

If YOOV is unable to manage its growth or execute its strategies effectively, YOOV’s business and prospects may be materially and adversely affected.

YOOV’s success depends on its ability to manage the growth of its operations effectively. YOOV anticipates further expansion as it pursues its growth strategies. YOOV’s expansion increases the complexity of its business and places a significant strain on its management, operations, technical systems and financial resources. YOOV’s current and planned personnel, systems, procedures and controls may not be adequate to support and effectively manage its future operations, especially as it employs personnel in several geographic locations. In addition, YOOV’s growth will require improvements to its operational and financial systems, procedures, and controls, as well as the successful management of international operations and the hiring of additional personnel. These efforts may not be successful, and YOOV may be unable to improve its systems, procedures and controls in a timely manner. Delays or problems associated with any of these initiatives could harm its business and operating results. These initiatives will also cause operating expenses to increase. If YOOV fails to accurately estimate and assess its growth or fails to increase net sales to match its increased operating expenses, YOOV’s financial condition and results of operations could suffer.

YOOV may not be able to adequately protect its intellectual property rights.

YOOV relies on trademark and copyright law, trade secret protection, and confidentiality or licensing agreements with employees, sales agents, resellers, brand partners and others to protect its proprietary rights. These measures may be inadequate, agreements may be violated or there may be inadequate remedies for a violation of such agreements. YOOV’s competitors may independently develop equivalent proprietary information and rights or may otherwise gain access to YOOV’s trade secrets or proprietary information, which could affect YOOV’s ability to compete in the market. There is no assurance that the steps that YOOV has taken will adequately protect its proprietary rights.

In addition, third parties may infringe or misappropriate YOOV’s proprietary rights, and YOOV could be required to enforce its intellectual property rights, which could require significant financial and managerial resources. YOOV has registered and common law trademark rights in certain jurisdictions. Effective trademark, service mark, copyright, patent and trade secret protection may not be available in every region or jurisdiction in which YOOV’s services may be made available online, which may cause YOOV’s business and operating results to suffer. In addition, YOOV may be unable to acquire or protect relevant domain names in every region. If YOOV is not able to acquire or protect its trademarks, domain names, or other intellectual property, it may experience difficulties in achieving and maintaining brand recognition and customer loyalty, which could adversely impact its operations, results and financial condition.

Assertions, claims and allegations, even if not true, that YOOV has infringed or violated intellectual property rights could harm YOOV’s business and reputation.

Third parties have asserted, and may continue to assert, allegations and claims of intellectual property infringement against YOOV on the items or their descriptions listed on YOOV’s websites and mobile apps. Any such claims, disputes or litigation, even if resolved in YOOV’s favor or not true, could be time-consuming and costly to defend, and could divert its management’s efforts from growing its business.

If any third parties prevail in their intellectual property rights claims against YOOV, YOOV may be required to pay significant licensing fees, damages and attorney’s fees, and may even be liable for punitive damages if YOOV is found to have willfully infringed third parties’ proprietary rights. YOOV may have to stop using certain technology or solutions and need to develop or acquire alternative, non-infringing technology or solutions, which could require significant time and resources and lead to interruption in its operations. YOOV could also be required to obtain a license to use certain technologies, although such licenses may not be available on reasonable terms or at all, which may result in substantial payments and royalties and significantly increase its operating expenses. If YOOV cannot develop non-infringing technology or license the appropriate technology at commercially reasonable rates, a successfully asserted intellectual property claim could cause significant business interruptions in YOOV’s operations, which could restrict YOOV’s ability to compete effectively and have a material adverse effect on its financial condition and results of operations.

Some of YOOV’s software and systems contain open-source software, which may pose particular risks to YOOV’s proprietary software and solutions.

YOOV has incorporated open-source software code into some of its internal software and systems and expects to continue to use this open-source software in the future. The licenses applicable to open-source software typically require that the source code subject to the license be made available to the public and that any modifications or derivative works to open-source software continue to be licensed under open-source licenses. From time to time, YOOV may face intellectual property infringement claims from third parties, demands for the release or license of the open-source software or derivative works that YOOV developed using such software, which could include YOOV’s proprietary source code, or claims that otherwise seek to enforce the terms of the applicable open-source license. These claims could result in litigation and could require YOOV to purchase a costly license, publicly release the affected portions of YOOV’s source code, be limited in the licensing of YOOV’s technologies or cease offering the implicated solutions unless and until YOOV can re-engineer them to avoid infringement or change the use of the implicated open-source software. In addition to risks related to license requirements, use of certain open-source software can lead to greater risks than use of third-party commercial software, as open-source licensors generally do not provide warranties, indemnities, or other contractual protections with respect to the software (e.g., non-infringement or functionality). YOOV’s use of open-source software may also present additional security risks because the source code for open-source software is publicly available, which may make it easier for hackers and other third parties to determine how to breach YOOV’s websites, mobile apps and systems that rely on open-source software. Any of these risks could be difficult to eliminate or manage and, if not addressed, could have a material adverse effect on YOOV’s business, financial condition and results of operations.

Our substantial liabilities and other financial obligations could impair our financial condition, results of operations and cash flow, and our ability to fulfill our debt obligations, as well as the Notes.

We have significant liabilities, including deferred revenue, and may incur substantial debt in the future, which could adversely affect our business, financial condition, and results of operations.

As of March 31, 2024, we had total liabilities of $28,788,193, which includes deferred revenue and other obligations. While not all of these liabilities represent debt, we may incur significant debt obligations in the future. Any existing or future indebtedness could impose various restrictions and covenants on us that may result in material adverse consequences, including:

Governmental, Regulatory and Legal Risks Related to YOOV

Employment laws in some of the countries in which YOOV operates are relatively stringent.

In some of the countries where YOOV operates, employment laws may grant significant job protection to employees, including rights on termination of employment and setting maximum number of hours and days per week that a particular employee is permitted to work. In addition, in certain countries in which it operates, YOOV is or may be required to consult and seek the advice of employee representatives and/or unions. These laws, coupled with the requirement to consult with any relevant employee representatives and unions, could impact YOOV’s ability to react to market changes and the needs of its business.

YOOV faces risks related to increased regulatory and social drive toward environmental sustainability, which can establish new compliance burdens and operational limitations.

As the global concern for environmental sustainability grows, so are regulatory bodies across different countries imposing stricter standards and practices to reduce their impact on the environment. YOOV might be driven to comply with a steadily expanding number of environmental regulations, probably highly disruptive to business, such as introducing new technologies and processes for reducing carbon emissions, handling waste in a more professional way, and using sustainable materials. If YOOV fails to comply with new and evolving standards, it could suffer severe consequences, including heavy fines, legal liabilities, and reputational damage. If the perception is that YOOV is a company unconcerned with laws and regulations or one that is harming the environment, this can result in the loss of public and consumer trust, which could negatively impact brand value and weaken the competitiveness of YOOV. Also, investment expenses to be incurred in establishing and maintaining green practices could substantially rise even though necessary for compliance. It might strain the financial resources of YOOV and hence affect its profitability. Further, environmental regulations might constrain the operation of YOOV, either through input or output restrictions, and thus hamper its production and growth potential.

Additional costs related to compliance and reporting may be incurred as YOOV becomes a public company.

Following YOOV’s listing on Nasdaq, it will be required to adhere to a range of regulatory, reporting, and corporate governance obligations. These requirements will likely lead to an increase in administrative, legal and accounting expenses, as the company will need to retain additional advisors and employees and implement new systems and processes to ensure compliance. The transition to a public company status demands significant focus and resources from YOOV’s management team. This shift may divert attention from core business operations and strategic initiatives, potentially impacting overall performance and growth. As a publicly traded entity, YOOV will also face increased scrutiny from investors, analysts, and regulatory bodies. This heightened visibility may lead to pressure to meet quarterly earnings expectations, which could influence management decisions and prioritize short-term results over long-term strategic goals. Furthermore, the need to enhance internal controls and compliance measures could impose additional financial burdens, straining YOOV’s budget and operational flexibility. Non-compliance with regulatory requirements could result in penalties, fines, or reputational damage, further jeopardizing YOOV’s financial health and market position.

YOOV’s financial and insurance services are subject to complex regulatory requirements.

YOOV’s subsidiaries, YOOV Capital and YOOV Insurance, operate in highly regulated industries that require compliance with a wide range of laws and regulations. For example, YOOV Capital may fail to obtain and maintain licenses and permits necessary to conduct its operations in Hong Kong, and YOOV Capital’s business may be materially and adversely affected as a result of any changes in the laws and regulations governing the financial services industry in Hong Kong. Depending on the type of products and services being offered, financial service providers may be subject to supervision and scrutiny by different authorities and may be required to obtain and hold different licenses or permits. YOOV Capital is also subject to risks relating to litigation (including class actions), claims and potential liabilities under laws and regulations applicable to financial services, including enforcement actions, investigations and examinations of regulatory authorities in jurisdictions in which we are regulated or serve users or have users. In addition, engaging in insurance brokerage services through YOOV Insurance entails navigating complex regulatory landscapes, including stringent compliance with anti-money laundering (AML) laws. Failure to comply with AML laws, know-your-customer (KYC), consumer protection, or insurance brokerage regulations could result in fines, legal action, or reputational damage. Regulatory changes could also increase compliance costs or limit our ability to offer certain services.

Risks Related to YOOV’s Industry and Business Environment

The development and use of AI technologies is subject to an evolving and uncertain regulatory landscape that may adversely impact YOOV’s business.

The regulatory environment surrounding AI is rapidly evolving, with governments and policymakers worldwide working to establish guidelines, standards, and legislation to govern the development and deployment of AI technologies. This regulatory uncertainty may bring challenges to YOOV, as it must navigate a constantly shifting landscape of rules, requirements, and compliance standards across different jurisdictions. This uncertainty may complicate YOOV’s ability to plan long-term strategies, invest in R&D, and ensure the compliance of its AI solutions. Failure to keep up with regulatory changes can result in YOOV’s business AI solutions becoming non-compliant, potentially leading to the rejection or removal of its products from the market, severe penalties, fines, and legal liabilities, or increased operational costs and disruptions.

Ethical concerns and public perception of AI could potentially limit market acceptance of YOOV’s services and harm the reputation.

There are growing public concerns about the ethical implications of AI, such as privacy, bias, and the potential displacement of human jobs. For example, providing business AI automation solutions to customers may lead to displacement of human jobs, especially in areas with repetitive, low-skilled tasks. The AI algorithms used in the business AI automation solutions may inherit biases from historical data or reflect the biases of the users, leading to unfair or discriminatory outcomes in areas like employee performance evaluation or customer service; the integration of AI technologies into sensitive business processes, such as financial or insurance applications may raise concerns around data privacy, security and any unintended consequences. Negative public perception or controversies surrounding AI could limit market acceptance of YOOV’s services and harm the reputation.

YOOV’s business may be subject to seasonality, and variations in customer demand due to budgeting cycles, industry dynamics, and economic trends could adversely affect its financial performance.

While YOOV’s business and the markets YOOV serves are generally not subject to significant seasonality, certain trends and external factors can influence the timing of sales, implementation, and revenue recognition for business AI automation solutions. Demand for business AI automation solutions is often impacted by the budgeting and procurement cycles of its customers, particularly large enterprise clients. Historically, YOOV has observed increased activity during the fourth quarter of the calendar year as customers allocate unused budgets and finalize purchasing decisions. Similarly, the first quarter tends to see a boost in demand as new budgets are approved and organizations prioritize investments in automation technologies.

Additionally, customer investment timing can vary across industries due to specific regulatory deadlines and market pressures. For example, industries such as financial services and healthcare often experience heightened demand at year-end as they address compliance requirements and pursue operational efficiencies. Broader economic conditions and market trends may also influence customer priorities and the adoption of automation and AI technologies.

Although the demand for business AI automation solutions is generally consistent throughout the year, operational factors such as holiday schedules or fiscal year-end priorities can affect the timing of solution implementation and deployment services. These timing considerations may result in minor fluctuations in the recognition of revenue on a quarterly basis.

General Risk Factors Related to YOOV

The loss of key employees or the failure to attract qualified personnel could have a material adverse effect on YOOV’s ability to run its business.

The loss of any of YOOV’s current executives, key employees or key advisors, or the failure to attract, integrate, motivate and retain additional key employees, could significantly impact YOOV’s business. Competition for well-qualified and skilled employees is intense globally, and YOOV’s future success also depends on its continued ability to attract, develop, motivate and retain highly qualified and skilled employees, particularly software engineers, data scientists and technology professionals. YOOV’s continued ability to compete effectively depends on its ability to attract new employees and retain and motivate existing employees. All of its senior management and key personnel are employees at will, and any of these employees could leave with little or no prior notice. If any member of its senior management team or other key employees leaves YOOV, its ability to successfully operate its business and execute its business strategy could be adversely affected. YOOV may also have to incur significant costs in identifying, hiring, training and retaining replacements of departing employees.

If YOOV is unable to provide satisfactory customer experience, its reputation would be harmed and it could lose customers.

The success of YOOV’s business depends largely on its ability to provide superior customer experience to maintain and grow its customer base and keep its customers highly engaged on its online platforms. This depends on various factors, including YOOV’s ability to continue to develop and deliver practical business AI automation solutions and provide high-quality customer support and service. If YOOV’s customers are not satisfied with its platforms or solutions, or if its online platforms are severely interrupted or otherwise fail to meet customers’ requests, YOOV’s reputation could be adversely affected.

It is crucial that YOOV continues to improve its online platforms. If YOOV does not continue to invest in the development of its online platforms and customer service operations or fails to provide a high-quality customer experience for any reason, YOOV may lose customers, which could adversely impact its operating results.

Any material disruption or slowdown in YOOV’s customer support services resulting from telephone or internet failures, power or service outages, natural disasters, labor disputes, or other events could make it difficult or impossible for YOOV to provide adequate customer support. In addition, the future volume of customer complaints and inquiries may exceed YOOV’s current system capacities. If this occurs, YOOV could experience delays in responding to customer inquiries and addressing customer complaints and concerns. YOOV’s current level of customer support may also fail to meet the customer expectations. Failure to provide satisfactory levels of customer service may harm YOOV’s reputation, causing potential loss of existing customers and difficulty in acquiring new customers.

As a global business, YOOV is subject to risks associated with YOOV’s non-U.S. operations where such risks are not present in the United States.

YOOV conducts its business on a global basis, with sales outside the United States constituting approximately 100% of YOOV’s total revenue for the fiscal year ended March 31, 2024, and a significant number of employees and contractors located in foreign countries. YOOV anticipates that international sales will continue to represent a substantial portion of YOOV’s revenue and that YOOV’s strategy for continued growth and profitability will entail further international expansion, particularly in emerging markets. Conducting business outside the United States subjects YOOV to numerous risks, including:

The occurrence of any of these, or other factors over which YOOV does not have control, could lead to reduced revenue and profitability.

New tariffs and other trade measures could adversely affect YOOV’s business and financial results.

Governments sometimes impose additional duties, tariffs or taxes on certain imported products. The imposition of import tariffs or restrictions, or other changes in U.S. trade policy, could trigger retaliatory actions by affected countries. Tariffs could increase the cost of the services and products, which could affect customers’ investment decisions. In addition, political uncertainty surrounding international trade disputes and the potential of their escalation to trade war and global recession could have a negative effect on customer confidence, which could materially and adversely affect our business. We also may have access to fewer business opportunities, and our operations may be negatively impacted as a result.

YOOV is exposed to currency exchange rate fluctuations that may bring negative impacts on YOOV’s financial condition and operational performance.

A small movement in the exchange rate could reduce the revenues and profitability of international operations. As an international business, YOOV generates transactions in multiple currencies and remains exposed to any deterioration in the exchange rate between different countries it operates in. This may yield substantial financial volatility for YOOV in terms of revenue, profitability, and net financial health. For instance, the money generated in another country in a different currency may become less valuable if converted to YOOV’s base currency due to some adverse change in exchange rates. This diminution reduces profit margins directly and may result in the showing of lower financial performance than expected. On the expense side, costs incurred in stronger foreign currencies could escalate when converted to YOOV’s reporting currency, thereby raising operational expenses and decreasing profitability. In addition, dealing with several currencies complicates financial planning and forecasting. One misprediction of the exchange rate and YOOV is thrown off-balance in terms of finance. The fact that these rates are naturally unpredictable further exaggerates the problems for long-term planning. Some countries have currency controls or foreign exchange restrictions, which could make the repatriation of profits or efficient cash flow management a problem for YOOV. These limitations may further reduce financial flexibility, making it hard to move money cross-border, settle with suppliers, or invest in growth opportunities. Currency fluctuations also have tax implications that can increase the amount of taxes due in different jurisdictions or result in unbudgeted tax liabilities. These include sophisticated financial strategies to reduce or eliminate these exposures with hedging instruments, but it cannot guarantee effectiveness. Inadequate control of these currency risks could have severe impacts on YOOV’s financial condition and operational performance.

Risks Related to Avalon

An investment in Avalon Common Stock involves a high degree of risk. In determining whether to purchase Avalon Common Stock, an investor should carefully consider all of the material risks described below, together with the other information contained in this proxy statement/prospectus before making a decision to purchase Avalon’s securities.

All references in this section to “Avalon,” the “Company,” “we,” “us,” or “our” mean Avalon and its subsidiaries unless we state otherwise, or the context otherwise indicates.

General Operating and Business Risks

Our limited revenue makes it difficult for us to evaluate our future business prospects and make decisions based on those estimates of our future performance. 

We have limited operating revenue. Because of the uncertainties related to our lack of significant revenue, we may be hindered in our ability to anticipate and timely adapt to increases or decreases in revenues or expenses. If we make poor budgetary decisions as a result of unreliable historical data, we could be less profitable or incur losses, which may result in a decline in our stock price.

Our results of operations have not resulted in profitability and we may not be able to achieve profitability going forward.

We incurred net losses amounting to approximately $7.9 million and $16.7 million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, we had an accumulated deficit of approximately $87.7 million. If we incur additional significant losses, our stock price may decline, perhaps significantly. Our management is developing plans to achieve profitability. Our business plan is speculative and unproven. There is no assurance that we will be successful in executing our business plan or that even if we successfully implement our business plan, that we will be able to curtail our losses now or in the future. Further, as we are a new enterprise, we expect that net losses will continue.

There is substantial doubt about our ability to continue as a going concern, which will affect our ability to obtain future financing and may require us to curtail our operations.

Our financial statements as of December 31, 2024 were prepared under the assumption that we will continue as a going concern. The independent registered public accounting firm that audited our 2024 financial statements, in their report, included an explanatory paragraph referring to our recurring losses since inception and expressing management’s assessment and conclusion that there is substantial doubt in our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. 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, to generate revenue. We cannot assure you, however, that we will be able to achieve any of the foregoing. See Note 2 to our Consolidated Financial Statements for further details.

Our cash will only fund our operations for a limited time and we will need to raise additional capital in order to support our development.

We are currently operating at a loss and expect our operating costs will increase significantly as we continue to grow our operations. The independent registered public accounting firm that audited our 2024 financial statements, in their report, included an explanatory paragraph referring to our recurring losses since inception and expressing management’s assessment and conclusion that there is substantial doubt in our ability to continue as a going concern. At December 31, 2024, we had cash of approximately $2.9 million. If the Merger is not consummated, we will need to raise additional capital or generate substantial revenue in order to support our operations.

If our available cash balances are insufficient to satisfy our liquidity requirements, including due to risks described herein, we may seek to raise additional capital through equity offerings, debt financings, collaborations or licensing arrangements. We will need to raise additional capital, and we may also consider raising additional capital in the future to expand our business, to pursue strategic investments, to take advantage of financing opportunities, or for other reasons, including to:

Our present and future funding requirements will depend on many factors, including:

Other than our debt facility with our chairman, we have no arrangements or credit facilities in place as a source of funds, and there can be no assurance that we will be able to raise sufficient additional capital on acceptable terms, or at all, and if we are not successful in raising additional capital, we may not be able to continue as a going concern. We may seek additional capital through a combination of private and public equity offerings, debt financings and strategic collaborations. Debt financing, if obtained, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, that could increase our expenses and require that our assets secure such debt. Equity financing, if obtained, could result in dilution to our then existing stockholders and/or require such stockholders to waive certain rights and preferences. If such financing is not available on satisfactory terms, or is not available at all, we may be required to delay, scale back or eliminate the development of business opportunities, seek dissolution or protection of the bankruptcy courts and our operations and financial condition will be materially adversely affected. We can provide no assurances that any additional sources of financing will be available to us on favorable terms, if at all. Future capital raises may dilute our existing stockholders’ ownership and/or have other adverse effects on our operations.

If we raise additional capital by issuing equity securities, our existing stockholders’ percentage ownership will be reduced and these stockholders may experience substantial dilution.

If we raise additional funds by issuing debt securities, these debt securities would have rights senior to those of our common stock and the terms of the debt securities issued could impose significant restrictions on our operations, including liens on our assets. If we raise additional funds through collaborations and licensing arrangements, we may be required to relinquish some rights to our technologies or products, or to grant licenses on terms that are not favorable to us.

We have significant outstanding debt obligations and servicing these debt obligations will require a significant amount of capital, and our business may not be able to pay our substantial debt.

As of December 31, 2024, we had approximately $8.4 million of outstanding indebtedness. In order to service this indebtedness and any additional indebtedness we may incur in the future, we will need to generate cash from our operating activities. Our ability to generate cash is subject, in part, to our ability to successfully execute our business strategy, as well as general economic, financial, competitive, regulatory and other factors beyond our control. If we are unable to generate sufficient cash to repay our debt obligations when they become due and payable, either when they mature, or in the event of a default, we may not be able to obtain additional debt or equity financing on favorable terms, if at all, which may negatively impact our business operations and financial condition.

If we breach any of the undertakings or default on any of our obligations under our agreements with our lenders, our outstanding indebtedness could become immediately due and payable, which would harm our business, financial condition and results of operations and could require us to reduce or cease operations. If our indebtedness were to be accelerated, there can be no assurance that our assets would be sufficient to repay in full that indebtedness.

Our business and operations may be further impacted by epidemics, outbreaks and other public health events.

Epidemics, outbreaks or other public health events that are outside of our control could significantly disrupt our operations and adversely affect our financial condition. The global or national outbreak of an illness or other communicable disease, or any other public health crisis, such as COVID-19, may cause disruptions to our business and operations, which may include (i) shortages of employees, (ii) unavailability of contractors or subcontractors, (iii) interruption of supplies from third parties upon which we rely, (iv) recommendations of, or restrictions imposed by government and health authorities, including quarantines, to address an outbreak and (v) restrictions that we and our contractors, subcontractors and our customers impose, including facility shutdowns, to ensure the safety of employees.

We depend upon key personnel and need additional personnel.

Our success depends on the continuing services of Wenzhao Lu, our Chairman of the Board, and David Jin, Meng Li and Luisa Ingargiola, our executive officers. The loss of Mr. Lu, Dr. Jin, Ms. Li or Ms. Ingargiola could have a material and adverse effect on our business operations. Additionally, the success of our operations will largely depend upon our ability to successfully attract and maintain competent and qualified key management personnel. As with any company with limited resources, there can be no guaranty that we will be able to attract such individuals or that the presence of such individuals will necessarily translate into profitability for us. Our inability to attract and retain key personnel may materially and adversely affect our business operations. The supply of qualified technical, professional, managerial and other personnel, including lab medical directors and lab operations managers, is currently constrained; competition for qualified employees, even across different industries, is intense, including as individuals leave the job market. We may lose, or fail to attract and retain, key management personnel, or qualified skilled technical, professional or other employees. The same is true for patient-facing staff with specialized training required to perform activities related to specimen collection. In the future, if competition for the services of these professionals increases, we may not be able to continue to attract and retain individuals in its markets. Changes in key management, or the ability to attract and retain qualified personnel, as a result of increased competition for talent, wage growth, or other market factors, could lead to strategic and operational challenges and uncertainties, distractions of management from other key initiatives, and inefficiencies and increased costs, any of which could adversely affect our business, financial condition, results of operations, and cash flows.

Joint ventures, joint ownership arrangements and other projects pose unique challenges and we may not be able to fully implement or realize synergies, expected returns or other anticipated benefits associated with such projects.

We are, and may be in the future, involved in strategic joint ventures and other joint ownership arrangements. We may not always be in complete alignment with our joint venture or joint owner counterparties; we may have differing strategic or commercial objectives and may be outvoted by our joint venture partners or we may disagree on governance matters with respect to the joint venture entity or the jointly owned assets. As a result, when we enter into joint ventures or joint ownership arrangements, we may be subject to a number of risks. In some joint ventures and joint ownership arrangements we may not be responsible for the operation of projects and will rely on our joint venture or joint owner counterparties for such services. Joint ventures and joint ownership arrangements may also require us to expend additional internal resources that could otherwise be directed to other projects. If we are unable to successfully execute and manage our existing and any proposed joint venture and joint owner arrangements, it could adversely impact our financial and operating results.

We may be undertaking, or participating with various counterparties in, a number of projects that involve forming joint ventures and acquiring laboratories that are accretive to our commercial strategy. Many of these projects could involve numerous regulatory, environmental, commercial, economic, political and legal uncertainties that are beyond our control, including the following:

As a result of these uncertainties, the anticipated benefits associated with our joint ventures and joint ownership arrangements may not be achieved or could be delayed. In turn, this could negatively impact our cash flow and our ability to make or increase cash distributions to our partners.

We must effectively manage the growth of our operations, or our company will suffer.

To manage our growth, we believe we must continue to implement and improve our services and products. We may not have adequately evaluated the costs and risks associated with our planned expansion, and our systems, procedures, and controls may not be adequate to support our operations. In addition, our management may not be able to achieve the rapid execution necessary to successfully offer our products and services and implement our business plan on a profitable basis. The success of our future operating activities will also depend upon our ability to expand our support system to meet the demands of our growing business. Any failure by our management to effectively anticipate, implement, and manage changes required to sustain our growth would have a material adverse effect on our business, financial condition, and results of operations. 

Our revenue and results of operations may suffer if we are unable to attract new tenants.

We presently derive our revenue from rental revenue from our income-producing real estate property in New Jersey. Our growth therefore depends on our ability to attract new tenants. This depends on our ability to understand and anticipate market and pricing trends and our tenants’ needs. Our failure to attract new tenants could materially and adversely affect our operating results.

Potential liability claims may adversely affect our business.

Our services, which may include recommendations and advice to organizations regarding complex business and operational processes and regulatory and compliance issues may give rise to liability claims by our clients or by third parties who bring claims against our clients. Healthcare organizations often are the subject of regulatory scrutiny and litigation, and we also may become the subject of such litigation based on our advice and services. Any such litigation, whether or not resulting in a judgment against us, may adversely affect our reputation and could have a material adverse effect on our financial condition and results of operations. We may not have adequate insurance coverage for claims against us.

In accordance with our strategic development policy, we may invest in companies for strategic reasons and may not realize a return on our investments.

From time to time, we may make investments in companies. These investments may be for strategic objectives to support our key business initiatives but may also be standalone investments or acquisitions. Such investments or acquisitions could include equity or debt instruments in private companies, many of which may not be marketable at the time of our initial investment. These companies may range from early-stage companies that are often still defining their strategic direction to more mature companies with established revenue streams and business models. The success of these companies may depend on product development, market acceptance, operational efficiency, and other key business factors. The companies in which we invest may fail because they may not be able to secure additional funding, obtain favorable investment terms for future financings, or take advantage of liquidity events such as public offerings, mergers, and private sales. If any of these private companies fails, we could lose all or part of our investment in that company. If we determine that impairment indicators exist and that there are other-than-temporary declines in the fair value of the investments, we may be required to write down the investments to their fair value and recognize the related write-down as an investment loss. For the year ended December 31, 2024, we had an impairment of goodwill acquired from Lab Services MSO acquisition of approximately $0.3 million. In the future, we could have additional impairment charges related to investments that we may make.

Our strategic transactions involve risks, and we may not realize the expected benefits because of numerous uncertainties and risks.

We regularly consider and may enter into strategic transactions, including mergers, acquisitions, joint ventures, investments and other growth, market and geographic expansion strategies, with the expectation that these transactions will result in increases in sales, cost savings, synergies, and other various benefits. Our ability to deliver the expected benefits from any strategic transaction is subject to numerous uncertainties and risks, including our ability to integrate personnel, labor models, financial, IT and other systems successfully; disruption of our ongoing business and distraction of management; hiring additional management and other critical personnel; and increasing the scope, geographic diversity, and complexity of our operations. Effective internal controls are necessary to provide reliable and accurate financial reports, and the integration of businesses may create complexity in our financial systems and internal controls and make them more difficult to manage. Integration of businesses into our internal control system could cause us to fail to meet our financial reporting obligations. Additionally, we may recognize material impairments in the future, including in connection with assets we have acquired or divested in a strategic transaction or charges to earnings associated with any strategic transaction, which may materially reduce our earnings. Our shareholders may react unfavorably to our strategic transactions and strategic transactions may also be subject to regulatory uncertainty due to the changing enforcement landscape. We may not realize the anticipated benefits from such transactions, we may be exposed to additional liabilities of any acquired business or joint venture, and we may be exposed to litigation in connection with the strategic transaction. Further, we may finance these strategic transactions by incurring additional debt, which could increase leverage or impact our ability to access capital in the future.

We face intense competition which could cause us to lose market share.

In the healthcare markets in which we operate, we will compete with large healthcare providers who have more significant financial resources, established market positions, long-standing relationships, and who have more significant name recognition, technical, marketing, sales, distribution, financial and other resources than we do. The resources available to our competitors to develop new services and products and introduce them into the marketplace exceed the resources currently available to us. This intense competitive environment may require us to make changes in our services, products, pricing, licensing, distribution, or marketing to develop a market position.

If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose intellectual property rights that are important to our business.

We are party to a research agreement with the Massachusetts Institute of Technology (“MIT”) for development of chimeric antigen receptor (CAR) technology. Although we have halted all research and development, MIT has granted us options to non-exclusively or exclusively license MIT inventions arising under this research agreement and we continue to maintain our joint patent applications.

Moreover, Disputes may arise regarding intellectual property subject to a licensing agreement, including:

In addition, the agreements under which we currently license intellectual property or technology from third parties are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, or increase what we believe to be our financial or other obligations under the relevant agreement, either of which could have a material adverse effect on our business, financial condition, results of operations, and prospects. Moreover, if disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on commercially acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates, which could have a material adverse effect on our business, financial conditions, results of operations, and prospects.

We may face uncertainty and difficulty in obtaining and enforcing our patents and other proprietary rights.

There can be no assurance that any patent applications we file or license will be approved, or that challenges will not be instituted against the validity or enforceability of any patent licensed-in or owned by us. Our pending and future patent applications may not result in patents being issued that protect our product candidates, in whole or in part, or which effectively prevent others from commercializing competitive product candidates. Even if our patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our patents by developing similar or alternative product candidates in a non-infringing manner. The cost of litigation to uphold the validity and prevent infringement of a patent is substantial. Furthermore, there can be no assurance that others will not independently develop substantially equivalent technologies not covered by patents to which we have rights or obtain access to our know-how. In addition, the laws of certain countries may not adequately protect our intellectual property. Our competitors may possess or obtain patents on products or processes that are necessary or useful to the development, use, or manufacture of our product candidates. There can also be no assurance that our proposed technology will not infringe upon patents or proprietary rights owned by others, with the result that others may bring infringement claims against us and require us to license such proprietary rights, which may not be available on commercially reasonable terms, if at all. Any such litigation, if instituted, could have a material adverse effect, potentially including monetary penalties, diversion of management resources, and injunction against continued manufacture, use, or sale of certain products or processes.

We rely upon non-patented proprietary know-how. There can be no assurance that we can adequately protect our rights in such non-patented proprietary know-how, or that others will not independently develop substantially equivalent proprietary information or techniques or gain access to our proprietary know-how. Any of the foregoing events could have a material adverse effect on us. In addition, if any of our trade secrets, know-how or other proprietary information were to be disclosed, or misappropriated, the value of our trade secrets, know-how and other proprietary rights would be significantly impaired and our business and competitive position would suffer.

In September 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications will be prosecuted and may also affect patent litigation. In particular, under the Leahy-Smith Act, the United States transitioned in March 2013 to a “first to file” system in which the first inventor to file a patent application will be entitled to the patent. Third parties are allowed to submit prior art before the issuance of a patent by the U.S. Patent and Trademark Office, or USPTO, and may become involved in opposition, derivation, post-grant and inter partes review, or interference proceedings challenging our patent rights. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, which could adversely affect our competitive position.

The USPTO has developed new and untested regulations and procedures to govern the full implementation of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the “first-to-file” provisions, only became effective in March 2013. The Leahy-Smith Act has also introduced procedures that may make it easier for third parties to challenge issued patents, as well as to intervene in the prosecution of patent applications. Finally, the Leahy-Smith Act contains new statutory provisions that still require the USPTO to issue new regulations for their implementation, and it may take the courts years to interpret the provisions of the new statute. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. The Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.

We may not be able to protect our intellectual property rights throughout the world.

Filing, prosecuting and defending patents on our product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States may be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we do not obtain patent protection to develop their own products and may also export infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our products and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time.

Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents covering our product candidates are obtained, once the patent life has expired, we may be open to competition from competitive products, including generics or biosimilars. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, any patents we may obtain may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.

Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and any patent protection we may obtain in the future could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to be paid to the USPTO and various governmental patent agencies outside of the United States in several stages over the lifetime of the patents and/or applications. The USPTO and various non-U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. There are situations in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, our competitors might be able to enter the market and this circumstance would have a material adverse effect on our business.

It is difficult and costly to protect our proprietary rights, and we may not be able to ensure their protection. If we fail to protect or enforce our intellectual property rights adequately or secure rights to patents of others, the value of our intellectual property rights would diminish.

Our commercial viability will depend in part on obtaining and maintaining patent protection and trade secret protection of our product candidates, and the methods used to manufacture them, as well as successfully defending these patents against third-party challenges. Our ability to stop third parties from making, using, selling, offering to sell, or importing our products is dependent upon the extent to which we obtain rights under valid and enforceable patents or trade secrets that cover these activities.

The patent positions of pharmaceutical and biopharmaceutical companies can be highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. No consistent policy regarding the breadth of claims allowed in biopharmaceutical patents has emerged to date in the United States. The biopharmaceutical patent situation outside the United States is even more uncertain. Changes in either the patent laws or in interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property. Accordingly, we cannot predict the breadth of claims that may be allowed or enforced in the patents we own. Further, if any of our patents are deemed invalid and unenforceable, it could impact our ability to commercialize or license our technology.

The degree of future protection for our proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage. For example:

We also may rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. Although we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, outside scientific collaborators, and other advisors may unintentionally or willfully disclose our information to competitors. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge, methods, and know-how.

We may be subject to claims challenging the inventorship of patents and other intellectual property.

We or our licensors may be subject to claims that former employees, collaborators or other third parties have an interest as an inventor or co-inventor in intellectual property we own or license. For example, we or our licensors may have inventorship disputes arise from conflicting obligations of employees, consultants or others who are involved in developing our product candidates. We may be subject to claims by third parties asserting that our licensors, employees or we have misappropriated their intellectual property, or claiming ownership of what we regard as our own intellectual property. Litigation may be necessary to defend against these and other claims challenging inventorship or our or our licensors’ ownership of our owned or in-licensed patents, trade secrets or other intellectual property. If we or our licensors fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, intellectual property that is important to our product candidates. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects.

If any of our trade secrets, know-how or other proprietary information is disclosed, the value of our trade secrets, know-how and other proprietary rights would be significantly impaired and our business and competitive position would suffer.

Our viability also depends upon the skills, knowledge and experience of our scientific and technical personnel, and our consultants and advisors. To help protect our proprietary know-how and our inventions for which patents may be unobtainable or difficult to obtain, we rely on trade secret protection and confidentiality agreements. To this end, we require all of our employees, consultants, advisors and contractors to enter into agreements which prohibit unauthorized disclosure and use of confidential information and, where applicable, require disclosure and assignment to us of the ideas, developments, discoveries and inventions important to our business. These agreements are often limited in duration and may not provide adequate protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use or disclosure or the lawful development by others of such information. There is no assurance that such agreements will be honored by such parties or enforced in whole or part by the courts. We cannot be certain that others will not gain access to these trade secrets or that our patents will provide adequate protection. Others may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets. In addition, enforcing a claim that a third party illegally obtained and is using any of our trade secrets is expensive and time consuming, and the outcome is unpredictable. If any of our trade secrets, know-how or other proprietary information is improperly disclosed, the value of our trade secrets, know-how and other proprietary rights would be significantly impaired and our business and competitive position would suffer.

We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights and we may be unable to protect our rights to, or use of, our technology.

If we choose to go to court to stop a third party from using the inventions claimed in our patents, that individual or company has the right to ask the court to rule that such patents are invalid and/or should not be enforced against that third party. These lawsuits are expensive and would consume time and other resources, even if we were successful in discontinuing the infringement of our patents. In addition, there is a risk that the court will decide that these patents are not valid and that we do not have the right to stop the other party from using the inventions. There is also the risk that, even if the validity of these patents is upheld, the court will refuse to stop the other party on the ground that such other party’s activities do not infringe our rights to these patents. In addition, the U.S. Supreme Court has in the past invalidated tests used by the USPTO in granting patents over the past 20 years. As a consequence, issued patents may be found to contain invalid claims according to the newly revised standards. Some of our own patents may be subject to challenge and subsequent invalidation in a variety of post-grant proceedings, particularly inter partes review, before the USPTO or during litigation under the revised criteria, which make it more difficult to defend the validity of claims in already issued patents.

Furthermore, a third party may claim that we or our manufacturing or commercialization partners are using inventions covered by the third party’s patent rights and may go to court to stop us from engaging in our normal operations and activities, including making or selling our product candidates. These lawsuits are costly and could affect our results of operations and divert the attention of managerial and technical personnel. There is a risk that a court could decide that we or our commercialization partners are infringing the third party’s patents and order us or our partners to stop the activities covered by the patents. In addition, there is a risk that a court could order us or our partners to pay the other party damages for having violated the other party’s patents. The biotechnology industry has produced a proliferation of patents, and it is not always clear to industry participants, including us, which patents cover various types of products, manufacturing processes or methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform. If we are sued for patent infringement, we would need to demonstrate that our products, manufacturing processes or methods of use either do not infringe the patent claims of the relevant patent and/or that the patent claims are invalid, and we may not be able to do this. Proving invalidity, in particular, is difficult since it requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents.

As some patent applications in the United States may be maintained in secrecy until the patents are issued, because patent applications in the United States and many foreign jurisdictions are typically not published until eighteen months after filing, and because publications in the scientific literature often lag behind actual discoveries, we cannot be certain that others have not filed patent applications for technology covered by our issued patents or our pending applications, or that we were the first to invent the technology. Our competitors may have filed, and may in the future file, patent applications covering technology similar to ours. Any such patent applications may have priority over our patent applications or patents, which could further require us to obtain rights to issued patents covering such technologies. If another party has filed a United States patent application on inventions similar to ours, we may have to participate in an interference proceeding declared by the USPTO to determine priority of invention in the United States. The costs of these proceedings could be substantial, and it is possible that such efforts would be unsuccessful if, unbeknownst to us, the other party had independently arrived at the same or similar invention prior to our own invention, resulting in a loss of our U.S. patent position with respect to such inventions.

Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation or inter partes review proceedings could have a material adverse effect on our ability to raise the funds necessary to continue our operations.

Some jurisdictions in which we operate have enacted legislation which allows members of the public to access information under statutes similar to the U.S. Freedom of Information Act. Even though we believe our information would be excluded from the scope of such statutes, there are no assurances that we can protect our confidential information from being disclosed under the provisions of such laws. If any confidential or proprietary information is released to the public, such disclosures may negatively impact our ability to protect our intellectual property rights.

Breaches or compromises of our information security systems or our information technology systems or infrastructure could result in exposure of private information, disruption of our business and damage to our reputation, which could harm our business, results of operation and financial condition.

We utilize information security and information technology systems and websites that allow for the secure storage and transmission of proprietary or private information regarding our clients, patients, employees, vendors and others, including individually identifiable health information. A security breach of our network, hosted service providers, or vendor systems, may expose us to a risk of loss or misuse of this information, litigation and potential liability. Hackers and data thieves are increasingly sophisticated and operate large-scale and complex automated attacks, including on companies within the healthcare industry. Although we believe that we take appropriate measures to safeguard sensitive information within our possession, we may not have the resources or technical sophistication to anticipate or prevent rapidly-evolving types of cyber-attacks targeted at us, our clients, our patients, or others who have entrusted us with information. Actual or anticipated attacks may cause us to incur costs, including costs to deploy additional personnel and protection technologies, train employees, and engage third-party experts and consultants. We invest in industry standard security technology to protect personal information. Advances in computer capabilities, new technological discoveries, or other developments may result in the technology used by us to protect personal information or other data being breached or compromised. To our knowledge, we have not experienced any material breach of our cybersecurity systems. If our or our third-party service provider systems fail to operate effectively or are damaged, destroyed, or shut down, or there are problems with transitioning to upgraded or replacement systems, or there are security breaches in these systems, any of the aforementioned could occur as a result of natural disasters, software or equipment failures, telecommunications failures, loss or theft of equipment, acts of terrorism, circumvention of security systems, or other cyber-attacks, we could experience delays or decreases in revenue, and reduced efficiency of our operations. Additionally, any of these events could lead to violations of privacy laws, loss of customers, or loss, misappropriation or corruption of confidential information, trade secrets or data, which could expose us to potential litigation, regulatory actions, sanctions or other statutory penalties, any or all of which could adversely affect our business, and cause us to incur significant losses and remediation costs.

We may be exposed to liabilities under the Foreign Corrupt Practices Act, and any determination that we violated the Foreign Corrupt Practices Act or Chinese anti-corruption law could have a material adverse effect on our business.

We are subject to the Foreign Corrupt Practice Act, or FCPA, and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute, for the purpose of obtaining or retaining business. We have operations and agreements with third parties where corruption may occur. It is our policy to implement safeguards to prevent these practices by our employees. However, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants, or sales agents of our company may engage in conduct for which we might be held responsible.

Violations of the FCPA or other anti-corruption laws may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In addition, the United States government may seek to hold our company liable for successor liability FCPA violations committed by companies in which we invest or that we acquire.

Changes or disruption in services supplies, or transportation provided by third parties have impacted and could continue to impact or adversely affect our business.

We depend on third parties to provide supplies and services critical to our Keto Air business. We are heavily reliant on third-party ground and air travel for transport of diagnostic testing supplies. A significant disruption to these travel systems, or our access to them, could have a material adverse effect on our business. Disruptions to the continued supply, or increases in costs, of these products. may arise from export/import restrictions or embargoes, political or economic instability, pressure from animal rights activists, adverse weather, natural disasters, public health crises, transportation disruptions, cyber-attacks, or other causes, as well as from termination of relationships with suppliers or vendors for their failure to follow our performance standards and requirements. Disruption of supply and services has impacted and could continue to impact or have a material adverse effect on our business related to the sale of Keto Air.

Risk Factors Related to Commercialization Activity

Some of our medical device products in the future may face significant government regulation, and there is no guarantee that our medical devices will receive regulatory approval.

The manufacturing and marketing of our potential medical device products such as our breathalyzer system may be subject to extensive regulation by the FDA and other regulatory authorities in the United States, as well as by regulatory authorities in other countries. In the United States, our product candidates are subject to regulation as biological products or as combination biological products/medical devices under the Federal Food, Drug and Cosmetic Act, the Public Health Service Act and other statutes, as outlined in the Code of Federal Regulations. Different regulatory requirements may apply to our products depending on how they are categorized by the FDA under these laws. These regulations can be subject to substantial and significant interpretation, addition, amendment or revision by the FDA and by the legislative process. The FDA may determine that we will need to undertake clinical trials beyond those currently planned. Furthermore, the FDA may determine that results of clinical trials do not support approval for the product. Similar determinations may be encountered in foreign countries. The FDA will continue to monitor products in the market after approval, if any, and may determine to withdraw its approval or otherwise seriously affect the marketing efforts for any such product. The same possibilities exist for trials to be conducted outside of the United States that are subject to regulations established by local authorities and local law. Any such determinations would delay or deny the introduction of our product candidates to the market and have a material adverse effect on our business, financial condition, and results of operations.

Certain medical devices are subject to ongoing periodic unannounced inspection by the FDA, the Drug Enforcement Agency, other federal agencies and corresponding state agencies to ensure strict compliance with good manufacturing practices, and other government regulations and corresponding foreign standards. We do not have control over third-party manufacturers’ compliance with these regulations and standards, nor can we guarantee that we will maintain compliance with such regulations in regard to our own manufacturing processes. Other risks include:

Even if our medical devices receive regulatory approval in the United States, we may never receive approval or commercialize our product candidates outside of the United States. In order to market and commercialize any product candidate outside of the United States, we must establish and comply with numerous and varying regulatory requirements of other countries regarding manufacturing, safety and efficacy. Approval procedures vary among countries and can involve additional product testing and additional administrative review periods. The time required to obtain approval in other countries might differ from that required to obtain FDA approval. The regulatory approval process in other countries may include all of the risks detailed above regarding FDA approval in the United States as well as other risks. Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory approval process in others. Failure to obtain regulatory approval in other countries, or any delay or setback in obtaining such approval, could have the same adverse effects detailed above regarding FDA approval in the United States. Such effects include the risks that our product candidates may not be approved for all indications requested, which could limit the uses of our product candidates and have an adverse effect on product sales and potential royalties, and that such approval may be subject to limitations on the indicated uses for which the product may be marketed or require costly, post-marketing follow-up studies.

Even if our medical devices receive regulatory approval, we may still face future development and regulatory difficulties.

Even if U.S. regulatory approval is obtained, the FDA may still impose significant restrictions on a product’s indicated uses or marketing, or impose ongoing requirements for potentially costly post-approval studies. If any of our products were granted accelerated approval, FDA could require post-marketing confirmatory trials to verify and describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit. FDA may withdraw approval of a drug or indication approved under the accelerated approval pathway if a trial required to verify the predicted clinical benefit of the product fails to verify such benefit; other evidence demonstrates that the product is not shown to be safe or effective under the conditions of use; the applicant fails to conduct any required post-approval trial of the drug with due diligence; or the applicant disseminates false or misleading promotional materials relating to the product. In addition, the FDA currently requires as a condition for accelerated approval the pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product.

Given the number of recent high-profile adverse safety events with certain medical devices, the FDA may require, as a condition of approval, costly risk management programs, which may include safety surveillance, restricted distribution and use, patient education, enhanced labeling, special packaging or labeling, expedited reporting of certain adverse events, pre-approval of promotional materials, and restrictions on direct-to-consumer advertising. Furthermore, heightened Congressional scrutiny on the adequacy of the FDA’s drug approval process and the FDA’s efforts to assure the safety of marketed cell based therapy has resulted in the proposal of new legislation addressing drug safety issues. If enacted, any new legislation could result in delays or increased costs during the period of product development, and regulatory review and approval, as well as increased costs to assure compliance with any new post-approval regulatory requirements. Any of these restrictions or requirements could force us to conduct costly studies or increase the time for us to become profitable. For example, any labeling approved for any of our product candidates may include a restriction on the term of its use, or it may not include one or more of our intended indications.

Our product candidates will also be subject to ongoing FDA requirements for the labeling, packaging, storage, advertising, promotion, record-keeping, and submission of safety and other post-market information on the cell based therapy. New issues may arise during a product lifecycle that did not exist, or were unknown, at the time of product approval, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured. Since approved products, manufacturers, and manufacturers’ facilities are subject to continuous review and periodic inspections, these new issues post-approval may result in voluntary actions by us or may result in a regulatory agency imposing restrictions on that product or us, including requiring withdrawal of the product from the market or for use in a clinical study. If our product candidates fail to comply with applicable regulatory requirements, such as good manufacturing practices, a regulatory agency may:

If we or current or future collaborators, manufacturers, or service providers fail to comply with healthcare laws and regulations, we or they could be subject to enforcement actions and substantial penalties, which could affect our ability to develop, market and sell our products and may harm our reputation.

Although we currently are only marketing Keto Air, once our medical devices are covered by federal health care programs, we will be subject to additional healthcare statutory and regulatory requirements and enforcement by the federal, state and foreign governments of the jurisdictions in which we conduct our business. Healthcare providers, physicians and third party payors play a primary role in the recommendation and prescription of any medical devices for which we obtain marketing approval. Our future arrangements with third party payors and customers may expose us to broadly applicable fraud and abuse, transparency, and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute our therapeutic candidates for which we obtain marketing approval. Restrictions under applicable federal and state healthcare laws and regulations include, but are not limited to, the following:

The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations. Federal and state enforcement bodies have recently increased their scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Responding to investigations can be time-and resource-consuming and can divert management’s attention from the business. Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business.

Ensuring that our business arrangements with third-parties comply with applicable healthcare laws and regulations could involve substantial costs. If our operations are found to be in violation of any such requirements, we may be subject to penalties, including civil or criminal penalties, monetary damages, the curtailment or restructuring of our operations, or exclusion from participation in government contracting, healthcare reimbursement or other government programs, including Medicare and Medicaid, any of which could adversely affect our financial results. Although effective compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, these risks cannot be entirely eliminated. Any action against us for an alleged or suspected violation could cause us to incur significant legal expenses and could divert our management’s attention from the operation of our business, even if our defense is successful. In addition, achieving and sustaining compliance with applicable laws and regulations may be costly to us in terms of money, time and resources.

Any medical devices we develop may become subject to unfavorable pricing regulations, third party coverage and reimbursement practices or healthcare reform initiatives, thereby harming our business.

The regulations that govern marketing approvals, pricing, coverage and reimbursement for new medical devices vary widely from country to country. Some countries require approval of the sale price of a device before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. Although we intend to monitor these regulations, our programs are currently in earlier stages of development and we will not be able to assess the impact of price regulations for a number of years. As a result, we might obtain regulatory approval for a product in a particular country, but then be subject to price regulations that delay our commercial launch of the product and negatively impact the revenues we are able to generate from the sale of the product in that country.

Our ability to commercialize any products successfully also will depend in part on the extent to which coverage and reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations. However, there may be significant delays in obtaining coverage for newly-approved medical devices. . Moreover, eligibility for coverage does not necessarily signify that a cell based therapy will be reimbursed in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution costs. Also, interim payments for new cell based therapy if applicable, may be insufficient to cover our costs and may not be made permanent. Thus, even if we succeed in bringing one or more products to the market, these products may not be considered medically necessary or cost-effective, and the amount reimbursed for any products may be insufficient to allow us to sell our products on a competitive basis. Because our programs are in earlier stages of development, we are unable at this time to determine their cost effectiveness, or the likely level or method of reimbursement. In addition, obtaining coverage and reimbursement approval of a product from a government or other third-party payor is a time-consuming and costly process that could require us to provide to each payor supporting scientific, clinical and cost-effectiveness data for the use of our product on a payor-by-payor basis, with no assurance that coverage and adequate reimbursement will be obtained. A payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved. Further, one payor’s determination to provide coverage for a product does not assure that other payors will also provide coverage for the product. Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development. If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize any product candidate that we successfully develop.

Increasingly, the third party payors who reimburse patients or healthcare providers, such as government and private insurance plans, are seeking greater upfront discounts, additional rebates and other concessions to reduce the prices for pharmaceutical products. If the price we are able to charge for any products we develop, or the reimbursement provided for such products, is inadequate in light of our development and other costs, our return on investment could be adversely affected.

Average prices for medical devices may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of medical devices from countries where they may be sold at lower prices than in the U.S. Reimbursement rates under Medicare Part B would depend in part on whether the newly approved product would be eligible for a unique billing code. It is difficult for us to predict how Medicare coverage and reimbursement policies will be applied to our products in the future and coverage and reimbursement under different federal healthcare programs are not always consistent. Medicare reimbursement rates may also reflect budgetary constraints placed on the Medicare program.

Third party payors often rely upon Medicare coverage policies and payment limitations in setting their own reimbursement rates. These coverage policies and limitations may rely, in part, on compendia listings for approved therapeutics. Our inability to promptly obtain relevant compendia listings, coverage, and adequate reimbursement from both government-funded and private payors for products that we develop and for which we obtain regulatory approval could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our financial condition.

We expect that these and other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and lower reimbursement, and in additional downward pressure on the price that we receive for any approved product. Any reduction in reimbursement from Medicare or other government-funded programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our products, once marketing approval is obtained.

We believe that the efforts of governments and third party payors to contain or reduce the cost of healthcare and legislative and regulatory proposals to broaden the availability of healthcare will continue to affect the business and financial condition of pharmaceutical and biopharmaceutical companies. A number of legislative and regulatory changes in the healthcare system in the U.S. and other major healthcare markets have been proposed, and such efforts have expanded substantially in recent years. These developments could, directly or indirectly, affect our ability to sell our products, if approved, at a favorable price. For example, in the United States, in 2010, the U.S. Congress passed the ACA, a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of health spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional policy reforms. Among the provisions of the ACA addressing coverage and reimbursement of pharmaceutical products, of importance to our potential therapeutic candidates are the following:

Separately, pursuant to the health reform legislation and related initiatives, the Centers for Medicare and Medicaid Services, or CMS, is working with various healthcare providers to develop, refine, and implement Accountable Care Organizations, or ACOs, and other innovative models of care for Medicare and Medicaid beneficiaries, including the Bundled Payments for Care Improvement Initiative, the Comprehensive Primary Care Initiative, the Duals Demonstration, and other models. The continued development and expansion of ACOs and other innovative models of care will have an uncertain impact on any future reimbursement we may receive for approved therapeutics administered by these organizations.

The healthcare industry is heavily regulated in the U.S. at the federal, state, and local levels, and our failure to comply with applicable requirements may subject us to penalties and negatively affect our financial condition.

As a healthcare company, our operations and interactions with healthcare providers may be subject to extensive regulation in the U.S., particularly if we receive FDA approval for any of its products in the future. For example, if we receive FDA approval for a product for which reimbursement is available under a federal healthcare program (e.g., Medicare, Medicaid), it would be subject to a variety of federal laws and regulations, including those that prohibit the filing of false or improper claims for payment by federal healthcare programs (e.g. the federal False Claims Act), prohibit unlawful inducements for the referral of business reimbursable by federal healthcare programs (e.g. the federal Anti-Kickback Statute), and require disclosure of certain payments or other transfers of value made to U.S.-licensed physicians and teaching hospitals or Open Payments. We are not able to predict how third parties will interpret these laws and apply applicable governmental guidance and may challenge our practices and activities under one or more of these laws. If our past or present operations are found to be in violation of any of these laws, we could be subject to civil and criminal penalties, which could hurt our business, our operations and financial condition.

The federal Anti-Kickback Statute prohibits, among other things, any person or entity, from knowingly and willfully offering, paying, soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or in return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs. The term remuneration has been interpreted broadly to include anything of value. The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on one hand and prescribers, purchasers, and formulary managers on the other. There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution. The exceptions and safe harbors are drawn narrowly and practices that involve remuneration that may be alleged to be intended to induce prescribing, purchasing or recommending may be subject to scrutiny if they do not qualify for an exception or safe harbor. Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute. Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all of its facts and circumstances. Our practices may not in all cases meet all of the criteria for protection under a statutory exception or regulatory safe harbor.

Additionally, the intent standard under the Anti-Kickback Statute was amended by the ACA, to a stricter standard such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. In addition, the ACA codified case law that a claim including items or services resulting from a violation of the federal Anti- Kickback Statute constitutes a false or fraudulent claim for purposes of the federal FCA.

The civil monetary penalties statute imposes penalties against any person or entity that, among other things, is determined to have presented or caused to be presented a claim to a federal healthcare program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.

Federal false claims and false statement laws, including the federal FCA, prohibit, among other things, any person or entity from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment to, or approval by, the federal healthcare programs, including Medicare and Medicaid, or knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government. A claim includes “any request or demand” for money or property presented to the U.S. government. For instance, historically, pharmaceutical and other healthcare companies have been prosecuted under these laws for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product. Other companies have been prosecuted for causing false claims to be submitted because of the companies’ marketing of the product for unapproved, off-label, and thus generally non-reimbursable, uses.

HIPAA prohibits, among other offenses, knowingly and willfully executing a scheme to defraud any health care benefit program, including private payors, or falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for items or services under a health care benefit program. To the extent that we act as a business associate to a healthcare provider engaging in electronic transactions, we may also be subject to the privacy and security provisions of HIPAA, as amended by HITECH, which restricts the use and disclosure of patient-identifiable health information, mandates the adoption of standards relating to the privacy and security of patient-identifiable health information, and requires the reporting of certain security breaches to healthcare provider customers with respect to such information. Additionally, many states have enacted similar laws that may impose more stringent requirements on entities like ours. Failure to comply with applicable laws and regulations could result in substantial penalties and adversely affect our financial condition and results of operations.

Many states also have similar fraud and abuse statutes or regulations that apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor. Additionally, to the extent that our product is sold in a foreign country, we may be subject to similar foreign laws.

Our products, once approved, may be eligible for coverage under Medicare and Medicaid, among other government healthcare programs. Accordingly, we may be subject to a number of obligations based on their participation in these programs, such as a requirement to calculate and report certain price reporting metrics to the government, such as average sales price (ASP) and best price. Penalties may apply in some cases when such metrics are not submitted accurately and timely. Further, these prices for medical devices may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of medical devices from countries where they may be sold at lower prices than in the United States. It is difficult to predict how Medicare coverage and reimbursement policies will be applied to our products in the future and coverage and reimbursement under different federal healthcare programs are not always consistent. Medicare reimbursement rates may also reflect budgetary constraints placed on the Medicare program.

In order to distribute products commercially, we must comply with state laws that require the registration of manufacturers and wholesale distributors of medical devices in a state, including, in certain states, manufacturers and distributors who ship products into the state even if such manufacturers or distributors have no place of business within the state. Some states also impose requirements on manufacturers and distributors to establish the pedigree of product in the chain of distribution, including some states that require manufacturers and others to adopt new technology capable of tracking and tracing product as it moves through the distribution chain. Several states have enacted legislation requiring pharmaceutical and biotechnology companies to establish marketing compliance programs, file periodic reports with the state, make periodic public disclosures on sales, marketing, pricing, clinical trials and other activities, and/or register their sales representatives, as well as to prohibit pharmacies and other healthcare entities from providing certain physician prescribing data to pharmaceutical and biotechnology companies for use in sales and marketing, and to prohibit certain other sales and marketing practices. All of our activities are potentially subject to federal and state consumer protection and unfair competition laws.

If our operations are found to be in violation of any of the federal and state healthcare laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including without limitation, civil, criminal and/or administrative penalties, damages, fines, disgorgement, exclusion from participation in government programs, such as Medicare and Medicaid, injunctions, private “qui tam” actions brought by individual whistleblowers in the name of the government, or refusal to allow us to enter into government contracts, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

Our ability to obtain reimbursement or funding from the federal government may be impacted by possible reductions in federal spending.

U.S. federal government agencies currently face potentially significant spending reductions. The Budget Control Act of 2011, or the BCA, established a Joint Select Committee on Deficit Reduction, which was tasked with achieving a reduction in the federal debt level of at least $1.2 trillion. That committee did not draft a proposal by the BCA’s deadline. As a result, automatic cuts, referred to as sequestration, in various federal programs were scheduled to take place, beginning in January 2013, although the American Taxpayer Relief Act of 2012 delayed the BCA’s automatic cuts until March 1, 2013. While the Medicare program’s eligibility and scope of benefits are generally exempt from these cuts, Medicare payments to providers and Part D health plans are not exempt. The BCA did, however, provide that the Medicare cuts to providers and Part D health plans would not exceed two percent. President Obama issued the sequestration order on March 1, 2013, and cuts went into effect on April 1, 2013. Additionally, the Bipartisan Budget Act of 2015 extended sequestration for Medicare through fiscal year 2027.

The U.S. federal budget remains in flux, which could, among other things, cut Medicare payments to providers. The Trump Administration cost reduction initiatives may impact Medicare and Medicaid reimbursement levels. Medicare program is frequently mentioned as a target for spending cuts. The full impact on our business of any future cuts in Medicare or other programs is uncertain. In addition, we cannot predict any impact President Trump’s administration and the U.S. Congress may have on the federal budget. If federal spending is reduced, anticipated budgetary shortfalls may also impact the ability of relevant agencies, such as the FDA or the National Institutes of Health, to continue to function at current levels. Amounts allocated to federal grants and contracts may be reduced or eliminated. These reductions may also impact the ability of relevant agencies to timely review and approve medical devises and development, manufacturing, and marketing activities, which may delay our ability to develop, market and sell any products we may develop.

Risks Related to Our Securities

Our officers, directors and principal stockholders own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.

Our officers, directors and 5% stockholders and their affiliates beneficially own a significant percentage of our outstanding common stock. As a result, these stockholders have significant influence and may be able to determine all matters requiring stockholder approval. For example, these stockholders may be able to control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transactions. This concentration of ownership could delay or prevent any acquisition of our company on terms that other stockholders may desire, and may adversely affect the market price of our common stock.

If we are unable to maintain listing of our securities on The Nasdaq Capital Market or another reputable stock exchange, it may be more difficult for our stockholders to sell their securities.

Nasdaq requires listing issuers to comply with certain standards in order to remain listed on its exchange. If Nasdaq should delist our securities from trading on its exchange for any reason and we are unable to obtain listing on another reputable national securities exchange, a reduction in some or all of the following may occur, each of which could materially adversely affect our stockholders. A delisting of our common stock is likely to reduce the liquidity of our common stock and may inhibit or preclude our ability to raise additional financing.

The price of our common stock may be volatile and fluctuate substantially, which could result in substantial losses for our stockholders.

Our common stock is listed on the Nasdaq Capital Market under the symbol “ALBT.” The price of our common stock has been, and we expect it to continue to be, volatile. The stock market in general and the market for smaller healthcare companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, you may not be able to sell your shares of common stock at or above the price you paid for your shares of common stock. The market price for our common stock may be influenced by many factors, including:

Future sales of our common stock or securities convertible or exchangeable for our common stock may cause our stock price to decline.

If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market, the price of our common stock could decline. The perception in the market that these sales may occur could also cause the price of our common stock to decline.

In addition, as of March 31, 2025:

If the shares we may issue from time to time upon the exercise of outstanding options and warrants and the conversion of our outstanding Series C Preferred Stock and Series D Preferred Stock are sold and outstanding convertible notes are issues, or if it is perceived that they will be sold, by the award recipients in the public market, the price of our common stock could decline.

You may experience dilution of your ownership interests because of the future issuance of additional shares of our common or preferred stock or other securities that are convertible into or exercisable for our common or preferred stock.

As of the date of this filing, we have issued an aggregate of (i) 3,500 shares of Series C Preferred Stock and (ii) 5,000 shares of Series D Preferred Stock. In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our stockholders. We are authorized to issue an aggregate of 100,000,000 shares of common stock and 10,000,000 shares of “blank check” preferred stock. We may issue additional shares of our common stock or other securities that are convertible into or exercisable for our common stock in connection with hiring or retaining employees, future acquisitions, future sales of our securities for capital raising purposes, or for other business purposes. The future issuance of any such additional shares of our common stock may create downward pressure on the trading price of our common stock. We expect we will need to raise additional capital in the near future to meet our working capital needs, and there can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with these capital raising efforts, including at a price (or exercise prices) below the price you paid for your stock.

The ability of our Board to issue additional stock may prevent or make more difficult certain transactions, including a sale or merger.

Our Board is authorized to issue up to 10,000,000 shares of preferred stock with powers, rights and preferences designated by it. Shares of voting or convertible preferred stock could be issued, or rights to purchase such shares could be issued, to create voting impediments or to frustrate persons seeking to effect a takeover or otherwise gain control of us. The rights of holders of our common stock are subject to the rights of the holders of our preferred stock, including Series C Preferred Stock, Series D Preferred Stock and any preferred stock that may be issued. The ability of the Board to issue such additional shares of preferred stock, with rights and preferences it deems advisable, could discourage an attempt by a party to acquire control of us by tender offer or other means. Such issuances could therefore deprive stockholders of benefits that could result from such an attempt, such as the realization of a premium over the market price for their shares in a tender offer or the temporary increase in market price that such an attempt could cause. Moreover, the issuance of such additional shares of preferred stock to persons friendly to the Board could make it more difficult to remove incumbent managers and directors from office even if such change were to be favorable to stockholders generally.

We are incorporated in Delaware. Certain anti-takeover provisions of Delaware law and our charter documents as currently in effect may make a change in control of us more difficult, even if a change in control would be beneficial to the stockholders. Delaware law also prohibits corporations from engaging in a business combination with any holders of 15% or more of their capital stock until the holder has held the stock for three years unless, among other possibilities, our Board approves the transaction. Our Board may use these provisions to prevent changes in the management and control of us. Also, under applicable Delaware law, our Board may adopt additional anti-takeover measures in the future.

If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no or few securities or industry analysts commence coverage of us, the trading price for our stock would be negatively impacted. In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us issue an adverse or misleading opinion regarding us, our business model, our intellectual property or our stock performance, or if our operating results fail to meet the expectations of analysts, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

We do not anticipate paying dividends on our common stock, and investors may lose the entire amount of their investment.

We have never declared or paid cash dividends on our common stock, and we do not anticipate such a declaration or payment for the foreseeable future.

We expect to use future earnings, if any, to fund business growth. Therefore, stockholders will not receive any funds absent a sale of their shares of our common stock. We cannot assure stockholders of a positive return on their investment when they sell their shares, nor can we assure that stockholders will not lose the entire amount of their investment.

Applicable regulatory requirements, including those contained in and issued under the Sarbanes-Oxley Act of 2002, may make it difficult for us to retain or attract qualified officers and directors, which could adversely affect the management of our business and our ability to obtain or retain listing of our common stock on a national securities exchange.

We may be unable to attract and retain those qualified officers, directors and members of board committees required to provide for effective management because of the rules and regulations that govern publicly held companies, including, but not limited to, certifications by principal executive officers. The enactment of the Sarbanes-Oxley Act has resulted in the issuance of a series of related rules and regulations and the strengthening of existing rules and regulations by the SEC, as well as the adoption of new and more stringent rules by national securities exchanges. The perceived increased personal risk associated with these changes may deter qualified individuals from accepting roles as directors and executive officers.

Further, some of these changes heighten the requirements for board or committee membership, particularly with respect to an individual’s independence from the corporation and level of experience in finance and accounting matters. We may have difficulty attracting and retaining directors with the requisite qualifications. If we are unable to attract and retain qualified officers and directors, the management of our business and our ability to obtain or retain listing of our shares of common stock on any national securities exchange could be adversely affected.

If we cannot satisfy the continued listing requirements and other rules of The Nasdaq Capital Market, our securities may be delisted, which could negatively impact the price of our securities and your ability to sell them.

Our common stock is listed on The Nasdaq Capital Market under the symbol “ALBT.” In order to maintain our listing on The Nasdaq Capital Market, we are required to comply with certain rules of the applicable trading market, including those regarding minimum stockholders’ equity, minimum share price and certain corporate governance requirements. In the past, we have failed to satisfy certain continued listing requirements and, although we are currently in compliance with such requirements, we may not be able to continue to satisfy the listing requirements and other applicable rules of The Nasdaq Capital Market. If we are unable to satisfy the criteria for maintaining our listing, our securities could be subject to delisting.

If our common stock is delisted from trading by the applicable trading market we could face significant consequences, including.

We could be subject to securities class action litigation.

In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because companies in our industry have experienced significant stock price volatility in recent years. If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial information presents the combination of the financial information of Avalon and YOOV adjusted to give effect to the Merger and related transactions. The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X. Defined terms included below have the same meaning as terms defined and included elsewhere in this proxy statement/prospectus.

Introduction

The following unaudited pro forma condensed combined financial information is provided to aid you in your analysis of the financial aspects of the Merger. The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of SEC Regulation S-X, as amended by the final rule, Release No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses. Release No. 33-10786 replaced the previous pro forma adjustment criteria with simplified requirements to depict the accounting for the Merger (“Transaction Accounting Adjustments”) and present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). Management has elected not to present Management’s Adjustments and will only be presenting Transaction Accounting Adjustments in the unaudited pro forma condensed combined financial information. The adjustments presented in the unaudited pro forma condensed combined financial statements have been identified and presented to provide relevant information necessary for an understanding of the combined company reflecting the Transactions.

YOOV and Avalon have different fiscal year ends. YOOV’s fiscal year end is March 31, and Avalon’s fiscal year end is December 31. Following the Merger, the Combined Company will have a fiscal year end of March 31. The unaudited pro forma combined balance sheet as of December 31, 2024 gives pro forma effect to the Merger as if it had been consummated as of that date. The unaudited pro forma combined statements of operations for the year ended March 31, 2024 and for the nine months ended December 31, 2024 give pro forma effect to the Merger as if it had occurred as of April 1, 2023. This information should be read together with YOOV and Avalon’s respective audited and unaudited financial statements and related notes included elsewhere in this proxy statement/prospectus.

The unaudited pro forma condensed combined financial statements are provided for illustrative purposes only and are not necessarily indicative of what the actual results of operations and financial position would have been had the Merger taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the combined company.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF DECEMBER 31, 2024