What changed in this filing

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Item 9A. Controls and Procedures

2021-03-30 compared with 2020-04-06 · 2369 added, 2601 removed, 461 unchanged (92% of the section changed)

CONTROLS AND PROCEDURES

of Disclosure Controls and Procedures

maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in

our periodic reports filed under the Securities Exchange Act of 1934, as amended, or 1934 Act, is recorded, processed, summarized,

and reported within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated

and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”)

as appropriate, to allow timely decisions regarding required disclosure.

We carried out an evaluation, under the supervision and

with the participation of our management, including the principal executive officer and the principal financial officer (principal

financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in

Rule 13(a)-15(e) under the 1934 Act, as of the end of the period covered by this report.

During evaluation of disclosure controls

and procedures as of December 31, 2019 conducted as part of our annual audit and preparation of our annual financial statements,

the CEO and CFO conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures

and concluded that our disclosure controls and procedures were not effective due to the lack of segregation of duties resulting

from our small size.

Management’s

Report on Internal Control over Financial Reporting

is responsible for the preparation and fair presentation of the financial statements included in this annual report.

The financial

statements have been prepared in conformity with accounting principles generally accepted in the United States of America and

reflect management’s judgment and estimates concerning effects of events and transactions that are accounted for or disclosed.

is also responsible for establishing and maintaining adequate internal control over financial reporting.

Our internal control

over financial reporting includes those policies and procedures that pertain to our ability to record, process, summarize and

report reliable data.

Management recognizes that there are inherent limitations in the effectiveness of any internal control over

financial reporting, including the possibility of human error and the circumvention or overriding of internal control.

even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement

presentation.

Further, because of changes in conditions, the effectiveness of internal control over financial reporting may vary

regularly assesses controls and did so most recently for our financial reporting as of December 31, 2019.

This assessment was

based on criteria for effective internal control over financial reporting described in the Internal Control Integrated Framework

issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission.

Based on this assessment, management has

concluded that our internal control over financial reporting was not effective as of December 31, 2019 due to the lack of segregation

of duties resulting from our small size.

In addition, due to the lack of segregation of duties and limited resources, the Company

has a small accounting staff to prepare and review its financial statements.

This issue has risen to a material weakness

for the year ended December 31, 2019.

light of the material weakness, we performed additional analyses and procedures in order to conclude that our consolidated financial

statements for the year ended December 31, 2019 included in this Annual Report on Form 10-K were fairly stated in accordance with

Accordingly, management believes that despite our material weakness, our consolidated financial statements for the year

ended December 31, 2019 are fairly stated, in all material respects, in accordance with US GAAP.

in Internal Control over Financial Reporting

were no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) under the Exchange

Act, during the quarter ended December 31, 2019 that have materially affected, or are reasonably likely to materially affect,

our internal control over financial reporting.

Attestation Report of the

Registered Public Accounting Firm

Annual Report on Form 10-K does not include an attestation report by our independent registered public accounting firm, regarding

internal control over financial reporting.

As a smaller reporting company, our internal control over financial reporting was not

subject to audit by our independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission

that permit us to provide only management’s report.

Evaluation of Disclosure Controls and Procedures

disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our

periodic reports filed under the Securities Exchange Act of 1934, as amended, or 1934 Act, is recorded, processed,

summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that such

information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and

Chief Financial Officer (“CFO”) as appropriate, to allow timely decisions regarding required disclosure.

carried out an evaluation, under the supervision and with the participation of our management, including the principal

executive officer and the principal financial officer (principal financial officer), of the effectiveness of the design and

operation of our disclosure controls and procedures, as defined in Rule 13(a)-15(e) under the 1934 Act, as of the end of the

period covered by this report.

During evaluation of disclosure controls and procedures as of December 31, 2020 conducted as

part of our annual audit and preparation of our annual financial statements, the CEO and CFO conducted an evaluation of the

effectiveness of the design and operations of our disclosure controls and procedures and concluded that our disclosure

controls and procedures were not effective due to the lack of segregation of duties resulting from our small size.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for the preparation and fair presentation

of the financial statements included in this annual report.

The financial statements have been prepared in conformity with accounting

principles generally accepted in the United States of America and reflect management’s judgment and estimates concerning

effects of events and transactions that are accounted for or disclosed.

Management is also responsible for establishing and maintaining

adequate internal control over financial reporting.

Our internal control over financial reporting includes those policies and

procedures that pertain to our ability to record, process, summarize and report reliable data.

Management recognizes that there

are inherent limitations in the effectiveness of any internal control over financial reporting, including the possibility of human

error and the circumvention or overriding of internal control.

Accordingly, even effective internal control over financial reporting

can provide only reasonable assurance with respect to financial statement presentation.

Further, because of changes in conditions,

the effectiveness of internal control over financial reporting may vary over time.

Management regularly assesses controls and did so most recently

for our financial reporting as of December 31, 2020.

This assessment was based on criteria for effective internal control over

financial reporting described in the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations

(COSO) of the Treadway Commission.

Based on this assessment, management has concluded that our internal control over financial

reporting was not effective as of December 31, 2020 due to the lack of segregation of duties resulting from our small size.

addition, due to the lack of segregation of duties and limited resources, the Company has a small accounting staff to prepare

and review its financial statements.

This issue has risen to a material weakness for the year ended December 31, 2020.

In light of the material weakness, we performed additional analyses

and procedures in order to conclude that our consolidated financial statements for the year ended December 31, 2020 included in

this Annual Report on Form 10-K were fairly stated in accordance with US GAAP.

Accordingly, management believes that despite our

material weakness, our consolidated financial statements for the year ended December 31, 2020 are fairly stated, in all material

respects, in accordance with US GAAP.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial

reporting, as such term is defined in Rules 13a-15(f) under the Exchange Act, during the quarter ended December 31, 2020 that

have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Attestation Report of the Registered Public Accounting Firm

This Annual Report on Form 10-K does not include an attestation

report by our independent registered public accounting firm, regarding internal control over financial reporting.

reporting company, our internal control over financial reporting was not subject to audit by our independent registered public

accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s

OTHER INFORMATION

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

and Executive Officers

are the names of and certain information regarding our executive officers and directors as of the date hereof:

Chairman of the

Board of Directors

Directors and Executive Officers

Below are the names of and certain information regarding our

executive officers and directors as of the date hereof:

Chairman of the Board of Directors

David Jin, MD, PhD

Chief Executive

Officer, President and Director

Chief Operating

Officer, Secretary and Director

Chief Executive Officer, President and Director

Chief Operating Officer, Secretary and Director

Luisa Ingargiola

Chief Financial

Chief Financial Officer

Yue “Charles”

are elected annually by the Board of Directors (subject to the terms of any employment agreement), at our annual meeting, to hold

such officer until an officer’s successor has been duly appointed and qualified, unless an officer sooner dies, resigns

or is removed by the Board.

principal occupation and business experience during at least the past five years for our executive officers and directors is as

Lu, Chairman of the Board of Directors

Officers are elected annually by the Board of Directors (subject

to the terms of any employment agreement), at our annual meeting, to hold such officer until an officer’s successor has

been duly appointed and qualified, unless an officer sooner dies, resigns or is removed by the Board.

The principal occupation and business experience during at least

the past five years for our executive officers and directors is as follows:

Wenzhao Lu, Chairman of the Board of Directors

Wenzhao Lu is our Chairman of the Board.

He is a seasoned healthcare entrepreneur with extensive operational knowledge and experience

He has been serving as Chairman of the Board for the Daopei Medical Group, or DPMG, since 2010.

Under his leadership,

DPMG has recently expanded its clinical network involving a state-of-the-art stem cell bank at Wuhan Biolake, three top-ranked

private hospitals (located in Beijing, Shanghai, and Hebei), specialty hematology laboratories, as well as a hematology research

institute, with more than 100 partnering and collaborating hospitals in China.

DPMG was founded by Professor Daopei Lu, a renowned

hematologist pioneering in hematopoietic stem cell transplant and member of the Academy of Engineering in China.

received a Bachelor of Arts from Temple University Tyler School of Arts in 1988 and subsequently worked as senior Art Director

at Ogilvy & Mather Advertising Company.

Prior to joining DPMG, Mr.

Lu served as Chief Operating Officer for BioTime Asia Limited,

which is a subsidiary of BioTime, Inc.

He is a seasoned

healthcare entrepreneur with extensive operational knowledge and experience in China.

He has been serving as Chairman of the Board

for the Daopei Medical Group, or DPMG, since 2010.

Under his leadership, DPMG has recently expanded its clinical network involving

a state-of-the-art stem cell bank at Wuhan Biolake, three top-ranked private hospitals (located in Beijing, Shanghai, and Hebei),

specialty hematology laboratories, as well as a hematology research institute, with more than 100 partnering and collaborating

hospitals in China.

DPMG was founded by Professor Daopei Lu, a renowned hematologist pioneering in hematopoietic stem cell transplant

and member of the Academy of Engineering in China.

Wenzhao Lu received a Bachelor of Arts from Temple University Tyler School

of Arts in 1988 and subsequently worked as senior Art Director at Ogilvy & Mather Advertising Company.

Prior to joining DPMG,

Lu served as Chief Operating Officer for BioTime Asia Limited, which is a subsidiary of BioTime, Inc.

(NYSE American:

BTX) in 2009.

Lu is qualified to serve as a director because of his

extensive operational knowledge of, and executive level management experience in, the healthcare industry.

Jin, Chief Executive Officer, President and Director

David Jin, MD, PhD, is our Chief Executive Officer, President and a member of the Board of Directors.

Lu is qualified to serve as a director because of his extensive operational knowledge of, and executive level management

experience in, the healthcare industry.

David Jin, Chief Executive Officer, President and Director

David Jin, MD, PhD, is our Chief Executive Officer, President

and a member of the Board of Directors.

From 2009 to 2017, Dr.

has served as the Chief Medical Officer of BioTime, Inc.

(NYSE American:

BTX), a clinical stage regenerative medicine company

with a focus on pluripotent stem cell technology.

Jin also acts as a senior translational clinician-scientist at the Howard

Hughes Medical Institute and the Ansary Stem Cell Center at Weill Cornell Medical College of Cornell University.

current endeavors, Dr.

Jin was Chief Consultant/Advisor for various biotech/pharmaceutical companies regarding hematology, oncology,

immunotherapy and stem cell-based technology development.

Jin has been Principle Investigator in more than 15 pre-clinical

and clinical trials, as well as author/co-author of over 80 peer-reviewed scientific abstracts, articles, reviews, and book chapters.

Jin studied medicine at SUNY Downstate College of Medicine in Brooklyn, New York.

He received his clinical training and subsequent

faculty tenure at the New York-Presbyterian Hospital (the teaching hospital for both Cornell and Columbia Universities) in the

areas of internal medicine, hematology, and clinical oncology.

Jin was honored as Top Chief Medical Officer by ExecRank in

2012, as well as recognized by Leading Physicians of the World in 2015.

Jin is qualified to serve as a director because of

his role with us, and his extensive operational knowledge of, and executive level management experience in, the healthcare industry.

Li, Chief Operating Officer and Secretary

Meng Li is our Chief Operating Officer and Secretary and a former member of the Board of Directors.

Li has over 15 years of

executive experience in international marketing, branding, communications, and media investment consultancy.

Managing Director at Maxus/GroupM (a WPP Group company) where she was responsible for business P&L and corporate management

from 2006 to 2015.

Jin has served as the Chief Medical Officer of BioTime, Inc.

BTX), a clinical stage regenerative medicine company with a focus on pluripotent stem cell technology.

acts as a senior translational clinician-scientist at the Howard Hughes Medical Institute and the Ansary Stem Cell Center at Weill

Cornell Medical College of Cornell University.

Prior to his current endeavors, Dr.

Jin was Chief Consultant/Advisor for various

biotech/pharmaceutical companies regarding hematology, oncology, immunotherapy and stem cell-based technology development.

Jin has been Principle Investigator in more than 15 pre-clinical and clinical trials, as well as author/co-author of over 80 peer-reviewed

scientific abstracts, articles, reviews, and book chapters.

Jin studied medicine at SUNY Downstate College of Medicine in

Brooklyn, New York.

He received his clinical training and subsequent faculty tenure at the New York-Presbyterian Hospital (the

teaching hospital for both Cornell and Columbia Universities) in the areas of internal medicine, hematology, and clinical oncology.

Jin was honored as Top Chief Medical Officer by ExecRank in 2012, as well as recognized by Leading Physicians of the World

Jin is qualified to serve as a director because of his role with us, and his extensive operational knowledge of,

and executive level management experience in, the healthcare industry.

Meng Li, Chief Operating Officer and Secretary

Meng Li is our Chief Operating Officer and Secretary and

a former member of the Board of Directors.

Li has over 15 years of executive experience in international marketing, branding,

communications, and media investment consultancy.

Li served as Managing Director at Maxus/GroupM (a WPP Group company) where

she was responsible for business P&L and corporate management from 2006 to 2015.

Prior to joining Maxus/Group M, Ms.

Li worked for Zenith Media (a Publicis Group company) from 2000 to 2006

as Senior Manager.

Li received a Bachelor of Arts in International Economic Law from Dalian Maritime University in China.

Ingargiola, Chief Financial Officer

Ingargiola is our Chief Financial Officer.

Ingargiola graduated in 1989 from Boston University with a Bachelor’s degree

in Business Administration and a concentration in Finance.

In 1996, she received her MBA in Health Administration from the University

of South Florida.

Ingargiola joined Boston Capital Partners as an Investment Advisor in their Limited Partnership

In this capacity, she worked with investors and partners to report investment results, file tax forms, and recommend

Ingargiola joined MetLife Insurance Company as a Budget and Expense Manager.

In this capacity she managed

a $30 million annual budget.

Her responsibilities included budget implementation, expense and variance analysis and financial

From 2007 through 2016, Ms.

Ingargiola served as the Chief Financial Officer at MagneGas Corporation (Nasdaq:

and continues to serve as a director.

Ingargiola serves as the Audit Committee Chair of several companies including Electrameccanica

Vehicles Corp.

(NASDAQ:SOLO)).

for Zenith Media (a Publicis Group company) from 2000 to 2006 as Senior Manager.

Li received a Bachelor of Arts in International

Economic Law from Dalian Maritime University in China.

Luisa Ingargiola, Chief Financial Officer

Luisa Ingargiola is

our Chief Financial Officer.

Ms Ingargiola has significant experience serving as Chief Financial Officer or Audit Chair for multiple

NASDAQ and NYSE companies.

She currently serves as Director and Audit Chair for several public companies including ElectraMeccanica

(NASDAQ:SOLO), AgEagle (NYSE:UAVS), Siyata Mobile (NASDAQ:SYTA) and Progress Acquisition Corporation (NASDAQ:PGRWU).

through 2016, Ms.

Ingargiola served as the Chief Financial Officer and then Director at MagneGas Corporation (Nasdaq:

Ingargiola held various roles as Budget Director and Investment Analyst in several private companies.

graduated in 1989 from Boston University with a Bachelor’s degree in Business Administration and a concentration in Finance.

In 1996, she received her MBA in Health Administration from the University of South Florida.

Ingargiola is qualified to serve

as a Chief Financial Officer because of her extensive knowledge corporate governance, regulatory requirements, executive leadership

and knowledge of, and experience in, financing and M&A transactions.

Sanders, Director

Sanders is a member of the Board of Directors.

Since January 2017, Mr.

Sanders has been Of Counsel to the law firm of Ortoli

Rosenstadt LLP.

January 2017, Mr.

Sanders has been Of Counsel to the law firm of Ortoli Rosenstadt LLP.

From July 2007 until January 2017, Mr.

Sanders was a Senior Partner of Ortoli Rosenstadt LLP.

From January 1,

2004 until June 30, 2007, he was Of Counsel to the law firm of Rubin, Bailin, Ortoli, LLP.

From January 1, 2001 to December 31,

2003, he was Counsel to the law firm of Spitzer & Feldman PC.

Sanders also serves as a Director of Helijet International,

From January 1, 2004 until June 30, 2007, he was Of Counsel to the law

firm of Rubin, Bailin, Ortoli, LLP.

From January 1, 2001 to December 31, 2003, he was Counsel to the law firm of Spitzer &

Sanders also serves as a Director of Helijet International, Inc.

and Electrameccanica Vehicles Corp.

(OTCQB:ECCTF).

Additionally, he has been a director at the American Academy of Dramatic

Arts since October 2013 and has been a director of the Bay Street Theater since February 2015.

Sanders received his JD from

Cornell University and his BBA from The City College of New York.

Sanders is qualified to serve as a director because of his

corporate, securities and international law experience, including working with companies in the life sciences industry.

Lu is a member of the Board of Directors.

Lu has more than 20 years of experience in investment banking and equity investment

Additionally, he has been a director at the American Academy of Dramatic Arts since October 2013 and has been a director of the

Bay Street Theater since February 2015.

Sanders received his JD from Cornell University and his BBA from The City College

Sanders is qualified to serve as a director because of his corporate, securities and international law experience,

including working with companies in the life sciences industry.

Yancen Lu, Director

Yancen Lu is a member

of the Board of Directors.

Lu has more than 20 years of experience in investment banking and equity investment management.

He is the Founder and CEO of PagodaTree Partners, a healthcare PE fund.

Before this, Mr.Lu was the Managing Director

of Fountain Vest Partners.

Before this, Mr.

Lu was the Managing Director of FountainVest

In addition to his professionalism in securities, investment and capital management, Mr.

Lu has a special

focus and comprehensive understanding of the global medical and healthcare industry.

He served as Director of leading healthcare

corporations including Sino Hospital Investment Corporation (Hong Kong), Chang’an Hospital (the largest private hospital

in Northwest China), and DIH Medical Technologies.

Lu received Bachelor’s and Master’s degrees in Engineering

Economics from Tianjin University.

Lu is qualified to serve as a director because of his extensive operational knowledge of,

and executive level management experience in, the healthcare industry.

Lu has a special focus and comprehensive

understanding of the global medical and healthcare industry.

He served as Director of leading healthcare corporations including

Sino Hospital Investment Corporation (Hong Kong), Chang’an Hospital (the largest private hospital in Northwest China), and

DIH Medical Technologies.

Lu received Bachelor’s and Master’s degrees in Engineering Economics from Tianjin University.

Lu is qualified to serve as a director because of his extensive operational knowledge of, and executive level management experience

in, the healthcare industry.

Tauzin II, Director

Tauzin II is a member of the Board of Directors.

From December 2010 until March 1, 2014, Congressman Tauzin served as Special

Legislative Counsel to Alston & Bird LLP.

From December 2004 to June 2010, Congressman Tauzin was President and Chief Executive

Officer of the Pharmaceutical Research and Manufacturers of America, a trade group that serves as one of the pharmaceutical industry’s

II is a member of the Board of Directors.

From December 2010 until March 1, 2014, Congressman Tauzin served as Special Legislative

Counsel to Alston & Bird LLP.

From December 2004 to June 2010, Congressman Tauzin was President and Chief Executive Officer

of the Pharmaceutical Research and Manufacturers of America, a trade group that serves as one of the pharmaceutical industry’s

top lobbying groups.

1 unchanged sentence

House of Representatives, representing Louisiana’s 3rd Congressional

District since being first sworn in in 1980.

From January 2001 through February 2004, Congressman Tauzin served as Chairman of

the House Committee on Energy and Commerce.

He also served as a senior member of the House Resources Committee and Deputy Majority

Prior to serving as a member of Congress, Congressman Tauzin was a member of the Louisiana State Legislature, where he served

as Chairman of the House Natural Resources Committee and Chief Administration Floor Leader.

He currently serves as a director

of LHC Group, Inc., publicly-traded companies, and Lenitiv Scientific, LLC a privately-held companies.

Congressman Tauzin received

a Bachelor of Arts Degree from Nicholls State University and a Juris Doctor degree from Louisiana State University.

Tauzin is qualified to serve as a director because of his extensive knowledge of the pharmaceutical industry and his experience

as a director of several publicly-traded and privately-held companies.

From January 2001 through February 2004, Congressman Tauzin served as Chairman of the House Committee on Energy and

He also served as a senior member of the House Resources Committee and Deputy Majority Whip.

Prior to serving as a member

of Congress, Congressman Tauzin was a member of the Louisiana State Legislature, where he served as Chairman of the House Natural

Resources Committee and Chief Administration Floor Leader.

He currently serves as lead independent director of LHC Group, a publicly

traded provider of quality home health care.

Congressman Tauzin received a Bachelor of Arts Degree from Nicholls State University

and a Juris Doctor degree from Louisiana State University.

Congressman Tauzin is qualified to serve as a director because of his

extensive knowledge of the pharmaceutical industry and his experience as a director of several publicly-traded and privately-held

Stilley, III, Director

Stilley is a member of the Board of Directors.

Stilley has been the chief executive officer and member of the board of

directors of Adial Pharmaceuticals, Inc.

is a member of the Board of Directors.

Stilley has been the chief executive officer and member of the board of directors of

Adial Pharmaceuticals, Inc.

since December 2010.

From August 2008 until December 2010, he was the vice president,

business development and strategic projects at Clinical Data, Inc.

From August 2008 until December 2010, he was the vice president, business development

and strategic projects at Clinical Data, Inc.

From February 2002, Mr.

Stilley was the COO

and CFO of Adenosine Therapeutics, LLC until certain assets of Adenosine Therapeutics were acquired by Clinical Data, Inc.

Stilley has advised both public and private companies on financing and M&A transactions, has been the interim

CFO of a public company, the interim Chief Business Officer of Diffusion Pharmaceuticals from September 2015 through December

2015, and the COO and CFO of a number of private companies.

Stilley was the COO and CFO of Adenosine Therapeutics,

LLC until certain assets of Adenosine Therapeutics were acquired by Clinical Data, Inc.

in August 2008.

Stilley has advised

both public and private companies on financing and M&A transactions, has been the interim CFO of a public company, the interim

Chief Business Officer and then Advisor for Diffusion Pharmaceuticals from September 2015 through March 2018, and the COO and CFO

of a number of private companies.

Before entering the business community, Mr.

Stilley served as Captain

Stilley served as Captain in the U.S.

Marine Corps.

Stilley has an MBA with honors from the Darden School of Business and a B.S.

in Commerce/Marketing

from the McIntire School of Commerce at the University of Virginia.

He currently serves on the Board of Virginia BIO, the statewide

biotechnology organization.

Stilley is qualified to serve as a director because of his extensive knowledge of the biotechnology

industry, significant executive leadership and operational experience, and knowledge of, and experience in, financing and M&A

transactions.

in Commerce/Marketing from the McIntire School

of Commerce at the University of Virginia.

He currently serves on the Advisory Board of Virginia BIO, the statewide biotechnology

organization.

Stilley is qualified to serve as a director because of his extensive knowledge of the biotechnology industry,

significant executive leadership and operational experience, and knowledge of, and experience in, financing and M&A transactions.

Tevi Troy, Director

Troy is a member of the Board of Directors.

Since February 2018, Dr.

Troy has served as Vice President of Public Policy for Juul

From 2014 to 2018, Dr.

Troy was the founder and CEO of the American Health Policy Institute.

Before that, Dr.

Troy was Senior

Fellow at Hudson Institute, where he remains an Adjunct Fellow.

Tevi Troy is a member of the Board of Directors and a former

Deputy Secretary of the U.S.

Department of Health and Human Services.

Troy has previously been the founder

and CEO of the American Health Policy Institute and a Senior Fellow at Hudson Institute, where he remains an Adjunct Fellow.

On August 3, 2007, Dr.

Troy was unanimously confirmed by the U.S.

Senate as the Deputy Secretary of the U.S.

Department of Health and Human Services.

As Deputy Secretary, Dr.

Troy was the chief

operating officer of the largest civilian department in the federal government, with a budget of $716 billion and over 67,000

Troy has extensive White House experience, having served in several high-level positions over a five-year period,

culminating in his service as Deputy Assistant and then Acting Assistant to the President for Domestic Policy.

Troy has held

high-level positions on Capitol Hill as well.

Senate as the Deputy Secretary of HHS.

As Deputy Secretary,

Troy was the chief operating officer of the largest civilian department in the federal government, with a budget of $716 billion

and over 67,000 employees.

Troy has extensive White House experience, having served in several high-level positions over a

five-year period, culminating in his service as Deputy Assistant and then Acting Assistant to the President for Domestic Policy.

Troy has held high-level positions on Capitol Hill as well.

From 1998 to 2000, Dr.

Troy served as the Policy Director for Senator John Ashcroft.

Troy served as the Policy Director for Senator

John Ashcroft.

From 1996 to 1998, Dr.

Troy was Senior Domestic Policy Adviser and later Domestic Policy Director for the House Policy Committee,

chaired by Christopher Cox.

Troy was Senior Domestic Policy Adviser and later Domestic Policy Director for the House

Policy Committee, chaired by Christopher Cox.

In addition to his senior level government work and health care expertise, Dr.

Troy is also a best-selling

presidential historian and the author of five books.

is also a best-selling presidential historian and the author of five books, including, most recently, "Fight House:

Rivalries in the White House from Truman to Trump,"

which the Wall Street Journal listed as one of the top political

books of 2020.

Troy’s many other affiliations include:

contributing editor for

Washingtonian magazine;

member of the publication committee of National Affairs;

member of the Board of Fellows of the Jewish

Policy Center;

a Senior Fellow at the Potomac Institute;

contributing editor for Washingtonian magazine;

member of the

publication committee of National Affairs;

member of the Board of Fellows of the Jewish Policy Center;

a Senior Fellow at the Potomac

and a member of the Bipartisan Commission on Biodefense.

in Industrial and Labor Relations from Cornell University and an M.A and Ph.D.

in American Civilization from the University

of Texas at Austin.

Troy is qualified to serve as a director because of his extensive knowledge of the healthcare industry

and his significant leadership experience.

Troy has a B.S.

in Industrial and Labor Relations from

Cornell University and an M.A and Ph.D.

in American Civilization from the University of Texas at Austin.

Troy is qualified

to serve as a director because of his extensive knowledge of the healthcare industry and his significant leadership experience.

Yue “Charles”

Li has about 20 years of experience in M&A and capital markets in China and the U.S.

Li currently is a Managing Director

at PagodaTree Partners, a private equity company with a focus on healthcare in Beijing.

Prior to PagodaTree, he was a senior executive

at a major conglomerate in China where he successfully closed $2 billion M&A transactions in healthcare and insurance areas.

Li has about 20 years of experience in M&A and capital

markets in China and the U.S.

Li currently is a Managing Director at PagodaTree Partners, a private equity company with a

focus on healthcare in Beijing.

Prior to PagodaTree, he was a senior executive at a major conglomerate in China where he successfully

closed $2 billion M&A transactions in healthcare and insurance areas.

Previously, Mr.

Li spent 8 years in Deloitte, as a director of financial advisory services in Beijing and capital markets in New

His key clients included Merrill Lynch, Blackrock, KKR etc.

Li spent 8 years in Deloitte, as a director

of financial advisory services in Beijing and capital markets in New York.

His key clients included Merrill Lynch, Blackrock,

In his early career, Mr.

Li served for top tier financial institutions

such as Credit Suisse and Fannie Mae, responsible for asset allocation strategy and risk management for multibillion USD portfolios.

Li received Master’s degree from the Olin School of Business at Washington University in 2000 and a Bachelor of Engineering

from Tianjin University in 1996.

He is a CFA charter holder.

Li is qualified to serve as a director because of his extensive

investment and executive level management experience.

business and affairs are organized under the direction of our board of directors, which currently consists of nine members.

primary responsibility of our board of directors is to provide oversight, strategic guidance, counseling, and direction to our

management team.

Our board of directors meets on a regular basis and additionally as required.

majority of the authorized number of directors constitutes a quorum of the Board of Directors for the transaction of business.

The directors must be present at the meeting to constitute a quorum.

However, any action required or permitted to be taken by

the Board of Directors may be taken without a meeting if all members of the Board of Directors individually or collectively consent

in writing to the action.

board of directors currently consists of nine members.

Li served for top tier financial institutions such as Credit Suisse and Fannie Mae, responsible

for asset allocation strategy and risk management for multibillion USD portfolios.

Li received Master’s degree from

the Olin School of Business at Washington University in 2000 and a Bachelor of Engineering from Tianjin University in 1996.

is a CFA charter holder.

Li is qualified to serve as a director because of his extensive investment and executive level management

Board Composition

Our business and affairs are organized under the direction of

our board of directors, which currently consists of nine members.

The primary responsibility of our board of directors is to provide

oversight, strategic guidance, counseling, and direction to our management team.

Our board of directors meets on a regular basis

and additionally as required.

A majority of the authorized number of directors constitutes

a quorum of the Board of Directors for the transaction of business.

The directors must be present at the meeting to constitute

However, any action required or permitted to be taken by the Board of Directors may be taken without a meeting if all

members of the Board of Directors individually or collectively consent in writing to the action.

Director Independence

Our board of directors currently consists

of nine members.

Our board of directors has determined that Yancen Lu, William B.

III, Steven A.

Sanders, Tevi Troy and Yue “Charles”

Li, qualify as independent directors in accordance with the Nasdaq

Capital Market (“Nasdaq”) listing requirements.

Stilley, III, Steven A.

Sanders, Tevi Troy

and Yue “Charles”

Li, qualify as independent directors in accordance with the Nasdaq Capital Market (“Nasdaq”)

listing requirements.

Wenzhao Lu, Dr.

Jin, Meng Li and Wilbert Tauzin II are not considered

Nasdaq’s independence definition includes a series of objective tests, such as that the director is not, and

has not been for at least three (3) years, one of our employees and that neither the director nor any of his or her

family members has engaged in various types of business dealings with us.

In addition, as required by Nasdaq rules, our board

of directors has made a subjective determination as to each independent director that no relationships exist that, in the opinion

of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a

In making these determinations, our board of directors reviewed and discussed information provided by the directors

and us with regard to each director’s business and personal activities and relationships as they may relate to us and our

There are no family relationships among any of our directors or executive officers.

required under Nasdaq rules and regulations, our independent directors meet in regularly scheduled executive sessions at which

only independent directors are present.

Relationships

are no family relationships among our directors or executive officers.

Leadership Structure and Role in Risk Oversight

Board of Directors, or the Board, is primarily responsible for overseeing our risk management processes on behalf of our company.

The Board receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate

regarding our company’s assessment of risks.

In addition, the Board focuses on the most significant risks facing our company

and our company’s general risk management strategy, and also ensures that risks undertaken by our company are consistent

with the board’s appetite for risk.

While the Board oversees our company’s risk management, management is responsible

for day-to-day risk management processes.

We believe this division of responsibilities is the most effective approach for addressing

the risks facing our company and that our board leadership structure supports this approach.

in Certain Legal Proceedings

our knowledge, our directors and executive officers have not been involved in any of the following events during the past ten

any bankruptcy petition

filed by or against such person or any business of which such person was a general partner or executive officer either at

the time of the bankruptcy or within two years prior to that time;

any conviction in

a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

being subject to

any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently

or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities

or to be associated with any person practicing in banking or securities activities;

being found by a

court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a

Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

being subject of,

or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed,

suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation,

any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail

or wire fraud or fraud in connection with any business entity;

being subject of

or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization,

any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over

its members or persons associated with a member.

Establishment of Board Committees

and Adoption of Charters

November 2018, the Company established a Nominating and Corporate Governance Committee, a Compensation Committee and an Audit

Committee (collectively, the “Committees”) and approved and adopted charters to govern each of the Committees.

connection with the establishment of the Nominating and Corporate Governance Committee, Compensation Committee and Audit

Committee, the Board of Directors of the Company appointed members to each such committee.

Currently, all three committees

are comprised of at least three (3) directors meeting the requirements set forth in each applicable charter.

The membership of

these three standing committees of the Board of Directors of the Company is as follows:

and Corporate

Jin, Meng Li and Wilbert Tauzin II are not considered independent.

Nasdaq’s independence

definition includes a series of objective tests, such as that the director is not, and has not been for at least three (3) years,

one of our employees and that neither the director nor any of his or her family members has engaged in various types of business

dealings with us.

In addition, as required by Nasdaq rules, our board of directors has made a subjective determination as to each

independent director that no relationships exist that, in the opinion of our board of directors, would interfere with the exercise

of independent judgment in carrying out the responsibilities of a director.

In making these determinations, our board of directors

reviewed and discussed information provided by the directors and us with regard to each director’s business and personal

activities and relationships as they may relate to us and our management.

There are no family relationships among any of our directors

or executive officers.

As required under Nasdaq rules and

regulations, our independent directors meet in regularly scheduled executive sessions at which only independent directors are

Family Relationships

There are no family relationships among our directors or executive

Board Leadership Structure and Role in Risk Oversight

Our Board of Directors, or the Board, is primarily responsible

for overseeing our risk management processes on behalf of our company.

The Board receives and reviews periodic reports from management,

auditors, legal counsel, and others, as considered appropriate regarding our company’s assessment of risks.

the Board focuses on the most significant risks facing our company and our company’s general risk management strategy, and

also ensures that risks undertaken by our company are consistent with the board’s appetite for risk.

While the Board oversees

our company’s risk management, management is responsible for day-to-day risk management processes.

We believe this division

of responsibilities is the most effective approach for addressing the risks facing our company and that our board leadership structure

supports this approach.

Involvement in Certain Legal Proceedings

To our knowledge, our directors and executive officers have

not been involved in any of the following events during the past ten years:

any bankruptcy petition filed by or against such person

or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within

two years prior to that time;

any conviction in a criminal proceeding or being subject

to a pending criminal proceeding (excluding traffic violations and other minor offenses);

being subject to any order, judgment, or decree, not subsequently

reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise

limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing

in banking or securities activities;

being found by a court of competent jurisdiction in a civil

action, the SEC or the Commodity Futures Trading Commission to have violated a Federal or state securities or commodities

law, and the judgment has not been reversed, suspended, or vacated;

being subject of, or a party to, any Federal or state judicial

or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged

violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial

institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any

business entity;

being subject of or party to any sanction or order, not

subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent

exchange, association, entity or organization that has disciplinary authority over its members or persons associated with

Board Committees

Establishment of Board Committees and Adoption of Charters

In November 2018, the Company established a Nominating and Corporate

Governance Committee, a Compensation Committee and an Audit Committee (collectively, the “Committees”) and approved

and adopted charters to govern each of the Committees.

In connection with the establishment of the Nominating

and Corporate Governance Committee, Compensation Committee and Audit Committee, the Board of Directors of the Company appointed

members to each such committee.

Currently, all three committees are comprised of at least three (3) directors meeting the requirements

set forth in each applicable charter.

The membership of these three standing committees of the Board of Directors of the

Company is as follows:

Nominating and Corporate

Governance Committee

Compensation Committee

Audit Committee

Steven Sanders (Chairman)

Yancen Lu (Chairman)

William Stilley

William Stilley (Chairman)

Steven Sanders

1 unchanged sentence

Steve Sanders

Nominating and Corporate Governance

board of directors has determined that each of the members of the Nominating and Governance Committee (the “Governance Committee”)

are “independent directors”

as defined by Nasdaq.

The Governance Committee generally responsible for recommending

to our full board of directors’

policies, procedures, and practices designed to help ensure that our corporate governance

policies, procedures, and practices continue to assist the board of directors and our management in effectively and efficiently

promoting the best interests of our stockholders.

The Governance Committee is also responsible for selecting and recommending

for approval by our board of directors and our stockholders a slate of director nominees for election at each of our annual meetings

of stockholders, and otherwise for determining the board committee members and chairmen, subject to board of directors ratification,

as well as recommending to the board director nominees to fill vacancies or new positions on the board of directors or its committees

that may occur or be created from time to time, all in accordance with our bylaws and applicable law.

The Governance Committee’s

principal functions include:

developing and maintaining

our corporate governance policy guidelines;

developing and maintaining

our codes of conduct and ethics;

overseeing the interpretation

and enforcement of our Code of Conduct and our Code of Ethics for Chief Executive Officer and Senior Financial and Accounting

evaluating the performance

of our board of directors, its committees, and committee chairmen and our directors;

selecting and recommending

a slate of director nominees for election at each of our annual meetings of the stockholders and recommending to the board

director nominees to fill vacancies or new positions on the board of directors or its committees that may occur from time

2019, the Nominating and Corporate Governance Committee meet one time.

The Governance Committee is governed by a written charter

approved by our board of directors.

A copy of the Governance Committee’s charter is posted on the Company’s website

at www.avalon-globocare.com in the “Investors”

Nominating and Corporate Governance Committee

Our board of directors has determined that each of the members

of the Nominating and Governance Committee (the “Governance Committee”) are “independent directors”

defined by Nasdaq.

The Governance Committee generally responsible for recommending to our full board of directors’

procedures, and practices designed to help ensure that our corporate governance policies, procedures, and practices continue to

assist the board of directors and our management in effectively and efficiently promoting the best interests of our stockholders.

The Governance Committee is also responsible for selecting and recommending for approval by our board of directors and our stockholders

a slate of director nominees for election at each of our annual meetings of stockholders, and otherwise for determining the board

committee members and chairmen, subject to board of directors ratification, as well as recommending to the board director nominees

to fill vacancies or new positions on the board of directors or its committees that may occur or be created from time to time,

all in accordance with our bylaws and applicable law.

The Governance Committee’s principal functions include:

developing and maintaining our corporate governance policy

developing and maintaining our codes of conduct and ethics;

overseeing the interpretation and enforcement of our Code

of Conduct and our Code of Ethics for Chief Executive Officer and Senior Financial and Accounting Officers;

evaluating the performance of our board of directors, its

committees, and committee chairmen and our directors;

selecting and recommending a slate of director nominees

for election at each of our annual meetings of the stockholders and recommending to the board director nominees to fill vacancies

or new positions on the board of directors or its committees that may occur from time to time.

During 2020, the Nominating and Corporate Governance Committee

did not meet.

The Governance Committee is governed by a written charter approved by our board of directors.

A copy of the Governance

Committee’s charter is posted on the Company’s website at www.avalon-globocare.com in the “Investors”

section of the website.

In identifying potential independent

board of directors’

candidates with significant senior-level professional experience, the Governance Committee solicits

candidates from the board of directors, senior management and others and may engage a search firm in the process.

The Governance

Committee reviews and narrows the list of candidates and interviews potential nominees.

The final candidate is also introduced

and interviewed by the board of directors and the lead director if one has been appointed.

In general, in considering whether

to recommend any particular candidate for inclusion in our board of directors’

slate of recommended director nominees, the

Governance Committee will apply the criteria set forth in our corporate governance guidelines.

These criteria include the candidate’s

integrity, business acumen, commitment to understanding our business and industry, experience, conflicts of interest and the ability

to act in the interests of our stockholders.

Further, specific consideration is given to, among other things, diversity of background

and experience that a candidate would bring to our board of directors.

The Governance Committee does not assign specific weights

to particular criteria and no particular criterion is a prerequisite for each prospective nominee.

We believe that the backgrounds

and qualifications of our directors, considered as a group, should provide a composite mix of experience, knowledge and abilities

that will allow our board of directors to fulfill its responsibilities.

Stockholders may recommend individuals to the Governance

Committee for consideration as potential director candidates by submitting their names, together with appropriate biographical

information and background materials to our Governance Committee.

Assuming that appropriate biographical and background material

has been provided on a timely basis, the Governance Committee will evaluate stockholder recommended candidates by following substantially

the same process, and applying substantially the same criteria, as it follows for candidates submitted by others.

have a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange

Act of 1934, as amended (the “Exchange Act”).

Our board of directors has determined that the members are all “independent

directors”

as defined by the rules of Nasdaq applicable to members of an audit committee and Rule 10A-3(b)(i) under the

Exchange Act.

In identifying potential independent board of directors’

candidates with significant senior-level

professional experience, the Governance Committee solicits candidates from the board of directors, senior management and others

and may engage a search firm in the process.

The Governance Committee reviews and narrows the list of candidates and interviews

potential nominees.

The final candidate is also introduced and interviewed by the board of directors and the lead director if

one has been appointed.

In general, in considering whether to recommend any particular candidate for inclusion in our board of

directors’

slate of recommended director nominees, the Governance Committee will apply the criteria set forth in our corporate

governance guidelines.

These criteria include the candidate’s integrity, business acumen, commitment to understanding our

business and industry, experience, conflicts of interest and the ability to act in the interests of our stockholders.

specific consideration is given to, among other things, diversity of background and experience that a candidate would bring to

our board of directors.

The Governance Committee does not assign specific weights to particular criteria and no particular criterion

is a prerequisite for each prospective nominee.

We believe that the backgrounds and qualifications of our directors, considered

as a group, should provide a composite mix of experience, knowledge and abilities that will allow our board of directors to fulfill

its responsibilities.

Stockholders may recommend individuals to the Governance Committee for consideration as potential director

candidates by submitting their names, together with appropriate biographical information and background materials to our Governance

Assuming that appropriate biographical and background material has been provided on a timely basis, the Governance

Committee will evaluate stockholder recommended candidates by following substantially the same process, and applying substantially

the same criteria, as it follows for candidates submitted by others.

Audit Committee

We have a separately-designated standing Audit Committee established

in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

board of directors has determined that the members are all “independent directors”

as defined by the rules of Nasdaq

applicable to members of an audit committee and Rule 10A-3(b)(i) under the Exchange Act.

In addition, Mr.

Stilley is an “audit committee financial expert”

as defined in Item 407(d)(5) of Regulation

S-K and demonstrates “financial sophistication”

Stilley is an “audit

committee financial expert”

as defined in Item 407(d)(5) of Regulation S-K and demonstrates “financial sophistication”

as defined by the rules of The NASDAQ Stock Market, Inc.

Committee is appointed by our board of directors to assist our board of directors in monitoring (1) the integrity of our financial

statements, (2) our compliance with legal and regulatory requirements, and (3) the independence and performance of our internal

and external auditors.

The Audit Committee’s principal functions include:

reviewing our annual

audited financial statements with management and our independent auditors, including major issues regarding accounting and

auditing principles and practices and financial reporting that could significantly affect our financial statements;

reviewing our quarterly

financial statements with management and our independent auditor prior to the filing of our Quarterly Reports on Form 10-Q,

including the results of the independent auditors’

The Audit Committee is appointed by our board of directors to assist

our board of directors in monitoring (1) the integrity of our financial statements, (2) our compliance with legal and regulatory

requirements, and (3) the independence and performance of our internal and external auditors.

The Audit Committee’s principal

functions include:

reviewing our annual audited financial statements with management

and our independent auditors, including major issues regarding accounting and auditing principles and practices and financial

reporting that could significantly affect our financial statements;

reviewing our quarterly financial statements with management and our

independent auditor prior to the filing of our Quarterly Reports on Form 10-Q, including the results of the independent auditors’

reviews of the quarterly financial statements;

recommending to

the board of directors the appointment of, and continued evaluation of the performance of, our independent auditor;

approving the fees

to be paid to our independent auditor for audit services and approving the retention of our independent auditor for non-audit

services and all fees for such services;

reviewing periodic

reports from our independent auditor regarding our auditor’s independence, including discussion of such reports with

reviewing the adequacy

of our overall control environment, including internal financial controls and disclosure controls and procedures;

reviewing with our

management and legal counsel legal matters that may have a material impact on our financial statements or our compliance policies

and any material reports or inquiries received from regulators or governmental agencies.

2019, the audit committee met four times.

A copy of the Audit Committee’s charter is posted on the Company’s website

at www.avalon-globocare.com in the “Investors”

recommending to the board of directors the appointment of, and continued

evaluation of the performance of, our independent auditor;

approving the fees to be paid to our independent auditor for audit services

and approving the retention of our independent auditor for non-audit services and all fees for such services;

reviewing periodic reports from our independent auditor regarding our

auditor’s independence, including discussion of such reports with the auditor;

reviewing the adequacy of our overall control environment, including

internal financial controls and disclosure controls and procedures;

reviewing with our management and legal counsel legal matters that may

have a material impact on our financial statements or our compliance policies and any material reports or inquiries received

from regulators or governmental agencies.

During 2020, the audit committee met four times.

A copy of the

Audit Committee’s charter is posted on the Company’s website at www.avalon-globocare.com in the “Investors”

section of the website.

may be held from time to time to consider matters for which approval of our Board of Directors is desirable or is required by

Meetings may be held from time to time to consider matters for

which approval of our Board of Directors is desirable or is required by law.

Compensation Committee

compensation committee consists of Yancen Lu, Steven Sanders and Tevi Troy.

Our board of directors has determined that each of

the members are an “independent director”

Our compensation

committee consists of Yancen Lu, Steven Sanders and Tevi Troy.

Our board of directors has determined that each of the members

are an “independent director”

as defined by the Nasdaq rules applicable to members of a compensation committee.

The Compensation Committee is responsible for establishing the compensation of our senior management, including salaries, bonuses,

termination arrangements, and other executive officer benefits as well as director compensation.

The Compensation Committee also

administers our equity incentive plans.

During the year ended December 31, 2019, the Compensation Committee met three times.

Compensation Committee is governed by a written charter approved by the board of directors.

A copy of the Compensation Committee’s

charter is posted on the Company’s website at www.avalon-globocare.com in the “Investors”

section of the

The Compensation Committee works with the Chairman of the Board and Chief Executive Officer and reviews and approves

compensation decisions regarding senior management including compensation levels and equity incentive awards.

The Compensation Committee is responsible for establishing the compensation of our senior management, including salaries,

bonuses, termination arrangements, and other executive officer benefits as well as director compensation.

The Compensation

Committee also approves employment and compensation agreements with our key personnel and directors.

The Compensation Committee

has the power and authority to conduct or authorize studies, retain independent consultants, accountants or others, and obtain

unrestricted access to management, our internal auditors, human resources and accounting employees and all information relevant

to its responsibilities.

responsibilities of the Compensation Committee, as stated in its charter, include the following:

review and approve

the Company’s compensation guidelines and structure;

review and approve

on an annual basis the corporate goals and objectives with respect to compensation for the Chief Executive Officer;

review and approve

on an annual basis the evaluation process and compensation structure for the Company’s other officers, including salary,

bonus, incentive and equity compensation;

periodically review

and make recommendations to the Board of Directors regarding the compensation of non-management directors.

Compensation Committee is responsible for developing the executive compensation philosophy and reviewing and recommending to the

Board of Directors for approval all compensation policies and compensation programs for the executive team.

Committee Interlocks and Insider Participation

of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation

committee of any entity that has one or more executive officers on our board of directors or compensation committee.

Committee also administers our equity incentive plans.

During the year ended December 31, 2020, the Compensation Committee

met one time.

The Compensation Committee is governed by a written charter approved by the board of directors.

A copy of the

Compensation Committee’s charter is posted on the Company’s website at www.avalon-globocare.com in the

“Investors”

section of the website.

The Compensation Committee works with the Chairman of the Board and Chief

Executive Officer and reviews and approves compensation decisions regarding senior management including compensation levels

and equity incentive awards.

The Compensation Committee also approves employment and compensation agreements with our key

personnel and directors.

The Compensation Committee has the power and authority to conduct or authorize studies, retain

independent consultants, accountants or others, and obtain unrestricted access to management, our internal auditors, human

resources and accounting employees and all information relevant to its responsibilities.

The responsibilities of the Compensation Committee, as stated

in its charter, include the following:

review and approve the Company’s compensation guidelines

and structure;

review and approve on an annual basis the corporate goals and objectives

with respect to compensation for the Chief Executive Officer;

review and approve on an annual basis the evaluation process

and compensation structure for the Company’s other officers, including salary, bonus, incentive and equity compensation;

periodically review and make recommendations to the Board of Directors

regarding the compensation of non-management directors.

The Compensation Committee is responsible for developing the

executive compensation philosophy and reviewing and recommending to the Board of Directors for approval all compensation policies

and compensation programs for the executive team.

Compensation Committee Interlocks and Insider Participation

None of our executive officers currently

serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has

one or more executive officers on our board of directors or compensation committee.

Code of Ethics

have a code of ethics that applies to all of our employees, including our principal executive officer, principal financial officer

and principal accounting officer, and the Board.

A copy of this code is available in our employee handbook and under the “About

We have a code of ethics that applies to all of our employees,

including our principal executive officer, principal financial officer and principal accounting officer, and the Board.

of this code is available in our employee handbook and under the “About Us –

Code of Conduct”

section of our website at www.avalon-globocare.com.

In addition, we intend to post on our website

all disclosures that are required by law or the listing standards of our applicable trading market concerning any amendments to,

or waivers from, any provision of the code.

The reference to our website address does not constitute incorporation by reference

of the information contained at or available through our website, and you should not consider it to be a part of this report.

Indemnification

of Directors and Officers

directors and executive officers are indemnified as provided by the Delaware law and our Bylaws.

These provisions state that our

directors may cause us to indemnify a director or former director against all costs, charges and expenses, including an amount

paid to settle an action or satisfy a judgment, actually and reasonably incurred by him or her as a result of him or her acting

as a director.

The indemnification of costs can include an amount paid to settle an action or satisfy a judgment.

Such indemnification

is at the discretion of our board of directors and is subject to the Securities and Exchange Commission’s policy regarding

indemnification.

as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons

controlling us pursuant to the foregoing provisions, or otherwise.

We have been advised that in the opinion of the Securities

and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

section of our

website at www.avalon-globocare.com.

In addition, we intend to post on our website all disclosures that are required by law or

the listing standards of our applicable trading market concerning any amendments to, or waivers from, any provision of the code.

The reference to our website address does not constitute incorporation by reference of the information contained at or available

through our website, and you should not consider it to be a part of this report.

Indemnification of Directors and Officers

Our directors and executive officers are indemnified as provided

by the Delaware law and our Bylaws.

These provisions state that our directors may cause us to indemnify a director or former director

against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, actually and reasonably

incurred by him or her as a result of him or her acting as a director.

The indemnification of costs can include an amount paid

to settle an action or satisfy a judgment.

Such indemnification is at the discretion of our board of directors and is subject

to the Securities and Exchange Commission’s policy regarding indemnification.

Insofar as indemnification for liabilities arising under the

Securities Act of 1933 may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions,

or otherwise.

We have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against

public policy as expressed in the Securities Act and is, therefore, unenforceable.

EXECUTIVE COMPENSATION

Officers’

following table sets forth information concerning the annual and long-term compensation earned by or paid to our Chief Executive

Officer and to other persons who served as executive officers as at and/or during the fiscal year ended December 31, 2019 or who

earned compensation exceeding $100,000 during fiscal year 2019 (the “named executive officers”), for services as executive

officers for the last two fiscal years.

Annual Compensation Table

Executive Officers’

The following table sets forth information concerning all cash

and non-cash compensation awarded to, earned by or paid to our Chief Executive Officer, Chief Financial Officer and Chief Operation

Officer during the last two (2) fiscal years.

No other executive officer received compensation in excess of $100,000 during the

fiscal year ended December 31, 2020.

Summary Annual Compensation Table

Incentive Plan

2 unchanged sentences

COO and Secretary

Former Co-CEO of Genexosome

Employment Agreements

December 1, 2016, the Company entered into an Executive Employment Agreement with David Jin, the Company’s CEO and President.

On December 1, 2016, the Company entered into an Executive Employment

Agreement with David Jin, the Company’s CEO and President.

Pursuant to the agreement, Mr.

Jin will be employed as President and Chief Executive Officer of the Company until November 30,

2017 unless earlier terminated pursuant to the terms of the agreement.

Jin will be employed as President

and Chief Executive Officer of the Company until November 30, 2017 unless earlier terminated pursuant to the terms of the agreement.

During the term of the agreement, Mr.

Jin will be entitled

to a base salary at the annualized rate of $200,000 and will be eligible for a discretionary performance bonus, equity awards

and to participate in employee benefits plans as the Company may institute from time to time at the discretion of the Company’s

Board of Directors.

Jin will be entitled to a base salary at the annualized rate of $200,000 and will be eligible

for a discretionary performance bonus, equity awards and to participate in employee benefits plans as the Company may institute

from time to time at the discretion of the Company’s Board of Directors.

Pursuant to the agreement, Mr.

Jin may be terminated for “cause”

Jin may be terminated

for “cause”

as defined and Mr.

Jin may resign

for “good reason”

Jin may resign for “good reason”

In the event Mr.

Jin is terminated without cause or resigns for good reason, the Company

will be required to pay Mr.

Jin all accrued salary and bonuses, reimbursement for all business expenses and Mr.

Jin’s salary

for one year.

Jin is terminated

without cause or resigns for good reason, the Company will be required to pay Mr.

Jin all accrued salary and bonuses, reimbursement

for all business expenses and Mr.

Jin’s salary for one year.

In the event Mr.

Jin is terminated with cause, resigns without good reason, dies or is disabled, the Company will

be required to pay Mr.

Jin all accrued salary and bonuses and reimbursement for all business expenses.

Jin is terminated with cause, resigns without

good reason, dies or is disabled, the Company will be required to pay Mr.

Jin all accrued salary and bonuses and reimbursement

for all business expenses.

Under the agreement Mr.

Jin is subject to confidentiality, non-compete and non-solicitation restrictions.

January 3, 2019, the Company entered into a Letter Agreement with Dr.

Jin, pursuant to which his annual base salary set forth

in his employment agreement was increased to $360,000 effective January 1, 2019.

On January 3, 2019, the Company entered into a Letter Agreement

Jin, pursuant to which his annual base salary set forth in his employment agreement was increased to $360,000 effective

January 1, 2019.

Further, the Company agreed to grant Dr.

stock options to acquire 150,000 shares of common stock at an exercise price of $2.00 per share.

February 20, 2020, the Company entered into a Letter Agreement with Dr.

Jin stock options to acquire 150,000 shares of common stock at an exercise

price of $2.00 per share.

On February 20, 2020, the Company entered into a Letter Agreement

Jin pursuant to which the term of Dr.

Jin’s Executive

Employment Agreement entered between the Company and Dr.

Jin dated December 1, 2016 was extended an additional three years and

Jin a Stock Option to acquire 400,000 shares of common stock at an exercise price of $1.52 per share for a period

of ten years.

January 11, 2017, Avalon Shanghai entered into an Executive Employment Agreement with Meng Li, the Company’s COO and Secretary.

Jin’s Executive Employment Agreement entered between the Company and Dr.

Jin dated December 1, 2016 was extended an additional three years and granted Dr.

Jin a Stock Option to acquire 400,000 shares

of common stock at an exercise price of $1.52 per share for a period of ten years.

On January 11,

2017, Avalon Shanghai entered into an Executive Employment Agreement with Meng Li, the Company’s COO and Secretary.

Pursuant to the agreement, Ms.

Li will be employed as Chief Operating Officer and President of Avalon Shanghai through November

30, 2019, unless earlier terminated pursuant to the terms of the agreement.

Li will be employed as Chief Operating Officer and President of Avalon Shanghai through

November 30, 2019, unless earlier terminated pursuant to the terms of the agreement.

During the term of the agreement, Ms.

Li will be entitled

to a base salary at the annualized rate of $100,000 and will be eligible for a discretionary performance bonus, equity awards

and to participate in employee benefits plans as the Avalon Shanghai may institute from time to time at the discretion of its

Board of Directors.

will be entitled to a base salary at the annualized rate of $100,000 and will be eligible for a discretionary performance

bonus, equity awards and to participate in employee benefits plans as the Avalon Shanghai may institute from time to time at

the discretion of its Board of Directors.

Pursuant to the agreement, Ms.

Li may be terminated for “cause”

as defined and Ms.

Li may resign

for “good reason”

defined and Ms.

Li may resign for “good reason”

In the event Ms.

Li is terminated without cause or resigns for good reason, Avalon Shanghai

will be required to pay Ms.

Li all accrued salary and bonuses, reimbursement for all business expenses and Ms.

Li’s salary

for one year.

Li is terminated without cause or

resigns for good reason, Avalon Shanghai will be required to pay Ms.

Li all accrued salary and bonuses, reimbursement for all

business expenses and Ms.

Li’s salary for one year.

In the event Ms.

Li is terminated with cause, resigns without good reason, dies or is disabled, Avalon Shanghai

will be required to pay Ms.

Li all accrued salary and bonuses and reimbursement for all business expenses.

Under the agreement

Li is subject to confidentiality, non-compete and non-solicitation restrictions.

January 3, 2019, the Company entered into a Letter Agreement with Ms.

Li, pursuant to which her annual base salary set forth in

her employment agreement was increased to $340,000 effective January 1, 2019.

Li is terminated with cause, resigns without good

reason, dies or is disabled, Avalon Shanghai will be required to pay Ms.

Li all accrued salary and bonuses and reimbursement

for all business expenses.

Under the agreement Ms.

Li is subject to confidentiality, non-compete and non-solicitation

restrictions.

On January 3, 2019, the Company entered into a Letter Agreement

Li, pursuant to which her annual base salary set forth in her employment agreement was increased to $340,000 effective

January 1, 2019.

Further, the Company agreed to grant Ms.

options to acquire 150,000 shares of common stock at an exercise price of $2.00 per share.

February 20, 2020, the Company entered into a Letter Agreement with Meng Li pursuant to which the term of Ms.

Li’s Executive

Employment Agreement entered between the Company’

subsidiary and Ms.

Li dated January 11, 2017 was extended an additional

three years and granted Ms.

Li a Stock Option to acquire 300,000 shares of common stock at an exercise price of $1.52 per share

for a period of ten years.

Li stock options to acquire 150,000 shares of common stock at an exercise

price of $2.00 per share.

On February 20, 2020, the Company entered into a Letter Agreement

with Meng Li pursuant to which the term of Ms.

Li’s Executive Employment Agreement entered between the Company’

Li dated January 11, 2017 was extended an additional three years and granted Ms.

Li a Stock Option to acquire 300,000

shares of common stock at an exercise price of $1.52 per share for a period of ten years.

Luisa Ingargiola

February 21, 2017, Ms.

Ingargiola and the Company entered into an Executive Retention Agreement effective February 9, 2017 pursuant

Ingargiola agreed to serve as Chief Financial Officer in consideration of an annual salary of $200,000 to be increased

to $225,000 on the 60-day anniversary.

The Company has agreed to provide a bonus of 50% of her base salary upon the Company timely

filing its annual report on Form 10-K for the year ended December 31, 2017 and the Company raising gross proceeds of $20 million

in debt and/or equity capital and a bonus of 100% of her base salary upon the Company achieving (i) any merger or sale of the

Company or its assets, (ii) the Company achieving adjusted EBITDA of $10 million in a fiscal year, (iii) the Company achieving

a listing on a national exchange and then or subsequently raising gross proceeds in the amount of $10 million.

The Company also

Ingargiola a Stock Option to acquire two million shares of common stock of the Company at an exercise price of $0.50

per share for a period of ten years.

The Stock Options vest in 36 equal tranches commencing on the grant date.

The Company and

On February 21, 2017, Ms.

Ingargiola and the Company entered

into an Executive Retention Agreement effective February 9, 2017 pursuant to which Ms.

Ingargiola agreed to serve as Chief Financial

Officer in consideration of an annual salary of $200,000 to be increased to $225,000 on the 60-day anniversary.

The Company has

agreed to provide a bonus of 50% of her base salary upon the Company timely filing its annual report on Form 10-K for the year

ended December 31, 2017 and the Company raising gross proceeds of $20 million in debt and/or equity capital and a bonus of 100%

of her base salary upon the Company achieving (i) any merger or sale of the Company or its assets, (ii) the Company achieving

adjusted EBITDA of $10 million in a fiscal year, (iii) the Company achieving a listing on a national exchange and then or subsequently

raising gross proceeds in the amount of $10 million.

The Company also granted Ms.

Ingargiola a Stock Option to acquire two million

shares of common stock of the Company at an exercise price of $0.50 per share for a period of ten years.

The Stock Options vest

in 36 equal tranches commencing on the grant date.

The Company and Ms.

Ingargiola also entered into an Indemnification Agreement.

employment of Ms.

Ingargiola is at will and may be terminated at any time, with or without formal cause.

Pursuant to the terms

of executive retention agreement with Ms.

Ingargiola, the Company has agreed to provide specified severance and bonus amounts

and to accelerate the vesting on their equity awards upon termination upon a change of control or an involuntary termination,

as each term is defined in the agreements.

the event of a termination upon a change of control, Ms.

Ingargiola is entitled to receive an amount equal to 12 months of her

base salary and the target bonus then in effect for the executive officer for the year in which such termination occurs, such

bonus payment to be pro-rated to reflect the full number of months the executive remained in the Company’s employ.

the vesting on any stock option held by the executive officer will be accelerated in full.

At the election of the executive officer,

the Company will also continue to provide health related employee insurance coverage for twelve months, at the Company’s

the event of an involuntary termination, Ms.

Ingargiola is entitled to receive an amount equal to six months of her base salary

and the target bonus then in effect for the executive officer for the six months in which such termination occurs, such bonus

payment to be pro-rated to reflect the full number of months the executive remained in the Company’s employ.

will be increased to 12 months upon the one-year anniversary of the retention agreement.

In addition, the vesting on any stock

option held by the executive officer will be accelerated in full.

At the election of the executive officer, the Company will also

continue to provide health related employee insurance coverage for twelve months, at the Company’s expense.

January 3, 2019, the Company entered into a Letter Agreement with Ms.

Ingargiola, pursuant to which her annual base salary set

forth in her employment agreement was increased to $350,000 effective January 1, 2019.

February 20, 2020, the Company entered into a Letter Agreement with Ms.

The employment of Ms.

Ingargiola is at will and may be terminated

at any time, with or without formal cause.

Pursuant to the terms of executive retention agreement with Ms.

Ingargiola, the Company

has agreed to provide specified severance and bonus amounts and to accelerate the vesting on their equity awards upon termination

upon a change of control or an involuntary termination, as each term is defined in the agreements.

In the event of a termination upon a change of control, Ms.

Ingargiola is entitled to receive an amount equal to 12 months of her base salary and the target bonus then in effect for the

executive officer for the year in which such termination occurs, such bonus payment to be pro-rated to reflect the full number

of months the executive remained in the Company’s employ.

In addition, the vesting on any stock option held by the executive

officer will be accelerated in full.

At the election of the executive officer, the Company will also continue to provide health

related employee insurance coverage for twelve months, at the Company’s expense.

In the event of an involuntary termination, Ms.

Ingargiola is

entitled to receive an amount equal to six months of her base salary and the target bonus then in effect for the executive officer

for the six months in which such termination occurs, such bonus payment to be pro-rated to reflect the full number of months the

executive remained in the Company’s employ.

Such payment will be increased to 12 months upon the one-year anniversary of

the retention agreement.

In addition, the vesting on any stock option held by the executive officer will be accelerated in full.

At the election of the executive officer, the Company will also continue to provide health related employee insurance coverage

for twelve months, at the Company’s expense.

On January 3, 2019, the Company entered into a Letter Agreement

Ingargiola, pursuant to which her annual base salary set forth in her employment agreement was increased to $350,000

effective January 1, 2019.

On February 20, 2020, the Company entered into a Letter Agreement

Ingargiola granting Ms.

Ingargiola a Stock Option to acquire

400,000 shares of common stock at an exercise price of $1.52 per share for a period of ten years.

October 25, 2017, Dr.

Yu Zhou and Genexosome entered into an Executive Retention Agreement pursuant to which Dr.

Zhou agreed to

serve as Co-Chief Executive Officer in consideration of an annual salary of $160,000.

Zhou and Genexosome also entered into

an Invention Assignment, Confidentiality, Non-Compete and Non-Solicit Agreement.

On August 14, 2019, Genexosome terminated Yu

Zhou as Co-Chief Executive Officer.

Ingargiola a Stock Option to acquire 400,000 shares of common stock at an exercise price of $1.52

per share for a period of ten years.

On October 25, 2017, Dr.

Yu Zhou and Genexosome entered into

an Executive Retention Agreement pursuant to which Dr.

Zhou agreed to serve as Co-Chief Executive Officer in consideration of

an annual salary of $160,000.

Zhou and Genexosome also entered into an Invention Assignment, Confidentiality, Non-Compete

and Non-Solicit Agreement.

On August 14, 2019, Genexosome terminated Yu Zhou as Co-Chief Executive Officer.

In addition, Dr.

Zhou’s Executive Retention Agreement was also terminated and he was

not elected to serve as a director for the year ended 2020.

Exercises and Stock Vested

were no options exercised by our executive officers or stock vested to our executive officers during the year ended December 31,

Executive Retention Agreement was also terminated and he was not elected to serve as a director for the year ended 2020.

Option Exercises and Stock Vested

There were no options exercised by our executive officers or

stock vested to our executive officers during the year ended December 31, 2020.

Outstanding Equity Awards

following table sets forth information with respect to the outstanding equity awards of our principal executive officers and principal

financial officer during 2019, and each person who served as an executive officer of the Company as of December 31, 2019:

Equity Awards

and principal position

of securities underlying unexercised options

of securities underlying unexercised options Unexercisable

incentive plan awards:

Number of securities underlying unexercised options

exercise price

expiration Date

of shares or units of stock that have not vested

value of shares or units of stock that have not vested

incentive plan awards:

Number of unearned shares other rights that have not vested

incentive plan

The following table sets forth information with respect to the

outstanding equity awards of our principal executive officers and principal financial officer during 2020, and each person who

served as an executive officer of the Company as of December 31, 2020:

Outstanding Equity Awards

Option Awards

Unexercisable

Luisa Ingargiola, CFO

2/8/2027 and 2/18/2030

Meng Li, COO and Secretary

Yu Zhou, Former Co-CEO of Genexosome

No Pension Benefits

Company does not maintain any plan that provides for payments or other benefits to its executive officers at, following or in

connection with retirement and including, without limitation, any tax-qualified defined benefit plans or supplemental executive

retirement plans.

No Nonqualified

Deferred Compensation

Company does not maintain any defined contribution or other plan that provides for the deferral of compensation on a basis that

is not tax-qualified.

The Company does not maintain any plan that provides for payments

or other benefits to its executive officers at, following or in connection with retirement and including, without limitation,

any tax-qualified defined benefit plans or supplemental executive retirement plans.

No Nonqualified Deferred Compensation

The Company does not maintain any defined contribution or other

plan that provides for the deferral of compensation on a basis that is not tax-qualified.

Director Compensation

Earned or Paid in Cash

Incentive Plan Compensation

in Pension Value and Non-Qualified Deferred Compensation Earnings

Other Compensation

Yue “Charles”

Incentive Plan

Pension Value

All Other Compensation

Yue (Charles) Li (1)

Yancen Lu (2)

Wilbert Tauzin (3)

Wenzhao Lu (4)

Steven Sanders (4)

1 unchanged sentence

William Stilley (6)

Li’s 2019 compensation consisted of cash of $44,333 and 30,000 options vested and

valued at $128,412.

Li has been our director since April 5, 2019.

Lu’s 2019 compensation consisted of cash of $70,000 and 200,000 options vested

and valued at $513,133.

Lu has been our director since April 28, 2017.

Tauzin’s 2019 compensation consisted of 200,000 options vested and valued at $236,122.

Tauzin has been our director since November 1, 2017.

Lu’s 2019 compensation consisted of cash of $100,000 and 1,500,000 options vested

and valued at $3,947,216.

Lu has been our director since October 10, 2016.

Li has been our director since April 5, 2019.

Sanders’s 2019 compensation consisted of cash of $70,000 and 50,000 options vested

and valued at $118,412.

Sanders has been our director since July 30, 2018.

Troy’s 2019 compensation consisted of cash of $60,000 and 50,000 options vested

and valued at $118,412.

Troy has been our director since June 4, 2018

Stilley’s 2019 compensation consisted of cash of $70,000 and 50,000 options vested

and valued at $118,412.

Stilley has been our director since July 5, 2018.

Li’s 2020 compensation

consisted of cash of $60,000 and 80,000 options vested and valued at $116,808.

Lu’s 2020 compensation

consisted of cash of $70,000 and 80,000 options vested and valued at $116,808.

Tauzin’s 2020 compensation

consisted of 200,000 options vested and valued at $249,137.

Sanders’s 2020 compensation

consisted of cash of $70,000 and 80,000 options vested and valued at $116,808.

Troy’s 2020 compensation

consisted of cash of $60,000 and 80,000 options vested and valued at $116,808.

Stilley’s 2020 compensation

consisted of cash of $70,000 and 80,000 options vested and valued at $116,808.

February 19, 2020, the Board of Directors of the Company approved an increase in the number of shares of common stock to be acquired

1 unchanged sentence

vest at the rate of 20,000 shares under such option per quarter.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect

to securities.

In accordance with SEC rules, shares of our common stock which may be acquired upon exercise of stock options

or warrants which are currently exercisable or which become exercisable within 60 days of the date of the applicable table below

are deemed beneficially owned by the holders of such options and warrants and are deemed outstanding for the purpose of computing

the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage of

ownership of any other person.

Subject to community property laws, where applicable, the persons or entities named in the tables

below have sole voting and investment power with respect to all shares of our common stock indicated as beneficially owned by

following table sets forth certain information, as of March 30, 2020 with respect to the beneficial ownership of the outstanding

common stock by (i) any holder of more than five (5%) percent;

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED

STOCKHOLDER MATTERS

Beneficial ownership is determined

in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities.

accordance with SEC rules, shares of our common stock which may be acquired upon exercise of stock options or warrants which are

currently exercisable or which become exercisable within 60 days of the date of the applicable table below are deemed beneficially

owned by the holders of such options and warrants and are deemed outstanding for the purpose of computing the percentage of ownership

of such person, but are not treated as outstanding for the purpose of computing the percentage of ownership of any other person.

Subject to community property laws, where applicable, the persons or entities named in the tables below have sole voting and investment

power with respect to all shares of our common stock indicated as beneficially owned by them.

The following table sets forth certain

information, as of March 29, 2021 with respect to the beneficial ownership of the outstanding common stock by (i) any holder of

more than five (5%) percent;

(ii) each of our executive officers and directors;

and (iii) our

directors and executive officers as a group.

and (iii) our directors and executive officers

The numbers below reflect a 1:4 reverse stock split implemented on October 18, 2016.

Except as otherwise indicated, each of the stockholders listed below has sole voting and investment power over the shares beneficially

of Beneficial Owner (1)

Beneficially Owned

Common Stock (2)

Except as otherwise indicated,

each of the stockholders listed below has sole voting and investment power over the shares beneficially owned.

Name of Beneficial Owner (1)

Common Stock Beneficially

Percentage of

Wenzhao Lu* (3)

5 unchanged sentences

Tevi Troy* (11)

Yue “Charles”

Yue (Charles) Li* (12)

All officers and directors as a group (10 persons)

and/or director of our company.

Officer and/or director of our company.

Less than 1.0%.

Except as otherwise

indicated, the address of each beneficial owner is c/o Avalon GloboCare Corp., 4400 Route 9 South, Suite 3100, Freehold, New

Jersey 07728.

Applicable percentage

ownership is based on 77,191,160 shares of common stock outstanding as of March 30, 2020, together with securities exercisable

or convertible into shares of common stock within 60 days of March 30, 2020 for each stockholder.

Beneficial ownership is

determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment

power with respect to securities.

Shares of common stock that are currently exercisable or exercisable within 60 days of March

30, 2020 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage

of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any

other person.

Wenzhao Lu holds

(i) 27,900,000 shares of common stock and (ii) 1,500,000 vested options to acquire 1,500,000 shares of common stock of our

David Jin holds

(i) 15,450,000 shares of common stock and (ii) 316,667 options, of which 250,000 shares have vested and an additional 66,667

shares shall vest within 60 days.

Meng Li holds (i)

5,150,000 shares of common stock and (ii) 275,000 options, of which 225,000 shares have vested and an additional 50,000 shares

shall vest within 60 days.

Represents stock

option to acquire 2,166,667 shares of common stock of our company, which included 66,667 shares to be vested within 60 days.

Yancen Lu holds

(i) 5,000,000 shares of common stock and (ii) 303,333 options, of which 290,000 shares have vested and an additional 13,333

shares shall vest within 60 days.

Represents stock

option to acquire 103,333 shares of common stock of our company, which included 13,333 shares to be vested within 60 days.

Represents stock

option to acquire 546,667 shares of common stock of our company, which included 6,667 shares to be vested within 60 days.

Represents stock

option to acquire 103,333 shares of common stock of our company, which included 13,333 shares to be vested within 60 days.

stock option to acquire 103,333 shares of common stock of our company, which included 13,333 shares to be vested within

Except as otherwise indicated, the address of each beneficial

owner is c/o Avalon GloboCare Corp., 4400 Route 9 South, Suite 3100, Freehold, New Jersey 07728.

Applicable percentage ownership is based on

84,405,614 shares of common stock outstanding as of March 29, 2021, together with securities exercisable or convertible into

shares of common stock within 60 days of March 29, 2021 for each stockholder.

Beneficial ownership is determined in accordance

with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to

Shares of common stock that are currently exercisable or exercisable within 60 days of March 29, 2021 are deemed

to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of

such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other

Wenzhao Lu holds (i) 28,545,161 shares of common stock and (ii) 1,500,000

vested options to acquire 1,500,000 shares of common stock of our company.

David Jin holds (i) 15,450,000 shares of common stock and (ii) 550,000

vested options to acquire 550,000 shares of common stock of our company.

Meng Li holds (i) 5,150,000 shares of common stock and (ii) 450,000

vested options to acquire 450,000 shares of common stock of our company.

Represents 2,400,000 vested options to acquire 2,400,000 shares of common

stock of our company.

Yancen Lu holds (i) 5,000,000 shares of common stock and (ii) 370,000

options, of which 350,000 shares have vested and an additional 20,000 shares shall vest within 60 days.

Represents stock option to acquire 170,000 shares of common

stock of our company, which included 20,000 shares to be vested within 60 days.

Represents stock option to acquire 660,000 shares of common stock of

our company, which included 10,000 shares to be vested within 60 days.

Represents stock option to acquire 170,000 shares of common stock of

our company, which included 20,000 shares to be vested within 60 days.

Represents stock option to acquire 170,000 shares of common stock of

our company, which included 20,000 shares to be vested within 60 days.

Represents stock option to acquire 130,000 shares of common stock of our company, which included

1 unchanged sentence

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Related Consulting Services Revenue from Related Parties and Accounts Receivable –

Medical Related Consulting Services Revenue from Related

Parties and Accounts Receivable –

Related Party

the years ended December 31, 2019 and 2018, medical related consulting services revenue from related parties was as follows:

During the years ended December 31, 2020 and 2019, medical related consulting services

revenue from related parties was as follows:

Years Ended December 31,

Medical related consulting services provided to:

2 unchanged sentences

Hebei Daopei *

Daopei is a subsidiary of an entity whose chairman is Wenzhao Lu, the largest shareholder

of the Company.

Daopei is a subsidiary of an entity whose chairman is Wenzhao Lu, the largest shareholder

of the Company.

Daopei is a subsidiary of an entity whose chairman is Wenzhao Lu, the largest shareholder

of the Company.

receivable –

related party, at December 31, 2019 and 2018 amounted to $215,418 and $0, respectively, and no allowance for

doubtful accounts is deemed to be required on accounts receivable –

related party at December 31, 2019 and 2018.

Expenses –

Related Parties

of December 31, 2019 and 2018, the Company made a prepayment of $0 and $1,897, respectively, to David Jin, its shareholder, chief

executive officer, president and board member, for business travel reimbursement, which has been included in prepaid expenses

related parties on the accompanying consolidated balance sheets.

of December 31, 2019 and 2018, the Company made a prepayment of $0 and $32,293, respectively, to Meng Li, its shareholder and

chief operating officer, for business travel reimbursement, which has been included in prepaid expenses –

related parties

on the accompanying consolidated balance sheets.

Liabilities and Other Payables –

* Beijing Daopei, Shanghai Daopei, and Hebei Daopei are subsidiaries of an entity whose chairman is Wenzhao Lu, the largest shareholder of the Company.

As of December 31, 2020, accounts receivable –

party was $0.

Accounts receivable –

related party at December 31, 2019 amounted to $215,418 and no allowance for doubtful

accounts is deemed to be required on accounts receivable –

related party at December 31, 2019.

Accrued Liabilities and Other Payables –

Related Parties

of December 31, 2019 and 2018, the advance from customer –

related party amounted to $0 and $14,829, respectively, which

represents a prepayment received from our related party, Beijing Daopei, for medical related consulting services.

When the services

are performed, the amount recorded as an advance from customer –

related party is recognized as revenue.

of December 31, 2019 and 2018, the Company owed David Jin, its shareholder, chief executive officer, president and board member,

$24,254 and $0, respectively, for travel and other miscellaneous reimbursements, which have been included in accrued liabilities

and other payables –

related parties on the accompanying consolidated balance sheets.

of December 31, 2019 and 2018, the Company owed Meng Li, its shareholder and chief operating officer, $10,473 and $0, respectively,

for travel and other miscellaneous reimbursements, which have been included in accrued liabilities and other payables –

related parties on the accompanying consolidated balance sheets.

31, 2019 and 2018, the Company owed Yu Zhou, director and former co-chief executive officer and 40% owner of Genexosome, of $3,121

and $0, respectively, for accrued travel and other miscellaneous reimbursements, which have been included in accrued liabilities

and other payables –

related parties on the accompanying consolidated balance sheets.

connection with the acquisition discussed elsewhere in this report, the Company acquired Beijing Genexosome for a cash payment

As of December 31, 2019 and 2018, the unpaid acquisition consideration of $100,000, was payable to Yu Zhou, director

and former co-chief executive officer and 40% owner of Genexosome, and has been included in accrued liabilities and other payables

related parties on the accompanying consolidated balance sheets.

of December 31, 2019 and 2018, the accrued and unpaid interest related to borrowings from Wenzhao Lu, the Company’s largest

shareholder and chairman of the Board of Directors, amounted to $49,194 and $0, respectively, and have been included in accrued

liabilities and other payables –

related parties on the accompanying consolidated balance sheets.

Property Management Agreement

Company pays a company, which is controlled by Wenzhao Lu, the Company’s largest shareholder and chairman of the Board of

Directors, for the management of its commercial real property located in New Jersey.

The property management agreement commenced

on May 5, 2017 and expired in March 2019.

For the years ended December 31, 2019 and 2018, the management fee related to the property

management agreement amounted to $23,334 and $65,004, respectively.

from Related Party

March 18, 2019, the Company issued Wenzhao Lu, the Company’s largest shareholder and Chairman of the Board of Directors,

a Promissory Note in the principal amount of $1,000,000 (“Promissory Note”) in consideration of cash in the amount

of $1,000,000.

The Promissory Note accrues interest at the rate of 5% per annum and matures March 19, 2022.

The Company repaid

principal of $410,000 in the third quarter of 2019.

As of December 31, 2019, the outstanding principal balance was $590,000.

August 29, 2019, the Company entered into a Line of Credit Agreement (the “Line of Credit Agreement”) providing

the Company with a $20 million line of credit (the “Line of Credit”) from Wenzhao Lu (the “Lender”), the

largest shareholder and Chairman of the Board of Directors of the Company.

The Line of Credit allows the Company to request loans

thereunder and to use the proceeds of such loans for working capital and operating expense purposes until the facility matures

on December 31, 2024.

The loans are unsecured and are not convertible into equity of the Company.

Loans drawn under the Line of

Credit bears interest at an annual rate of 5% and each individual loan will be payable three years from the date of issuance.

The Company has a right to draw down on the line of credit and not at the discretion of the related party Lender.

may, at its option, prepay any borrowings under the Line of Credit, in whole or in part at any time prior to maturity, without

premium or penalty.

Company acquired Beijing Genexosome for a cash payment of $450,000.

As of December 31, 2020 and 2019, the unpaid

acquisition consideration of $100,000, was payable to Dr.

Yu Zhou, former director and former co-chief executive officer and

40% owner of Genexosome, and has been included in accrued liabilities and other payables –

related parties on the

accompanying consolidated balance sheets.

As of December 31, 2020 and 2019, the accrued and unpaid interest related to borrowings

from Wenzhao Lu, the Company’s largest shareholder and chairman of the Board of Directors, amounted to $167,956 and $49,194,

respectively, and have been included in accrued liabilities and other payables –

related parties on the accompanying consolidated

balance sheets.

Borrowings from Related Party

Promissory Note

On March 18, 2019,

the Company issued Wenzhao Lu, the Company’s largest shareholder and Chairman of the Board of Directors, a Promissory Note

in the principal amount of $1,000,000 (“Promissory Note”) in consideration of cash in the amount of $1,000,000.

Promissory Note accrues interest at the rate of 5% per annum and matures March 19, 2022.

The Company repaid principal of $410,000

and $200,000 in the third quarter of 2019 and second quarter of 2020, respectively.

As of December 31, 2020 and 2019, the

outstanding principal balance was $390,000 and $590,000, respectively.

Line of Credit

On August 29, 2019, the Company entered into a Line of Credit Agreement (the

“Line of Credit Agreement”) providing the Company with a $20 million line of credit (the “Line of Credit”)

from Wenzhao Lu (the “Lender”), the largest shareholder and Chairman of the Board of Directors of the Company.

Line of Credit allows the Company to request loans thereunder and to use the proceeds of such loans for working capital and operating

expense purposes until the facility matures on December 31, 2024.

The loans are unsecured and are not convertible into equity

of the Company.

Loans drawn under the Line of Credit bears interest at an annual rate of 5% and each individual loan will be payable

three years from the date of issuance.

The Company has a right to draw down on the line of credit and not at the discretion of

the related party Lender.

The Company may, at its option, prepay any borrowings under the Line of Credit, in whole or in part

at any time prior to maturity, without premium or penalty.

The Line of Credit Agreement includes customary events of default.

If any such event of default occurs,

the Lender may declare all outstanding loans under the Line of Credit to be due and payable immediately.

Under the Line of

Credit, as of December 31, 2019, the Company received loan from the Lender of $2,600,000.

the year ended December 31, 2019, the interest expense related to above borrowings amounted to $49,194 and has been included in

interest expense –

related party on the accompanying consolidated statements of operations and comprehensive loss.

December 31, 2019, the related accrued and unpaid interest for above borrowings was $49,194 and has been included in accrued liabilities

If any such event of default occurs, the Lender may declare all outstanding loans under the Line of Credit to be due and

payable immediately.

As of December 31, 2020 and 2019, $3,200,000 and $2,600,000 was outstanding under the Line of Credit,

respectively.

For the years ended December 31, 2020 and 2019, the interest expense related to

above borrowings amounted to $168,762 and $49,194, respectively, and has been included in interest expense –

related party

on the accompanying consolidated statements of operations and comprehensive loss.

As of December 31, 2020 and 2019, the related accrued

and unpaid interest for above borrowings was $167,956 and $49,194, respectively, and has been included in accrued liabilities

and other payables –

related parties on the accompanying consolidated balance sheets.

Space from Related Party

Genexosome uses office space of a related party, free of rent, which is considered immaterial.

Common Shares Sold to Related Party

On April 1, 2020, the Company sold 645,161 shares of its common stock to WLM Limited

(“WLM”), an entity owned by Wenzhao Lu, Chairman of the Board of Directors of the Company, at a price per share of

$1.55 for an aggregate purchase price of $1,000,000 (See Note 11 –

Common Shares Sold for Cash).

Office Space from Related Party

Beijing Genexosome uses office space of a related party,

free of rent, which is considered immaterial.

PRINCIPAL ACCOUNTING FEES AND SERVICES

LLP served as our independent auditors for the year ended December 31, 2019.

RBSM LLP served as our independent auditors for the

year ended December 31, 2018.

fees billed to the Company for professional services rendered by Marcum LLP and RBSM LLP, during the last two fiscal years were

Marcum LLP served as our independent auditors for the years

ended December 31, 2020 and 2019.

Aggregate fees billed to the Company for professional services

rendered by Marcum LLP during the last two fiscal years were as follows:

Audit Related Fees

All Other Fees

Consists of fees billed for professional services rendered for the audit of our annual consolidated financial statements,

review of the Form 10-K, and review of the interim consolidated financial statements included in quarterly reports, and services

that are normally provided by our independent auditors in connection with statutory and regulatory filings or engagements, including

registration statements.

AUDIT-RELATED

Consists of fees billed for assurance and related services that are reasonably related to the performance of the audit and

or review of our consolidated financial statements and are not reported under “Audit Fees”, such as audits and reviews

in connection with acquisitions.

Consists of fees billed for professional services for tax compliance, tax advice and tax planning.

Consists of fees for products and services other than the services reported above.

There were no management consulting

services provided in fiscal 2019 or 2018.

ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES OF INDEPENDENT AUDITORS

current policy of the directors, acting as the audit committee, is to approve the appointment of the principal auditing firm and

any permissible audit-related services.

The audit and audit related fees include fees for the annual audit of the financial statements

and review of financial statements included in 10Q filings.

Fees charged by the auditor were approved by the Board with engagement

letters signed by the audit committee chairman.

Audit Committee is responsible for the pre-approval of audit and permitted non-audit services to be performed by the Company’s

independent auditor.

The Audit Committee will, on an annual basis, consider and, if appropriate, approve the provision of audit

and non-audit services by the auditor.

Thereafter, the Audit Committee will, as necessary, consider and, if appropriate, approve

the provision of additional audit and non-audit services by the auditor which are not encompassed by the Audit Committee’s

annual pre-approval and are not prohibited by law.

The Audit Committee has delegated to the Chair of the Audit Committee the authority

to pre-approve, on a case-by-case basis, non-audit services to be performed by the auditor.

The Audit Committee has approved all

audit and permitted non-audit services performed by the auditor for the year ended December 31, 2019.

Market Sale Agreement SM , dated as of December 13, 2019, by and between Avalon GloboCare Corp.

and Jefferies

(incorporated by reference to Exhibit 1.1 of the Current Report on Form 8-K filed with the Securities and Exchange

Commission on December 13, 2019)

and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 of the Current Report

on Form 8-K/A filed with the Securities and Exchange Commission on April 26, 2018)

and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 of the Current Report on Form 8-K/A filed

with the Securities and Exchange Commission on April 26, 2018)

of Subscription Agreement by and between Avalon GloboCare Corp.

and the December 2016 Accredited Investors (incorporated by

reference to Exhibit 4.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 21,

Option issued to Luisa Ingargiola dated February 21, 2017 (incorporated by reference to Exhibit 4.1 of the Current Report

on Form 8-K filed with the Securities and Exchange Commission on February 21, 2017)

of Subscription Agreement by and between Avalon GloboCare Corp.

and the March 2017 Accredited Investor (incorporated by reference

to Exhibit 4.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 7, 2017)

Subscription Agreement between Avalon GloboCare Corp., Avalon (Shanghai) Healthcare Technology Co., Ltd., Beijing DOING Biomedical

Technology Co., Ltd.

and Daron Liang (incorporated by reference to Exhibit 4.2 of the Current Report on Form 8-K filed with

the Securities and Exchange Commission on March 7, 2017)

Agreement between Lu Wenzhao and Beijing DOING Biomedical Technology Co., Ltd.

(incorporated by reference to Exhibit 4.3 of

the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 7, 2017)

of Subscription Agreement between Avalon GloboCare Corp.

and the October 2017 Accredited Investors (incorporated by reference

to Exhibit 4.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 26, 2017)

of Warrant to Boustead Securities, LLC in connection with the private placements (incorporated by reference to Exhibit 4.8

of the Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on July 27, 2018)

of Warrant (April 2019) (Incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed with the Securities

and Exchange Commission on April 26, 2019)

Exchange Agreement dated as of October 19, 2016 by and among Avalon Healthcare System, Inc., the shareholders of Avalon Healthcare

Consists of fees billed for professional

services rendered for the audit of our annual consolidated financial statements, review of the Form 10-K, and review of the interim

consolidated financial statements included in quarterly reports, and services that are normally provided by our independent auditors

in connection with statutory and regulatory filings or engagements, including registration statements.

AUDIT-RELATED FEES.

Consists of fees billed for assurance and

related services that are reasonably related to the performance of the audit and or review of our consolidated financial statements

and are not reported under “Audit Fees”, such as audits and reviews in connection with acquisitions.

Consists of fees billed for professional services

for tax compliance, tax advice and tax planning.

ALL OTHER FEES.

Consists of fees for products and services other

than the services reported above.

There were no management consulting services provided in fiscal 2020 or 2019.

POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE

NON-AUDIT SERVICES OF INDEPENDENT AUDITORS

The current policy of the directors, acting as the audit committee,

is to approve the appointment of the principal auditing firm and any permissible audit-related services.

The audit and audit related

fees include fees for the annual audit of the financial statements and review of financial statements included in 10Q filings.

Fees charged by the auditor were approved by the Board with engagement letters signed by the audit committee chairman.

The Audit Committee is responsible for the pre-approval of audit

and permitted non-audit services to be performed by the Company’s independent auditor.

The Audit Committee will, on an annual

basis, consider and, if appropriate, approve the provision of audit and non-audit services by the auditor.

Thereafter, the Audit

Committee will, as necessary, consider and, if appropriate, approve the provision of additional audit and non-audit services by

the auditor which are not encompassed by the Audit Committee’s annual pre-approval and are not prohibited by law.

Committee has delegated to the Chair of the Audit Committee the authority to pre-approve, on a case-by-case basis, non-audit services

to be performed by the auditor.

The Audit Committee has approved all audit and permitted non-audit services performed by the auditor

for the year ended December 31, 2020.

Open Market Sale Agreement SM , dated as of December 13, 2019, by and between Avalon GloboCare Corp.

and Jefferies LLC.

(incorporated by reference to Exhibit 1.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 13, 2019)

Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K/A filed with the Securities and Exchange Commission on April 26, 2018)

Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 of the Current Report on Form 8-K/A filed with the Securities and Exchange Commission on April 26, 2018)

Form of Subscription Agreement by and between Avalon GloboCare Corp.

and the December 2016 Accredited Investors (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 21, 2016)

Stock Option issued to Luisa Ingargiola dated February 21, 2017 (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2017)

Form of Subscription Agreement by and between Avalon GloboCare Corp.

and the March 2017 Accredited Investor (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 7, 2017)

Share Subscription Agreement between Avalon GloboCare Corp., Avalon (Shanghai) Healthcare Technology Co., Ltd., Beijing DOING Biomedical Technology Co., Ltd.

and Daron Liang (incorporated by reference to Exhibit 4.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 7, 2017)

Warranty Agreement between Lu Wenzhao and Beijing DOING Biomedical Technology Co., Ltd.

(incorporated by reference to Exhibit 4.3 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 7, 2017)

Form of Subscription Agreement between Avalon GloboCare Corp.

and the October 2017 Accredited Investors (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 26, 2017)

Form of Warrant to Boustead Securities, LLC in connection with the private placements (incorporated by reference to Exhibit 4.8 of the Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on July 27, 2018)

Form of Warrant (April 2019) (Incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 26, 2019)

Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934

Share Exchange Agreement dated as of October 19, 2016 by and among Avalon Healthcare System, Inc., the shareholders of Avalon Healthcare System, Inc.

and Avalon GloboCare Corp.

(incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed

with the Securities and Exchange Commission on October 19, 2016)

(incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 19, 2016)

10.2 &dagger;

Employment Agreement, effective December 1, 2016, by and between Avalon GloboCare Corp.

and David Jin (incorporated by reference

to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 2, 2016)

of Sale by and between Freehold Craig Road Partnership, as Seller, and Avalon GloboCare Corp., as Buyer dated as of December

22, 2016 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange

Commission on December 23, 2016)

Executive Employment Agreement, effective December 1, 2016, by and between Avalon GloboCare Corp.

and David Jin (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 2, 2016)

Agreement of Sale by and between Freehold Craig Road Partnership, as Seller, and Avalon GloboCare Corp., as Buyer dated as of December 22, 2016 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 23, 2016)

10.4 &dagger;

Employment Agreement by and between Avalon (Shanghai) Healthcare Technology Ltd.

and Meng Li dated January 11, 2017 (incorporated

by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on January

Executive Employment Agreement by and between Avalon (Shanghai) Healthcare Technology Ltd.

and Meng Li dated January 11, 2017 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 11, 2017)

10.5 &dagger;

Retention Agreement by and between Avalon GloboCare Corp.

and Luisa Ingargiola dated February 21, 2017 (incorporated

by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on February

Executive Retention Agreement by and between Avalon GloboCare Corp.

and Luisa Ingargiola dated February 21, 2017 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2017)

10.6 &dagger;

Indemnification

Agreement by and between Avalon GloboCare Corp.

and Luisa Ingargiola dated February 21, 2017 (incorporated by reference to

Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2017)

Indemnification Agreement by and between Avalon GloboCare Corp.

and Luisa Ingargiola dated February 21, 2017 (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2017)

10.7 &dagger;

Agreement by and between Avalon GloboCare Corp.

Director Agreement by and between Avalon GloboCare Corp.

and Steven P.

Sukel dated April 28, 2017 (incorporated by reference to Exhibit

10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 28, 2017)

Sukel dated April 28, 2017 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 28, 2017)

10.8 &dagger;

Agreement by and between Avalon GloboCare Corp.

and Yancen Lu dated April 28, 2017 (incorporated by reference to Exhibit 10.2

of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 28, 2017)

Service Contract between Daopei Investment Management (Shanghai) Co., Ltd.

Director Agreement by and between Avalon GloboCare Corp.

and Yancen Lu dated April 28, 2017 (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 28, 2017)

Consultation Service Contract between Daopei Investment Management (Shanghai) Co., Ltd.

and Avalon HealthCare System Inc.

dated April 1,

2016 (English translation) (incorporated by reference to Exhibit 10.8 of Amendment No.

1 to the Registration Statement on

Form S-1 filed with the Securities and Exchange Commission on July 7, 2017)

Service Contract between Hebei Yanda Ludaopei Hospital Co., Ltd and Avalon HealthCare System Inc.

dated April 1, 2016 (English

translation) (incorporated by reference to Exhibit 10.9 of Amendment No.

1 to the Registration Statement on Form S-1 filed

with the Securities and Exchange Commission on July 7, 2017)

Service Contract between Nanshan Memorial Stem Cell Biotechnology Co., Ltd.

dated April 1, 2016 (English translation) (incorporated by reference to Exhibit 10.8 of Amendment No.

1 to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on July 7, 2017)

Consultation Service Contract between Hebei Yanda Ludaopei Hospital Co., Ltd and Avalon HealthCare System Inc.

dated April 1, 2016 (English translation) (incorporated by reference to Exhibit 10.9 of Amendment No.

1 to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on July 7, 2017)

Consultation Service Contract between Nanshan Memorial Stem Cell Biotechnology Co., Ltd.

and Avalon HealthCare System Inc.

1, 2016 (English translation) (incorporated by reference to Exhibit 10.10 of Amendment No.

1 to the Registration Statement

on Form S-1 filed with the Securities and Exchange Commission on July 7, 2017)

Agreement between Lotus Capital Overseas Limited and Avalon (Shanghai) Healthcare Technology Co., Ltd.

dated April 19, 2017

(English translation) (incorporated by reference to Exhibit 10.12 of the Quarterly Report on Form 10-Q filed with the Securities

and Exchange Commission on August 14, 2017)

Purchase Agreement between Avalon GloboCare Corp.

dated April 1, 2016 (English translation) (incorporated by reference to Exhibit 10.10 of Amendment No.

1 to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on July 7, 2017)

Loan Agreement between Lotus Capital Overseas Limited and Avalon (Shanghai) Healthcare Technology Co., Ltd.

dated April 19, 2017 (English translation) (incorporated by reference to Exhibit 10.12 of the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2017)

Securities Purchase Agreement between Avalon GloboCare Corp.

and Genexosome Technologies Inc.

dated October 25, 2017 (incorporated by

reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 26,

Purchase Agreement between Genexosome Technologies Inc.

and Yu Zhou dated October 25, 2017 (incorporated by reference to Exhibit

10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 26, 2017)

Purchase Agreement between Genexosome Technologies Inc., Beijing Jieteng (Genexosome) Biotech Co.

and Yu Zhou dated October

25, 2017 (incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K filed with the Securities and Exchange

Commission on October 26, 2017)

dated October 25, 2017 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 26, 2017)

Asset Purchase Agreement between Genexosome Technologies Inc.

and Yu Zhou dated October 25, 2017 (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 26, 2017)

Stock Purchase Agreement between Genexosome Technologies Inc., Beijing Jieteng (Genexosome) Biotech Co.

and Yu Zhou dated October 25, 2017 (incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 26, 2017)

10.16 &dagger;

Retention Agreement between Genexosome Technologies Inc.

and Yu Zhou dated October 25, 2017 (incorporated by reference to

Exhibit 10.4 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 26, 2017)

Assignment, Confidentiality, Non-Compete and Non-Solicit Agreement between Genexosome Technologies Inc.

and Yu Zhou dated

October 25, 2017 (incorporated by reference to Exhibit 10.5 of the Current Report on Form 8-K filed with the Securities and

Exchange Commission on October 26, 2017)

Executive Retention Agreement between Genexosome Technologies Inc.

and Yu Zhou dated October 25, 2017 (incorporated by reference to Exhibit 10.4 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 26, 2017)

Invention Assignment, Confidentiality, Non-Compete and Non-Solicit Agreement between Genexosome Technologies Inc.

and Yu Zhou dated October 25, 2017 (incorporated by reference to Exhibit 10.5 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 26, 2017)

10.18 &dagger;

Agreement by and between Avalon GloboCare Corp.

Director Agreement by and between Avalon GloboCare Corp.

and Wilbert J.

Tauzin II dated November 1, 2017 (incorporated by reference

to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on November 7, 2017)

between Avalon GloboCare Corp.

and Tauzin Consultants, LLC dated November 1, 2017 (incorporated by reference to Exhibit 10.2

of the Current Report on Form 8-K filed with the Securities and Exchange Commission on November 7, 2017)

Tauzin II dated November 1, 2017 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on November 7, 2017)

Agreement between Avalon GloboCare Corp.

and Tauzin Consultants, LLC dated November 1, 2017 (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on November 7, 2017)

10.20 &dagger;

Agreement by and between Avalon GloboCare Corp.

and David Jin dated April 3, 2018 (incorporated by reference to Exhibit 10.1

of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 4, 2018)

Letter Agreement by and between Avalon GloboCare Corp.

and David Jin dated April 3, 2018 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 4, 2018)

10.21 &dagger;

Agreement by and between Avalon GloboCare Corp.

36 unchanged sentences

with the Securities and Exchange Commission on August 7, 2018)

Partnership Agreement between Avalon GloboCare Corp.

and Weill Cornell Medical College of Cornell University dated August

6, 2018 (incorporated by reference to Exhibit 10.31 of the Registration Statement on Form S-1/A filed with the Securities

and Exchange Commission on August 7, 2018)

Joint Venture Agreement by and between Avactis Biosciences, Inc., a wholly-owned subsidiary of Avalon GloboCare Corp., and

Arbele Limited for the establishment of AVAR (China) BioTherapeutics Ltd.

dated October 23, 2018 (incorporated by reference

to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 29, 2018)

Agreement by and between Avalon GloboCare Corp.

and David Jin dated January 3, 2019 (incorporated by reference to Exhibit

10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 4, 2019)

Agreement by and between Avalon GloboCare Corp.

and Luisa Ingargiola dated January 3, 2019 (incorporated by reference to Exhibit

10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 4, 2019)

Agreement by and between Avalon (Shanghai) Healthcare Technology Co.

and Meng Li dated January 3, 2019 (incorporated

by reference to Exhibit 10.3 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on January

Note issued to Daniel Lu dated Mach 18, 2019 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K

filed with the Securities and Exchange Commission on March 22, 2019)

Strategic Partnership Agreement between Avalon GloboCare Corp.

and Weill Cornell Medical College of Cornell University dated August 6, 2018 (incorporated by reference to Exhibit 10.31 of the Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on August 7, 2018)

Equity Joint Venture Agreement by and between Avactis Biosciences, Inc., a wholly-owned subsidiary of Avalon GloboCare Corp., and Arbele Limited for the establishment of AVAR (China) BioTherapeutics Ltd.

dated October 23, 2018 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 29, 2018)

Letter Agreement by and between Avalon GloboCare Corp.

and David Jin dated January 3, 2019 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 4, 2019)

Letter Agreement by and between Avalon GloboCare Corp.

and Luisa Ingargiola dated January 3, 2019 (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 4, 2019)

Letter Agreement by and between Avalon (Shanghai) Healthcare Technology Co.

and Meng Li dated January 3, 2019 (incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 4, 2019)

Promissory Note issued to Daniel Lu dated Mach 18, 2019 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 22, 2019)

10.37&dagger;

Agreement by and between Avalon GloboCare Corp.

and Meng Li dated April 5, 2019 (Incorporated by reference to Exhibit 10.1

of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 8, 2019)

Director Agreement by and between Avalon GloboCare Corp.

and Meng Li dated April 5, 2019 (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 8, 2019)

10.38&dagger;

Agreement by and between Avalon GloboCare Corp.

Director Agreement by and between Avalon GloboCare Corp.

and Yue “Charles”

Li dated April 5, 2019 (Incorporated by reference

to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 8, 2019)

of Securities Purchase Agreement dated April 25, 2019 (Incorporated by reference to Exhibit 10.1 of the Current Report on

Form 8-K filed with the Securities and Exchange Commission on April 26, 2019)

Line of Credit Agreement dated as of August 29, 2019 between Avalon GloboCare Corp.

Li dated April 5, 2019 (Incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 8, 2019)

Form of Securities Purchase Agreement dated April 25, 2019 (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 26, 2019)

Revolving Line of Credit Agreement dated as of August 29, 2019 between Avalon GloboCare Corp.

and Wenzhao “Daniel”

August 29, 2019 (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and

Exchange Commission on September 3, 2019)

of Warrant Redemption and Cancellation Agreement (Incorporated by reference to Exhibit 10.1 of the Current Report on Form

8-K filed with the Securities and Exchange Commission on October 21, 2019)

Agreement by and between Avalon GloboCare Corp.

and David Jin dated February 20, 2020 (Incorporated by reference to Exhibit

10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 24, 2020)

Agreement by and between Avalon GloboCare Corp.

and Meng Li dated February 20, 2020 (Incorporated by reference to Exhibit

10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 24, 2020)

Agreement by and between Avalon GloboCare Corp.

and Luisa Ingargiola dated February 20, 2020 (Incorporated by reference to

Exhibit 10.3 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 24, 2020)

of Subsidiaries (incorporated by reference to Exhibit 21.1 of the Registration Statement on Form S-1/A filed with the Securities

and Exchange Commission on July 20, 2018)

Consent of Independent

Registered Accounting Firm

Consent of Independent Auditors.

Certification

of Principal Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act

Certification

of Principal Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act

Certification

of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act

Certification of Principal

Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act

Lu dated August 29, 2019 (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on September 3, 2019)

Form of Warrant Redemption and Cancellation Agreement (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 21, 2019)

Letter Agreement by and between Avalon GloboCare Corp.

and David Jin dated February 20, 2020 (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 24, 2020)

Letter Agreement by and between Avalon GloboCare Corp.

and Meng Li dated February 20, 2020 (Incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 24, 2020)

Letter Agreement by and between Avalon GloboCare Corp.

and Luisa Ingargiola dated February 20, 2020 (Incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 24, 2020)

List of Subsidiaries (incorporated by reference to Exhibit 21.1 of the Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on July 20, 2018)

Consent of Independent Registered Accounting Firm

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act

Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act

Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act

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Filed herewith

Management contract

or compensatory plan or arrangement.

Management contract or compensatory plan or arrangement.

FORM 10-K SUMMARY.

to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report

to be signed on its behalf by the undersigned hereunto duly authorized.

Pursuant to the requirements

of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its

behalf by the undersigned hereunto duly authorized.

AVALON GLOBOCARE CORP.

April 6, 2020

March 30, 2021

/s/ David Jin

Chief Executive Officer, President and Director

(Principal Executive Officer)

April 6, 2020

Luisa Ingargiola

March 30, 2021

/s/ Luisa Ingargiola

Luisa Ingargiola

1 unchanged sentence

(Principal Financial and Accounting Officer)

accordance with the Exchange Act, this report has been signed below by the following persons on April 6, 2020, on behalf of the

registrant and in the capacities indicated.

In accordance with

the Exchange Act, this report has been signed below by the following persons on March 30, 2021, on behalf of the registrant and

in the capacities indicated.

/s/ David Jin

Chief Executive Officer, President and Director

(Principal Executive Officer)

Luisa Ingargolia

/s/ Luisa Ingargolia

Chief Financial Officer

1 unchanged sentence

(Principal Financial Officer)

/s/ Wenzhao Lu

Chairman of the Board of Directors

Chief Operating Officer, Secretary and Director

Yue “Charles”

/s/ Steven A.

/s/ Yancen Lu

/s/ Wilbert J.

/s/ William B.

/s/ Tevi Troy

/s/ Yue “Charles”

Yue “Charles”

GLOBOCARE CORP.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

FINANCIAL STATEMENTS

31, 2019 and 2018

GLOBOCARE CORP.

CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2019 and 2018

of Independent Registered Public Accounting Firms

Financial Statements:

Balance Sheets - As of December 31, 2019 and 2018

Statements of Operations and Comprehensive Loss - For the Years Ended December 31, 2019 and 2018

Statements of Changes in Equity - For the Years Ended December 31, 2019 and 2018

Statements of Cash Flows - For the Years Ended December 31, 2019 and 2018

to Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders

and Board of Directors of

Avalon GloboCare

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

Report of Independent Registered Public Accounting Firm

Consolidated Financial Statements:

Consolidated Balance Sheets - As of December 31, 2020 and 2019

Consolidated Statements of Operations and Comprehensive Loss - For the Years Ended December 31, 2020 and 2019

Consolidated Statements of Changes in Equity - For the Years Ended December 31, 2020 and 2019

Consolidated Statements of Cash Flows – For the Years Ended December 31, 2020 and 2019

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

the Shareholders and Board of Directors of

GloboCare Corp.

on the Financial Statements

audited the accompanying consolidated balance sheet of Avalon GloboCare Corp.

have audited the accompanying consolidated balance sheets of Avalon GloboCare Corp.

(the “Company”) as of December

2019, the related consolidated statements of operations and comprehensive loss, changes in equity and cash flows for the

year ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”).

our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the

Company as of December 31, 2019, and the results of its operations and its cash flows for the year ended December 31, 2019,

in conformity with accounting principles generally accepted in the United States of America .

Explanatory Paragraph –

31, 2020 and 2019, the related consolidated statements of operations and comprehensive loss, changes in stockholders’

and cash flows for each of the two years in the period ended December 31, 2020, and the related notes (collectively referred to

as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects,

the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for

each of the two years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the

United States of America.

Paragraph –

Going Concern

The accompanying

consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As more fully

described in Note 2, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise

additional funds to meet its obligations and sustain its operations.

These conditions raise substantial doubt about the Company's

ability to continue as a going concern.

accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As more fully described in Note 2, the Company has a significant working capital deficiency, has incurred significant losses and

needs to raise additional funds to meet its obligations and sustain its operations.

These conditions raise substantial doubt about

the Company's ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note

The consolidated

financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's

consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting

Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance

with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the

our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight

Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not

for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

we express no such opinion.

included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but

not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial

We believe that our audit provides a reasonable basis for our opinion.

/s/ Marcum llp

We have served as the Company’s

auditor since 2019 .

April 6, 2020

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Avalon GloboCare Corp.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheets of Avalon GloboCare Corp.

and Subsidiaries (the “Company”) as of December 31, 2018, and the related

consolidated statements of operations and comprehensive loss, changes in equity, and cash flows for the year ended December 31,

2018, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial

statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018, and the results

of its operations and its cash flows for the year ended December 31, 2018, in conformity with accounting principles generally accepted

in the United States of America.

Substantial Doubt about the Company’s

Ability to Continue as a Going Concern

The accompanying financial statements have

been prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the consolidated financial

statements, the Company has a limited operating history, incurred recurring net loss and negative cash flows from operating activities.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s evaluation

of the events and conditions and management’s plan in regard to these matters are also described in Note 2.

The financial

statements do not include any adjustments that may result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based

on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with

the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether

the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have,

nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required

to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the

effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to

assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures

in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made

by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a

reasonable basis for our opinion.

We have served as the Company’s auditors since 2016.

New York, New York

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Audit Matters

Audit Matters are matters arising from the current period audit of the financial statements that were communicated or required

to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements

and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit

have served as the Company’s auditor since 2019.

March 30, 2021

GLOBOCARE CORP.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS

CURRENT ASSETS:

Accounts receivable

Accounts receivable -

related party

Straight-line rent receivable

Security deposit

Prepaid expenses - related

expenses and other current assets

Current Assets

NON-CURRENT ASSETS:

Straight-line rent receivable

- noncurrent portion

Property and equipment,

Investment in real estate,

Intangible assets, net

method investment

Accounts receivable - related party

Rent receivable

Deferred financing costs

Prepaid expenses and other current assets

Total Current Assets

NON-CURRENT ASSETS:

Rent receivable - noncurrent portion

Deferred leasing costs

Operating lease right-of-use assets, net

Property and equipment, net

Investment in real estate, net

Equity method investment

Total Non-current Assets

LIABILITIES AND EQUITY

CURRENT LIABILITIES:

professional fees

research and development fees

payroll liability

Accrued liabilities and

other payables

Accrued liabilities and

other payables - related parties

Accrued professional fees

Accrued research and development fees

Accrued payroll liability and directors’

Accrued liabilities and other payables

Accrued liabilities and other payables - related parties

Operating lease obligation

Tenants’

security deposit

Current Liabilities

NON-CURRENT LIABILITIES:

Note payable - related

payable - related party

Total Current Liabilities

NON-CURRENT LIABILITIES:

Commitments and Contingencies

Preferred stock, $0.0001

Operating lease obligation - noncurrent portion

Note payable - related party

Loan payable - related party

Total Non-current Liabilities

Total Liabilities

Commitments and Contingencies - (Note 17)

Preferred stock, $0.0001 par value;

10,000,000 shares authorized;

3 unchanged sentences

82,795,297 shares issued and 82,275,297 shares outstanding at December 31, 2020;

73,830,751 shares issued

and 73,310,751 shares outstanding at December 31, 2018

76,730,802 shares issued and 76,210,802 shares outstanding at December 31, 2019

Additional paid-in capital

common stock held

in treasury, at cost;

common stock held in treasury, at cost;

520,000 shares at December 31, 2020 and 2019

3 unchanged sentences

Statutory reserve

other comprehensive loss - foreign currency translation adjustment

Total Avalon GloboCare

Accumulated other comprehensive loss - foreign currency translation adjustment

Total Avalon GloboCare Corp.

stockholders’

equity and non-controlling interest

Non-controlling

Liabilities and Equity

accompanying notes to the consolidated financial statements.

GLOBOCARE CORP.

Non-controlling interest

Total Liabilities and Equity

See accompanying notes to the consolidated financial

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

the Years Ended

Real property

Medical related consulting

services - related parties

services and sales of developed products

COSTS AND EXPENSES

Real property operating

Medical related consulting

services - related parties

services and sales of developed products

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

the Years Ended December 31,

Real property rental

Medical related consulting services - related parties

Development services and sales of developed products

Total Revenues

COSTS AND EXPENSES

PROPERTY OPERATING INCOME

PROFIT FROM MEDICAL RELATED CONSULTING SERVICES

(LOSS) PROFIT FROM DEVELOPMENT SERVICES AND SALES OF DEVELOPED PRODUCTS

Real property operating expenses

Medical related consulting services - related parties

Development services and sales of developed products

Total Costs and Expenses

REAL PROPERTY OPERATING INCOME

GROSS PROFIT FROM MEDICAL RELATED CONSULTING SERVICES

GROSS LOSS FROM DEVELOPMENT SERVICES AND SALES OF DEVELOPED PRODUCTS

Total Gross Profit

OTHER OPERATING EXPENSES:

Compensation and related

Research and development

Professional fees

Compensation and related benefits

Research and development expenses

Other general and administrative

Other Operating Expenses

FROM OPERATIONS

Impairment loss

Total Other Operating Expenses

LOSS FROM OPERATIONS

(12,454,019 )

OTHER INCOME (EXPENSE)

(19,377,230 )

OTHER (EXPENSE) INCOME

Interest expense

Interest expense - related

Change in fair value of

warrants liabilities

Interest expense - related party

Change in fair value of warrants liabilities

Financing expense

Loss from equity-method

Foreign currency transaction

Loss from noncontrolling

interest deficit adjustment

Other Income (Expense), net

Loss from equity method investment

Loss from noncontrolling interest deficit adjustment

Other (expense) income

Total Other (Expense) Income, net

LOSS BEFORE INCOME TAXES

2 unchanged sentences

$ (12,679,438 )

$ (18,070,161 )

NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST

LOSS ATTRIBUTABLE TO AVALON GLOBOCARE CORP.

NET LOSS ATTRIBUTABLE TO AVALON GLOBOCARE CORP.

COMMON SHAREHOLDERS

3 unchanged sentences

$ (12,679,438 )

OTHER COMPREHENSIVE LOSS

foreign currency translation loss

$ (18,070,161 )

OTHER COMPREHENSIVE INCOME (LOSS)

Unrealized foreign currency translation gain (loss)

COMPREHENSIVE LOSS

2 unchanged sentences

COMPREHENSIVE LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST

COMPREHENSIVE

LOSS ATTRIBUTABLE TO AVALON GLOBOCARE CORP.

COMPREHENSIVE LOSS ATTRIBUTABLE TO AVALON GLOBOCARE CORP.

COMMON SHAREHOLDERS

1 unchanged sentence

$ (18,091,048 )

NET LOSS PER COMMON SHARE

ATTRIBUTABLE TO AVALON GLOBOCARE CORP.

NET LOSS PER COMMON SHARE ATTRIBUTABLE TO AVALON GLOBOCARE CORP.

COMMON SHAREHOLDERS:

Basic and diluted

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

accompanying notes to the consolidated financial statements.

GLOBOCARE CORP.

Basic and diluted

See accompanying notes to the consolidated financial

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

STATEMENTS OF CHANGES IN EQUITY

the Years Ended December 31, 2019 and 2018

GloboCare Corp.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Years Ended December 31, 2020 and 2019

Avalon GloboCare Corp.

Stockholders’

Preferred Stock

Treasury Stock

Accumulated Other

Comprehensive

Non-controlling

Balance, January 1, 2019

$ (11,291,776 )

Treasury stock purchase

Repayment made for Share

Subscription Agreement

Refundable deposit exchange

for common shares

Common shares issued in equity

raise, net of fees associated with equity raise

Common shares issued for

Noncontrolling interest deficit adjustment

Issuance of common stock upon cashless exercise of stock warrants

Issuance of common stock upon cashless exercise of stock options

Sale of common stock, net

Issuance of common stock for services

Stock-based compensation

Foreign currency translation

loss for the year

Foreign currency translation adjustment

Net loss for the year

(18,070,161 )

Balance, December 31, 2019

(29,361,937 )

Noncontrolling interest deficit

Issuance of common stock

upon cashless exercise of stock warrants

Issuance of common stock

upon exercise of options

Sale of common stock, net

Issuance of common stock

Issuance of common stock for services

Stock-based compensation

Foreign currency translation

loss for the year

Foreign currency translation adjustment

Net loss for the year

(12,679,438 )

2 unchanged sentences

$ (42,041,375 )

accompanying notes to the consolidated financial statements.

GLOBOCARE CORP.

See accompanying notes to the consolidated financial

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS

the Years Ended

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

$ (18,070,161 )

to reconcile net loss to net cash used in operating activities:

and amortization

compensation and service expense

on equity method investment

in warrants derivative liabilities

financing costs

from noncontrolling interest deficit adjustment

on fixed assets disposal

in operating assets and liabilities,

receivable - related party

Straight-line

Adjustments to reconcile net loss to net cash used in

operating activities:

Bad debt provision

Depreciation and amortization

Amortization of straight-line rent receivable

Amortization of use-of-right asset

Stock-based compensation and service expense

Loss from equity method investment

Loss on fixed assets disposal

Changes in warrants derivative liabilities

Allocated financing costs

Impairment loss

Loss from noncontrolling interest deficit adjustment

Changes in operating assets and liabilities:

Accounts receivable

Accounts receivable - related party

Rent receivable

expenses - related parties

expenses and other current assets

liabilities and other payables

liabilities and other payables - related parties

Prepaid expenses - related parties

Prepaid expenses and other current assets

Security deposit

Accrued liabilities and other payables

Accrued liabilities and other payables - related parties

Operating lease obligation

Tenants’

security deposit

CASH USED IN OPERATING ACTIVITIES

FLOWS FROM INVESTING ACTIVITIES:

of property and equipment

of commercial real estate

in equity method investment

for previously acquired business

CASH USED IN INVESTING ACTIVITIES

FLOWS FROM FINANCING ACTIVITIES

received from note payable - related party

of note payable - related party

of loan payable

received from loan payable - related party

of common stock

for refundable deposit in connection with Share Subscription Agreement

received from offering

Disbursements

for offering costs

CASH PROVIDED BY FINANCING ACTIVITIES

OF EXCHANGE RATE ON CASH

DECREASE IN CASH

- beginning of year

- end of year

DISCLOSURE OF CASH FLOW INFORMATION:

INVESTING AND FINANCING ACTIVITIES:

and equipment acquired on credit as payable

of equipment by decreasing prepayment for equipment

stock issued for future services

stock issued for accrued liabilities

deposit exchange for common shares

accompanying notes to the consolidated financial statements.

GLOBOCARE CORP.

NET CASH USED IN OPERATING ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment

Improvement of commercial real estate

Additional investment in equity method investment

NET CASH USED IN INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds received from note payable - related party

Repayments of note payable - related party

Proceeds received from loan payable - related party

Repurchase of warrants

Proceeds received from offering

Disbursements for offering costs

Repayments of loan payable

NET CASH PROVIDED BY FINANCING ACTIVITIES

EFFECT OF EXCHANGE RATE ON CASH

NET DECREASE IN CASH

CASH - beginning of year

CASH - end of year

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid for:

NON-CASH INVESTING AND FINANCING ACTIVITIES:

Property and equipment acquired on credit as payable

Common stock issued for future services

Common stock issued for accrued liabilities

See accompanying notes to the consolidated financial statements.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

ORGANIZATION AND NATURE OF OPERATIONS

GloboCare Corp.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND NATURE

OF OPERATIONS

Avalon GloboCare Corp.

(the “Company”

or “AVCO”) is a Delaware corporation.

The Company was incorporated under

the laws of the State of Delaware on July 28, 2014.

On October 19, 2016, the Company entered into and closed a Share Exchange

Agreement with the shareholders of Avalon Healthcare System, Inc., a Delaware corporation (“AHS”), each of which are

accredited investors (“AHS Shareholders”) pursuant to which we acquired 100% of the outstanding securities of AHS

in exchange for 50,000,000 shares of our common stock (the “AHS Acquisition”).

AHS was incorporated on May 18, 2015

under the laws of the State of Delaware.

accounting purposes, AHS was the surviving entity.

The transaction was accounted for as a recapitalization of AHS pursuant to

which AHS was treated as the accounting acquirer, surviving and continuing entity although the Company is the legal acquirer.

The Company did not recognize goodwill or any intangible assets in connection with this transaction.

Accordingly, the Company’s

historical financial statements are those of AHS and its wholly-owned subsidiary, Avalon (Shanghai) Healthcare Technology Co.,

(“Avalon Shanghai”) immediately following the consummation of this reverse merger transaction.

Company now is a clinical-stage, leading CellTech bio-developer dedicated to advancing and empowering innovative, and transformative

immune effector cell therapy and exosome technology.

The Company also provides strategic advisory and outsourcing services to

facilitate and enhance its clients’

growth, development, as well as competitiveness in healthcare and CellTech industry

AHS owns 100% of the capital stock of Avalon Shanghai, which is a wholly foreign-owned enterprise organized under the

laws of the People’s Republic of China (“PRC”).

Avalon Shanghai was incorporated on April 29, 2016 and is engaged

in medical related consulting services for customers.

January 23, 2017, the Company incorporated Avalon (BVI) Ltd., a British Virgin Island company.

There was no activity for the subsidiary

since its incorporation through December 31, 2019.

The Company was incorporated under the laws of the State of Delaware on July

On October 19, 2016, the Company entered into and closed a Share Exchange Agreement with the shareholders of Avalon Healthcare

System, Inc., a Delaware corporation (“AHS”), each of which were accredited investors (“AHS Shareholders”)

pursuant to which we acquired 100% of the outstanding securities of AHS in exchange for 50,000,000 shares of the Company’s

common stock (the “AHS Acquisition”).

AHS was incorporated on May 18, 2015 under the laws of the State of Delaware.

For accounting purposes, AHS was the surviving

The transaction was accounted for as a recapitalization of AHS pursuant to which AHS was treated as the accounting acquirer,

surviving and continuing entity although the Company is the legal acquirer.

The Company did not recognize goodwill or any intangible

assets in connection with this transaction.

Accordingly, the Company’s historical financial statements are those of AHS and

its wholly-owned subsidiary, Avalon (Shanghai) Healthcare Technology Co., Ltd.

(“Avalon Shanghai”) immediately following

the consummation of this reverse merger transaction.

AHS owns 100% of the capital stock of Avalon Shanghai, which is a wholly foreign-owned

enterprise organized under the laws of the People’s Republic of China (“PRC”).

Avalon Shanghai was incorporated

on April 29, 2016 and is engaged in medical related consulting services for customers.

The Company is a

clinical-stage, vertically integrated, leading CellTech bio-developer dedicated to advancing and empowering innovative, transformative

immune effector cell therapy, exosome technology, as well as COVID-19 related diagnostics and therapeutics.

The Company also provides

strategic advisory and outsourcing services to facilitate and enhance its clients’

growth and development, as well as competitiveness

in healthcare and CellTech industry markets.

Through its subsidiary structure with unique integration of verticals from innovative

R&D to automated bioproduction and accelerated clinical development, the Company is establishing a leading role in the fields

of cellular immunotherapy (including CAR-T/NK), exosome technology (ACTEX™), and regenerative therapeutics.

On January 23, 2017, the Company incorporated

Avalon (BVI) Ltd., a British Virgin Island company.

There was no activity for the subsidiary since its incorporation through December

Avalon (BVI) Ltd.

is dormant and is in process of being dissolved.

February 7, 2017, the Company formed Avalon RT 9 Properties, LLC (“Avalon RT 9”), a New Jersey limited liability company.

On May 5, 2017, Avalon RT 9 purchased a real property located in Township of Freehold, County of Monmouth, State of New Jersey,

having a street address of 4400 Route 9 South, Freehold, NJ 07728.

This property was purchased to serve as the Company’s

world-wide headquarters for all corporate administration and operations.

On February 7, 2017, the Company formed Avalon

RT 9 Properties, LLC (“Avalon RT 9”), a New Jersey limited liability company.

On May 5, 2017, Avalon RT 9 purchased

a real property located in Township of Freehold, County of Monmouth, State of New Jersey, having a street address of 4400 Route

9 South, Freehold, NJ 07728.

This property was purchased to serve as the Company’s world-wide headquarters for all corporate

administration and operations.

In addition, the property generates rental income.

RT 9 owns this office building.

Currently, Avalon RT 9’s business consists of the ownership and operation of the income-producing

real estate property in New Jersey.

The current occupancy rate of the building is 93.4%.

July 31, 2017, the Company formed Genexosome Technologies Inc.

Avalon RT 9 owns this office building.

Avalon RT 9’s business consists of the ownership and operation of the income-producing real estate property in New Jersey.

Currently, the occupancy rate of the building is 83.7%.

On July 31, 2017, the Company formed Genexosome

Technologies Inc.

(“Genexosome”) in Nevada.

July 18, 2018, the Company formed a wholly owned subsidiary, Avactis Biosciences Inc., a Nevada corporation, which will focus

on accelerating commercial activities related to cellular therapies, including regenerative medicine with stem/progenitor cells

as well as cellular immunotherapy including CAR-T, CAR-NK, TCR-T and others.

The subsidiary is designed to integrate and optimize

our global scientific and clinical resources to further advance the use of cellular therapies to treat certain cancers.

June 13, 2019, the Company formed a wholly owned subsidiary, International Exosome Association LLC, a Delaware company.

was no activity for the subsidiary since its incorporation through December 31, 2019.

GLOBOCARE CORP.

Genexosome is engaged in developing proprietary diagnostic and therapeutic

products using exosomes.

Effective October 25, 2017, Genexosome owns 100% of the capital stock of Beijing Jieteng (Genexosome)

Biotech Co., Ltd., a corporation incorporated in the People’s Republic of China on August 7, 2015 (“Beijing Genexosome”),

and the Company holds 60% of Genexosome and Dr.

Yu Zhou holds 40% of Genexosome.

Beijing Genexosome is engaged in providing development

services and selling developed items to customers in China.

On July 18, 2018, the Company formed a wholly

owned subsidiary, Avactis Biosciences Inc., a Nevada corporation, which will focus on accelerating commercial activities related

to cellular therapies, including regenerative medicine with stem/progenitor cells as well as cellular immunotherapy including CAR-T,

CAR-NK, TCR-T and others.

The subsidiary is designed to integrate and optimize our global scientific and clinical resources to

further advance the use of cellular therapies to treat certain cancers.

On June 13, 2019, the Company formed a wholly

owned subsidiary, International Exosome Association LLC, a Delaware company.

There was no activity for the subsidiary since its

incorporation through December 31, 2020.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

ORGANIZATION AND NATURE OF OPERATIONS (continued)

of the Company’s subsidiaries which are included in these consolidated financial statements as of December 31, 2019 are

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND NATURE

OF OPERATIONS (continued)

Details of the Company’s subsidiaries

which are included in these consolidated financial statements as of December 31, 2020 are as follows:

of Subsidiary

and date of Incorporation

Healthcare System, Inc.

Incorporation

Percentage of

Avalon Healthcare System, Inc.

(“AHS”)

medical related consulting services and developing Avalon Cell and Avalon Rehab in United States of America (“USA”)

(“Avalon

Virgin Island

is in process of being dissolved

RT 9 Properties LLC

(“Avalon

and operates an income-producing real property and holds and manages the corporate headquarters

(Shanghai) Healthcare Technology Co., Ltd.

(“Avalon

Shanghai”)

medical related consulting services and developing Avalon Cell and Avalon Rehab in China

Technologies Inc.

100% held by AVCO

Provides medical related consulting services and developing Avalon Cell and Avalon Rehab in United States of America (“USA”)

Avalon (BVI) Ltd.

(“Avalon BVI”)

British Virgin Island

January 23, 2017

100% held by AVCO

Dormant, is in process of being dissolved

Avalon RT 9 Properties LLC

(“Avalon RT 9”)

February 7, 2017

100% held by AVCO

Owns and operates an income-producing real property and holds and manages the corporate headquarters

Avalon (Shanghai) Healthcare Technology Co.,

(“Avalon Shanghai”)

April 29, 2016

100% held by AHS

Provides medical related consulting services and developing Avalon Cell and Avalon Rehab in China

Genexosome Technologies Inc.

(“Genexosome”)

proprietary diagnostic and therapeutic products using exosomes

Jieteng (Genexosome) Biotech Co., Ltd.

(“Beijing

Genexosome”)

July 31, 2017

60% held by AVCO

Develops proprietary diagnostic and therapeutic products using exosomes

Beijing Jieteng (Genexosome) Biotech Co., Ltd.

(“Beijing Genexosome”)

August 7, 2015

100% held by Genexosome

development services for hospitals and other customers and sells developed items to hospitals and other customers in China

Biosciences Inc.

Provides development services for hospitals and other customers and sells developed items to hospitals and other customers in China

Avactis Biosciences Inc.

(“Avactis”)

and optimize global scientific and clinical resources to further advance cellular therapies, including regenerative medicine

with stem/progenitor cells as well as cellular immunotherapy including CAR-T, CAR-NK, TCR-T and others to treat certain cancers

International

Exosome Association LLC

July 18, 2018

100% held by AVCO

Integrate and optimize global scientific and clinical resources to further advance cellular therapies, including regenerative medicine with stem/progenitor cells as well as cellular immunotherapy including CAR-T, CAR-NK, TCR-T and others to treat certain cancers

International Exosome Association LLC

(“Exosome”)

standardization related to exosome industry

June 13, 2019

100% held by AVCO

Promotes standardization related to exosome industry

2 – BASIS OF PRESENTATION AND GOING CONCERN CONDITION

of Presentation

accompanying consolidated financial statements and related notes have been prepared in accordance with accounting principles generally

accepted in the United States of America (“U.S.

Basis of Presentation

The accompanying consolidated financial statements

and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America

GAAP”) and with the rules and regulations of the U.S.

Securities and

Exchange Commission for financial information.

Company’s consolidated financial statements include the accounts of the Company and its subsidiaries.

All significant intercompany

accounts and transactions have been eliminated in consolidation.

Going Concern

currently has limited operations.

Currently, the Company’s operations are focused on:

(i) real estate property ownership

and operation in the United States;

(ii) providing outsourced, customized international healthcare services to the rapidly changing

health care industry primarily focused in the People’s Republic of China;

(iii) performing development services

for hospitals and other customers and sales of developed products to hospitals and other customers .

The Company is also pursuing the provision of healthcare services in the United States.

These consolidated financial statements

have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization

of assets and the satisfaction of liabilities in the normal course of business .

reflected in the accompanying consolidated financial statements, the Company had an accumulated deficit of $29,361,937 at December

31, 2019, and has incurred recurring net loss and negative cash flow from operating activities of $18,070,161 and $7,079,871 for

the year ended December 31, 2019, respectively.

The Company has a limited operating history and its continued growth is dependent

upon the continuation of providing medical consulting services to its only four clients who are related parties and generating

rental revenue from its income-producing real estate property in New Jersey and performing development services for hospitals

and other customers and sales of developed products to hospitals and other customers ;

generating revenues, and obtaining additional financing to fund future obligations and pay liabilities arising from normal business

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

from the release date of this report.

These matters raise substantial doubt about the Company’s ability to continue as a

going concern.

The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise

additional capital, implement its business plan, and generate significant revenues.

There are no assurances that the Company will

be successful in its efforts to generate significant revenues, maintain sufficient cash balance or report profitable operations

or to continue as a going concern.

The Company plans on raising capital through the sale of equity to implement its business plan.

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

on satisfactory terms and conditions, if any.

accompanying consolidated financial statements do not include any adjustments related to the recoverability or classification

of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue

as a going concern.

GLOBOCARE CORP.

Securities and Exchange Commission for financial information.

The Company’s consolidated financial

statements include the accounts of the Company and its subsidiaries.

All significant intercompany accounts and transactions have

been eliminated in consolidation.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

preparation of the consolidated financial statements in conformity with U.S.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2 – BASIS OF PRESENTATION AND GOING CONCERN CONDITION (continued)

Going Concern

The Company is a

clinical-stage, vertically integrated, leading CellTech bio-developer dedicated to advancing and empowering innovative, transformative

immune effector cell therapy, exosome technology, as well as COVID-19 related diagnostics and therapeutics.

The Company also provides

strategic advisory and outsourcing services to facilitate and enhance its clients’

growth and development, as well as competitiveness

in healthcare and CellTech industry markets.

Through its subsidiary structure with unique integration of verticals from innovative

R&D to automated bioproduction and accelerated clinical development, the Company is establishing a leading role in the fields

of cellular immunotherapy (including CAR-T/NK), exosome technology (ACTEX™), and regenerative therapeutics.

In addition, the Company owns commercial real

estate that houses its headquarters in Freehold, New Jersey and provides outsourced, customized

international healthcare services to the rapidly changing health care industry primarily focused in the People’s Republic

The Company did not generate any revenue from development services and sales of developed products segment during

the year ended December 31, 2020.

These consolidated financial statements have been prepared assuming that the Company will continue

as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the

normal course of business.

As reflected in the accompanying consolidated

financial statements, the Company has incurred recurring net

loss and generated negative cash flow from operating activities of $12,679,438 and $7,546,100 for the year ended December 31, 2020,

respectively.

The Company has a limited operating history and its continued growth is dependent upon the continuation of providing

medical consulting services to its only few clients who are related parties and generating rental revenue from its income-producing

real estate property in New Jersey and performing development services for hospitals and other customers and sales of developed

products to hospitals and other customers;

hence generating revenues, and obtaining additional financing to fund future obligations

and pay liabilities arising from normal business operations.

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

the operating expenses for the next twelve months from the release date of this report.

These matters raise substantial doubt about

the Company’s ability to continue as a going concern.

The ability of the Company to continue as a going concern is dependent

on the Company’s ability to raise additional capital, implement its business plan, and generate significant revenues.

are no assurances that the Company will be successful in its efforts to generate significant revenues, maintain sufficient cash

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

The Company plans on raising capital through the sale

of equity to implement its business plan.

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

will be available to the Company on satisfactory terms and conditions, if any.

The occurrence of an uncontrollable event

such as the COVID-19 pandemic had negatively impact on the Company’s operations.

Some tenants have delayed on rent payment

and our occupancy of our rental property has decreased in 2020.

Most tenants are paid up to date and our occupancy has increased

from 83.7% to 89.4% in subsequent period.

Our general development operations have continued during the COVID-19 pandemic and we

have not had significant disruption.

However, we are uncertain if the COVID-19 pandemic will impact future operations at our laboratory,

or our ability to collaborate with other laboratories and universities.

In addition, we are unsure if the COVID-19 pandemic will

impact future clinical trials.

Given the dynamic nature of these circumstances, the duration of business disruption and reduced

traffic, the related financial effect cannot be reasonably estimated at this time but is expected to adversely impact the Company’s

business for the year of 2021.

The accompanying consolidated financial statements

do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification

of liabilities that may result should the Company be unable to continue as a going concern.

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES

Use of Estimates

The preparation

of the consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions

1 unchanged sentence

the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ

from these estimates.

Significant estimates during the years ended December 31, 2019 and 2018 include the allowance for doubtful

accounts, the useful life of property and equipment and investment in real estate and intangible assets, assumptions used in assessing

impairment of long-term assets, valuation of deferred tax assets and the associated valuation allowances, and valuation of stock-based

compensation.

Value of Financial Instruments and Fair Value Measurements

Actual results could

differ from these estimates.

Significant estimates during the years ended December 31, 2020 and 2019 include the useful life

of property and equipment and investment in real estate, assumptions used in assessing impairment of long-term assets,

valuation of deferred tax assets and the associated valuation allowances, and valuation of stock-based compensation.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

Fair Value of Financial Instruments

and Fair Value Measurements

Company adopted the guidance of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies

the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify

the inputs used in measuring fair value as follows:

1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities

available at the measurement date.

2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets,

quoted prices for identical or similar assets and liabilities in markets that are not

active, inputs other than quoted prices that are observable, and inputs derived from

or corroborated by observable market data.

3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions

on what assumptions the market participants would use in pricing the asset or liability

the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the

inputs used in measuring fair value as follows :

● Level 1-Inputs are unadjusted quoted prices in active markets

for identical assets or liabilities available at the measurement date.

● Level 2-Inputs are unadjusted quoted prices for similar assets

and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active,

inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

● Level 3-Inputs are unobservable inputs which reflect the

reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability

based on the best available information.

and liabilities measured at fair value on a nonrecurring basis.

Certain assets and liabilities are measured

at fair value on a nonrecurring basis.

These assets and liabilities are not measured at fair value on an ongoing basis, but are

subject to fair value adjustments in certain circumstances.

These assets and liabilities can include intangible assets that are

written down to fair value when they are impaired.

The factors used to determine fair value are subject to management’s judgment and expertise and include,

but are not limited to, lower sales of the product than anticipated and future ability to use the product.

These assumptions represent

Level 3 inputs.

Assets and liabilities

measured at fair value on a nonrecurring basis.

Certain assets and liabilities are measured at fair value on a nonrecurring

These assets and liabilities are not measured at fair value on an ongoing basis, but are subject to fair value adjustments

in certain circumstances.

These assets and liabilities can include intangible assets that are written down to fair value when they

are impaired.

Intangible assets.

The factors used to determine fair value are subject to management’s judgment and expertise and include, but are not

limited to, lower sales of the product than anticipated and future ability to use the product.

These assumptions represent Level

Impairment of intangible assets for the year ended December 31, 2020 and 2019 was $0 and $1,010,011, respectively.

and liabilities measured at fair value on a recurring basis.

Certain assets and liabilities are measured at

fair value on a recurring basis.

Assets and liabilities

measured at fair value on a recurring basis.

Certain assets and liabilities are measured at fair value on a recurring basis.

These assets and liabilities are measured at fair value on an ongoing basis.

These assets and

liabilities include derivative liabilities.

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Value of Financial Instruments and Fair Value Measurements (continued)

These assets and liabilities include derivative liabilities.

Derivative liabilities are carried at fair value and measured on an ongoing basis.

3 unchanged sentences

value for the year ended December 31, 2019:

Unobservable Inputs

Significant Unobservable

Balance of derivative liabilities as of January 1, 2019

Initial fair value of derivative liabilities attributable

to warrants issuance with fund raise

Initial fair value of derivative liabilities attributable to warrants issuance with fund raise

Gain from change in the fair value of derivative liabilities

1 unchanged sentence

Balance of derivative liabilities as of December 31, 2019

825-10 “Financial Instruments”, allows entities to voluntarily choose to measure certain financial assets and liabilities

at fair value (fair value option).

The fair value option may be elected on an instrument-by-instrument basis and is irrevocable,

unless a new election date occurs.

If the fair value option is elected for an instrument, unrealized gains and losses for that

instrument should be reported in earnings at each subsequent reporting date.

The Company did not elect to apply the fair value

option to any outstanding instruments.

and Cash Equivalents

consists of cash on hand and cash in banks.

A portion of the Company’s cash is maintained with state-owned banks within

the PRC, and none of these deposits are covered by insurance.

The Company has not experienced any losses in such accounts and

believes it is not exposed to any risks on its cash in bank accounts.

Company maintains cash balances in excess of Federal Deposit Insurance Corporation (“FDIC”) limits at certain financial

institutions.

The Company manages this credit risk by concentrating its cash balances in high quality financial institutions and

by periodically evaluating the credit quality of the primary financial institutions holding such deposits.

The Company has not

experienced any losses in bank accounts and believes it is not exposed to any risks on its cash in bank accounts.

December 31, 2019 and 2018, the Company’s cash balances by geographic area were as follows:

The carrying amounts reported in the consolidated balance sheets

for cash, rent receivable, accrued liabilities and other payables, accrued liabilities and other payables –

related parties,

operating lease obligation, tenants’

security deposit, approximate their fair market value as of December 31, 2020 and 2019

based on the short-term maturity of these instruments.

ASC 825-10 “Financial Instruments”,

allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option).

fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs.

the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings

at each subsequent reporting date.

The Company did not elect to apply the fair value option to any outstanding instruments.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

Cash Equivalents

At December 31, 2020 and 2019, the Company’s

cash balances by geographic area were as follows:

United States

of the consolidated statements of cash flows, the Company considers all highly liquid instruments purchased with a maturity of

three months or less when purchased and money market accounts to be cash equivalents.

The Company had no cash equivalents

at December 31, 2019 and 2018.

Concentrations

of Credit Risk

a portion of the Company’s operations are carried out in PRC.

Accordingly, the Company’s business, financial condition

and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state

of the PRC’s economy.

The Company’s operations in PRC are subject to specific considerations and significant risks

not typically associated with companies in North America.

The Company’s results may be adversely affected by changes in

governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad,

and rates and methods of taxation, among other things.

instruments which potentially subject the Company to concentrations of credit risk consist principally of trade accounts receivable.

A portion of the Company’s sales are credit sales which is to the customer whose ability to pay is dependent upon the industry

economics prevailing in these areas;

however, concentrations of credit risk with respect to trade accounts receivable is limited

due to generally short payment terms.

The Company also performs ongoing credit evaluations of its customers to help further reduce

Receivable and Allowance for Doubtful Accounts

receivable are presented net of an allowance for doubtful accounts.

The Company maintains allowances for doubtful accounts for

estimated losses.

The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when

there is doubt as to the collectability of individual balances.

In evaluating the collectability of individual receivable balances,

the Company considers many factors, including the age of the balance, a customer’s historical payment history, its current

credit-worthiness and current economic trends.

Accounts are written off after exhaustive efforts at collection.

GLOBOCARE CORP.

of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months

or less when purchased and money market accounts to be cash equivalents.

The Company had no cash equivalents at December 31, 2020

Credit Risk and Uncertainties

A portion of the Company’s cash is maintained

with state-owned banks within the PRC.

Balances at state-owned banks within the PRC are covered by insurance up to RMB 500,000

(approximately $77,000) per bank.

Any balance over RMB 500,000 per bank in PRC will not be covered.

At December 31, 2020, cash

balances held in the PRC are RMB 1,089,733 (approximately $167,000), of which, RMB 563,458 (approximately $86,000) was not covered

by such limited insurance.

The Company has not experienced any losses in such accounts and believes it is not exposed to any risks

on its cash in bank accounts.

The Company maintains a portion of its cash

in bank and financial institution deposits within U.S.

that at times may exceed federally-insured limits of $250,000.

manages this credit risk by concentrating its cash balances in high quality financial institutions and by periodically evaluating

the credit quality of the primary financial institutions holding such deposits.

The Company has not experienced any losses in such

bank accounts and believes it is not exposed to any risks on its cash in bank accounts.

At December 31, 2020, the Company’s

cash balances in United States bank accounts had approximately $51,000 in excess of the federally-insured limits.

Currently, a portion of the Company’s

operations are carried out in PRC.

Accordingly, the Company’s business, financial condition and results of operations may

be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC’s economy.

The Company’s operations in PRC are subject to specific considerations and significant risks not typically associated with

companies in North America.

The Company’s results may be adversely affected by changes in governmental policies with respect

to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation,

among other things.

Financial instruments which potentially subject

the Company to concentrations of credit risk consist principally of trade accounts receivable.

A portion of the Company’s

sales are credit sales which is to the customer whose ability to pay is dependent upon the industry economics prevailing in these

however, concentrations of credit risk with respect to trade accounts receivable is limited due to generally short payment

The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk.

Rent Receivable and Allowance for Doubtful Accounts

Rent receivable is presented net of an allowance

for doubtful accounts.

Rent receivable balance consists of base rents, tenant reimbursements and receivables arising from straight-lining

of rents represent amounts accrued and unpaid from tenants in accordance with the terms of the respective leases, subject to the

Company’s revenue recognition policy.

An allowance for the uncollectible portion of rent receivable is determined based upon

an analysis of the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in

which the tenant operates and economic conditions in Freehold, New Jersey in which the property is located.

Management believes that the rent receivable

is fully collectable.

Therefore, no allowance for doubtful accounts is deemed to be required on its rent receivable at December

31, 2020 and 2019.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Receivable and Allowance for Doubtful Accounts (continued)

believes that the accounts receivable are fully collectable.

Therefore, no allowance for doubtful accounts is deemed to be required

on its accounts receivable at December 31, 2019 and 2018.

The Company historically has not experienced uncollectible accounts

from customers granted with credit sales.

Straight-line

rent receivable

Straight-line

rent receivable represents amount accrued and unpaid from tenants in accordance with the terms of the respective leases, subject

to the Company’s revenue recognition policy.

and Equipment

and equipment are carried at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets.

The cost of repairs and maintenance is expensed as incurred;

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

Deferred financing costs

Deferred financing

costs consist of legal, accounting and other costs that are directly related to the Company’s open market sale equity financing

and will be charged to stockholders’

equity upon the completion of the equity offering.

As of December 31, 2020 and 2019,

deferred financing costs amounted to $222,141 and $311,177, respectively.

Deferred leasing costs

Costs incurred to

obtain tenant leases are amortized using the straight-line method over the term of the related lease agreement.

Such costs include

lease incentives and leasing commissions.

If the lease is terminated early, the remaining unamortized deferred leasing cost is

Property and Equipment

Property and equipment are carried at cost

and are depreciated on a straight-line basis over the estimated useful lives of the assets.

The cost of repairs and maintenance

is expensed as incurred;

major replacements and improvements are capitalized.

are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses

are included in income in the period of disposition.

The Company examines the possibility of decreases in the value of fixed assets

when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.

In Real Estate and Depreciation

in real estate is carried at cost less accumulated depreciation and consists of building and improvement.

The Company depreciates

real estate building and improvement on a straight-line basis over estimated useful life.

Expenditures for ordinary repair and

maintenance costs are charged to expense as incurred.

Expenditure for improvements, renovations, and replacements of real estate

asset is capitalized and depreciated over its estimated useful life if the expenditure qualifies as betterment.

in Unconsolidated Company –

Epicon Biosciences Co., Ltd.

Company uses the equity method of accounting for its investment in, and earning or loss of, company that it does not control but

over which it does exert significant influence.

The Company considers whether the fair value of its equity method investment has

declined below its carrying value whenever adverse events or changes in circumstances indicate that recorded value may not be

If the Company considers any decline to be other than temporary (based on various factors, including historical financial

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

for discussion of equity method investment.

of Long-lived Assets

accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances

indicate that the carrying amount of the assets may not be fully recoverable, or at least annually.

The Company recognizes an

impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset.

of impairment is measured as the difference between the asset’s estimated fair value and its book value.

When assets are retired or disposed of, the cost

and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the period

of disposition.

The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances

reflect the fact that their recorded value may not be recoverable.

Investment In Real

Estate and Depreciation

Investment in real estate is carried at cost

less accumulated depreciation and consists of building and improvement.

The Company depreciates real estate building and improvement

on a straight-line basis over estimated useful life.

Expenditures for ordinary repair and maintenance costs are charged to expense

Expenditure for improvements, renovations, and replacements of real estate asset is capitalized and depreciated over

its estimated useful life if the expenditure qualifies as betterment.

Investment in Unconsolidated

Company – Epicon Biosciences Co., Ltd.

The Company uses the equity method of accounting

for its investment in, and earning or loss of, company that it does not control but over which it does exert significant influence.

The Company considers whether the fair value of its equity method investment has declined below its carrying value whenever adverse

events or changes in circumstances indicate that recorded value may not be recoverable.

If the Company considers any decline to

be other than temporary (based on various factors, including historical financial results and the overall health of the investee),

then a write-down would be recorded to estimated fair value.

See Note 7 for discussion of equity method investment.

Impairment of Long-lived Assets

In accordance with ASC Topic 360, the Company

reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets

may not be fully recoverable, or at least annually.

The Company recognizes an impairment loss when the sum of expected undiscounted

future cash flows is less than the carrying amount of the asset.

The amount of impairment is measured as the difference between

the asset’s estimated fair value and its book value.

In September 2019, the Company assessed its

4 unchanged sentences

31, 2019, which reduced the value of intangible assets acquired to $0.

The Company did not record any impairment charge for

the year ended December 31, 2018 as there was no impairment indicator noted.

GLOBOCARE CORP.

The Company did not record any impairment charge for the

year ended December 31, 2020.

Deferred Rental Income

Deferred rental income represents rental income

collected but not earned as of the reporting date.

The Company defers the revenue related to lease payments received from tenants

in advance of their due dates.

As of December 31, 2020 and 2019, deferred rental income totaled $23,510 and $13,136, respectively,

which were included in accrued liabilities and other payables on the accompanying consolidated balance sheets.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Rental Income

rental income represents rental income collected but not earned as of the reporting date.

The Company defers the revenue related

to lease payments received from tenants in advance of their due dates.

As of December 31, 2019 and 2018, deferred rental income

totaled $13,136 and $14,136, respectively.

Shanghai and Beijing Genexosome are subject to a value added tax (“VAT”) for providing medical related consulting

services and performing development services and sales of developed products.

The amount of VAT liability is determined by applying

the applicable tax rates to the invoiced amount of medical related consulting services provided and the invoiced amount of development

services provided and sales of developed products (output VAT) less VAT paid on purchases made with the relevant supporting invoices

The Company reports revenue net of PRC’s value added tax for all the periods presented in the consolidated

statements of operations.

January 1, 2018, the Company began recognizing revenue under Accounting Standards Codification (“ASC”) Topic 606,

Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective transition method.

of adopting the new revenue standard was not material to the Company’s consolidated financial statements and there was no

adjustment to beginning accumulated deficit on January 1, 2018.

The core principle of this new revenue standard is that a company

should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration

to which the company expects to be entitled in exchange for those goods or services.

The following five steps are applied to achieve

that core principle:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

Value Added Tax

Avalon Shanghai and Beijing Genexosome are

subject to a value added tax (“VAT”) for providing medical related consulting services and performing development services

and sales of developed products.

The amount of VAT liability is determined by applying the applicable tax rates to the invoiced

amount of medical related consulting services provided and the invoiced amount of development services provided and sales of developed

products (output VAT) less VAT paid on purchases made with the relevant supporting invoices (input VAT).

The Company reports revenue

net of PRC’s value added tax for all the periods presented in the consolidated statements of operations and comprehensive

Revenue Recognition

The Company recognizes revenue under Accounting Standards Codification

(“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”).

The core principle of the revenue

standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount

that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.

The following

five steps are applied to achieve that core principle:

Identify the contract with the customer

8 unchanged sentences

goods or service (or bundle of goods or services) if both of the following criteria are met:

customer can benefit from the good or service either on its own or together with other

resources that are readily available to the customer (i.e., the good or service is capable

of being distinct).

entity’s promise to transfer the good or service to the customer is separately

identifiable from other promises in the contract (i.e., the promise to transfer the good

or service is distinct within the context of the contract).

a goods or service is not distinct, the goods or service is combined with other promised goods or services until a bundle of goods

or services is identified that is distinct.

transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised

goods or services to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes).

The consideration

promised in a contract with a customer may include fixed amounts, variable amounts, or both.

Variable consideration is included

in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue

recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

transaction price is allocated to each performance obligation on a relative standalone selling price basis.

The transaction price

allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over

time as appropriate.

GLOBOCARE CORP.

● The customer can benefit from the goods or service either on its own or together with other resources

that are readily available to the customer (i.e., the goods or service is capable of being distinct).

● The entity’s promise to transfer the goods or service to the customer is separately identifiable

from other promises in the contract (i.e., the promise to transfer the goods or service is distinct within the context of the contract).

If a goods or service

is not distinct, the goods or service is combined with other promised goods or services until a bundle of goods or services is

identified that is distinct.

The transaction price is the amount of consideration

to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts

collected on behalf of third parties (for example, some sales taxes).

The consideration promised in a contract with a customer

may include fixed amounts, variable amounts, or both.

Variable consideration is included in the transaction price only to the extent

that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty

associated with the variable consideration is subsequently resolved.

The transaction price is allocated to each

performance obligation on a relative standalone selling price basis.

The transaction price allocated to each performance obligation

is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recognition (continued)

fees under consulting agreements with related parties to provide medical related consulting services to its clients.

is paid for its services by its clients pursuant to the terms of the written consulting agreements.

Each contract calls for

a fixed payment.

fees under agreements to perform development services for hospitals and other customers.

The Company does not perform contracts

that are contingent upon successful results.

of developed products to hospitals and other customers.

recognition criteria:

Company recognizes revenue by providing medical related consulting services under written service contracts with its customers.

Revenue related to its service offerings is recognized as the services are performed.

from development services performed under written contracts is recognized as services are provided.

from sales of developed items to hospitals and other customers is recognized when items are shipped to customers and titles

are transferred.

Company has determined that the ASC 606 does not apply to rental contracts, which are within the scope of other revenue recognition

accounting standards.

Rental income

from operating leases is recognized on a straight-line basis under the guidance of ASC 842.

Lease payments under tenant leases

are recognized on a straight-line basis over the term of the related leases.

The cumulative difference between lease revenue recognized

under the straight-line method and contractual lease payments are recorded a “Straight-line rent receivable”

consolidated balance sheets.

Company does not offer promotional payments, customer coupons, rebates or other cash redemption offers to its customers.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

Revenue Recognition

Types of revenue:

● Service fees under consulting agreements with related parties

to provide medical related consulting services to its clients.

The Company is paid for its services by its clients pursuant to

the terms of the written consulting agreements.

Each contract calls for a fixed payment.

● Service fees under agreements to perform development services

for hospitals and other customers.

The Company does not perform contracts that are contingent upon successful results .

● Sales of developed products to hospitals and other customers .

Revenue recognition

● The Company recognizes revenue by providing medical related

consulting services under written service contracts with its customers.

Revenue related to its service offerings is recognized

as the services are performed.

● Revenue from development services performed under written

contracts is recognized as services are provided .

● Revenue from sales of developed items to hospitals and other

customers is recognized when items are shipped to customers and titles are transferred .

The Company has determined that the ASC 606

does not apply to rental contracts, which are within the scope of other revenue recognition accounting standards.

Rental income from operating leases is recognized

on a straight-line basis under the guidance of ASC 842.

Lease payments under tenant leases are recognized on a straight-line basis

over the term of the related leases.

The cumulative difference between lease revenue recognized under the straight-line method

and contractual lease payments are included in rent receivable on the consolidated balance sheets.

The Company does not offer promotional payments,

customer coupons, rebates or other cash redemption offers to its customers.

Disaggregation

the following tables, revenue is disaggregated by segment:

Ended December 31, 2019

Related Consulting Services Segment

services and sales of Developed Products Segment

In the following tables,

revenue is disaggregated by segment:

For the Year Ended December 31, 2020

Medical Related

Services Segment

Development Services

Products Segment

Medical related consulting services

- related parties

Development services and

sales of developed products

Development services and sales of developed products

Total revenues

Ended December 31, 2018

Related Consulting Services Segment

services and sales of Developed Products Segment

For the Year Ended December 31, 2019

Medical Related

Services Segment

Development Services

Products Segment

Medical related consulting services

- related parties

Development services and

sales of developed products

Development services and sales of developed products

Total revenues

a lease contains “rent holidays”, the Company records rental expense on a straight-line basis over the term of

the lease and the difference between the average rental amount charged to expense and the amount payable under the lease is recorded

as prepaid expenses in the consolidated balance sheets.

The Company begins recording rent expense on the lease possession date.

GLOBOCARE CORP.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Property Operating Expenses

February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”)

2016-02, Leases (Topic 842).

Lessees are required to recognize a right-of-use asset and a lease liability for virtually all of

their leases (other than leases that meet the definition of a short-term lease).

The liability is equal to the present value of

lease payments.

The asset is based on the liability, subject to certain adjustments, such as for initial direct costs.

statement purposes, a dual model was retained, requiring leases to be classified as either operating or finance leases.

leases result in straight-line expense (similar to operating leases under the prior accounting standard) while finance leases

result in a front-loaded expense pattern (similar to capital leases under the prior accounting standard).

Lessor accounting is

similar to the prior model, but updated to align with certain changes to the lessee model (e.g., certain definitions, such as

initial direct costs, have been updated) and the new revenue standard, ASU2014-9.

adopted ASU 842 effective January 1, 2019 using the optional transition method of recognizing a cumulative-effect adjustment to

the opening balance of accumulated deficit on January 1, 2019.

Therefore, comparative financial information was not adjusted and

continues to be reported under the prior lease accounting guidance in ASU 840.

The Company elected the transition relief package

of practical expedients, and as a result, the Company did not assess 1) whether existing or expired contracts contain embedded

leases, 2) lease classification for any existing or expired leases, and 3) whether lease origination costs qualified as initial

direct costs.

The Company elected the short-term lease practical expedient by establishing an accounting policy to exclude leases

with a term of 12 months or less.

property operating expenses consist of property management fees, property insurance, real estate taxes, depreciation, repairs

and maintenance fees, utilities and other expenses related to the Company’s rental properties.

Related Consulting Services Costs

of medical related consulting services includes the cost of internal labor and related benefits, travel expenses related to consulting

services, subcontractor costs, other related consulting costs, and other overhead costs.

Subcontractor costs were costs related

to medical related consulting services incurred by our subcontractor, such as medical professional’s compensation and travel

Services and Sales of Developed Products Costs

of development services and sales of developed items includes inventory costs, materials and supplies costs, depreciation, internal

labor and related benefits, other overhead costs and shipping and handling costs incurred.

and Development

for research and product development costs are expensed as incurred.

The Company incurred research and development expense of

$1,781,869 and $39,061 in the years ended December 31, 2019 and 2018, respectively.

costs related to advertising are expensed as incurred.

For the years ended December 31, 2019 and 2018, advertising costs amounted

to $685,064 and $335,900, respectively.

Company accounts for its stock-based compensation awards in accordance with Accounting Standards Codification (“ASC”)

Topic 718, Compensation—Stock Compensation (“ASC 718”).

ASC 718 requires all stock-based payments to employees

and non-employees including grants of stock options, to be recognized as expense in the statements of operations based on their

grant date fair values.

The Company estimates the grant date fair value of each option award using the Black-Scholes option-pricing

Company periodically issues common stock and common stock options to consultants for various services.

Costs of these transactions

are measured at the fair value of the service received or the fair value of the equity instruments issued, whichever is more reliably

The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance

by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty’s performance is

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

The Company accounts for income taxes using the asset/liability

method prescribed by ASC 740, “Income Taxes.”

Under this method, deferred tax assets and liabilities are determined

based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will

be in effect in the period in which the differences are expected to reverse.

The Company records a valuation allowance to offset

deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the

deferred tax assets will not be realized.

The effect on deferred taxes of a change in tax rates is recognized as income or loss

in the period that includes the enactment date.

GLOBOCARE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

When a lease contains “rent holidays”,

the Company records rental expense on a straight-line basis over the term of the lease and the difference between the average rental

amount charged to expense and the amount paid under the lease is recorded as prepaid expenses in the consolidated balance sheets.

The Company begins recording rent expense on the lease possession date.

Real Property Operating Expenses

Real property operating expenses consist of

property management fees, property insurance, real estate taxes, depreciation, repairs and maintenance fees, utilities and other

expenses related to the Company’s rental properties.

Medical Related Consulting Services Costs

Costs of medical related consulting services

include the cost of labor and related benefits, travel expenses related to consulting services, other related consulting costs,

and other overhead costs.

Development Services and Sales of Developed

Products Costs

Costs of development services and sales of

developed items include inventory costs, materials and supplies costs, labor and related benefits, depreciation, other overhead

costs and shipping and handling costs incurred.

Research and Development

Expenditures for research and product development

costs are expensed as incurred.

The Company incurred research and development expense of $883,855 and $1,781,869 in the years ended

December 31, 2020 and 2019, respectively.

Advertising Costs

All costs related to advertising are expensed

For the years ended December 31, 2020 and 2019, advertising costs amounted to $294,352 and $685,064, respectively.

Stock-based Compensation

The Company accounts for its stock-based compensation awards in accordance with Accounting Standards Codification

(“ASC”) Topic 718, Compensation—Stock Compensation (“ASC 718”).

ASC 718 requires all stock-based

payments to employees and non-employees including grants of stock options, to be recognized as expense in the statements of operations

based on their grant date fair values.

The Company estimates the grant date fair value of each option award using the Black-Scholes

option-pricing model.

The Company periodically issues common stock

and common stock options to consultants for various services.

Costs of these transactions are measured at the fair value of the

service received or the fair value of the equity instruments issued, whichever is more reliably measurable.

The value of the common

stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity

instruments is reached or (ii) the date at which the counterparty’s performance is complete.

The Company is governed by the income tax laws

of China and the United States.

The Company accounts for income taxes using the asset/liability method prescribed by ASC 740, “Income

Taxes.”

Under this method, deferred tax assets and liabilities are determined based on the difference between the financial

reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences

are expected to reverse.

The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available

evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized.

The effect on

deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Taxes (continued)

Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes”.

Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not

the position will be sustained upon examination by the tax authorities.

As of December 31, 2019 and 2018, the Company had no significant

uncertain tax positions that qualify for either recognition or disclosure in the financial statements.

Tax year that remains subject

to examination is the years ended December 31, 2019, 2018 and 2017.

The Company recognizes interest and penalties related to significant

uncertain income tax positions in other expense.

However, no such interest and penalties were recorded as of December 31, 2019

Currency Translation

reporting currency of the Company is the U.S.

The functional currency of the parent company, AHS, Avalon RT 9, Genexosome,

Avactis, and Exosome, is the U.S.

dollar and the functional currency of Avalon Shanghai and Beijing Genexosome, is the Chinese

Renminbi (“RMB”).

For the subsidiaries whose functional currency is the RMB, result of operations and cash flows are

translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at

the end of the period, and equity is translated at historical exchange rates.

As a result, amounts relating to assets and liabilities

reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balances on the balance

Translation adjustments resulting from the process of translating the local currency financial statements into U.S.

are included in determining comprehensive income/loss.

Transactions denominated in foreign currencies are translated into the

functional currency at the exchange rates prevailing on the transaction dates.

Assets and liabilities denominated in foreign currencies

are translated into the functional currency at the exchange rates prevailing at the balance sheet date with any transaction gains

and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency

are included in the results of operations as incurred.

of the Company’s revenue transactions are transacted in the functional currency of the operating subsidiaries.

does not enter into any material transaction in foreign currencies.

Transaction gains or losses have not had, and are not expected

to have, a material effect on the results of operations of the Company.

and liability accounts at December 31, 2019 and 2018 were translated at 6.9632 RMB and 6.8785 RMB to $1.00, respectively, which

were the exchange rates on the balance sheet dates.

Income Taxes (continued)

The Company follows

the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes”.

guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position

will be sustained upon examination by the tax authorities.

As of December 31, 2020 and 2019, the Company had no significant uncertain

tax positions that qualify for either recognition or disclosure in the financial statements.

Tax year that remains subject to examination

is the years ended December 31, 2020, 2019 and 2018.

The Company recognizes interest and penalties related to significant uncertain

income tax positions in other expense.

However, no such interest and penalties were recorded as of December 31, 2020 and 2019.

Foreign Currency Translation

The reporting currency of the Company is the

The functional currency of the parent company, AHS, Avalon RT 9, Genexosome, Avactis, and Exosome, is the U.S.

and the functional currency of Avalon Shanghai and Beijing Genexosome, is the Chinese Renminbi (“RMB”).

For the subsidiaries

whose functional currency is the RMB, result of operations and cash flows are translated at average exchange rates during the period,

assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical

exchange rates.

As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily

agree with the changes in the corresponding balances on the balance sheets.

Translation adjustments resulting from the process

of translating the local currency financial statements into U.S.

dollars are included in determining comprehensive income/loss.

Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on

the transaction dates.

Assets and liabilities denominated in foreign currencies are translated into the functional currency at

the exchange rates prevailing at the balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations

on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

All of the Company’s revenue transactions

are transacted in the functional currency of the operating subsidiaries.

The Company does not enter into any material transaction

in foreign currencies.

Transaction gains or losses have not had, and are not expected to have, a material effect on the results

of operations of the Company.

Asset and liability accounts at December 31,

2020 and 2019 were translated at 6.5306 RMB and 6.9632 RMB to $1.00, respectively, which were the exchange rates on the balance

Equity accounts were stated at their historical rates.

The average translation

rates applied to the statements of operations for the years ended December 31, 2019 and 2018 were 6.9099 RMB and 6.6202 RMB to

$1.00, respectively.

Cash flows from the Company’s operations are calculated based upon the local currencies using the average

translation rate.

Comprehensive

loss is comprised of net loss and all changes to the statements of equity, except those due to investments by stockholders, changes

in paid-in capital and distributions to stockholders.

For the Company, comprehensive loss for the years ended December 31, 2019

and 2018 consisted of net loss and unrealized loss from foreign currency translation adjustment.

Topic 260 “Earnings per Share,”

requires presentation of both basic and diluted earnings per share (“EPS”)

with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted

EPS computation.

The average translation rates applied to the statements of

operations for the years ended December 31, 2020 and 2019 were 6.8999 RMB and 6.9099 RMB to $1.00, respectively.

Cash flows from

the Company’s operations are calculated based upon the local currencies using the average translation rate.

Comprehensive Loss

Comprehensive loss is comprised of net loss

and all changes to the statements of equity, except those due to investments by stockholders, changes in paid-in capital and distributions

to stockholders.

For the Company, comprehensive loss for the years ended December 31, 2020 and 2019 consisted of net loss and unrealized

gain/loss from foreign currency translation adjustment.

Per Share Data

ASC Topic 260 “Earnings per Share,”

requires presentation of both basic and diluted earnings per share (“EPS”) with a reconciliation of the numerator and

denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation.

Basic EPS excludes dilution.

Diluted EPS reflects the potential dilution that could occur if securities or other

contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that

then shared in the earnings of the entity.

net loss per share are computed by dividing net loss available to common stockholders by the weighted average number of shares

of common stock outstanding during the period.

Diluted net loss per share is computed by dividing net loss by the weighted average

number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period.

Potentially dilutive common shares consist of the common shares issuable upon the exercise of common stock options and warrants

(using the treasury stock method).

Common stock equivalents are not included in the calculation of diluted net loss per share

if their effect would be anti-dilutive.

In a period in which the Company has a net loss, all potentially dilutive securities are

excluded from the computation of diluted shares outstanding as they would have had an anti-dilutive impact.

GLOBOCARE CORP.

Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised

or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

Basic net loss per share are computed by dividing

net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period.

Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock

equivalents and potentially dilutive securities outstanding during each period.

Potentially dilutive common shares consist of the

common shares issuable upon the exercise of common stock options and warrants (using the treasury stock method).

Common stock equivalents

are not included in the calculation of diluted net loss per share if their effect would be anti-dilutive.

In a period in which

the Company has a net loss, all potentially dilutive securities are excluded from the computation of diluted shares outstanding

as they would have had an anti-dilutive impact.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Share Data (continued)

following table summarizes the securities that were excluded from the diluted per share calculation because the effect of including

these potential shares was antidilutive:

Ended December 31,

dilutive securities

Per Share Data

The following table summarizes the securities

that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive:

Years Ended December 31,

Stock options

Potentially dilutive securities

Non-controlling

of December 31, 2019, Yu Zhou, director and former Co-Chief Executive Officer of Genexosome, who owned 40% of the equity interests

of Genexosome, which is not under the Company’s control.

uses “the management approach”

As of December 31, 2020, Dr.

former director and former Co-Chief Executive Officer of Genexosome, who owns 40% of the equity interests of Genexosome,

which is not under the Company’s control.

Segment Reporting

The Company uses “the management approach”

in determining reportable operating segments.

The management approach considers the

internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions

and assessing performance as the source for determining the Company’s reportable segments.

The Company’s chief operating

decision maker is the Chief Executive Officer (“CEO”) and president of the Company, who reviews operating results

to make decisions about allocating resources and assessing performance for the entire Company.

The Company has determined that

it has three reportable business segments:

real property operating segment, medical related consulting services segment, and development

services and sales of developed products segment.

These reportable segments offer different types of services and products, have

different types of revenue, and are managed separately as each requires different operating strategies and management expertise.

are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control,

are controlled by, or are under common control with the Company.

Related parties also include principal owners of the Company,

its management, members of the immediate families of principal owners of the Company and its management and other parties with

which the Company may deal with if one party controls or can significantly influence the management or operating policies of the

other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.

Company discloses all significant related party transactions.

The management approach considers the internal organization and reporting used by

the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining

the Company’s reportable segments.

The Company’s chief operating decision maker is the Chief Executive Officer (“CEO”)

and president of the Company, who reviews operating results to make decisions about allocating resources and assessing performance

for the entire Company.

The Company has determined that it has three reportable business segments:

real property operating segment,

medical related consulting services segment, and development services and sales of developed products segment.

These reportable

segments offer different types of services and products, have different types of revenue, and are managed separately as each requires

different operating strategies and management expertise.

Related Parties

Parties are considered to be related to the

Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common

control with the Company.

Related parties also include principal owners of the Company, its management, members of the immediate

families of principal owners of the Company and its management and other parties with which the Company may deal with if one party

controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting

parties might be prevented from fully pursuing its own separate interests.

The Company discloses all significant related party

transactions.

Reclassification

prior period amounts have been reclassified to conform to the current period presentation.

These reclassifications have no effect

on the previously reported financial position, results of operations and cash flows.

Company has adopted a fiscal year end of December 31st.

Accounting Standards

February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2016-02, “Leases”

(“ASU 842”), which amended the existing accounting standards for

lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to

lessor accounting.

ASU 842 is effective for public companies during interim and annual reporting periods beginning after December

15, 2018, with early adoption permitted.

In July 2018, the FASB issued ASU No.

2018-11, which permits entities to record the right-of-use

asset and lease liability on the date of adoption, with no requirement to recast comparative periods.

GLOBOCARE CORP.

Certain prior period amounts have been reclassified

to conform to the current period presentation.

These reclassifications have no effect on the previously reported financial position,

results of operations and cash flows.

Fiscal Year End

The Company has adopted

a fiscal year end of December 31st.

Recent Accounting

In August 2018, the FASB issued ASU No.

Fair Value Measurement (Topic 820):

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement .

The objective of ASU 2018-13 is to improve the effectiveness of disclosures in the notes to the financial statements by removing,

modifying, and adding certain fair value disclosure requirements to facilitate clear communication of the information required

by generally accepted accounting principles.

The amendments are effective for all entities for fiscal years, and interim periods

within those fiscal years, beginning after December 15, 2019 with early adoption permitted upon issuance of this ASU.

of ASU 2018 – 13 did not have a material impact on the Company’s consolidated financial statements.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Standards (continued)

Company adopted ASU 842 effective January 1, 2019 using the optional transition method of recognizing a cumulative-effect adjustment

to the opening balance of accumulated deficit on January 1, 2019.

Therefore, comparative financial information was not adjusted

and continues to be reported under the prior lease accounting guidance in ASU 840.

The Company elected the transition relief package

of practical expedients, and as a result, the Company did not assess 1) whether existing or expired contracts contain embedded

leases, 2) lease classification for any existing or expired leases, and 3) whether lease origination costs qualified as initial

direct costs.

The Company elected the short-term lease practical expedient by establishing an accounting policy to exclude leases

with a term of 12 months or less.

Company generates rental revenue under leases with tenants occupying the Freehold, New Jersey commercial real properties.

with tenants are accounted for as operating leases.

The adoption of ASU 842 did not have a material impact on the Company’s

consolidated financial statements.

July 2017, the FASB issued Accounting Standards Update No.

2017-11, Accounting for Certain Financial Instruments with

Down Round Features (“ASU 2017-11”).

When determining whether certain financial instruments should be classified

as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the

instrument is indexed to an entity’s own stock.

ASU 2017-11 is effective for annual or interim periods within

those fiscal years beginning after December 15, 2018 and should be applied on a retrospective basis.

Early adoption is permitted

for all entities, including adoption in an interim period.

The Company adopted ASU 2017-11 in 2019 and it did not have

a material impact on the Company’s consolidated financial statements.

June 20, 2018, the FASB issued ASU 2018-07, which simplifies the accounting for share-based payments granted to nonemployees

for goods and services.

Under the ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements

for share-based payments granted to employees.

For public business entities (PBEs), the amendments in ASU 2018-07 are effective

for fiscal years beginning after December 15, 2018, including interim periods therein.

Early adoption is permitted if financial

statements have not yet been issued (for PBEs), but no earlier than an entity’s adoption date of ASC 606.

If early adoption

is elected, all amendments in the ASU that apply must be adopted in the same period.

In addition, if early adoption is elected

in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.

The Company has adopted the ASU 2018-07 in 2019 and it did not have a material impact on the Company’s consolidated

financial statements.

August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework-Changes to the

Disclosure Requirements for Fair Value Measurement .

The objective of ASU 2018-13 is to improve the effectiveness of disclosures

in the notes to the financial statements by removing, modifying, and adding certain fair value disclosure requirements to facilitate

clear communication of the information required by generally accepted accounting principles.

The amendments are effective for

all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 with early adoption

permitted upon issuance of this ASU.

The adoption of ASU 2018 –

13 has no material impact on the Company’s consolidated

financial statements.

2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (“Topic 326”).

The ASU introduces

a new accounting model, the Current Expected Credit Losses model (“CECL”), which requires earlier recognition

of credit losses and additional disclosures related to credit risk.

The CECL model utilizes a lifetime expected credit loss

measurement objective for the recognition of credit losses at the time the financial asset is originated or acquired.

is effective for annual period beginning after December 15, 2022, including interim reporting periods within those annual reporting

We expect that the adoption will not have a material impact.

accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected

to have a material impact on the consolidated financial statements upon adoption.

The Company does not discuss recent pronouncements

that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations,

cash flows or disclosures.

PREPAID EXPENSES AND OTHER CURRENT ASSETS

December 31, 2019 and 2018, prepaid expenses and other current assets consisted of the following:

Recent Accounting

Standards (continued)

In June 2016, the FASB issued ASU 2016-13,

Financial Instruments - Credit Losses (“Topic 326”).

The ASU introduces a new accounting model, the Current

Expected Credit Losses model (“CECL”), which requires earlier recognition of credit losses and additional disclosures

related to credit risk.

The CECL model utilizes a lifetime expected credit loss measurement objective for the recognition of credit

losses at the time the financial asset is originated or acquired.

ASU 2016-13 is effective for annual period beginning after December

15, 2022, including interim reporting periods within those annual reporting periods.

The Company expects that the adoption will

not have a material impact on the Company’s consolidated financial statements.

December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes , as part of its Simplification Initiative

to reduce the cost and complexity in accounting for income taxes.

This standard removes certain exceptions related to the approach

for intra period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred

tax liabilities for outside basis differences.

It also amends other aspects of the guidance to help simplify and promote consistent

application of GAAP.

The guidance is effective for interim and annual periods beginning after December 15, 2020, with early adoption

The Company is evaluating the effects that the adoption of this guidance will have its consolidated financial statements.

Other accounting standards that have been issued

or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated

financial statements upon adoption.

The Company does not discuss recent pronouncements that are not anticipated to have an impact

on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures.

NOTE 4 – PREPAID EXPENSES AND

OTHER CURRENT ASSETS

At December 31, 2020 and 2019, prepaid

expenses and other current assets consisted of the following:

Prepaid professional fees

Deferred financing costs *

Prepaid research and development service fees

Prepaid insurance expense

Prepaid dues and subscriptions

Deferred financing costs consist of legal, accounting and other costs that are directly related to the Company’s open market

sale equity financing and will be charged to stockholders’

equity upon the completion of the equity offering.

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

PROPERTY AND EQUIPMENT

December 31, 2019 and 2018, property and equipment consisted of the following:

equipment and furniture

of useful life or lease term

Prepaid research and development fees

Prepaid directors and officers liability insurance premium

Prepaid VAT on purchase

Security deposit

NOTE 5 – PROPERTY AND EQUIPMENT

At December 31, 2020

and 2019, property and equipment consisted of the following:

December 31, 2020

December 31, 2019

Laboratory equipment

Office equipment and furniture

accumulated depreciation

the years ended December 31, 2019 and 2018, depreciation expense of property and equipment amounted to $100,540 and $59,886, respectively,

of which, $3,276 and $3,275 was included in real property operating expenses, $39,070 and $38,229 was included in costs of development

services and sales of developed products, $30,947 and $18,382 was included in other operating expenses, and $27,247 and $0 was

included in research and development expense, respectively.

For the years ended

December 31, 2020 and 2019, depreciation expense of property and equipment amounted to $145,603 and $100,540, respectively, of

which, $3,276 and $3,276 was included in real property operating expenses, $0 and $39,070 was included in costs of development

services and sales of developed products, $70,241 and $30,947 was included in other operating expenses, and $72,086 and $27,247

was included in research and development expense, respectively.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6 – INVESTMENT IN REAL ESTATE

December 31, 2019 and 2018, investment in real estate consisted of the following:

real property building

At December 31, 2020

and 2019, investment in real estate consisted of the following:

December 31, 2020

December 31, 2019

Commercial real property building

accumulated depreciation

the years ended December 31, 2019 and 2018, depreciation expense of this commercial real property amounted to $160,527 and $135,378,

which was included in real property operating expenses.

INTANGIBLE ASSETS

December 31, 2019 and 2018, intangible assets consisted of the following:

Patents and other technologies

accumulated amortization

impairment loss

the years ended December 31, 2019 and 2018, amortization expense amounted to $245,678 and $327,571, respectively.

In September 2019,

the Company assessed its intangible assets which were solely related to the Genexosome Technology acquisition (which primarily

consisted of a commercialized system to isolate exosomes) for any impairment and concluded that there were indicators of impairment

as of September 30, 2019.

The impairment is due to the Company’s conclusion that it will be unable to realize any future

revenue from the sale of the exosome isolation systems.

The Company calculated that the estimated undiscounted cash flows were

less than the carrying amount related to the exosome isolation system projected sales and unrelated patent applications.

has not been able to realize the financial projections provided by Mr.

Zhou for the sale of the exosome isolation systems at the

time of the intangible assets purchase and has recognized an impairment loss of $1,010,011 related to the intangible assets for

the year ended December 31, 2019, which reduced the value to zero.

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended

December 31, 2020 and 2019, depreciation expense of this commercial real property amounted to $169,177 and $160,527, which was

included in real property operating expenses.

EQUITY METHOD INVESTMENT

of December 31, 2019 and 2018, the equity method investment amounted to $483,101 and $385,162, respectively.

The investment represents

the Company’s subsidiary, Avalon Shanghai’s interest in Epicon Biotech Co., Ltd.

As of December 31, 2020 and 2019, the equity

method investment amounted to $521,758 and $483,101, respectively.

The investment represents the Company’s subsidiary, Avalon

Shanghai’s interest in Epicon Biotech Co., Ltd.

(“Epicon”).

incorporated on August 14, 2018 in PRC.

Avalon Shanghai and the other unrelated company, Jiangsu Unicorn Biological Technology

(“Unicorn”), accounted for 40% and 60% of the total ownership, respectively.

Epicon is focused on cell preparation,

third party testing, biological sample repository for commercial and scientific research purposes and the clinical transformation

of scientific achievements.

Company treats the equity investment in the consolidated financial statements under the equity method.

Under the equity method,

the investment is initially recorded at cost, adjusted for any excess of the Company’s share of the incorporated-date fair

values of the investee’s identifiable net assets over the cost of the investment (if any).

Thereafter, the investment is

adjusted for the post incorporation change in the Company’s share of the investee’s net assets and any impairment

loss relating to the investment.

the year ended December 31, 2019 and for the period from August 14, 2018 (inception) through December 31, 2018, the Company’s

share of Epicon’s net loss was $55,776 and $52,969, respectively, which was included in loss from equity-method investment

in the accompanying consolidated statements of operations and comprehensive loss.

recorded for the Company’s equity method investment in Epicon is summarized in the following table:

Epicon was incorporated on August 14, 2018 in PRC.

Avalon Shanghai and the other unrelated company, Jiangsu Unicorn Biological Technology Co., Ltd.

(“Unicorn”), accounted

for 40% and 60% of the total ownership, respectively.

Epicon is focused on cell preparation, third party testing, biological sample

repository for commercial and scientific research purposes and the clinical transformation of scientific achievements.

The Company treats the equity investment in

the consolidated financial statements under the equity method.

Under the equity method, the investment is initially recorded at

cost, adjusted for any excess of the Company’s share of the incorporated-date fair values of the investee’s identifiable

net assets over the cost of the investment (if any).

Thereafter, the investment is adjusted for the post incorporation change in

the Company’s share of the investee’s net assets and any impairment loss relating to the investment.

For the years ended December 31, 2020 and 2019,

the Company’s share of Epicon’s net loss was $51,673 and $55,776, respectively, which was included in loss from equity

method investment in the accompanying consolidated statements of operations and comprehensive loss.

Activity recorded for the Company’s equity

method investment in Epicon is summarized in the following table:

Equity investment carrying amount at January 1, 2019

Payment made for equity method investment

Epicon's net loss attributable to the Company

Epicon’s net loss attributable to the Company

Foreign currency fluctuation

1 unchanged sentence

Payment made for equity method investment

Epicon's net loss attributable to the Company

Epicon’s net loss attributable to the Company

Foreign currency fluctuation

Equity investment carrying amount at December 31, 2020

tables below present the summarized financial information, as provided to the Company by the investee, for the unconsolidated

the Year Ended December 31, 2019

the Period from August 14, 2018 (Inception) through December 31, 2018

from operation

GLOBOCARE CORP.

tables below present the summarized financial information, as provided to the Company by the investee, for the unconsolidated company:

Current assets

Noncurrent assets

Current liabilities

Noncurrent liabilities

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EQUITY METHOD INVESTMENT (continued)

For the Years Ended

Loss from operation

ACCRUED LIABILITIES AND OTHER PAYABLES

December 31, 2019 and 2018, accrued liabilities and other payables consisted of the following:

Accrued payroll liability

At December 31, 2020

and 2019, accrued liabilities and other payables consisted of the following:

Accrued professional fees

Accrued research and development fees

Insurance payable

Accrued directors’

Accrued payroll liability and directors’

Accounts payable

Interest payable

In accordance with the strategic partnership agreement with Weill Cornell’s cGMP Cellular Therapy Facility and Laboratory

signed on August 6, 2018, the Company provides $400,000 annually to Weill Cornell’s cGMP Cellular Therapy Facility and Laboratory

to support the co-development projects.

In addition, the Company will on an annual basis send one scientist or clinician to Weill

Cornell’s cGMP Cellular Therapy Facility and Laboratory to receive relevant training for three to six months.

As of December

31, 2019, the accrued and unpaid research and development fees related to this agreement was $150,000.

19, 2017, the Company entered into a loan agreement, providing for the issuance of a loan in the principal amount of $2,100,000.

The term of the loan was one year.

On May 3, 2018, the Company signed an extension agreement with a maturity date of March 31,

On August 3, 2018, the Company signed an extension agreement for the loan with a maturity date of March 31, 2020.

interest rate for the loan was 10%.

The loan was guaranteed by the Company’s Chairman, Mr.

repaid principal of $600,000, $500,000 and $1,000,000 in November 2017, April 2018 and April 2019, respectively.

Accrued tenants’

improvement reimbursement

Deferred rental income

NOTE 9 – RELATED PARTY TRANSACTIONS

Medical Related

Consulting Services Revenue from Related Parties and Accounts Receivable – Related Party

During the years ended December 31, 2020 and

2019, medical related consulting services revenue from related parties was as follows:

Years Ended December 31,

Medical related consulting services provided to:

Beijing Daopei *

Shanghai Daopei *

Hebei Daopei *

*Beijing Daopei, Shanghai

Daopei, and Hebei Daopei are subsidiaries of an entity whose chairman is Wenzhao Lu, the largest shareholder of the Company.

As of December 31,

31, 2019, the outstanding principal balance of the loan was $0.

RELATED PARTY TRANSACTIONS

Related Consulting Services Revenue from Related Parties and Accounts Receivable –

Related Party

the years ended December 31, 2019 and 2018, medical related consulting services revenue from related parties was as follows:

Ended December 31,

related consulting services provided to:

Daopei is a subsidiary of an entity whose chairman is Wenzhao Lu, the largest shareholder

of the Company.

Daopei is a subsidiary of an entity whose chairman is Wenzhao Lu, the largest shareholder

of the Company.

Daopei is a subsidiary of an entity whose chairman is Wenzhao Lu, the largest shareholder

of the Company.

receivable –

related party at December 31, 2019 and 2018 amounted to $215,418 and $0, respectively, and no allowance for

doubtful accounts is deemed to be required on accounts receivable –

related party at December 31, 2019 and 2018.

Expenses –

Related Parties

of December 31, 2019 and 2018, the Company made a prepayment of $0 and $1,897, respectively, to David Jin, its shareholder, chief

executive officer, president and board member, for business travel reimbursement, which has been included in prepaid expenses

related parties on the accompanying consolidated balance sheets.

GLOBOCARE CORP.

2020, accounts receivable – related party was $0.

Accounts receivable – related party at December 31, 2019 amounted

to $215,418 and no allowance for doubtful accounts was deemed to be required on accounts receivable – related party at December

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED PARTY TRANSACTIONS (continued)

Expenses –

Related Parties (continued)

of December 31, 2019 and 2018, the Company made a prepayment of $0 and $32,293, respectively, to Meng Li, its shareholder and

chief operating officer, for business travel reimbursement, which has been included in prepaid expenses –

related parties

on the accompanying consolidated balance sheets.

Liabilities and Other Payables –

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 – RELATED PARTY TRANSACTIONS

Accrued Liabilities and Other Payables –

Related Parties

of December 31, 2019 and 2018, the advance from customer –

related party amounted to $0 and $14,829, respectively, which

represents a prepayment received from our related party, Beijing Daopei, for medical related consulting services.

When the services

are performed, the amount recorded as an advance from customer –

related party is recognized as revenue.

of December 31, 2019 and 2018, the Company owed David Jin, its shareholder, chief executive officer, president and board member,

$24,254 and $0, respectively, for travel and other miscellaneous reimbursements, which have been included in accrued liabilities

and other payables –

related parties on the accompanying consolidated balance sheets.

of December 31, 2019 and 2018, the Company owed Meng Li, its shareholder and chief operating officer, $10,473 and $0, respectively,

for travel and other miscellaneous reimbursements, which have been included in accrued liabilities and other payables –

related parties on the accompanying consolidated balance sheets.

31, 2019 and 2018, the Company owed Yu Zhou, director and former co-chief executive officer and 40% owner of Genexosome, of $3,121

and $0, respectively, for accrued travel and other miscellaneous reimbursements, which have been included in accrued liabilities

and other payables –

related parties on the accompanying consolidated balance sheets.

connection with the acquisition discussed elsewhere in this report, the Company acquired Beijing Genexosome for a cash payment

As of December 31, 2019 and 2018, the unpaid acquisition consideration of $100,000, was payable to Yu Zhou, director

and former co-chief executive officer and 40% owner of Genexosome, and has been included in accrued liabilities and other payables

related parties on the accompanying consolidated balance sheets.

of December 31, 2019 and 2018, the accrued and unpaid interest related to borrowings from Wenzhao Lu, the Company’s largest

shareholder and chairman of the Board of Directors, amounted to $49,194 and $0, respectively, and have been included in accrued

liabilities and other payables –

The Company acquired Beijing Genexosome

for a cash payment of $450,000.

As of December 31, 2020 and 2019, the unpaid acquisition consideration of $100,000, was

payable to Dr.

Yu Zhou, former director and former co-chief executive officer and 40% owner of Genexosome, and has been

included in accrued liabilities and other payables – related parties on the accompanying consolidated balance

As of December 31, 2020 and 2019, the accrued

and unpaid interest related to borrowings from Wenzhao Lu, the Company’s largest shareholder and chairman of the Board of

Directors, amounted to $167,956 and $49,194, respectively, and have been included in accrued liabilities and other payables –

related parties on the accompanying consolidated balance sheets.

Property Management Agreement

Company pays a company, which is controlled by Wenzhao Lu, the Company’s largest shareholder and chairman of the Board of

Directors, for the management of its commercial real property located in New Jersey.

The property management agreement commenced

on May 5, 2017 and expired in March 2019.

For the years ended December 31, 2019 and 2018, the management fee related to the property

management agreement amounted to $23,334 and $65,004, respectively.

from Related Party

Borrowings from Related Party

Promissory Note

March 18, 2019, the Company issued Wenzhao Lu, the Company’s largest shareholder and Chairman of the Board of Directors,

3 unchanged sentences

The Company repaid

principal of $410,000 in the third quarter of 2019.

As of December 31, 2019, the outstanding principal balance was $590,000.

GLOBOCARE CORP.

principal of $410,000 and $200,000 in the third quarter of 2019 and second quarter of 2020, respectively.

As of December 31, 2020

and 2019, the outstanding principal balance was $390,000 and $590,000, respectively.

Line of Credit

On August 29, 2019, the Company entered into

a Line of Credit Agreement (the “Line of Credit Agreement”) providing the Company with a $20 million line of credit

(the “Line of Credit”) from Wenzhao Lu (the “Lender”), the largest shareholder and Chairman of the Board

of Directors of the Company.

The Line of Credit allows the Company to request loans thereunder and to use the proceeds of such

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

The loans are unsecured

and are not convertible into equity of the Company.

Loans drawn under the Line of Credit bears interest at an annual rate of 5%

and each individual loan will be payable three years from the date of issuance.

The Company has a right to draw down on the line

of credit and not at the discretion of the related party Lender.

The Company may, at its option, prepay any borrowings under the

Line of Credit, in whole or in part at any time prior to maturity, without premium or penalty.

The Line of Credit Agreement includes

customary events of default.

If any such event of default occurs, the Lender may declare all outstanding loans under the Line of

Credit to be due and payable immediately.

As of December 31, 2020 and 2019, $3,200,000 and $2,600,000 was outstanding under the

Line of Credit, respectively.

For the years ended December 31, 2020 and 2019,

the interest expense related to above borrowings amounted to $168,762 and $49,194, respectively, and has been included in interest

expense – related party on the accompanying consolidated statements of operations and comprehensive loss.

As of December 31,

2020 and 2019, the related accrued and unpaid interest for above borrowings was $167,956 and $49,194, respectively, and has been

included in accrued liabilities and other payables – related parties on the accompanying consolidated balance sheets.

Common Shares Sold

to Related Party

On April 1, 2020, the Company sold 645,161 shares of its common

stock to WLM Limited (“WLM”), an entity owned by Wenzhao Lu, Chairman of the Board of Directors of the Company, at

a price per share of $1.55, the fair market value on transaction date, for an aggregate purchase price of $1,000,000 (See Note

Common Shares Sold for Cash).

Office Space from

Related Party

Beijing Genexosome

uses office space of a related party, free of rent, which is considered immaterial.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED PARTY TRANSACTIONS (continued)

from Related Party (continued)

August 29, 2019, the Company entered into a Line of Credit Agreement (the “Line of Credit Agreement”) providing

the Company with a $20 million line of credit (the “Line of Credit”) from Wenzhao Lu (the “Lender”), the

largest shareholder and Chairman of the Board of Directors of the Company.

The Line of Credit allows the Company to request loans

thereunder and to use the proceeds of such loans for working capital and operating expense purposes until the facility matures

on December 31, 2024.

The loans are unsecured and are not convertible into equity of the Company.

Loans drawn under the Line of

Credit bears interest at an annual rate of 5% and each individual loan will be payable three years from the date of issuance.

The Company has a right to draw down on the line of credit and not at the discretion of the related party Lender.

may, at its option, prepay any borrowings under the Line of Credit, in whole or in part at any time prior to maturity, without

premium or penalty.

The Line of Credit Agreement includes customary events of default.

If any such event of default occurs,

the Lender may declare all outstanding loans under the Line of Credit to be due and payable immediately.

Under the Line of

Credit, as of December 31, 2019, the Company received loan from the Lender of $2,600,000.

the year ended December 31, 2019, the interest expense related to above borrowings amounted to $49,194 and has been included in

interest expense –

related party on the accompanying consolidated statements of operations and comprehensive loss.

December 31, 2019, the related accrued and unpaid interest for above borrowings was $49,194 and has been included in accrued liabilities

and other payables –

related parties on the accompanying consolidated balance sheets.

Space from Related Party

Genexosome uses office space of a related party, free of rent, which is considered immaterial.

The Company is governed by the Income Tax

Law of the PRC and the U.S.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – INCOME TAXES

The Company is governed by the Income Tax Law

of the PRC and the U.S.

Internal Revenue Code of 1986, as amended.

Under the Income Tax Laws of PRC, Chinese companies are

generally subject to an income tax at an effective rate of 25% on income reported in the statutory financial statements after

appropriate tax adjustments.

The Company has a cumulative deficit from its foreign subsidiaries of $1,367,578 as of December 31,

2019, which is included in the consolidated accumulated deficit.

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

INCOME TAXES (continued)

The Company’s

loss before income taxes includes the following components:

Under the Income Tax Laws of PRC, Chinese companies are generally

subject to an income tax at an effective rate of 25% on income reported in the statutory financial statements after appropriate

tax adjustments.

The Company has a cumulative deficit from its foreign subsidiaries of $2,005,685 as of December 31, 2020, which

is included in the consolidated accumulated deficit.

The Company’s loss before income taxes

includes the following components:

Years Ended December 31,

United States loss before income taxes

5 unchanged sentences

$ (18,070,161 )

For the years ended

December 31, 2019 and 2018, amount of $0 and $572,613, respectively, is included in the United States loss before income taxes,

which is not included in the Company’s consolidated income tax return, because the Company owns only 60% of Genexosome.

tax law requires 80% ownership to consolidate.

Components of

income taxes expense (benefit) consisted of the following:

Components of income taxes expense (benefit)

consisted of the following:

Years Ended December 31,

state and local

8 unchanged sentences

Total income taxes expense

The table below

summarizes the differences between the U.S.

statutory rate and the Company’s effective tax rate for the years ended December

31, 2019 and 2018:

The table below summarizes the differences

between the U.S.

statutory rate and the Company’s effective tax rate for the years ended December 31, 2020 and 2019:

Years Ended December 31,

Non-deductible expenses

3 unchanged sentences

Total provision for income taxes

For the years

ended December 31, 2019 and 2018, the Company did not incur any income taxes expense since it did not generate any taxable income

in those periods.

The Company’s foreign entities did not pay any income taxes during the years ended December 31, 2019 and

GLOBOCARE CORP.

For the years ended December 31, 2020 and 2019, the Company did

not incur any income taxes expense since it did not generate any taxable income in those periods.

The Company’s foreign entities

did not pay any income taxes during the years ended December 31, 2020 and 2019.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

INCOME TAXES (continued)

The Company’s

approximate net deferred tax assets as of December 31, 2019 and 2018 were as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – INCOME TAXES (continued)

The Company’s components of deferred taxes as of December

31, 2020 and 2019 were as follows:

Deferred tax assets

1 unchanged sentence

Disallowed business interest deduction

Fixed assets book/tax basis difference

Lease liability

Net operating loss carryforward

Total deferred tax assets, gross

Valuation allowance

(12,649,005 )

Total deferred tax assets, net

Deferred tax liabilities

Fixed assets book/tax basis difference

Right-of-use assets

Total deferred tax liabilities

Net deferred tax assets

As of December 31, 2019, the Company had federal

and state net operating loss carryforwards of $21,368,053 and $21,368,053, respectively.

The Company has $18,890,612 of U.S.

net operating loss carryovers that have no expiration date, the remaining of the federal net operating loss and state net operating

loss carry-forwards begin to expire in 2034.

31, 2019, the Company had net operating loss carryforwards in China of $1,398,737 that begin to expire in 2022.

Additionally,

$61,847 of the future utilization of the net operating loss carryforward to offset future taxable income is subject to special

tax rules which may limit their usage under IRS Section 382 (Change of Ownership) and possibly the Separate Return Limitation

Year (“SRLY”) rules.

A full valuation

allowance has been provided against the Company's deferred tax assets at December 31, 2019 as the Company believes it is more

likely than not that sufficient taxable income will not be generated to realize these temporary differences.

has been notified and assessed an IRS Section 6038 penalty of $10,000 for failure to file a foreign entity tax disclosure.

Company has appealed the penalty and awaits the Internal Revenue Service’s review of the appeal.

There is no assurance such

appeal will be successful.

has not been audited by any jurisdiction since its inception.

As of December 31, 2020, the Company’s

both federal and state net operating loss carryforwards amounted to $30,557,167.

As of December 31, 2020, the Company has $28,079,726

federal net operating loss carryovers that have no expiration date, the remaining of the federal net operating loss and

state net operating loss carry-forwards begin to expire in 2035.

As of December 31, 2020, the Company had net

operating loss carryforwards in China of $1,958,029 that begin to expire in 2023.

Additionally, as of December 31, 2020, $61,847

of the future utilization of the net operating loss carryforward to offset future taxable income is subject to special tax rules

which may limit their usage under IRS Section 382 (Change of Ownership) and possibly the Separate Return Limitation Year (“SRLY”)

A full valuation allowance has been provided

against the Company’s deferred tax assets at December 31, 2020 as the Company believes it is more likely than not that sufficient

taxable income will not be generated to realize these temporary differences.

The Company has been notified and assessed

an IRS Section 6038 penalty of $10,000 for failure to file a foreign entity tax disclosure.

The Company has appealed the penalty

and awaits the Internal Revenue Service’s review of the appeal.

There is no assurance such appeal will be successful.

The Company has not been audited by any jurisdiction

since its inception.

The Company is open for audit by the U.S.

Internal Revenue

Service, and the Chinese Ministry of Finance and U.S.

Internal Revenue Service, and the Chinese Ministry of Finance and

state tax jurisdictions from 2018 to 2020.

There were no

material uncertain tax positions as of December 31, 2019 and 2018.

The Company recognizes interest and penalties related to unrecognized

tax benefits as income tax expense, if any.

The Company does not have any significant uncertain tax positions or events leading

to uncertainty in a tax position.

DERIVATIVE LIABILITIES

April 25, 2019, the Company issued 1,714,288 five-year warrants to several third-party institutional investors in a registered

direct offering (see Note 14).

The warrants include the fundamental transaction provisions and the exercise price of the warrants

is protected against down-round financing throughout the term of the warrants.

Upon evaluation, the warrants meet the definition

of derivative liabilities under FASB ASC 815, as the Company cannot avoid a net cash settlement under certain circumstances.

the fair value of the warrants was classified as derivative liabilities of $4,217,241 on the issuance date, April 25, 2019.

estimated fair value of the warrants was computed at issuance using Black-Scholes option-pricing model, with the following

stock price of $2.82, volatility of 142.55%, risk-free rate of 2.33%, annual dividend yield of 0% and expected life

April 25, 2019, the derivative liabilities were recorded at fair value of $4,217,241.

Given that the fair value of the derivative

liabilities was less than the proceeds of the units sale fund raise of $6,000,008, the remaining proceeds of $1,782,767 were

allocated to the common stock and additional paid-in capital.

October 18, 2019, the Company and third-party institutional investors entered into a Warrant Redemption and Cancellation Agreement

(the “Redemption Agreement”).

In accordance with the Redemption Agreement, the Company redeemed the 1,714,288 warrants

for a purchase price of $1,400,000 in the fourth quarter of 2019, resulting in all of the 1,714,288 warrants being redeemed and

or decreases in fair value of the derivative liabilities are included as a component of total other income (expenses) in the accompanying

consolidated statements of operations and comprehensive loss.

The change to the derivative liabilities for the warrants from April

25, 2019 through October 18, 2019 resulted in a decrease of $2,817,241 in the derivative liabilities and the corresponding increase

in other income as a gain for the year ended December 31, 2019.

GLOBOCARE CORP.

There were no material uncertain tax positions

as of December 31, 2020 and 2019.

The Company recognizes interest and penalties related to unrecognized tax benefits as income

tax expense, if any.

The Company does not have any significant uncertain tax positions or events leading to uncertainty in a tax

2020 Incentive

Company held its annual meeting on August 4, 2020.

During its annual meeting, the Company approved 2020 Incentive Stock Plan and

reserved 5,000,000 shares of common stock for issuance thereunder.

Common Shares Issued

for Warrant Exercise

On January 9, 2019,

the Company issued 350,856 shares of its common stock upon cashless exercise of warrants to purchase 578,891 shares of common stock.

Common Shares Issued

for Option Exercise

On February 27, 2019, the Company issued 158,932

shares of its common stock upon cashless exercise of options to purchase 200,000 shares of common stock.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

records treasury stock using the cost method.

On March 27, 2018, the Company repurchased 520,000 shares of its common stock from

a third party through a privately negotiated transaction at an aggregate price of $522,500, of which $2,500 was paid to an escrow

agent as share repurchase cost.

Shares Sold for Cash

year ended December 31, 2018, the Company sold 3,107,000 and 939,450 shares of common stock at $1.75 and $2.25 per share, respectively,

to investors pursuant to subscription agreements.

The Company received net cash proceeds of $7,064,717, net of cash fee paid to

an investment banking firm of $486,296.

On December 13,

2019, the Company entered into an Open Market Sale Agreement SM (the “Sales Agreement”) with Jefferies

LLC, as sales agent (“Jefferies”), pursuant to which the Company may offer and sell, from time to time, through Jefferies,

shares of its common stock, par value $0.0001 per share, having an aggregate offering price of up to $20.0 million.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EQUITY (continued)

Common Shares Sold

On December 13, 2019, the Company entered

into an Open Market Sale Agreement SM (the “Sales Agreement”) with Jefferies LLC, as sales agent

(“Jefferies”), pursuant to which the Company may offer and sell, from time to time, through Jefferies, shares of

its common stock, par value $0.0001 per share, having an aggregate offering price of up to $20.0 million.

In December 2019,

Jefferies sold 138,595 shares of common stock at an average price of $1.98 per share to investors.

The Company received

net cash proceeds of $261,206, net of cash fee paid for sales agent’s commission and other offering expenses of $12,530.

Sold for Cash

April 25, 2019, the Company entered into a purchase agreement with several third-party institutional investors for the purchase

of 1,714,288 units in a registered direct offering, for gross proceeds of $6,000,008 before placement agent fees and other offering

expenses payable by the Company.

Each unit was sold at a public offering price of $3.50 and consists of one share of common stock

and a warrant to purchase one share of common stock.

The Company received net cash proceeds of $5,103,704, net of cash paid for

placement agent fees and other offering expenses.

warrants are exercisable immediately as of the date of issuance (the “Initial Exercise Date”), at an exercise price

of $3.50 per share, subject to adjustment as provided in the warrants, and expire on the fifth (5 th ) anniversary of

the Initial Exercise Date.

The warrants include anti-dilution rights, which provide that if at any time the warrants are outstanding,

the Company issues or is deemed to have issued any common stock or common stock equivalents for consideration less than the then

current exercise price of the warrants, the exercise price of such warrants is automatically reduced to the lowest price per share

of consideration provided or deemed to have been provided for such securities (subject to adjustment for reverse and forward stock

splits, recapitalizations and similar transactions).

The warrants include the fundamental transaction provisions and the exercise

price of the warrants is protected against down-round financing throughout the term of the warrants.

Upon evaluation, the warrants

meet the definition of a derivative under FASB ASC 815, as the Company cannot avoid a net cash settlement under certain circumstances

(see Note 13).

Shares Issued for Services

year ended December 31, 2018, pursuant to consulting agreements, the Company issued an aggregate of 505,679 shares of common stock

for consulting services rendered and to be rendered.

These shares were valued at $1,371,450, the fair market values on the grant

dates using the reported closing share prices on the dates of grant, and the Company recorded stock-based compensation expense

of $865,700 for the year ended December 31, 2018 and reduced accrued liabilities of $10,000 and recorded prepaid expense of $495,750

as of December 31, 2018 which was amortized over the rest of corresponding service periods.

The Company recorded net

proceeds of $261,206, net of commission and other offering costs of $12,530.

During the years ended December 31, 2020,

Jefferies sold an aggregate of 3,913,413 shares of common stock at an average price of $1.74 per share to investors.

Company recorded net proceeds of $6,405,475, net of commission and other offering costs of $398,624.

On April 1, 2020, the Company entered into

a Subscription Agreement with WLM, an entity owned by Wenzhao Lu, Chairman of the Board of Directors of the Company, pursuant to

which WLM purchased 645,161 shares of the Company’s common stock at a price per share of $1.55, the fair market value on

transaction date, for an aggregate purchase price of $1,000,000.

The closing occurred on April 1, 2020.

Units Sold for

On April 25, 2019,

the Company entered into a purchase agreement with several third-party institutional investors for the purchase of 1,714,288 units

in a registered direct offering, for gross proceeds of $6,000,008 before placement agent fees and other offering expenses payable

by the Company.

Each unit was sold at a public offering price of $3.50 and consists of one share of common stock and a warrant

to purchase one share of common stock.

The Company received net cash proceeds of $5,103,704, net of cash paid for placement agent

fees and other offering expenses.

The warrants are exercisable immediately as

of the date of issuance (the “Initial Exercise Date”), at an exercise price of $3.50 per share, subject to adjustment

as provided in the warrants, and expire on the fifth (5 th ) anniversary of the Initial Exercise Date.

The warrants include

anti-dilution rights, which provide that if at any time the warrants are outstanding, the Company issues or is deemed to have issued

any common stock or common stock equivalents for consideration less than the then current exercise price of the warrants, the exercise

price of such warrants is automatically reduced to the lowest price per share of consideration provided or deemed to have been

provided for such securities (subject to adjustment for reverse and forward stock splits, recapitalizations and similar transactions).

The warrants include the fundamental transaction provisions and the exercise price of the warrants is protected against down-round

financing throughout the term of the warrants.

Upon evaluation, the warrants meet the definition of a derivative under FASB ASC

815, as the Company cannot avoid a net cash settlement under certain circumstances.

Accordingly, the fair value of the warrants

was classified as derivative liabilities of $4,217,241 on the issuance date, April 25, 2019.

The estimated fair value of the warrants

was computed at issuance using Black-Scholes option-pricing model, with the following assumptions:

stock price of $2.82, volatility

of 142.55%, risk-free rate of 2.33%, annual dividend yield of 0% and expected life of 5 years.

On April 25, 2019,

the derivative liabilities were recorded at fair value of $4,217,241.

Given that the fair value of the derivative liabilities was

less than the proceeds of the units sale fund raise of $6,000,008, the remaining proceeds of $1,782,767 were allocated to the common

stock and additional paid-in capital.

On October 18, 2019, the Company and third-party

institutional investors entered into a Warrant Redemption and Cancellation Agreement (the “Redemption Agreement”).

In accordance with the Redemption Agreement, the Company redeemed the 1,714,288 warrants for a purchase price of $1,400,000 in

the fourth quarter of 2019, resulting in all of the 1,714,288 warrants being redeemed and cancelled.

Increases or decreases

in fair value of the derivative liabilities are included as a component of total other income (expenses) in the accompanying consolidated

statements of operations and comprehensive loss.

The change to the derivative liabilities for the warrants from April 25, 2019

through October 18, 2019 resulted in a decrease of $2,817,241 in the derivative liabilities and the corresponding increase in other

income as a gain for the year ended December 31, 2019.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EQUITY (continued)

Common Shares Issued

the year ended December 31, 2019, the Company issued a total of 537,380 shares of its common stock for services rendered and to

3 unchanged sentences

be amortized over the rest of corresponding service periods.

Shares Issued for Share Subscription Agreement

March 3, 2017, the Company entered into and closed a Subscription Agreement with an accredited investor (the “March 2017

Accredited Investor”) pursuant to which the March 2017 Accredited Investor purchased 3,000,000 shares of the Company’s

common stock (“March 2017 Shares”) for a purchase price of $3,000,000 (the “Purchase Price”).

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

EQUITY (continued)

Shares Issued for Share Subscription Agreement (continued)

Company, Avalon Shanghai, Beijing DOING Biomedical Technology Co., Ltd.

(“DOING”), who is an unaffiliated third party,

and the March 2017 Accredited Investor entered into a Share Subscription Agreement whereby the parties acknowledged, among other

things, that DOING agreed to transfer the Purchase Price to Avalon Shanghai on behalf of the March 2017 Accredited Investor and

the March 2017 Accredited Investor agreed to transfer the March 2017 Shares to DOING upon DOING completing the registration of

the acquisition of the March 2017 Shares with the Beijing Commerce Commission (“BCC”) and obtaining an Enterprise

Overseas Investment Certificate (the “Investment Certificate”) from BCC.

If DOING fails to complete the registration

and acquire the Investment Certificate within one year of the closing then Avalon Shanghai shall transfer $3,000,000 with an annual

interest of 20% to DOING upon the request of DOING (the “BCC Repayment Obligation”).

Further, Wenzhao Lu, a director

and shareholder of the Company, and DOING entered into a Warranty Agreement.

Pursuant to the Warranty Agreement, Mr.

to (i) cause the Company to be liable to DOING in the event the March 2017 Accredited Investor defaults in its obligations to

DOING, (ii) cause the March 2017 Accredited Investor to transfer the March 2017 Shares to DOING upon DOING’s receipt of

the Investment Certificate from BCC, (iii) within three years from the date of the Warranty Agreement, DOING may require Mr.

to acquire the March 2017 Shares at $1.20 per share upon three-month notice, and (iv) in the event Mr.

Lu does not acquire the

March 2017 Shares within the three-month period, interest of 15% per annum will be added to the purchase price.

April 23, 2018, the Company, Avalon Shanghai, DOING and March 2017 Accredited Investor entered into a Supplementary Agreement

Related to Share Subscription pursuant to which Avalon Shanghai agreed to pay RMB 8,256,000 (approximately $1.3 million based

on the exchange rate on April 23, 2018) to DOING representing one-third of the DOING Investment plus 20% interest for the one-third

DOING Investment resulting in a reduction in the March 2017 Shares by one-third to 2,000,000 shares.

Further, the parties agreed

that the BCC Repayment Obligation was extended to July 31, 2018.

The $1 million BCC Repayment Obligation and related interest

was paid in full in May 2018.

August 8, 2018, DOING and the March 2017 Accredited Investor sold the remaining 2,000,000 shares of common stock.

Therefore, the

BCC Repayment Obligation was satisfied in full and the Company has no further obligation for DOING and the March 2017 Accredited

Shares Issued for Warrant Exercise

January 9, 2019, the Company issued 350,856 shares of its common stock upon cashless exercise of warrants to purchase 578,891

shares of common stock.

Shares Issued for Option Exercise

February 27, 2019, the Company issued 158,932 shares of its common stock upon cashless exercise of options to purchase 200,000

shares of common stock.

following table summarizes the shares of the Company’s common stock issuable upon exercise of options outstanding at December

Exercise Price

During the year ended

December 31, 2020, the Company issued a total of 1,505,921 shares of its common stock for services rendered and to be rendered.

These shares were valued at $1,892,520, the fair market values on the grant dates using the reported closing share prices on the

dates of grant and the Company recorded stock-based compensation expense of $1,670,166 for the year ended December 31, 2020 and

reduced accrued liabilities of $187,725 and recorded prepaid expense of $34,629 as of December 31, 2020 which will be amortized

over the rest of corresponding service periods.

The following table summarizes the shares of

the Company’s common stock issuable upon exercise of options outstanding at December 31, 2020:

Options Outstanding

Options Exercisable

Outstanding at

Weighted Average

Exercisable at

Stock option activities

for the years ended December 31, 2020 and 2019 were as follows:

Outstanding at January 1, 2019

Terminated / Exercised / Expired

Outstanding at December 31, 2019

of Weighted Average Remaining Contractual

Exercisable at December 31, 2019

GLOBOCARE CORP.

Terminated / Exercised / Expired

Outstanding at December 31, 2020

Options exercisable at December 31, 2020

Options expected to vest

The aggregate intrinsic value of both stock

options outstanding and stock options exercisable at December 31, 2020 was $1,277,200.

The fair values of options granted during the

year ended December 31, 2020 were estimated at the date of grant using the Black-Scholes option-pricing model with the following

volatility of 131.16% - 139.58%, risk-free rate of 0.20% - 1.67%, annual dividend yield of 0% and expected life of

3.00 – 10.00 years.

The aggregate fair value of the options granted during the year ended December 31, 2020 was $2,878,773.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EQUITY (continued)

option activities for the years ended December 31, 2019 and 2018 were as follows:

Average Exercise Price

at January 1, 2018

at December 31, 2018

at December 31, 2019

exercisable at December 31, 2019

expected to vest

aggregate intrinsic values of stock options outstanding and stock options exercisable at December 31, 2019 was $3,259,900 and

$3,171,746, respectively.

fair values of options granted during the year ended December 31, 2019 were estimated at the date of grant using the Black-Scholes

option-pricing model with the following assumptions:

volatility of 140.57% - 151.70%, risk-free rate of 1.55% - 2.49%, annual

dividend yield of 0% and expected life of 3.00 –

The aggregate fair value of the options granted during the

year ended December 31, 2019 was $6,461,970.

compensation expense associated with stock options granted amounted to $7,448,230 and $2,227,281 for the years ended December

31, 2019 and 2018, respectively.

summary of the status of the Company’s nonvested stock options granted as of December 31, 2019 and changes during the years

ended December 31, 2019 and 2018 is presented below:

Average Exercise Price

at January 1, 2018

at December 31, 2018

at December 31, 2019

GLOBOCARE CORP.

Options (continued)

The fair values of

options granted during the year ended December 31, 2019 were estimated at the date of grant using the Black-Scholes option-pricing

model with the following assumptions:

volatility of 140.57% - 151.70%, risk-free rate of 1.55% - 2.49%, annual dividend yield of

0% and expected life of 3.00 – 5.00 years.

The aggregate fair value of the options granted during the year ended December

31, 2019 was $6,461,970.

Stock-based compensation expense associated

with stock options granted amounted to $2,966,052 and $7,448,230, of which, $2,669,729 and $6,802,896 was recorded as compensation

and related benefits, $240,354 and $640,978 was recorded as professional fees, $55,969 and $4,356 was recorded as research and

development expenses, for the years ended December 31, 2020 and 2019, respectively.

A summary of the status of the Company’s

nonvested stock options granted as of December 31, 2020 and changes during the years ended December 31, 2020 and 2019 is presented

Nonvested at January 1, 2019

Nonvested at December 31, 2019

Nonvested at December 31, 2020

There were no stock warrants issued, terminated/forfeited

and exercised during the year ended December 31, 2020.

Stock warrants activities during the

year ended December 31, 2019 were as follows:

Outstanding at January 1, 2019

Redeemed and cancelled

Outstanding and exercisable at December 31, 2019

NOTE 12 –

Avalon Shanghai and Beijing Genexosome operate

in the PRC, are required to reserve 10% of their net profit after income tax, as determined in accordance with the PRC accounting

rules and regulations.

Appropriation to the statutory reserve by the Company is based on profit arrived at under PRC accounting

standards for business enterprises for each year.

The profit arrived at must be set off against

any accumulated losses sustained by the Company in prior years, before allocation is made to the statutory reserve.

Appropriation

to the statutory reserve must be made before distribution of dividends to shareholders.

The appropriation is required until the

statutory reserve reaches 50% of the registered capital.

This statutory reserve is not distributable in the form of cash dividends.

The Company did not make any appropriation to statutory reserve for Avalon Shanghai and Beijing Genexosome during the years ended

December 31, 2020 and 2019 as they incurred net losses in these periods.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

EQUITY (continued)

warrants activities during the years ended December 31, 2019 and 2018 were as follows:

Average Exercise Price

at January 1, 2018

at December 31, 2018

and cancelled

and exercisable at December 31, 2019

15 - STATUTORY RESERVE

Avalon Shanghai

and Beijing Genexosome operate in the PRC, are required to reserve 10% of their net profit after income tax, as determined in

accordance with the PRC accounting rules and regulations.

Appropriation to the statutory reserve by the Company is based on profit

arrived at under PRC accounting standards for business enterprises for each year.

arrived at must be set off against any accumulated losses sustained by the Company in prior years, before allocation is made to

the statutory reserve.

Appropriation to the statutory reserve must be made before distribution of dividends to shareholders.

appropriation is required until the statutory reserve reaches 50% of the registered capital.

This statutory reserve is not distributable

in the form of cash dividends.

The Company did not make any appropriation to statutory reserve for Avalon Shanghai and Beijing

Genexosome during the years ended December 31, 2019 and 2018 as they incurred net losses in the periods.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 –

NONCONTROLLING INTEREST

December 31, 2019, Yu Zhou, director and former Co-Chief Executive Officer of Genexosome, who owns 40% of the equity interests

of Genexosome, which is not under the Company’s control.

The following is a summary of noncontrolling interest activities

in the years ended December 31, 2019 and 2018.

Noncontrolling interest at January 1, 2018

Net loss attributable to noncontrolling interest

Foreign currency translation adjustment

attributable to noncontrolling interest

Noncontrolling interest at December 31, 2018

Noncontrolling interest deficit adjustment *

Net loss attributable to noncontrolling interest

Foreign currency translation adjustment

attributable to noncontrolling interest

Noncontrolling interest at December 31, 2019

noncontrolling interest holder does not have the ability to satisfy the deficit of $862,200

(See note 21).

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

of December 31, 2020,

Yu Zhou, former director and former co-chief executive officer of Genexosome, who owns 40% of the equity interests of Genexosome,

which is not under the Company’s control.

In 2019, the Company

made a noncontrolling interest deficit adjustment of $862,200 since t he Company determined

that the noncontrolling interest holder does not have the ability to satisfy the deficit, which adjusted the balance of noncontrolling

interest to zero.

During the years ended

December 31, 2020 and 2019, the Company did not allocate any net loss and foreign currency translation adjustment to the noncontrolling

interest holder due to its inability to satisfy these deficits.

NOTE 14 –

RESTRICTED NET ASSETS

portion of the Company’s operations are conducted through its PRC subsidiaries, which can only pay dividends out of their

retained earnings determined in accordance with the accounting standards and regulations in the PRC and after they have met the

PRC requirements for appropriation to statutory reserve.

In addition, a portion of the Company’s businesses and assets are

denominated in RMB, which is not freely convertible into foreign currencies.

All foreign exchange transactions take place either

through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted

by the People’s Bank of China.

Approval of foreign currency payments by the People’s Bank of China or other regulatory

institutions requires submitting a payment application form together with suppliers’

invoices, shipping documents and signed

These currency exchange control procedures imposed by the PRC government authorities may restrict the ability of the

Company’s PRC subsidiaries to transfer their net assets to the Parent Company through loans, advances or cash dividends.

I of Article 5-04 of Regulation S-X requires the condensed financial information of the parent company to be filed when the restricted

net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed

For purposes of this test, restricted net assets of consolidated subsidiaries shall mean that amount of the registrant’s

proportionate share of net assets of its consolidated subsidiaries (after intercompany eliminations) which as of the end of the

most recent fiscal year may not be transferred to the parent company in the form of loans, advances or cash dividends without

the consent of a third party.

Company’s PRC subsidiaries’

net assets as of December 31, 2019 and 2018 did not exceed 25% of the Company’s

consolidated net assets.

Accordingly, the Parent Company’s condensed consolidated financial statements have not been required

in accordance with Rule 5-04 and Rule 12-04 of SEC Regulation S-X.

A portion of the Company’s operations

are conducted through its PRC subsidiaries, which can only pay dividends out of their retained earnings determined in accordance

with the accounting standards and regulations in the PRC and after they have met the PRC requirements for appropriation to statutory

In addition, a portion of the Company’s businesses and assets are denominated in RMB, which is not freely convertible

into foreign currencies.

All foreign exchange transactions take place either through the People’s Bank of China or other

banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China.

of foreign currency payments by the People’s Bank of China or other regulatory institutions requires submitting a payment

application form together with suppliers’

invoices, shipping documents and signed contracts.

These currency exchange control

procedures imposed by the PRC government authorities may restrict the ability of the Company’s PRC subsidiaries to transfer

their net assets to the Parent Company through loans, advances or cash dividends.

Schedule I of Article 5-04 of Regulation S-X

requires the condensed financial information of the parent company to be filed when the restricted net assets of consolidated subsidiaries

exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year.

For purposes of this test,

restricted net assets of consolidated subsidiaries shall mean that amount of the registrant’s proportionate share of net

assets of its consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may

not be transferred to the parent company in the form of loans, advances or cash dividends without the consent of a third party.

The Company’s PRC subsidiaries’

net assets as of December 31, 2020 and 2019 did not exceed 25% of the Company’s consolidated net assets.

Accordingly, the

Parent Company’s condensed consolidated financial statements have not been required in accordance with Rule 5-04 and Rule

12-04 of SEC Regulation S-X.

NOTE 15 –

CONCENTRATIONS

following table sets forth information as to each customer that accounted for 10% or more of the Company’s revenues for

the years ended December 31, 2019 and 2018.

(Beijing Daopei, a related party)

(Hebei Daopei, a related party)

customers, whose outstanding receivable accounted for 10% or more of the Company’s total outstanding accounts receivable

and accounts receivable –

related party and straight-line rent receivable at December 31, 2019, accounted for 93.0% of the

Company’s total outstanding accounts receivable and accounts receivable –

related party and straight-line rent receivable

at December 31, 2019.

customers, whose outstanding receivable accounted for 10% or more of the Company’s total outstanding accounts receivable

and accounts receivable –

related party and straight-line rent receivable at December 31, 2018, accounted for 56.0% of the

Company’s total outstanding accounts receivable and accounts receivable –

related party and straight-line rent receivable

at December 31, 2018.

supplier accounted for 10% or more of the Company’s purchase during the years ended December 31, 2019 and 2018.

supplier, whose outstanding payable accounted for 10% or more of the Company’s total outstanding accounts payable at December

31, 2019, accounted for 90.8% of the Company’s total outstanding accounts payable at December 31, 2019.

supplier, whose outstanding payable accounted for 10% or more of the Company’s total outstanding accounts payable at December

31, 2018, accounted for 95.5% of the Company’s total outstanding accounts payable at December 31, 2018.

GLOBOCARE CORP.

The following table sets forth information

as to each customer that accounted for 10% or more of the Company’s revenues for the years ended December 31, 2020 and 2019.

Years Ended December 31,

A (Shanghai Daopei, a related party)

B (Hebei Daopei, a related party)

*Less than 10%

Two customers, whose outstanding receivable

accounted for 10% or more of the Company’s total outstanding accounts receivable, accounts receivable – related party,

and rent receivable at December 31, 2020, accounted for 78.3% of the Company’s total outstanding accounts receivable, accounts

receivable – related party, and rent receivable at December 31, 2020.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 – CONCENTRATIONS (continued)

Customers (continued)

Two customers, whose outstanding receivable

accounted for 10% or more of the Company’s total outstanding accounts receivable, accounts receivable – related party,

and rent receivable at December 31, 2019, accounted for 93.0% of the Company’s total outstanding accounts receivable, accounts

receivable – related party, and rent receivable at December 31, 2019.

No supplier accounted for 10% or more of the

Company’s purchase during the years ended December 31, 2020 and 2019.

One supplier, whose outstanding payable accounted

for 10% or more of the Company’s total outstanding accounts payable at December 31, 2020, accounted for 93.6% of the Company’s

total outstanding accounts payable at December 31, 2020.

One supplier, whose outstanding payable accounted

for 10% or more of the Company’s total outstanding accounts payable at December 31, 2019, accounted for 90.8% of the Company’s

total outstanding accounts payable at December 31, 2019.

16 – SEGMENT INFORMATION

the years ended December 31, 2019 and 2018, the Company operated in three reportable business segments - (1) the real property

operating segment, (2) the medical related consulting services segment, and (3) the performing development services for hospitals

and other customers and sales of developed products to hospitals and other customers segment.

The Company’s reportable segments

are strategic business units that offer different services and products.

They are managed separately based on the fundamental

differences in their operations.

Information with respect to these reportable business segments for the years ended December 31,

2019 and 2018 was as follows:

For the years ended December 31, 2020 and 2019,

the Company operated in three reportable business segments - (1) the real property operating segment, (2) the medical related consulting

services segment, and (3) the performing development services for hospitals and other customers and sales of developed products

to hospitals and other customers segment.

The Company’s reportable segments are strategic business units that offer different

services and products.

They are managed separately based on the fundamental differences in their operations.

Information with respect

to these reportable business segments for the years ended December 31, 2020 and 2019 was as follows:

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEGMENT INFORMATION (continued)

Years Ended December 31,

Real property operations

Medical related consulting services –

related parties

Medical related consulting services

Development services and sales of developed products

1 unchanged sentence

Real property operations

Medical related consulting services –

related parties

Medical related consulting services

Development services and sales of developed products

Real property operating income

Gross profit from medical related consulting services

Gross (loss) profit from development services and sales of developed products

Gross profit (loss)

Real property operations

Medical related consulting services

Development services and sales of developed products

Other operating expenses

7 unchanged sentences

Corporate/Other

Other income (expense)

Real property operations

Medical related consulting services –

related parties

Medical related consulting services

Development services and sales of developed products

Corporate/Other

Total other income (expense)

Total other (expense) income

Real property operations

2 unchanged sentences

Corporate/Other

GLOBOCARE CORP.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEGMENT INFORMATION (continued)

Identifiable long-lived tangible

assets at December 31, 2019 and 2018

Identifiable long-lived tangible assets at December 31, 2020 and 2019

Real property operations

Medical related consulting services

Development services and sales of developed

long-lived tangible assets at December 31, 2019 and 2018

COMMITMENTS AND CONTINGENCIES

From time to time, we are subject to ordinary

routine litigation incidental to our normal business operations.

We are not currently a party to, and our property is not subject

to, any material legal proceedings, except as set forth below.

On October 25, 2017, Genexosome entered into and closed a Stock

Purchase Agreement with Beijing Genexosome and Yu Zhou, MD, PhD, the sole shareholder of Beijing Genexosome, pursuant to which

Genexosome acquired all of the issued and outstanding securities of Beijing Genexosome in consideration of a cash payment in the

amount of $450,000 of which $100,000 is still owed.

Further, on October 25, 2017, Genexosome entered into and closed an Asset Purchase

Agreement with Dr.

Zhou, pursuant to which the Company acquired all assets, including all intellectual property and exosome separation

systems, held by Dr.

Zhou pertaining to the business of researching, developing and commercializing exosome technologies.

In consideration

of the assets, Genexosome paid Dr.

Zhou $876,087 in cash, transferred 500,000 shares of common stock of the Company to Dr.

and issued Dr.

Development services and sales of developed products

Identifiable long-lived tangible assets at December 31,

2020 and 2019

United States

COMMITMENTS AND CONTINCENGIES

From time to time, the Company is subject to

ordinary routine litigation incidental to its normal business operations.

The Company is not currently a party to, and its property

is not subject to, any material legal proceedings, except as set forth below.

On October 25, 2017, Genexosome entered into

and closed a Stock Purchase Agreement with Beijing Genexosome and Yu Zhou, MD, PhD, the sole shareholder of Beijing Genexosome,

pursuant to which Genexosome acquired all of the issued and outstanding securities of Beijing Genexosome in consideration of a

cash payment in the amount of $450,000, of which $100,000 is still owed.

Further, on October 25, 2017, Genexosome entered into

and closed an Asset Purchase Agreement with Dr.

Zhou, pursuant to which the Company acquired all assets, including all intellectual

property and exosome separation systems, held by Dr.

Zhou pertaining to the business of researching, developing and commercializing

exosome technologies.

In consideration of the assets, Genexosome paid Dr.

Zhou $876,087 in cash, transferred 500,000 shares of

common stock of the Company to Dr.

Zhou and issued Dr.

Zhou 400 shares of common stock of Genexosome.

Further, The Company had not been able to realize the

financial projections provided by Dr.

Zhou at the time of the acquisition and has decided to impair the intangible asset associated

with this acquisition to zero.

Further, The Company had

not been able to realize the financial projections provided by Dr.

Zhou at the time of the acquisition and has decided to impair

the intangible asset associated with this acquisition to zero.

Zhou was terminated as Co-CEO of Genexosome on August 14, 2019.

October 28, 2019, Research Institute at Nationwide Children’s Hospital (“Research Institute”) filed a Complaint

in the United States District Court for the Southern District of Ohio Eastern Division against Dr.

Zhou, Li Chen, the Company and

Genexosome with various claims against the Company and Genexosome including misappropriation of trade secrets in violation of the

Defend Trade Secrets Act of 2016 and violation of Ohio Uniform Trade Secrets Act.

Further, on October 28, 2019, Research Institute at Nationwide Children’s Hospital (“Research Institute”) filed

a Complaint in the United States District Court for the Southern District of Ohio Eastern Division against Dr.

Zhou, Li Chen, the

Company and Genexosome with various claims against the Company and Genexosome including misappropriation of trade secrets in violation

of the Defend Trade Secrets Act of 2016 and violation of Ohio Uniform Trade Secrets Act.

Research Institute is seeking monetary

damages, injunctive relief, exemplary damages, injunctive relief and other equitable relief.

The Company intends

to vigorously defend against this action and pursue all available legal remedies.

The proceedings are in there early

stage and while there can be no assurances, the Company believes it has substantial legal and factual defenses to the Research

Institute’s claims and the likelihood of any findings of liability for the Company cannot be assessed at this time.

Genexosome Office Lease

March 2019, Beijing Genexosome signed an agreement to lease its office space under operating lease.

Pursuant to the signed lease,

the annual rent is RMB 7,000 (approximately $1,000).

The term of this lease is one year commencing on March 15, 2019 and expired

on March 14, 2020.

For the year ended December 31, 2019, rent expense related to the lease amounted to $802.

As of December 31,

2019, the future minimum rental payment required under this operating lease is $209.

Shanghai Office Lease

January 19, 2017, Avalon Shanghai entered into a lease for office space in Beijing, China, with a third party (the “Beijing

Office Lease”).

Pursuant to the Beijing Office Lease, the monthly rent is RMB 50,586 (approximately $7,000) with a required

security deposit of RMB 164,764 (approximately $24,000).

In addition, Avalon Shanghai needs to pay monthly maintenance fees of

RMB 4,336 (approximately $600).

The term of the Beijing Office Lease is 26 months commencing on January 1, 2017 and expired on

February 28, 2019 with two months of free rent in the months of December 2017 and February 2019.

On December 27, 2018, Avalon

Shanghai signed an extension for the lease with expiration date of February 29, 2020.

The Company intends to vigorously

defend against this action and pursue all available legal remedies.

The civil case against Avalon is stayed pending resolution

of the criminal proceedings against Dr.

Zhou and Li Chen, and while there can be no assurances, the Company believes it has substantial

legal and factual defenses to the Research Institute’s claims and the likelihood of any findings of liability for the Company

cannot be assessed at this time.

Operating Leases

Avalon Shanghai Office Lease

On February 24, 2020, Avalon Shanghai entered

into a lease for office space in Beijing, China, with a third party (the “Beijing Office Lease”).

Pursuant to the Beijing

Office Lease, the monthly rent is RMB 50,586 (approximately $8,000) with a required security deposit of RMB 164,764 (approximately

In addition, Avalon Shanghai needs to pay monthly maintenance fees of RMB 4,336 (approximately $700).

The term of the

Beijing Office Lease was 12 months commencing on March 1, 2020 and expired on February 28, 2021.

As of December 31, 2020, the future

minimum rental payment required under this Beijing Office Lease is $16,820.

For the years ended December 31 2020 and 2019,

2018, rent expense and maintenance fees related to the Beijing Office Lease amounted to approximately $90,000 and $91,000, respectively.

As of December 31, 2019, the future minimum rental payment required under this Beijing Office Lease is $15,775.

Investment Commitment

May 29, 2018, Avalon Shanghai entered into a Joint Venture Agreement with Jiangsu Unicorn Biological Technology Co., Ltd.

(“Unicorn”),

pursuant to which a company named Epicon Biotech Co., Ltd.

(“Epicon”) was formed on August 14, 2018.

Epicon is owned

60% by Unicorn and 40% by Avalon Shanghai.

Within two years of execution of the Joint Venture Agreement, Unicorn shall invest

cash into Epicon in an amount not less than RMB 8,000,000 (approximately $1.1 million) and the premises of the laboratories of

Nanjing Hospital of Chinese Medicine for exclusive use by Epicon, and Avalon Shanghai shall invest cash into Epicon in an amount

not less than RMB 10,000,000 (approximately $1.4 million).

Epicon is focused on cell preparation, third party testing, biological

sample repository for commercial and scientific research purposes and the clinical transformation of scientific achievements.

As of December 31, 2019, Avalon Shanghai has contributed RMB 4,100,000 (approximately $0.6 million) that was included in equity

method investment on the accompanying consolidated balance sheets.

Avalon Shanghai intends to use its present working capital

together with loans, borrowings, and equity raises to fund the project cost.

Venture –

AVAR BioTherapeutics (China) Co.

October 23, 2018, Avactis Biosciences, Inc.

(“Avactis”), a wholly-owned subsidiary of the Company, and Arbele Limited

(“Arbele”) agreed to the establishment of AVAR BioTherapeutics (China) Co.

(“AVAR”), a Sino-foreign

equity joint venture, pursuant to an Equity Joint Venture Agreement (the “AVAR Agreement”), which will be owned 60%

by Avactis and 40% by Arbele.

The purpose and business scope of the Joint Venture is to research, develop, produce, sell, distribute

and generally commercialize CAR-T/CAR-NK/TCR-T/universal cellular immunotherapy in China.

Avactis is required to contribute $10

million (or equivalent in RMB) in cash and/or services, which shall be contributed in tranches based on milestones to be determined

jointly by AVAR and Avactis in writing subject to Avactis’

cash reserves.

Within 30 days, Arbele shall make a contribution

of $6.66 million in the form of entering into a License Agreement with AVAR granting AVAR with an exclusive right and license

in China to its technology and intellectual property pertaining to CAR-T/CAR-NK/TCR-T/universal cellular immunotherapy technology

and any additional technology developed in the future with terms and conditions to be mutually agreed upon Avactis and AVAR and

GLOBOCARE CORP.

rent expense and maintenance fees related to Avalon Shanghai office lease amounted to approximately $91,000 and $90,000, respectively.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

COMMITMENTS AND CONTINCENGIES (continued)

Venture –

AVAR BioTherapeutics (China) Co.

addition, Avactis is responsible for:

registered capital of RMB 5,000,000 (approximately $0.7 million) for working capital purposes as required by local regulation,

which is not required to be contributed immediately and will be contributed subject to Avactis’

AVAR in setting up its business operations and obtaining all required permits and licenses from the Chinese government;

AVAR in recruiting, hiring and retaining personnel;

AVAR with access to various hospital networks in China to assist in the testing and commercialization of the CAR-T/CAR-NK/TCR-T/universal

cellular immunotherapy technology in China;

AVAR in managing the Good Manufacturing Practices (GMP) facility and clinic to be developed by AVAR;

AVAR with advice pertaining to conducting clinicals in China;

6 days of signing the AVAR Agreement, Avactis is required to pay to Arbele $300,000 as a research and development fee with

an additional two payments of $300,000 (for a total of $900,000) to be paid upon mutually agreed upon milestones.

AVAR Agreement, Arbele shall be responsible for the following:

into a License Agreement with AVAR;

AVAR with research and development expertise pertaining to clinical laboratory medicine when hired by AVAR.

As of December

31, 2019, Avactis has paid $600,000 to Arbele as research and development fee, and AVAR is in process of being established and

the License Agreement has not been finalized.

of Credit Agreement

August 29, 2019, the Company entered into a Line of Credit Agreement (the “Line of Credit Agreement”) providing

the Company with a $20 million line of credit (the “Line of Credit”) from Wenzhao Lu (the “Lender”), a

significant shareholder and director of the Company.

The Line of Credit allows the Company to request loans thereunder and to

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

The loans are unsecured and are not convertible into equity of the Company.

Loans drawn under the Line of Credit bears interest

at an annual rate of 5% and each individual loan will be payable three years from the date of issuance.

The Company has a right

to draw down on the line of credit and not at the discretion of the related party Lender.

The Company may, at its option, prepay

any borrowings under the Line of Credit, in whole or in part at any time prior to maturity, without premium or penalty.

Line of Credit Agreement includes customary events of default.

If any such event of default occurs, the Lender may declare all

outstanding loans under the Line of Credit to be due and payable immediately.

Under the Line of Credit, as of December 31,

2019, the Company received loan from the Lender of $2,600,000.

NOTE 21 –

the fourth quarter of 2019, the Company determined that there was an error in the accounting for the noncontrolling interest during

the third quarter of 2019.

The Company determined that the events surrounding its ability to recover the excess losses allocated

to the noncontrolling interest holder over its basis occurred during the third quarter of 2019.

The Company recorded the intra-period

adjustment as if it occurred as of September 30, 2019.

The Company’s unaudited condensed consolidated balance sheet as of

September 30, 2019 has been restated for the impact of this adjustment as follows:

Accumulated deficit

$ (23,913,011 )

$ (25,431,084 )

Accumulated other comprehensive loss - foreign currency translation adjustment

Total Avalon GloboCare Corp.

stockholders' equity and non-controlling interest

Non-controlling interest

$ (1,513,621 )

GLOBOCARE CORP.

Operating Leases (continued)

Operating Lease for General Business

In December 2019, the Company entered into

a lease in New York, U.S., with a third party (the “New York Lease”).

Pursuant to the New York Lease, the monthly rent

The term of the New York Lease is 3 years commencing on January 1, 2020 and expires on December 31, 2022.

ended December 31, 2020, rent expense related to the New York Lease amounted to $72,000.

Operating lease right-of-use asset related

to the New York Lease is included in “Right-of-use asset, operating lease”

on the accompanying consolidated balance

With respect to lease liability, operating lease liability is included in “Operating lease obligation”

“Operating lease obligation – noncurrent portion,”

on the accompanying consolidated balance sheets.

The Company’s

leases as of December 31, 2019 did not meet the requirements to be recorded as a right-of-use asset and operating lease obligation

as they were immaterial and less than 12 months in term.

Supplemental cash flow information related

to the New York lease for the year ended December 31, 2020 is as follows:

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows paid for operating lease

Right-of-use asset obtained in exchange for lease obligation:

Operating lease

Supplemental balance sheet information related to the New York Lease

as of December 31, 2020 is as follows:

Operating Lease:

Operating lease right-of-use asset

Current portion of operating lease liability

Long-term operating lease liability

Total operating lease liability

Weighted Average Remaining Lease Term (in years):

Operating lease

Weighted Average Discount Rate:

Operating lease

The following table summarizes the maturity of lease liability under

the New York Lease as of December 31, 2020:

For the Year Ending December 31:

2023 and thereafter

Total lease payments

Amount of lease payments representing interest

Total present value of operating lease liability

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 21 –

REVISION (continued)

Company’s condensed consolidated statement of operations for the three and nine months ended September 30, 2019 have been

restated for the impact of this adjustment as follows:

Three Months Ended

Nine Months Ended

Three Months Ended

Nine Months Ended

September 30,

from noncontrolling interest deficit adjustment

$ (1,042,210 )

Total Other Income

(Expense), net

LOSS BEFORE INCOME

$ (4,334,058 )

$ (13,277,810 )

$ (5,376,268 )

$ (14,140,010 )

$ (4,334,058 )

$ (13,277,810 )

$ (5,376,268 )

$ (14,140,010 )

NET LOSS ATTRIBUTABLE

TO NON-CONTROLLING INTEREST

NET LOSS ATTRIBUTABLE

TO AVALON GLOBOCARE CORP.

COMMON SHAREHOLDERS

$ (3,858,195 )

$ (12,621,235 )

$ (5,376,268 )

$ (14,140,010 )

NET LOSS PER COMMON

SHARE ATTRIBUTABLE TO AVALON GLOBOCARE CORP.

COMMON SHAREHOLDERS:

Basic and diluted

Company’s condensed consolidated statement of cash flow for the nine months ended September 30, 2019 have been restated for

the impact of this adjustment as follows:

CASH FLOWS FROM OPERATING ACTIVITIES:

$ (13,277,810 )

$ (14,140,010 )

Adjustments to reconcile net loss to net cash used in operating

Loss from noncontrolling interest deficit adjustment

SUBSEQUENT EVENTS

February 5, 2020, the Company drew down $300,000 from its credit facility under that certain credit line agreement with

Wenzhao Lu, a significant shareholder and director of the Company, which provides the Company with a $20 million line of credit.

As a result of this draw down, the Company has approximately $17.1 million remaining available under the Line Credit.

This draw down increased the total principal amount outstanding under the Credit Line to $2.9 million.

On December 13,

2019, we entered into an Open Market Sale Agreement SM (the “Sales Agreement”) with Jefferies LLC,

as sales agent (“Jefferies”), pursuant to which we may offer and sell, from time to time, through Jefferies, shares

of our common stock, par value $0.0001 per share, having an aggregate offering price of up to $20.0 million.

From January 1, 2020

to April 2, 2020, Jefferies sold an aggregate of 980,358 shares of common stock at an average price of $1.66 per share to investors.

The Company received net cash proceeds of $1,549,265, net of cash fee paid for sales agent’s commission and other offering

expenses of $74,319.

GLOBOCARE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

COMMITMENTS AND CONTINCENGIES (continued)

Equity Investment Commitment

On May 29, 2018, Avalon Shanghai entered into

a Joint Venture Agreement with Jiangsu Unicorn Biological Technology Co., Ltd.

(“Unicorn”), pursuant to which a company

named Epicon Biotech Co., Ltd.

(“Epicon”) was formed on August 14, 2018.

Epicon is owned 60% by Unicorn and 40% by

Avalon Shanghai.

Within five years of execution of the Joint Venture Agreement, Unicorn shall invest cash into Epicon in an amount

not less than RMB 8,000,000 (approximately $1.2 million) and the premises of the laboratories of Nanjing Hospital of Chinese Medicine

for exclusive use by Epicon, and Avalon Shanghai shall invest cash into Epicon in an amount not less than RMB 10,000,000 (approximately

$1.5 million).

Epicon is focused on cell preparation, third party testing, biological sample repository for commercial and scientific

research purposes and the clinical transformation of scientific achievements.

As of December 31, 2020, Avalon Shanghai has contributed

RMB 4,500,000 (approximately $0.7 million) that was included in equity method investment on the accompanying consolidated balance

The Company intends to use its present working capital together with borrowings from related party and equity raises to

fund the project cost.

Joint Venture – AVAR BioTherapeutics (China) Co.

On October 23, 2018, Avactis Biosciences, Inc.

(“Avactis”), a wholly-owned subsidiary of the Company, and Arbele Limited (“Arbele”) agreed to the establishment

of AVAR BioTherapeutics (China) Co.

(“AVAR”), a Sino-foreign equity joint venture, pursuant to an Equity Joint

Venture Agreement (the “AVAR Agreement”), which will be owned 60% by Avactis and 40% by Arbele.

The purpose and business

scope of the Joint Venture is to research, develop, produce, sell, distribute and generally commercialize CAR-T/CAR-NK/TCR-T/universal

cellular immunotherapy in China.

Avactis is required to contribute $10 million (or equivalent in RMB) in cash and/or services,

which shall be contributed in tranches based on milestones to be determined jointly by AVAR and Avactis in writing subject to Avactis’

cash reserves.

Within 30 days, Arbele shall make a contribution of $6.66 million in the form of entering into a License Agreement

with AVAR granting AVAR with an exclusive right and license in China to its technology and intellectual property pertaining to

CAR-T/CAR-NK/TCR-T/universal cellular immunotherapy technology and any additional technology developed in the future with terms

and conditions to be mutually agreed upon Avactis and AVAR and services.

In addition, Avactis is responsible for:

Contributing registered capital of RMB 5,000,000 (approximately $0.8 million) for working capital purposes as required by local regulation, which is not required to be contributed immediately and will be contributed subject to Avactis’

assist AVAR in setting up its business operations and obtaining all required permits and licenses from Chinese government;

assisting AVAR in recruiting, hiring and retaining personnel;

providing AVAR with access to various hospital networks in China to assist in the testing and commercialization of the CAR-T/CAR-NK/TCR-T/universal cellular immunotherapy technology in China;

assisting AVAR in managing the Good Manufacturing Practices (GMP) facility and clinic to be developed by AVAR;

providing AVAR with advice pertaining to conducting clinicals in China;

Within 6 days of signing the AVAR Agreement, Avactis is required to pay to Arbele $300,000 as a research and development fee with an additional two payments of $300,000 (for a total of $900,000) to be paid upon mutually agreed upon milestones.

Under AVAR Agreement, Arbele shall be responsible for the following:

Entering into a License Agreement with AVAR;

Providing AVAR with research and development expertise pertaining to clinical laboratory medicine when hired by AVAR.

As of December 31, 2020 and 2019, Avactis

has paid $900,000 and $600,000 to Arbele as research and development fee, respectively.

As of December 31, 2020, License Agreement

has not been finalized.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

SUBSEQUENT EVENTS (continued)

February 20, 2020, the Company entered into (i) a Letter Agreement with Dr.

David Jin, Chief Executive Officer of the Company,

pursuant to which the term of Dr.

Jin’s Executive Employment Agreement entered between the Company and Dr.

Jin dated December

1, 2016 was extended an additional three years and granted Dr.

Jin a Stock Option to acquire 400,000 shares of common stock at

an exercise price of $1.52 per share for a period of ten years, (ii) a Letter Agreement with Meng Li, Chief Operating Officer

of the Company, pursuant to which the term of Ms.

Li’s Executive Employment Agreement entered between the Company’

subsidiary and Ms.

Li dated January 11, 2017 was extended an additional three years and granted Ms.

Li a Stock Option to acquire

300,000 shares of common stock at an exercise price of $1.52 per share for a period of ten years and (iii) a Letter Agreement

with Luisa Ingargiola, Chief Financial Officer of the Company, granting Ms.

Ingargiola a Stock Option to acquire 400,000 shares

of common stock at an exercise price of $1.52 per share for a period of ten years.

28, 2020, Beijing Genexosome signed an agreement to lease its office space under operating lease.

Pursuant to the signed lease,

monthly rent is RMB 833 (approximately $120) with a required security deposit of RMB 5,000 (approximately $700).

The term of the

lease is 13 months commencing on March 15, 2020 and expires on April 14, 2021 with one month of free rent.

The total rent is RMB

10,000 (approximately $1,400) and paid in full in March 2020.

February 24, 2020, Avalon Shanghai entered into a lease for office space in Beijing, China, with a third party (the “Beijing

Office Lease”).

Pursuant to the Beijing Office Lease, the monthly rent is RMB 50,586 (approximately $7,000) with a required

security deposit of RMB 164,764 (approximately $24,000).

In addition, Avalon Shanghai needs to pay monthly maintenance fees of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

COMMITMENTS AND CONTINCENGIES (continued)

Line of Credit Agreement

On August 29, 2019, the Company entered into

a Line of Credit Agreement (the “Line of Credit Agreement”) providing the Company with a $20 million line of credit

(the “Line of Credit”) from Wenzhao Lu (the “Lender”), a significant shareholder and director of the Company.

The Line of Credit allows the Company to request loans thereunder and to use the proceeds of such loans for working capital and

operating expense purposes until the facility matures on December 31, 2024.

The loans are unsecured and are not convertible into

equity of the Company.

Loans drawn under the Line of Credit bears interest at an annual rate of 5% and each individual loan will

be payable three years from the date of issuance.

The Company has a right to draw down on the line of credit and not at the discretion

of the related party Lender.

The Company may, at its option, prepay any borrowings under the Line of Credit, in whole or in part

at any time prior to maturity, without premium or penalty.

The Line of Credit Agreement includes customary events of default.

any such event of default occurs, the Lender may declare all outstanding loans under the Line of Credit to be due and payable immediately.

As of December 31, 2020, $3,200,000 was outstanding under the Line of Credit.

NOTE 18 – SUBSEQUENT EVENTS

On December 13, 2019, the Company entered into an Open Market

Sale Agreement SM (the “Sales Agreement”) with Jefferies LLC, as sales agent (“Jefferies”).

January 1, 2021 to March 29, 2021, Jefferies sold an aggregate of 1,830,317 shares of common stock at an average price of $1.34

per share to investors.

The Company received net cash proceeds of $2,386,924, net of commission paid to sales agent of $73,822.

In January 2021,

the Company issued a total of 300,000 shares of its common stock for services rendered.

These shares were valued at $360,000, the

fair market values on the grant dates using the reported closing share prices on the dates of grant and the Company reduced accrued

liabilities of $360,000.

On February 2 2, 2021, Avalon

Shanghai entered into a lease for office space in Beijing, China, with a third party (the “Beijing Office Lease”).

Pursuant to the Beijing Office Lease, the monthly rent is RMB 37,578 (approximately $6,000) with a required security deposit of

RMB 125,741 (approximately $19,000).

In addition, Avalon Shanghai needs to pay monthly maintenance fees of RMB 4,336 (approximately

The term of the Beijing Office Lease is 24 months commencing on March 1, 2021 and expires on February 28, 2023.

March 11, 2020, the World Health Organization declared the outbreak of the coronavirus (COVID-19) a pandemic.

While the disruption

is currently expected to be temporary, there is considerable uncertainty about its possible duration.

As a result, significant

economic uncertainties have arisen which are likely to negatively impact our tenants, employees and consultants.

A return of recessionary

conditions and/or other negative developments in the domestic or international credit markets or economies may significantly affect

the markets in which we do business, and our ongoing operations, costs and profitability.

These negative events may cause us to

incur losses and may adversely affect our liquidity and financial condition.

Other negative financial and operational impacts

could occur although such potential impact is unknown and cannot be reasonably estimated at this time.

1, 2020, the Company entered into a Subscription Agreement with WLM Limited (“WLM”), an entity owned by Wenzhao “Daniel”

Lu, Chairman of the Board of Directors of the Company, pursuant to which WLM purchased 645,161 shares of the Company’s common

stock at a price per share of $1.55 for an aggregate purchase price of $1,000,000.

The closing occurred on April 1, 2020.

During the first

quarter of 2020, the Company issued a total of 222,577 shares of its common stock for services rendered and to be rendered.

shares were valued at $213,300, the fair market values on the grant dates using the reported closing share prices on the dates

of grant and the Company recorded stock-based compensation expense of $156,093 for the quarter ended March 31, 2020 and recorded

prepaid expense of $57,207 as of March 31, 2020 which will be amortized over the rest of corresponding service periods.

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

What changed 10-K

Item 9A. Controls and Procedures