What changed in this filing

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Item 1. Financial Statements

2021-08-16 compared with 2021-05-14 · 691 added, 1147 removed, 540 unchanged (77% of the section changed)

Financial Statements.

GLOBOCARE CORP.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

CURRENT ASSETS:

financing costs

expenses and other current assets

CONDENSED CONSOLIDATED BALANCE SHEETS

CURRENT ASSETS:

NON-CURRENT ASSETS:

receivable - noncurrent portion

leasing costs

lease right-of-use assets, net

and equipment, net

in real estate, net

method investment

Rent receivable

Deferred financing costs

Prepaid expenses and other current assets

Total Current Assets

NON-CURRENT ASSETS:

Rent receivable - noncurrent portion

Security deposit

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 and directors' compensation

liabilities and other payables

liabilities and other payables - related parties

lease obligation

payable - related party

Current Liabilities

NON-CURRENT LIABILITIES:

lease obligation - noncurrent portion

payable - related party

Accrued professional fees

Accrued research and development fees

Accrued payroll liability and directors' compensation

Accrued liabilities and other payables

Accrued liabilities and other payables - related parties

Operating lease obligation

Note payable - related party

Total Current Liabilities

NON-CURRENT LIABILITIES:

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

Preferred stock, $ 0.0001 par value;

10,000,000 shares authorized;

no shares issued and outstanding

at March 31, 2021 and December 31, 2020

Common stock, $0.0001 par

no shares issued and outstanding at June 30, 2021 and December 31, 2020

Common stock, $ 0.0001 par value;

490,000,000 shares authorized;

84,943,564 shares issued

and 84,423,564 shares outstanding at March 31, 2021;

82,795,297 shares issued

and 82,275,297 shares outstanding at December 31, 2020

paid-in capital

85,600,919 shares issued and 85,080,919 shares outstanding at June 30, 2021;

82,795,297 shares issued and 82,275,297 shares outstanding at December 31, 2020

Additional paid-in capital

common stock held in treasury, at cost;

520,000 shares at March

31, 2021 and December 31, 2020

520,000 shares at June 30, 2021 and December 31, 2020

Accumulated deficit

( 46,773,403 )

( 42,041,375 )

other comprehensive loss - foreign currency translation adjustment

Avalon GloboCare Corp.

Statutory reserve

Accumulated other comprehensive loss - foreign currency translation adjustment

Total Avalon GloboCare Corp.

stockholders' equity

Non-controlling

Liabilities and Equity

accompanying notes to the condensed consolidated financial statements.

GLOBOCARE CORP.

Non-controlling interest

Total Liabilities and Equity

See accompanying notes to the condensed consolidated

financial statements.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

the Three Months Ended

Real property

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

For the Three Months Ended

For the Six Months Ended

Real property rental

COSTS AND EXPENSES

property operating expenses

property operating income

Real property operating expenses

Real property operating income

OTHER OPERATING EXPENSES:

Professional fees

Compensation and related

Research and development

general and administrative

Other Operating Expenses

Compensation and related benefits

Research and development expenses

Other general and administrative

Total Other Operating Expenses

LOSS FROM OPERATIONS

( 2,302,280 )

( 3,002,827 )

( 4,605,868 )

( 6,225,019 )

OTHER INCOME (EXPENSE)

Interest expense - related

Loss from equity method

Other Expense, net

Interest expense - related party

Loss from equity method investment

Other (expense) income

Total Other Expense, net

LOSS BEFORE INCOME TAXES

1 unchanged sentence

( 3,056,382 )

NET LOSS ATTRIBUTABLE

TO NON-CONTROLLING INTEREST

NET LOSS ATTRIBUTABLE

TO AVALON GLOBOCARE CORP.

( 4,732,028 )

( 6,327,163 )

$ ( 2,364,910 )

$ ( 3,056,382 )

$ ( 4,732,028 )

$ ( 6,327,163 )

NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST

NET LOSS ATTRIBUTABLE TO AVALON GLOBOCARE CORP.

COMMON SHAREHOLDERS

1 unchanged sentence

$ ( 3,056,382 )

$ ( 4,732,028 )

$ ( 6,327,163 )

COMPREHENSIVE LOSS:

1 unchanged sentence

$ ( 3,056,382 )

OTHER COMPREHENSIVE LOSS

foreign currency translation loss

$ ( 4,732,028 )

$ ( 6,327,163 )

OTHER COMPREHENSIVE INCOME (LOSS)

Unrealized foreign currency translation gain (loss)

COMPREHENSIVE LOSS

( 2,350,124 )

( 3,053,073 )

( 4,719,964 )

( 6,345,920 )

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

$ ( 3,053,073 )

NET LOSS PER COMMON SHARE ATTRIBUTABLE TO AVALON

GLOBOCARE CORP.

$ ( 4,719,964 )

$ ( 6,345,920 )

NET LOSS PER COMMON SHARE ATTRIBUTABLE TO AVALON GLOBOCARE CORP.

COMMON SHAREHOLDERS:

Basic and diluted

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

accompanying notes to the condensed consolidated financial statements.

Basic and diluted

See accompanying notes to the condensed consolidated

financial statements.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Three Months Ended March 31, 2021

GloboCare Corp.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

For the Three and Six Months Ended June 30, 2021

Avalon GloboCare Corp.

Stockholders' Equity

Preferred Stock

Treasury Stock

Comprehensive

January 1, 2021

Non-controlling

Balance, January 1, 2021

$ ( 522,500 )

of common stock, net

of common stock

for services (Note 8)

translation adjustment

loss for the three

months ended March 31, 2021

March 31, 2021

$ ( 42,041,375 )

See accompanying notes to the condensed consolidated financial statements.

$ ( 190,510 )

Sale of common stock, net

Issuance of common stock for services

Stock-based compensation

Foreign currency translation adjustment

Net loss for the three months ended March 31, 2021

( 2,367,118 )

Balance, March 31, 2021

( 44,408,493 )

Issuance of common stock for settlement of accrued professional fees

Issuance of common stock for services

Stock-based compensation

Foreign currency translation adjustment

Net loss for the three months ended June 30, 2021

( 2,364,910 )

Balance, June 30, 2021

$ ( 522,500 )

$ ( 46,773,403 )

$ ( 178,446 )

See accompanying notes to the condensed consolidated

financial statements.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Three Months Ended March 31, 2020

GloboCare Corp.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

For the Three and Six Months Ended June 30, 2020

Avalon GloboCare Corp.

Stockholders' Equity

Preferred Stock

Treasury Stock

Comprehensive

January 1, 2020

Non-controlling

Balance, January 1, 2020

$ ( 522,500 )

of common stock, net

of common stock for services

currency translation adjustment

loss for the three months ended March 31, 2020

March 31, 2020

$ ( 29,361,937 )

See accompanying notes to

the condensed consolidated financial statements.

$ ( 257,747 )

Sale of common stock, net

Issuance of common stock for services

Stock-based compensation

Foreign currency translation adjustment

Net loss for the three months ended March 31, 2020

( 3,270,781 )

Balance, March 31, 2020

( 32,632,718 )

Sale of common stock, net

Issuance of common stock for services

Stock-based compensation

Foreign currency translation adjustment

Net loss for the three months ended June 30, 2020

( 3,056,382 )

Balance, June 30, 2020

$ ( 522,500 )

$ ( 35,689,100 )

$ ( 276,504 )

See accompanying notes to the condensed consolidated

financial statements.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended

CONDENSED CONSOLIDATED STATEMENTS OF

For the Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

$ ( 6,327,163 )

Adjustments to reconcile net loss to

net cash used in operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Bad debt provision

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NET CASH USED IN OPERATING ACTIVITIES

( 2,593,548 )

( 3,924,902 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Improvement of commercial real estate

Additional investment in equity method investment

1 unchanged sentence

CASH FLOWS FROM FINANCING ACTIVITIES

Repayments of note payable - related party

Proceeds received from loan payable - related party

3 unchanged sentences

EFFECT OF EXCHANGE RATE ON CASH

NET INCREASE (DECREASE) IN CASH

NET (DECREASE) INCREASE IN CASH

CASH - beginning of period

3 unchanged sentences

Common stock issued for accrued liabilities

See accompanying notes to the condensed consolidated financial statements.

Deferred financing costs in accrued liabilities

Accrued professional fees relieved for shares issued

See accompanying notes to the condensed consolidated

financial statements.

AVALON GLOBOCARE CORP.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 –

NOTE 1 – ORGANIZATION

AND NATURE OF OPERATIONS

Avalon GloboCare Corp.

(the “Company”

or “AVCO”) is a Delaware corporation.

(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 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”).

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 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,

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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.

Through its subsidiary structure with unique integration of verticals from innovative research and development (“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 March 31,

There was no activity for the subsidiary since its incorporation through June 30,

Avalon (BVI) Ltd.

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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,

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.

Avalon 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.

As of March 31, 2021, the occupancy rate of

As of June 30, 2021, the occupancy rate of

the building is 89.4 %.

On July 31, 2017, the Company formed Genexosome

Technologies Inc.

(“Genexosome”) in Nevada.

Genexosome was engaged in developing proprietary diagnostic and therapeutic products

using exosomes.

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

On July 31, 2017, the Company formed Genexosome Technologies

(“Genexosome”) in Nevada.

Genexosome was engaged in developing proprietary diagnostic and therapeutic products using

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.

The Company had not been able to realize the financial projections provided by Dr.

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.

Since the fourth quarter of 2019, the non-controlling interest keeps inactive.

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.

Since the fourth quarter of 2019, the non-controlling interest has remained inactive.

On July 18, 2018, the Company formed a wholly

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therapies, including regenerative medicine with stem/progenitor cells as well as cellular immunotherapy including CAR-T, CAR-NK, TCR-T

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.

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

1 unchanged sentence

There was no activity for the subsidiary since its incorporation

through March 31, 2021.

through June 30, 2021.

AVALON GLOBOCARE CORP.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 –

NOTE 1 – ORGANIZATION

AND NATURE OF OPERATIONS (continued)

Details of the Company’s subsidiaries which

are included in these condensed consolidated financial statements as of March 31, 2021 are as follows:

of Subsidiary

and date of Incorporation

Details of the Company’s subsidiaries which

are included in these condensed consolidated financial statements as of June 30, 2021 are as follows:

Name of Subsidiary

Place and date of Incorporation

Percentage of Ownership

Principal Activities

Avalon Healthcare System, Inc.

(“AHS”)

medical related consulting services and developing Avalon Cell and Avalon Rehab in United States of America (“USA”)

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

is in process of being dissolved

Avalon RT 9 Properties LLC

(“Avalon RT 9”)

February 7, 2017

and operates an income-producing real property and holds and manages the corporate headquarters

Avalon (Shanghai) Healthcare Technology Co.,

(“Avalon Shanghai”)

100% held by AVCO

Owns and operates an income-producing real property and holds and manages the corporate headquarters

Avalon (Shanghai) Healthcare Technology Co., Ltd.

(“Avalon Shanghai”)

April 29, 2016

medical related consulting services and developing Avalon Cell and Avalon Rehab in China

100% held by AHS

Provides medical related consulting services and developing Avalon Cell and Avalon Rehab in China

Genexosome Technologies Inc.

(“Genexosome”)

July 31, 2017

Beijing Jieteng (Genexosome) Biotech Co.,

(“Beijing Genexosome”)

60% held by AVCO

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

Avactis Biosciences Inc.

(“Avactis”)

July 18, 2018

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

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”)

June 13, 2019

standardization related to exosome industry

NOTE 2 –

BASIS OF PRESENTATION

AND GOING CONCERN CONDITION

100% held by AVCO

Promotes standardization related to exosome industry

2 – BASIS OF PRESENTATION AND GOING CONCERN CONDITION

Basis of Presentation

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results that may be reported for the entire year.

The accompanying condensed consolidated financial statements have been prepared in

accordance with the rules and regulations of the Securities and Exchange Commission and do not include all information and footnotes

necessary for a complete presentation of financial statements in conformity with accounting principles generally accepted in the United

States (“U.S.

GAAP”).

The Company’s condensed consolidated financial statements include the accounts of the Company

and its subsidiaries.

The accompanying condensed consolidated financial statements have been prepared in accordance

with the rules and regulations of the Securities and Exchange Commission and do not include all information and footnotes necessary for

a complete presentation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S.

The Company’s condensed consolidated financial statements include the accounts of the Company and its subsidiaries.

All significant intercompany accounts and transactions have been eliminated in consolidation.

2 unchanged sentences

GAAP have been condensed or omitted.

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial

statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial

statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed

with the Securities and Exchange Commission on March 30, 2021.

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 –

BASIS OF PRESENTATION

AND GOING CONCERN CONDITION (continued)

2 – BASIS OF PRESENTATION AND GOING CONCERN CONDITION (continued)

Going Concern

4 unchanged sentences

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.

Through its subsidiary structure with unique integration of verticals from innovative research and development (“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 of China.

The Company did not generate any

revenue from medical related consulting services segment during the three months ended March 31, 2021.

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 of China.

The Company did not generate any revenue

from medical related consulting services segment during the three and six months ended June 30, 2021.

These condensed consolidated financial

2 unchanged sentences

As reflected in the accompanying condensed consolidated

financial statements, the Company had working capital deficit of $1,059,606 as of March 31, 2021 and has incurred recurring net loss

and generated negative cash flow from operating activities of $2,367,118 and $1,515,525 for the three months ended March 31, 2021, respectively.

financial statements, the Company had working capital deficit of $ 2,354,803 as of June 30, 2021 and has incurred recurring net loss and

generated negative cash flow from operating activities of $ 4,732,028 and $ 2,593,548 for the six months ended June 30, 2021, respectively.

The Company has a limited operating history and its continued growth is dependent upon the continuation of providing medical consulting

5 unchanged sentences

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.

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

The Company plans on raising capital through the sale of equity to implement its business plan.

2 unchanged sentences

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.

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 rest of 2021.

as the COVID-19 pandemic had negatively impact on the Company’s operations.

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 rest of 2021.

The accompanying condensed consolidated financial

1 unchanged sentence

classification of liabilities that may result should the Company be unable to continue as a going concern.

NOTE 3 –

NOTE 3 – SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES

6 unchanged sentences

Actual results could differ from these estimates.

estimates during the three months ended March 31, 2021 and 2020 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.

estimates during the three and six months ended June 30, 2021 and 2020 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.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 –

SUMMARY OF SIGNIFICANT

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

1 unchanged sentence

Fair Value Measurements

The 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 based

on the best available information.

The 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:

● 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.

The carrying amounts

reported in the condensed consolidated balance sheets for cash, rent receivable, accrued liabilities and other payables, accrued liabilities

and other payables –

related parties, operating lease obligation, and note payable, approximate their fair market value as of March

and other payables – related parties, operating lease obligation, and note payable, approximate their fair market value as of June

30, 2021 and December 31, 2020 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).

5 unchanged sentences

Cash and Cash Equivalents

At March 31, 2021 and December 31, 2020, the

Company’s cash balances by geographic area were as follows:

At June 30, 2021 and December 31, 2020, the Company’s

cash balances by geographic area were as follows:

June 30, 2021

December 31, 2020

United States

2 unchanged sentences

accounts to be cash equivalents.

The Company had no cash equivalents at March 31, 2021 and December 31, 2020.

The Company had no cash equivalents at June 30, 2021 and December 31, 2020.

Credit Risk and Uncertainties

A portion of the Company’s cash is maintained

with state-owned banks within the PRC.

2 unchanged sentences

Any balance over RMB 500,000 per bank in PRC will not be covered.

At March 31, 2021, cash balances held in the PRC

are RMB 1,083,049 (approximately $165,000), of which, RMB 556,726 (approximately $85,000) 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.

At June 30, 2021, cash balances held in the PRC are

RMB 631,294 (approximately $ 98,000 ), of which, RMB 126,589 (approximately $ 20,000 ) was not covered by such limited insurance.

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

2 unchanged sentences

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 such bank accounts

and believes it is not exposed to any risks on its cash in bank accounts.

At March 31, 2021, the Company’s cash balances in United

States bank accounts had approximately $986,000 in excess of the federally-insured limits.

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 June 30, 2021, the Company’s cash balances in United States bank

accounts had approximately $ 63,000 in excess of the federally-insured limits.

AVALON GLOBOCARE CORP.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 –

SUMMARY OF SIGNIFICANT

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

Credit Risk and Uncertainties (continued)

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

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,

2 unchanged sentences

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;

concentrations of credit risk with respect to trade accounts receivable is limited due to short-term payment terms.

The Company also

performs ongoing credit evaluations of its customers to help further reduce credit risk.

The Company also performs

ongoing credit evaluations of its customers to help further reduce credit risk.

Investment in Unconsolidated

Company –

Epicon Biosciences Co., Ltd.

Company – Epicon Biosciences Co., Ltd.

The Company uses the equity method of accounting

8 unchanged sentences

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

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

Identify the performance

obligations in the contract

Determine the transaction

Allocate the transaction

price to the performance obligations in the contract

Recognize revenue

when the company satisfies a performance obligation

In order to identify

the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify

each promised goods or service that is distinct.

A performance obligation meets ASC 606’s definition of a “distinct”

goods or service (or bundle of goods or services) if both of the following criteria are met:

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).

Identify the contract with the customer

Identify the performance obligations in the contract

Determine the transaction price

Allocate the transaction price to the performance obligations in the contract

Recognize revenue when the company satisfies a performance obligation

order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the

contract and identify each promised goods or service that is distinct.

A performance obligation meets ASC 606’s definition of a

“distinct” goods or service (or bundle of goods or services) if both of the following criteria are met:

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 –

SUMMARY OF SIGNIFICANT

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

12 unchanged sentences

when that performance obligation is satisfied, at a point in time or over time as appropriate.

The Company’s

revenues are derived from providing medial related consulting services for its’

related parties.

Revenues related to its service

offerings are recognized as the services are performed.

Any payments received in advance of the performance of services are recorded

as deferred revenue until such time as the services are performed.

The Company’s revenues

are derived from providing medial related consulting services for its’ related parties.

Revenues related to its service offerings

are recognized at a point in time when service is rendered.

Any payments received in advance of

the performance of services are recorded as deferred revenue until such time as the services are performed.

The Company has determined that the ASC 606 does

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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

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.

6 unchanged sentences

and potentially dilutive securities outstanding during each period.

For the three months ended March 31, 2021 and 2020, potentially dilutive

common shares consist of the common shares issuable upon the exercise of common stock options (using the treasury stock method).

stock equivalents are not included in the calculation of diluted net loss per share if their effect would be anti-dilutive.

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.

For the three and six months ended June 30, 2021 and 2020, potentially

dilutive common shares consist of the common shares issuable upon the exercise of common stock options (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.

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.

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:

Three Months Ended

Three Months Ended June 30,

Six Months Ended June 30,

Stock options

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 –

SUMMARY OF SIGNIFICANT

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

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

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.

4 unchanged sentences

longer has any material revenues or expenses in this segment.

As a result, commencing from the first quarter of 2021, the Company’s

chief operating decision maker no longer reviews development services and sales of developed products operating results and the Company

no longer reports in three segments.

During the three months ended March 31, 2021,

During the three and six months ended June 30,

2021, the Company operates through two business segments:

5 unchanged sentences

to conform to the current period presentation.

These reclassifications have no effect on the previously reported financial position,

results of operations and cash flows.

These reclassifications have no effect on the previously reported financial position, results

of operations and cash flows.

Recent Accounting Standards

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.

CECL model utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses at the time the 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.

1 unchanged sentence

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.

In 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.

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 permitted.

The adoption of ASU 2019 –

12 did not have

a material impact on the Company’s consolidated financial statements.

In 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

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 permitted.

The adoption of ASU 2019 – 12 did not have a material

impact on the Company’s consolidated financial statements.

Other accounting standards that have been issued

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 –

PREPAID EXPENSES

NOTE 4 – PREPAID EXPENSES

AND OTHER CURRENT ASSETS

At March 31, 2021 and December 31, 2020,

prepaid expenses and other current assets consisted of the following:

Prepaid NASDAQ listing fee

At June 30, 2021 and December 31, 2020, prepaid

expenses and other current assets consisted of the following:

Prepaid professional fee

Prepaid directors and officers liability insurance premium

Prepaid professional fees

Prepaid NASDAQ listing fee

Recoverable VAT

1 unchanged sentence

Prepaid research and development fees

NOTE 5 –

NOTE 5 – EQUITY

METHOD INVESTMENT

As of March 31, 2021 and December 31, 2020, the

As of June 30, 2021 and December 31, 2020, the

equity method investment amounted to $ 533,949 and $ 521,758 , respectively.

The investment represents the Company’s subsidiary, Avalon

Shanghai’s interest in Epicon Biotech Co., Ltd.

(“Epicon”).

The investment represents the Company’s subsidiary, Avalon

Shanghai’s interest in Epicon Biotech Co., Ltd.

Epicon was incorporated on August 14, 2018 in PRC.

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.

(“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

1 unchanged sentence

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 three months ended March 31, 2021 and

2020, the Company’s share of Epicon’s net loss was $18,514 and $9,084, respectively, which was included in loss from equity

method investment in the accompanying condensed consolidated statements of operations and comprehensive loss.

In the three months ended March 31, 2021, activity

recorded for the Company’s equity method investment in Epicon is summarized in the following table:

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 three months ended June 30, 2021 and 2020,

the Company’s share of Epicon’s net loss was $ 15,418 and $ 11,332 , respectively, which was included in loss from equity method

investment in the accompanying condensed consolidated statements of operations and comprehensive loss.

For the six months ended June 30,

2021 and 2020, the Company’s share of Epicon’s net loss was $ 33,932 and $ 20,416 , respectively, which was included in loss

from equity method investment in the accompanying condensed consolidated statements of operations and comprehensive loss.

In the six months

ended June 30, 2021, activity recorded for the Company’s equity method investment in Epicon is summarized in the following

Equity investment carrying amount at January 1, 2021

2 unchanged sentences

Foreign currency fluctuation

Equity investment carrying amount at March 31, 2021

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 –

METHOD INVESTMENT (continued)

The tables below present

the summarized financial information, as provided to the Company by the investee, for the unconsolidated company:

Equity investment carrying amount at June 30, 2021

tables below present the summarized financial information, as provided to the Company by the investee, for the unconsolidated company:

Current assets

2 unchanged sentences

Noncurrent liabilities

For the Three Months

Ended March 31,

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 – EQUITY

METHOD INVESTMENT (continued)

For the Three Months Ended

For the Six Months Ended

Loss from operation

NOTE 6 –

NOTE 6 – ACCRUED

LIABILITIES AND OTHER PAYABLES

At March 31, 2021 and

At June 30, 2021 and

December 31, 2020, accrued liabilities and other payables consisted of the following:

1 unchanged sentence

Accrued research and development fees

Accrued payroll liability and directors’

Accrued tenants’

improvement reimbursement

Tenants’

security deposit

Accrued payroll liability and directors’ compensation

Accrued tenants’ improvement reimbursement

Tenants’ security deposit

Accounts payable

Deferred rental income

NOTE 7 –

RELATED PARTY TRANSACTIONS

Accrued Liabilities and Other Payables –

NOTE 7 – RELATED PARTY TRANSACTIONS

Accrued Liabilities and Other Payables –

Related Parties

1 unchanged sentence

cash payment of $ 450,000 .

As of March 31, 2021 and December 31, 2020, the unpaid acquisition consideration of $100,000, was payable to

As of June 30, 2021 and December 31, 2020, the unpaid acquisition consideration of $ 100,000 , was payable to

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 condensed consolidated balance sheets.

As of March 31, 2021 and December 31, 2020, 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 $213,105 and $167,956, respectively, and have been included in accrued liabilities and other payables –

related parties on the accompanying condensed consolidated balance sheets.

and other payables – related parties on the accompanying condensed consolidated balance sheets.

As of June 30, 2021 and December 31, 2020, 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 $ 259,236 and $ 167,956 , respectively, and have been included in accrued liabilities and other payables – related

parties on the accompanying condensed 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.

The 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 both March 31, 2021 and December 31, 2020, the outstanding principal balance

was $390,000.

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 and $ 200,000 in

the third quarter of 2019 and second quarter of 2020, respectively.

As of both June 30, 2021 and December 31, 2020, the outstanding principal

balance was $ 390,000 .

AVALON GLOBOCARE CORP.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 –

RELATED PARTY TRANSACTIONS (continued)

NOTE 7 – RELATED PARTY

TRANSACTIONS (continued)

Borrowings from Related Party (continued)

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.

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 March 31, 2021

and December 31, 2020, $3,305,249 and $3,200,000 was outstanding under the Line of Credit, respectively.

For the three months ended March 31, 2021 and

2020, the interest expense related to above borrowings amounted to $45,149 and $42,169, respectively, and has been included in interest

expense –

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 June 30, 2021 and December 31, 2020,

$ 3,393,188 and $ 3,200,000 was outstanding under the Line of Credit, respectively.

For the three months ended June 30, 2021 and 2020,

the interest expense related to above borrowings amounted to $ 46,131 and $ 42,469 , respectively, and has been included in interest expense

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

As of March 31, 2021

and December 31, 2020, the related accrued and unpaid interest for above borrowings was $213,105 and $167,956, respectively, and has

been included in accrued liabilities and other payables –

related parties on the accompanying condensed consolidated balance sheets.

For the six months ended

June 30, 2021 and 2020, the interest expense related to above borrowings amounted to $ 91,280 and $ 84,638 , respectively, and has been included

in interest expense – related party on the accompanying condensed consolidated statements of operations and comprehensive loss.

As of June 30, 2021 and

December 31, 2020, the related accrued and unpaid interest for above borrowings was $ 259,236 and $ 167,956 , respectively, and has been

included in accrued liabilities and other payables – related parties on the accompanying condensed consolidated balance sheets.

Office Space from

2 unchanged sentences

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

NOTE 8 –

NOTE 8 – EQUITY

2020 Incentive Stock

5 unchanged sentences

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.

During the three

months ended March 31, 2021, Jefferies sold an aggregate of 1,848,267 shares of common stock at an average price of $1.34 per share to

During the six months

ended June 30, 2021, Jefferies sold an aggregate of 1,848,267 shares of common stock at an average price of $ 1.34 per share to investors.

The Company recorded net proceeds of $ 2,337,259 , net of commission and other offering costs of $ 144,146 .

Common Shares Issued

During the three months ended March 31, 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 recorded stock-based compensation

expense of $98,968 for the three months ended March 31, 2021 and reduced accrued liabilities of $261,032.

During the six months ended June 30, 2021, the

Company issued a total of 790,000 shares of its common stock for services rendered and to be rendered.

These shares were valued at $ 894,300 ,

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 $ 398,518 for the six months ended June 30, 2021 and reduced accrued liabilities of $ 261,032 and recorded prepaid

expense of $ 234,750 as of June 30, 2021 which will be amortized over the rest of corresponding service periods.

Common Shares Issued

for Settlement of Accrued Professional Fees

June 2021, the Company issued 167,355 shares of its common stock to settle accrued and unpaid professional fees of $ 202,500 .

AVALON GLOBOCARE CORP.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 –

The following table summarizes the shares of

the Company’s common stock issuable upon exercise of options outstanding at March 31, 2021:

NOTE 8 – EQUITY

The following table summarizes the shares of the

Company’s common stock issuable upon exercise of options outstanding at June 30, 2021:

Options Outstanding

Options Exercisable

Exercise Price

Outstanding at

Weighted Average

Weighted Average Remaining

Contractual Life

Exercise Price

Exercisable at

$ 0.50 –

Stock option activities

for the three months ended March 31, 2021 were as follows:

Exercise Price

$ 0.50 – 4.76

Stock option activities

for the six months ended June 30, 2021 were as follows:

Number of Options

Weighted Average Exercise Price

Outstanding at January 1, 2021

Terminated / Exercised / Expired

Outstanding at March 31, 2021

Options exercisable at March 31, 2021

Outstanding at June 30, 2021

Options exercisable at June 30, 2021

Options expected to vest

The aggregate intrinsic value of both stock options

outstanding and stock options exercisable at March 31, 2021 was $1,161,700.

outstanding and stock options exercisable at June 30, 2021 was $ 965,000 .

The fair values of options granted during the

three months ended March 31, 2021 were estimated at the date of grant using the Black-Scholes option-pricing model with the following

six months ended June 30, 2021 were estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

volatility of 123.27 % - 128.42 %, risk-free rate of 0.33 % - 0.80 %, annual dividend yield of 0 % and expected life of 3.00 - 5.00 years.

The aggregate

fair value of the options granted during the three months ended March 31, 2021 was $419,020.

The aggregate fair value of the options granted during the six months ended June 30, 2021 was $ 575,078 .

The fair values of options

granted during the three months ended March 31, 2020 were estimated at the date of grant using the Black-Scholes option-pricing model

with the following assumptions:

granted during the six months ended June 30, 2020 were estimated at the date of grant using the Black-Scholes option-pricing model with

the following assumptions:

volatility of 137.42% - 139.58%, risk-free rate of 0.25% - 1.67%, annual dividend yield of 0% and expected

life of 5.00 –

The aggregate fair value of the options granted during the three months ended March 31, 2020 was $2,422,225.

For the three months ended March 31, 2021 and

life of 3.00 – 10.00 years.

The aggregate fair value of the options granted during the six months ended June 30, 2020 was $2,644,161.

For the three months ended June 30, 2021 and 2020,

stock-based compensation expense associated with stock options granted amounted to $ 195,209 and $ 726,600 , respectively, of which, $ 136,392

and $ 694,692 was recorded as compensation and related benefits, $ 39,545 and $ 25,374 was recorded as professional fees, and $ 19,272 and

$ 6,534 was recorded as research and development expenses, respectively.

For the six months ended June 30, 2021 and 2020,

stock-based compensation expense associated with stock options granted amounted to $ 397,714 and $ 1,511,950 , respectively, of which, $ 275,899

and $ 1,369,690 was recorded as compensation and related benefits, $ 82,988 and $ 129,192 was recorded as professional fees, and $ 38,827

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 –

NOTE 8 – EQUITY

Options (continued)

A summary of the status of the Company’s

nonvested stock options granted as of March 31, 2021 and changes during the three months ended March 31, 2021 is presented below:

A summary of the status of the Company’s

nonvested stock options granted as of June 30, 2021 and changes during the six months ended June 30, 2021 is presented below:

Number of Options

Weighted Average Exercise Price

Nonvested at January 1, 2021

Nonvested at March 31, 2021

Nonvested at June 30, 2021

NOTE 9 – STATUTORY

6 unchanged sentences

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.

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.

did not make any appropriation to statutory reserve for Avalon Shanghai and Beijing Genexosome during the three months ended March 31,

2021 and 2020 as they incurred net losses in these periods.

NOTE 10 –

A portion of the Company’s operations are

The Company did not

make any appropriation to statutory reserve for Avalon Shanghai and Beijing Genexosome during the six months ended June 30, 2021 and 2020

as they incurred net losses in these periods.

NOTE 10 – RESTRICTED

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 reserve.

In addition, a portion of the Company’s businesses and assets are denominated in RMB, which is not freely convertible into foreign

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.

addition, a portion of the Company’s businesses and assets are denominated in RMB, which is not freely convertible into foreign

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 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.

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’

assets as of March 31, 2021 and December 31, 2020 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.

The Company’s PRC subsidiaries’ net

assets as of June 30, 2021 and December 31, 2020 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.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 – CONCENTRATIONS

The following table sets forth information as

to each customer that accounted for 10% or more of the Company’s revenues for the three months ended March 31, 2021 and 2020.

to each customer that accounted for 10 % or more of the Company’s revenues for the three and six months ended June 30, 2021 and 2020.

Three Months Ended

* Less than 10%

Six Months Ended

One customer, whose outstanding receivable accounted

for 10% or more of the Company’s total outstanding accounts receivable, accounts receivable –

related party, and rent receivable

at March 31, 2021, accounted for 70.3% of the Company’s total outstanding accounts receivable, accounts receivable –

party, and rent receivable at March 31, 2021.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 –

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, 2020, accounted for 78.3% of the Company’s total outstanding accounts receivable,

accounts receivable –

related party, and rent receivable at December 31, 2020.

No supplier accounted for 10% or more of the

Company’s purchase during the three months ended March 31, 2021 and 2020.

for 10 % or more of the Company’s total outstanding accounts receivable, accounts receivable – related party, and rent receivable

at June 30, 2021, accounted for 71.5 % of the Company’s total outstanding accounts receivable, accounts receivable – related

party, and rent receivable at June 30, 2021.

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.

No supplier accounted for 10 % or more of the Company’s

purchase during the three and six months ended June 30, 2021 and 2020.

One supplier, whose outstanding payable accounted

for 10% or more of the Company’s total outstanding accounts payable at March 31, 2021, accounted for 90.2% of the Company’s

total outstanding accounts payable at March 31, 2021.

for 10 % or more of the Company’s total outstanding accounts payable at June 30, 2021, accounted for 90.2 % of the Company’s

total outstanding accounts payable at June 30, 2021.

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

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.

NOTE 12 –

For the three months ended March 31, 2020, the

Company operated in three reportable business segments - (1) the real property operating segment, (2) the medical related consulting

NOTE 12 – SEGMENT

For the three and six months ended June 30, 2020,

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

2 unchanged sentences

and sales of developed products segment in 2020, the Company no longer has any material revenues or expenses in this segment.

a result, commencing from the first quarter of 2021, the Company’s chief operating decision maker no longer reviews development

services and sales of developed products operating results.

For the three months ended March 31, 2021, the

Company operated in two reportable business segments - (1) the real property operating segment, and (2) the medical related consulting

For the three and six months ended June 30, 2021,

the Company operated in two reportable business segments - (1) the real property operating segment, and (2) the medical related consulting

services 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

Information with respect to these reportable business segments for the three months ended March 31, 2021 and 2020 was as

They are managed separately based on the fundamental differences in their operations.

Information with respect to these reportable business segments for the three and six months ended June 30, 2021 and 2020 was as follows:

AVALON GLOBOCARE CORP.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 –

SEGMENT INFORMATION

NOTE 12 – SEGMENT INFORMATION

Three Months Ended

Six Months Ended

Real property operations

4 unchanged sentences

Real property operations

Medical related consulting services

Medical related consulting services - related parties

Development services and sales of developed products

5 unchanged sentences

Real property operations

Medical related consulting services

Medical related consulting services - related parties

Development services and sales of developed products

2 unchanged sentences

Real property operations

Medical related consulting services

Medical related consulting services - related parties

Development services and sales of developed products

Corporate/Other

Identifiable long-lived tangible assets at

March 31, 2021 and December 31,

Identifiable long-lived tangible assets at June 30, 2021 and December 31, 2020

Real property operations

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 –

SEGMENT INFORMATION

Identifiable long-lived tangible assets at

March 31, 2021 and December 31,

NOTE 12 – SEGMENT INFORMATION

Identifiable long-lived tangible assets at June 30, 2021 and December 31, 2020

United States

NOTE 13 –

NOTE 13 – COMMITMENTS

AND CONTINGENCIES

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.

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

14 unchanged sentences

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.

3 unchanged sentences

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.

The criminal proceedings against

Zhou and Li Chen have been concluded, and the civil litigation continues.

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 Commitment

1 unchanged sentence

to leases for office space.

Rent expense under all operating leases amounted to approximately $39,000 for both the three months ended

March 31, 2021 and 2020.

Rent expense under all operating leases amounted to approximately $ 73,000 and $ 78,000 for the six months ended

June 30, 2021 and 2020, respectively.

Supplemental cash flow information related to

leases for the three months ended March 31, 2021 and 2020 is as follows:

Three Month Ended

leases for the six months ended June 30, 2021 and 2020 is as follows:

Six Months ended

Cash paid for amounts included in the measurement of lease liabilities:

3 unchanged sentences

The following table summarizes the lease term

and discount rate for the Company’s operating lease as of March 31, 2021:

and discount rate for the Company’s operating lease as of June 30, 2021:

Operating Lease

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 –

NOTE 13 – COMMITMENTS

AND CONTINCENGIES (continued)

1 unchanged sentence

The following table summarizes the maturity of lease liabilities under

operating lease as of March 31, 2021:

For the Twelve-month Period Ending March

operating lease as of June 30, 2021:

For the Twelve-month Period Ending June 30:

Operating Lease

8 unchanged sentences

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.

5 unchanged sentences

transformation of scientific achievements.

As of March 31, 2021, Avalon Shanghai has contributed RMB 4,700,000 (approximately $0.7 million)

As of June 30, 2021, Avalon Shanghai has contributed RMB 4,760,000 (approximately $0.7 million)

that was included in equity method investment on the accompanying condensed consolidated balance sheets.

1 unchanged sentence

present working capital together with borrowings from related party and equity raises to fund the project cost.

Joint Venture –

AVAR BioTherapeutics

Joint Venture – AVAR BioTherapeutics

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.

(“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

1 unchanged sentence

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.

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.

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.

AVALON GLOBOCARE CORP.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 –

NOTE 13 – COMMITMENTS

AND CONTINGENCIES (continued)

Joint Venture –

AVAR BioTherapeutics

Joint Venture – AVAR BioTherapeutics

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 the Chinese government;

● 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’ discretion;

● assist AVAR in setting up its business operations and obtaining all required permits and licenses from the 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 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.

● 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.

As of June 30, 2021, Avactis has paid the $ 900,000

to Arbele as research and development fee.

Under AVAR Agreement, Arbele shall be responsible

1 unchanged sentence

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 March 31, 2021 and December 31, 2020, Avactis

has paid $900,000 to Arbele as research and development fee.

As of March 31, 2021, License Agreement has not been finalized.

Providing AVAR with research and development expertise pertaining to clinical laboratory medicine when hired by AVAR.

As of June 30, 2021, License Agreement has not

been finalized.

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.

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

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

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.

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.

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

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

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 March 31, 2021, $3,305,249

was outstanding under the Line of Credit.

NOTE 14 –

Management has evaluated subsequent events through

the date of the filing.

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion

and analysis of our financial condition and results of operations for the three months ended March 31, 2021 and 2020 should be read in

conjunction with our condensed consolidated financial statements and related notes to those condensed consolidated financial statements

that are included elsewhere in this report.

Our discussion includes forward-looking statements based upon current expectations that involve

risks and uncertainties, such as our plans, objectives, expectations and intentions.

Actual results and the timing of events could differ

materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under

the Risk Factors, Special Note Regarding Forward-Looking Statements and Business sections in our Form 10-K as filed with the Securities

and Exchange Commission on March 30, 2021.

We use words such as “anticipate,”

“estimate,”

“plan,”

“project,”

“continuing,”

“ongoing,”

“expect,”

“believe,”

“intend,”

“may,”

“will,”

“should,”

“could,”

and similar expressions to identify forward-looking

Impact of COVID-19

on Our Operations, Financial Condition, Liquidity and Results of Operations

Although the COVID-19 vaccines have generally

been introduced to the public, the ultimate impact of the COVID-19 pandemic on our operations is unknown and will depend on future developments,

which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information

which may emerge concerning the severity of the COVID-19 pandemic, a significant increase in new and variant strains of COVID-19 cases,

availability and effectiveness of COVID-19 vaccines and therapeutics, the level of acceptance of the vaccine by the general population

and any additional preventative and protective actions that governments, or us, may determine are needed.

The occurrence of COVID-19 pandemic had negative

impact on our operations.

Some tenants have delayed on rent payment and some of the universities and laboratories with which we collaborate

were temporarily closed.

Our general development operations have continued during the COVID-19 pandemic and we have not had significant

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.

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 rest of 2021.

We have limited cash available to fund planned

operations and although we have other sources of capital described below under “Liquidity and Capital Resources,”

continues to pursue various financing alternatives to fund our operations so we can continue as a going concern.

However, the COVID-19

pandemic has created significant economic uncertainty and volatility in the credit and capital markets.

Management plans to secure the

necessary financing through the issue of new equity and/or the entering into of strategic partnership arrangements but the ultimate impact

of the COVID-19 pandemic on our ability to raise additional capital is unknown and will depend on future developments, which are highly

uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak and new information which may emerge

concerning the severity of the COVID-19 pandemic.

We may not be able to raise sufficient additional capital and may tailor our operations

based on the amount of funding we are able to raise in the future.

Nevertheless, there is no assurance that these initiatives will be

Further, there is no assurance that capital available to us in any future financing will be on acceptable terms.

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.

Avalon achieves and fosters seamless integration

of unique verticals to bridge and accelerate innovative research, bio-process development, clinical programs and product commercialization.

Avalon’s upstream innovative research includes:

● Development of Avalon Clinical-grade Tissue-specific Exosome (“ACTEX™”).

therapeutic and diagnostic targets development utilizing QTY-code protein design technology

with Massachusetts Institute of Technology (MIT) including using the QTY code protein design

technology for development of a hemofiltration device to treat Cytokine Storm.

partnership with the University of Natural Resources and Life Sciences (BOKU) in Vienna,

Austria to develop an S-layer vaccine that can be administered by an intranasal or oral route

against SARS-CoV-2, the novel coronavirus that causes COVID-19 disease.

Avalon’s midstream bio-processing and bio-production

facility is located in Nanjing, China with state-of-the-art, automated GMP and QC/QA infrastructure for standardized bio-manufacturing

of clinical-grade cellular products involved in our clinical programs in immune effector cell therapy, regenerative therapeutics, as well

as bio-banking.

As a result of the COVID pandemic, the operation of this facility has not been at full capacity.

However, the Company

expects to slowly increase operations during 2021.

Avalon’s

downstream medical team and facility consists of top-rated affiliated hospital network and experts specialized in hematology, oncology,

cellular immunotherapy, hematopoietic stem/progenitor cell transplant, as well as regenerative therapeutics.

Our major clinical programs

Avalon has initiated its first-in-human clinical trial of CD19 CAR-T candidate, AVA-001 in

August 2019 at the Hebei Yanda Lu Daopei Hospital and Beijing Lu Daopei Hospital in China

(the world’s single largest CAR-T treatment network with over 600 patients being treated

with CAR-T) for the indication of relapsed/refractory B-cell acute lymphoblastic leukemia

and non-Hodgkin Lymphoma.

The AVA-001 candidate (co-developed with China Immunotech Co.

is characterized by the utilization of 4-1BB (CD137) co-stimulatory signaling pathway, conferring

a strong anti-cancer activity during pre-clinical study.

It also features a shorter bio-manufacturing

time which leads to the advantage of prompt treatment to patients where timing is important

related hematologic malignancies.

Avalon has successfully completed the first-in-human clinical

trial of its AVA-001 anti-CD19 CAR-T cell therapy as a bridge to allogeneic bone marrow transplantation

for patients with relapsed/refractory B-cell acute lymphoblastic leukemia at the Lu Daopei

Hospital (registered clinical trial number NCT03952923) with excellent efficacy (90% complete

remission rate) and minimal adverse side effects.

Avalon is currently expanding the patient

recruitment for AVA-001 to include relapsed/refractory non-Hodgkin lymphoma patients.

● ACTEX™:

Stem cell-derived Avalon Clinical-grade Tissue-specific Exosomes (ACTEX™) is one of

the core technology platforms that has been co-developed by Avalon GloboCare and Weill Cornell

The Company formed a strategic partnership with HydroPeptide, LLC, a leading epigenetics

skin care company, to engage in co-development and commercialization of a series of clinical-grade,

exosome-based cosmeceutical and orthopedic products.

As part of this agreement, the Company

signed a three-way Material Transfer Agreement between Avalon GloboCare, HydroPeptide and

Weill Cornell Medicine.

● FLASH-CAR™:

The Company advanced its next generation immune cell therapy using RNA-based, non-viral FLASH-CAR™

technology co-developed with the Company’s strategic partner Arbele Limited.

The adaptable

FLASH-CAR™

platform can be used to create personalized cell therapy from a patient’s

own cells, as well as off-the-shelf cell therapy from a universal donor.

candidate, AVA-011, is currently at process development stage to generate clinical-grade

cell-therapy products for subsequent clinical studies.

● AVA-Trap™:

Avalon’s AVA-Trap™

therapeutic program plans to enter animal model testing followed

by expedited clinical studies with the goal of providing an effective therapeutic option

to combat COVID-19 and other life-threatening conditions involving cytokine storms.

initiated a sponsored research and co-development project with Massachusetts Institute of

Technology (MIT) led by Professor Shuguang Zhang as Principal Investigator in May 2019.

the unique QTY code protein design platform, six water-soluble variant cytokine receptors

have been successfully designed and tested to show binding affinity to the respective cytokines.

provide medical related consulting services in advanced areas of immunotherapy and second opinion/referral services through our wholly-owned

subsidiary Avalon (Shanghai) Healthcare Technology Co., Ltd., or Avalon Shanghai.

We also own and operate rental commercial real property

in New Jersey, where we are headquartered.

the first quarter of 2021, we did not have any revenue from medical related consulting services.

Although we maintain close working relationships

with our related parties, the consulting agreements with our related parties expired as of December 31, 2020.

There was no order from

related party and third party customers in the three months ended March 31, 2021.

Currently, we are negotiating with our potential customers

and consulting services agreements are not finalized.

value of the Renminbi (“RMB”), the main currency used in China, fluctuates and is affected by, among other things, changes

in China’s political and economic conditions.

The conversion of RMB into foreign currencies such as the U.S.

dollar have generally

been based on rates set by the People’s Bank of China, which are set daily based on the previous day’s interbank foreign

exchange market rates and current exchange rates on the world financial markets.

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.

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.

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 of China.

The Company did not generate any revenue from medical related consulting services segment during the three

months ended March 31, 2021.

These condensed 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 condensed consolidated financial statements, the Company had working capital deficit of $1,059,606 as of

March 31, 2021 and has incurred recurring net loss and generated negative cash flow from operating activities of $2,367,118 and $1,515,525

for the three months ended March 31, 2021, 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;

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.

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.

occurrence of an uncontrollable event such as the COVID-19 pandemic had negatively impact on the Company’s operations.

have delayed on rent payment.

Our general development operations have continued during the COVID-19 pandemic and we have not had significant

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.

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 rest of 2021.

accompanying condensed 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.

Accounting Policies

discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements,

which have been prepared in accordance with accounting principles generally accepted in the United States.

The preparation of these condensed

consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities,

revenues and expenses, and related disclosure of contingent assets and liabilities.

We continually evaluate our estimates, including

those related to 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.

our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances, the

results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent

from other sources.

Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues,

expenses, assets and liabilities.

Actual results may differ from these estimates under different assumptions or conditions.

recognize revenue under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC

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

Identify the performance

obligations in the contract

Determine the transaction

Allocate the transaction

price to the performance obligations in the contract

Recognize revenue

when the company satisfies a performance obligation

order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in

the contract and identify each promised goods or service that is distinct.

A performance obligation meets ASC 606’s definition

of a “distinct”

goods or service (or bundle of goods or services) if both of the following criteria are met:

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

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).

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.

Company’s revenues are derived from providing medial related consulting services for its’

related parties.

Revenues related

to its service offerings are recognized as the services are performed.

Any payments received in

advance of the performance of services are recorded as deferred revenue until such time as the services are performed.

have determined that the ASC 606 does not apply to rental contracts, which are within the scope of other revenue recognition accounting

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 condensed consolidated balance sheets.

do not offer promotional payments, customer coupons, rebates or other cash redemption offers to our customers.

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

Income taxes are accounted for pursuant to ASC 740 “Accounting

for Income Taxes,”

which is an asset and liability approach that requires the recognition of deferred tax assets and liabilities

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

The charge for

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

It is calculated using tax

rates that have been enacted or substantively enacted by the balance sheet date.

tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the

carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of assessable

In principle, deferred tax liabilities are recognized for all taxable temporary differences, and deferred tax assets are

recognized to the extent that it is probably that taxable profit will be available against which deductible temporary differences can

tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled.

tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which

case the deferred tax is changed to equity.

Deferred tax assets and liabilities are offset when they related to income taxes levied by

the same taxation authority and we intend to settle its current tax assets and liabilities on a net basis.

Accounting Standards

details of applicable new accounting standards, please, refer to Recent Accounting Standards in Note 3 of our condensed

consolidated financial statements accompanying this report.

OF OPERATIONS

of Results of Operations for the Three Months Ended March 31, 2021 and 2020

the three months ended March 31, 2021, we had real property rental revenue of $289,774, as compared to $296,956 for the three months

ended March 31, 2020, a decrease of $7,182, or 2.4%.

The slight decrease was primarily attributable to a tenant moved out in August 2020.

We expect that our revenue from real property rent will remain in its current quarterly level with minimal increase in the near future.

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

fees, utilities and other expenses related to our rental properties.

the three months ended March 31, 2021, our real property operating expenses amounted to $216,894, as compared to $254,501 for the three

months ended March 31, 2020, a decrease of $37,607, or 14.8%.

The decrease was mainly due to a decrease in repairs and maintenance fees

of approximately $22,000, and a decrease in other miscellaneous items of approximately $16,000.

Property Operating Income

real property operating income for the three months ended March 31, 2021 was $72,880, representing an increase of $30,425, or 71.7%,

as compared to $42,455 for the three months ended March 31, 2020.

The increase was mainly attributable to the decrease in real property

operating expenses as described above.

We expect our real property operating income will remain in its current quarterly level with minimal

increase in the near future.

Operating Expenses

the three months ended March 31, 2021 and 2020, other operating expenses consisted of the following:

Three Months Ended

Professional fees

Compensation and related benefits

Research and development

Directors and officers liability insurance premium

Travel and entertainment

Rent and related utilities

Advertising expenses

Other general and administrative

● Professional

fees primarily consisted of accounting fees, audit fees, legal service fees, consulting fees,

investor relations service charges and other fees incurred for service related to being a

public company.

For the three months ended March 31, 2021, professional fees decreased by

$172,520, or 11.1%, as compared to the three months ended March 31, 2020.

The decrease was

primarily attributable to a decrease in investor relations service fees of approximately

$171,000 mainly due to the decrease in use of investor relations service providers, and a

decrease in other miscellaneous items of approximately $1,000.

We expect that our professional

fees will remain in its current quarterly level with minimal increase in the near future.

the three months ended March 31, 2021, compensation and related benefits decreased by $566,462,

or 50.2%, as compared to the three months ended March 31, 2020.

The significant decrease

was primarily attributable to a decrease in stock-based compensation of approximately $578,000

which reflected the value of options granted and vested to our management, offset by an increase

in compensation and related benefits for other employees of approximately $12,000.

that our compensation and related benefits will remain in its current quarterly level with

minimal increase in the near future.

the three months ended March 31, 2021, research and development expenses decreased by $62,214,

or 22.6%, as compared to the three months ended March 31, 2020.

The decrease was primarily

attributable to our first project with Arbele was completed in 2020 and no further research

and development project was incurred in 2021.

We expect our research and development expenses

will increase in the near future.

the three months ended March 31, 2021, Directors and Officers Liability Insurance premium

increased by $23,128, or 39.9%, as compared to the three months ended March 31, 2020.

increase was mainly due to different insurance provider with different premium.

the three months ended March 31, 2021, travel and entertainment expense decreased by $41,430,

or 56.3%, as compared to the three months ended March 31, 2020.

The decrease was mainly due

to decreased business travel activities and decreased entertainment expenditure resulting

from COVID-19.

The spread of COVID-19 has caused public health officials to recommend precautions

to mitigate the spread of the virus, such as, cease traveling to non-essential jobs and curtail

all unnecessary travel, and stay at home as much as possible.

the three months ended March 31, 2021, rent and related utilities expenses decreased by $114,

or 0.5%, as compared to the three months ended March 31, 2020.

the three months ended March 31, 2021, advertising expenses decreased by $62,080 or 87.6%

as compared to the three months ended March 31, 2020.

The decrease was primarily due to decreased

advertising activities incurred as a result of stricter control on corporation spending.

We expect that our advertising expenses will increase in the near future.

general and administrative expenses mainly consisted of NASDAQ listing fee, office supplies,

and other miscellaneous items.

For the three months ended March 31, 2021, other general and

administrative expenses decreased by $6,487, or 7.9%, as compared to the three months ended

March 31, 2020, reflecting our efforts at stricter controls on corporate expenditure.

from Operations

a result of the foregoing, for the three months ended March 31, 2021, loss from operations amounted to $2,303,588, as compared to $3,222,192

for the three months ended March 31, 2020, a decrease of $918,604, or 28.5%.

Income (Expense)

income (expense) mainly includes interest expense and loss from equity method investment .

expense, net, totaled $63,530 for the three months ended March 31, 2021, as compared to $48,589 for the three months ended March 31,

2020, an increase of $14,941, or 30.7%, which was primarily attributable to an increase in loss from equity method investment of approximately

$9,000, an increase in interest expense of approximately $3,000, and a decrease in miscellaneous income of approximately $3,000.

did not have any income taxes expense for the three months ended March 31, 2021 and 2020 since we incurred losses in these periods.

a result of the factors described above, our net loss was $2,367,118 for the three months ended March 31, 2021, as compared to $3,270,781

for the three months ended March 31, 2020, a decrease of $903,663 or 27.6%.

Loss Attributable to Avalon GloboCare Corp.

Common Shareholders

net loss attributable to Avalon GloboCare Corp.

common shareholders was $2,367,118 or $(0.03) per share (basic and diluted) for the three

months ended March 31, 2021, as compared with $3,270,781, or $(0.04) per share (basic and diluted) for the three months ended March 31,

2020, a change of $903,663 or 27.6%.

Currency Translation Adjustment

reporting currency is the U.S.

The functional currency of our parent company, AHS, Avalon RT 9, Genexosome, Avactis, and Exosome,

dollar and the functional currency of Avalon Shanghai and Beijing Genexosome is the Chinese Renminbi (“RMB”).

The financial statements of our subsidiaries whose functional currency is the RMB are translated to U.S.

dollars using period end rates

of exchange for assets and liabilities, average rate of exchange for revenues, costs, and expenses and cash flows, and at historical

exchange rates for equity.

Net gains and losses resulting from foreign exchange transactions are included in the results of operations.

As a result of foreign currency translations, which are a non-cash adjustment, we reported a foreign currency translation loss of $2,722

and $22,066 for the three months ended March 31, 2021 and 2020, respectively.

This non-cash loss had the effect of increasing our reported

comprehensive loss.

Comprehensive

a result of our foreign currency translation adjustment, we had comprehensive loss of $2,369,840 and $3,292,847 for the three months

ended March 31, 2021 and 2020, respectively.

and Capital Resources

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;

hence 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.

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.

occurrence of an uncontrollable event such as the COVID-19 pandemic is likely to negatively affect the Company’s operations.

to contain the spread of the coronavirus have intensified, including social distancing, travel bans and quarantine, and these

are likely to negatively impact our tenants, employees and consultants.

These, in turn, will not only impact our operations, financial

condition and demand for our medical related consulting services but our overall ability to react timely to mitigate the impact of this

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 our business for the rest of 2021.

is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate

on an ongoing basis.

At March 31, 2021 and December 31, 2020, we had cash balance of approximately $1,693,000 and $727,000, respectively.

These funds are kept in financial institutions located as follows:

United States

applicable PRC regulations, foreign invested enterprises, or FIEs, in China may pay dividends only out of their accumulated profits,

if any, determined in accordance with PRC accounting standards and regulations.

In addition, a foreign invested enterprise in China is

required to set aside at least 10% of its after-tax profit based on PRC accounting standards each year to its general reserves until

the cumulative amount of such reserves reach 50% of its registered capital.

These reserves are not distributable as cash dividends.

addition, a portion of our businesses and assets are denominated in RMB, which is not freely convertible into foreign currencies.

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’

shipping documents and signed contracts.

These currency exchange control procedures imposed by the PRC government authorities may restrict

the ability of our PRC subsidiary to transfer its net assets to the Parent Company through loans, advances or cash dividends.

current PRC Enterprise Income Tax (“EIT”) Law and its implementing rules generally provide that a 10% withholding tax applies

to China-sourced income derived by non-resident enterprises for PRC enterprise income tax purposes unless the jurisdiction of incorporation

of such enterprises’

shareholder has a tax treaty with China that provides for a different withholding arrangement.

following table sets forth a summary of changes in our working capital from December 31, 2019 to September 30, 2020:

Working capital deficit:

Total current assets

Total current liabilities

Working capital deficit

$ (1,059,606 )

$ (1,306,056 )

working capital deficit decreased by $246,450 to $1,059,606 at March 31, 2021 from $1,306,056 at December 31, 2020.

in working capital deficit was primarily attributable to an increase in cash of approximately $966,000, and a decrease in accrued research

and development fees of approximately $81,000, offset by a decrease in deferred financing costs of approximately $70,000, an increase

in accrued professional fees of approximately $232,000, an increase in accrued liabilities and other payables –

related parties

of approximately $45,000, an increase in operating lease obligation of approximately $56,000, and an increase in note payable –

related party of $390,000.

the exchange rate conversion is different for the condensed consolidated balance sheets and the condensed consolidated statements of

cash flows, the changes in assets and liabilities reflected on the condensed consolidated statements of cash flows are not necessarily

identical with the comparable changes reflected on the condensed consolidated balance sheets.

Flows for the Three Months Ended March 31, 2021 Compared to the Three Months Ended March 31, 2020

following summarizes the key components of our cash flows for the three months ended March 31, 2021 and 2020:

Three Months Ended

Net cash used in operating activities

$ (1,515,525 )

$ (1,998,796 )

Net cash used in investing activities

Net cash provided by financing activities

Effect of exchange rate on cash

Net increase (decrease) in cash

cash flow used in operating activities for the three months ended March 31, 2021 was $1,515,525, which primarily reflected our consolidated

net loss of approximately $2,367,000, and the changes in operating assets and liabilities, primarily consisting of an increase in prepaid

expenses and other current assets of approximately $41,000, and a decrease in operating lease obligation of approximately $33,000, offset

by an increase in accrued liabilities and other payables of approximately $163,000, an increase in accrued liabilities and other payables

related parties of approximately $45,000, and the non-cash items adjustment primarily consisting of depreciation of approximately

$79,000, and stock-based compensation and service expense of approximately $574,000.

cash flow used in operating activities for the three months ended March 31, 2020 was $1,998,796, which primarily reflected our consolidated

net loss of approximately $3,271,000, and the changes in operating assets and liabilities, primarily consisting of an increase in prepaid

expenses and other current assets of approximately $97,000, offset by a decrease in accounts receivable –

related party of approximately

$86,000, and the non-cash items adjustment primarily consisting of depreciation of approximately $77,000, and stock-based compensation

and service expense of approximately $1,189,000.

expect our cash used in operating activities to increase due to the following:

development and commercialization of new products;

increase in professional staff and services;

increase in public relations and/or sales promotions for existing and/or new brands as we

expand within existing markets or enter new markets.

cash flow used in investing activities was $30,844 for the three months ended March 31, 2021.

During the three months ended March 31,

2021, we made additional investment in equity method investment of approximately $31,000.

There were no investing activities during

the three months ended March 31, 2020.

cash flow provided by financing activities was $2,512,212 for the three months ended March 31, 2021 as compared to $1,874,877 for the

three months ended March 31, 2020.

During the three months ended March 31, 2021, we received proceeds from related party borrowings of

approximately $105,000 and net proceeds from equity offering of approximately $2,407,000 (net of cash paid for commission of approximately

During the three months ended March 31, 2020, we received proceeds from related party borrowings of $300,000 and net proceeds

from equity offering of approximately $1,575,000 (net of cash paid for commission of approximately $49,000).

capital requirements for the next twelve months primarily relate to working capital requirements, including salaries, fees related to

third parties’

professional services, reduction of accrued liabilities, mergers, acquisitions and the development of business opportunities.

These uses of cash will depend on numerous factors including our sales and other revenues, and our ability to control costs.

received have been expended in the furtherance of growing the business.

The following trends are reasonably likely to result in a material

decrease in our liquidity over the near to long term:

an increase in working

capital requirements to finance our current business, including ongoing research and development programs, clinical studies, as well

as commercial strategies;

the use of capital for

mergers, acquisitions and the development of business opportunities;

addition of administrative

personnel as the business grows;

the cost of being a public

the third quarter of 2019, we had secured a $20 million credit facility (Line of Credit) provided by our Chairman, Wenzhao Lu.

The unsecured credit facility bears interest at a rate of 5% and provides for maturity on drawn loans 36 months after funding.

is not convertible to equity.

As of March 31, 2021, the total principal amount outstanding under the Credit Line was approximately $3.3

million and we have approximately $16.7 million remaining available under the Line Credit.

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.

On April 6, 2020, the date

on which we filed our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, our registration statement

became subject to the offering limits set forth in General Instruction I.B.6 of Form S-3.

As of April 6, 2020, the aggregate

market value of our outstanding common stock held by non-affiliates, or public float, was $39,564,237, based on 23,691,160

shares of our outstanding common stock that were held by non-affiliates on such date and a price of $1.67 per share, which

was the price at which our common stock was last sold on The Nasdaq Capital Market on February 19, 2020 (a date within 60 days of the

date hereof), calculated in accordance with General Instruction I.B.6 of Form S-3.

We have not offered any securities

pursuant to General Instruction I.B.6 of Form S-3 in the 12 calendar months preceding the date of this prospectus supplement.

We filed a prospectus supplement to amend and supplement the information in our prospectus and original prospectus supplement based on

the amount of securities that we are eligible to sell under General Instruction I.B.6 of Form S-3.

After giving effect

to the $13,000,000 offering limit imposed by General Instruction I.B.6 of Form S-3, we may offer and sell additional shares

of our common stock having an aggregate offering price of up to $13,000,000 from time to time through Jefferies acting as our sales agent

in accordance with the terms of the sales agreement.

As of March 31, 2021, we sold a total of 5,900,275 shares of our common stock

through Jefferies with an aggregate offering price of $9,559,240 and we have approximately $5.4 million offering price remaining available

under the Sales Agreement.

estimate that based on current plans and assumptions, that our available cash will be insufficient to satisfy our cash requirements under

our present operating expectations through cash available under our Credit Line and sales of equity through our Sales Agreement.

than funds received from the sale of our equity and advances from our related party, and cash resource generating from our operations,

we presently have no other significant alternative source of working capital.

We have used these funds to fund our operating expenses,

pay our obligations and grow our company.

We will need to raise significant additional capital to fund our operations and to provide

working capital for our ongoing operations and obligations.

Therefore, our future operation is dependent on our ability to secure additional

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

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

equity and debt markets could make it more difficult

to obtain financing through the issuance of equity or debt securities.

Even if we are able to raise the funds required, it is possible

that we could incur unexpected costs and expenses or experience unexpected cash requirements that would force us to seek alternative

Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new

equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock.

The inability to

obtain additional capital may restrict our ability to grow and may reduce our ability to continue to conduct business operations.

we are unable to obtain additional financing, we will be required to cease our operations.

To date, we have not considered this alternative,

nor do we view it as a likely occurrence.

Obligations and Off-Balance Sheet Arrangements

have certain fixed contractual obligations and commitments that include future estimated payments.

Changes in our business needs, cancellation

provisions, and other factors may result in actual payments differing from the estimates.

We cannot provide certainty regarding the timing

and amounts of payments.

We have presented below a summary of the most significant assumptions used in our determination of amounts presented

in the tables, in order to assist in the review of this information within the context of our consolidated financial position, results

of operations, and cash flows.

The following tables summarize our contractual obligations as of March 31, 2021, and the effect these

obligations are expected to have on our liquidity and cash flows in future periods.

Payments Due by Period

Contractual obligations:

Less than 1 year

Operating lease commitment

Acquisition consideration

Borrowings from related party (principal)

Accrued interest –

related party

Epicon equity investment obligation

AVAR joint venture commitment

Sheet Arrangements

presently do not have off-balance sheet arrangements.

Currency Exchange Rate Risk

portion of our operations are in China.

Thus, a portion of our revenues and operating results may be impacted by exchange rate fluctuations

between RMB and US dollars.

For the three months ended March 31, 2021 and 2020, we had an unrealized foreign currency translation loss

of approximately $3,000 and $22,000, respectively, because of changes in the exchange rate.

effect of inflation on our revenue and operating results was not significant.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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

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 June 30, 2021, $ 3,393,188 was outstanding under

the Line of Credit.

NOTE 14 – SUBSEQUENT

On June 13, 2021, the Company entered into a Share

Purchase Agreement (the “Purchase Agreement”), by and among the Company, Lonlon Biotech Ltd., a company incorporated in the

British Virgin Islands (“BVI”) (“Sen Lang”), the holders of the share capital of Sen Lang (the “Sen Lang

Shareholders”), the ultimate beneficial owners of the Sen Lang Shareholders (the “Sen Lang Beneficial Shareholders”

and, together with the Sen Lang Shareholders, the “Sen Lang Owners”) and a representative of the Sen Lang Owners (the “Sen

Lang Representative”).

Pursuant to the Purchase Agreement, subject to the satisfaction of the conditions to closing therein, including

approval by the Avalon stockholders pursuant to the rules of the Nasdaq Stock Market (“Nasdaq”), Avalon agreed to purchase

(the “Acquisition”) all of the issued and outstanding share capital of Sen Lang (the “Sen Lang Shares”).

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 – SUBSEQUENT EVENTS (continued)

Merger (continued)

Sen Lang, through a variable interest entity (“VIE”)

structure of contractual rights held by its wholly-owned subsidiary Beijing Langlang Runfeng Biotechnology Co., Ltd., a wholly foreign

owned enterprise with limited liability organized and existing under the laws of the People’s Republic of China (the “PRC”)

(the “PRC Subsidiary”), has full economic benefit and management control over, and is consolidated for accounting purposes

with, Senlang Biotechnology Co.

Ltd., a PRC domestic company with limited liability organized and existing under the laws of the PRC (the

“OpCo” or “SenlangBio”).

The OpCo is mainly engaged in the business of research and development in relation to

CAR-T cell therapy, immune cell therapy and related drug development.

The OpCo is owned 100 % by certain of the Sen Lang Beneficial Shareholders.

A wholly-owned subsidiary of the OpCo, Shijiazhuang Senlang Medical Laboratory Co., Ltd., a company with limited liability organized and

existing under the laws of the PRC (“SenlangBio Clinical Laboratory”) is engaged in the business of testing of immunology,

serology and molecular genetics specialties for patients, including hematology-tumor diagnostics and testing prior to clinical trials

for cell therapy.

Prior to the execution of the Purchase Agreement,

the Board of Directors of Avalon (the “Board”), unanimously (i) determined that the terms and provisions of the Purchase Agreement

and the transactions contemplated thereby, including the Acquisition, are fair to, advisable and in the best interests of the Company

and its stockholders, (ii) approved the Purchase Agreement and the transactions contemplated thereby, including the Acquisition, (iii)

authorized, empowered and directed the Company to perform all of its obligations under the Purchase Agreement and related documents, and

(iv) resolved to recommend the adoption of the Purchase Agreement by the stockholders of the Company in compliance with the rules of Nasdaq

(the “Company Board Recommendation”).

The purchase price being paid by Avalon to the

Sen Lang Shareholders under the Purchase Agreement for the Sen Lang Shares is an aggregate of 81 million shares (the “Acquisition

Shares”) of the common stock, par value US$ 0.0001 per share, of Avalon (the “Avalon Common Stock”).

Ten percent ( 10 %),

or 8.1 million, of such shares will be held in escrow for 12 months following the closing to satisfy any indemnification obligations of

the Sen Lang Shareholders under the Share Purchase Agreement.

In addition, at the closing of the Acquisition, it is expected that Dr.

Jianqiang Li, scientific founder and CSO of the OpCo, will join the board of the Company, and Dr.

Li will also be appointed as Chief Technology

Officer of the Company.

The Acquisition Shares will not be registered under the Securities Act of 1933, as amended (the “Securities

Act”) and, therefore, will be restricted securities under Rule 144 under the Securities Act for six months or longer after the closing

of the Acquisition, subject to “affiliate” status with the Company under the Securities Act.

The Purchase Agreement contains customary representations,

warranties and covenants made by the parties thereto, including covenants relating to obtaining the requisite approvals of the stockholders

of Avalon and Sen Lang, regulatory approvals and Avalon’s and Sen Lang’s conduct of their respective businesses (and that

of the OpCo) between the date of signing of the Purchase Agreement and the closing of the Acquisition.

The Acquisition is expected to be accounted for

as a business acquisition, with the Company identified as the accounting acquirer.

The Company is considered the accounting acquirer since

immediately following the closing:

(i) the Company’s stockholders will own a majority of the voting rights of the post-Acquisition

(ii) the Company will have designate a majority (eight of nine) of the initial members of the board of directors of the post-Acquisition

(iii) the Company’s senior management will hold the majority of the key positions in senior management of the post-Acquisition

and (iv) the Company will continue to maintain its corporate headquarters in Freehold, New Jersey, United States.

will continue to maintain operations in the Shijiazhuang High-tech Development Zone, Hebei Province, China.

The acquisition consideration is 81,000,000 shares

of the Company’s Common Stock.

The purchase price will be allocated to the acquired assets and assumed liabilities based on their

fair values at the closing date, and any excess is initially allocated to identifiable intangible assets mainly consisting of cell and

gene engineering technologies with the ability to generate innovative and transformative cellular immunotherapies for solid and hematologic

cancers, which will be amortized over 10 years.

The initial allocation is subject to change upon the final valuation which is to be done

at the time of closing.

Such change could have a material impact on the Company’s financial statements.

As of June 30, 2020, the Company had incurred

costs of $ 938,073 with respect to the Merger and these costs have been expensed.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 – SUBSEQUENT EVENTS (continued)

Equity Financing

In connection with the Acquisition mentioned above,

on June 13, 2021, an institutional investor (the “Investor”) entered into an agreement with the OpCo related to the purchase

of registered capital of the OpCo (the “OpCo Capital Increase Agreement”) pursuant to which the Investor will acquire an aggregate

of up to 13.5 % of the equity ownership of the OpCo for an aggregate purchase price of approximately US$ 30,000,000 (the “Equity Financing”),

which funds will be invested in the OpCo in three equal installments of US$ 10,000,000 , at a fixed price, the first to be upon the closing

of the Acquisition, the second to be within three months after the closing and the third to be within six months after the closing.

addition, pursuant to a Securities Exchange Agreement (the “Exchange Agreement”), by and among the Company, Sen Lang, the

OpCo and the Investor, dated June 13, 2021, the Investor has the right, exercisable between the six-month and five year -anniversaries

of the respective initial closing and installment closings, to elect to exchange, from time to time, all or part of its then-owned equity

ownership of the OpCo for shares (the “Exchange Shares”) of Avalon Common Stock at a fixed exchange price of US$ 1.21 per share

of Avalon Common Stock, which was the market price of the Avalon Common Stock as of the date of the Exchange Agreement under Nasdaq rules.

In addition, the Exchange Agreement provides that the Investor may only exchange up to 10 % of its total investment amount in any 30-day

China eCapital Holdings, Ltd.

(CEC Capital) served

as financial advisor to Avalon in connection with the Equity Financing and will receive a cash fee of approximately $ 900,000 , representing

3 % of the gross proceeds from the Equity Financing.

Common Shares Issued

In August 2021, the Company issued a total of

325,000 shares of its common stock for services rendered and to be rendered.

These shares were valued at $ 301,750 , the fair market values

on the grant dates using the reported closing share prices on the dates of grant.

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-Q

Item 1. Financial Statements