What changed in this filing

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Item 1. Financial Statements

2021-11-15 compared with 2021-08-16 · 885 added, 934 removed, 297 unchanged (86% of the section changed)

2 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED

BALANCE SHEETS

September 30,

CURRENT ASSETS:

Rent receivable

Rent receivable - related party

Deferred financing costs

Prepaid professional fees

Prepaid expenses and other current assets

2 unchanged sentences

Rent receivable - noncurrent portion

Security deposit

Deferred leasing costs

3 unchanged sentences

Equity method investment

Other noncurrent assets

Total Non-current Assets

15 unchanged sentences

Total Liabilities

Commitments and Contingencies

Commitments and Contingencies (Note 14)

Preferred stock, $ 0.0001 par value;

10,000,000 shares authorized;

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

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

Common stock, $ 0.0001 par value;

490,000,000 shares authorized;

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

86,052,367 shares issued and 85,532,367 shares outstanding at September 30, 2021;

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

1 unchanged sentence

common stock held in treasury, at cost;

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

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

Accumulated deficit

7 unchanged sentences

Total Liabilities and Equity

See accompanying notes to the condensed consolidated

financial statements.

See accompanying notes to the condensed consolidated financial statements.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

For the Three Months Ended

For the Six Months Ended

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Three Months Ended

September 30,

Nine Months Ended

September 30,

Real property rental

Medical related consulting services - related party

Total Revenues

COSTS AND EXPENSES

Real property operating expenses

Medical related consulting services - related party

Total Costs and Expenses

Real property operating income

Gross profit from medical related consulting services

Total Gross Profit

OTHER OPERATING EXPENSES:

12 unchanged sentences

Loss from equity method investment

Other (expense) income

Other income (expense)

Total Other Expense, net

20 unchanged sentences

$ ( 9,579,122 )

OTHER COMPREHENSIVE INCOME (LOSS)

Unrealized foreign currency translation gain (loss)

OTHER COMPREHENSIVE INCOME

Unrealized foreign currency translation gain

COMPREHENSIVE LOSS

15 unchanged sentences

Basic and diluted

See accompanying notes to the condensed consolidated

financial statements.

See accompanying notes to the condensed consolidated financial statements.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

For the Three and Six Months Ended June 30, 2021

Avalon GloboCare Corp.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Three and Nine Months Ended September 30, 2021

GloboCare Corp.

Stockholders’ Equity

Preferred Stock

Treasury Stock

Comprehensive

Non-controlling

Balance, January 1, 2021

January 1, 2021

$ ( 522,500 )

1 unchanged sentence

$ ( 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

of common stock, net

of common stock for services

currency translation adjustment

loss for the three months ended March 31, 2021

( 2,367,118 )

Balance, March 31, 2021

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

of common stock for settlement of accrued professional fees

of common stock for services

currency translation adjustment

loss for the three months ended June 30, 2021

( 2,364,910 )

Balance, June 30, 2021

June 30, 2021

( 46,773,403 )

of common stock, net

of common stock for services

currency translation adjustment

loss for the three months ended September 30, 2021

( 2,024,219 )

See accompanying notes to the condensed consolidated

financial statements.

September 30, 2021

$ ( 522,500 )

$ ( 48,797,622 )

$ ( 177,161 )

See accompanying notes to the condensed consolidated financial statements.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

For the Three and Six Months Ended June 30, 2020

Avalon GloboCare Corp.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Three and Nine Months Ended September 30, 2020

GloboCare Corp.

Stockholders’ Equity

Preferred Stock

Treasury Stock

Comprehensive

Non-controlling

Balance, January 1, 2020

January 1, 2020

$ ( 522,500 )

1 unchanged sentence

$ ( 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

of common stock, net

of common stock for services

currency translation adjustment

loss for the three months ended March 31, 2020

( 3,270,781 )

Balance, March 31, 2020

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

of common stock, net

of common stock for services

currency translation adjustment

loss for the three months ended June 30, 2020

( 3,056,382 )

Balance, June 30, 2020

June 30, 2020

( 35,689,100 )

of common stock, net

of common stock for services

currency translation adjustment

loss for the three months ended September 30, 2020

( 3,251,959 )

See accompanying notes to the condensed consolidated

financial statements.

September 30, 2020

$ ( 522,500 )

$ ( 38,941,059 )

$ ( 236,806 )

See accompanying notes to the condensed consolidated financial statements.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF

For the Six Months Ended

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

$ ( 9,579,122 )

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

Amortization of straight-line rent receivable

Change in straight-line rent receivable

Amortization of right-of-use asset

5 unchanged sentences

Rent receivable

Rent receivable - related party

Security deposit

Deferred leasing costs

Prepaid expenses and other current assets

Prepaid expenses and other assets

Accrued liabilities and other payables

5 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment

Improvement of commercial real estate

11 unchanged sentences

CASH - end of period

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid for:

NON-CASH INVESTING AND FINANCING ACTIVITIES:

3 unchanged sentences

Accrued professional fees relieved for shares issued

See accompanying notes to the condensed consolidated

financial statements.

AVALON GLOBOCARE CORP.

Improvement of commercial real estate acquired on credit as payable

See accompanying notes to the condensed consolidated financial statements.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION

AND NATURE OF OPERATIONS

Avalon GloboCare Corp.

(the “Company”

or “AVCO”) is a Delaware corporation.

The Company was incorporated under the laws of the State of Delaware on July 28, 2014.

On October 19, 2016, the Company entered into and closed a Share Exchange Agreement with the shareholders of Avalon Healthcare System,

Inc., a Delaware corporation (“AHS”), each of which were accredited investors (“AHS Shareholders”) pursuant to

which we acquired 100 % of the outstanding securities of AHS in exchange for 50,000,000 shares of the Company’s common stock (the

“AHS Acquisition”).

AHS was incorporated on May 18, 2015 under the laws of the State of Delaware.

For accounting purposes, AHS was the surviving

The transaction was accounted for as a recapitalization of AHS pursuant to which AHS was treated as the accounting acquirer, surviving

and continuing entity although the Company is the legal acquirer.

The Company did not recognize goodwill or any intangible assets in connection

with this transaction.

Accordingly, the Company’s historical financial statements are those of AHS and its wholly-owned subsidiary,

Avalon (Shanghai) Healthcare Technology Co., Ltd.

(“Avalon Shanghai”) immediately following the consummation of this reverse

merger transaction.

AHS owns 100 % of the capital stock of Avalon Shanghai, which is a wholly foreign-owned enterprise organized under

the laws of the People’s Republic of China (“PRC”).

Avalon Shanghai was incorporated on April 29, 2016 and is engaged

in medical related consulting services for customers.

The Company is a clinical-stage, vertically integrated,

leading CellTech bio-developer dedicated to advancing and empowering innovative, transformative immune effector cell therapy, exosome

technology, as well as COVID-19 related diagnostics and therapeutics.

The company also provides strategic advisory and outsourcing services

to facilitate and enhance its clients' growth and development, as well as competitiveness in healthcare and CellTech industry markets.

Through its subsidiary structure with unique integration of verticals from innovative 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 June 30,

1 – ORGANIZATION AND NATURE OF OPERATIONS

GloboCare Corp.

(the “Company” or “AVCO”) is a Delaware corporation.

The Company was incorporated under the laws

of the State of Delaware on July 28, 2014.

On October 19, 2016, the Company entered into and closed a Share Exchange Agreement with the

shareholders of Avalon Healthcare System, Inc., a Delaware corporation (“AHS”), each of which 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

accounting purposes, AHS was the surviving entity.

The transaction was accounted for as a recapitalization of AHS pursuant to which AHS

was treated as the accounting acquirer, surviving and continuing entity although the Company is the legal acquirer.

The Company did not

recognize goodwill or any intangible assets in connection with this transaction.

Accordingly, the Company’s historical financial

statements are those of AHS and its wholly-owned subsidiary, Avalon (Shanghai) Healthcare Technology Co., 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.

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 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.

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 September 30, 2021.

Avalon (BVI) Ltd.

is dormant and is in process of being dissolved.

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.

February 7, 2017, the Company formed Avalon RT 9 Properties, LLC (“Avalon RT 9”), a New Jersey limited liability company.

On May 5, 2017, Avalon RT 9 purchased a real property located in Township of Freehold, County of Monmouth, State of New Jersey, having

a street address of 4400 Route 9 South, Freehold, NJ 07728.

This property was purchased to serve as the Company’s world-wide headquarters

for all corporate administration and operations.

In addition, the property generates rental income.

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 June 30, 2021, the occupancy rate of

the building is 89.4 %.

On July 31, 2017, the Company formed Genexosome Technologies

Currently, Avalon RT 9’s business consists of the ownership and operation of the income-producing real estate property in New Jersey.

As of September 30, 2021, the occupancy rate of the building is 89.4 %.

July 31, 2017, the Company formed Genexosome Technologies Inc.

(“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.

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 and Dr.

Yu Zhou holds 40 % of Genexosome.

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

Zhou at the time of

the acquisition and has decided to impair the intangible asset associated with this acquisition to zero.

Zhou was terminated as Co-CEO

of Genexosome on August 14, 2019.

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

On July 18, 2018, the Company formed a wholly

owned subsidiary, Avactis Biosciences Inc., a Nevada corporation, which will focus on accelerating commercial activities related to cellular

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

The subsidiary is designed to integrate and optimize our global scientific and clinical resources to further advance the use

of cellular therapies to treat certain cancers.

On June 13, 2019, the Company formed a wholly

owned subsidiary, International Exosome Association LLC, a Delaware company.

There was no activity for the subsidiary since its incorporation

through June 30, 2021.

AVALON GLOBOCARE CORP.

The Company had not been able to realize the financial

projections provided by Dr.

Zhou at the time of the acquisition and has decided to impair the intangible asset associated with this acquisition

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.

July 18, 2018, the Company formed a wholly owned subsidiary, Avactis Biosciences Inc., a Nevada corporation, which will focus on accelerating

commercial activities related to cellular therapies, including regenerative medicine with stem/progenitor cells as well as cellular immunotherapy

including CAR-T, CAR-NK, TCR-T and others.

The subsidiary is designed to integrate and optimize our global scientific and clinical resources

to further advance the use of cellular therapies to treat certain cancers.

June 13, 2019, the Company formed a wholly owned subsidiary, International Exosome Association LLC, a Delaware company.

activity for the subsidiary since its incorporation through September 30, 2021.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 June 30, 2021 are as follows:

Name of Subsidiary

Place and date of Incorporation

Percentage of Ownership

Principal Activities

Avalon Healthcare System, Inc.

1 – ORGANIZATION AND NATURE OF OPERATIONS (continued)

of the Company’s subsidiaries which are included in these condensed consolidated financial statements as of September 30, 2021

are as follows:

of Subsidiary

and date of Incorporation

Healthcare System, Inc.

100% held by AVCO

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

Avalon (BVI) Ltd.

(“Avalon BVI”)

British Virgin Island

January 23, 2017

Virgin Island

100% held by AVCO

is in process of being dissolved

Avalon RT 9 Properties LLC

(“Avalon RT 9”)

February 7, 2017

RT 9 Properties LLC

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

(Shanghai) Healthcare Technology Co., Ltd.

100% held by AHS

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

Genexosome Technologies Inc.

Technologies Inc.

(“Genexosome”)

July 31, 2017

60% held by AVCO

Beijing Jieteng (Genexosome)

Biotech Co., Ltd.

(“Beijing Genexosome”)

August 7, 2015

Jieteng (Genexosome) Biotech Co., Ltd.

100% held by Genexosome

Avactis Biosciences Inc.

July 18, 2018

Biosciences Inc.

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

June 13, 2019

International

Exosome Association LLC

100% held by AVCO

Promotes standardization related to exosome industry

2 – BASIS OF PRESENTATION AND GOING CONCERN CONDITION

Basis of Presentation

These interim condensed consolidated financial

statements of the Company and its subsidiaries are unaudited.

In the opinion of management, all adjustments (consisting of normal recurring

accruals) and disclosures necessary for a fair presentation of these interim condensed consolidated financial statements have been included.

The results reported in the condensed consolidated financial statements for any interim periods are not necessarily indicative of the

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.

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.

Certain information and footnote disclosures

normally included in the annual consolidated financial statements prepared in accordance with U.S.

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

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

AVALON GLOBOCARE CORP.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Going Concern

The Company is a clinical-stage, vertically integrated,

leading CellTech bio-developer dedicated to advancing and empowering innovative, transformative immune effector cell therapy, exosome

technology, as well as COVID-19 related diagnostics and therapeutics.

The Company also provides strategic advisory and outsourcing services

to facilitate and enhance its clients' growth and development, as well as competitiveness in healthcare and CellTech industry markets.

Through its subsidiary structure with unique integration of verticals from innovative 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 and six months ended June 30, 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.

As reflected in the accompanying condensed consolidated

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

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

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,

The occurrence of an uncontrollable event such

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

statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and

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

NOTE 3 – SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of the

condensed consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect

the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements

and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from these estimates.

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.

2 – BASIS OF PRESENTATION AND GOING CONCERN CONDITION

of Presentation

These interim

condensed consolidated financial statements of the Company and its subsidiaries are unaudited.

In the opinion of management, all adjustments

(consisting of normal recurring accruals) and disclosures necessary for a fair presentation of these interim condensed consolidated financial

statements have been included.

The results reported in the condensed consolidated financial statements for any interim periods are not

necessarily indicative of the 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.

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.

Certain information

and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S.

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

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 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.

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.

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 $ 3,277,946 as of

September 30, 2021 and has incurred recurring net loss and generated negative cash flow from operating activities of $ 6,756,247 and $ 3,307,520

for the nine months ended September 30, 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.

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.

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.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

Fair Value of Financial Instruments and

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:

● 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 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).

value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs.

If the fair value

option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent

reporting date.

The Company did not elect to apply the fair value option to any outstanding instruments.

Cash and Cash Equivalents

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

cash balances by geographic area were as follows:

June 30, 2021

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

preparation of the condensed consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and

assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date

of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ

from these estimates.

Significant estimates during the three and nine months ended September 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.

Value of Financial Instruments and Fair Value Measurements

Company adopted the guidance of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies

the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs

used in measuring fair value as follows:

● 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.

fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value

Measurement,” approximates the carrying amounts represented in the accompanying condensed consolidated financial statements, primarily

due to their short-term nature.

825-10 “Financial Instruments”, allows entities to voluntarily choose to measure certain financial assets and liabilities

at fair value (fair value option).

The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless

a new election date occurs.

If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should

be reported in earnings at each subsequent reporting date.

The Company did not elect to apply the fair value option to any outstanding

and Cash Equivalents

September 30, 2021 and December 31, 2020, the Company’s cash balances by geographic area were as follows:

September 30, 2021

December 31, 2020

United States

For purposes of the condensed consolidated statements

of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less when purchased and money market

accounts to be cash equivalents.

The Company had no cash equivalents at 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.

Balances at state-owned banks within the PRC are covered by insurance up to RMB 500,000 (approximately

$77,000) per bank.

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

At 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

bank and financial institution deposits within U.S.

that at times may exceed federally-insured limits of $ 250,000 .

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 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.

purposes of the condensed consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity

of three months or less when purchased and money market accounts to be cash equivalents.

The Company had no cash equivalents at September

30, 2021 and December 31, 2020.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

in PRC are subject to specific considerations and significant risks not typically associated with companies in North America.

The Company’s

results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures,

currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Financial instruments which potentially subject

the Company to concentrations of credit risk consist principally of trade accounts receivable.

A portion of the Company’s sales

are credit sales which is to the customer whose ability to pay is dependent upon the industry economics prevailing in these 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.

Investment in Unconsolidated

Company – Epicon Biosciences Co., Ltd.

The Company uses the equity method of accounting

for its investment in, and earning or loss of, company that it does not control but over which it does exert significant influence.

Company considers whether the fair value of its equity method investment has declined below its carrying value whenever adverse events

or changes in circumstances indicate that recorded value may not be recoverable.

If the Company considers any decline to be other than

temporary (based on various factors, including historical financial results and the overall health of the investee), then a write-down

would be recorded to estimated fair value.

See Note 5 for discussion of equity method investment.

Revenue Recognition

The Company recognizes

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

The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services

to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Risk and Uncertainties

portion of the Company’s cash is maintained with state-owned banks within the PRC.

Balances at state-owned banks within the PRC

are covered by insurance up to RMB 500,000 (approximately $78,000) per bank.

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

At September 30, 2021, cash balances held in the PRC are RMB 665,725 (approximately $ 103,000 ), of which, RMB 139,695 (approximately

$ 22,000 ) 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.

Company maintains a portion of its cash in bank and financial institution deposits within U.S.

that at times may exceed federally-insured

limits of $ 250,000 .

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 September 30, 2021, there

were no balances in excess of the federally-insured limits.

a portion of the Company’s operations are carried out in PRC.

Accordingly, the Company’s business, financial condition and

results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the

PRC’s economy.

The Company’s operations in PRC are subject to specific considerations and significant risks not typically

associated with companies in North America.

The Company’s results may be adversely affected by changes in governmental policies

with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of

taxation, among other things.

instruments which potentially subject the Company to concentrations of credit risk consist principally of trade accounts receivable.

A portion of the Company’s sales are credit sales which is to the customer whose ability to pay is dependent upon the industry

economics prevailing in these areas;

however, concentrations of credit risk with respect to trade accounts receivable is limited due

to short-term payment terms.

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

in Unconsolidated Company – Epicon Biosciences Co., Ltd.

Company uses the equity method of accounting for its investment in, and earning or loss of, company that it does not control but over

which it does exert significant influence.

The Company considers whether the fair value of its equity method investment has declined

below its carrying value whenever adverse events or changes in circumstances indicate that recorded value may not be recoverable.

the Company considers any decline to be other than temporary (based on various factors, including historical financial results and the

overall health of the investee), then a write-down would be recorded to estimated fair value.

See Note 5 for discussion of equity method

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

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 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

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.

AVALON GLOBOCARE CORP.

Identify the contract

with the customer

Identify the performance

obligations in the contract

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

Revenue Recognition (continued)

The transaction price is the amount of consideration

to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected

on behalf of third parties (for example, some sales taxes).

The consideration promised in a contract with a customer may include fixed

amounts, variable amounts, or both.

Variable consideration is included in the transaction price only to the extent that it is probable

that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable

consideration is subsequently resolved.

The transaction price is allocated to each performance

obligation on a relative standalone selling price basis.

The transaction price allocated to each performance obligation is recognized

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

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

not apply to rental contracts, which are within the scope of other revenue recognition accounting standards.

Rental income from operating leases is recognized

on a straight-line basis under the guidance of ASC 842.

Lease payments under tenant leases are recognized on a straight-line basis over

the term of the related leases.

The cumulative difference between lease revenue recognized under the straight-line method and contractual

lease payments are included in rent receivable on the condensed consolidated balance sheets.

The Company does not offer promotional payments,

customer coupons, rebates or other cash redemption offers to its customers.

Per Share Data

ASC Topic 260 “Earnings per Share,”

requires presentation of both basic and diluted earnings per share (“EPS”) with a reconciliation of the numerator and denominator

of the basic EPS computation to the numerator and denominator of the diluted EPS computation.

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recognition (continued)

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:

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).

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 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.

Company has 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.

Company does not offer promotional payments, customer coupons, rebates or other cash redemption offers to its customers.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Topic 260 “Earnings per Share,” requires presentation of both basic and diluted earnings per share (“EPS”) with

a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation.

Basic EPS excludes dilution.

reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into

common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

Basic net loss per share is computed by dividing

net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period.

net loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents

and potentially dilutive securities outstanding during each period.

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 June 30,

Six Months Ended June 30,

Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common

stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the

net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common

stock outstanding during the period.

Diluted net loss per share is computed by dividing net loss by the weighted average number of shares

of common stock, common stock equivalents and potentially dilutive securities outstanding during each period.

For the three and nine

months ended September 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.

In a period in which the Company has a net loss, all potentially dilutive securities

are excluded from the computation of diluted shares outstanding as they would have had an anti-dilutive impact.

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

September 30,

Nine Months Ended

September 30,

Stock options

Potentially dilutive securities

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

reportable segments.

The Company’s chief operating decision maker is the Chief Executive Officer (“CEO”) and president

of the Company, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company.

The Company previously had three reportable business

real property operating segment, medical related consulting services segment, and development services and sales of developed

products segment.

Due to the winding down of the development services and sales of developed products segment in 2020, the Company no

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 and six months ended June 30,

2021, the Company operates through two business segments:

real property operating segment and medical related consulting services segment.

These reportable segments offer different types of services and products, have different types of revenue, and are managed separately

as each requires different operating strategies and management expertise.

Company uses “the management approach” in determining reportable operating segments.

The management approach considers the

internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing

performance as the source for determining the Company’s reportable segments.

The Company’s chief operating decision maker

is the Chief Executive Officer (“CEO”) and president of the Company, who reviews operating results to make decisions about

allocating resources and assessing performance for the entire Company.

Company previously had three reportable business segments:

real property operating segment, medical related consulting services segment,

and development services and sales of developed products segment.

Due to the winding down of the development services and sales of developed

products segment in 2020, the Company no 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.

the three and nine months ended September 30, 2021, the Company operates through two business segments:

real property operating segment

and medical related consulting services segment.

These reportable segments offer different types of services and products, have different

types of revenue, and are managed separately as each requires different operating strategies and management expertise.

Reclassification

Certain prior period amounts have been reclassified

to conform to the current period presentation.

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

of operations and cash flows.

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.

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

asset is originated or acquired.

ASU 2016-13 is effective for annual period beginning after December 15, 2022, including interim reporting

periods within those annual reporting periods.

The Company expects that the adoption will not have a material impact on the Company’s

consolidated financial statements.

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

or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial

statements upon adoption.

The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated

to its consolidated financial condition, results of operations, cash flows or disclosures.

AVALON GLOBOCARE CORP.

prior period amounts have been reclassified to conform to the current period presentation.

These reclassifications have no effect on

the previously reported financial position, results of operations and cash flows.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 – PREPAID EXPENSES

AND OTHER CURRENT ASSETS

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

expenses and other current assets consisted of the following:

Prepaid professional fee

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Standards

June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (“Topic 326”).

The ASU introduces

a new accounting model, the Current Expected Credit Losses model (“CECL”), which requires earlier recognition of credit losses

and additional disclosures related to credit risk.

The CECL model utilizes a lifetime expected credit loss measurement objective for

the recognition of credit losses at the time the financial asset is originated or acquired.

ASU 2016-13 is effective for annual period

beginning after December 15, 2022, including interim reporting periods within those annual reporting periods.

The Company expects that

the adoption will not have a material impact on the Company’s consolidated financial statements.

December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes , as part of its Simplification Initiative

to reduce the cost and complexity in accounting for income taxes.

This standard removes certain exceptions related to the approach for

intra period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities

for outside basis differences.

It also amends other aspects of the guidance to help simplify and promote consistent application of GAAP.

The guidance is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted.

of ASU 2019 – 12 did not have a material impact on the Company’s consolidated financial statements.

accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have

a material impact on the consolidated financial statements upon adoption.

The Company does not discuss recent pronouncements that are

not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures.

4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

September 30, 2021 and December 31, 2020, prepaid expenses and other current assets consisted of the following:

September 30,

Prepaid directors and officers liability insurance premium

Prepaid NASDAQ listing fee

Recoverable VAT

1 unchanged sentence

Prepaid research and development fees

NOTE 5 – EQUITY

METHOD INVESTMENT

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 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.

The Company treats the equity investment in the

consolidated financial statements under the equity method.

Under the equity method, the investment is initially recorded at cost, adjusted

for any excess of the Company’s share of the incorporated-date fair values of the investee’s identifiable net assets over

the cost of the investment (if any).

Thereafter, the investment is adjusted for the post incorporation change in the Company’s share

of the investee’s net assets and any impairment loss relating to the investment.

For the 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

5 – EQUITY METHOD INVESTMENT

of September 30, 2021 and December 31, 2020, the equity method investment amounted to $ 520,569 and $ 521,758 , respectively.

The investment

represents the Company’s subsidiary, Avalon Shanghai’s interest in Epicon Biotech Co., Ltd.

was incorporated on August 14, 2018 in PRC.

Avalon Shanghai and the other unrelated company, Jiangsu Unicorn Biological Technology Co.,

(“Unicorn”), accounted for 40 % and 60 % of the total ownership, respectively.

Epicon is focused on cell preparation,

third party testing, biological sample repository for commercial and scientific research purposes and the clinical transformation of

scientific achievements.

Company treats the equity investment in the consolidated financial statements under the equity method.

Under the equity method, the investment

is initially recorded at cost, adjusted for any excess of the Company’s share of the incorporated-date fair values of the investee’s

identifiable net assets over the cost of the investment (if any).

Thereafter, the investment is adjusted for the post incorporation change

in the Company’s share of the investee’s net assets and any impairment loss relating to the investment.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5 – EQUITY METHOD INVESTMENT (continued)

the three months ended September 30, 2021 and 2020, the Company’s share of Epicon’s net loss was $ 14,203 and $ 14,966 , respectively,

which was included in loss from equity method investment in the accompanying condensed consolidated statements of operations and comprehensive

For the nine months ended September 30, 2021 and 2020, the Company’s share of Epicon’s net loss was $ 48,135 and $ 35,382 ,

respectively, which was included in loss from equity method investment in the accompanying condensed consolidated statements of operations

and comprehensive loss.

In the nine months ended September 30, 2021, activity recorded for the Company’s equity method investment in

Epicon is summarized in the following table:

Equity investment carrying amount at January 1, 2021

2 unchanged sentences

Foreign currency fluctuation

Equity investment carrying amount at June 30, 2021

Equity investment carrying amount at September 30, 2021

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

September 30,

Current assets

2 unchanged sentences

Noncurrent liabilities

AVALON GLOBOCARE CORP.

Three Months Ended

September 30,

Nine Months Ended

September 30,

Loss from operation

6 – OTHER NONCURRENT ASSETS

September 30, 2021 and December 31, 2020, other noncurrent assets consisted of the following:

September 30,

Deferred financing costs

Security deposit

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 – ACCRUED

LIABILITIES AND OTHER PAYABLES

At June 30, 2021 and

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

Accrued professional fees

Accrued research and development fees

Accrued payroll liability and directors’ compensation

7 – ACCRUED LIABILITIES AND OTHER PAYABLES

September 30, 2021 and December 31, 2020, accrued liabilities and other payables consisted of the following:

September 30,

Accrued tenants’ improvement reimbursement

1 unchanged sentence

Accounts payable

Accrued utilities

Taxes payable

Deferred rental income

NOTE 7 – RELATED PARTY TRANSACTIONS

Accrued Liabilities and Other Payables –

Related Parties

The Company acquired Beijing Genexosome for a

cash payment of $ 450,000 .

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 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

8 – RELATED PARTY TRANSACTIONS

Liabilities and Other Payables – Related Parties

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

As of September 30, 2021 and December 31, 2020, the unpaid acquisition

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

Yu Zhou, former director and former co-chief executive officer and 40 % owner of Genexosome,

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

of September 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 $ 309,484 and $ 167,956 , respectively, and have been included in

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

from Related Party

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

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

The Promissory

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

The Company repaid principal of $ 410,000 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.

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 September 30, 2021 and December 31, 2020,

the outstanding principal balance was $ 390,000 .

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

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

and Chairman of the Board of Directors of the Company.

The Line of Credit allows the Company to request loans thereunder and to use the

proceeds of such loans for working capital and operating expense purposes until the facility matures on December 31, 2024 .

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 September 30, 2021 and December 31, 2020, $ 3,963,189 and $ 3,200,000 was outstanding under the Line of

Credit, respectively.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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 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.

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

Related Party

Beijing Genexosome uses

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

NOTE 8 – EQUITY

2020 Incentive Stock

The Company held its

annual meeting on August 4, 2020.

During its annual meeting, the Company approved 2020 Incentive Stock Plan and reserved 5,000,000 shares

of common stock for issuance thereunder.

Common Shares Sold

On December 13, 2019, the Company entered into

an Open Market Sale Agreement SM (the “Sales Agreement”) with Jefferies LLC, as sales agent (“Jefferies”),

pursuant to which the Company may offer and sell, from time to time, through Jefferies, shares of its common stock.

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 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

8 – RELATED PARTY TRANSACTIONS (continued)

from Related Party (continued)

the three months ended September 30, 2021 and 2020, the interest expense related to above borrowings amounted to $ 50,248 and $ 41,531 ,

respectively, and has been included in interest expense – related party on the accompanying condensed consolidated statements of

operations and comprehensive loss.

For the nine months ended September 30, 2021 and 2020, the interest expense related to above borrowings

amounted to $ 141,528 and $ 126,169 , respectively, and has been included in interest expense – related party on the accompanying

condensed consolidated statements of operations and comprehensive loss.

of September 30, 2021 and December 31, 2020, the related accrued and unpaid interest for above borrowings was $ 309,484 and $ 167,956 ,

respectively, and has been included in accrued liabilities and other payables – related parties on the accompanying condensed consolidated

balance sheets.

Revenue from Related Party

from year 2021, the Company leases space of its commercial real property located in New Jersey to a company, which is controlled by Wenzhao

Lu, the Company’s largest shareholder and chairman of the Board of Directors.

For both the three and nine months ended September

30, 2021, the related party rental revenue amounted to $ 21,000 , and has been included in real property rental on the accompanying condensed

consolidated statements of operations and comprehensive loss.

of September 30, 2021, the related party rent receivable totaled $ 21,000 , which was included in rent receivable – related party

on the accompanying condensed consolidated balance sheets.

Incentive Stock Plan

Company held its annual meeting on August 4, 2020.

During its annual meeting, the Company approved 2020 Incentive Stock Plan and reserved

5,000,000 shares of common stock for issuance thereunder.

Shares Sold for Cash

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 nine months ended September 30, 2021, Jefferies sold an aggregate of 1,884,036 shares

of common stock at an average price of $ 1.34 per share to investors.

The Company recorded net proceeds of $ 2,371,052 , net of commission

and other offering costs of $ 147,656 .

Shares Issued for Services

the nine months ended September 30, 2021, the Company issued a total of 1,205,679 shares of its common stock for services rendered and

to be rendered.

These shares were valued at $ 1,319,487 , 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 $ 784,800 for the nine months ended September 30,

2021 and reduced accrued liabilities of $ 276,032 and recorded prepaid expense of $ 258,655 as of September 30, 2021 which will be amortized

over the rest of corresponding service periods.

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.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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:

9 – EQUITY (continued)

following table summarizes the shares of the Company’s common stock issuable upon exercise of options outstanding at September

Options Outstanding

Options Exercisable

Exercise Price

Outstanding at

Weighted Average Remaining

September 30,

Weighted Average

Contractual Life

Exercise Price

Exercisable at

Exercise Price

September 30,

$ 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

option activities for the nine months ended September 30, 2021 were as follows:

Weighted Average

Exercise Price

Outstanding at January 1, 2021

Terminated / Exercised / Expired

Outstanding at June 30, 2021

Options exercisable at June 30, 2021

Outstanding at September 30, 2021

Options exercisable at September 30, 2021

Options expected to vest

The aggregate intrinsic value of both stock options

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

The fair values of options granted during the

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 six months ended June 30, 2021 was $ 575,078 .

The fair values of options

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 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

and $ 13,068 was recorded as research and development expenses, respectively.

AVALON GLOBOCARE CORP.

aggregate intrinsic value of both stock options outstanding and stock options exercisable at September 30, 2021 was $ 776,000 .

fair values of options granted during the nine months ended September 30, 2021 were estimated at the date of grant using the Black-Scholes

option-pricing model with the following assumptions:

volatility of 121.52 % - 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 nine months ended September

30, 2021 was $ 594,401 .

fair values of options granted during the nine months ended September 30, 2020 were estimated at the date of grant using the Black-Scholes

option-pricing model with the following assumptions:

volatility of 134.32% - 139.58%, risk-free rate of 0.25% - 1.67%, annual dividend

yield of 0% and expected life of 3.00 – 10.00 years.

The aggregate fair value of the options granted during the nine months ended

September 30, 2020 was $2,702,401.

the three months ended September 30, 2021 and 2020, stock-based compensation expense associated with stock options granted amounted to

$ 188,859 and $ 739,362 , respectively, of which, $ 134,833 and $ 605,555 was recorded as compensation and related benefits, $ 37,596 and $ 110,970

was recorded as professional fees, and $ 16,430 and $ 22,837 was recorded as research and development expenses, respectively.

the nine months ended September 30, 2021 and 2020, stock-based compensation expense associated with stock options granted amounted to

$ 586,573 and $ 2,251,312 , respectively, of which, $ 410,732 and $ 1,975,245 was recorded as compensation and related benefits, $ 120,584

and $ 240,162 was recorded as professional fees, and $ 55,257 and $ 35,905 was recorded as research and development expenses, respectively.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 – EQUITY

Options (continued)

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

9 – EQUITY (continued)

summary of the status of the Company’s nonvested stock options granted as of September 30, 2021 and changes during the nine months

ended September 30, 2021 is presented below:

Weighted Average

Exercise Price

Nonvested at January 1, 2021

Nonvested at June 30, 2021

NOTE 9 – STATUTORY

Avalon Shanghai and Beijing Genexosome operate

in the PRC, are required to reserve 10 % of their net profit after income tax, as determined in accordance with the PRC accounting rules

and regulations.

Appropriation to the statutory reserve by the Company is based on profit arrived at under PRC accounting standards for

business enterprises for each year.

The profit arrived at must be set off against

any accumulated losses sustained by the Company in prior years, before allocation is made to the statutory reserve.

Appropriation to the

statutory reserve must be made before distribution of dividends to shareholders.

The appropriation is required until the statutory reserve

reaches 50 % of the registered capital.

This statutory reserve is not distributable in the form of cash dividends.

The Company did not

make any appropriation to statutory reserve for Avalon Shanghai and Beijing Genexosome during the 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.

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.

For purposes of this test, restricted

net assets of consolidated subsidiaries shall mean that amount of the registrant’s proportionate share of net assets of its consolidated

subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent

company in the form of loans, advances or cash dividends without the consent of a third party.

The Company’s PRC subsidiaries’ net

assets as of 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.

Nonvested at September 30, 2021

10 – STATUTORY RESERVE

Shanghai and Beijing Genexosome operate in the PRC, are required to reserve 10 % of their net profit after income tax, as determined in

accordance with the PRC accounting rules and regulations.

Appropriation to the statutory reserve by the Company is based on profit arrived

at under PRC accounting standards for business enterprises for each year.

profit arrived at must be set off against any accumulated losses sustained by the Company in prior years, before allocation is made to

the statutory reserve.

Appropriation to the statutory reserve must be made before distribution of dividends to shareholders.

The appropriation

is required until the statutory reserve reaches 50 % of the registered capital.

This statutory reserve is not distributable in the form

of cash dividends.

The Company did not make any appropriation to statutory reserve for Avalon Shanghai and Beijing Genexosome during

the nine months ended September 30, 2021 and 2020 as they incurred net losses in these periods.

11 – RESTRICTED NET ASSETS

portion of the Company’s operations are conducted through its PRC subsidiaries, which can only pay dividends out of their retained

earnings determined in accordance with the accounting standards and regulations in the PRC and after they have met the PRC requirements

for appropriation to statutory reserve.

In addition, a portion of the Company’s businesses and assets are denominated in RMB, which

is not freely convertible into foreign currencies.

All foreign exchange transactions take place either through the People’s Bank

of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China.

Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions requires submitting a payment

application form together with suppliers’ invoices, shipping documents and signed 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.

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

For purposes of this test, restricted net assets of consolidated subsidiaries shall mean that amount of the registrant’s

proportionate share of net assets of its consolidated subsidiaries (after intercompany eliminations) which as of the end of the most

recent fiscal year may not be transferred to the parent company in the form of loans, advances or cash dividends without the consent

of a third party.

Company’s PRC subsidiaries’ net assets as of September 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.

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 and six months ended June 30, 2021 and 2020.

12 – CONCENTRATIONS

following table sets forth information as to each customer that accounted for 10 % or more of the Company’s revenues for the three

and nine months ended September 30, 2021 and 2020.

Three Months Ended

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 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 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

total outstanding accounts payable at December 31, 2020.

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

and other customers segment.

Due to the winding down of the development services

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 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 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.

September 30,

Nine Months Ended

September 30,

A (Hebei Daopei, a related party)

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 September 30, 2021, accounted for 71.2 % of the Company’s total outstanding

accounts receivable, accounts receivable – related party, and rent receivable at September 30, 2021.

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.

supplier accounted for 10 % or more of the Company’s purchase during the three and nine months ended September 30, 2021 and 2020.

supplier, whose outstanding payable accounted for 10 % or more of the Company’s total outstanding accounts payable at September

30, 2021, accounted for 100.0 % of the Company’s total outstanding accounts payable at September 30, 2021.

supplier, whose outstanding payable accounted for 10 % or more of the Company’s total outstanding accounts payable at December 31,

2020, accounted for 93.6 % of the Company’s total outstanding accounts payable at December 31, 2020.

13 – SEGMENT INFORMATION

the three and nine months ended September 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 and other customers segment.

to the winding down of the development services and sales of developed products segment in 2020, the Company no 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.

the three and nine months ended September 30, 2021, the Company operated in two reportable business segments - (1) the real property

operating segment, and (2) the medical related consulting services segment.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 – SEGMENT INFORMATION

Three Months Ended

Six Months Ended

Real property operations

Costs and expenses

Real property operations

Other operating expenses

Real property operations

Medical related consulting services - related parties

Development services and sales of developed products

Company’s reportable segments are strategic business units that offer different services and products.

They are managed separately

based on the fundamental differences in their operations.

Information with respect to these reportable business segments for the three

and nine months ended September 30, 2021 and 2020 was as follows:

13 – SEGMENT INFORMATION (continued)

September 30,

property operations

related consulting services

property operations

related consulting services

property operations

related consulting services

operating expenses

property operations

related consulting services

services and sales of developed products

Corporate/Other

Other income (expense)

Interest expense

(expense) income

Corporate/Other

Other income (expense)

Real property operations

Medical related consulting services - related parties

Development services and sales of developed products

income (expense)

property operations

related consulting services

services and sales of developed products

Corporate/Other

Total other expense, net

Real property operations

Medical related consulting services - related parties

Development services and sales of developed products

other expense, net

income (loss)

property operations

related consulting services

services and sales of developed products

Corporate/Other

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

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

September 30,

Real property operations

2 unchanged sentences

Corporate/Other

AVALON GLOBOCARE CORP.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 – SEGMENT INFORMATION

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

13 – SEGMENT INFORMATION (continued)

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

September 30,

United States

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.

On October 25, 2017, Genexosome entered into and closed

a Stock Purchase Agreement with Beijing Genexosome and Yu Zhou, MD, PhD, the sole shareholder of Beijing Genexosome, pursuant to which

Genexosome acquired all of the issued and outstanding securities of Beijing Genexosome in consideration of a cash payment in the amount

of $450,000, of which $100,000 is still owed.

Further, on October 25, 2017, Genexosome entered into and closed an Asset Purchase Agreement

Zhou, pursuant to which the Company acquired all assets, including all intellectual property and exosome separation systems,

Zhou pertaining to the business of researching, developing and commercializing exosome technologies.

In consideration of the

assets, Genexosome paid Dr.

Zhou $876,087 in cash, transferred 500,000 shares of common stock of the Company to Dr.

14 – COMMITMENTS AND CONTINGENCIES

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.

October 25, 2017, Genexosome entered into and closed a Stock Purchase Agreement with Beijing Genexosome and Yu Zhou, MD, PhD, the

sole shareholder of Beijing Genexosome, pursuant to which Genexosome acquired all of the issued and outstanding securities of Beijing

Genexosome in consideration of a cash payment in the amount of $450,000, of which $100,000 is still owed.

Further, on October 25, 2017,

Genexosome entered into and closed an Asset Purchase Agreement with Dr.

Zhou, pursuant to which the Company acquired all assets, including

all intellectual property and exosome separation systems, held by Dr.

Zhou pertaining to the business of researching, developing and

commercializing exosome technologies.

In consideration of the assets, Genexosome paid Dr.

Zhou $876,087 in cash, transferred 500,000

shares of common stock of the Company to Dr.

Zhou and issued Dr.

Zhou 400 shares of common stock of Genexosome.

Further, the Company had not been able to realize the financial projections provided by

Zhou at the time of the acquisition and has decided to impair the intangible asset associated with this acquisition to zero on September

Zhou was terminated as Co-CEO of Genexosome on August 14, 2019.

Further, on October 28, 2019, Research Institute at Nationwide

Children’s Hospital (“Research Institute”) filed a Complaint in the United States District Court for the Southern District

of Ohio Eastern Division against Dr.

Zhou, Li Chen, the Company and Genexosome with various claims against the Company and Genexosome

including misappropriation of trade secrets in violation of the Defend Trade Secrets Act of 2016 and violation of Ohio Uniform Trade Secrets

Research Institute is seeking monetary damages, injunctive relief, exemplary damages, injunctive relief and other equitable relief.

The Company intends to vigorously defend against this action and pursue all available legal remedies.

The 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

The Company is a party

to leases for office space.

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

Six Months ended

Further, the Company

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

Zhou at the time of the acquisition and has decided to impair

the intangible asset associated with this acquisition to zero on September 30, 2019.

Zhou was terminated as Co-CEO of Genexosome

on August 14, 2019.

Further, on October 28, 2019, Research Institute at Nationwide Children’s Hospital (“Research Institute”)

filed a Complaint in the United States District Court for the Southern District of Ohio Eastern Division against Dr.

Zhou, Li Chen, the

Company and Genexosome with various claims against the Company and Genexosome including misappropriation of trade secrets in violation

of the Defend Trade Secrets Act of 2016 and violation of Ohio Uniform Trade Secrets Act.

Research Institute is seeking monetary damages,

injunctive relief, exemplary damages, injunctive relief and other equitable relief.

The Company intends to vigorously defend against

this action and pursue all available legal remedies.

The criminal proceedings against Dr.

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.

Leases Commitment

Company is a party to leases for office space.

Rent expense under all operating leases amounted to approximately $ 108,000 and $ 117,000

for the nine months ended September 30, 2021 and 2020, respectively.

cash flow information related to leases for the nine months ended September 30, 2021 and 2020 is as follows:

Nine Months Ended

September 30,

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

2 unchanged sentences

Operating lease

The following table summarizes the lease term

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

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

14 – COMMITMENTS AND CONTINCENGIES (continued)

Leases Commitment

following table summarizes the lease term and discount rate for the Company’s operating lease as of September 30, 2021:

Operating Lease

1 unchanged sentence

Weighted average discount rate

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 – COMMITMENTS

AND CONTINCENGIES (continued)

Operating Leases Commitment (continued)

The following table summarizes the maturity of lease liabilities under

operating lease as of June 30, 2021:

For the Twelve-month Period Ending June 30:

following table summarizes the maturity of lease liabilities under operating lease as of September 30, 2021:

For the Twelve-month Period Ending September 30:

Operating Lease

5 unchanged sentences

Long-term portion

Equity Investment Commitment

On May 29, 2018, Avalon Shanghai entered into

a Joint Venture Agreement with Jiangsu Unicorn Biological Technology Co., Ltd.

(“Unicorn”), pursuant to which a company named

Epicon Biotech Co., Ltd.

Investment Commitment

May 29, 2018, Avalon Shanghai entered into a Joint Venture Agreement with Jiangsu Unicorn Biological Technology Co., Ltd.

pursuant to which a company named Epicon Biotech Co., Ltd.

(“Epicon”) was formed on August 14, 2018.

Epicon is owned 60% by Unicorn and 40% by Avalon Shanghai.

Within five years of execution of the Joint Venture Agreement, Unicorn shall invest cash into Epicon in an amount not less than RMB 8,000,000

(approximately $1.2 million) and the premises of the laboratories of Nanjing Hospital of Chinese Medicine for exclusive use by Epicon,

and Avalon Shanghai shall invest cash into Epicon in an amount not less than RMB 10,000,000 (approximately $1.5 million).

Epicon is focused

on cell preparation, third party testing, biological sample repository for commercial and scientific research purposes and the clinical

transformation of scientific achievements.

As of 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.

The Company intends to use its

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

Joint Venture – AVAR BioTherapeutics

On October 23, 2018, Avactis Biosciences, Inc.

(“Avactis”), a wholly-owned subsidiary of the Company, and Arbele Limited (“Arbele”) agreed to the establishment

of AVAR BioTherapeutics (China) Co.

(“AVAR”), a Sino-foreign equity joint venture, pursuant to an Equity Joint Venture

Agreement (the “AVAR Agreement”), which will be owned 60% by Avactis and 40% by Arbele.

The purpose and business scope of

the Joint Venture is to research, develop, produce, sell, distribute and generally commercialize CAR-T/CAR-NK/TCR-T/universal cellular

immunotherapy in China.

Avactis is required to contribute $10 million (or equivalent in RMB) in cash and/or services, which shall be contributed

in tranches based on milestones to be determined jointly by AVAR and Avactis in writing subject to Avactis’ cash reserves.

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.

Epicon is owned 60%

by Unicorn and 40% by Avalon Shanghai.

Within five years of execution of the Joint Venture Agreement, Unicorn shall invest cash into

Epicon in an amount not less than RMB 8,000,000 (approximately $1.2 million) and the premises of the laboratories of Nanjing Hospital

of Chinese Medicine for exclusive use by Epicon, and Avalon Shanghai shall invest cash into Epicon in an amount not less than RMB 10,000,000

(approximately $1.6 million).

Epicon is focused on cell preparation, third party testing, biological sample repository for commercial

and scientific research purposes and the clinical transformation of scientific achievements.

As of September 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.

The Company intends to use its present working capital together with borrowings from related party and equity

raises to fund the project cost.

Venture – AVAR BioTherapeutics (China) Co.

October 23, 2018, Avactis Biosciences, Inc.

(“Avactis”), a wholly-owned subsidiary of the Company, and Arbele Limited (“Arbele”)

agreed to the establishment of AVAR BioTherapeutics (China) Co.

(“AVAR”), a Sino-foreign equity joint venture, pursuant

to an Equity Joint Venture Agreement (the “AVAR Agreement”), which will be owned 60% by Avactis and 40% by Arbele.

and business scope of the Joint Venture is to research, develop, produce, sell, distribute and generally commercialize CAR-T/CAR-NK/TCR-T/universal

cellular immunotherapy in China.

Avactis is required to contribute $10 million (or equivalent in RMB) in cash and/or services, which

shall be contributed in tranches based on milestones to be determined jointly by AVAR and Avactis in writing subject to Avactis’

cash reserves.

Within 30 days, Arbele shall make a contribution of $6.66 million in the form of entering into a License Agreement with

AVAR granting AVAR with an exclusive right and license in China to its technology and intellectual property pertaining to CAR-T/CAR-NK/TCR-T/universal

cellular immunotherapy technology and any additional technology developed in the future with terms and conditions to be mutually agreed

upon Avactis and AVAR and services.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 – COMMITMENTS

AND CONTINGENCIES (continued)

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’ 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 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.

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

for the following:

Entering into a License Agreement with AVAR;

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

As of 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.

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

14 – COMMITMENTS AND CONTINCENGIES (continued)

Venture – AVAR BioTherapeutics (China) Co.

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’ discretion;

AVAR in setting up its business operations and obtaining all required permits and licenses from the Chinese government;

AVAR in recruiting, hiring and retaining personnel;

AVAR with access to various hospital networks in China to assist in the testing and commercialization of the CAR-T/CAR-NK/TCR-T/universal

cellular immunotherapy technology in China;

AVAR in managing the Good Manufacturing Practices (GMP) facility and clinic to be developed by AVAR;

AVAR with advice pertaining to conducting clinicals in China;

6 days of signing the AVAR Agreement, Avactis is required to pay to Arbele $300,000 as a research and development fee with an additional

two payments of $300,000 (for a total of $900,000) to be paid upon mutually agreed upon milestones.

of September 30, 2021, Avactis has paid the $ 900,000 to Arbele as research and development fee.

AVAR Agreement, Arbele shall be responsible for the following:

into a License Agreement with AVAR;

Providing AVAR with research

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

of September 30, 2021, License Agreement has not been finalized.

of Credit Agreement

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

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

and director of the Company.

The Line of Credit allows the Company to request loans thereunder and to use the proceeds of such loans

for working capital and operating expense purposes until the facility matures on December 31, 2024.

The loans are unsecured and are not

convertible into equity of the Company.

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

loan will be payable three years from the date of issuance.

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

discretion of the related party Lender.

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

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

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 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.

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 September 30, 2021, $ 3,963,189 was outstanding under the Line of Credit.

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.

15 – SUBSEQUENT EVENTS

and Equity Financing

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

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

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

(the “Sen Lang BVI 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”),

the Company agreed to purchase (the “Acquisition”) all of the issued and outstanding share capital of Sen Lang BVI (the “Sen

Lang BVI Shares”).

Lang BVI, through a “variable interest entity” structure (“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 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”).

SenlangBio is

mainly engaged in the business of research and development in relation to CAR-T cell therapy, immune cell therapy and related drug development.

SenlangBio is owned 100 % by certain of the Sen Lang BVI Beneficial Shareholders.

A wholly-owned subsidiary of SenlangBio, 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.

The purchase price being paid by the Company to the

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

Shares”) of the common stock of the Company (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 BVI 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.

Jianqiang Li, scientific founder

and CSO of SenlangBio, 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.

connection with the Acquisition, on June 13, 2021, an institutional investor (the “Investor”) entered into an agreement,

as amended on June 24, 2021, with SenlangBio related to the purchase of registered capital of SenlangBio (the “OpCo Capital Increase

Agreement”) pursuant to which the Investor will acquire an aggregate of up to 13.5 % of the equity ownership of SenlangBio for an

aggregate purchase price (the “Subscription Amount) of approximately US$ 30,000,000 (represented by an actual investment of RMB 200,000,000 )

(the “Equity Financing”), which funds will be invested in SenlangBio in three equal installments of approximately 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.

In addition, pursuant to a Securities Exchange Agreement, as amended on June 24, 2021

(the “Exchange Agreement”), by and among the Company, Sen Lang BVI, SenlangBio and the Investor, dated June 13, 2021, the

Investor shall have 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 SenlangBio 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 period.

Shares Issued for Services

October 2021, the Company issued 200,000 shares of its common stock to a consultant for services rendered.

These shares were valued at

$ 188,000 , the fair market value on the grant date using the reported closing share price on the date of grant.

Shares Sold for Cash

On December 13, 2019, the Company entered into

an Open Market Sale Agreement SM with Jefferies LLC, as sales agent (“Jefferies”).

From October 1, 2021 to November

15, 2021, Jefferies sold an aggregate of 268,561 shares of common stock at an average price of $ 1.06 per share to investors.

received net cash proceeds of $ 276,022 , net of commission paid to sales agent of $ 8,537 .

Line of Credit

As of November 4, 2021, the Company drew down an additional

aggregate of $1,000,000 from its credit facility under that certain credit line agreement with Wenzhao “Daniel”

Lu (the “Lender”), a significant shareholder and director of the Company, which provides the Company with a $20 million line

of credit (together with related documentation, the “Line of Credit”).

The draw down aggregating $1,000,000 is intended

to provide working capital for the Company to use on a temporary basis for certain obligations in connection with the Company’s

As a result of these draw downs, the Company has approximately $15.3 million remaining available under the Line of

This draw down increased the total principal amount outstanding under the Line of Credit to $4.7 million.

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