What changed in this filing

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Item 9A. Controls and Procedures

2022-03-30 compared with 2021-03-30 · 1956 added, 2255 removed, 575 unchanged (88% of the section changed)

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Evaluation of Disclosure Controls and Procedures

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

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

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

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

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

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

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

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

period covered by this report.

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

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

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

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

Management’s Report on Internal Control over Financial Reporting

Management is responsible for the preparation and fair presentation

of the financial statements included in this annual report.

The financial statements have been prepared in conformity with accounting

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

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

Management is also responsible for establishing and maintaining

adequate internal control over financial reporting.

Our internal control over financial reporting includes those policies and

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

Management recognizes that there

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

error and the circumvention or overriding of internal control.

We maintain disclosure controls

and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed under the

Securities Exchange Act of 1934, as amended, or 1934 Act, is recorded, processed, summarized, and reported within the time periods specified

in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to our management, including our

Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) as appropriate, to allow timely decisions

regarding required disclosure.

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

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

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

covered by this report.

During evaluation of disclosure controls and procedures as of December 31, 2021 conducted as part of our annual

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

operations of our disclosure controls and procedures and concluded that our disclosure controls and procedures were not effective due

to the lack of segregation of duties resulting from our small size.

Management’s Report on Internal Control

over Financial Reporting

Management is responsible

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

The financial statements have been

prepared in conformity with accounting principles generally accepted in the United States of America and reflect management’s judgment

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

Management is also responsible

for establishing and maintaining adequate internal control over financial reporting.

Our internal control over financial reporting includes

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

Management recognizes

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

human error and the circumvention or overriding of internal control.

Accordingly, even effective internal control over financial reporting

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

Further, because of changes in conditions,

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

Management regularly assesses controls and did so most recently

for our financial reporting as of December 31, 2020.

This assessment was based on criteria for effective internal control over

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

(COSO) of the Treadway Commission.

Further, because of changes in conditions, the

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

Management regularly assesses

controls and did so most recently for our financial reporting as of December 31, 2021.

This assessment was based on criteria for effective

internal control over financial reporting described in the Internal Control Integrated Framework issued by the Committee of Sponsoring

Organizations (COSO) of the Treadway Commission.

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

reporting was not effective as of December 31, 2021 due to the lack of segregation of duties resulting from our small size.

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

and review its financial statements.

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

In light of the material weakness, we performed additional analyses

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

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

Accordingly, management believes that despite our

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

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

In light of the material weakness,

we performed additional analyses and procedures in order to conclude that our consolidated financial statements for the year ended December

31, 2021 included in this Annual Report on Form 10-K were fairly stated in accordance with US GAAP.

Accordingly, management believes that

despite our material weakness, our consolidated financial statements for the year ended December 31, 2021 are fairly stated, in all material

respects, in accordance with US GAAP.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial

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

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

Changes in Internal Control over Financial

There were no changes in

our internal control over financial reporting, as such term is defined in Rules 13a-15(f) under the Exchange Act, during the quarter ended

December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Attestation Report of the Registered Public Accounting Firm

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

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

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

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

This Annual Report on Form

10-K does not include an attestation report by our independent registered public accounting firm, regarding internal control over financial

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

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

OTHER INFORMATION

Nasdaq Notice

On February 9, 2022, the

Company received notice from The Nasdaq Stock Market (“Nasdaq”) that the closing bid price for the Company’s common

stock had been below $1.00 per share for the previous 30 consecutive business days, and that the Company is therefore not in compliance

with the minimum bid price requirement for continued inclusion on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2) (the

Nasdaq’s notice has no immediate effect on the listing or trading of the Company’s common stock on The

Nasdaq Capital Market.

The notice indicates that the Company will have 180 calendar days, until August 8, 2022, to regain compliance with

this requirement.

The Company can regain compliance with the $1.00 minimum bid listing requirement if the closing bid price of its common

stock is at least $1.00 per share for a minimum of ten (10) consecutive business days during the 180-day compliance period.

If the Company

does not regain compliance during the initial compliance period, it may be eligible for additional time to regain compliance.

the Company will be required to meet the continued listing requirement for market value of its publicly held shares and all other Nasdaq

initial listing standards, except the bid price requirement, and will need to provide written notice to Nasdaq of its intention to cure

the deficiency during the second compliance period by effecting a reverse stock split, if necessary.

If the Company is not eligible or

it appears to Nasdaq that the Company will not be able to cure the deficiency during the second compliance period, Nasdaq will provide

written notice to the Company that the Company’s common stock will be subject to delisting.

In the event of such notification, the

Company may appeal Nasdaq’s determination to delist its securities, but there can be no assurance that Nasdaq would grant the Company’s

request for continued listing.

The Company intends to actively monitor the minimum bid price of its common stock and may, as appropriate,

consider available options to regain compliance with the Rule.

There can be no assurance that the Company will be able to regain compliance

with the Rule or will otherwise be in compliance with other Nasdaq listing criteria.

A delisting of our common stock is likely to reduce

the liquidity of our common stock and may inhibit or preclude our ability to raise additional financing.

2022 Convertible Note

March 28, 2022, the Company entered into Securities Purchase Agreement with an accredited investor providing for the sale by the Company

to the investor of a Convertible Note in the amount of $4,000,000 (the “2022 Convertible Note”).

In addition to the 2022 Convertible

Note, the investor will also receive a Stock Purchase Warrant (the “2022 Warrant”) to acquire an aggregate of 1,333,333 shares

of common stock.

The 2022 Warrants will be exercisable for five years at an exercise price of $1.25.

The financing will close on or about

April 15, 2022.

2022 Convertible Note will bear interest at 1% per annum payable at maturity and matures ten years from issuance.

The investor may elect

to convert all or part of the 2022 Convertible Note, plus accrued interest, at any time into shares of common stock of the Company at

a conversion price equal to 95% of the average of the highest three trading prices for the common stock during the 20-trading day period

ending one trading day prior to the conversion date but in no event will the conversion price be lower than $0.75 per share.

The investor agreed to restrict

its ability to convert the 2022 Convertible Note and exercise the 2022 Warrants and receive shares of common stock such that the number

of shares of common stock held by the investor after such conversion or exercise does not exceed 4.99% of the then issued and outstanding

shares of common stock.

Further, Investor agreed to not sell or transfer any or all of the shares of common stock underlying the 2022

Convertible Note or the 2022 Warrant for a period of 90 days beginning on the closing date (the “Lock-Up Period”).

the expiration of the Lock-Up Period, the investor has agreed to limit its sale or transfer of such shares of common stock to a maximum

monthly amount equal to 20% of the shares of common stock issuable upon conversion of the 2022 Convertible Note.

The Company agreed to

use its reasonable best efforts to file a registration statement on Form S-3 (or other appropriate form) providing for the resale by the

investor of the shares of common stock underlying the 2022 Convertible Note and the 2022 Warrant.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS

THAT PREVENT INSPECTIONS.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

Below are the names of and certain information regarding our

executive officers and directors as of the date hereof:

Below are the names of and

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

Chairman of the Board of Directors

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Chief Financial Officer

Yue “Charles”

Officers are elected annually by the Board of Directors (subject

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

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

The principal occupation and business experience during at least

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

Yue “Charles” Li

Officers are elected annually

by the Board of Directors (subject to the terms of any employment agreement), at our annual meeting, to hold such officer until an officer’s

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

The principal occupation

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

Wenzhao Lu, Chairman of the Board of Directors

Wenzhao Lu is our Chairman of the Board.

He is a seasoned

healthcare entrepreneur with extensive operational knowledge and experience in China.

He has been serving as Chairman of the Board

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

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

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

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

Wenzhao Lu is our Chairman

of the Board.

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

He has been serving

as Chairman of the Board for the Daopei Medical Group, or DPMG, since 2010.

Under his leadership, DPMG has recently expanded its clinical

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

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

hospitals in China.

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and member of the Academy of Engineering in China.

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

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

Prior to joining DPMG,

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

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

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

Prior to joining DPMG, Mr.

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

(NYSE American:

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

experience in, the healthcare industry.

David Jin, Chief Executive Officer, President and Director

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

and a member of the Board of Directors.

BTX) in 2009.

Lu is qualified

to serve as a director because of his extensive operational knowledge of, and executive level management experience in, the healthcare

David Jin, Chief Executive Officer, President

David Jin, MD, PhD, is

our Chief Executive Officer, President and a member of the Board of Directors.

From 2009 to 2017, Dr.

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

Jin has served as the Chief Medical

Officer of BioTime, Inc.

(NYSE American:

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

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

Cornell Medical College of Cornell University.

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

at Weill Cornell Medical College of Cornell University.

Prior to his current endeavors, Dr.

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

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

scientific abstracts, articles, reviews, and book chapters.

Jin studied medicine at SUNY Downstate College of Medicine in

Brooklyn, New York.

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

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

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

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

and executive level management experience in, the healthcare industry.

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

abstracts, articles, reviews, and book chapters.

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

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

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

Jin was honored as Top Chief

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

Jin is qualified to serve as

a director because of his role with us, and his extensive operational knowledge of, and executive level management experience in, the

healthcare industry.

Meng Li, Chief Operating Officer and Secretary

Meng Li is our Chief Operating Officer and Secretary and

a former member of the Board of Directors.

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

communications, and media investment consultancy.

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

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

Meng Li is our Chief

Operating Officer and Secretary and a former member of the Board of Directors.

Li has over 15 years of executive experience in international

marketing, branding, communications, and media investment consultancy.

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

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

Prior to joining Maxus/Group M, Ms.

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

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

Li received a Bachelor of Arts in International

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Luisa Ingargiola, Chief Financial Officer

Luisa Ingargiola is

our Chief Financial Officer.

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

NASDAQ and NYSE companies.

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

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

through 2016, Ms.

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

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

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

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

Ingargiola is qualified to serve

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

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

Luisa Ingargiola is our Chief

Financial Officer.

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

NYSE companies.

She currently serves as Director and Audit Chair for several public companies including ElectraMeccanica (NASDAQ:SOLO),

AgEagle (NYSE:UAVS) and Progress Acquisition Corporation (NASDAQ:PGRWU).

From 2007 through 2016, Ms.

Ingargiola served as the Chief Financial

Officer and then Director at MagneGas Corporation (Nasdaq:

Prior to 2007, Ms.

Ingargiola held various roles as Budget Director and

Investment Analyst in several private companies.

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

in Business Administration and a concentration in Finance.

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

of South Florida.

Ingargiola is qualified to serve as a Chief Financial Officer because of her extensive knowledge corporate governance,

regulatory requirements, executive leadership and knowledge of, and experience in, financing and M&A transactions.

Sanders, Director

Sanders is a member of the Board of Directors.

January 2017, Mr.

Sanders is a member

of the Board of Directors.

Since January 2017, Mr.

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

From July 2007 until January 2017, Mr.

From July 2007

until January 2017, Mr.

Sanders was a Senior Partner of Ortoli Rosenstadt LLP.

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

firm of Rubin, Bailin, Ortoli, LLP.

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

to the law firm of Rubin, Bailin, Ortoli, LLP.

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

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and Electrameccanica Vehicles Corp.

(OTCQB:ECCTF).

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

Bay Street Theater since February 2015.

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

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

including working with companies in the life sciences industry.

(NASDAQ:SOLO).

Additionally,

he has been a director at the American Academy of Dramatic Arts since October 2013 and has been a director of the Bay Street Theater since

February 2015.

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

Sanders is qualified

to serve as a director because of his corporate, securities and international law experience, including working with companies in the

life sciences industry.

Yancen Lu, Director

Yancen Lu is a member

of the Board of Directors.

Yancen Lu is a member of

the Board of Directors.

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

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

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

Before this, Mr.

Lu was the Managing Director of FountainVest

Lu was the Managing Director of FountainVest Partners.

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

Lu has a special focus and comprehensive

understanding of the global medical and healthcare industry.

He served as Director of leading healthcare corporations including

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

DIH Medical Technologies.

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

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

in, the healthcare industry.

Lu has a special focus and comprehensive understanding

of the global medical and healthcare industry.

He served as Director of leading healthcare corporations including Sino Hospital Investment

Corporation (Hong Kong), Chang’an Hospital (the largest private hospital in Northwest China), and DIH Medical Technologies.

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

Lu is qualified to serve

as a director because of his extensive operational knowledge of, and executive level management experience in, the healthcare industry.

Tauzin II, Director

II is a member of the Board of Directors.

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

Counsel to Alston & Bird LLP.

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

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

top lobbying groups.

He served 12.5 terms in the U.S.

House of Representatives, representing Louisiana’s 3rd Congressional

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

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

Prior to serving as a member

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

Resources Committee and Chief Administration Floor Leader.

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

traded provider of quality home health care.

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

and a Juris Doctor degree from Louisiana State University.

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

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

Tauzin II is a

member of the Board of Directors.

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

Alston & Bird LLP.

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

Research and Manufacturers of America, a trade group that serves as one of the pharmaceutical industry’s top lobbying groups.

served 12.5 terms in the U.S.

House of Representatives, representing Louisiana’s 3rd Congressional District.

From January 2001 through

February 2004, Congressman Tauzin served as Chairman of the House Committee on Energy and Commerce.

He also served as a senior member

of the House Resources Committee and Deputy Majority Whip.

Prior to serving as a member of Congress, Congressman Tauzin was a member of

the Louisiana State Legislature, where he served as Chairman of the House Natural Resources Committee and Chief Administration Floor Leader.

He served as Lead Independent Director of LHC Group, a publicly traded provider of quality home health care, from 2005 to 2021 and retains

the role of Lead Independent Emeritus today.

The Congressman also served on the Board of Entergy, a Fortune 500 company.

the Congressman chartered a Louisiana State Savings and Loan Association and Chaired its first Board.

He received a Bachelor of Arts Degree

from Nicholls State University and a Juris Doctor degree from Louisiana State University.

Congressman Tauzin is qualified to serve as

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

and privately-held companies.

Stilley, III, Director

is a member of the Board of Directors.

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

Adial Pharmaceuticals, Inc.

Stilley is a member

of the Board of Directors.

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

since December 2010.

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

and strategic projects at Clinical Data, Inc.

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

at Clinical Data, Inc.

In September 2021, Mr.

Stilley was appointed to serve as a member of the board of directors of Sysorex,

Inc., where he serves as chair of the audit committee.

From February 2002, Mr.

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in August 2008.

Stilley has advised

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

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

of a number of private companies.

Stilley has advised both public

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

Officer and then Advisor for Diffusion Pharmaceuticals from September 2015 through March 2018, and the COO and CFO of a number of private

Before entering the business community, Mr.

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Marine Corps.

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

in Commerce/Marketing from the McIntire School

of Commerce at the University of Virginia.

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

organization.

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

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

Stilley has an MBA with

honors from the Darden School of Business and a B.S.

in Commerce/Marketing from the McIntire School of Commerce at the University of Virginia.

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

Stilley is qualified to serve

as a director because of his extensive knowledge of the biotechnology industry, significant executive leadership and operational experience,

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

Tevi Troy, Director

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

Deputy Secretary of the U.S.

Tevi Troy is a member of

the Board of Directors and a former Deputy Secretary of the U.S.

Department of Health and Human Services.

Troy has previously been the founder

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

Troy is a Senior Fellow

at the Bipartisan Policy Center in Washington.

He has previously been the founder and CEO of the American Health Policy Institute and

a Senior Fellow at Hudson Institute.

On August 3, 2007, Dr.

Troy was unanimously confirmed by the U.S.

Senate as the Deputy Secretary of HHS.

As Deputy Secretary,

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

and over 67,000 employees.

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

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

Senate as the Deputy Secretary

As Deputy Secretary, Dr.

Troy was the chief operating officer of the largest civilian department in the federal government, with

a budget of $716 billion and over 67,000 employees.

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

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

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

From 1998 to 2000, Dr.

Troy served as the Policy Director for Senator

John Ashcroft.

Troy served as the Policy Director for

Senator John Ashcroft.

From 1996 to 1998, Dr.

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

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

Rivalries in the White House from Truman to Trump,"

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

books of 2020.

Troy’s many other affiliations include:

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

Rivalries in the White

House from Truman to Trump,” which the Wall Street Journal listed as one of the top political books of 2020.

other affiliations include:

contributing editor for Washingtonian magazine;

member of the

publication committee of National Affairs;

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

a Senior Fellow at the Potomac

and a member of the Bipartisan Commission on Biodefense.

member of the publication committee of National Affairs;

of the Board of Fellows of the Jewish Policy Center;

a Senior Fellow at the Potomac Institute;

and a member of the Bipartisan Commission

on Biodefense.

Troy has a B.S.

in Industrial and Labor Relations from

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

in American Civilization from the University of Texas at Austin.

Troy is qualified

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

Yue “Charles”

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

markets in China and the U.S.

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

focus on healthcare in Beijing.

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

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

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

in American Civilization

from the University of Texas at Austin.

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

industry and his significant leadership experience.

Yue “Charles” Li

Li has about 20 years

of experience in M&A and capital markets in China and the U.S.

Li currently is a Managing Director at PagodaTree Partners, a private

equity company with a focus on healthcare in Beijing.

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

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

Previously, Mr.

Li spent 8 years in Deloitte, as a director

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

Li spent 8 years in Deloitte,

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

His key clients included Merrill Lynch, Blackrock,

In his early career, Mr.

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

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

Li received Master’s degree from

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

is a CFA charter holder.

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

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

asset allocation strategy and risk management for multibillion USD portfolios.

Li received Master’s degree from the Olin School

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

He is a CFA charter holder.

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

Board Composition

Our business and affairs are organized under the direction of

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

The primary responsibility of our board of directors is to provide

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

Our board of directors meets on a regular basis

and additionally as required.

A majority of the authorized number of directors constitutes

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

The directors must be present at the meeting to constitute

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

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

Our business and affairs

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

The primary responsibility of our

board of directors is to provide oversight, strategic guidance, counseling, and direction to our management team.

Our board of directors

meets on a regular basis and additionally as required.

A majority of the authorized

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

The directors must be present at the

meeting to constitute a quorum.

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

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

Director Independence

Our board of directors currently consists

of nine members.

board of directors currently consists of nine members.

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

Stilley, III, Steven A.

Sanders, Tevi Troy

and Yue “Charles”

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

listing requirements.

III, Steven A.

Sanders, Tevi Troy and Yue “Charles” Li, qualify as independent directors in accordance with the Nasdaq Capital

Market (“Nasdaq”) listing requirements.

Wenzhao Lu, Dr.

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

Nasdaq’s independence

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

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

dealings with us.

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

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

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

least three (3) years, one of our employees and that neither the director nor any of his or her family members has engaged in

various types of business dealings with us.

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

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

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

In making these determinations, our board of directors

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

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

There are no family relationships among any of our directors

or executive officers.

As required under Nasdaq rules and

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

In making these determinations, our board of directors reviewed

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

as they may relate to us and our management.

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

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

directors are present.

Family Relationships

There are no family relationships among our directors or executive

Board Leadership Structure and Role in Risk Oversight

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

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

The Board receives and reviews periodic reports from management,

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

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

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

While the Board oversees

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

There are no family relationships

among our directors or executive officers.

Board Leadership Structure and Role in Risk

Our Board of Directors, or

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

The Board receives and reviews

periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding our company’s assessment

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

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

While the Board

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

We believe this division

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Involvement in Certain Legal Proceedings

To our knowledge, our directors and executive officers have

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

any bankruptcy petition filed by or against such person

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

two years prior to that time;

any conviction in a criminal proceeding or being subject

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

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

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

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

in banking or securities activities;

being found by a court of competent jurisdiction in a civil

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

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

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

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

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

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

business entity;

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

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

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

To our knowledge, our directors

and executive officers have not been involved in any of the following events during the past ten years:

any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

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

being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities;

being found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

being subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity;

being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Board Committees

Establishment of Board Committees and Adoption of Charters

In November 2018, the Company established a Nominating and Corporate

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

and adopted charters to govern each of the Committees.

In connection with the establishment of the Nominating

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

members to each such committee.

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

set forth in each applicable charter.

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

Company is as follows:

In November 2018, the Company

established a Nominating and Corporate Governance Committee, a Compensation Committee and an Audit Committee (collectively, the “Committees”)

and approved and adopted charters to govern each of the Committees.

In connection with the establishment

of the Nominating and Corporate Governance Committee, Compensation Committee and Audit Committee, the Board of Directors

of the Company appointed members to each such committee.

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

meeting the requirements set forth in each applicable charter.

The membership of these three standing committees of the Board of

Directors of the Company is as follows:

Nominating and Corporate

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Nominating and Corporate Governance Committee

Our board of directors has determined that each of the members

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

defined by Nasdaq.

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

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

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

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

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

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

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

all in accordance with our bylaws and applicable law.

The Governance Committee’s principal functions include:

developing and maintaining our corporate governance policy

Our board of directors has

determined that each of the members of the Nominating and Governance Committee (the “Governance Committee”) are “independent

directors” as defined by Nasdaq.

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

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

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

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

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

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

or new positions on the board of directors or its committees that may occur or be created from time to time, all in accordance with our

bylaws and applicable law.

The Governance Committee’s principal functions include:

developing and maintaining our corporate governance policy guidelines;

developing and maintaining our codes of conduct and ethics;

overseeing the interpretation and enforcement of our Code

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

evaluating the performance of our board of directors, its

committees, and committee chairmen and our directors;

selecting and recommending a slate of director nominees

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

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

During 2020, the Nominating and Corporate Governance Committee

did not meet.

overseeing the interpretation and enforcement of our Code of Conduct and our Code of Ethics for Chief Executive Officer and Senior Financial and Accounting Officers;

evaluating the performance of our board of directors, its committees, and committee chairmen and our directors;

selecting and recommending a slate of director nominees for election at each of our annual meetings of the stockholders and recommending to the board director nominees to fill vacancies or new positions on the board of directors or its committees that may occur from time to time.

During 2021, the Nominating

and Corporate Governance Committee did not meet.

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

A copy of the Governance

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

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

section of the website.

In identifying potential independent board of directors’

candidates with significant senior-level

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

and may engage a search firm in the process.

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

potential nominees.

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

one has been appointed.

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

directors’

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

governance guidelines.

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

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

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

our board of directors.

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

is a prerequisite for each prospective nominee.

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

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

its responsibilities.

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

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

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

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

In identifying potential independent board of directors’ candidates with significant senior-level professional

experience, the Governance Committee solicits candidates from the board of directors, senior management and others and may engage a search

firm in the process.

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

candidate is also introduced and interviewed by the board of directors and the lead director if one has been appointed.

In general, in

considering whether to recommend any particular candidate for inclusion in our board of directors’ slate of recommended director

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

These criteria include the

candidate’s integrity, business acumen, commitment to understanding our business and industry, experience, conflicts of interest

and the ability to act in the interests of our stockholders.

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

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

The Governance Committee does not assign specific

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

We believe that the backgrounds

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

will allow our board of directors to fulfill its responsibilities.

Stockholders may recommend individuals to the Governance Committee

for consideration as potential director candidates by submitting their names, together with appropriate biographical information and background

materials to our Governance Committee.

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

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

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

Audit Committee

We have a separately-designated standing Audit Committee established

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

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

as defined by the rules of Nasdaq

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

We have a separately-designated

standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange

Our board of directors has determined that the members are all “independent directors” as defined by the rules

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

In addition, Mr.

Stilley is an “audit

committee financial expert”

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

Stilley is an “audit

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

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

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

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

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

The Audit Committee’s principal

functions include:

reviewing our annual audited financial statements with management

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

reporting that could significantly affect our financial statements;

reviewing our quarterly financial statements with management and our

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

reviews of the quarterly financial statements;

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

evaluation of the performance of, our independent auditor;

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

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

reviewing periodic reports from our independent auditor regarding our

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

reviewing the adequacy of our overall control environment, including

internal financial controls and disclosure controls and procedures;

reviewing with our management and legal counsel legal matters that may

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

from regulators or governmental agencies.

During 2020, the audit committee met four times.

A copy of the

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

section of the website.

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

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

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

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

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

The Audit Committee’s principal functions include:

reviewing our annual audited financial statements with management and our independent auditors, including major issues regarding accounting and auditing principles and practices and financial reporting that could significantly affect our financial statements;

reviewing our quarterly financial statements with management and our independent auditor prior to the filing of our Quarterly Reports on Form 10-Q, including the results of the independent auditors’ reviews of the quarterly financial statements;

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

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

reviewing periodic reports from our independent auditor regarding our auditor’s independence, including discussion of such reports with the auditor;

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

reviewing with our management and legal counsel legal matters that may have a material impact on our financial statements or our compliance policies and any material reports or inquiries received from regulators or governmental agencies.

During the year ended December

31, 2021, the audit committee met four times.

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

www.avalon-globocare.com in the “Investors” section of the website.

Meetings may be held from

time to time to consider matters for which approval of our Board of Directors is desirable or is required by law.

Compensation Committee

Our compensation

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

Our board of directors has determined that each of the members

are an “independent director”

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

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

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

Our compensation committee

consists of Yancen Lu, Steven Sanders and Tevi Troy.

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

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

The Compensation Committee is responsible

for establishing the compensation of our senior management, including salaries, bonuses, termination arrangements, and other executive

officer benefits as well as director compensation.

The Compensation Committee also administers our equity incentive plans.

year ended December 31, 2021, the Compensation Committee did not meet.

The Compensation Committee is governed by a written charter approved

by the board of directors.

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

the “Investors” section of the website.

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

Officer and reviews and approves compensation decisions regarding senior management including compensation levels and equity incentive

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

The Compensation

Committee also administers our equity incentive plans.

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

met one time.

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

A copy of the

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

“Investors”

section of the website.

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

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

and equity incentive awards.

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

personnel and directors.

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

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

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

The responsibilities of the Compensation Committee, as stated

in its charter, include the following:

review and approve the Company’s compensation guidelines

and structure;

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

with respect to compensation for the Chief Executive Officer;

review and approve on an annual basis the evaluation process

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

periodically review and make recommendations to the Board of Directors

regarding the compensation of non-management directors.

The Compensation Committee is responsible for developing the

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

and compensation programs for the executive team.

Compensation Committee Interlocks and Insider Participation

None of our executive officers currently

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

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

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

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

responsibilities.

The responsibilities of the

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

review and approve the Company’s compensation guidelines and structure;

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

review and approve on an annual basis the evaluation process and compensation structure for the Company’s other officers, including salary, bonus, incentive and equity compensation;

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

The Compensation Committee

is responsible for developing the executive compensation philosophy and reviewing and recommending to the Board of Directors for approval

all compensation policies and compensation programs for the executive team.

Compensation Committee Interlocks and Insider

Participation

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

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

Code of Ethics

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

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

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

Code of Conduct”

section of our

website at www.avalon-globocare.com.

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

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

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

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

We have a code of ethics

that applies to all of our employees, including our principal executive officer, principal financial officer and principal accounting

officer, and the Board.

A copy of this code is available in our employee handbook and under the “About Us – Code of Conduct”

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

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

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

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

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

Indemnification of Directors and Officers

Our directors and executive officers are indemnified as provided

by the Delaware law and our Bylaws.

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

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

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

The indemnification of costs can include an amount paid

to settle an action or satisfy a judgment.

Our directors and executive

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

These provisions state that our directors may cause us to indemnify

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

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

The indemnification of costs can include

an amount paid to settle an action or satisfy a judgment.

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

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

Insofar as indemnification for liabilities arising under the

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

or otherwise.

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

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

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

Insofar as indemnification

for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling us pursuant to

the foregoing provisions, or otherwise.

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

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

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires

the Company’s executive officers, directors, and persons who beneficially own more than ten percent of a registered class of the

Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of the Company’s

common stock.

Such officers, directors, and persons are required by SEC regulation to furnish the Company with copies of all Section 16(a)

forms that they file with the SEC.

To our knowledge, based solely on review of the

copies of such reports and amendments to such reports with respect to the year ended December 31, 2021 filed with the SEC, all required

Section 16 reports under the Exchange Act for our directors, executive officers, principal accounting officer and beneficial owners

of greater than 10% of our common stock were filed on a timely basis during the year ended December 31, 2021.

EXECUTIVE COMPENSATION

Executive Officers’

The following table sets forth information concerning all cash

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

Officer during the last two (2) fiscal years.

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

fiscal year ended December 31, 2020.

Executive Officers’ Compensation

The following table sets

forth information concerning all cash and non-cash compensation awarded to, earned by or paid to our Chief Executive Officer, Chief Financial

Officer and Chief Operation Officer during the last two (2) years.

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

during the fiscal year ended December 31, 2021.

Summary Annual Compensation Table

2 unchanged sentences

Luisa Ingargiola

COO and Secretary

Employment Agreements

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

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

Pursuant to the agreement, Mr.

Jin will be employed as President

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

During the term of the agreement, Mr.

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

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

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

On December 1, 2016, the

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

Pursuant to the agreement,

Jin will be employed as President and Chief Executive Officer of the Company which agreement had a term initially through November

30, 2017 unless earlier terminated pursuant to the terms of the agreement.

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

Jin pursuant to which the term of Dr.

Jin’s Executive Employment Agreement was extended an additional three years and granted

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

During the term of the agreement,

Jin is entitled to a base salary and will be eligible for a discretionary performance bonus, equity awards and to participate in employee

benefits plans as the Company may institute from time to time at the discretion of the Company’s Board of Directors.

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

Jin, pursuant to which his annual base salary set forth in his employment

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

Further, the Company agreed to grant Dr.

Jin additional stock options to

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

Pursuant to the agreement, Mr.

Jin may be terminated

for “cause”

as defined and Mr.

Jin may resign for “good reason”

Jin may be terminated for

“cause” as defined and Mr.

Jin may resign for “good reason” as defined.

In the event Mr.

Jin is terminated

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

Jin all accrued salary and bonuses, reimbursement

for all business expenses and Mr.

Jin’s salary for one year.

Jin is terminated without

cause or resigns for good reason, the Company will be required to pay Mr.

Jin all accrued salary and bonuses, reimbursement for all business

expenses and Mr.

Jin’s salary for one year.

In the event Mr.

Jin is terminated with cause, resigns without

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

Jin all accrued salary and bonuses and reimbursement

for all business expenses.

Under the agreement Mr.

Jin is terminated with cause, resigns without good reason, dies or

is disabled, the Company will be required to pay Mr.

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

the agreement Mr.

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

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

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

January 1, 2019.

Further, the Company agreed to grant Dr.

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

price of $2.00 per share.

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

Jin pursuant to which the term of Dr.

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

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

Jin a Stock Option to acquire 400,000 shares

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

On January 11,

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

Pursuant to the agreement, Ms.

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

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

During the term of the agreement, Ms.

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

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

the discretion of its Board of Directors.

On January 11, 2017, Avalon

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

Pursuant to the agreement,

Li will be employed as Chief Operating Officer and President of Avalon Shanghai initially through November 30, 2019, unless earlier

terminated pursuant to the terms of the agreement.

On February 20, 2020, the Company entered into a Letter Agreement with Meng Li pursuant

to which the term of Ms.

Li’s Executive Employment Agreement entered between the Company’ subsidiary and Ms.

Li dated January

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

Li a Stock Option to acquire 300,000 shares of common stock at an exercise

price of $1.52 per share for a period of ten years.

During the term of the agreement,

Li is be entitled to a base salary and will be eligible for a discretionary performance bonus, equity awards and to participate in

employee benefits plans as the Avalon Shanghai may institute from time to time at the discretion of its Board of Directors.

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

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

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

Further, the Company agreed to grant Ms.

Li stock options to acquire 150,000

shares of common stock at an exercise price of $2.00 per share.

Pursuant to the agreement, Ms.

Li may be terminated for “cause”

defined and Ms.

Li may resign for “good reason”

Li may be terminated for “cause”

as defined and Ms.

Li may resign for “good reason” as defined.

In the event Ms.

Li is terminated without cause or

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

Li all accrued salary and bonuses, reimbursement for all

business expenses and Ms.

Li’s salary for one year.

Li is terminated without cause or resigns

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

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

Li’s salary for one year.

In the event Ms.

Li is terminated with cause, resigns without good

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

Li all accrued salary and bonuses and reimbursement

for all business expenses.

Under the agreement Ms.

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

restrictions.

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

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

January 1, 2019.

Further, the Company agreed to grant Ms.

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

price of $2.00 per share.

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

with Meng Li pursuant to which the term of Ms.

Li’s Executive Employment Agreement entered between the Company’

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

Li a Stock Option to acquire 300,000

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

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

Avalon Shanghai will be required to pay Ms.

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

Under the agreement

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

Luisa Ingargiola

On February 21, 2017, Ms.

Ingargiola and the Company entered

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

Ingargiola agreed to serve as Chief Financial

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

The Company has

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

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

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

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

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

Ingargiola agreed

to serve as Chief Financial Officer in consideration of an annual salary.

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

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

January 1, 2019.

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

on Form 10-K for the year ended December 31, 2017 and the Company raising gross proceeds of $20 million in debt and/or equity capital

and a bonus of 100% of her base salary upon the Company achieving (i) any merger or sale of the Company or its assets, (ii) the Company

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

raising gross proceeds in the amount of $10 million.

The Company also granted Ms.

Ingargiola a Stock Option to acquire two million

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

The Stock Options vest

in 36 equal tranches commencing on the grant date.

Ingargiola a Stock Option to acquire two million shares

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

The Stock Options vest in 36 equal tranches

commencing on the grant date.

The Company and Ms.

1 unchanged sentence

The employment of Ms.

Ingargiola is at will and may be terminated

at any time, with or without formal cause.

Pursuant to the terms of executive retention agreement with Ms.

Ingargiola, the Company

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

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

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

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

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

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

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

Pursuant to the terms of executive retention agreement with

Ingargiola, the Company has agreed to provide specified severance and bonus amounts and to accelerate the vesting on their equity

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

In the event of a termination

upon a change of control, Ms.

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

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

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

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

officer will be accelerated in full.

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

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

In the event of an involuntary termination, Ms.

Ingargiola is

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

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

executive remained in the Company’s employ.

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

the retention agreement.

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

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

In the event of an involuntary

termination, Ms.

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

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

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

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

of the retention agreement.

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

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

for twelve months, at the Company’s expense.

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

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

effective January 1, 2019.

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

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

months, at the Company’s expense.

On February 20, 2020, the

Company entered into a Letter Agreement with Ms.

Ingargiola granting Ms.

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

per share for a period of ten years.

On October 25, 2017, Dr.

Yu Zhou and Genexosome entered into

an Executive Retention Agreement pursuant to which Dr.

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

an annual salary of $160,000.

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

and Non-Solicit Agreement.

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

In addition, Dr.

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

Ingargiola a Stock Option to acquire 400,000 shares of common

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

Option Exercises and Stock Vested

There were no options exercised by our executive officers or

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

There were no options exercised

by our executive officers or stock vested to our executive officers during the year ended December 31, 2021.

Outstanding Equity Awards

The following table sets forth information with respect to the

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

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

The following table sets

forth information with respect to the outstanding equity awards of our principal executive officers and principal financial officer during

2021, and each person who served as an executive officer of the Company as of December 31, 2021:

Outstanding Equity Awards

Option Awards

Unexercisable

Name and principal position

Number of securities underlying unexercised options

Number of securities underlying unexercised options Unexercisable

Equity incentive plan awards:

Number of securities underlying unexercised options

Options exercise price

Option expiration Date

Number of shares or units of stock that have not vested

Market value of shares or units of stock that have not vested

Equity incentive plan awards:

Number of unearned shares, units or other rights that have not vested

incentive plan

shares, units

Luisa Ingargiola, CFO

2/8/2027 and 2/18/2030

Meng Li, COO and Secretary

David Jin, CEO

No Pension Benefits

The Company does not maintain any plan that provides for payments

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

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

The Company does not maintain

any plan that provides for payments or other benefits to its executive officers at, following or in connection with retirement and including,

without limitation, any tax-qualified defined benefit plans or supplemental executive retirement plans.

No Nonqualified Deferred Compensation

The Company does not maintain any defined contribution or other

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

The Company does not maintain

any defined contribution or other plan that provides for the deferral of compensation on a basis that is not tax-qualified.

Director Compensation

Incentive Plan

Pension Value

Fees Earned or Paid in Cash

Option Awards

Non-equity Incentive Plan Compensation

Change in Pension Value and Non-Qualified Deferred Compensation Earnings

All Other Compensation

5 unchanged sentences

William Stilley (6)

Li’s 2020 compensation

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

Lu’s 2020 compensation

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

Tauzin’s 2020 compensation

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

Sanders’s 2020 compensation

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

Troy’s 2020 compensation

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

Stilley’s 2020 compensation

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

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

pursuant to option grants for all independent Directors from 50,000 shares to 80,000 shares annually going forward, which shall

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

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED

STOCKHOLDER MATTERS

Beneficial ownership is determined

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

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

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

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

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

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

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

The following table sets forth certain

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

Li’s 2021 compensation consisted of cash of $60,000 and 80,000 options vested and valued at

Lu’s 2021 compensation consisted of cash of $70,000 and 80,000 options vested and valued at

Tauzin’s 2021 compensation consisted of 200,000 options vested and valued at $163,858.

Sanders’s 2021 compensation consisted of cash of $70,000 and 80,000 options vested and valued

Troy’s 2021 compensation consisted of cash of $60,000 and 80,000 options vested and valued at

Stilley’s 2021 compensation consisted of cash of $70,000 and 80,000 options vested and valued

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL

OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

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

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

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

holders of such options and warrants and are deemed outstanding for the purpose of computing the percentage of ownership of such person,

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

Subject to community

property laws, where applicable, the persons or entities named in the tables below have sole voting and investment power with respect

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

The following table sets forth

certain information, as of March 29, 2022 with respect to the beneficial ownership of the outstanding common stock by (i) any holder of

more than five (5%) percent;

(ii) each of our executive officers and directors;

and (iii) our directors and executive officers

and (iii) our directors and executive officers as a group.

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

Except as otherwise indicated,

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

Except as otherwise indicated, each of the stockholders

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

Name of Beneficial Owner (1)

Common Stock Beneficially

Percentage of

Common Stock (2)

Wenzhao Lu* (3)

9 unchanged sentences

Less than 1.0%.

Except as otherwise indicated, the address of each beneficial

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

Applicable percentage ownership is based on

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

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

Beneficial ownership is determined in accordance

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

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

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

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

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

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

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

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

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

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

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

stock of our company.

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

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

Represents stock option to acquire 170,000 shares of common

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

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

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

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

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

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

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

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

20,000 shares to be vested within 60 days.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Medical Related Consulting Services Revenue from Related

Parties and Accounts Receivable –

Related Party

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

revenue from related parties was as follows:

Except as otherwise indicated, the address of each beneficial owner is c/o Avalon GloboCare Corp., 4400 Route 9 South, Suite 3100, Freehold, New Jersey 07728.

Applicable percentage ownership is based on 88,625,709 shares of common

stock outstanding as of March 29, 2022, together with securities exercisable or convertible into shares of common stock within 60 days

of March 29, 2022 for each stockholder.

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange

Commission and generally includes voting or investment power with respect to securities.

Shares of common stock that are currently exercisable

or exercisable within 60 days of March 29, 2022 are deemed to be beneficially owned by the person holding such securities for the purpose

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

ownership of any other person.

Wenzhao Lu holds (i) 30,945,161 shares of common stock and (ii) 1,500,000 vested options to acquire 1,500,000 shares of common stock of our company.

David Jin holds (i) 15,450,000 shares of common stock and (ii) 550,000 vested options to acquire 550,000 shares of common stock of our company.

Meng Li holds (i) 5,150,000 shares of common stock and (ii) 450,000 vested options to acquire 450,000 shares of common stock of our company.

Represents 2,400,000 vested options to acquire 2,400,000 shares of common stock of our company.

Yancen Lu holds (i) 5,000,000 shares of common stock and (ii) 450,000 options, of which 430,000 shares have vested and an additional 20,000 shares shall vest within 60 days.

Represents stock option to acquire 250,000 shares of common stock of our company, which included 20,000 shares to be vested within 60 days.

Represents stock option to acquire 700,000 shares of common stock of our company, which included 10,000 shares to be vested within 60 days.

Represents stock option to acquire 250,000 shares of common stock of our company, which included 20,000 shares to be vested within 60 days.

Represents stock option to acquire 210,000 shares of common stock of our company, which included 20,000 shares to be vested within 60 days.

CERTAIN RELATIONSHIPS AND RELATED

TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Revenue from Related Party and Rent Receivable – Related Party

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.

The term of the related party lease agreement is five years commencing on May 1, 2021 and will expire on April

For the year ended December 31, 2021, the related party rental revenue amounted to $33,600, and has been included in real property

rental on the accompanying consolidated statements of operations and comprehensive loss.

As of December 31, 2021, the related party rent

receivable totaled $33,600 and no allowance for doubtful accounts was deemed to be required on rent receivable – related party at

December 31, 2021.

Medical Related Consulting

Services Revenue from Related Parties

During the years ended December 31, 2021 and 2020,

medical related consulting services revenue from related parties was as follows:

Years Ended December 31,

Medical related consulting services provided to:

Beijing Daopei *

Shanghai Daopei *

Hebei Daopei *

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

As of December 31, 2020, accounts receivable –

party was $0.

Accounts receivable –

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

accounts is deemed to be required on accounts receivable –

related party at December 31, 2019.

Accrued Liabilities and Other Payables –

Shanghai Daopei *

* Hebei Daopei and Shanghai Daopei are subsidiaries of an entity

whose chairman is Wenzhao Lu, the largest shareholder of the Company.

Accrued Liabilities and Other Payables –

Related Parties

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

As of December 31, 2020 and 2019, the unpaid

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

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

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

related parties on the

accompanying consolidated balance sheets.

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

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

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

related parties on the accompanying consolidated

balance sheets.

In 2017, the Company acquired Beijing Genexosome

for a cash payment of $450,000.

As of December 31, 2021 and 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 consolidated balance sheets.

As of December 31, 2021 and 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 $368,433 and $167,956, respectively, and have been included in accrued liabilities and other payables – related

parties on the accompanying consolidated balance sheets.

Borrowings from Related Party

Promissory Note

On March 18, 2019,

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

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

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

The Company repaid principal of $410,000

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

As of December 31, 2020 and 2019, the

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

On March 18, 2019, the

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

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

The Promissory Note accrues

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

The Company repaid principal of $410,000 and $200,000 in

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

As of December 31, 2021 and 2020, the outstanding principal balance

was $390,000.

Line of Credit

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

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

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

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

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

The loans are unsecured and are not convertible into equity

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.

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

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

The loans are unsecured and are not convertible into

equity of the Company.

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

be payable three years from the date of issuance.

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

of the related party Lender.

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

time prior to maturity, without premium or penalty.

The Line of Credit Agreement includes customary events of default.

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

payable immediately.

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

respectively.

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

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

related party

on the accompanying consolidated statements of operations and comprehensive loss.

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

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

and other payables –

related parties on the accompanying consolidated balance sheets.

Common Shares Sold to Related Party

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

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

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

Common Shares Sold for Cash).

Office Space from Related Party

Beijing Genexosome uses office space of a related party,

free of rent, which is considered immaterial.

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.

In the years ended December 31, 2021 and 2020,

activity recorded for the Line of Credit is summarized in the following table:

Outstanding principal under the Line of Credit at January 1, 2020

Draw down from Line of Credit

Outstanding principal under the Line of Credit at December 31, 2020

Draw down from Line of Credit

Settlement pursuant to Debt Settlement Agreement and Release *

Outstanding principal under the Line of Credit at December 31, 2021

* On December 21, 2021,

the Company and Mr.

Lu entered into and closed a Debt Settlement Agreement and Release pursuant to which the $3.0 million debt was settled

by issuance of the Company’s 2,400,000 shares of common stock.

The 2.4 million shares issued had a fair value of $3 million.

For the years ended December 31, 2021 and 2020,

the interest expense related to above borrowings amounted to $200,477 and $168,762, respectively, and has been included in interest expense

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

As of December 31, 2021

and 2020, the related accrued and unpaid interest for above borrowings was $368,433 and $167,956, respectively, and has been included

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

Common Shares Sold

to Related Party

On April 1, 2020, the Company sold 645,161 shares

of its common stock to WLM Limited (“WLM”), an entity owned by Wenzhao Lu, Chairman of the Board of Directors of the Company,

at a price per share of $1.55, the fair market value on transaction date, for an aggregate purchase price of $1,000,000.

PRINCIPAL ACCOUNTING FEES AND SERVICES

Marcum LLP served as our independent auditors for the years

ended December 31, 2020 and 2019.

Aggregate fees billed to the Company for professional services

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

Marcum LLP served as our

independent auditors for the years ended December 31, 2021 and 2020.

Aggregate fees billed to

the Company for professional services rendered by Marcum LLP during the last two years were as follows:

Years Ended December 31,

Audit Related Fees

All Other Fees

Consists of fees billed for professional

services rendered for the audit of our annual consolidated financial statements, review of the Form 10-K, and review of the interim

consolidated financial statements included in quarterly reports, and services that are normally provided by our independent auditors

in connection with statutory and regulatory filings or engagements, including registration statements.

Consists of fees

billed for professional services rendered for the audit of our annual consolidated financial statements, review of the Form 10-K, and

review of the interim consolidated financial statements included in quarterly reports, and services that are normally provided by our

independent auditors in connection with statutory and regulatory filings or engagements, including registration statements.

AUDIT-RELATED FEES.

Consists of fees billed for assurance and

related services that are reasonably related to the performance of the audit and or review of our consolidated financial statements

and are not reported under “Audit Fees”, such as audits and reviews in connection with acquisitions.

Consists of fees billed for professional services

for tax compliance, tax advice and tax planning.

of fees billed for assurance and related services that are reasonably related to the performance of the audit and or review of our consolidated

financial statements and are not reported under “Audit Fees”, such as audits and reviews in connection with acquisitions.

Consists of fees

billed for professional services for tax compliance, tax advice and tax planning.

ALL OTHER FEES.

Consists of fees for products and services other

than the services reported above.

There were no management consulting services provided in fiscal 2020 or 2019.

POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE

NON-AUDIT SERVICES OF INDEPENDENT AUDITORS

The current policy of the directors, acting as the audit committee,

is to approve the appointment of the principal auditing firm and any permissible audit-related services.

The audit and audit related

fees include fees for the annual audit of the financial statements and review of financial statements included in 10Q filings.

Fees charged by the auditor were approved by the Board with engagement letters signed by the audit committee chairman.

The Audit Committee is responsible for the pre-approval of audit

and permitted non-audit services to be performed by the Company’s independent auditor.

The Audit Committee will, on an annual

basis, consider and, if appropriate, approve the provision of audit and non-audit services by the auditor.

Thereafter, the Audit

Committee will, as necessary, consider and, if appropriate, approve the provision of additional audit and non-audit services by

the auditor which are not encompassed by the Audit Committee’s annual pre-approval and are not prohibited by law.

Committee has delegated to the Chair of the Audit Committee the authority to pre-approve, on a case-by-case basis, non-audit services

to be performed by the auditor.

The Audit Committee has approved all audit and permitted non-audit services performed by the auditor

for the year ended December 31, 2020.

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

There were no management consulting services provided in 2021

POLICY ON AUDIT COMMITTEE

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

The current policy of the

directors, acting as the audit committee, is to approve the appointment of the principal auditing firm and any permissible audit-related

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

included in 10Q filings.

Fees charged by the auditor were approved by the Board with engagement letters signed by the audit committee

The Audit Committee is responsible

for the pre-approval of audit and permitted non-audit services to be performed by the Company’s independent auditor.

The Audit Committee

will, on an annual basis, consider and, if appropriate, approve the provision of audit and non-audit services by the auditor.

the Audit Committee will, as necessary, consider and, if appropriate, approve the provision of additional audit and non-audit services

by the auditor which are not encompassed by the Audit Committee’s annual pre-approval and are not prohibited by law.

The Audit Committee

has delegated to the Chair of the Audit Committee the authority to pre-approve, on a case-by-case basis, non-audit services to be performed

by the auditor.

The Audit Committee has approved all audit and permitted non-audit services performed by the auditor for the year ended

December 31, 2021.

Open Market Sale Agreement SM , dated as of December 13, 2019, by and between Avalon GloboCare Corp.

20 unchanged sentences

(incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 19, 2016)

10.2 &dagger;

Executive Employment Agreement, effective December 1, 2016, by and between Avalon GloboCare Corp.

1 unchanged sentence

Agreement of Sale by and between Freehold Craig Road Partnership, as Seller, and Avalon GloboCare Corp., as Buyer dated as of December 22, 2016 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 23, 2016)

10.4 &dagger;

Executive Employment Agreement by and between Avalon (Shanghai) Healthcare Technology Ltd.

and Meng Li dated January 11, 2017 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 11, 2017)

10.5 &dagger;

Executive Retention Agreement by and between Avalon GloboCare Corp.

and Luisa Ingargiola dated February 21, 2017 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2017)

10.6 &dagger;

Indemnification Agreement by and between Avalon GloboCare Corp.

and Luisa Ingargiola dated February 21, 2017 (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2017)

10.7 &dagger;

Director Agreement by and between Avalon GloboCare Corp.

1 unchanged sentence

Sukel dated April 28, 2017 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 28, 2017)

10.8 &dagger;

Director Agreement by and between Avalon GloboCare Corp.

20 unchanged sentences

and Yu Zhou dated October 25, 2017 (incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 26, 2017)

10.16 &dagger;

Executive Retention Agreement between Genexosome Technologies Inc.

2 unchanged sentences

and Yu Zhou dated October 25, 2017 (incorporated by reference to Exhibit 10.5 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 26, 2017)

10.18 &dagger;

Director Agreement by and between Avalon GloboCare Corp.

3 unchanged sentences

and Tauzin Consultants, LLC dated November 1, 2017 (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on November 7, 2017)

10.20 &dagger;

Letter Agreement by and between Avalon GloboCare Corp.

and David Jin dated April 3, 2018 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 4, 2018)

10.21 &dagger;

Agreement by and between Avalon GloboCare Corp.

16 unchanged sentences

the Securities and Exchange Commission on May 11, 2018)

10.26 &dagger;

Agreement by and between Avalon GloboCare Corp.

5 unchanged sentences

8-K filed with the Securities and Exchange Commission on June 6, 2018)

10.28 &dagger;

Agreement by and between Avalon GloboCare Corp.

1 unchanged sentence

to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 10, 2018)

10.29 &dagger;

Agreement by and between Avalon GloboCare Corp.

16 unchanged sentences

Promissory Note issued to Daniel Lu dated Mach 18, 2019 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 22, 2019)

10.37&dagger;

Director Agreement by and between Avalon GloboCare Corp.

and Meng Li dated April 5, 2019 (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 8, 2019)

10.38&dagger;

Director Agreement by and between Avalon GloboCare Corp.

and Yue “Charles”

Li dated April 5, 2019 (Incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 8, 2019)

and Yue “Charles” Li dated April 5, 2019 (Incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 8, 2019)

Form of Securities Purchase Agreement dated April 25, 2019 (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 26, 2019)

Revolving Line of Credit Agreement dated as of August 29, 2019 between Avalon GloboCare Corp.

and Wenzhao “Daniel”

Lu dated August 29, 2019 (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on September 3, 2019)

and Wenzhao “Daniel” Lu dated August 29, 2019 (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on September 3, 2019)

Form of Warrant Redemption and Cancellation Agreement (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 21, 2019)

5 unchanged sentences

and Luisa Ingargiola dated February 20, 2020 (Incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 24, 2020)

Debt Settlement Agreement and Release between Avalon GloboCare Corp.

and Wenzhao “Daniel” Lu (Incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 12, 2021)

Corporate Research Agreement by and between Avalon GloboCare Corp.

and the University of Pittsburgh of the Commonwealth System of Higher Education dated July 8, 2021 (Incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 14, 2021)

Form of Securities Purchase Agreement dated March 28, 2022

Form of Convertible Note – March 2022

Loan Extension and Modification Agreement between Avalon GloboCare

and Wenzhao Lu dated March 28, 2022

List of Subsidiaries (incorporated by reference to Exhibit 21.1 of the Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on July 20, 2018)

4 unchanged sentences

Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act

XBRL INSTANCE DOCUMENT

XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT

XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT

XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT

XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT

XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT

Inline XBRL Instance Document.

Inline XBRL Taxonomy Extension Schema Document.

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

Inline XBRL Taxonomy Extension Definition Linkbase Document.

Inline XBRL Taxonomy Extension Label Linkbase Document.

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

Filed herewith

2 unchanged sentences

Pursuant to the requirements

of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its

behalf by the undersigned hereunto duly authorized.

of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf

by the undersigned hereunto duly authorized.

AVALON GLOBOCARE CORP.

8 unchanged sentences

(Principal Financial and Accounting Officer)

In accordance with

the Exchange Act, this report has been signed below by the following persons on March 30, 2021, on behalf of the registrant and

in the capacities indicated.

In accordance with the Exchange

Act, this report has been signed below by the following persons on March 30, 2022, on behalf of the registrant and in the capacities indicated.

/s/ David Jin

13 unchanged sentences

/s/ Tevi Troy

/s/ Yue “Charles”

Yue “Charles”

AVALON GLOBOCARE CORP.

/s/ Yue “Charles” Li

Yue “Charles” Li

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2021 and 2020

Report of Independent Registered Public Accounting Firm (PCAOB No.

Consolidated Financial Statements:

December 31, 2020 and 2019

Consolidated Balance Sheets - As of December 31, 2021 and 2020 F-3

Consolidated Statements of Operations and Comprehensive Loss - For the Years Ended December 31, 2021 and 2020 F-4

Consolidated Statements of Changes in Equity - For the Years Ended December 31, 2021 and 2020 F-5

Consolidated Statements of Cash Flows – For the Years Ended December 31, 2021 and 2020 F-6

Notes to Consolidated Financial Statements F-7

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

Avalon GloboCare Corp.

AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

Report of Independent Registered Public Accounting Firm

Consolidated Financial Statements:

Consolidated Balance Sheets - As of December 31, 2020 and 2019

Consolidated Statements of Operations and Comprehensive Loss - For the Years Ended December 31, 2020 and 2019

Consolidated Statements of Changes in Equity - For the Years Ended December 31, 2020 and 2019

Consolidated Statements of Cash Flows – For the Years Ended December 31, 2020 and 2019

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

the Shareholders and Board of Directors of

GloboCare Corp.

on the Financial Statements

have audited the accompanying consolidated balance sheets of Avalon GloboCare Corp.

(the “Company”) as of December

31, 2020 and 2019, the related consolidated statements of operations and comprehensive loss, changes in stockholders’

and cash flows for each of the two years in the period ended December 31, 2020, and the related notes (collectively referred to

as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects,

the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for

each of the two years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the

United States of America.

Paragraph –

Going Concern

accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As more fully described in Note 2, the Company has a significant working capital deficiency, has incurred significant losses and

needs to raise additional funds to meet its obligations and sustain its operations.

These conditions raise substantial doubt about

the Company's ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight

Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but

not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheets of Avalon GloboCare Corp.

(the “Company”) as of December 31, 2021 and 2020, the related consolidated statements

of operations and comprehensive loss, changes in equity and cash flows for each of the two years in the period ended December 31, 2021,

and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present

fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations

and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally

accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying consolidated financial statements

have been prepared assuming that the Company will continue as a going concern.

As more fully described in Note 2, the Company has a significant

working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its

These conditions raise substantial doubt about the Company's ability to continue as a going concern.

Management's plans in

regard to these matters are also described in Note 2.

The consolidated financial statements do not include any adjustments that might

result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility

of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are

required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and

regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged

to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal

control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

Our audits included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Audit Matters

Audit Matters are matters arising from the current period audit of the financial statements that were communicated or required

to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements

and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit

have served as the Company’s auditor since 2019.

Critical Audit Matters

Critical Audit Matters are matters arising from

the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,

subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ Marcum llp

We have served as the Company’s auditor since 2019.

March 30, 2022

AVALON GLOBOCARE CORP.

GLOBOCARE CORP.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

BALANCE SHEETS

CURRENT ASSETS:

Accounts receivable

Accounts receivable - related party

Rent receivable

Deferred financing costs

Prepaid expenses and other current assets

Total Current Assets

receivable - related party

financing costs, net

professional fees

expenses and other current assets

Current Assets

receivable - noncurrent portion

financing costs - noncurrent portion, net

leasing costs

lease right-of-use assets, net

and equipment, net

in real estate, net

method investment

Non-current Assets

Rent receivable - noncurrent portion

Deferred leasing costs

Operating lease right-of-use assets, net

Property and equipment, net

Investment in real estate, net

Equity method investment

Total Non-current Assets

LIABILITIES AND EQUITY

professional fees

research and development fees

payroll liability and directors’ compensation

liabilities and other payables

liabilities and other payables - related parties

lease obligation

payable - related party

Current Liabilities

Accrued professional fees

Accrued research and development fees

Accrued payroll liability and directors’

Accrued liabilities and other payables

Accrued liabilities and other payables - related parties

Operating lease obligation

Tenants’

security deposit

Total Current Liabilities

lease obligation - noncurrent portion

payable - related party

Non-current Liabilities

Operating lease obligation - noncurrent portion

Note payable - related party

Loan payable - related party

Total Non-current Liabilities

Total Liabilities

Commitments and Contingencies - (Note 17)

Preferred stock, $0.0001 par value;

and Contingencies (Note 17)

Preferred stock,

$0.0001 par value;

10,000,000 shares authorized;

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

Common stock, $0.0001 par value;

stock, $ 0.0001 par value;

490,000,000 shares authorized;

1 unchanged sentence

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

Additional paid-in capital

paid-in capital

common stock held in treasury, at cost;

520,000 shares at December 31, 2020 and 2019

Accumulated deficit

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

( 51,131,874 )

( 42,041,375 )

Statutory reserve

Accumulated other comprehensive loss - foreign currency translation adjustment

Total Avalon GloboCare Corp.

stockholders’

Non-controlling interest

Total Liabilities and Equity

See accompanying notes to the consolidated financial

other comprehensive loss - foreign currency translation adjustment

Avalon GloboCare Corp.

stockholders’ equity

Non-controlling

Liabilities and Equity

accompanying notes to the consolidated financial statements.

GLOBOCARE CORP.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

the Years Ended December 31,

Real property rental

Medical related consulting services - related parties

Development services and sales of developed products

Total Revenues

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

property rental

related consulting services - related party

property operating expenses

related consulting services - related party

Costs and Expenses

Real property operating expenses

Medical related consulting services - related parties

Development services and sales of developed products

Total Costs and Expenses

REAL PROPERTY OPERATING INCOME

GROSS PROFIT FROM MEDICAL RELATED CONSULTING SERVICES

GROSS LOSS FROM DEVELOPMENT SERVICES AND SALES OF DEVELOPED PRODUCTS

Total Gross Profit

property operating income

profit from medical related consulting services - related party

OPERATING EXPENSES:

and related benefits

and development expenses

general and administrative

Other Operating Expenses

Professional fees

Compensation and related benefits

Research and development expenses

Other general and administrative

Impairment loss

Total Other Operating Expenses

LOSS FROM OPERATIONS

FROM OPERATIONS

( 8,833,830 )

( 12,454,019 )

OTHER (EXPENSE) INCOME

Interest expense

Interest expense - related party

Change in fair value of warrants liabilities

Financing expense

Loss from equity method investment

Loss from noncontrolling interest deficit adjustment

Other (expense) income

Total Other (Expense) Income, net

LOSS BEFORE INCOME TAXES

INCOME (EXPENSE)

expense - related party

from equity method investment

income (expense)

Other Expense, net

BEFORE INCOME TAXES

( 9,090,499 )

3 unchanged sentences

NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST

NET LOSS ATTRIBUTABLE TO AVALON GLOBOCARE CORP.

LOSS ATTRIBUTABLE TO AVALON GLOBOCARE CORP.

COMMON SHAREHOLDERS

1 unchanged sentence

$ ( 12,679,438 )

COMPREHENSIVE LOSS:

COMPREHENSIVE

$ ( 9,090,499 )

$ ( 12,679,438 )

OTHER COMPREHENSIVE INCOME (LOSS)

Unrealized foreign currency translation gain (loss)

COMPREHENSIVE LOSS

COMPREHENSIVE INCOME

foreign currency translation gain

COMPREHENSIVE

( 9,065,255 )

1 unchanged sentence

COMPREHENSIVE LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST

COMPREHENSIVE LOSS ATTRIBUTABLE TO AVALON GLOBOCARE CORP.

COMPREHENSIVE

LOSS ATTRIBUTABLE TO AVALON GLOBOCARE CORP.

COMMON SHAREHOLDERS

1 unchanged sentence

$ ( 12,612,201 )

NET LOSS PER COMMON SHARE ATTRIBUTABLE TO AVALON GLOBOCARE CORP.

LOSS PER COMMON SHARE ATTRIBUTABLE TO AVALON GLOBOCARE CORP.

COMMON SHAREHOLDERS:

Basic and diluted

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic and diluted

See accompanying notes to the consolidated financial

AVALON GLOBOCARE CORP.

WEIGHTED AVERAGE

COMMON SHARES OUTSTANDING:

accompanying notes to the consolidated financial statements.

AVALON GLOBOCARE

AND SUBSIDIARIES

1 unchanged sentence

For the Years Ended December 31, 2021 and 2020

Avalon GloboCare Corp.

Stockholders’

Preferred Stock

Treasury Stock

Accumulated Other

GloboCare Corp.

Stockholders’ Equity

Comprehensive

Balance, January 1, 2019

January 1, 2020

$ ( 522,500 )

Noncontrolling interest deficit adjustment

Issuance of common stock upon cashless exercise of stock warrants

Issuance of common stock upon cashless exercise of stock options

Sale of common stock, net

Issuance of common stock for services

Stock-based compensation

Foreign currency translation adjustment

Net loss for the year

$ ( 29,361,937 )

$ ( 257,747 )

Balance, December 31, 2019

of common stock, net

of common stock for services

currency translation adjustment

loss for the year

( 12,679,438 )

Sale of common stock, net

Issuance of common stock for services

Stock-based compensation

Foreign currency translation adjustment

Net loss for the year

( 12,679,438 )

December 31, 2020

( 42,041,375 )

Balance, December 31, 2020

of common stock, net

of common stock for settlement of accrued professional fees

of common stock for settlement of loan payable - related party

of common stock for services

currency translation adjustment

loss for the year

( 9,090,499 )

See accompanying notes to the consolidated financial

AVALON GLOBOCARE CORP.

( 9,090,499 )

December 31, 2021

$ ( 522,500 )

$ ( 51,131,874 )

$ ( 165,266 )

accompanying notes to the consolidated financial statements.

AVALON GLOBOCARE

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

CASH FLOWS FROM

OPERATING ACTIVITIES:

$ ( 9,090,499 )

$ ( 12,679,438 )

Adjustments to reconcile net loss to net cash used in

operating activities:

Bad debt provision

Depreciation and amortization

Amortization of straight-line rent receivable

Amortization of use-of-right asset

Stock-based compensation and service expense

Loss from equity method investment

Loss on fixed assets disposal

Changes in warrants derivative liabilities

Allocated financing costs

Impairment loss

Loss from noncontrolling interest deficit adjustment

Changes in operating assets and liabilities:

Accounts receivable

Accounts receivable - related party

Rent receivable

Prepaid expenses - related parties

Prepaid expenses and other current assets

Security deposit

Accrued liabilities and other payables

Accrued liabilities and other payables - related parties

Operating lease obligation

Tenants’

security deposit

NET CASH USED IN OPERATING ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment

Improvement of commercial real estate

Additional investment in equity method investment

NET CASH USED IN INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds received from note payable - related party

Repayments of note payable - related party

Proceeds received from loan payable - related party

Repurchase of warrants

Proceeds received from offering

Disbursements for offering costs

Repayments of loan payable

NET CASH PROVIDED BY FINANCING ACTIVITIES

EFFECT OF EXCHANGE RATE ON CASH

NET DECREASE IN CASH

CASH - beginning of year

CASH - end of year

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid for:

NON-CASH INVESTING AND FINANCING ACTIVITIES:

Property and equipment acquired on credit as payable

Common stock issued for future services

Common stock issued for accrued liabilities

See accompanying notes to the consolidated financial statements.

AVALON GLOBOCARE CORP.

to reconcile net loss to net

cash used in operating activities:

debt provision

in straight-line rent receivable

of right-of-use asset

compensation and service expense

on equity method investment

on fixed assets disposal

in operating assets and liabilities:

receivable - related party

leasing costs

expenses and other assets

liabilities and other payables

liabilities and other payables - related parties

lease obligation

CASH USED IN OPERATING ACTIVITIES

( 5,024,479 )

( 7,546,100 )

FLOWS FROM INVESTING ACTIVITIES:

of property and equipment

of commercial real estate

investment in equity method investment

USED IN INVESTING ACTIVITIES

FLOWS FROM FINANCING ACTIVITIES

of note payable - related party

received from loan payable - related party

received from equity offering

Disbursements

for equity offering costs

CASH PROVIDED BY FINANCING ACTIVITIES

OF EXCHANGE RATE ON CASH

INCREASE (DECREASE) IN CASH

beginning of year

- end of year

DISCLOSURE OF CASH FLOW INFORMATION:

INVESTING AND FINANCING ACTIVITIES:

stock issued for future services

stock issued for accrued liabilities

financing costs in accrued liabilities

professional fees relieved for shares issued

party loan settled in shares

accompanying notes to the consolidated financial statements.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND NATURE

OF OPERATIONS

Avalon GloboCare Corp.

(the “Company”

or “AVCO”) is a Delaware corporation.

The Company was incorporated under the laws of the State of Delaware on July

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

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

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

common stock (the “AHS Acquisition”).

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

For accounting purposes, AHS was the surviving

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

surviving and continuing entity although the Company is the legal acquirer.

The Company did not recognize goodwill or any intangible

assets in connection with this transaction.

Accordingly, the Company’s historical financial statements are those of AHS and

its wholly-owned subsidiary, Avalon (Shanghai) Healthcare Technology Co., Ltd.

(“Avalon Shanghai”) immediately following

the consummation of this reverse merger transaction.

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

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

Avalon Shanghai was incorporated

on April 29, 2016 and is engaged in medical related consulting services for customers.

The Company is a

clinical-stage, vertically integrated, leading CellTech bio-developer dedicated to advancing and empowering innovative, transformative

immune effector cell therapy, exosome technology, as well as COVID-19 related diagnostics and therapeutics.

The Company also provides

strategic advisory and outsourcing services to facilitate and enhance its clients’

growth and development, as well as competitiveness

in healthcare and CellTech industry markets.

Through its subsidiary structure with unique integration of verticals from innovative

R&D to automated bioproduction and accelerated clinical development, the Company is establishing a leading role in the fields

of cellular immunotherapy (including CAR-T/NK), exosome technology (ACTEX™), and regenerative therapeutics.

On January 23, 2017, the Company incorporated

Avalon (BVI) Ltd., a British Virgin Island company.

There was no activity for the subsidiary since its incorporation through December

TO CONSOLIDATED FINANCIAL STATEMENTS

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

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”).

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 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 COVID-19 related vaccine and 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 December 31, 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, NJ 07728.

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.

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

Currently, the occupancy rate of the building is 83.7%.

On July 31, 2017, the Company formed Genexosome

Technologies Inc.

(“Genexosome”) in Nevada.

Genexosome is engaged in developing proprietary diagnostic and therapeutic

products using exosomes.

Effective October 25, 2017, Genexosome owns 100% of the capital stock of Beijing Jieteng (Genexosome)

Biotech Co., Ltd., a corporation incorporated in the People’s Republic of China on August 7, 2015 (“Beijing Genexosome”),

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

March 24, 2022, the occupancy rate of the building is 83.5 %.

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

(“Genexosome”) in Nevada.

Genexosome was engaged in developing

proprietary diagnostic and therapeutic products using exosomes.

Genexosome owns 100 % of the capital stock of Beijing Jieteng (Genexosome)

Biotech Co., Ltd., a corporation incorporated in the People’s Republic of China on August 7, 2015 (“Beijing Genexosome”),

and the Company holds 60 % of Genexosome and Dr.

Yu Zhou holds 40 % of Genexosome.

Beijing Genexosome is engaged in providing development

services and selling developed items to customers in China.

On July 18, 2018, the Company formed a wholly

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

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

CAR-NK, TCR-T and others.

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

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

On June 13, 2019, the Company formed a wholly

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

There was no activity for the subsidiary since its

incorporation through December 31, 2020.

AVALON GLOBOCARE CORP.

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.

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 December 31, 2021.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND NATURE

OF OPERATIONS (continued)

Details of the Company’s subsidiaries

which are included in these consolidated financial statements as of December 31, 2020 are as follows:

TO CONSOLIDATED FINANCIAL STATEMENTS

1 – ORGANIZATION AND NATURE OF OPERATIONS (continued )

of the Company’s subsidiaries which are included in these consolidated financial statements as of December 31, 2021 are as follows:

of Subsidiary

Incorporation

Percentage of

Avalon Healthcare System, Inc.

(“AHS”)

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”)

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

British Virgin Island

1 unchanged sentence

100% held by AVCO

Dormant, is in process of being dissolved

Avalon RT 9 Properties LLC

(“Avalon RT 9”)

is in process of being dissolved

RT 9 Properties LLC

February 7, 2017

1 unchanged sentence

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

Avalon (Shanghai) Healthcare Technology Co.,

(“Avalon Shanghai”)

(Shanghai) Healthcare Technology Co., Ltd.

April 29, 2016

1 unchanged sentence

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

Genexosome Technologies Inc.

(“Genexosome”)

Technologies Inc.

(“Genexosome”)

July 31, 2017

60% held by AVCO

Develops proprietary diagnostic and therapeutic products using exosomes

Beijing Jieteng (Genexosome) Biotech Co., Ltd.

(“Beijing Genexosome”)

Jieteng (Genexosome) Biotech Co., Ltd.

August 7, 2015

100% held by Genexosome

Provides development services for hospitals and other customers and sells developed items to hospitals and other customers in China

Avactis Biosciences Inc.

(“Avactis”)

Biosciences Inc.

July 18, 2018

1 unchanged sentence

Integrate and optimize global scientific and clinical resources to further advance cellular therapies, including regenerative medicine with stem/progenitor cells as well as cellular immunotherapy including CAR-T, CAR-NK, TCR-T and others to treat certain cancers

International Exosome Association LLC

(“Exosome”)

International

Exosome Association LLC

June 13, 2019

1 unchanged sentence

Promotes standardization related to exosome industry

2 – BASIS OF PRESENTATION AND GOING CONCERN CONDITION

Basis of Presentation

The accompanying consolidated financial statements

and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America

GAAP”) and with the rules and regulations of the U.S.

Securities and Exchange Commission for financial information.

The Company’s consolidated financial

statements include the accounts of the Company and its subsidiaries.

All significant intercompany accounts and transactions have

been eliminated in consolidation.

AVALON GLOBOCARE CORP.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Going Concern

The Company is a

clinical-stage, vertically integrated, leading CellTech bio-developer dedicated to advancing and empowering innovative, transformative

immune effector cell therapy, exosome technology, as well as COVID-19 related diagnostics and therapeutics.

The Company also provides

strategic advisory and outsourcing services to facilitate and enhance its clients’

growth and development, as well as competitiveness

in healthcare and CellTech industry markets.

Through its subsidiary structure with unique integration of verticals from innovative

R&D to automated bioproduction and accelerated clinical development, the Company is establishing a leading role in the fields

of cellular immunotherapy (including CAR-T/NK), exosome technology (ACTEX™), and regenerative therapeutics.

In addition, the Company owns commercial real

estate that houses its headquarters in Freehold, New Jersey and provides outsourced, customized

international healthcare services to the rapidly changing health care industry primarily focused in the People’s Republic

The Company did not generate any revenue from development services and sales of developed products segment during

the year ended December 31, 2020.

These consolidated financial statements have been prepared assuming that the Company will continue

as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the

normal course of business.

As reflected in the accompanying consolidated

financial statements, the Company has incurred recurring net

loss and generated negative cash flow from operating activities of $12,679,438 and $7,546,100 for the year ended December 31, 2020,

respectively.

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

medical consulting services to its only few clients who are related parties and generating rental revenue from its income-producing

real estate property in New Jersey and performing development services for hospitals and other customers and sales of developed

products to hospitals and other customers;

hence generating revenues, and obtaining additional financing to fund future obligations

and pay liabilities arising from normal business operations.

In addition, the current cash balance cannot be projected to cover

the operating expenses for the next twelve months from the release date of this report.

These matters raise substantial doubt about

the Company’s ability to continue as a going concern.

The ability of the Company to continue as a going concern is dependent

on the Company’s ability to raise additional capital, implement its business plan, and generate significant revenues.

are no assurances that the Company will be successful in its efforts to generate significant revenues, maintain sufficient cash

TO CONSOLIDATED FINANCIAL STATEMENTS

2 – BASIS OF PRESENTATION AND GOING CONCERN CONDITION

of Presentation

accompanying consolidated financial statements and related notes have been prepared in accordance with accounting principles generally

accepted in the United States of America (“U.S.

GAAP”) and with the rules and regulations of the U.S.

Securities and Exchange

Commission for financial information.

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

All significant intercompany

accounts and transactions have been eliminated in consolidation.

Company is a clinical-stage, vertically integrated, leading CellTech bio-developer dedicated to advancing and empowering innovative,

transformative immune effector cell therapy, exosome technology, as well as COVID-19 related diagnostics and therapeutics.

also provides strategic advisory and outsourcing services to facilitate and enhance its clients’ growth and development, as well

as competitiveness in healthcare and CellTech industry markets.

Through its subsidiary structure with unique integration of verticals

from innovative R&D to automated bioproduction and accelerated clinical development, the Company is establishing a leading role in

the fields of cellular immunotherapy (including CAR-T/NK), exosome technology (ACTEX™), and COVID-19 related vaccine and 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 consolidated financial statements have been prepared assuming that the Company will continue as

a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal

course of business.

reflected in the accompanying consolidated financial statements, the Company had a working capital deficit of $ 3,078,616 as of December

31, 2021 and has incurred recurring net losses and generated negative cash flow from operating activities of $ 9,090,499 and $ 5,024,479 for

the year ended December 31, 2021, respectively.

The Company has a limited operating history and its continued growth is dependent upon

the continuation of providing medical related 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.

The occurrence of an uncontrollable event

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

Some tenants have delayed on rent payment

and our occupancy of our rental property has decreased in 2020.

Most tenants are paid up to date and our occupancy has increased

from 83.7% to 89.4% in subsequent period.

Our general development operations have continued during the COVID-19 pandemic and we

have not had significant disruption.

However, we are uncertain if the COVID-19 pandemic will impact future operations at our laboratory,

or our ability to collaborate with other laboratories and universities.

In addition, we are unsure if the COVID-19 pandemic will

impact future clinical trials.

Given the dynamic nature of these circumstances, the duration of business disruption and reduced

traffic, the related financial effect cannot be reasonably estimated at this time but is expected to adversely impact the Company’s

business for the year of 2021.

The accompanying consolidated financial statements

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

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

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES

Use of Estimates

The preparation

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

GAAP requires management to make estimates and assumptions

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 years ended December 31, 2020 and 2019 include the useful life

of property and equipment and investment in real estate, assumptions used in assessing impairment of long-term assets,

valuation of deferred tax assets and the associated valuation allowances, and valuation of stock-based compensation.

AVALON GLOBOCARE CORP.

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 year of 2022.

accompanying consolidated financial statements do not include any adjustments related to the recoverability or classification of asset-carrying

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

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

Fair Value of Financial Instruments

and Fair Value Measurements

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

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

inputs used in measuring fair value as follows :

● Level 1-Inputs are unadjusted quoted prices in active markets

TO CONSOLIDATED FINANCIAL STATEMENTS

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

preparation of the 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 years ended December 31, 2021 and 2020 include the useful life of property and equipment and investment

in real estate, assumptions used in assessing impairment of long-term assets, valuation of deferred tax assets and the associated valuation

allowances, and valuation of stock-based compensation.

Value of Financial Instruments and Fair Value Measurements

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

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

used in measuring fair value as follows :

1-Inputs are unadjusted quoted prices in active markets

for identical assets or liabilities available at the measurement date.

● 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.

Assets and liabilities

measured at fair value on a nonrecurring basis.

Certain assets and liabilities are measured at fair value on a nonrecurring

These assets and liabilities are not measured at fair value on an ongoing basis, but are subject to fair value adjustments

in certain circumstances.

These assets and liabilities can include intangible assets that are written down to fair value when they

are impaired.

Intangible assets.

The factors used to determine fair value are subject to management’s judgment and expertise and include, but are not

limited to, lower sales of the product than anticipated and future ability to use the product.

These assumptions represent Level

Impairment of intangible assets for the year ended December 31, 2020 and 2019 was $0 and $1,010,011, respectively.

Assets and liabilities

measured at fair value on a recurring basis.

Certain assets and liabilities are measured at fair value on a recurring basis.

These assets and liabilities are measured at fair value on an ongoing basis.

These assets and liabilities include derivative liabilities.

Derivative liabilities are carried at fair value and measured on an ongoing basis.

The Company did not have derivative

liabilities in the year ended December 31, 2020.

The table below reflects the activity of derivative liabilities measured at fair

value for the year ended December 31, 2019:

Significant Unobservable

Balance of derivative liabilities as of January 1, 2019

Initial fair value of derivative liabilities attributable to warrants issuance with fund raise

Gain from change in the fair value of derivative liabilities

Warrants were redeemed and cancelled

Balance of derivative liabilities as of December 31, 2019

The carrying amounts reported in the consolidated balance sheets

for cash, rent receivable, accrued liabilities and other payables, accrued liabilities and other payables –

related parties,

operating lease obligation, tenants’

security deposit, approximate their fair market value as of December 31, 2020 and 2019

based on the short-term maturity of these instruments.

ASC 825-10 “Financial Instruments”,

allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option).

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

the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings

at each subsequent reporting date.

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

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

Cash Equivalents

At December 31, 2020 and 2019, the Company’s

cash balances by geographic area were as follows:

2-Inputs are unadjusted quoted prices for similar assets

and liabilities in active markets, quoted prices for identical or similar assets and liabilities

in markets that are not active, inputs other than quoted prices that are observable, and

inputs derived from or corroborated by observable market data.

3-Inputs are unobservable inputs which reflect the

reporting entity’s own assumptions on what assumptions the market participants would

use in pricing the asset or liability based on the best available information.

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 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

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

United States

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

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

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

The Company had no cash equivalents at December 31, 2020

Credit Risk and Uncertainties

A portion of the Company’s cash is maintained

with state-owned banks within the PRC.

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

(approximately $77,000) per bank.

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

At December 31, 2020, cash

balances held in the PRC are RMB 1,089,733 (approximately $167,000), of which, RMB 563,458 (approximately $86,000) was not covered

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

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

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 $79,000) per bank.

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

At December 31, 2021, cash balances held in the PRC were RMB 253,813 (approximately $ 40,000 ), which were covered

by such limited insurance.

The Company has not experienced any losses in such accounts and believes it is not exposed to any risks

on its cash in bank accounts.

The Company maintains a portion of its cash

in bank and financial institution deposits within U.S.

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

manages this credit risk by concentrating its cash balances in high quality financial institutions and by periodically evaluating

the credit quality of the primary financial institutions holding such deposits.

The Company has not experienced any losses in such

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

At December 31, 2020, the Company’s

cash balances in United States bank accounts had approximately $51,000 in excess of the federally-insured limits.

Currently, a portion of the Company’s

operations are carried out in PRC.

Accordingly, the Company’s business, financial condition and results of operations may

be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC’s economy.

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

companies in North America.

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

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

among other things.

Financial instruments which potentially subject

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

A portion of the Company’s

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

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

The Company 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 December 31, 2021, the

Company’s cash balances in United States bank accounts had approximately $ 228,000 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.

Rent Receivable and Allowance for Doubtful Accounts

Rent receivable is presented net of an allowance

for doubtful accounts.

Rent receivable balance consists of base rents, tenant reimbursements and receivables arising from straight-lining

of rents represent amounts accrued and unpaid from tenants in accordance with the terms of the respective leases, subject to the

Company’s revenue recognition policy.

An allowance for the uncollectible portion of rent receivable is determined based upon

an analysis of the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in

which the tenant operates and economic conditions in Freehold, New Jersey in which the property is located.

Management believes that the rent receivable

is fully collectable.

Therefore, no allowance for doubtful accounts is deemed to be required on its rent receivable at December

31, 2020 and 2019.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

Receivable and Allowance for Doubtful Accounts

receivable is presented net of an allowance for doubtful accounts.

Rent receivable balance consists of base rents, tenant reimbursements

and receivables arising from straight-lining of rents represent amounts accrued and unpaid from tenants in accordance with the terms

of the respective leases, subject to the Company’s revenue recognition policy.

An allowance for the uncollectible portion of rent

receivable is determined based upon an analysis of the tenant’s payment history, the financial condition of the tenant, business

conditions in the industry in which the tenant operates and economic conditions in Freehold, New Jersey in which the property is located.

believes that the rent receivable is fully collectable.

Therefore, no allowance for doubtful accounts is deemed to be required on its

rent receivable at December 31, 2021 and 2020.

Deferred Financing Costs

Deferred financing

costs consist of legal, accounting and other costs that are directly related to the Company’s open market sale equity financing

and will be charged to stockholders’

equity upon the completion of the equity offering.

financing costs consist of legal, accounting and other costs that are directly related to the Company’s open market sale equity

financing and will be charged to stockholders’ equity upon the completion of the equity offering.

As of December 31, 2021 and 2020,

1 unchanged sentence

Deferred Leasing Costs

Costs incurred to

obtain tenant leases are amortized using the straight-line method over the term of the related lease agreement.

Such costs include

lease incentives and leasing commissions.

incurred to obtain tenant leases are amortized using the straight-line method over the term of the related lease agreement.

include lease incentives and leasing commissions.

If the lease is terminated early, the remaining unamortized deferred leasing cost is

Property and Equipment

Property and equipment are carried at cost

and are depreciated on a straight-line basis over the estimated useful lives of the assets.

The cost of repairs and maintenance

is expensed as incurred;

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued )

and Equipment

and equipment are carried at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets.

of repairs and maintenance is expensed as incurred;

major replacements and improvements are capitalized.

When assets are retired or disposed of, the cost

and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the period

of disposition.

When assets are retired or disposed

of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in

the period of disposition.

The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances

reflect the fact that their recorded value may not be recoverable.

Investment In Real

Estate and Depreciation

Investment in real estate is carried at cost

less accumulated depreciation and consists of building and improvement.

The Company depreciates real estate building and improvement

on a straight-line basis over estimated useful life.

Expenditures for ordinary repair and maintenance costs are charged to expense

Expenditure for improvements, renovations, and replacements of real estate asset is capitalized and depreciated over

its estimated useful life if the expenditure qualifies as betterment.

Investment in Unconsolidated

Company – Epicon Biosciences Co., Ltd.

The Company uses the equity method of accounting

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

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

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

If the Company considers any decline to

be other than temporary (based on various factors, including historical financial results and the overall health of the investee),

then a write-down would be recorded to estimated fair value.

See Note 7 for discussion of equity method investment.

Impairment of Long-lived Assets

In accordance with ASC Topic 360, the Company

reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets

may not be fully recoverable, or at least annually.

The Company recognizes an impairment loss when the sum of expected undiscounted

future cash flows is less than the carrying amount of the asset.

The amount of impairment is measured as the difference between

the asset’s estimated fair value and its book value.

In September 2019, the Company assessed its

long-lived assets for any impairment and concluded that there were indicators of impairment as of September 30, 2019 and it calculated

that the estimated undiscounted cash flows related to the sales of the exosome isolation systems were less than the carrying amount

of the intangible assets.

Based on its analysis, the Company recognized an impairment loss of $1,010,011 for the year ended December

31, 2019, which reduced the value of intangible assets acquired to $0.

The Company did not record any impairment charge for the

year ended December 31, 2020.

Deferred Rental Income

Deferred rental income represents rental income

collected but not earned as of the reporting date.

The Company defers the revenue related to lease payments received from tenants

in advance of their due dates.

As of December 31, 2020 and 2019, deferred rental income totaled $23,510 and $13,136, respectively,

which were included in accrued liabilities and other payables on the accompanying consolidated balance sheets.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

Value Added Tax

Avalon Shanghai and Beijing Genexosome are

subject to a value added tax (“VAT”) for providing medical related consulting services and performing development services

and sales of developed products.

The amount of VAT liability is determined by applying the applicable tax rates to the invoiced

amount of medical related consulting services provided and the invoiced amount of development services provided and sales of developed

products (output VAT) less VAT paid on purchases made with the relevant supporting invoices (input VAT).

The Company reports revenue

net of PRC’s value added tax for all the periods presented in the consolidated statements of operations and comprehensive

Revenue Recognition

The Company recognizes revenue under Accounting Standards Codification

(“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”).

The core principle of the revenue

standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount

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

The following

five steps are applied to achieve that core principle:

Identify the contract with the customer

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.

The transaction price is the amount of consideration

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

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

The consideration promised in a contract with a customer

may include fixed amounts, variable amounts, or both.

Variable consideration is included in the transaction price only to the extent

that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty

associated with the variable consideration is subsequently resolved.

The transaction price is allocated to each

performance obligation on a relative standalone selling price basis.

The transaction price allocated to each performance obligation

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

AVALON GLOBOCARE CORP.

In Real Estate and Depreciation

in real estate is carried at cost less accumulated depreciation and consists of building and improvement.

The Company depreciates real

estate building and improvement on a straight-line basis over estimated useful life.

Expenditures for ordinary repair and maintenance

costs are charged to expense as incurred.

Expenditure for improvements, renovations, and replacements of real estate asset is capitalized

and depreciated over its estimated useful life if the expenditure qualifies as betterment.

in Unconsolidated Company – Epicon Biosciences Co., Ltd.

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

which it does exert significant influence.

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

below its carrying value whenever adverse events or changes in circumstances indicate that recorded value may not be 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 7 for discussion of equity method

of Long-lived Assets

accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate

that the carrying amount of the assets may not be fully recoverable, or at least annually.

The Company recognizes an impairment loss

when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset.

The amount of impairment is measured

as the difference between the asset’s estimated fair value and its book value.

The Company did not record any impairment charge

for the years ended December 31, 2021 and 2020.

Rental Income

rental income represents rental income collected but not earned as of the reporting date.

The Company defers the revenue related to lease

payments received from tenants in advance of their due dates.

As of December 31, 2021 and 2020, deferred rental income totaled $ 8,638

and $ 23,510 , respectively, which were included in accrued liabilities and other payables on the accompanying consolidated balance sheets.

Shanghai is subject to a value added tax (“VAT”) for providing medical related consulting services.

The amount of VAT liability

is determined by applying the applicable tax rates to the invoiced amount of medical related consulting services provided (output VAT)

less VAT paid on purchases made with the relevant supporting invoices (input VAT).

The Company reports revenue net of PRC’s value

added tax for all the periods presented in the consolidated statements of operations and comprehensive loss.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

Revenue Recognition

Types of revenue:

● Service fees under consulting agreements with related parties

to provide medical related consulting services to its clients.

The Company is paid for its services by its clients pursuant to

the terms of the written consulting agreements.

Each contract calls for a fixed payment.

● Service fees under agreements to perform development services

for hospitals and other customers.

The Company does not perform contracts that are contingent upon successful results .

● Sales of developed products to hospitals and other customers .

Revenue recognition

● The Company recognizes revenue by providing medical related

consulting services under written service contracts with its customers.

Revenue related to its service offerings is recognized

as the services are performed.

● Revenue from development services performed under written

contracts is recognized as services are provided .

● Revenue from sales of developed items to hospitals and other

customers is recognized when items are shipped to customers and titles are transferred .

The Company has determined that the ASC 606

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

Rental income from operating leases is recognized

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

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

over the term of the related leases.

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

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

The Company does not offer promotional payments,

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

Disaggregation

In the following tables,

revenue is disaggregated by segment:

For the Year Ended December 31, 2020

Medical Related

Services Segment

Development Services

Products Segment

Medical related consulting services

Development services and sales of developed products

Total revenues

For the Year Ended December 31, 2019

Medical Related

Services Segment

Development Services

Products Segment

Medical related consulting services

Development services and sales of developed products

Total revenues

AVALON GLOBOCARE CORP.

TO CONSOLIDATED FINANCIAL STATEMENTS

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued )

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

Identify the performance

obligations in the contract

Determine the transaction

Allocate the transaction

price to the performance obligations in the contract

Recognize revenue when

the company satisfies a performance obligation

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

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

A performance obligation meets ASC 606’s definition

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

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 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 CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

When a lease contains “rent holidays”,

the Company records rental expense on a straight-line basis over the term of the lease and the difference between the average rental

amount charged to expense and the amount paid under the lease is recorded as prepaid expenses in the consolidated balance sheets.

TO CONSOLIDATED FINANCIAL STATEMENTS

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued )

a lease contains “rent holidays”, the Company records rental expense on a straight-line basis over the term of the lease.

The Company begins recording rent expense on the lease possession date.

Real Property Operating Expenses

Real property operating expenses consist of

property management fees, property insurance, real estate taxes, depreciation, repairs and maintenance fees, utilities and other

expenses related to the Company’s rental properties.

Medical Related Consulting Services Costs

Costs of medical related consulting services

include the cost of labor and related benefits, travel expenses related to consulting services, other related consulting costs,

Real Property

Operating Expenses

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

fees, utilities and other expenses related to the Company’s rental properties.

Related Consulting Services Costs

of medical related consulting services include the cost of labor and related benefits, travel expenses related to consulting services,

and other overhead costs.

Development Services and Sales of Developed

Products Costs

Costs of development services and sales of

developed items include inventory costs, materials and supplies costs, labor and related benefits, depreciation, other overhead

costs and shipping and handling costs incurred.

Research and Development

Expenditures for research and product development

costs are expensed as incurred.

The Company incurred research and development expense of $883,855 and $1,781,869 in the years ended

December 31, 2020 and 2019, respectively.

Advertising Costs

All costs related to advertising are expensed

For the years ended December 31, 2020 and 2019, advertising costs amounted to $294,352 and $685,064, respectively.

Stock-based Compensation

The Company accounts for its stock-based compensation awards in accordance with Accounting Standards Codification

(“ASC”) Topic 718, Compensation—Stock Compensation (“ASC 718”).

ASC 718 requires all stock-based

payments to employees and non-employees including grants of stock options, to be recognized as expense in the statements of operations

based on their grant date fair values.

The Company estimates the grant date fair value of each option award using the Black-Scholes

option-pricing model.

The Company periodically issues common stock

and common stock options to consultants for various services.

Costs of these transactions are measured at the fair value of the

service received or the fair value of the equity instruments issued, whichever is more reliably measurable.

The value of the common

stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity

instruments is reached or (ii) the date at which the counterparty’s performance is complete.

The Company is governed by the income tax laws

of China and the United States.

The Company accounts for income taxes using the asset/liability method prescribed by ASC 740, “Income

Taxes.”

Under this method, deferred tax assets and liabilities are determined based on the difference between the financial

reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences

are expected to reverse.

The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available

evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized.

The effect on

deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.

AVALON GLOBOCARE CORP.

and Development

for research and product development costs are expensed as incurred.

The Company incurred research and development expense of $ 1,025,009

and $ 883,855 in the years ended December 31, 2021 and 2020, respectively.

costs related to advertising are expensed as incurred.

For the years ended December 31, 2021 and 2020, advertising costs amounted to

$ 328,565 and $ 294,352 , respectively.

Company accounts for its stock-based compensation awards in accordance with Accounting Standards Codification (“ASC”) Topic

718, Compensation—Stock Compensation (“ASC 718”).

ASC 718 requires all stock-based payments to employees and non-employees

including grants of stock options, to be recognized as expense in the statements of operations based on their grant date fair values.

The Company estimates the grant date fair value of each option award using the Black-Scholes option-pricing model.

Company periodically issues common stock and common stock options to consultants for various services.

Costs of these transactions are

measured at the fair value of the service received or the fair value of the equity instruments issued, whichever is more reliably measurable.

The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty

to earn the equity instruments is reached or (ii) the date at which the counterparty’s performance is complete.

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

The Company accounts for income taxes using the asset/liability

method prescribed by ASC 740, “Income Taxes.” Under this method, deferred tax assets and liabilities are determined based

on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect

in the period in which the differences are expected to reverse.

The Company records a valuation allowance to offset deferred tax assets

if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will

not be realized.

The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the

enactment date.

Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes”.

that guidance, the benefit for tax positions taken can only be recognized in the financial statements when it is more likely than not

the position will be sustained upon examination by the tax authorities.

As of December 31, 2021 and 2020, the Company had no significant

uncertain tax positions which would require either recognition of a liability or disclosure in the financial statements.

For United States

entities, tax year that remains subject to examination is the years ended December 31, 2021, 2020, 2019 and 2018.

For China entities,

income tax returns for the tax years ended December 31, 2017 through December 31, 2021 remain open for statutory examination by PRC tax

The Company recognizes interest and penalties related to significant uncertain income tax positions in income

tax expense .

However, no such interest and penalties were recorded as of December 31, 2021 and 2020.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued )

Income Taxes (continued)

The Company follows

the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes”.

guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position

will be sustained upon examination by the tax authorities.

As of December 31, 2020 and 2019, the Company had no significant uncertain

tax positions that qualify for either recognition or disclosure in the financial statements.

Tax year that remains subject to examination

is the years ended December 31, 2020, 2019 and 2018.

The Company recognizes interest and penalties related to significant uncertain

income tax positions in other expense.

However, no such interest and penalties were recorded as of December 31, 2020 and 2019.

Foreign Currency Translation

The reporting currency of the Company is the

The functional currency of the parent company, AHS, Avalon RT 9, Genexosome, Avactis, and Exosome, is the U.S.

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

For the subsidiaries

whose functional currency is the RMB, result of operations and cash flows are translated at average exchange rates during the period,

assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical

exchange rates.

As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily

agree with the changes in the corresponding balances on the balance sheets.

Currency Translation

reporting currency of the Company is the U.S.

The functional currency of the parent company, AHS, Avalon RT 9, Genexosome, Avactis,

and Exosome, is the U.S.

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

For the subsidiaries whose functional currency is the RMB, result of operations and cash flows are translated at average exchange rates

during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated

at historical exchange rates.

As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not

necessarily agree with the changes in the corresponding balances on the balance sheets.

Translation adjustments resulting from the process

1 unchanged sentence

dollars are included in determining comprehensive income/loss.

Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on

the transaction dates.

Assets and liabilities denominated in foreign currencies are translated into the functional currency at

the exchange rates prevailing at the balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations

on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

All of the Company’s revenue transactions

are transacted in the functional currency of the operating subsidiaries.

denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates.

Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing

at the balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated

in a currency other than the functional currency are included in the results of operations as incurred.

All of the Company’s revenue

transactions are transacted in the functional currency of the operating subsidiaries.

The Company does not enter into any material transaction

in foreign currencies.

Transaction gains or losses have not had, and are not expected to have, a material effect on the results

of operations of the Company.

Asset and liability accounts at December 31,

2020 and 2019 were translated at 6.5306 RMB and 6.9632 RMB to $1.00, respectively, which were the exchange rates on the balance

Transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations

of the Company.

and liability accounts at December 31, 2021 and 2020 were translated at 6.3559 RMB and 6.5306 RMB to $1.00, respectively, which were

the exchange rates on the balance sheet dates.

Equity accounts were stated at their historical rates.

The average translation rates applied to the statements of

operations for the years ended December 31, 2020 and 2019 were 6.8999 RMB and 6.9099 RMB to $1.00, respectively.

Cash flows from

the Company’s operations are calculated based upon the local currencies using the average translation rate.

Comprehensive Loss

Comprehensive loss is comprised of net loss

and all changes to the statements of equity, except those due to investments by stockholders, changes in paid-in capital and distributions

to stockholders.

For the Company, comprehensive loss for the years ended December 31, 2020 and 2019 consisted of net loss and unrealized

gain/loss from foreign currency translation adjustment.

Per Share Data

ASC Topic 260 “Earnings per Share,”

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

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

The average translation rates applied

to the statements of operations for the years ended December 31, 2021 and 2020 were 6.4515 RMB and 6.8999 RMB to $1.00, respectively.

Cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rate.

Comprehensive

loss is comprised of net loss and all changes to the statements of equity, except those due to investments by stockholders, changes in

paid-in capital and distributions to stockholders.

For the Company, comprehensive loss for the years ended December 31, 2021 and 2020

consisted of net loss and unrealized gain from foreign currency translation adjustment.

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

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

Basic EPS excludes dilution.

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

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

Basic net loss per share are computed by dividing

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

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

equivalents and potentially dilutive securities outstanding during each period.

Potentially dilutive common shares consist of the

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

Common stock equivalents

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

In a period in which

the Company has a net loss, all potentially dilutive securities are excluded from the computation of diluted shares outstanding

as they would have had an anti-dilutive impact.

AVALON GLOBOCARE CORP.

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 years ended December

31, 2021 and 2020, potentially dilutive common shares consist of the common shares issuable upon the exercise of common stock options

(using the treasury stock method).

Common stock equivalents are not included in the calculation of diluted net loss per share if their

effect would be anti-dilutive.

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

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

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued )

Per Share Data

The following table summarizes the securities

that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive:

Years Ended December 31,

following table summarizes the securities that were excluded from the diluted per share calculation because the effect of including these

potential shares was antidilutive:

Stock options

1 unchanged sentence

Non-controlling

As of December 31, 2020, Dr.

former director and former Co-Chief Executive Officer of Genexosome, who owns 40% of the equity interests of Genexosome,

which is not under the Company’s control.

Segment Reporting

The Company uses “the management approach”

in determining reportable operating segments.

The management approach considers the internal organization and reporting used by

the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining

the Company’s reportable segments.

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

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

for the entire Company.

The Company has determined that it has three reportable business segments:

real property operating segment,

medical related consulting services segment, and development services and sales of developed products segment.

These reportable

segments offer different types of services and products, have different types of revenue, and are managed separately as each requires

different operating strategies and management expertise.

Related Parties

Parties are considered to be related to the

Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common

control with the Company.

Related parties also include principal owners of the Company, its management, members of the immediate

families of principal owners of the Company and its management and other parties with which the Company may deal with if one party

controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting

parties might be prevented from fully pursuing its own separate interests.

The Company discloses all significant related party

transactions.

of December 31, 2021, Dr.

Yu Zhou, former director and former Co-Chief Executive Officer of Genexosome, who owns 40 % of the equity interests

of Genexosome, which is not under the Company’s control.

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

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.

During the year ended December

31, 2021, the Company operates through two business segments:

real property operating segment and medical related consulting services

During the year ended December 31, 2020, the Company operates through three reportable business segments:

real property

operating segment, medical related consulting services segment, and development services and sales of developed products segment.

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

requires different operating strategies and management expertise.

are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are

controlled by, or are under common control with the Company.

Related parties also include principal owners of the Company, its management,

members of the immediate families of principal owners of the Company and its management and other parties with which the Company may

deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one

of the transacting parties might be prevented from fully pursuing its own separate interests.

The Company discloses all significant related

party transactions.

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.

Fiscal Year End

The Company has adopted

a fiscal year end of December 31st.

Recent Accounting

In August 2018, the FASB issued ASU No.

Fair Value Measurement (Topic 820):

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement .

The objective of ASU 2018-13 is to improve the effectiveness of disclosures in the notes to the financial statements by removing,

modifying, and adding certain fair value disclosure requirements to facilitate clear communication of the information required

by generally accepted accounting principles.

The amendments are effective for all entities for fiscal years, and interim periods

within those fiscal years, beginning after December 15, 2019 with early adoption permitted upon issuance of this ASU.

of ASU 2018 – 13 did not have a material impact on the Company’s consolidated financial statements.

AVALON GLOBOCARE CORP.

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

These reclassifications have no effect on

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

Company has adopted a fiscal year end of December 31st.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued )

Recent Accounting

Standards (continued)

In June 2016, the FASB issued ASU 2016-13,

Financial Instruments - Credit Losses (“Topic 326”).

The ASU introduces a new accounting model, the Current

Expected Credit Losses model (“CECL”), which requires earlier recognition of credit losses and additional disclosures

related to credit risk.

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

losses at the time the financial asset is originated or acquired.

ASU 2016-13 is effective for annual period beginning after December

15, 2022, including interim reporting periods within those annual reporting periods.

The Company expects that the adoption will

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

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

The Company is evaluating the effects that the adoption of this guidance will have its consolidated financial statements.

Other accounting standards that have been issued

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

financial statements upon adoption.

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

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

NOTE 4 – PREPAID EXPENSES AND

OTHER CURRENT ASSETS

At December 31, 2020 and 2019, prepaid

expenses and other current assets consisted of the following:

Prepaid professional fees

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

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

Prepaid directors and officers

liability insurance premium

Recoverable VAT

Deferred leasing costs

Prepaid research and development fees

Prepaid directors and officers liability insurance premium

Prepaid VAT on purchase

Security deposit

NOTE 5 – PROPERTY AND EQUIPMENT

At December 31, 2020

and 2019, property and equipment consisted of the following:

December 31, 2020

December 31, 2019

5 – PROPERTY AND EQUIPMENT

December 31, 2021 and 2020, property and equipment consisted of the following:

Laboratory equipment

Office equipment and furniture

Office equipment and

accumulated depreciation

For the years ended

December 31, 2020 and 2019, depreciation expense of property and equipment amounted to $145,603 and $100,540, respectively, of

which, $3,276 and $3,276 was included in real property operating expenses, $0 and $39,070 was included in costs of development

services and sales of developed products, $70,241 and $30,947 was included in other operating expenses, and $72,086 and $27,247

was included in research and development expense, respectively.

AVALON GLOBOCARE CORP.

the years ended December 31, 2021 and 2020, depreciation expense of property and equipment amounted to $ 144,513 and $ 145,603 , respectively,

of which, $ 3,276 and $ 3,276 was included in real property operating expenses, $ 19,914 and $ 70,241 was included in other operating expenses,

and $ 121,323 and $ 72,086 was included in research and development expense, respectively.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

6 – INVESTMENT IN REAL ESTATE

At December 31, 2020

and 2019, investment in real estate consisted of the following:

December 31, 2020

December 31, 2019

December 31, 2021 and 2020, investment in real estate consisted of the following:

Commercial real property building

accumulated depreciation

For the years ended

December 31, 2020 and 2019, depreciation expense of this commercial real property amounted to $169,177 and $160,527, which was

included in real property operating expenses.

the years ended December 31, 2021 and 2020, depreciation expense of this commercial real property amounted to $ 167,248 and $ 169,177 ,

which was included in real property operating expenses.

7 – EQUITY METHOD INVESTMENT

As of December 31, 2020 and 2019, the equity

method investment amounted to $521,758 and $483,101, respectively.

The investment represents the Company’s subsidiary, Avalon

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

(“Epicon”).

Epicon was incorporated on August 14, 2018 in PRC.

of December 31, 2021 and 2020, the equity method investment amounted to $ 515,632 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.

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

(“Unicorn”), accounted

for 40% and 60% of the total ownership, respectively.

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

repository for commercial and scientific research purposes and the clinical transformation of scientific achievements.

The Company treats the equity investment in

the consolidated financial statements under the equity method.

Under the equity method, the investment is initially recorded at

cost, adjusted for any excess of the Company’s share of the incorporated-date fair values of the investee’s identifiable

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

Thereafter, the investment is adjusted for the post incorporation change in

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

For the years ended December 31, 2020 and 2019,

the Company’s share of Epicon’s net loss was $51,673 and $55,776, respectively, which was included in loss from equity

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

Activity recorded for the Company’s equity

method investment in Epicon is summarized in the following table:

Equity investment carrying amount at January 1, 2019

accounted for 40 % and 60 % of the total ownership, respectively.

Epicon is focused on cell preparation, third party testing,

biological sample repository for commercial and scientific research purposes and the clinical transformation of scientific achievements.

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

Under the equity method, the investment

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

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

Thereafter, the investment is adjusted for the post incorporation change

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

the years ended December 31, 2021 and 2020, the Company’s share of Epicon’s net loss was $ 60,463 and $ 51,673 , respectively,

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

the years ended December 31, 2021 and 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, 2020

Payment made for equity method investment

Epicon’s net loss attributable to the Company

Epicon’s net loss attributable to the

Foreign currency fluctuation

1 unchanged sentence

Payment made for equity method investment

Epicon’s net loss attributable to the Company

Epicon’s net loss attributable to the

Foreign currency fluctuation

Equity investment carrying amount at December 31, 2020

Equity investment carrying

amount at December 31, 2021

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

7 – EQUITY METHOD INVESTMENT (continued )

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

3 unchanged sentences

Noncurrent liabilities

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EQUITY METHOD INVESTMENT (continued)

For the Years Ended

Loss from operation

8 – ACCRUED LIABILITIES AND OTHER PAYABLES

At December 31, 2020

and 2019, accrued liabilities and other payables consisted of the following:

Accrued professional fees

Accrued research and development fees

Accrued payroll liability and directors’

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

Accrued tenants’ improvement

reimbursement

Tenants’ security deposit

Accrued business expense reimbursement

Accounts payable

Accrued tenants’

improvement reimbursement

Accrued utilities

Taxes payable

Deferred rental income

NOTE 9 – RELATED PARTY TRANSACTIONS

Medical Related

Consulting Services Revenue from Related Parties and Accounts Receivable – Related Party

During the years ended December 31, 2020 and

2019, medical related consulting services revenue from related parties was as follows:

Years Ended December 31,

Medical related consulting services provided to:

Beijing Daopei *

Shanghai Daopei *

Hebei Daopei *

*Beijing Daopei, Shanghai

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

As of December 31,

2020, accounts receivable – related party was $0.

Accounts receivable – related party at December 31, 2019 amounted

to $215,418 and no allowance for doubtful accounts was deemed to be required on accounts receivable – related party at December

AVALON GLOBOCARE CORP.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 – RELATED PARTY TRANSACTIONS

Accrued Liabilities and Other Payables –

Related Parties

The Company acquired Beijing Genexosome

for a cash payment of $450,000.

As of December 31, 2020 and 2019, the unpaid acquisition consideration of $100,000, was

payable to Dr.

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

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

As of December 31, 2020 and 2019, the accrued

and unpaid interest related to borrowings from Wenzhao Lu, the Company’s largest shareholder and chairman of the Board of

Directors, amounted to $167,956 and $49,194, respectively, and have been included in accrued liabilities and other payables –

related parties on the accompanying consolidated balance sheets.

Borrowings from Related Party

Promissory Note

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

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

of $1,000,000.

TO CONSOLIDATED FINANCIAL STATEMENTS

9 – RELATED PARTY TRANSACTIONS

Revenue from Related Party and Rent Receivable – Related Party

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.

The term of the related party lease agreement is five years commencing on

May 1, 2021 and will expire on April 30, 2026.

For the year ended December 31, 2021, the related party rental revenue amounted to $ 33,600 ,

and has been included in real property rental on the accompanying consolidated statements of operations and comprehensive loss.

December 31, 2021, the related party rent receivable totaled $ 33,600 and

no allowance for doubtful accounts was deemed to be required on rent receivable – related party at December 31, 2021.

Related Consulting Services Revenue from Related Parties

the years ended December 31, 2021 and 2020, medical related consulting services revenue from related parties was as follows:

Medical related consulting services provided to:

Daopei and Shanghai Daopei are subsidiaries of an entity whose chairman is Wenzhao Lu, the

largest shareholder of the Company.

Services Provided by Related Party

From time to time, Wilbert Tauzin, a director

of the Company, and his son provide consulting services to the Company.

As compensation for professional services provided, the Company

recognized consulting expenses of $ 216,169 and $ 282,582 for the years ended December 31, 2021 and 2020, respectively, which have been

included in professional fees on the accompanying consolidated statements of operations and comprehensive loss.

Liabilities and Other Payables – Related Parties

2017, the Company acquired Beijing Genexosome for a cash payment of $ 450,000 .

As of December 31, 2021 and 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 consolidated balance sheets.

of December 31, 2021 and 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 $ 368,433 and $ 167,956 , respectively, and have been included in accrued liabilities

and other payables – related parties on the accompanying 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 December 31, 2020

and 2019, the outstanding principal balance was $390,000 and $590,000, respectively.

Line of Credit

On August 29, 2019, the Company entered into

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

(the “Line of Credit”) from Wenzhao Lu (the “Lender”), the largest shareholder and Chairman of the Board

of Directors of the Company.

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

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

The loans are unsecured

and are not convertible into equity of the Company.

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

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

The Company has a right to draw down on the line

of credit and not at the discretion of the related party Lender.

In March 2022, the Company and Wenzhao

Lu entered into a Loan Extension and Modification Agreement (the “Extension”) to extend the maturity date to March 19, 2024.The

Company repaid principal of $ 410,000 and $ 200,000 in the third quarter of 2019 and second quarter of 2020, respectively.

of December 31, 2021 and 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

2 unchanged sentences

customary events of default.

If any such event of default occurs, the Lender may declare all outstanding loans under the Line of

Credit to be due and payable immediately.

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

Line of Credit, respectively.

For the years ended December 31, 2020 and 2019,

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

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

As of December 31,

2020 and 2019, the related accrued and unpaid interest for above borrowings was $167,956 and $49,194, respectively, and has been

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

Common Shares Sold

to Related Party

On April 1, 2020, the Company sold 645,161 shares of its common

stock to WLM Limited (“WLM”), an entity owned by Wenzhao Lu, Chairman of the Board of Directors of the Company, at

a price per share of $1.55, the fair market value on transaction date, for an aggregate purchase price of $1,000,000 (See Note

Common Shares Sold for Cash).

Office Space from

Related Party

Beijing Genexosome

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

AVALON GLOBOCARE CORP.

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.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – INCOME TAXES

The Company is governed by the Income Tax Law

of the PRC and the U.S.

TO CONSOLIDATED FINANCIAL STATEMENTS

9 – RELATED PARTY TRANSACTIONS (continued )

from Related Party (continued)

of Credit (continued)

the years ended December 31, 2021 and 2020, activity recorded for the Line of Credit is summarized in the following table:

Outstanding principal under the

Line of Credit at January 1, 2020

Draw down from Line

Outstanding principal under the Line of Credit

at December 31, 2020

Draw down from Line of Credit

Settlement pursuant

to Debt Settlement Agreement and Release *

( 3,000,000 )

Outstanding principal

under the Line of Credit at December 31, 2021

On December 21, 2021, the Company and Mr.

Lu entered into and closed a Debt Settlement Agreement and Release pursuant to which the $3.0

million debt was settled by issuance of the Company’s 2,400,000 shares of common stock (See Note 11 – Common Shares Issued

Pursuant to for Related Party Debt Settlement Agreement and Release).

The 2.4 million shares issued had a fair value of $ 3 million.

the years ended December 31, 2021 and 2020, the interest expense related to above borrowings amounted to $ 200,477 and $ 168,762 , respectively,

and has been included in interest expense – related party on the accompanying consolidated statements of operations and comprehensive

of December 31, 2021 and 2020, the related accrued and unpaid interest for above borrowings was $ 368,433 and $ 167,956 , respectively,

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

Shares Sold to Related Party

April 1, 2020, the Company sold 645,161 shares of its common stock to WLM Limited (“WLM”), an entity owned by Wenzhao Lu,

Chairman of the Board of Directors of the Company, at a price per share of $ 1.55 , the fair market value on transaction date, for an aggregate

purchase price of $ 1,000,000 (See Note 11 – Common Shares Sold for Cash).

10 – INCOME TAXES

Company is governed by the Income Tax Law of the PRC and the U.S.

Internal Revenue Code of 1986, as amended.

Under the Income Tax Laws of PRC, Chinese companies are generally

subject to an income tax at an effective rate of 25% on income reported in the statutory financial statements after appropriate

tax adjustments.

The Company has a cumulative deficit from its foreign subsidiaries of $2,005,685 as of December 31, 2020, which

is included in the consolidated accumulated deficit.

The Company’s loss before income taxes

includes the following components:

Years Ended December 31,

United States loss before income taxes

Under the Income Tax Laws

of PRC, Chinese companies are generally subject to an income tax at an effective rate of 25 % on income reported in the statutory financial

statements after appropriate tax adjustments.

The Company has a cumulative deficit from its foreign subsidiaries of $ 2,591,758 as of

December 31, 2021, which is included in the consolidated accumulated deficit.

Company’s loss before income taxes includes the following components:

United States loss before income

$ ( 8,504,426 )

$ ( 12,041,331 )

China loss before income taxes

Total loss before income taxes

China loss before income

loss before income taxes

$ ( 9,090,499 )

$ ( 12,679,438 )

Components of income taxes expense (benefit)

consisted of the following:

Years Ended December 31,

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

10 – INCOME TAXES (continued )

of income taxes expense (benefit) consisted of the following:

state and local

Total current income taxes expense

current income taxes expense

$ ( 1,810,264 )

1 unchanged sentence

state and local

Total deferred income taxes (benefit)

deferred income taxes (benefit)

$ ( 2,575,183 )

$ ( 3,256,375 )

Change in valuation allowance

Total income taxes expense

The table below summarizes the differences

between the U.S.

statutory rate and the Company’s effective tax rate for the years ended December 31, 2020 and 2019:

Years Ended December 31,

Non-deductible expenses

in valuation allowance

income taxes expense

table below summarizes the differences between the U.S.

statutory rate and the Company’s effective tax rate for the years ended

December 31, 2021 and 2020:

Non-US rate differential

1 unchanged sentence

valuation allowance

Total provision for income taxes

For the years ended December 31, 2020 and 2019, the Company did

not incur any income taxes expense since it did not generate any taxable income in those periods.

The Company’s foreign entities

did not pay any income taxes during the years ended December 31, 2020 and 2019.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – INCOME TAXES (continued)

The Company’s components of deferred taxes as of December

31, 2020 and 2019 were as follows:

Total provision for income

the years ended December 31, 2021 and 2020, the Company did not incur any income taxes expense since it did not generate any taxable

income in those periods.

The Company’s foreign entities did not pay any income taxes during the years ended December 31, 2021 and

The Company’s components of deferred taxes as of December 31, 2021 and 2020 were as follows:

Deferred tax assets

Stock-based compensation

Disallowed business interest deduction

Disallowed business

interest deduction

Accrued directors’

Lease liability

Net operating loss carryforward

Total deferred tax assets, gross

operating loss carryforward

Total deferred tax assets,

Valuation allowance

( 15,224,188 )

Total deferred tax assets, net

( 12,649,005 )

Total deferred tax assets,

Deferred tax liabilities

Fixed assets book/tax basis difference

Right-of-use assets

Total deferred tax liabilities

Fixed assets and intangible

assets book/tax basis difference

deferred tax liabilities

$ ( 121,317 )

$ ( 171,172 )

Net deferred tax assets

As of December 31, 2020, the Company’s

both federal and state net operating loss carryforwards amounted to $30,557,167.

As of December 31, 2020, the Company has $28,079,726

federal net operating loss carryovers that have no expiration date, the remaining of the federal net operating loss and

state net operating loss carry-forwards begin to expire in 2035.

As of December 31, 2020, the Company had net

operating loss carryforwards in China of $1,958,029 that begin to expire in 2023.

Additionally, as of December 31, 2020, $61,847

of the future utilization of the net operating loss carryforward to offset future taxable income is subject to special tax rules

which may limit their usage under IRS Section 382 (Change of Ownership) and possibly the Separate Return Limitation Year (“SRLY”)

A full valuation allowance has been provided

against the Company’s deferred tax assets at December 31, 2020 as the Company believes it is more likely than not that sufficient

taxable income will not be generated to realize these temporary differences.

The Company has been notified and assessed

an IRS Section 6038 penalty of $10,000 for failure to file a foreign entity tax disclosure.

The Company has appealed the penalty

and awaits the Internal Revenue Service’s review of the appeal.

There is no assurance such appeal will be successful.

The Company has not been audited by any jurisdiction

since its inception.

The Company is open for audit by the U.S.

Internal Revenue Service, and the Chinese Ministry of Finance and

state tax jurisdictions from 2018 to 2020.

There were no material uncertain tax positions

as of December 31, 2020 and 2019.

The Company recognizes interest and penalties related to unrecognized tax benefits as income

tax expense, if any.

The Company does not have any significant uncertain tax positions or events leading to uncertainty in a tax

2020 Incentive

Company held its annual meeting on August 4, 2020.

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

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

Common Shares Issued

for Warrant Exercise

On January 9, 2019,

the Company issued 350,856 shares of its common stock upon cashless exercise of warrants to purchase 578,891 shares of common stock.

Common Shares Issued

for Option Exercise

On February 27, 2019, the Company issued 158,932

shares of its common stock upon cashless exercise of options to purchase 200,000 shares of common stock.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EQUITY (continued)

Common Shares Sold

On December 13, 2019, the Company entered

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

(“Jefferies”), pursuant to which the Company may offer and sell, from time to time, through Jefferies, shares of

its common stock, par value $0.0001 per share, having an aggregate offering price of up to $20.0 million.

In December 2019,

Jefferies sold 138,595 shares of common stock at an average price of $1.98 per share to investors.

The Company recorded net

proceeds of $261,206, net of commission and other offering costs of $12,530.

During the years ended December 31, 2020,

Jefferies sold an aggregate of 3,913,413 shares of common stock at an average price of $1.74 per share to investors.

Company recorded net proceeds of $6,405,475, net of commission and other offering costs of $398,624.

On April 1, 2020, the Company entered into

a Subscription Agreement with WLM, an entity owned by Wenzhao Lu, Chairman of the Board of Directors of the Company, pursuant to

which WLM purchased 645,161 shares of the Company’s common stock at a price per share of $1.55, the fair market value on

transaction date, for an aggregate purchase price of $1,000,000.

The closing occurred on April 1, 2020.

Units Sold for

On April 25, 2019,

the Company entered into a purchase agreement with several third-party institutional investors for the purchase of 1,714,288 units

in a registered direct offering, for gross proceeds of $6,000,008 before placement agent fees and other offering expenses payable

by the Company.

Each unit was sold at a public offering price of $3.50 and consists of one share of common stock and a warrant

to purchase one share of common stock.

The Company received net cash proceeds of $5,103,704, net of cash paid for placement agent

fees and other offering expenses.

The warrants are exercisable immediately as

of the date of issuance (the “Initial Exercise Date”), at an exercise price of $3.50 per share, subject to adjustment

as provided in the warrants, and expire on the fifth (5 th ) anniversary of the Initial Exercise Date.

The warrants include

anti-dilution rights, which provide that if at any time the warrants are outstanding, the Company issues or is deemed to have issued

any common stock or common stock equivalents for consideration less than the then current exercise price of the warrants, the exercise

price of such warrants is automatically reduced to the lowest price per share of consideration provided or deemed to have been

provided for such securities (subject to adjustment for reverse and forward stock splits, recapitalizations and similar transactions).

The warrants include the fundamental transaction provisions and the exercise price of the warrants is protected against down-round

financing throughout the term of the warrants.

Upon evaluation, the warrants meet the definition of a derivative under FASB ASC

815, as the Company cannot avoid a net cash settlement under certain circumstances.

Accordingly, the fair value of the warrants

was classified as derivative liabilities of $4,217,241 on the issuance date, April 25, 2019.

The estimated fair value of the warrants

was computed at issuance using Black-Scholes option-pricing model, with the following assumptions:

stock price of $2.82, volatility

of 142.55%, risk-free rate of 2.33%, annual dividend yield of 0% and expected life of 5 years.

On April 25, 2019,

the derivative liabilities were recorded at fair value of $4,217,241.

Given that the fair value of the derivative liabilities was

less than the proceeds of the units sale fund raise of $6,000,008, the remaining proceeds of $1,782,767 were allocated to the common

stock and additional paid-in capital.

On October 18, 2019, the Company and third-party

institutional investors entered into a Warrant Redemption and Cancellation Agreement (the “Redemption Agreement”).

In accordance with the Redemption Agreement, the Company redeemed the 1,714,288 warrants for a purchase price of $1,400,000 in

the fourth quarter of 2019, resulting in all of the 1,714,288 warrants being redeemed and cancelled.

Increases or decreases

in fair value of the derivative liabilities are included as a component of total other income (expenses) in the accompanying consolidated

statements of operations and comprehensive loss.

The change to the derivative liabilities for the warrants from April 25, 2019

through October 18, 2019 resulted in a decrease of $2,817,241 in the derivative liabilities and the corresponding increase in other

income as a gain for the year ended December 31, 2019.

AVALON GLOBOCARE CORP.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EQUITY (continued)

Common Shares Issued

the year ended December 31, 2019, the Company issued a total of 537,380 shares of its common stock for services rendered and to

TO CONSOLIDATED FINANCIAL STATEMENTS

10 – INCOME TAXES (continued )

As of December 31, 2021 and 2020, the Company’s

both federal and state net operating loss carryforwards amounted to $ 38,420,422 and $ 30,557,167 , respectively.

As of December 31, 2021,

the Company has $35,932,868 of U.S.

federal net operating loss carryovers that have no expiration date, and $2,487,554 of the federal

net operating loss and state net operating loss carry-forwards begin to expire in 2034.

of December 31, 2021, the Company had net operating loss carryforwards in China of $ 2,566,087 that begin to expire in 2022.

Additionally,

as of December 31, 2021, $ 61,847 of the future utilization of the net operating loss carryforward to offset future taxable income is

subject to special tax rules which may limit their usage under IRS Section 382 (Change of Ownership) and possibly the Separate Return

Limitation Year (“SRLY”) rules.

full valuation allowance has been provided against the Company’s deferred tax assets at December 31, 2021 as the Company believes

it is more likely than not that sufficient taxable income will not be generated to realize these temporary differences.

Company has been notified and assessed an IRS Section 6038 penalty of $ 10,000 for failure to file a foreign entity tax disclosure.

Company has appealed the penalty and awaits the Internal Revenue Service’s review of the appeal.

There is no assurance such appeal

will be successful.

Company has not been audited by any jurisdiction since its inception.

The Company is open for audit by the U.S.

Internal Revenue Service

state tax jurisdictions from 2018 to 2021, and open for audit by the Chinese Ministry of Finance from 2017 to 2021.

were no material uncertain tax positions as of December 31, 2021 and 2020.

The Company recognizes interest and penalties related to unrecognized

tax benefits as income tax expense, if any.

The Company does not have any significant uncertain tax positions or events leading to uncertainty

in a tax position.

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 year ended December 31, 2021, Jefferies sold an aggregate of 2,206,838 shares

of common stock at an average price of $ 1.30 per share to investors and the Company recorded net proceeds of $ 2,553,409 , net of

commission and other offering costs of $ 306,895 .

During the year ended December 31, 2020, Jefferies sold an aggregate of 3,913,413 shares

of common stock at an average price of $ 1.74 per share to investors and the Company recorded net proceeds of $ 6,405,475 , net of commission

and other offering costs of $ 398,624 .

April 1, 2020, the Company entered into a Subscription Agreement with WLM, an entity owned by Wenzhao Lu, Chairman of the Board of Directors

of the Company, pursuant to which WLM purchased 645,161 shares of the Company’s common stock at a price per share of $ 1.55 , the

fair market value on transaction date, for an aggregate purchase price of $ 1,000,000 .

The closing occurred on April 1, 2020 (See Note

9 - Common Shares Sold to Related Party).

Shares Issued for Services

the year ended December 31, 2021, the Company issued a total of 1,405,679 shares of its common stock for services rendered

and to be rendered.

These shares were valued at $ 1,507,488 , the fair market values on the grant dates using the reported closing share

prices on the dates of grant, and the Company recorded stock-based compensation expense of $ 1,075,756 for the year ended December

31, 2019 and reduced accrued liabilities of $116,575 and recorded prepaid expense of $124,583 as of December 31, 2019 which will

be amortized over the rest of corresponding service periods.

During the year ended

December 31, 2020, the Company issued a total of 1,505,921 shares of its common stock for services rendered and to be rendered.

These shares were valued at $1,892,520, the fair market values on the grant dates using the reported closing share prices on the

dates of grant and the Company recorded stock-based compensation expense of $1,670,166 for the year ended December 31, 2020 and

reduced accrued liabilities of $187,725 and recorded prepaid expense of $34,629 as of December 31, 2020 which will be amortized

over the rest of corresponding service periods.

The following table summarizes the shares of

the Company’s common stock issuable upon exercise of options outstanding at December 31, 2020:

Options Outstanding

Options Exercisable

31, 2021 and reduced accrued liabilities of $ 276,032 and recorded prepaid expense of $ 155,700 as of December 31, 2021 which

will be amortized over the rest of corresponding service periods.

the year ended December 31, 2020, the Company issued a total of 1,505,921 shares of its common stock for services rendered and to be

These shares were valued at $ 1,892,520 , the fair market values on the grant dates using the reported closing share prices on

the dates of grant and the Company recorded stock-based compensation expense of $ 1,670,166 for the year ended December 31, 2020 and reduced

accrued liabilities of $ 187,725 and recorded prepaid expense of $ 34,629 as of December 31, 2020 which will be amortized over the rest

of corresponding service periods.

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

11 – EQUITY (continued )

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 .

The 167,355 shares issued had a fair value of $ 202,500 .

Shares Issued Pursuant to Related Party Debt Settlement Agreement and Release

December 21, 2021, the Company and Mr.

Lu entered into and closed a Debt Settlement Agreement and Release pursuant to which The Company

settled $ 3.0 million debt owed under the Line of Credit by issuance of the Company’s 2,400,000 shares of common stock (See Note

9 – Borrowings from Related Party – Line of Credit ) .

The 2.4 million shares issued had a fair value of $ 3 million.

following table summarizes the shares of the Company’s common stock issuable upon exercise of options outstanding at December 31,

Outstanding at

Weighted Average

Contractual Life

Exercisable at

Stock option activities

for the years ended December 31, 2020 and 2019 were as follows:

$ 0.50 – 4.76

option activities for the years ended December 31, 2021 and 2020 were as follows:

Outstanding at January 1, 2020

Terminated / Exercised / Expired

Outstanding at December 31, 2020

Terminated / Exercised / Expired

Forfeited / Expired

Outstanding at December 31, 2021

1 unchanged sentence

Options expected to vest

The aggregate intrinsic value of both stock

options outstanding and stock options exercisable at December 31, 2020 was $1,277,200.

The fair values of options granted during the

year ended December 31, 2020 were estimated at the date of grant using the Black-Scholes option-pricing model with the following

volatility of 131.16% - 139.58%, risk-free rate of 0.20% - 1.67%, annual dividend yield of 0% and expected life of

3.00 – 10.00 years.

The aggregate fair value of the options granted during the year ended December 31, 2020 was $2,878,773.

AVALON GLOBOCARE CORP.

aggregate intrinsic value of both stock options outstanding and stock options exercisable at December 31, 2021 was $ 640,000 .

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

11 – EQUITY (continued )

Options (continued)

The fair values of

options granted during the year ended December 31, 2019 were estimated at the date of grant using the Black-Scholes option-pricing

fair values of options granted during the year ended December 31, 2021 were estimated at the date of grant using the Black-Scholes option-pricing

model with the following assumptions:

volatility of 119.21 % - 128.42 %, risk-free rate of 0.33 % - 1.20 %, annual dividend

yield of 0 %, and expected life of 3.00 - 5.00 years.

The aggregate fair value of the options granted during

the year ended December 31, 2021 was $726,952.

fair values of options granted during the year ended December 31, 2020 were estimated at the date of grant using the Black-Scholes option-pricing

model with the following assumptions:

volatility of 131.16% - 139.58%, risk-free rate of 0.20% - 1.67%, annual dividend yield of 0%,

2 unchanged sentences

was $2,878,773.

Stock-based compensation expense associated

with stock options granted amounted to $2,966,052 and $7,448,230, of which, $2,669,729 and $6,802,896 was recorded as compensation

and related benefits, $240,354 and $640,978 was recorded as professional fees, $55,969 and $4,356 was recorded as research and

development expenses, for the years ended December 31, 2020 and 2019, respectively.

A summary of the status of the Company’s

nonvested stock options granted as of December 31, 2020 and changes during the years ended December 31, 2020 and 2019 is presented

compensation expense associated with stock options granted amounted to $ 769,334 and $ 2,966,052 , of which, $ 544,785 and $ 2,669,729 was

recorded as compensation and related benefits, $ 157,207 and $ 240,354 was recorded as professional fees, and $ 67,342 and $ 55,969 was recorded

as research and development expenses, for the years ended December 31, 2021 and 2020, respectively.

summary of the status of the Company’s nonvested stock options granted as of December 31, 2021 and changes during the years ended

December 31, 2021 and 2020 is presented below:

Nonvested at January 1, 2020

( 2,006,389 )

Nonvested at December 31, 2020

Nonvested at December 31, 2021

There were no stock warrants issued, terminated/forfeited

and exercised during the year ended December 31, 2020.

Stock warrants activities during the

year ended December 31, 2019 were as follows:

Outstanding at January 1, 2019

Redeemed and cancelled

Outstanding and exercisable at December 31, 2019

NOTE 12 –

Avalon Shanghai and Beijing Genexosome operate

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

rules and regulations.

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

standards for business enterprises for each year.

The profit arrived at must be set off against

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

Appropriation

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

The appropriation is required until the

statutory reserve reaches 50% of the registered capital.

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

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

December 31, 2020 and 2019 as they incurred net losses in these periods.

AVALON GLOBOCARE CORP.

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.

12 - STATUTORY RESERVE AND RESTRICTED NET ASSETS

Company’s PRC subsidiaries, Avalon Shanghai and Beijing Genexosome, are restricted

in their ability to transfer a portion of their net assets to the Company.

The payment of dividends by entities organized in China is

subject to limitations, procedures and formalities.

Regulations in the PRC currently permit payment of dividends only out of accumulated

profits as determined in accordance with accounting standards and regulations in China.

Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus

reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC

Appropriations to the statutory surplus reserve are required to be at least 10 % of the after-tax net income determined

in accordance with PRC GAAP until the reserve is equal to 50 % of the entity’s registered capital.

Appropriations to the discretionary

surplus reserve are made at the discretion of the Board of Directors.

The statutory reserve may be applied against prior year losses,

if any, and may be used for general business expansion and production or increase in registered capital, but are not distributable as

cash dividends.

PRC laws and regulations restrict the Company’s PRC subsidiaries, Avalon Shanghai and Beijing

Genexosome , from transferring a portion of their net assets, equivalent to their statutory reserves and their share capital, to

the Company’s shareholders in the form of loans, advances or cash dividends.

Only PRC entities’ accumulated profits may be

distributed as dividends to the Company’s shareholders without the consent of a third party.

Company did not make any appropriation to statutory reserve for Avalon Shanghai and Beijing Genexosome during the years ended December

31, 2021 and 2020 as they incurred net losses in these periods.

December 31, 2021 and 2020, the restricted amounts as determined pursuant to PRC statutory laws totaled $ 6,578 and $ 6,578 , respectively,

and total restricted net assets amounted to $ 783,984 and $ 683,984 , respectively.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 –

TO CONSOLIDATED FINANCIAL STATEMENTS

13 – NONCONTROLLING INTEREST

of December 31, 2020,

Yu Zhou, former director and former co-chief executive officer of Genexosome, who owns 40% of the equity interests of Genexosome,

which is not under the Company’s control.

In 2019, the Company

made a noncontrolling interest deficit adjustment of $862,200 since t he Company determined

that the noncontrolling interest holder does not have the ability to satisfy the deficit, which adjusted the balance of noncontrolling

interest to zero.

During the years ended

December 31, 2020 and 2019, the Company did not allocate any net loss and foreign currency translation adjustment to the noncontrolling

interest holder due to its inability to satisfy these deficits.

NOTE 14 –

RESTRICTED NET ASSETS

A portion of the Company’s operations

are conducted through its PRC subsidiaries, which can only pay dividends out of their retained earnings determined in accordance

with the accounting standards and regulations in the PRC and after they have met the PRC requirements for appropriation to statutory

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

into foreign currencies.

All foreign exchange transactions take place either through the People’s Bank of China or other

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

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

application form together with suppliers’

invoices, shipping documents and signed contracts.

These currency exchange control

procedures imposed by the PRC government authorities may restrict the ability of the Company’s PRC subsidiaries to transfer

their net assets to the Parent Company through loans, advances or cash dividends.

Schedule I of Article 5-04 of Regulation S-X

requires the condensed financial information of the parent company to be filed when the restricted net assets of consolidated subsidiaries

exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year.

For purposes of this test,

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

assets of its consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may

not be transferred to the parent company in the form of loans, advances or cash dividends without the consent of a third party.

The Company’s PRC subsidiaries’

net assets as of December 31, 2020 and 2019 did not exceed 25% of the Company’s consolidated net assets.

Accordingly, the

Parent Company’s condensed consolidated financial statements have not been required in accordance with Rule 5-04 and Rule

12-04 of SEC Regulation S-X.

NOTE 15 –

December 31, 2021, Dr.

Yu Zhou, former director and former co-chief executive officer of Genexosome, who owns 40 % of the equity interests

of Genexosome, which is not under the Company’s control.

the years ended December 31, 2021 and 2020, the Company did not allocate any net loss and foreign currency translation adjustment to

the noncontrolling interest holder due to its inability to satisfy these deficits.

14 – CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY

to the requirements of Rule 12-04(a), 5-04(c) and 4-08(e)(3) of Regulation S-X, the condensed financial information of the parent company

shall be filed when the restricted net assets of consolidated subsidiary 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 subsidiary shall mean that

amount of the Company’s proportionate share of net assets of consolidated subsidiary (after intercompany eliminations) which as

of the end of the most recent fiscal year may not be transferred to the parent company by subsidiary in the form of loans, advances or

cash dividends without the consent of a third party.

Company performed a test on the restricted net assets of consolidated subsidiary in accordance with such requirement and concluded that

it was not applicable to the Company as the restricted net assets of the Company’s PRC subsidiaries did not exceed 25 % of the consolidated

net assets of the Company, therefore, the condensed financial statements for the parent company have not been required.

15 - CONCENTRATIONS

The following table sets forth information

as to each customer that accounted for 10% or more of the Company’s revenues for the years ended December 31, 2020 and 2019.

Years Ended December 31,

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

years ended December 31, 2021 and 2020.

A (Shanghai Daopei, a related party)

B (Hebei Daopei, a related party)

*Less than 10%

Two customers, whose outstanding receivable

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

and rent receivable at December 31, 2020, accounted for 78.3% of the Company’s total outstanding accounts receivable, accounts

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

AVALON GLOBOCARE CORP.

Two customers,

of which, one is a related party and the other is a third party, whose outstanding receivable accounted for 10 % or more of the Company’s

total outstanding accounts receivable, accounts receivable – related party, rent receivable, and rent receivable – related

party at December 31, 2021, accounted for 80.6 % of the Company’s total outstanding accounts receivable, accounts receivable

– related party, rent receivable, and rent receivable – related party at December 31, 2021.

party 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 years ended December 31, 2021 and 2020.

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.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 – CONCENTRATIONS (continued)

Customers (continued)

Two customers, whose outstanding receivable

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

and rent receivable at December 31, 2019, accounted for 93.0% of the Company’s total outstanding accounts receivable, accounts

receivable – related party, and rent receivable at December 31, 2019.

No supplier accounted for 10% or more of the

Company’s purchase during the years ended December 31, 2020 and 2019.

One supplier, whose outstanding payable accounted

for 10% or more of the Company’s total outstanding accounts payable at December 31, 2020, accounted for 93.6% of the Company’s

total outstanding accounts payable at December 31, 2020.

One supplier, whose outstanding payable accounted

for 10% or more of the Company’s total outstanding accounts payable at December 31, 2019, accounted for 90.8% of the Company’s

total outstanding accounts payable at December 31, 2019.

TO CONSOLIDATED FINANCIAL STATEMENTS

16 – SEGMENT INFORMATION

For the years ended December 31, 2020 and 2019,

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

services segment, and (3) the performing development services for hospitals and other customers and sales of developed products

to hospitals and other customers segment.

The Company’s reportable segments are strategic business units that offer different

services and products.

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

Information with respect

to these reportable business segments for the years ended December 31, 2020 and 2019 was as follows:

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEGMENT INFORMATION (continued)

Years Ended December 31,

Real property operations

Medical related consulting services

Development services and sales of developed products

the year ended December 31, 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 year ended December 31, 2021, the Company operated in two reportable business segments - (1) the real property operating

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

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

They are managed separately

based on the fundamental differences in their operations.

Information with respect to these reportable business segments for the years

ended December 31, 2021 and 2020 was as follows:

Real property

related consulting services

Costs and expenses

Real property operations

Medical related consulting services

Development services and sales of developed products

Gross profit (loss)

Medical related consulting

Real property operations

Medical related consulting services

Development services and sales of developed products

related consulting services

Other operating expenses

Real property operations

Medical related consulting services

Development services and sales of developed products

Medical related consulting

Development services

and sales of developed products

Corporate/Other

Other income (expense)

Other (expense) income

Interest expense

Real property operations

Corporate/Other

1 unchanged sentence

Real property operations

Medical related consulting services

Development services and sales of developed products

Medical related consulting

Development services

and sales of developed products

Corporate/Other

Total other (expense) income

Total other expense,

Real property operations

Medical related consulting services

Development services and sales of developed products

Medical related consulting

Development services

and sales of developed products

Corporate/Other

AVALON GLOBOCARE CORP.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

16 – SEGMENT INFORMATION (continued )

Identifiable long-lived tangible assets at December 31, 2020 and 2019

Identifiable long-lived

tangible assets at December 31, 2021 and 2020

Real property operations

Medical related consulting services

Development services and sales of developed products

Identifiable long-lived tangible assets at December 31,

2020 and 2019

Development services and sales of developed

Corporate/Other

Identifiable long-lived

tangible assets at December 31, 2021 and 2020

United States

17 – COMMITMENTS AND CONTINCENGIES

From time to time, the Company is subject to

ordinary routine litigation incidental to its normal business operations.

The Company is not currently a party to, and its property

is not subject to, any material legal proceedings, except as set forth below.

On October 25, 2017, Genexosome entered into

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

pursuant to which Genexosome acquired all of the issued and outstanding securities of Beijing Genexosome in consideration of a

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

Further, on October 25, 2017, Genexosome entered into

and closed an Asset Purchase Agreement with Dr.

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.

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 $876,087 in cash, transferred 500,000 shares of common stock of

the Company to Dr.

Zhou and issued Dr.

Zhou 400 shares of common stock of Genexosome.

Further, The Company had

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

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

the intangible asset associated with this acquisition to zero.

Further, The Company had not been able to realize

the financial projections provided by Dr.

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

with this acquisition to zero.

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

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 civil case against Avalon is stayed pending resolution

of the criminal proceedings against Dr.

Zhou and Li Chen, and while there can be no assurances, the Company believes it has substantial

legal and factual defenses to the Research Institute’s claims and the likelihood of any findings of liability for the Company

cannot be assessed at this time.

Operating Leases

Avalon Shanghai Office Lease

On February 24, 2020, Avalon Shanghai entered

into a lease for office space in Beijing, China, with a third party (the “Beijing Office Lease”).

Pursuant to the Beijing

Office Lease, the monthly rent is RMB 50,586 (approximately $8,000) with a required security deposit of RMB 164,764 (approximately

In addition, Avalon Shanghai needs to pay monthly maintenance fees of RMB 4,336 (approximately $700).

The term of the

Beijing Office Lease was 12 months commencing on March 1, 2020 and expired on February 28, 2021.

As of December 31, 2020, the future

minimum rental payment required under this Beijing Office Lease is $16,820.

For the years ended December 31 2020 and 2019,

rent expense and maintenance fees related to Avalon Shanghai office lease amounted to approximately $91,000 and $90,000, respectively.

AVALON GLOBOCARE CORP.

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.

criminal proceedings against Dr.

Zhou and Li Chen have been concluded and the civil litigation continue.

The Company and Nationwide Children’s

Hospital have reached a verbal settlement agreement.

Both parties are in the process of drafting the related written agreements.

can be no assurances that these settlement agreements will be signed.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

17 – COMMITMENTS AND CONTINCENGIES (continued )

Operating Leases (continued)

Operating Lease for General Business

In December 2019, the Company entered into

a lease in New York, U.S., with a third party (the “New York Lease”).

Pursuant to the New York Lease, the monthly rent

The term of the New York Lease is 3 years commencing on January 1, 2020 and expires on December 31, 2022.

ended December 31, 2020, rent expense related to the New York Lease amounted to $72,000.

Operating lease right-of-use asset related

to the New York Lease is included in “Right-of-use asset, operating lease”

on the accompanying consolidated balance

With respect to lease liability, operating lease liability is included in “Operating lease obligation”

“Operating lease obligation – noncurrent portion,”

on the accompanying consolidated balance sheets.

The Company’s

leases as of December 31, 2019 did not meet the requirements to be recorded as a right-of-use asset and operating lease obligation

as they were immaterial and less than 12 months in term.

Supplemental cash flow information related

to the New York lease for the year ended December 31, 2020 is as follows:

Leases Commitment

Company is a party to leases for office space.

Rent expense under all operating leases amounted to approximately $ 143,000 and $ 157,000 for

the years ended December 31, 2021 and 2020, respectively.

cash flow information related to leases for the years ended December 31, 2021 and 2020 is as follows:

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

Operating cash flows paid for operating lease

Right-of-use asset obtained in exchange for lease obligation:

Operating lease

Supplemental balance sheet information related to the New York Lease

as of December 31, 2020 is as follows:

Operating Lease:

Operating lease right-of-use asset

Current portion of operating lease liability

Long-term operating lease liability

Total operating lease liability

Weighted Average Remaining Lease Term (in years):

cash flows paid for operating lease

Right-of-use assets obtained in exchange for

lease obligation:

Operating lease

following table summarizes the lease term and discount rate for the Company’s operating lease as of December 31, 2021:

Weighted average remaining lease

term (in years)

Weighted average discount rate

Operating lease

The following table summarizes the maturity of lease liability under

the New York Lease as of December 31, 2020:

The following

table summarizes the maturity of lease liabilities under operating lease as of December 31, 2021:

For the Year Ending December

1 unchanged sentence

Total lease payments

Amount of lease payments representing interest

Total present value of operating lease liability

AVALON GLOBOCARE CORP.

Amount of lease payments

representing interest

Total present value of

operating lease liabilities

Current portion

Long-term portion

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 $1.3 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 December 31, 2021, Avalon Shanghai

has contributed RMB 4,760,000 (approximately $0.7 million) that was included in equity method investment on the accompanying 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.

The purpose and business scope of the Joint Venture is to research, develop, produce, sell, distribute and generally commercialize

CAR-T/CAR-NK/TCR-T/universal cellular immunotherapy in China.

Avactis is required to contribute $10 million (or equivalent in RMB) in

cash and/or services, which shall be contributed in tranches based on milestones to be determined jointly by AVAR and Avactis in writing

subject to Avactis’ cash reserves.

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

a License Agreement with AVAR granting AVAR with an exclusive right and license in China to its technology and intellectual property

pertaining to CAR-T/CAR-NK/TCR-T/universal cellular immunotherapy technology and any additional technology developed in the future with

terms and conditions to be mutually agreed upon Avactis and AVAR and services.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

17 – COMMITMENTS AND CONTINCENGIES (continued )

Equity Investment Commitment

On May 29, 2018, Avalon Shanghai entered into

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

(“Unicorn”), pursuant to which a company

named Epicon Biotech Co., Ltd.

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

Epicon is owned 60% by Unicorn and 40% by

Avalon Shanghai.

Within five years of execution of the Joint Venture Agreement, Unicorn shall invest cash into Epicon in an amount

not less than RMB 8,000,000 (approximately $1.2 million) and the premises of the laboratories of Nanjing Hospital of Chinese Medicine

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

$1.5 million).

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

research purposes and the clinical transformation of scientific achievements.

As of December 31, 2020, Avalon Shanghai has contributed

RMB 4,500,000 (approximately $0.7 million) that was included in equity method investment on the accompanying consolidated balance

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

fund the project cost.

Joint Venture – AVAR BioTherapeutics (China) Co.

On October 23, 2018, Avactis Biosciences, Inc.

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

of AVAR BioTherapeutics (China) Co.

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

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

The purpose and business

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

cellular immunotherapy in China.

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

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

cash reserves.

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

with AVAR granting AVAR with an exclusive right and license in China to its technology and intellectual property pertaining to

CAR-T/CAR-NK/TCR-T/universal cellular immunotherapy technology and any additional technology developed in the future with terms

and conditions to be mutually agreed upon Avactis and AVAR and services.

In addition, Avactis is responsible for:

Contributing registered capital of RMB 5,000,000 (approximately $0.8 million) for working capital purposes as required by local regulation, which is not required to be contributed immediately and will be contributed subject to Avactis’

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

assisting AVAR in recruiting, hiring and retaining personnel;

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

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

providing AVAR with advice pertaining to conducting clinicals in China;

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 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

AVAR with advice pertaining to conducting clinicals in China;

● Within 6 days of signing the AVAR Agreement, Avactis is required to pay to Arbele $300,000 as a research and development fee with an additional two payments of $300,000 (for a total of $900,000) to be paid upon mutually agreed upon milestones.

Under AVAR Agreement, Arbele shall be responsible for the following:

Entering into a License Agreement with AVAR;

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

As of December 31, 2020 and 2019, Avactis

has paid $900,000 and $600,000 to Arbele as research and development fee, respectively.

As of December 31, 2020, License Agreement

has not been finalized.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

COMMITMENTS AND CONTINCENGIES (continued)

Line of Credit Agreement

On August 29, 2019, the Company entered into

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

(the “Line of Credit”) from Wenzhao Lu (the “Lender”), a significant shareholder and director of the Company.

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

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

The loans are unsecured and are not convertible into

equity of the Company.

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

be payable three years from the date of issuance.

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

of the related party Lender.

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

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

Agreement, Arbele shall be responsible for the following:

into a License Agreement with AVAR;

AVAR with research and development expertise pertaining to clinical laboratory medicine when

hired by AVAR.

of both December 31, 2021 and 2020, Avactis paid the $ 900,000 to Arbele as research and development fee.

As of December 31, 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.

1 unchanged sentence

As of December 31, 2021, $ 2,750,262 was outstanding under the Line of Credit.

NOTE 18 – SUBSEQUENT EVENTS

On December 13, 2019, the Company entered into an Open Market

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

January 1, 2021 to March 29, 2021, Jefferies sold an aggregate of 1,830,317 shares of common stock at an average price of $1.34

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

18 – SUBSEQUENT EVENTS

Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements

Based upon this review, other than as described below, the Company did not identify any subsequent events that would have

required adjustment or disclosure in the financial statements.

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 January 1, 2022 to March 30, 2022, Jefferies sold an aggregate of 170,540 shares of common stock at an average price of

$ 0.79 per share to investors.

The Company received net cash proceeds of $ 131,427 , net of commission paid to sales agent of $ 4,065 .

In January 2021,

the Company issued a total of 300,000 shares of its common stock for services rendered.

These shares were valued at $360,000, the

fair market values on the grant dates using the reported closing share prices on the dates of grant and the Company reduced accrued

liabilities of $360,000.

On February 2 2, 2021, Avalon

Shanghai entered into a lease for office space in Beijing, China, with a third party (the “Beijing Office Lease”).

Pursuant to the Beijing Office Lease, the monthly rent is RMB 37,578 (approximately $6,000) with a required security deposit of

RMB 125,741 (approximately $19,000).

In addition, Avalon Shanghai needs to pay monthly maintenance fees of RMB 4,336 (approximately

The term of the Beijing Office Lease is 24 months commencing on March 1, 2021 and expires on February 28, 2023.

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

Original Note had a maturity date of March 19, 2022.

In March 2022, the Company and Wenzhao Lu entered into a Loan Extension and Modification

Agreement (the “Extension”) to extend the maturity date to March 19, 2024.

Convertible Note

28, 2022, the Company entered into Securities Purchase Agreement with an accredited investor providing for the sale by the Company to

the investor of a Convertible Note in the amount of $ 4,000,000 (the “2022 Convertible Note”).

In addition to the 2022 Convertible

Note, the investor will also receive a Stock Purchase Warrant (the “2022 Warrant”) to acquire an aggregate of 1,333,333 shares

of common stock.

The 2022 Warrants will be exercisable for five years at an exercise price of $ 1.25 .

The financing will close on or about

April 15, 2022.

Convertible Note will bear interest at 1 % per annum payable at maturity and matures ten years from issuance.

The investor may elect to

convert all or part of the 2022 Convertible Note, plus accrued interest, at any time into shares of common stock of the Company at a conversion

price equal to 95 % of the average of the highest three trading prices for the common stock during the 20-trading day period ending one

trading day prior to the conversion date but in no event will the conversion price be lower than $ 0.75 per share.

agreed to restrict its ability to convert the 2022 Convertible Note and exercise the 2022 Warrants and receive shares of common stock

such that the number of shares of common stock held by the investor after such conversion or exercise does not exceed 4.99 % of the then

issued and outstanding shares of common stock.

Further, Investor agreed to not sell or transfer any or all of the shares of common stock

underlying the 2022 Convertible Note or the 2022 Warrant for a period of 90 days beginning on the closing date (the “Lock-Up Period”).

Following the expiration of the Lock-Up Period, the investor has agreed to limit its sale or transfer of such shares of common stock to

a maximum monthly amount equal to 20 % of the shares of common stock issuable upon conversion of the 2022 Convertible Note.

agreed to use its reasonable best efforts to file a registration statement on Form S-3 (or other appropriate form) providing for the resale

by the investor of the shares of common stock underlying the 2022 Convertible Note and the 2022 Warrant.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures