What changed in this filing

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Item 1. Financial Statements

2022-05-11 compared with 2021-11-15 · 459 added, 611 removed, 571 unchanged (65% of the section changed)

2 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED

BALANCE SHEETS

September 30,

CONDENSED CONSOLIDATED BALANCE SHEETS

CURRENT ASSETS:

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Rent receivable - related party

Deferred financing costs

Prepaid professional fees

Deferred financing costs, net

Prepaid expenses and other current assets

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Rent receivable - noncurrent portion

Deferred financing costs - noncurrent portion, net

Security deposit

Deferred leasing costs

3 unchanged sentences

Equity method investment

Other noncurrent assets

Total Non-current Assets

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10,000,000 shares authorized;

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

no shares issued and outstanding at March 31, 2022 and December 31, 2021

Common stock, $ 0.0001 par value;

490,000,000 shares authorized;

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

89,145,809 shares issued and 88,625,809 shares outstanding at March 31, 2022;

88,975,169 shares issued and 88,455,169 shares outstanding at December 31, 2021;

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common stock held in treasury, at cost;

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

520,000 shares at March 31, 2022 and December 31, 2021

Accumulated deficit

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AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Three Months Ended

September 30,

Nine Months Ended

September 30,

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

For the Three Months

Ended March 31,

Real property rental

Medical related consulting services - related party

Total Revenues

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Real property operating expenses

Medical related consulting services - related party

Total Costs and Expenses

Real property operating income

Gross profit from medical related consulting services

Total Gross Profit

OTHER OPERATING EXPENSES:

Advertising and marketing

Professional fees

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( 2,303,588 )

( 6,570,839 )

( 9,415,577 )

OTHER INCOME (EXPENSE)

OTHER (EXPENSE) INCOME

Interest expense - related party

Loss from equity method investment

Other income (expense)

Total Other Expense, net

Total Other Income (Expense), net

LOSS BEFORE INCOME TAXES

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$ ( 2,367,118 )

$ ( 2,024,219 )

$ ( 3,251,959 )

$ ( 6,756,247 )

$ ( 9,579,122 )

NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST

3 unchanged sentences

$ ( 2,367,118 )

$ ( 6,756,247 )

$ ( 9,579,122 )

COMPREHENSIVE LOSS:

1 unchanged sentence

$ ( 2,367,118 )

$ ( 6,756,247 )

$ ( 9,579,122 )

OTHER COMPREHENSIVE INCOME

Unrealized foreign currency translation gain

OTHER COMPREHENSIVE INCOME (LOSS)

Unrealized foreign currency translation gain (loss)

COMPREHENSIVE LOSS

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( 2,369,840 )

( 6,742,898 )

( 9,558,181 )

COMPREHENSIVE LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST

3 unchanged sentences

$ ( 2,369,840 )

$ ( 6,742,898 )

$ ( 9,558,181 )

NET LOSS PER COMMON SHARE ATTRIBUTABLE TO AVALON GLOBOCARE CORP.

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Basic and diluted

See accompanying notes to the condensed consolidated financial statements.

accompanying notes to the condensed consolidated financial statements.

AVALON GLOBOCARE CORP.

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Three and Nine Months Ended September 30, 2021

For the Three Months Ended March 31, 2022

GloboCare Corp.

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of common stock, net

of common stock for services

currency translation adjustment

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$ ( 522,500 )

of common stock for settlement of accrued professional fees

of common stock for services

currency translation adjustment

loss for the three months ended June 30, 2021

$ ( 53,202,412 )

$ ( 163,245 )

June 30, 2021

( 46,773,403 )

of common stock, net

of common stock for services

currency translation adjustment

loss for the three months ended September 30, 2021

( 2,024,219 )

September 30, 2021

$ ( 522,500 )

$ ( 48,797,622 )

$ ( 177,161 )

See accompanying notes to the condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Three and Nine Months Ended September 30, 2020

For the Three Months Ended March 31, 2021

GloboCare Corp.

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$ ( 522,500 )

of common stock, net

of common stock for services

currency translation adjustment

loss for the three months ended June 30, 2020

$ ( 44,408,493 )

$ ( 193,232 )

June 30, 2020

( 35,689,100 )

of common stock, net

of common stock for services

currency translation adjustment

loss for the three months ended September 30, 2020

( 3,251,959 )

September 30, 2020

$ ( 522,500 )

$ ( 38,941,059 )

$ ( 236,806 )

See accompanying notes to the condensed consolidated financial statements.

See accompanying notes to the condensed

consolidated financial statements.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

CONDENSED CONSOLIDATED STATEMENTS OF

For the Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

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$ ( 2,367,118 )

Adjustments to reconcile net loss to net cash used

in operating activities:

Bad debt provision

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

Change in straight-line rent receivable

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Loss on equity method investment

Loss on fixed assets disposal

Changes in operating assets and liabilities:

Accounts receivable - related party

Rent receivable

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( 1,515,525 )

( 6,185,198 )

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 USED IN INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES

Repayments of note payable - related party

Proceeds received from loan payable - related party

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CASH - end of period

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid for:

NON-CASH INVESTING AND FINANCING ACTIVITIES:

Common stock issued for future services

Common stock issued for accrued liabilities

Deferred financing costs in accrued liabilities

Accrued professional fees relieved for shares issued

Improvement of commercial real estate acquired on credit as payable

See accompanying notes to the condensed consolidated financial statements.

GLOBOCARE CORP.

See accompanying notes to the condensed

consolidated financial statements.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

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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

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.

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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.

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,

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Through its subsidiary structure with unique integration of verticals

from innovative research and development (“R&D”) to automated bioproduction and accelerated clinical development, the

Company is establishing a leading role in the fields of cellular immunotherapy (including CAR-T/NK), exosome technology (ACTEX™),

and regenerative therapeutics.

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 September 30, 2021.

since its incorporation through March 31, 2022.

Avalon (BVI) Ltd.

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Avalon RT 9 owns this office building.

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

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

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

March 31, 2022, the occupancy rate of the building is 83.5 %.

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

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Yu Zhou holds 40 % of Genexosome.

The Company had not been able to realize the financial

projections provided by Dr.

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

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.

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

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

on April 6, 2022, the Company owns 60 % of Avactis

Biosciences Inc.

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

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

GLOBOCARE CORP.

activity for the subsidiary since its incorporation through March 31, 2022.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

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1 – ORGANIZATION AND NATURE OF OPERATIONS (continued)

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

are as follows:

of Subsidiary

and date of Incorporation

Healthcare System, Inc.

of the Company’s subsidiaries which are included in these condensed consolidated financial statements as of March 31, 2022 are

Name of Subsidiary

Place and date of Incorporation

Percentage of Ownership

Principal Activities

Avalon 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”)

Virgin Island

Avalon (BVI) Ltd.

(“Avalon BVI”)

British Virgin Island

January 23, 2017

100% held by AVCO

is in process of being dissolved

RT 9 Properties LLC

Dormant, is in process of being dissolved

Avalon RT 9 Properties LLC

(“Avalon RT 9”)

February 7, 2017

100% held by AVCO

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

(Shanghai) Healthcare Technology Co., Ltd.

Avalon (Shanghai) Healthcare Technology Co., Ltd.

(“Avalon Shanghai”)

April 29, 2016

100% held by AHS

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

Technologies Inc.

Genexosome Technologies Inc.

(“Genexosome”)

July 31, 2017

60% held by AVCO

Jieteng (Genexosome) Biotech Co., Ltd.

Beijing Jieteng (Genexosome) Biotech Co., Ltd.

(“Beijing Genexosome”)

August 7, 2015

100% held by Genexosome

Biosciences Inc.

Avactis Biosciences Inc.

July 18, 2018

100% held by AVCO

Integrate and optimize global scientific and clinical resources to further advance cellular therapies, including regenerative medicine with stem/progenitor cells as well as cellular immunotherapy including CAR-T, CAR-NK, TCR-T and others to treat certain cancers

International

Exosome Association LLC

International Exosome Association LLC

June 13, 2019

100% held by AVCO

Promotes standardization related to exosome industry

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2 – BASIS OF PRESENTATION AND GOING CONCERN CONDITION

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2021 filed with the Securities and Exchange Commission on March 30, 2022.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Company is a clinical-stage, vertically integrated, leading CellTech bio-developer dedicated to advancing and empowering innovative,

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Through its subsidiary structure with unique integration of verticals

from innovative research and development (“R&D”) to automated bioproduction and accelerated clinical development, the

Company is establishing a leading role in the fields of cellular immunotherapy (including CAR-T/NK), exosome technology (ACTEX™),

and regenerative therapeutics.

addition, the Company owns commercial real estate that houses its headquarters in Freehold, New Jersey and provides outsourced, customized

international healthcare services to the rapidly changing health care industry primarily focused in the People’s Republic of China.

These condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which

contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business.

reflected in the accompanying condensed consolidated financial statements, the Company had working capital deficit of $ 3,277,946 as of

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

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

The Company has a limited operating history and its continued growth is dependent

upon the continuation of providing medical consulting services to its only few clients who are related parties and generating rental

revenue from its income-producing real estate property in New Jersey;

hence generating revenues, and obtaining additional financing to

fund future obligations and pay liabilities arising from normal business operations.

In addition, the current cash balance cannot be

projected to cover the operating expenses for the next twelve months from the release date of this report.

These matters raise substantial

doubt about the Company’s ability to continue as a going concern.

The ability of the Company to continue as a going concern is

dependent on the Company’s ability to raise additional capital, implement its business plan, and generate significant revenues.

There are no assurances that the Company will be successful in its efforts to generate significant revenues, maintain sufficient cash

balance or report profitable operations or to continue as a going concern.

The Company plans on raising capital through the sale of equity

to implement its business plan.

However, there is no assurance these plans will be realized and that any additional financings will be

available to the Company on satisfactory terms and conditions, if any.

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

These condensed consolidated financial statements have been prepared assuming that the Company will continue as a going

concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of

reflected in the accompanying condensed consolidated financial statements, the Company had a working capital deficit of $ 4,234,370 as

of March 31, 2022 and has incurred recurring net losses and generated negative cash flow from operating activities of $ 2,070,538 and

$ 511,208 for the three months ended March 31, 2022, 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.

matters raise substantial doubt about the Company’s ability to continue as a going concern.

The ability of the Company to continue

as a going concern is dependent on the Company’s ability to raise additional capital, implement its business plan, and generate

significant revenues.

There are no assurances that the Company will be successful in its efforts to generate significant revenues, maintain

sufficient cash balance or report profitable operations or to continue as a going concern.

The Company plans on raising capital through

the sale of equity to implement its business plan.

However, there is no assurance these plans will be realized and that any additional

financings will be available to the Company on satisfactory terms and conditions, if any.

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

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a going concern.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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from these estimates.

Significant estimates during the three and nine months ended September 30, 2021 and 2020 include the useful life

of property and equipment and investment in real estate, assumptions used in assessing impairment of long-term assets, valuation of deferred

tax assets and the associated valuation allowances, and valuation of stock-based compensation.

Significant estimates during the three months ended March 31, 2022 and 2021 include the useful life of property

and equipment and investment in real estate, assumptions used in assessing impairment of long-term assets, valuation of deferred tax

assets and the associated valuation allowances, and valuation of stock-based compensation.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Value of Financial Instruments and Fair Value Measurements

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used in measuring fair value as follows:

● Level 1 - Inputs are

unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

● Level 2 - Inputs are

unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and

liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or

corroborated by observable market data.

● Level 3 - Inputs are

unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use

in pricing the asset or liability based on the best available information.

1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities

available at the measurement date.

2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets,

quoted prices for identical or similar assets and liabilities in markets that are not active,

inputs other than quoted prices that are observable, and inputs derived from or corroborated

by observable market data.

3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions

on what assumptions the market participants would use in pricing the asset or liability based

on the best available information.

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

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and Cash Equivalents

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

September 30, 2021

March 31, 2022 and December 31, 2021, the Company’s cash balances by geographic area were as follows:

March 31, 2022

December 31, 2021

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

The Company had no cash equivalents at September

The Company had no cash equivalents at March

31, 2022 and December 31, 2021.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Risk and Uncertainties

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

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

At March 31, 2022, cash balances held in the PRC are RMB 810,451 (approximately $ 128,000 ), of which, RMB 284,408 (approximately

$ 45,000 ) was not covered by such limited insurance.

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

At September 30, 2021, there

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

At March 31, 2022, there were

no balances in excess of the federally-insured limits.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Risk and Uncertainties (continued)

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

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The following five steps are applied to achieve that core principle:

Identify the contract

with the customer

Identify the performance

obligations in the contract

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recognition (continued)

Determine the transaction

Allocate the transaction

price to the performance obligations in the contract

Recognize revenue

when the company satisfies a performance obligation

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

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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).

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).

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.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recognition (continued)

transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods

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The cumulative difference between lease revenue recognized

under the straight-line method and contractual lease payments are included in rent receivable on the condensed consolidated balance sheets.

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 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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

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

For the three and nine

months ended September 30, 2021 and 2020, potentially dilutive common shares consist of the common shares issuable upon the exercise

of common stock options (using the treasury stock method).

Common stock equivalents are not included in the calculation of diluted net

loss per share if their effect would be anti-dilutive.

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

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

For the three months ended

March 31, 2022 and 2021, potentially dilutive common shares consist of the common shares issuable upon the exercise of common stock options

(using the treasury stock method).

Common stock equivalents are not included in the calculation of diluted net loss per share if their

effect would be anti-dilutive.

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

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

following table summarizes the securities that were excluded from the diluted per share calculation because the effect of including these

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Three Months Ended

September 30,

Nine Months Ended

September 30,

Stock options

Potentially dilutive securities

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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

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allocating resources and assessing performance for the entire Company.

Company previously had three reportable business segments:

real property operating segment, medical related consulting services segment,

and development services and sales of developed products segment.

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

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

As a result, commencing from

the first quarter of 2021, the Company’s chief operating decision maker no longer reviews development services and sales of developed

products operating results and the Company no longer reports in three segments.

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

real property operating segment

and medical related consulting services segment.

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

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

During the three months ended March 31, 2022 and 2021, the

Company operates through two business segments:

real property operating segment and medical related consulting services 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.

Reclassification

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

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Standards

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The Company expects that

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

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

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

This standard removes certain exceptions related to the approach for

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

for outside basis differences.

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

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

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

the adoption will not have a material impact on the Company’s condensed 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

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4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

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

September 30,

March 31, 2022 and December 31, 2021, prepaid expenses and other current assets consisted of the following:

Prepaid directors and officers liability insurance premium

Prepaid professional fees

Recoverable VAT

Deferred leasing costs

Prepaid research and development fees

Security deposit

Advance to supplier

5 – EQUITY METHOD INVESTMENT

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

of March 31, 2022 and December 31, 2021, the equity method investment amounted to $ 503,994 and $ 515,632 , respectively.

The investment

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scientific achievements.

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

Under the equity method, the investment

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

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

Thereafter, the investment is adjusted for the post incorporation change

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

GLOBOCARE CORP.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

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5 – EQUITY METHOD INVESTMENT (continued)

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

Company treats the equity investment in the condensed 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

the three months ended March 31, 2022 and 2021, the Company’s share of Epicon’s net loss was $ 12,916 and $ 18,514 , respectively,

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

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

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

and comprehensive loss.

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

Epicon is summarized in the following table:

In the three months ended March 31, 2022, activity recorded for the Company’s equity method investment in Epicon

is summarized in the following table:

Equity investment carrying amount at January 1, 2022

Payment made for equity method investment

Epicon’s net loss attributable to the Company

Foreign currency fluctuation

Equity investment carrying amount at September 30, 2021

Equity investment carrying amount at March 31, 2022

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

September 30,

Current assets

2 unchanged sentences

Noncurrent liabilities

Three Months Ended

September 30,

Nine Months Ended

September 30,

For the Three Months

Ended March 31,

Loss from operation

6 – OTHER NONCURRENT ASSETS

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

September 30,

Deferred financing costs

Security deposit

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6 – ACCRUED LIABILITIES AND OTHER PAYABLES

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

September 30,

March 31, 2022 and December 31, 2021, accrued liabilities and other payables consisted of the following:

March 31, 2022

Accrued tenants’ improvement reimbursement

Tenants’ security deposit

Accrued business expense reimbursement

Accounts payable

Accrued utilities

Taxes payable

Advance from customer

Deferred rental income

Refundable deposit

Accrued equity offering costs

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7 – 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 three months ended March 31, 2022, the related party rental revenue amounted to

$ 12,600 , and has been included in real property rental on the accompanying condensed consolidated statements of operations and comprehensive

The related party rent receivable totaled $ 46,200 and $ 33,600 , respectively, and no allowance for doubtful accounts was deemed

to be required on rent receivable – related party at March 31, 2022 and December 31, 2021.

Provided by Related Party

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 $ 51,138 and $ 57,405 for the three months ended

March 31, 2022 and 2021, respectively, which have been included in professional fees on the accompanying condensed consolidated statements

of operations and comprehensive loss.

Liabilities and Other Payables – Related Parties

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

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

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

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

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

of September 30, 2021 and December 31, 2020, the accrued and unpaid interest related to borrowings from Wenzhao Lu, the Company’s

largest shareholder and chairman of the Board of Directors, amounted to $ 309,484 and $ 167,956 , respectively, and have been included in

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

2017, the Company acquired Beijing Genexosome for a cash payment of $ 450,000 .

As of March 31, 2022 and December 31, 2021, the unpaid

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

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

owner of Genexosome, and has been included in accrued liabilities and other payables – related parties on the accompanying condensed

consolidated balance sheets.

of March 31, 2022 and December 31, 2021, 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 $ 408,120 and $ 368,433 , respectively, and have been included in accrued

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

from Related Party

1 unchanged sentence

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 both September 30, 2021 and December 31, 2020,

the outstanding principal balance was $ 390,000 .

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

Company repaid principal of $ 410,000 and $ 200,000 in the third quarter of 2019 and second quarter of 2020, respectively.

of both March 31, 2022 and December 31, 2021, 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

6 unchanged sentences

of 5 % and each individual loan will be payable three years from the date of issuance.

The Company has a right to draw down on the line

of credit and not at the discretion of the related party Lender.

The Company may, at its option, prepay any borrowings under the Line

of Credit, in whole or in part at any time prior to maturity, without premium or penalty.

The Line of Credit Agreement includes customary

events of default.

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

and payable immediately.

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

Credit, respectively.

GLOBOCARE CORP.

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.

For the three months ended March 31, 2022 and 2021, the interest

expense related to above borrowings amounted to $ 39,686 and $ 45,149 , respectively, and has been included in interest expense –

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

of March 31, 2022 and December 31, 2021, the related accrued and unpaid interest for above borrowings was $ 408,120 and $ 368,433 , respectively,

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

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8 – RELATED PARTY TRANSACTIONS (continued)

from Related Party (continued)

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

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

operations and comprehensive loss.

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

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

condensed consolidated statements of operations and comprehensive loss.

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

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

balance sheets.

Revenue from Related Party

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

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

For both the three and nine months ended September

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

consolidated statements of operations and comprehensive loss.

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

on the accompanying condensed consolidated balance sheets.

Incentive Stock Plan

Company held its annual meeting on August 4, 2020.

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

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

Shares Sold for Cash

2 unchanged sentences

Jefferies, shares of its common stock.

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

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

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

During the three months ended March 31, 2022, Jefferies sold an aggregate of 170,640 shares

of common stock at an average price of $ 0.79 per share to investors and the Company recorded net proceeds of $ 112,328 , net of commission

and other offering costs of $ 23,239 .

Shares Issued for Services

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

to be rendered.

These shares were valued at $ 1,319,487 , the fair market values on the grant dates using the reported closing share prices

on the dates of grant, and the Company recorded stock-based compensation expense of $ 784,800 for the nine months ended September 30,

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

over the rest of corresponding service periods.

Shares Issued for Settlement of Accrued Professional Fees

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

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9 – EQUITY (continued)

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

following table summarizes the shares of the Company’s common stock issuable upon exercise of options outstanding at March 31,

Options Outstanding

1 unchanged sentence

Outstanding at

September 30,

March 31, 2022

Weighted Average

1 unchanged sentence

Exercisable at

September 30,

March 31, 2022

$ 0.50 – 0.82

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

Weighted Average

Exercise Price

$ 0.50 – 4.76

option activities for the three months ended March 31, 2022 were as follows:

Number of Options

Outstanding at January 1, 2022

Outstanding at September 30, 2021

Options exercisable at September 30, 2021

Expired/forfeited/exercised

Outstanding at March 31, 2022

Options exercisable at March 31, 2022

Options expected to vest

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

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

aggregate intrinsic value of both stock options outstanding and stock options exercisable at March 31, 2022 was $ 401,400 .

fair values of options granted during the three months ended March 31, 2022 were estimated at the date of grant using the Black-Scholes

option-pricing model with the following assumptions:

1 unchanged sentence

yield of 0 %, and expected life of 5.00 years.

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

30, 2021 was $ 594,401 .

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

The aggregate fair value of the options granted during the three months

ended March 31, 2022 was $ 315,145 .

fair values of options granted during the three months ended March 31, 2021 were estimated at the date of grant using the Black-Scholes

option-pricing model with the following assumptions:

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

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

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

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

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

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

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

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

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

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

GLOBOCARE CORP.

volatility of 128.42 %, risk-free rate of 0.36 %, annual dividend yield of 0 % and

expected life of 5.00 years.

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

the three months ended March 31, 2022 and 2021, stock-based compensation expense associated with stock options granted amounted

to $ 152,323 and $ 202,505 , of which, $ 104,913 and $ 139,507 was recorded as compensation and related benefits, $ 36,138 and

$ 43,443 was recorded as professional fees, and $ 11,272 and $ 19,555 was recorded as research and development expenses,

respectively.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

1 unchanged sentence

8 – EQUITY (continued)

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

ended September 30, 2021 is presented below:

Weighted Average

Exercise Price

A summary of the status of the Company’s

nonvested stock options granted as of March 31, 2022 and changes during the three months ended March 31, 2022 is presented below:

Nonvested at January 1, 2022

Nonvested at September 30, 2021

10 – STATUTORY RESERVE

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

accordance with the PRC accounting rules and regulations.

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

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

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

the statutory reserve.

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

The appropriation

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

This statutory reserve is not distributable in the form

of cash dividends.

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

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

11 – RESTRICTED NET ASSETS

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

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

for appropriation to statutory reserve.

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

is not freely convertible into foreign currencies.

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

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

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

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

These currency exchange control procedures

imposed by the PRC government authorities may restrict the ability of the Company’s PRC subsidiaries to transfer their net assets

to the Parent Company through loans, advances or cash dividends.

I of Article 5-04 of Regulation S-X requires the condensed financial information of the parent company to be filed when the restricted

net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal

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

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

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

of a third party.

Company’s PRC subsidiaries’ net assets as of September 30, 2021 and December 31, 2020 did not exceed 25 % of the Company’s

consolidated net assets.

Accordingly, the Parent Company’s condensed consolidated financial statements have not been required in

accordance with Rule 5-04 and Rule 12-04 of SEC Regulation S-X.

GLOBOCARE CORP.

Nonvested at March 31, 2022

9 – 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

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.

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

three months ended March 31, 2022 as they incurred net losses in the period.

As of both March 31, 2022 and December 31, 2021, the

restricted amounts as determined pursuant to PRC statutory laws totaled $ 6,578 .

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.

As of both March 31, 2022 and December 31, 2021, total restricted net assets amounted

to $ 783,984 .

10 – 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.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

1 unchanged sentence

11 – CONCENTRATIONS

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

and nine months ended September 30, 2021 and 2020.

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

three months ended March 31, 2022 and 2021.

Three Months Ended

September 30,

Nine Months Ended

September 30,

A (Hebei Daopei, a related party)

customer, whose outstanding receivable accounted for 10 % or more of the Company’s total outstanding accounts receivable, accounts

receivable – related party, and rent receivable at September 30, 2021, accounted for 71.2 % of the Company’s total outstanding

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

customers, whose outstanding receivable accounted for 10 % or more of the Company’s total outstanding accounts receivable, accounts

receivable – related party, and rent receivable at December 31, 2020, accounted for 78.3 % of the Company’s total outstanding

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

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

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

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

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

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

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 rent receivable and rent receivable – related party at March 31, 2022, accounted for 74.1 % of the Company’s

total outstanding rent receivable and rent receivable – related party at March 31, 2022.

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 rent receivable and rent receivable – related party at December 31, 2021, accounted for 80.6 % of the Company’s

total outstanding rent receivable and rent receivable – related party at December 31, 2021.

supplier accounted for 10 % or more of the Company’s purchase during the three months ended March 31, 2022 and 2021.

One supplier,

whose outstanding payable accounted for 10 % or more of the Company’s total outstanding accounts payable at March 31, 2022,

accounted for 100.0 % of the Company’s total outstanding accounts payable at March 31, 2022.

12 – SEGMENT INFORMATION

the three and nine months ended September 30, 2020, the Company operated in three reportable business segments - (1) the real property

operating segment, (2) the medical related consulting services segment, and (3) the performing development services for hospitals and

other customers and sales of developed products to hospitals and other customers segment.

to the winding down of the development services and sales of developed products segment in 2020, the Company no longer has any material

revenues or expenses in this segment.

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

decision maker no longer reviews development services and sales of developed products operating results.

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

the three months ended March 31, 2022 and 2021, the Company operated in two reportable business segments - (1) the real property

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

GLOBOCARE CORP.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

12 – SEGMENT INFORMATION (continued)

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

2 unchanged sentences

Information with respect to these reportable business segments for the three

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

13 – SEGMENT INFORMATION (continued)

September 30,

property operations

related consulting services

property operations

related consulting services

property operations

related consulting services

operating expenses

property operations

related consulting services

services and sales of developed products

months ended March 31, 2022 and 2021 was as follows:

Three Months Ended

Real property operations

Costs and expenses

Real property operations

Other operating expenses

Real property operations

Medical related consulting services

Corporate/Other

(expense) income

Other (expense) income

Interest expense

Corporate/Other

income (expense)

property operations

related consulting services

services and sales of developed products

Other income (expense)

Real property operations

Medical related consulting services

Corporate/Other

other expense, net

income (loss)

property operations

related consulting services

services and sales of developed products

Total other income (expense), net

Net (loss) income

Real property operations

Medical related consulting services

Corporate/Other

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

September 30,

( 2,051,643 )

( 2,158,640 )

$ ( 2,070,538 )

$ ( 2,367,118 )

Identifiable long-lived tangible assets at March 31, 2022 and December 31, 2021

Real property operations

Medical related consulting services

Development services and sales of developed products

Corporate/Other

GLOBOCARE CORP.

Identifiable long-lived tangible assets at March 31, 2022 and December 31, 2021

March 31, 2022

United States

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

13 – SEGMENT INFORMATION (continued)

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

September 30,

United States

13 – COMMITMENTS AND CONTINGENCIES

19 unchanged sentences

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

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

Zhou was terminated as Co-CEO of Genexosome

on August 14, 2019.

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

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

Zhou, Li Chen, the

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

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

Research Institute is seeking monetary damages,

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

The Company intends to vigorously defend against

this action and pursue all available legal remedies.

the intangible asset associated with this acquisition to zero.

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

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

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

Zhou, Li Chen, the Company and Genexosome

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

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

Research Institute is seeking monetary damages, injunctive relief, exemplary

damages, injunctive relief and other equitable relief.

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

legal remedies.

The criminal proceedings against Dr.

Zhou and Li Chen have been concluded, and the

civil litigation continues.

While there can be no assurances, the Company believes it has substantial legal and factual defenses to the

Research Institute’s claims and the likelihood of any findings of liability for the Company cannot be assessed at this time.

Zhou and Li Chen have been concluded and the civil litigation continue.

and Nationwide Children’s Hospital have reached a verbal settlement agreement.

Both parties are in the process of drafting the

related written agreements.

There can be no assurances that these settlement agreements will be signed.

Leases Commitment

Company is a party to leases for office space.

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

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

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

Nine Months Ended

September 30,

Rent expense under all operating leases amounted to approximately $ 36,000 and $ 39,000 for

the three months ended March 31, 2022 and 2021, respectively.

Supplemental cash flow information related to leases for the three

months ended March 31, 2022 and 2021 is as follows:

Three Months Ended

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

2 unchanged sentences

Operating lease

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

14 – COMMITMENTS AND CONTINCENGIES (continued)

Leases Commitment

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

Operating Lease

following table summarizes the lease term and discount rate for the Company’s operating lease as of March 31, 2022:

Weighted average remaining lease term (in years)

Weighted average discount rate

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

For the Twelve-month Period Ending September 30:

Operating Lease

following table summarizes the maturity of lease liabilities under operating lease as of March 31, 2022:

For the Twelve-month Period Ending March 31:

2024 and thereafter

3 unchanged sentences

Current portion

Long-term portion

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

13 – COMMITMENTS AND CONTINCENGIES (continued)

Investment Commitment

10 unchanged sentences

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

As of September 30, 2021, Avalon Shanghai

has contributed RMB 4,760,000 (approximately $0.7 million) that was included in equity method investment on the accompanying condensed

consolidated balance sheets.

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

raises to fund the project cost.

Venture – AVAR BioTherapeutics (China) Co.

October 23, 2018, Avactis Biosciences, Inc.

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

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

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

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

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

cellular immunotherapy in China.

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

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

cash reserves.

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

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

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

upon Avactis and AVAR and services.

GLOBOCARE CORP.

As of March 31, 2022, Avalon Shanghai has

contributed RMB 4,760,000 (approximately $0.8 million) that was included in equity method investment on the accompanying condensed consolidated

balance sheets.

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

to fund the project cost.

Venture – Avactis Biosciences Inc.

July 18, 2018, the Company formed Avactis Biosciences Inc.

(“Avactis”), a Nevada corporation, as a wholly owned subsidiary.

On October 23, 2018, Avactis 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 was to be owned 60% by Avactis and 40% by Arbele.

On April 6, 2022, the Company, Acactis, Arbele and Arbele Biotherapeutics Limited

(“Arbele Biotherapeutics”), a wholly owned subsidiary of Arbele, entered into an Amendment No.

1 to the Equity Joint Venture

Agreement pursuant to which Arbele Biotherapeutics acquired 40% of Avactis for the purpose of the Company and Arbele establishing a joint

venture in the United States and the parties agreed that they would no longer pursue AVAR as a joint venture.

Further, all rights and

obligations under the AVAR Agreement were assigned by Avactis to Avalon and by Arbele to Arbele Biotherapeutics.

Avactis established

Avactis Nanjing Biosciences Ltd., a wholly owned foreign entity in the PRC.

Further, the parties agreed that the Exclusive Patent License

Agreement dated January 3, 2019 entered between Arbele, as licensor, and AVAR, as licensee (the “Arbele License Agreement”),

was assigned to Avactis and Avalon and Arbele agreed to enter into a new Arbele License Agreement with Avactis on the same/similar terms

as the Arbele License Agreement.

Anthony Chan was appointed to the Board of Directors of Avactis and as the Chief Scientific

Officer of Avactis.

Avactis purpose and business scope is to research, research, develop, produce, sell, distribute and generally commercialize

CAR-T/CAR-NK/TCR-T/universal cellular immunotherapy globally including in the PRC.

The Company 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 Avactis

and the Company in writing subject to the Company’s cash reserves.

Within 30 days, Arbele Biotherapeutics shall make contribution

of $6.66 million in the form of entering into a License Agreement with Avactis granting Avactis 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 the Company and Avactis and services.

As of the date hereof, the License Agreement has not been finalized.

In addition, the Company 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 the Company’s discretion;

Avactis in setting up its business operations and obtaining all required permits and licenses

from the Chinese government;

Avactis in recruiting, hiring and retaining personnel;

Avactis 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;

Avactis in managing the Good Manufacturing Practices (GMP) facility and clinic to be developed

Avactis with advice pertaining to conducting clinicals in China;

● Within 6 days of signing the AVAR Agreement, the Company is required to pay to Arbele Biotherapeutics $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.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

1 unchanged sentence

13 – COMMITMENTS AND CONTINCENGIES (continued)

Venture – AVAR BioTherapeutics (China) Co.

addition, Avactis is responsible for:

● Contributing

registered capital of RMB 5,000,000 (approximately $0.8 million) for working capital purposes as required by local regulation, which

is not required to be contributed immediately and will be contributed subject to Avactis’ discretion;

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

AVAR in recruiting, hiring and retaining personnel;

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

cellular immunotherapy technology in China;

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

AVAR with advice pertaining to conducting clinicals in China;

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

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

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

AVAR Agreement, Arbele shall be responsible for the following:

into a License Agreement with AVAR;

Providing AVAR with research

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

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

Venture – Avactis Biosciences Inc.

AVAR Agreement, as amended, Arbele Biotherapeutics shall be responsible for the following:

Entering into a License Agreement with Avactis;

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

of both March 31, 2022 and December 31, 2021, the Company paid the $ 900,000 to Arbele Biotherapeutics as research and development

As of March 31, 2022, License Agreement has not been finalized.

of Credit Agreement

14 unchanged sentences

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

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

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2022, $ 2,850,262 was outstanding under the Line of Credit.

14 – SUBSEQUENT EVENTS

and Equity Financing

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

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

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

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

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

(the “Sen Lang BVI Representative”).

Pursuant to the Purchase Agreement, subject to the satisfaction of the conditions to

closing therein, including approval by the Avalon stockholders pursuant to the rules of the Nasdaq Stock Market (“Nasdaq”),

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

Lang BVI Shares”).

Lang BVI, through a “variable interest entity” structure (“VIE Structure”) of contractual rights held by its

wholly-owned subsidiary Beijing Langlang Runfeng Biotechnology Co., Ltd., a wholly foreign owned enterprise with limited liability organized

and existing under the laws of the People’s Republic of China (the “PRC Subsidiary”), has full economic benefit and

management control over, and is consolidated for accounting purposes with, Senlang Biotechnology Co.

Ltd., a PRC domestic company with

limited liability organized and existing under the laws of the PRC (the “OpCo” or “SenlangBio”).

SenlangBio is

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

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

A wholly-owned subsidiary of SenlangBio, Shijiazhuang

Senlang Medical Laboratory Co., Ltd., a company with limited liability organized and existing under the laws of the PRC (“SenlangBio

Clinical Laboratory”) is engaged in the business of testing of immunology, serology and molecular genetics specialties for patients,

including hematology-tumor diagnostics and testing prior to clinical trials for cell therapy.

The purchase price being paid by the Company to the

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

Shares”) of the common stock of the Company (the “Avalon Common Stock”).

Ten percent ( 10 %), or 8.1 million, of such

shares will be held in escrow for 12 months following the closing to satisfy any indemnification obligations of the Sen Lang BVI Shareholders

under the Share Purchase Agreement.

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

Jianqiang Li, scientific founder

and CSO of SenlangBio, will join the board of the Company, and Dr.

Li will also be appointed as Chief Technology Officer of the Company.

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

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

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

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

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

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

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

(the “Equity Financing”), which funds will be invested in SenlangBio in three equal installments of approximately US$ 10,000,000 ,

at a fixed price, the first to be upon the closing of the Acquisition, the second to be within three months after the closing and the

third to be within six months after the closing.

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

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

Investor shall have the right, exercisable between the six-month and five year -anniversaries of the respective initial closing and installment

closings, to elect to exchange, from time to time, all or part of its then-owned equity ownership of SenlangBio for shares (the “Exchange

Shares”) of Avalon Common Stock at a fixed exchange price of US$ 1.21 per share of Avalon Common Stock, which was the market price

of the Avalon Common Stock as of the date of the Exchange Agreement under Nasdaq rules.

In addition, the Exchange Agreement provides

that the Investor may only exchange up to 10 % of its total investment amount in any 30 day period.

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.

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 closed

with respect to $ 2,669,521.60 of the financing on April 15, 2022 and with respect to $ 659,580.64 of the financing on April 29, 2022.

The Company and the investor expect to close on the balance of the $ 4,000,000 in funding no later than May 15, 2022.

As a result of the

first closing, the Company issued the investor a 2022 Convertible Note in the principal amount of $ 2,669,521.60 and a 2022 Warrant to

acquire 889,840 shares of common stock and as a result of the second closing, the Company issued the investor a 2022 Convertible Note

in the principal amount of $ 659,580.64 and a 2022 Warrant to acquire 219,860 shares of common stock.

2022 Convertible Note bears 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.

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, the 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

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

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.

Shares Issued for Services

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

These shares were valued at

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

Shares Sold for Cash

On December 13, 2019, the Company entered into

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

From October 1, 2021 to November

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

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

Line of Credit

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

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

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

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

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

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

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

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

April 2022, the Company issued a total of 329,592 shares of its common stock for services rendered and to be rendered.

shares were valued at $ 290,950 , 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 $ 251,590 and recorded prepaid expense of $ 39,360 which will be amortized over the

rest of corresponding service periods.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements