What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-11 compared with 2021-11-15 · 544 added, 558 removed, 56 unchanged (95% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

following discussion and analysis of our financial condition and results of operations for the three and nine months ended September

30, 2021 and 2020 should be read in conjunction with our condensed consolidated financial statements and related notes to those condensed

consolidated financial statements that are included elsewhere in this report.

Our discussion includes forward-looking statements based

upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions.

Actual results

and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of

factors, including those set forth under the Risk Factors, Special Note Regarding Forward-Looking Statements and Business sections in

our Form 10-K as filed with the Securities and Exchange Commission on March 30, 2021.

We use words such as “anticipate,”

“estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,”

“believe,” “intend,” “may,” “will,” “should,” “could,” and similar

expressions to identify forward-looking statements.

of COVID-19 on Our Operations, Financial Condition, Liquidity and Results of Operations

the COVID-19 vaccines have generally been introduced to the public, the ultimate impact of the COVID-19 pandemic on our operations is

unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration

of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, a significant increase in

new and variant strains of COVID-19 cases, availability and effectiveness of COVID-19 vaccines and therapeutics, the level of acceptance

of the vaccine by the general population and any additional preventative and protective actions that governments, or us, may determine

occurrence of COVID-19 pandemic had negative impact on our operations.

Some of the universities and laboratories with which we collaborate

were temporarily closed.

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

However, we are uncertain if the COVID-19 pandemic will impact future operations at our laboratory, or our ability to collaborate

with other laboratories and universities.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following

discussion and analysis of our financial condition and results of operations for the three months ended March 31, 2022 and 2021 should

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

statements that are included elsewhere in this report.

Our discussion includes forward-looking statements based upon current expectations

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

Actual results and the timing of events

could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those

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

the Securities and Exchange Commission on March 30, 2022.

We use words such as “anticipate,” “estimate,” “plan,”

“project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,”

“may,” “will,” “should,” “could,” and similar expressions to identify forward-looking

Impact of COVID-19

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

Although the COVID-19

vaccines have generally been introduced to the public, the ultimate impact of the COVID-19 pandemic on our operations is unknown and will

depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19

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

strains of COVID-19 cases, availability and effectiveness of COVID-19 vaccines and therapeutics, the level of acceptance of the vaccine

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

The occurrence of COVID-19

pandemic had negative impact on our operations.

Some of the universities and laboratories with which we collaborate were temporarily closed.

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

are uncertain if the COVID-19 pandemic will impact future operations at our laboratory, or our ability to collaborate with other laboratories

and universities.

In addition, we are unsure if the COVID-19 pandemic will impact future clinical trials.

the dynamic nature of these circumstances, the duration of business disruption and reduced traffic, the related financial effect cannot

be reasonably estimated at this time but is expected to adversely impact the Company’s business for the rest of 2021.

have limited cash available to fund planned operations and although we have other sources of capital described below under “Liquidity

and Capital Resources,” management continues to pursue various financing alternatives to fund our operations so we can continue

as a going concern.

However, the COVID-19 pandemic has created significant economic uncertainty and volatility in the credit and capital

Management plans to secure the necessary financing through the issue of new equity and/or the entering into of strategic partnership

arrangements but the ultimate impact of the COVID-19 pandemic on our ability to raise additional capital is unknown and will depend on

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

and new information which may emerge concerning the severity of the COVID-19 pandemic.

We may not be able to raise sufficient additional

capital and may tailor our operations based on the amount of funding we are able to raise in the future.

Nevertheless, there is no assurance

that these initiatives will be successful.

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

on acceptable terms.

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

transformative immune effector cell therapy, exosome technology, as well as COVID-19 related diagnostics and therapeutics.

also provides strategic advisory and outsourcing services to facilitate and enhance its clients’ growth and development, as well

as competitiveness in healthcare and CellTech industry markets.

Through its subsidiary structure with unique integration of verticals

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

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

and regenerative therapeutics.

achieves and fosters seamless integration of unique verticals to bridge and accelerate innovative research, bio-process development,

clinical programs and product commercialization.

Given the dynamic nature of

these circumstances, the duration of business disruption and reduced traffic, the related financial effect cannot be reasonably estimated

at this time but is expected to adversely impact the Company’s business for the rest of 2022.

We have limited cash

available to fund planned operations and although we have other sources of capital described below under “Liquidity and Capital

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

However, the COVID-19 pandemic has created significant economic uncertainty and volatility in the credit and capital markets.

plans to secure the necessary financing through the issue of new equity and/or the entering into of strategic partnership arrangements

but the ultimate impact of the COVID-19 pandemic on our ability to raise additional capital is unknown and will depend on future developments,

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

which may emerge concerning the severity of the COVID-19 pandemic.

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

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

Nevertheless, there is no assurance that these initiatives

will be successful.

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

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 COVID-19 related vaccine and therapeutics.

Avalon achieves and fosters

seamless integration of unique verticals to bridge and accelerate innovative research, bio-process development, clinical programs and

product commercialization.

Avalon’s upstream innovative research includes:

● Development

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

therapeutic and diagnostic targets development utilizing QTY-code protein design technology with Massachusetts Institute of Technology

(MIT) including using the QTY code protein design technology for development of a hemofiltration device to treat Cytokine Storm.

Strategic partnership with the University of Natural Resources and Life Sciences (BOKU) in Vienna, Austria to develop an S-layer based mucosal vaccine that can be administered by an intranasal or oral route against SARS-CoV-2, the novel coronavirus that causes COVID-19 disease, and other respiratory infections.

midstream bio-processing and bio-production facility is located in Nanjing, China with state-of-the-art, automated GMP and QC/QA infrastructure

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

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

Massachusetts Institute of Technology (MIT) including using the QTY code protein design technology for development of a hemofiltration

device to treat Cytokine Storm.

● Co-development of next generation, transposon-based, multi-target CAR-T, CAR-NK and other immune effector

cell therapeutic modalities with Arbele Limited.

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

to develop an S-layer vaccine that can be administered by an intranasal or oral route against SARS-CoV-2, the novel coronavirus that causes

COVID-19 disease.

Avalon’s midstream

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

for standardized bio-manufacturing of clinical-grade cellular products involved in our clinical programs in immune effector cell therapy,

regenerative therapeutics, as well as bio-banking.

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

full capacity.

However, the Company expects to slowly increase operations in the near future.

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

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

Our major clinical programs

Avalon has initiated

its first-in-human clinical trial of CD19 CAR-T candidate, AVA-001 in August 2019 at the Hebei Yanda Lu Daopei Hospital and Beijing

Lu Daopei Hospital in China (the world’s single largest CAR-T treatment network with over 600 patients being treated with CAR-T)

for the indication of relapsed/refractory B-cell acute lymphoblastic leukemia and non-Hodgkin Lymphoma.

The AVA-001 candidate (co-developed

with China Immunotech Co.

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

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

It also features a shorter bio-manufacturing time which leads to the advantage

of prompt treatment to patients where timing is important related hematologic malignancies.

Avalon has successfully completed the

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

patients with relapsed/refractory B-cell acute lymphoblastic leukemia at the Lu Daopei Hospital (registered clinical trial number

Avalon’s downstream

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

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

Our major clinical programs include:

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

2019 at the Hebei Yanda Lu Daopei Hospital and Beijing Lu Daopei Hospital in China (the world’s single largest CAR-T treatment network

with over 600 patients being treated with CAR-T) for the indication of relapsed/refractory B-cell acute lymphoblastic leukemia and non-Hodgkin

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

Ltd) is characterized by the utilization of 4-1BB (CD137) co-stimulatory

signaling pathway, conferring a strong anti-cancer activity during pre-clinical study.

It also features a shorter bio-manufacturing time

which leads to the advantage of prompt treatment to patients where timing is important related hematologic malignancies.

Avalon has successfully

completed the first-in-human clinical trial of its AVA-001 anti-CD19 CAR-T cell therapy as a bridge to allogeneic bone marrow transplantation

for patients with relapsed/refractory B-cell acute lymphoblastic leukemia at the Lu Daopei Hospital (registered clinical trial number

NCT03952923) with excellent efficacy (90% complete remission rate) and minimal adverse side effects.

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

Stem cell-derived Avalon Clinical-grade Tissue-specific Exosomes (ACTEX™) is one of the core technology platforms that has

been co-developed by Avalon GloboCare and Dr.

Yen-Michael Hsu at University of Pittsburgh Medical Center (UPMC).

The Company formed

a strategic partnership with HydroPeptide, LLC, a leading epigenetics skin care company, to engage in co-development and

commercialization of a series of clinical-grade, exosome-based cosmeceutical and orthopedic products.

FLASH-CAR™ / AVA-011:

The Company advanced its next generation immune cell therapy using mRNA-based, non-viral FLASH-CAR™ technology co-developed with the Company’s strategic partner Arbele Limited.

The adaptable FLASH-CAR™ platform can be used to create personalized cell therapy from a patient’s own cells, as well as off-the-shelf cell therapy from a universal donor.

Our leading candidate, AVA-011, is currently at process development stage to generate clinical-grade cell-therapy products for subsequent clinical studies.

Avalon’s AVA-Trap™ therapeutic program plans to enter animal model testing followed by expedited clinical studies with the goal of providing an effective therapeutic option to combat COVID-19 and other life-threatening conditions involving cytokine storms.

The Company initiated a sponsored research and co-development project with Massachusetts Institute of Technology (MIT) led by Professor Shuguang Zhang as Principal Investigator in May 2019.

Using the unique QTY code protein design platform, six water-soluble variant cytokine receptors have been successfully designed and tested to show binding affinity to the respective cytokines.

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

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

We also own and operate rental commercial real property

in New Jersey, where we are headquartered.

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

transformative immune effector cell therapy, exosome technology, as well as COVID-19 related diagnostics and therapeutics.

also provides strategic advisory and outsourcing services to facilitate and enhance its clients’ growth and development, as well

as competitiveness in healthcare and CellTech industry markets.

Through its subsidiary structure with unique integration of verticals

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

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

and regenerative therapeutics.

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

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 working capital deficit of $3,277,946 as of

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

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

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

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

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

hence generating revenues, and obtaining additional financing to

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

In addition, the current cash balance cannot be

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

These matters raise substantial

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

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

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

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

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

The Company plans on raising capital through the sale of equity

to implement its business plan.

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

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

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

development operations have continued during the COVID-19 pandemic and we have not had significant disruption.

However, we are uncertain

if the COVID-19 pandemic will impact future operations at our laboratory, or our ability to collaborate with other laboratories and universities.

In addition, we are unsure if the COVID-19 pandemic will impact future clinical trials.

Given the dynamic nature of these circumstances,

the duration of business disruption and reduced traffic, the related financial effect cannot be reasonably estimated at this time but

is expected to adversely impact the Company’s business for the rest of 2021.

accompanying condensed consolidated financial statements do not include any adjustments related to the recoverability or classification

of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as

a going concern.

● AVA-011 and FLASH-CAR™:

The Company advanced its next generation immune cell therapy using RNA-based,

non-viral FLASH-CAR™ technology co-developed with the Company’s strategic partner Arbele Limited.

The adaptable FLASH-CAR™

platform can be used to create personalized cell therapy from a patient’s own cells, as well as off-the-shelf cell therapy from

a universal donor.

Our leading candidate, AVA-011, is currently at process development stage to generate clinical-grade cell-therapy products

for subsequent clinical studies.

On July 8, 2021, the Company and the University of Pittsburgh of the Commonwealth System of Higher

Education (the “University”) entered into a Corporate Research Agreement (the “University Agreement”).

to the University Agreement, for a term of two years the University agreed to use its reasonable efforts to perform academic research

funded by the Company in connection with the development of point-of-care modular autonomous processing system to generate clinical-grade

AVA-011, a RNA-based chimeric antigen receptor (CAR) T-cell therapy candidate (the “Project”) subject to the appointment of

Yen Michael S.

Hsu as Principal Investigator.

During the term, the Company agreed to make eight payments of $125,000 to the

As of March 31, 2022, the Company did not make any payment.

The Company and the University shall each own an undivided, one

half interest in any intellectual property rights jointly developed by both parties.

The Company has been granted a worldwide, irrevocable,

non-exclusive, royalty free, fully paid-up, perpetual right to use intellectual property developed by the University in connection with

the Project for commercial purposes research activities and other purposes.

Further, the Company will have an exclusive right of first

offer to an exclusive royalty-bearing license to intellectual property developed by the University or co-developed by the Company and

the University in connection with the Project.

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

the core technology platforms that has been co-developed by Avalon GloboCare and the University of Pittsburgh Medical Center.

formed a strategic partnership with HydroPeptide, LLC, a leading epigenetics skin care company, to engage in co-development and commercialization

of a series of clinical-grade, exosome-based cosmeceutical and orthopedic products.

As part of this agreement, the Company signed a three-way

Material Transfer Agreement between Avalon GloboCare, HydroPeptide and the University of Pittsburgh Medical Center.

Avalon’s AVA-Trap™ therapeutic program plans to enter animal model testing

followed by expedited clinical studies with the goal of providing an effective therapeutic option to combat COVID-19 and other life-threatening

conditions involving cytokine storms.

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

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

Using the unique QTY code protein design platform,

six water-soluble variant cytokine receptors have been successfully designed and tested to show binding affinity to the respective cytokines.

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 COVID-19 related vaccine and therapeutics.

In addition, the Company

owns commercial real estate that houses its headquarters in Freehold, New Jersey and provides outsourced and 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.

As 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.

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.

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.

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.

we are unsure if the COVID-19 pandemic will impact future clinical trials.

Given the dynamic nature of these circumstances, the duration

of business disruption and reduced traffic, the related financial effect cannot be reasonably estimated at this time but is expected to

adversely impact the Company’s business for the rest of 2022.

The accompanying condensed

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

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

Accounting Policies

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

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

The preparation of these condensed

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

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

We continually evaluate our estimates, including

those related to the useful life of property and equipment and investment in real estate, assumptions used in assessing impairment of

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

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

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

from other sources.

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

expenses, assets and liabilities.

Use of Estimates

Our discussion and analysis

of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared

in accordance with accounting principles generally accepted in the United States.

The preparation of these condensed consolidated financial

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

and related disclosure of contingent assets and liabilities.

We continually evaluate our estimates, including those related to the useful

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

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

We base our estimates

on historical experience and on various other assumptions that we believed to be reasonable under the circumstances, the results of which

form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

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

and liabilities.

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

Revenue Recognition

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

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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

Determine the transaction

Allocate the transaction

price to the performance obligations in the contract

Recognize revenue

when the company satisfies a performance obligation

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

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

A performance obligation meets ASC 606’s definition

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

customer can benefit from the goods or service either on its own or together with other resources that are readily available to the customer

(i.e., the goods or service is capable of being 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.

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.

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

income from operating leases is recognized on a straight-line basis under the guidance of ASC 842.

Lease payments under tenant leases

are recognized on a straight-line basis over the term of the related leases.

The cumulative difference between lease revenue recognized

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

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

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

Income taxes are accounted for pursuant to ASC 740 “Accounting

for Income Taxes,” which is an asset and liability approach that requires the recognition of deferred tax assets and liabilities

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

The charge for

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

It is calculated using tax

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

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

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

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

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

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

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

case the deferred tax is changed to equity.

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

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

Accounting Standards

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

consolidated financial statements accompanying this report.

OF OPERATIONS

of Results of Operations for the Three and Nine Months Ended September 30, 2021 and 2020

the three months ended September 30, 2021, we had real property rental revenue of $355,459, as compared to $324,982 for the three months

ended September 30, 2020, an increase of $30,477, or 9.4%.

For the nine months ended September 30, 2021, we had real property rental

revenue of $925,465, as compared to $923,205 for the nine months ended September 30, 2020, an increase of $2,260, or 0.2%.

was primarily attributable to the increase of tenants in 2021.

We expect that our revenue from real property rent will remain in its

current quarterly level with minimal increase in the near future.

the three and nine months ended September 30, 2021, we had medical related consulting services revenue from related party of $131,305.

For the three and nine months ended September 30, 2020, we did not have any medical related consulting services revenue since there was

no demand for our consulting service from our related parties and there was no order for our medical related consulting services from

third party in these periods.

We expect that our revenue from medical related consulting services will increase in the near future.

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

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

the three months ended September 30, 2021, our real property operating expenses amounted to $215,622, as compared to $135,821 for the

three months ended September 30, 2020, an increase of $79,801, or 58.8%.

The increase was mainly due to an increase in repairs and maintenance

fees of approximately $16,000, an increase in janitorial supplies of approximately $3,000, an increase in utilities of approximately

$8,000, and an increase in other miscellaneous items of approximately $52,000.

For the nine months ended September 30, 2021, our real

property operating expenses amounted to $637,663, as compared to $663,086 for the nine months ended September 30, 2020, a decrease of

$25,423, or 3.8%.

The decrease was mainly due to a decrease in air conditioner maintenance fees of approximately $3,000, a decrease in

janitorial supplies of approximately $4,000, and a decrease in other miscellaneous items of approximately $18,000.

of medical related consulting services include the cost of labor and related benefits, travel expenses related to medical related consulting

services, and other overhead costs.

the three and nine months ended September 30, 2021, costs of medical related consulting services amounted to $102,442.

There were no

comparative revenue and related costs of revenue from our medical related consulting services for the three and nine months ended September

30, 2020 since there was no demand for our consulting service from our related parties and there was no order for our medical related

consulting services from third party in these periods.

Property Operating Income

real property operating income for the three months ended September 30, 2021 was $139,837, representing a decrease of $49,324, or 26.1%,

as compared to $189,161 for the three months ended September 30, 2020.

The decrease was mainly attributable to the increase in real property

operating expenses as described above.

Our real property operating income for the nine months ended September 30, 2021 was $287,802,

representing an increase of $27,683, or 10.6%, as compared to $260,119 for the nine months ended September 30, 2020.

The increase was

mainly attributable to the decrease in real property operating expenses as described above.

We expect our real property operating income

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

Profit from Medical Related Consulting Services and Gross Margin

gross profit from medical related consulting services for the three and nine months ended September 30, 2021 was $28,863, with a

gross margin of 22.0%.

We did not generate any gross profit from medical related consulting services in the three and nine months ended

September 30, 2020.

We estimate that our gross margin from medical related consulting services segment will remain at its current level.

Operating Expenses

the three and nine months ended September 30, 2021 and 2020, other operating expenses consisted of the following:

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

In order to identify the performance obligations

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

service that is distinct.

A performance obligation meets ASC 606’s definition of a “distinct” goods or service (or bundle

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

● The customer can benefit from the goods or service either on its own or together with other resources

that are readily available to the customer (i.e., the goods or service is capable of being distinct).

● The entity’s promise to transfer the goods or service to the customer is separately identifiable

from other promises in the contract (i.e., the promise to transfer the goods or service is distinct within the context of the contract).

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.

The Company’s revenues

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

Revenues related to its service offerings

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

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

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

We have determined that

the ASC 606 does not apply to rental contracts, which are within the scope of other revenue recognition accounting standards.

Rental income from operating

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

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

basis over the term of the related leases.

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

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

We do not offer promotional

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

We are governed by the

income tax laws of China and the United States.

Income taxes are accounted for pursuant to ASC 740 “Accounting for Income Taxes,”

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

tax consequences of events that have been recognized in our financial statements or tax returns.

The charge for taxes is based on the

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

It is calculated using tax rates that have been

enacted or substantively enacted by the balance sheet date.

Deferred tax is accounted

for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount

of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of assessable tax profit.

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

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

Deferred tax is calculated

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

Deferred tax is charged

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

tax is changed to equity.

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

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

Recent Accounting Standards

For details of applicable new accounting standards,

please, refer to Recent Accounting Standards in Note 3 of our condensed consolidated financial statements

accompanying this report.

RESULTS OF OPERATIONS

Comparison of Results of Operations for the

Three Months Ended March 31, 2022 and 2021

For the three months

ended March 31, 2022, we had real property rental revenue of $297,631, as compared to $289,774 for the three months ended March 31, 2021,

an increase of $7,857, or 2.7%.

The slight increase was primarily attributable to the increase of tenants in the first quarter of 2021.

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

Costs and 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 our rental properties.

For the three months

ended March 31, 2022, our real property operating expenses amounted to $218,448, as compared to $216,894 for the three months ended March

31, 2021, an increase of $1,554, or 0.7%.

Real Property Operating Income

property operating income for the three months ended March 31, 2022 was $79,183, representing an increase of $6,303, or 8.6%, as compared

to $72,880 for the three months ended March 31, 2021.

The increase was mainly attributable to the increase in real property rental revenue

as described above.

We expect our real property operating income will remain in its current level with minimal increase in the near future.

Other Operating Expenses

the three months ended March 31, 2022 and 2021, other operating expenses consisted of the following:

Three Months Ended

September 30,

Nine Months Ended

September 30,

Advertising and marketing expenses

Professional fees

1 unchanged sentence

Research and development

Directors and officers liability insurance premium

Travel and entertainment

Directors and officers liability insurance premium

Rent and related utilities

Advertising expenses

Other general and administrative

● Professional

fees primarily consisted of accounting fees, audit fees, legal service fees, consulting fees, investor relations service charges and

other fees incurred for service related to being a public company.

For the three months ended September 30, 2021, professional fees decreased

by $531,230, or 30.3%, as compared to the three months ended September 30, 2020.

The decrease was primarily attributable to a decrease

in consulting fees of approximately $738,000 mainly due to the decrease in use of consulting service providers, and a decrease in investor

relations service fees of approximately $183,000 mainly due to the decrease in use of investor relations service providers, offset by

an increase in legal service fees of approximately $316,000 mainly due to increased legal service related to our potential acquisition,

and an increase in other miscellaneous items of approximately $74,000.

For the nine months ended September 30, 2021, professional fees

decreased by $908,321, or 18.7%, as compared to the nine months ended September 30, 2020.

The decrease was primarily attributable to

a decrease in consulting fees of approximately $1,160,000 mainly due to the decrease in use of consulting service providers, a decrease

in investor relations service fees of approximately $479,000 mainly due to the decrease in use of investor relations service providers,

and a decrease in other miscellaneous items of approximately $63,000, offset by an increase in legal service fees of approximately $613,000

mainly due to increased legal service related to our potential acquisition, and an increase in valuation fee for our potential acquisition

We expect that our professional fees will remain in its current quarterly level with minimal decrease in the near future.

the three months ended September 30, 2021, compensation and related benefits decreased by $623,968, or 58.9%, as compared to the three

months ended September 30, 2020.

The significant decrease was primarily attributable to a decrease in stock-based compensation of approximately

$520,000 which reflected the value of options granted and vested to our management, and a decrease in management’s compensation

and related benefits of approximately $104,000.

For the nine months ended September 30, 2021, compensation and related benefits decreased

by $1,696,653, or 52.3%, as compared to the nine months ended September 30, 2020.

The significant decrease was primarily attributable

to a decrease in stock-based compensation of approximately $1,614,000 which reflected the value of options granted and vested to our

management, and a decrease in management’s compensation and related benefits of approximately $83,000.

We expect that our compensation

and related benefits will remain in its current quarterly level with minimal increase in the near future.

the three months ended September 30, 2021, research and development expenses decreased by $14,360, or 6.0%, as compared to the three

months ended September 30, 2020.

For the nine months ended September 30, 2021, research and development expenses increased by $1,118,

or 0.2%, as compared to the nine months ended September 30, 2020.

We expect that our research and development expenses will remain in

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

the three months ended September 30, 2021, Directors and Officers Liability Insurance premium increased by $22,637, or 28.7%, as compared

to the three months ended September 30, 2020.

For the nine months ended September 30, 2021, Directors and Officers Liability Insurance

premium increased by $68,894, or 35.4%, as compared to the nine months ended September 30, 2020.

The increase was mainly due to different

insurance provider with different premium.

the three months ended September 30, 2021, travel and entertainment expense increased by $15,911, or 48.6%, as compared to the three

months ended September 30, 2020.

The increase was primarily due to the increased business travel activities in the third quarter of 2021.

For the nine months ended September 30, 2021, travel and entertainment expense decreased by $16,683, or 12.1%, as compared to the nine

months ended September 30, 2020.

The decrease was mainly due to decreased business travel activities and decreased entertainment expenditure

resulting from COVID-19.

the three months ended September 30, 2021, rent and related utilities expenses decreased by $4,528, or 19.7%, as compared to the three

months ended September 30, 2020.

For the nine months ended September 30, 2021, rent and related utilities expenses decreased by $8,517,

or 12.5%, as compared to the nine months ended September 30, 2020.

The decrease was mainly attributable to the decreased monthly rent

in Avalon Shanghai’s office.

the three months ended September 30, 2021, advertising expenses decreased by $74,639 or 72.8% as compared to the three months ended September

For the nine months ended September 30, 2021, advertising expenses decreased by $172,161 or 79.6% as compared to the nine months

ended September 30, 2020.

The significant decrease was primarily due to reduced advertising activities incurred as a result of stricter

control on corporation spending.

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

general and administrative expenses mainly consisted of NASDAQ listing fee, office supplies, and other miscellaneous items.

For the three

months ended September 30, 2021, other general and administrative expenses decreased by $35,871, or 38.8%, as compared to the three months

ended September 30, 2020.

For the nine months ended September 30, 2021, other general and administrative expenses decreased by $55,869,

or 20.4%, as compared to the nine months ended September 30, 2020.

The decrease resulted from our efforts at stricter controls on corporate

from Operations

a result of the foregoing, for the three months ended September 30, 2021, loss from operations amounted to $1,964,971, as compared to

$3,190,558 for the three months ended September 30, 2020, a decrease of $1,225,587, or 38.4%.

a result of the foregoing, for nine months ended September 30, 2021, loss from operations amounted to $6,570,839, as compared to $9,415,577

for the nine months ended September 30, 2020, a decrease of $2,844,738, or 30.2%.

Income (Expense)

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

expense, net, totaled $59,248 for the three months ended September 30, 2021, as compared to $61,401 for the three months ended September

30, 2020, a decrease of $2,153, or 3.5%, which was primarily attributable to a decrease in other miscellaneous expense of approximately

$10,000, and a decrease in loss from equity method investment of approximately $1,000, offset by an increase in interest expense of approximately

expense, net, totaled $185,408 for the nine months ended September 30, 2021, as compared to $163,545 for the nine months ended September

30, 2020, an increase of $21,863, or 13.4%, which was primarily attributable to an increase in interest expense of approximately $15,000,

and an increase in loss from equity method investment of approximately $13,000, offset by a decrease in other miscellaneous expense of

approximately $6,000.

did not have any income taxes expense for the three and nine months ended September 30, 2021 and 2020 since we incurred losses in

these periods.

a result of the factors described above, our net loss was $2,024,219 for the three months ended September 30, 2021, as compared to $3,251,959

for the three months ended September 30, 2020, a decrease of $1,227,740 or 37.8%.

a result of the factors described above, our net loss was $6,756,247 for the nine months ended September 30, 2021, as compared to $9,579,122

for the nine months ended September 30, 2020, a decrease of $2,822,875 or 29.5%.

Loss Attributable to Avalon GloboCare Corp.

● For the three months ended March 31, 2022, advertising and

marketing expenses increased by $517,983 or 5,870.8% as compared to the three months ended March 31, 2021.

The increase was primarily

due to increased advertising activities.

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

● Professional fees primarily consisted of accounting fees, audit

fees, legal service fees, consulting fees, investor relations service charges and other fees.

For the three months ended March 31, 2022,

professional fees decreased by $559,870, or 40.5%, as compared to the three months ended March 31, 2021.

The decrease was primarily attributable

to a decrease in consulting fees of approximately $476,000 mainly due to the decrease in use of consulting service providers, a decrease

in legal service fees of approximately $111,000 mainly due to the decrease in use of legal service providers, and a decrease in valuation

service fee of $90,000, offset by an increase in investor relations service fees of approximately $107,000 mainly due to the increase

in use of investor relations service providers, and an increase in other miscellaneous items of approximately $10,000.

We expect that

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

● For the three months ended March 31, 2022, compensation and

related benefits decreased by $38,961, or 6.9%, as compared to the three months ended March 31, 2021.

The decrease was primarily attributable

to a decrease in stock-based compensation of approximately $35,000 which reflected the value of options granted and vested to our management

and a decrease in management’s compensation and related benefits of approximately $4,000.

We expect that our compensation and related

benefits will remain in its current level with minimal decrease in the near future.

● For the three months ended March 31, 2022, research and development

expenses decreased by $96,504, or 45.3%, as compared to the three months ended March 31, 2021.

The decrease was mainly attributable to

we decreased research and development projects in the first quarter of 2022.

We expect that our research and development expenses will

continue to decrease in the near future.

● For the three months ended March 31, 2022, travel and entertainment

expense increased by $6,130, or 19.1%, as compared to the three months ended March 31, 2021.

The increase was mainly due to increased

business travel activities in the first quarter of 2022.

● For the three months ended March 31, 2022, Directors and Officers

Liability Insurance premium increased by $22,443, or 27.7%, as compared to the three months ended March 31, 2021.

The increase was mainly

due to different insurance provider with different premium.

● For the three months ended March 31, 2022, rent and related utilities

expenses decreased by $2,071, or 9.2%, as compared to the three months ended March 31, 2021.

The decrease was mainly due to the decreased

monthly rent in Avalon Shanghai’s office.

● Other general and administrative expenses mainly consisted

of NASDAQ listing fee, office supplies, and other miscellaneous items.

For the three months ended March 31, 2022, other general and administrative

expenses decreased by $19,493, or 25.9%, as compared to the three months ended March 31, 2021, reflecting our efforts at stricter controls

on corporate expenditure.

Loss from Operations

a result of the foregoing, for the three months ended March 31, 2022, loss from operations amounted to $2,126,942, as compared to $2,303,588

for the three months ended March 31, 2021, a decrease of $176,646 or 7.7%.

Other (Expense)

Other (expense) income

mainly includes interest expense, loss from equity method investment, and other miscellaneous income.

Other income, net, totaled

$56,404 for the three months ended March 31, 2022, as compared to other expense, net, of $63,530 for the three months ended March 31,

2021, a change of $119,934, or 188.8%, which was primarily attributable to a decrease in interest expense of approximately $5,000, and

a decrease in loss from equity method investment of approximately $6,000, and an increase in other miscellaneous income of approximately

have any income taxes expense for the three months ended March 31, 2022 and 2021 since we incurred losses in these periods.

of the factors described above, our net loss was $2,070,538 for the three months ended March 31, 2022, as compared to $2,367,118 for the

three months ended March 31, 2021, a decrease of $296,580 or 12.5%.

Net Loss Attributable to Avalon GloboCare

Common Shareholders

net loss attributable to Avalon GloboCare Corp.

common shareholders was $2,024,219 or $0.02 per share (basic and diluted) for the three

months ended September 30, 2021, as compared with $3,251,959, or $0.04 per share (basic and diluted) for the three months ended September

30, 2020, a change of $1,227,740 or 37.8%.

net loss attributable to Avalon GloboCare Corp.

common shareholders was $6,756,247 or $0.08 per share (basic and diluted) for the nine

months ended September 30, 2021, as compared with $9,579,122, or $0.12 per share (basic and diluted) for the nine months ended September

30, 2020, a change of $2,822,875 or 29.5%.

Currency Translation Adjustment

reporting currency is the U.S.

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

loss attributable to Avalon GloboCare Corp.

common shareholders was $2,070,538 or $0.02 per share (basic and diluted) for the three months

ended March 31, 2022, as compared with $2,367,118, or $0.03 per share (basic and diluted) for the three months ended March 31, 2021, a

change of $296,580 or 12.5%.

Foreign Currency Translation Adjustment

Our reporting

currency is the U.S.

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

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

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

dollars using period end rates

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

exchange rates for equity.

The financial

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

dollars using period end rates of exchange

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

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

As a result of foreign currency translations, which are a non-cash adjustment, we reported a foreign currency translation gain of $1,285

and $39,698 for the three months ended September 30, 2021 and 2020, respectively.

As a result of foreign currency translations, which

are a non-cash adjustment, we reported a foreign currency translation gain of $13,349 and $20,941 for the nine months ended September

30, 2021 and 2020, respectively.

This non-cash gain had the effect of decreasing our reported comprehensive loss.

Comprehensive

a result of our foreign currency translation adjustment, we had comprehensive loss of $2,022,934 and $3,212,261 for the three months

ended September 30, 2021 and 2020, respectively.

As a result of our foreign currency translation adjustment, we had comprehensive loss

of $6,742,898 and $9,558,181 for the nine months ended September 30, 2021 and 2020, respectively.

and Capital Resources

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

to its only few clients who are related parties and generating rental revenue from its income-producing real estate property in New Jersey;

hence generating revenues, and obtaining additional financing to fund future obligations and pay liabilities arising from normal business

In addition, the current cash balance cannot be projected to cover the operating expenses for the next twelve months from

the release date of this report.

As a result of

foreign currency translations, which are a non-cash adjustment, we reported a foreign currency translation gain of $2,021 and a foreign

currency translation loss of $2,722 for the three months ended March 31, 2022 and 2021, respectively.

This non-cash gain/loss had the

effect of decreasing/increasing our reported comprehensive loss.

Comprehensive Loss

As a result of our foreign

currency translation adjustment, we had comprehensive loss of $2,068,517 and $2,369,840 for the three months ended March 31, 2022 and

2021, respectively.

Liquidity and Capital Resources

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;

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.

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

However, there is no assurance these plans will be

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

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

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

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

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

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

Given the dynamic nature of these circumstances, the duration of business disruption and reduced traffic, the related financial

effect cannot be reasonably estimated at this time but is expected to adversely impact our business for the rest of 2021.

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

on an ongoing basis.

At September 30, 2021 and December 31, 2020, we had cash balance of approximately $532,000 and $727,000, respectively.

These funds are kept in financial institutions located as follows:

September 30,

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 is likely to negatively affect the Company’s operations.

Efforts to contain the

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

negatively impact our tenants, employees and consultants.

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

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

the dynamic nature of these circumstances, the duration of business disruption and reduced traffic, the related financial effect cannot

be reasonably estimated at this time but is expected to adversely impact our business for the rest of 2022.

Liquidity is the ability

of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing

At March 31, 2022 and December 31, 2021, we had cash balance of approximately $526,000 and $808,000, respectively.

are kept in financial institutions located as follows:

March 31, 2022

December 31,2021

United States

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

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

In addition, a foreign invested enterprise in China is

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

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

Under applicable PRC

regulations, foreign invested enterprises, or FIEs, in China may pay dividends only out of their accumulated profits, if any, determined

in accordance with PRC accounting standards and regulations.

In addition, a foreign invested enterprise in China is required to set aside

at least 10% of its after-tax profit based on PRC accounting standards each year to its general reserves until the cumulative amount of

such reserves reach 50% of its registered capital.

These reserves are not distributable as cash dividends.

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

foreign exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and sell foreign

currencies at the exchange rates quoted by the People’s Bank of China.

Approval of foreign currency payments by the People’s

Bank of China or other regulatory institutions requires submitting a payment application form together with suppliers’ invoices,

shipping documents and signed contracts.

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

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

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

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

of such enterprises’ shareholder has a tax treaty with China that provides for a different withholding arrangement.

following table sets forth a summary of changes in our working capital from December 31, 2020 to September 30, 2021:

September 30,

In addition, a portion

of our 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 our PRC subsidiary to

transfer its net assets to the Parent Company through loans, advances or cash dividends.

The current PRC Enterprise

Income Tax (“EIT”) Law and its implementing rules generally provide that a 10% withholding tax applies to China-sourced income

derived by non-resident enterprises for PRC enterprise income tax purposes unless the jurisdiction of incorporation of such enterprises’

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

The following table sets

forth a summary of changes in our working capital from December 31, 2021 to March 31, 2022:

Working capital deficit:

5 unchanged sentences

$ (1,155,754 )

working capital deficit increased by $1,971,890 to $3,277,946 at September 30, 2021 from $1,306,056 at December 31, 2020.

in working capital deficit was primarily attributable to a decrease in cash of approximately $194,000, an increase in accrued professional

fees of approximately $994,000, mainly due to an increase in professional services providers, an increase in accrued research and development

fees of approximately $227,000, an increase in accrued payroll liability and directors’ compensation of approximately $147,000,

an increase in accrued liabilities and other payables – related parties of approximately $142,000, and an increase in note payable

– related party of $390,000, offset by an increase in prepaid professional fees of approximately $256,000.

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

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

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

Flows for the Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020

following summarizes the key components of our cash flows for the nine months ended September 30, 2021 and 2020:

Nine Months Ended

September 30,

Our working capital deficit

increased by $1,155,754 to $4,234,370 at March 31, 2022 from $3,078,616 at December 31, 2021.

The increase in working capital deficit

was primarily attributable to a decrease in cash of approximately $281,000, a decrease in prepaid expenses and other current assets of

approximately $152,000, an increase in accrued professional fees of approximately $686,000, an increase in accrued payroll liability and

directors’ compensation of approximately $173,000, and an increase in accrued liabilities and other payables of approximately $382,000,

offset by a decrease in accrued research and development fees of approximately $116,000 and a decrease in note payable – related

party of $390,000 resulting from the reclassification of note payable – related party from current to non-current.

Because the exchange

rate conversion is different for the condensed consolidated balance sheets and the condensed consolidated statements of cash flows, the

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

the comparable changes reflected on the condensed consolidated balance sheets.

Cash Flows for the Three Months Ended March

31, 2022 Compared to the Three Months Ended March 31, 2021

The following summarizes the key components of

our cash flows for the three months ended March 31, 2022 and 2021:

Three Months Ended

Net cash used in operating activities

$ (1,515,525 )

$ (6,185,198 )

Net cash used in investing activities

2 unchanged sentences

Net (decrease) increase in cash

cash flow used in operating activities for the nine months ended September 30, 2021 was $3,307,520, which primarily reflected our consolidated

net loss of approximately $6,756,000, and the changes in operating assets and liabilities, primarily consisting of a decrease in operating

lease obligation of approximately $87,000, offset by an increase accrued liabilities and other payables of approximately $1,436,000,

and an increase in accrued liabilities and other payables – related parties of approximately $142,000, and the non-cash items adjustment

primarily consisting of depreciation of approximately $227,000, amortization of right-of-use asset of approximately $93,000, and stock-based

compensation and service expense of approximately $1,621,000.

Net cash flow used in operating activities for

the nine months ended September 30, 2020 was $6,185,198, which primarily reflected our consolidated net loss of approximately $9,579,000,

and the changes in operating assets and liabilities, primarily consisting of an increase in rent receivable of approximately $94,000,

an increase in prepaid expenses and other current assets of approximately $353,000, a decrease in accrued liabilities and other payables

of approximately $680,000, offset by a decrease in accounts receivable – related party of approximately $214,000, an increase in

accrued liabilities and other payables – related parties of approximately $75,000, and the non-cash items adjustment primarily consisting

of depreciation of approximately $233,000, and stock-based compensation and service expense of approximately $3,965,000.

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

development and commercialization of new products;

increase in professional staff and services;

increase in public relations and/or sales promotions for existing and/or new brands as we expand within existing markets or enter new

cash flow used in investing activities was $67,960 for the nine months ended September 30, 2021 as compared to $28,594 for the nine

months ended September 30, 2020.

During the nine months ended September 30, 2021, we made payments for purchase of property and equipment

of approximately $17,000 and for improvement of commercial real estate of approximately $10,000, and made additional investment in equity

method investment of approximately $40,000.

During the nine months ended September 30, 2020, we made additional investment in equity

method investment of approximately $29,000.

cash flow provided by financing activities was $3,178,336 for the nine months ended September 30, 2021 as compared to $6,841,783 for

the nine months ended September 30, 2020.

During the nine months ended September 30, 2021, we received proceeds from related party borrowings

of approximately $763,000 and net proceeds from equity offering of approximately $2,415,000 (net of cash paid for commission and other

offering costs of approximately $104,000).

During the nine months ended September 30, 2020, we received proceeds from related party borrowings

of $300,000 and net proceeds from equity offering of approximately $6,742,000 (net of cash paid for commission and other offering costs

of approximately $492,000), offset by repayments made for note payable – related party of $200,000.

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

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

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

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

The following trends are reasonably likely to result in a material

decrease in our liquidity over the near to long term:

an increase in working

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

as commercial strategies;

the use of capital for

mergers, acquisitions and the development of business opportunities;

addition of administrative

personnel as the business grows;

the cost of being a public

In the third quarter of 2019, we had secured a $20

million credit facility (Line of Credit) provided by our Chairman, Wenzhao Lu.

The unsecured credit facility bears interest at a rate

of 5% and provides for maturity on drawn loans 36 months after funding.

The note is not convertible to equity.

As of November 4, 2021,

the Company drew down an additional aggregate of $1,000,000 from the Line of Credit.

As a result of these draw downs, the Company

has approximately $15.3 million remaining available under the Line of Credit.

This draw down increased the total principal

amount outstanding under the Line of Credit to $4.7 million.

December 13, 2019, we entered into an Open Market Sale Agreement SM (the “Sales Agreement”) with Jefferies

LLC, as sales agent (“Jefferies”), pursuant to which we may offer and sell, from time to time, through Jefferies, shares

of our common stock, par value $0.0001 per share, having an aggregate offering price of up to $20.0 million.

On April 6, 2020, the date

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

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

As of April 6, 2020, the aggregate

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

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

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

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

We have not offered any securities

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

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

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

After giving effect

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

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

in accordance with the terms of the sales agreement.

As of September 30, 2021, we sold a total of 5,936,044 shares of our common

stock through Jefferies with an aggregate offering price of $9,596,542 and we have approximately $5.4 million offering price remaining

available under the Sales Agreement.

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

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

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

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

We have used these funds to fund our operating expenses,

pay our obligations and grow our company.

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

working capital for our ongoing operations and obligations.

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

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

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

equity and debt markets could make it more difficult

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

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

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

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

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

The inability to

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

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

To date, we have not considered this alternative,

nor do we view it as a likely occurrence.

Obligations and Off-Balance Sheet Arrangements

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

Net cash flow used in

operating activities for the three months ended March 31, 2022 was $511,208, which primarily reflected our consolidated net loss of approximately

$2,071,000, and the changes in operating assets and liabilities, primarily consisting of a decrease in operating lease obligation of approximately

$34,000, offset by a decrease in prepaid expenses and other assets of approximately $30,000, an increase accrued liabilities and other

payables of approximately $794,000, and an increase in accrued liabilities and other payables – related parties of approximately

$40,000, and the non-cash items adjustment primarily consisting of depreciation of approximately $85,000, amortization of right-of-use

asset of approximately $34,000, and stock-based compensation and service expense of approximately $606,000.

Net cash flow used in

operating activities for the three months ended March 31, 2021 was $1,515,525, which primarily reflected our consolidated net loss of

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

and other assets of approximately $41,000, and a decrease in operating lease obligation of approximately $33,000, offset by an increase

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

parties of approximately $45,000, and the non-cash items adjustment primarily consisting of depreciation of approximately $79,000, and

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

We expect our cash

used in operating activities to increase due to the following:

● the development and commercialization of new products;

● an increase in professional staff and services;

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

within existing markets or enter new markets.

Net cash flow used in

investing activities was $1,749 for the three months ended March 31, 2022 as compared to $30,844 for the three months ended March

During the three months ended March 31, 2022, we made payments for purchase of property and equipment of approximately $2,000.

the three months ended March 31, 2021, we made additional investment in equity method investment of approximately $31,000.

Net cash flow provided

by financing activities was $231,500 for the three months ended March 31, 2022 as compared to $2,512,212 for the three months ended March

During the three months ended March 31, 2022, we received proceeds from related party borrowings of approximately $100,000 and

net proceeds from equity offering of approximately $132,000 (net of cash paid for commission of approximately $4,000).

During the three

months ended March 31, 2021, we received proceeds from related party borrowings of approximately $105,000 and net proceeds from equity

offering of approximately $2,407,000 (net of cash paid for commission of approximately $74,000).

Our capital requirements

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

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

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

All funds received have

been expended in the furtherance of growing the business.

The following trends are reasonably likely to result in a material decrease

in our liquidity over the near to long term:

● an increase in working capital requirements to finance our current business, including ongoing research

and development programs, clinical studies, as well as commercial strategies;

● the use of capital for mergers, acquisitions and the development of business opportunities;

● addition of administrative personnel as the business grows;

● the cost of being a public company.

In the third quarter

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

The unsecured credit facility

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

As of March 31, 2022, the total principal

amount outstanding under the Credit Line was $2.9 million and we have approximately $14.1 million remaining available under the Line

On December 13,

2019, we entered into an Open Market Sale Agreement SM (the “Sales Agreement”) with Jefferies LLC, as sales

agent (“Jefferies”), pursuant to which we may offer and sell, from time to time, through Jefferies, shares of our common stock,

par value $0.0001 per share, having an aggregate offering price of up to $20.0 million.

On April 6, 2020, the date on which we filed our

Annual Report on Form 10-K for the fiscal year ended December 31, 2019, our registration statement became subject to the

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

As of April 6, 2020, the aggregate market value of our outstanding

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

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

stock was last sold on The Nasdaq Capital Market on February 19, 2020 (a date within 60 days of the date hereof), calculated in accordance

with General Instruction I.B.6 of Form S-3.

We have not offered any securities pursuant to General Instruction I.B.6 of

Form S-3 in the 12 calendar months preceding the date of this prospectus supplement.

We filed a prospectus supplement to amend

and supplement the information in our prospectus and original prospectus supplement based on the amount of securities that we are eligible

to sell under General Instruction I.B.6 of Form S-3.

After giving effect to the $13,000,000 offering limit imposed by General

Instruction I.B.6 of Form S-3, we may offer and sell additional shares of our common stock having an aggregate offering

price of up to $13,000,000 from time to time through Jefferies acting as our sales agent in accordance with the terms of the sales

As of March 31, 2022, we sold a total of 6,429,486 shares of our common stock through Jefferies with an aggregate offering

price of $10,073,707 and we have approximately $4.9 million offering price remaining available under the Sales Agreement.

We estimate that based

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

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

Other than funds received from

the sale of our equity and advances from our related party, and cash resource generating from our operations, we presently have no other

significant alternative source of working capital.

We have used these funds to fund our operating expenses, pay our obligations and grow

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

operations and obligations.

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

Financing transactions

may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms.

However, the trading

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

equity and debt markets could make it more difficult to obtain financing through

the issuance of equity or debt securities.

Even if we are able to raise the funds required, it is possible that we could incur unexpected

costs and expenses or experience unexpected cash requirements that would force us to seek alternative financing.

Furthermore, if we issue

additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences

or privileges senior to those of existing holders of our common stock.

The inability to obtain additional capital may restrict our ability

to grow and may reduce our ability to continue to conduct business operations.

If we are unable to obtain additional financing, we will

be required to cease our operations.

To date, we have not considered this alternative, nor do we view it as a likely occurrence.

Contractual Obligations and Off-Balance Sheet

Contractual Obligations

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

Changes in our business needs, cancellation

5 unchanged sentences

of operations, and cash flows.

The following tables summarize our contractual obligations as of September 30, 2021, and the effect these

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

The following tables summarize our contractual obligations as of March 31, 2022, and the effect these obligations

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

Payments Due by Period

6 unchanged sentences

AVAR joint venture commitment

Sheet Arrangements

presently do not have off-balance sheet arrangements.

Currency Exchange Rate Risk

portion of our operations are in China.

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

between RMB and US dollars.

For the three months ended September 30, 2021 and 2020, we had an unrealized foreign currency translation

gain of approximately $1,000 and $40,000, respectively, because of changes in the exchange rate.

For the nine months ended September

30, 2021 and 2020, we had an unrealized foreign currency translation gain of approximately $13,000 and $21,000, respectively, because

of changes in the exchange rate.

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

Off-balance Sheet Arrangements

We presently do not have off-balance sheet arrangements.

Foreign Currency Exchange Rate Risk

of our operations are in China.

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

RMB and US dollars.

For the three months ended March 31, 2022 and 2021, we had an unrealized foreign currency translation gain of approximately

$2,000 and an unrealized foreign currency translation loss of approximately $3,000, respectively, because of changes in the exchange rate.

The effect of inflation on our revenue and operating

results was not significant.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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

As a smaller reporting

company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this Item .

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 2. Management’s Discussion and Analysis