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Item 9A. Controls and Procedures

2025-03-31 compared with 2024-04-15 · 2521 added, 2193 removed, 1479 unchanged (76% of the section changed)

This section is long enough that the comparison stopped early. What follows is partial, and the remainder is not necessarily unchanged.

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Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls

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

Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and to ensure

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

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

We carried out an

evaluation, under the supervision and with the participation of our management, including the principal executive officer and the principal

financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13(a)-15(e)

We maintain disclosure controls and

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

Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and to

ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer

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

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

the CFO, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13(a)-15(e)

under the Exchange Act, as of the end of the period covered by this report.

Our management recognizes that any controls and procedures,

no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily

applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

During evaluation of disclosure

controls and procedures as of December 31, 2023, conducted as part of our annual audit and preparation of our annual financial statements,

our management, including our CEO and CFO, conducted an evaluation of the effectiveness of the design and operations of our disclosure

controls and procedures and concluded that our disclosure controls and procedures were not effective due to the reasons set forth below.

Our management recognizes that any controls and

procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and

management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

evaluation of disclosure controls and procedures as of December 31, 2024, conducted as part of our annual audit and preparation of

our annual financial statements, our management, including our CEO and CFO, conducted an evaluation of the effectiveness of the

design and operations of our disclosure controls and procedures and concluded that our disclosure controls and procedures were not

effective as of December 31, 2024 due to the reasons set forth below.

Management’s Report on Internal Control

over Financial Reporting

Management is responsible

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

The financial statements have been prepared

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

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

Management is also responsible

for establishing and maintaining adequate internal control over financial reporting.

Our internal control over financial reporting includes

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

Management recognizes

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

human error and the circumvention or overriding of internal control.

Accordingly, even effective internal control over financial reporting

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

Further, because of changes in conditions, the

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

Management regularly assesses our internal

control over financial reporting and did so most recently for our financial reporting as of December 31, 2023.

This assessment was

based on criteria for effective internal control over financial reporting described in the Internal Control Integrated Framework

issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission.

Based on this assessment, management has

concluded that our internal control over financial reporting was not effective as of December 31, 2023, due to the lack of

segregation of duties resulting from our small size and inability to perform an effective test of the operating effectiveness of the

controls, including the oversight of our financial statement close process.

As a result of our Lab Services MSO transaction in

February 2023, we retained additional accounting staff and hired a Controller that works part-time for Lab Services MSO and

part-time for the Company.

We hope to be able to utilize the Controller going forward to enhance the segregation of duties.

addition, the Company has transitioned all email servers to the United States to enhance this aspect of internal controls.

In light of the material weaknesses

described above, we performed additional analyses and procedures in order to conclude that our consolidated financial statements for the

year ended December 31, 2023 included in this Annual Report on Form 10-K were fairly stated in accordance with US GAAP.

Management is responsible for the preparation

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

The financial statements have been prepared in conformity with

GAAP and reflect management’s judgment and estimates concerning effects of events and transactions that are accounted for or

Management is also responsible for establishing

and maintaining adequate internal control over financial reporting.

Our internal control over financial reporting includes those policies

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

Management recognizes that there are

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

the circumvention or overriding of internal control.

Accordingly, even effective internal control over financial reporting can provide

only reasonable assurance with respect to financial statement presentation.

Further, because of changes in conditions, the effectiveness

of internal control over financial reporting may vary over time.

Management regularly assesses our internal control over financial reporting

and did so most recently for our financial reporting as of December 31, 2024.

This assessment was based on criteria for effective internal

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

(COSO) of the Treadway Commission (2013).

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

reporting was not effective as of December 31, 2024, due to the lack of segregation of duties resulting from our small size and inability

to perform an effective test of the operating effectiveness of the controls, including the oversight of our financial statement close

As a result of our Lab Services MSO transaction in February 2023, we retained additional accounting staff and hired a Controller

that worked part-time for Lab Services MSO and part-time for the Company.

In addition, the Company has transitioned all email servers

to the United States to enhance this aspect of internal controls.

In light of the material weaknesses described

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

December 31, 2024 included in this Annual Report on Form 10-K were fairly stated in accordance with U.S.

Accordingly, management

believes that despite the material weakness identified in our internal control over financial reporting, our consolidated financial statements

for the year ended December 31, 2023 are fairly stated, in all material respects, in accordance with US GAAP.

for the year ended December 31, 2024 are fairly stated, in all material respects, in accordance with U.S.

Changes in Internal Control over Financial

Other than those described above, there were no changes in our internal

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

31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting

Attestation Report of the Registered Public Accounting Firm

This Annual Report on Form

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

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

public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report.

Other than those described above, there were no

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

quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over

financial reporting

Attestation Report of the Registered Public

Accounting Firm

This Annual Report on Form 10-K does not include

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

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

accounting firm pursuant to rules of the SEC that permit us to provide only management’s report.

OTHER INFORMATION

(a) We issued 105,000 shares of our common stock as a commitment fee

and warrants for the purchase of up to 252,404 shares of our common stock in connection with the issuance of the March 2024 Note to the

March 2024 Lender.

(b) During the quarter ended December 31, 2024,

none of our directors or executive officers adopted or terminated a Rule 10b5-1 trading plan or a non-Rule 10b5-1

trading arrangement (as defined in Item 408(c) of Regulation S-K).

none of our directors or executive officers adopted or terminated a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement

(as defined in Item 408(c) of Regulation S-K).

DISCLOSURE REGARDING FOREIGN JURISDICTIONS

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Directors and Executive Officers

Below are the names of and

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

Below are the names of, and certain information

regarding, our executive officers and directors.

Chairman of the Board of Directors

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Lourdes Felix

Officers are elected annually

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

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

The principal occupation and

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

Directors are elected annually, to hold such office

until a successor has been duly appointed and qualified, unless an director sooner dies, resigns or is removed.

Officers serve at the

discretion of the Board, subject to the terms of any employment agreement.

The principal occupation and business experience

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

Wenzhao Lu, Chairman of the Board of Directors

Wenzhao Lu has served as our Chairman of the Board since October 10, 2016.

He is a seasoned healthcare entrepreneur with extensive operational

knowledge and experience in the US & Asia.

He has served as Chairman of the board of directors of the Daopei Medical Group, or DPMG,

since 2010 to December, 2021.

Under his leadership, DPMG operates three top-ranked private hospitals (located in Beijing and Hebei), specialty

hematology laboratories, and a hematology research institute, with more than 100 partnering and collaborating hospitals in China.

was founded by Professor Daopei Lu, a renowned hematologist pioneering in hematopoietic stem cell transplant and a member of the Academy

of Engineering in China.

Lu received a Bachelor of Arts from Temple University Tyler School of Arts in 1988 and subsequently worked

as senior Art Director at Ogilvy & Mather Advertising Company.

Wenzhao Lu has served as our Chairman of the

Board since October 10, 2016.

He is a seasoned healthcare entrepreneur with extensive operational knowledge and experience in the U.S.

He served as Chairman of the board of directors of the Daopei Medical Group (“DPMG”), from 2010 to December 2021.

Under his leadership, DPMG operated three top-ranked private hospitals (located in Beijing and Hebei), specialty hematology laboratories,

and a hematology research institute, with more than 100 partnering and collaborating hospitals in China.

DPMG was founded by Professor

Daopei Lu, a renowned hematologist pioneering in hematopoietic stem cell transplant and a member of the Academy of Engineering in China.

Lu received a Bachelor of Arts from Temple University Tyler School of Arts in 1988 and subsequently worked as senior Art Director

at Ogilvy & Mather Advertising Company.

Prior to joining DPMG, in 2009, Mr.

Lu served as Chief Operating Officer

of BioTime Asia Limited, a subsidiary of BioTime, Inc.

Lu served as Chief Operating Officer of BioTime Asia Limited,

a subsidiary of BioTime, Inc.

(NYSE American:

Lu is qualified to serve as a director because of his

extensive operational knowledge of, and executive level management experience in, the healthcare industry.

Lu is qualified to serve as a director because of his extensive operational knowledge

of, and executive level management experience in, the healthcare industry.

David Jin, Chief Executive Officer, President

David Jin, MD, PhD, has served as our Chief Executive Officer, President and as a member of our Board since September 14, 2016.

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

David Jin, MD, PhD, has served as our

Chief Executive Officer, President and as a member of our Board since September 14, 2016.

From 2009 to 2017, Dr.

Jin served as the

Chief Medical Officer of BioTime, Inc.

(NYSE American:

BTX), a clinical stage regenerative medicine company

with a focus on pluripotent stem cell technology.

Jin also acts as a senior translational clinician-scientist at the Howard Hughes

Medical Institute and the Ansary Stem Cell Center at Weill Cornell Medical College of Cornell University.

BTX), a clinical stage regenerative medicine company with a focus on

pluripotent stem cell technology.

Jin also acts as a senior translational clinician-scientist at the Howard Hughes Medical

Institute and the Ansary Stem Cell Center at Weill Cornell Medical College of Cornell University.

Prior to his current endeavors,

Jin was Chief Consultant/Advisor for various biotech/pharmaceutical companies regarding hematology, oncology, immunotherapy and stem

cell-based technology development.

Jin has been Principle Investigator in more than 15 pre-clinical and clinical trials, as well as

an author/co-author of over 80 peer-reviewed scientific abstracts, articles, reviews, and book chapters.

Jin studied medicine at SUNY

Downstate College of Medicine in Brooklyn, New York.

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

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

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

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

level management experience in, the healthcare industry.

Jin was Chief Consultant/Advisor for various biotech/pharmaceutical companies regarding hematology, oncology, immunotherapy and

stem cell-based technology development.

Jin has been Principle Investigator in more than 15 pre-clinical and clinical trials, as

well as an author/co-author of over 80 peer-reviewed scientific abstracts, articles, reviews, and book chapters.

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

He received his clinical training and subsequent faculty

tenure at the New York-Presbyterian Hospital (the teaching hospital for both Cornell and Columbia Universities) in the areas of

internal medicine, hematology, and clinical oncology.

Jin was honored as Top Chief Medical Officer by ExecRank in 2012, as well

as recognized by Leading Physicians of the World in 2015.

Jin is qualified to serve as a director because of his role with us,

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

Meng Li, Chief Operating Officer and Secretary

Meng Li has served as our Chief Operating Officer, Secretary since October 10, 2016 and served as a member of the Board from October 10,

2016 to July 9, 2018 and from April 5, 2019 through December 30, 2022.

Li has over 15 years of executive experience in international

marketing, branding, communications, and media investment consultancy.

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

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

Meng Li has served as our Chief Operating

Officer and Secretary since October 10, 2016 and served as a member of the Board from October 10, 2016 to July 9, 2018 and from April

5, 2019 through December 30, 2022.

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

and media investment consultancy.

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

business P&L and corporate management from 2006 to 2015.

Prior to joining Maxus/Group M, Ms.

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

Li received a Bachelor of Arts in International

Economic Law from Dalian Maritime University in China.

Li worked for Zenith Media (a Publicis

Group company) from 2000 to 2006 as Senior Manager.

Li received a Bachelor of Arts in International Economic Law from Dalian Maritime

University in China.

Luisa Ingargiola, Chief Financial Officer

Ingargiola has served as our Chief Financial Officer since February 21, 2017.

Ingargiola has significant experience serving as Chief

Financial Officer or Audit Chair for multiple Nasdaq and New York Stock Exchange companies.

She currently serves as Director and Audit

Chair for several public companies including ElectraMeccanica (NASDAQ:SOLO), Dragonfly Energy (DFLI) and Vision Marine (VMAR).

through 2016, Ms.

Ingargiola served as the Chief Financial Officer and then a member of the board of directors at MagneGas Corporation

Luisa Ingargiola has served as our Chief Financial

Officer since February 21, 2017.

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

Nasdaq and New York Stock Exchange companies.

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

ElectraMeccanica (NASDAQ:SOLO), Dragonfly Energy (DFLI) and Vision Marine (VMAR).

From 2007 through 2016, Ms.

Ingargiola served as the

Chief Financial Officer and then a member of the board of directors at MagneGas Corporation (Nasdaq:

Prior to 2007, Ms.

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

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

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

Ingargiola is qualified to

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

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

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

Ingargiola graduated in 1989 from Boston

University with a Bachelor’s degree in Business Administration and a concentration in Finance.

In 1996, she received her MBA in

Health Administration from the University of South Florida.

Ingargiola is qualified to serve as a Chief Financial Officer because

of her extensive knowledge corporate governance, regulatory requirements, executive leadership and knowledge of, and experience in, financing

and M&A transactions.

Sanders, Director

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Since January 2017, Mr.

Sanders has been Of Counsel to the law firm

of Ortoli Rosenstadt LLP.

From July 2007 until January 2017, Mr.

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

From July 2007 until January 2017,

Sanders was a Senior Partner at Ortoli Rosenstadt LLP.

From January 1,

2004 until June 30, 2007, he was Of Counsel to the law firm of Rubin, Bailin, Ortoli, LLP.

From January 1, 2001 to December 31, 2003,

he was Counsel at the law firm of Spitzer & Feldman PC.

Sanders also serves as a member of the boards of directors of Helijet

International, Inc.

and Electrameccanica Vehicles Corp.

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

of Rubin, Bailin, Ortoli, LLP.

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

Sanders also serves as a member of the board of directors of Helijet International, Inc.

and served as a member of the board of directors

of Electrameccanica Vehicles Corp.

(NASDAQ:SOLO).

Additionally, since October 2013, he has been a member of the board

of directors at the American Academy of Dramatic Arts, and, since February 2015, has been a member of the board of directors of the Bay

Street Theater.

Additionally, since October 2013, he has been a member of the board of directors at

the American Academy of Dramatic Arts, and, since February 2015, has been a member of the board of directors of the Bay Street Theater.

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

Sanders is qualified

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

life sciences industry.

Sanders is qualified to serve as

a director because of his corporate, securities and international law experience, including working with companies in the life sciences

Lourdes Felix, Director

Lourdes Felix has served as

a member of the Board since January 9, 2023.

Felix is an entrepreneur and corporate finance executive with 30 years of combined experience

in capital markets, public accounting and in the private sector.

She presently serves as Chief Executive Officer, Chief Financial Officer,

and a member of the board of directors of BioCorRx Inc, a company focused on addiction treatment solutions and related disorders.

has been with BioCorRx since October 2012.

Felix is one of the founders and President of BioCorRx Pharmaceuticals Inc., a majority

owned subsidiary of BioCorRx Inc.

Prior to joining BioCorRx, her experience was in the private sector and public accounting.

has expertise in finance, accounting, company-wide operations, budgeting, and internal control principles including GAAP, SEC, and SOX

She has thorough knowledge of federal and state regulations and has successfully managed and produced SEC regulatory filings.

She also has extensive experience in developing and managing financial operations.

Felix holds a Bachelor of Science degree in Accounting

from the University of Phoenix.

She continued her education and is an MBA candidate at D’Amore-McKim School of Business, Northeastern

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

Lourdes Felix has served as a member of the

Board since January 9, 2023.

Felix is an entrepreneur and corporate finance executive with 30 years of combined experience in

capital markets, public accounting and in the private sector.

She presently serves as Chief Executive Officer, Chief Financial

Officer, and a member of the board of directors of BioCorRx Inc., a company focused on addiction treatment solutions and related

She has been with BioCorRx Inc.

since October 2012.

Felix is one of the founders and President of BioCorRx

Pharmaceuticals Inc., a majority owned subsidiary of BioCorRx Inc.

Prior to joining BioCorRx Inc., her experience was in the private

sector and public accounting.

Felix has expertise in finance, accounting, company-wide operations, budgeting, and internal

control principles, including U.S.

GAAP, SEC, and SOX compliance.

She has thorough knowledge of federal and state regulations and

has successfully managed and produced SEC regulatory filings.

She also has extensive experience in developing and managing financial

Felix holds a Bachelor of Science degree in Accounting from the University of Phoenix.

She continued her education

and is an MBA candidate at D’Amore-McKim School of Business, Northeastern University.

Felix is qualified to serve as a

director because of her extensive investment and executive level management experience.

Tauzin II, Director

Tauzin II has served as a member of the Board since November 1, 2017.

From December 2010 until March 1, 2014, Congressman Tauzin served

as a Special Legislative Counsel at Alston & Bird LLP.

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

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

top lobbying groups.

He served 12.5 terms in the U.S.

Tauzin II has served as a member of

the Board since November 1, 2017.

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

Alston & Bird LLP.

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

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

served 12.5 terms in the U.S.

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

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

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

Prior to serving as a member of Congress, Congressman

Tauzin was a member of the Louisiana State Legislature, where he served as Chairman of the House Natural Resources Committee and Chief

Administration Floor Leader.

He served as Lead Independent Director of LHC Group, a publicly traded provider of quality home health care,

from 2005 to 2021 and retains the role of Lead Independent Emeritus today.

The Congressman also served on the board of directors of Entergy,

a Fortune 500 company.

In addition, the Congressman chartered a Louisiana State Savings and Loan Association and Chaired its first board

of directors.

He received a Bachelor of Arts Degree from Nicholls State University and a Juris Doctor degree from Louisiana State University.

Congressman Tauzin is qualified to serve as a director because of his extensive knowledge of the pharmaceutical industry and his experience

as a director of several publicly traded and privately held companies.

From January 2001 through

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

He also served as a senior member

of the House Resources Committee and Deputy Majority Whip.

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

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

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

the role of Lead Independent Emeritus today.

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

In addition, the Congressman chartered a Louisiana State Savings and Loan Association and Chaired its first board of directors.

a Bachelor of Arts Degree from Nicholls State University and a Juris Doctor degree from Louisiana State University.

Congressman Tauzin

is qualified to serve as a director because of his extensive knowledge of the pharmaceutical industry and his experience as a director

of several publicly traded and privately held companies.

Stilley, III, Director

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He currently serves on the Advisory Board of

Virginia BIO, the statewide biotechnology organization and has guest lectures as the University School of Engineering.

qualified to serve as a director because of his extensive knowledge of the biotechnology industry, significant executive leadership and

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

Virginia BIO, the statewide biotechnology organization and has guest lectured at the Darden School of Business and the University School

of Engineering.

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

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

Tevi Troy, Director

Troy has served as a member of the Board since June 4, 2018.

Tevi Troy has served as a member of the

Board since June 4, 2018.

Troy is a former Deputy Secretary of the U.S.

Department of Health and

Human Services.

Troy is a Senior Fellow at the Bipartisan Policy Center in Washington.

He was the founder and CEO of the American

Health Policy Institute and a Senior Fellow at Hudson Institute.

Department of Health and Human Services.

Senior Fellow at the Bipartisan Policy Center in Washington.

He was the founder and CEO of the American Health Policy Institute and

a Senior Fellow at Hudson Institute.

On August 3, 2007, Dr.

Troy was unanimously confirmed by the U.S.

as the Deputy Secretary of HHS.

Senate as the Deputy

Secretary of HHS.

As Deputy Secretary, Dr.

Troy was the chief operating officer of the largest civilian department in the

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

Troy has extensive White House experience, having served

in several high-level positions over a five-year period, culminating in his service as Deputy Assistant and then Acting Assistant to the

President for Domestic Policy.

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

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

Troy has extensive White House experience, having served in

several high-level positions over a five-year period, culminating in his service as Deputy Assistant and then Acting Assistant to

the President for Domestic Policy.

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

From 1998 to 2000, Dr.

Troy served as the

Policy Director for Senator John Ashcroft.

served as the Policy Director for Senator John Ashcroft.

From 1996 to 1998, Dr.

Troy was Senior Domestic Policy Adviser and later Domestic Policy Director

for the House Policy Committee, chaired by Christopher Cox.

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

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

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

many other affiliations include:

contributing editor for Washingtonian magazine;

Troy was Senior Domestic Policy Adviser and later

Domestic Policy Director for the House Policy Committee, chaired by Christopher Cox.

In addition to his senior level government work

and health care expertise, Dr.

Troy is also a best-selling presidential historian and the author of five books, including, most

recently, “Fight House:

Rivalries in the White House from Truman to Trump,” which the Wall Street Journal listed as one

of the top political books of 2020.

Troy’s many other affiliations include:

contributing editor for Washingtonian

member of the publication committee of National Affairs;

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

a Senior Fellow at the Potomac Institute;

and a member of the Bipartisan Commission

on Biodefense.

Senior Fellow at the Potomac Institute;

and a member of the Bipartisan Commission on Biodefense.

Troy has a B.S.

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

in American Civilization

from the University of Texas at Austin.

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

industry and his significant leadership experience.

in Industrial

and Labor Relations from Cornell University and an M.A.

in American Civilization from the University of Texas at Austin.

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

leadership experience.

Board Composition

Our Board is currently composed

of seven directors.

Our directors hold office until their successors have been elected and qualified or until the earlier of their resignation

We are subject to Nasdaq Board diversity rules and ensure our compliance with such rules.

In addition, our priority

in selection of board members is identification of members who will further the interests of our stockholders through his or her established

record of professional accomplishment, the ability to contribute positively to the collaborative culture among board members, knowledge

of our business and understanding of the competitive landscape.

A majority of the authorized

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

However, any action required or permitted to be

taken by the Board may be taken without a meeting if all members of the Board individually or collectively consent in writing to the action.

Our Board is currently composed of seven directors.

Our priority in selection of board members is

identification of members who will further the interests of our stockholders through his or her established record of professional accomplishment,

the ability to contribute positively to the collaborative culture among board members, knowledge of our business and understanding of

the competitive landscape.

A majority of the authorized number of directors

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

However, any action required or permitted to be taken by the Board

may be taken without a meeting if all members of the Board individually or collectively consent in writing to the action.

Board Leadership Structure and Role in Risk

The positions of our Chairman

of the Board and Chief Executive Officer are separated.

Separating these positions allows our Chief Executive Officer to focus on our

day-to-day business, while allowing the Chairman of the Board to lead our Board in its fundamental role of providing advice to and independent

oversight of management.

Our Board recognizes the time, effort and energy that the Chief Executive Officer must devote to his position

in the current business environment, as well as the commitment required to serve as our Chairman, particularly as our Board’s oversight

responsibilities continue to grow.

Our Board also believes that this structure ensures a greater role for the independent directors in

the oversight of our Company and active participation of the independent directors in setting agendas and establishing priorities and

procedures for the work of our Board.

Our Board believes its administration of its risk oversight function has not affected its leadership

Although our bylaws do not

require our Chairman and Chief Executive Officer positions to be separate, our Board believes that having separate positions is the appropriate

leadership structure for us at this time and demonstrates our commitment to good corporate governance.

Risk is inherent with every

business, and how well a business manages risk can ultimately determine its success.

We face a number of risks, including those described

under the section entitled “ Risk Factors ” of this report.

Our Board is actively involved in oversight of risks that

could affect us.

The positions of our Chairman of the Board and

Chief Executive Officer are separated.

Separating these positions allows our Chief Executive Officer to focus on our day-to-day business,

while allowing the Chairman of the Board to lead our Board in its fundamental role of providing advice to and independent oversight of

Our Board recognizes the time, effort and energy that the Chief Executive Officer must devote to his position in the current

business environment, as well as the commitment required to serve as our Chairman, particularly as our Board’s oversight responsibilities

continue to grow.

Our Board also believes that this structure ensures a greater role for the independent directors in the oversight of

our Company and active participation of the independent directors in setting agendas and establishing priorities and procedures for the

work of our Board.

Our Board believes its administration of its risk oversight function has not affected its leadership structure.

Although our bylaws do not require our Chairman

and Chief Executive Officer positions to be separate, our Board believes that having separate positions is the appropriate leadership

structure for us at this time and demonstrates our commitment to good corporate governance.

Risk is inherent with every business, and how

well a business manages risk can ultimately determine its success.

We face a number of risks, including those described under the section

entitled “ Risk Factors ” of this report.

Our Board is actively involved in oversight of risks that could affect us.

This oversight is conducted primarily by our full Board, which has responsibility for general oversight of risks.

Our Board satisfies this responsibility

through full reports by each committee chair regarding the committee’s considerations and actions, as well as through regular reports

directly from officers responsible for oversight of particular risks within our Company.

Our Board believes that full and open communication

between management and the Board is essential for effective risk management and oversight.

Our Board satisfies this responsibility through

full reports by each committee chair regarding the committee’s considerations and actions, as well as through regular reports directly

from officers responsible for oversight of particular risks within our Company.

Our Board believes that full and open communication between

management and the Board is essential for effective risk management and oversight.

Board of Director Meetings

The primary responsibility

of the Board is to provide oversight, strategic guidance, counseling, and direction to our management team.

Our Board meets on a regular

basis and additionally as required.

Our Board met three times in 2023.

Each of the directors attended at least 75% of the aggregate of

(i) the total number of meetings of our Board (held during the period for which such directors served on the Board) and (ii) the total

number of meetings of all committees of our Board on which the director served (during the periods for which the director served on such

committee or committees).

We do not have a formal policy requiring members of the Board to attend our annual meetings.

Our last annual

meeting of stockholders was held on October 12, 2023.

One of our directors serving at the time attended last year’s annual meeting.

The primary responsibility of the Board is to provide oversight, strategic

guidance, counseling, and direction to our management team.

Our Board meets on a regular basis and additionally as required.

met five times in 2024.

Each of the directors attended at least 75% of the aggregate of (i) the total number of meetings of our Board

(held during the period for which such directors served on the Board) and (ii) the total number of meetings of all committees of our Board

on which the director served (during the periods for which the director served on such committee or committees).

We do not have a formal

policy requiring members of the Board to attend our annual meetings of stockholders.

Three of our directors attended last year’s

annual meeting.

Director Independence

Our common stock is listed

on The Nasdaq Capital Market.

Our common stock is listed on The Nasdaq Capital

Under the rules of The Nasdaq Capital Market, independent directors must comprise a majority of our Board.

In addition, the rules of The Nasdaq Capital Market require that all the members of such committees be independent.

Members of our Audit

Committee, as defined below, must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act.

committee members must also satisfy the independence criteria established by The Nasdaq Capital Market in accordance with Rule 10C-1 under

the Exchange Act.

Under the rules of The Nasdaq Capital Market, a director will only qualify as an “independent director”

if, among other qualifications, in the opinion of that company’s board of directors, that person does not have a relationship that

would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

The Board has reviewed its

composition, the composition of its committees and the independence of each director.

Based upon information requested from and provided

by each director concerning his or her background, employment and affiliations, including family relationships, the Board has determined

that Steven A.

Sanders, Lourdes Felix, William B.

Stilley, III and Tevi Troy do not, respectively, have a relationship that would interfere

with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent”

as that term is defined under the Rules of The Nasdaq Capital Market and the SEC.

In making this determination,

our Board considered the relationships that each non-employee director has with our Company and all other facts and circumstances our

Board deemed relevant in determining their independence.

We intend to comply with the other independence requirements for committees within

the time periods specified above.

In addition, the rules

of The Nasdaq Capital Market require that all the members of such committees be independent.

Members of our Audit Committee, as defined

below, must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act.

Compensation committee members must

also satisfy the independence criteria established by The Nasdaq Capital Market in accordance with Rule 10C-1 under the Exchange Act.

Under the rules of The Nasdaq Capital Market, a director will only qualify as an “independent director” if, among other qualifications,

in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise

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

The Board has reviewed its composition, the composition

of its committees and the independence of each director.

Based upon information requested from and provided by each director concerning

his or her background, employment and affiliations, including family relationships, the Board has determined that Steven A.

Sanders, Lourdes

Felix, William B.

Stilley, III and Tevi Troy do not, respectively, have a relationship that would interfere with the exercise of independent

judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term

is defined under the Rules of The Nasdaq Capital Market and the SEC.

In making this determination, our Board considered

the relationships that each non-employee director has with our Company and all other facts and circumstances our Board deemed relevant

in determining their independence.

We intend to comply with the other independence requirements for committees within the time periods

specified above.

Family Relationships

There are no family relationships

among our directors or executive officers.

There are no family relationships among our directors

or executive officers.

Board Committees

The Board has established

an audit committee, a compensation committee and a nominating and corporate governance committee.

Our Board may establish other committees

to facilitate the management of our business.

The Board has established an audit committee,

a compensation committee and a nominating and corporate governance committee.

Our Board may establish other committees to facilitate the

management of our business.

The composition and functions of each committee named above are defined and described below.

Members serve on these committees until their resignation or until otherwise determined by our Board.

Members serve

on these committees until their resignation or until otherwise determined by our Board.

Audit Committee .

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reports or inquiries received from regulators or governmental agencies.

During the fiscal year ended December 31, 2023,

the Audit Committee met four times.

During the fiscal year ended December 31, 2024, the Audit Committee

met four times.

The Audit Committee is governed by a written charter, as adopted by the Board.

A copy of the Audit

Committee Charter is posted under the “Investors” tab under “Corporate Governance” on our website, which is located

at www.avalon-globocare.com .

A copy of the Audit Committee Charter is

posted under the “Investors” tab under “Corporate Governance” on our website, which is located at www.avalon-globocare.com .

Compensation Committee .

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

During the fiscal year ended

December 31, 2023, the Compensation Committee did not meet.

The Compensation Committee is governed by a written charter, as adopted by

A copy of the Compensation Committee Charter is posted under the “Investors” tab under “Corporate Governance”

on our website, which is located at www.avalon-globocare.com .

During the fiscal year ended December 31, 2024, the Compensation Committee

met two times.

The Compensation Committee is governed by a written charter, as adopted by our Board.

A copy of the Compensation Committee

Charter is posted under the “Investors” tab under “Corporate Governance” on our website, which is located at www.avalon-globocare.com .

Nominating and Corporate Governance Committee .

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to time, all in accordance with our bylaws and applicable law.

In identifying independent

candidates, with significant senior-level professional experience, to be nominated as potential members of our Board, the Nominating and

Corporate Governance Committee solicits candidates from the Board, senior management and others, and may engage a search firm in the process.

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

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

In general, in considering

whether to recommend any particular candidate for inclusion in our Board’s slate of recommended director nominees, the Nominating

and Corporate Governance Committee will apply the criteria set forth in our corporate governance guidelines.

These criteria include the

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

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

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

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

The Nominating and Corporate Governance Committee does not assign

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

We believe that the

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

that will allow our Board to fulfill its responsibilities.

Stockholders may recommend individuals to the Nominating and Corporate Governance

Committee for consideration as potential director candidates by submitting the names, together with appropriate biographical information

and background materials to our Nominating and Corporate Governance Committee.

The Nominating and Corporate Governance Committee considers

recommendations from stockholders if submitted in a timely manner in accordance with the procedures set forth in our bylaws and will apply

the same criteria to all persons being considered.

In identifying independent candidates, with significant

senior-level professional experience, to be nominated as potential members of our Board, the Nominating and Corporate Governance Committee

solicits candidates from the Board, senior management and others, and may engage a search firm in the process.

The Nominating and Corporate

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

The final candidate is also introduced

and interviewed by the Board and the lead director if one has been appointed.

In general, in considering whether to recommend any particular

candidate for inclusion in our Board’s slate of recommended director nominees, the Nominating and Corporate Governance Committee

will apply the criteria set forth in our corporate governance guidelines.

These criteria include the candidate’s integrity, business

acumen, commitment to understanding our business and industry, experience, conflicts of interest and the ability to act in the interests

of our stockholders.

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

would bring to our Board.

The Nominating and Corporate Governance Committee does not assign specific weights to particular criteria and

no particular criterion is a prerequisite for each prospective nominee.

We believe that the backgrounds and qualifications of our directors,

considered as a group, should provide a composite mix of experience, knowledge and abilities that will allow our Board to fulfill its

responsibilities.

Stockholders may recommend individuals to the Nominating and Corporate Governance Committee for consideration as potential

director candidates by submitting the names, together with appropriate biographical information and background materials to our Nominating

and Corporate Governance Committee.

The Nominating and Corporate Governance Committee considers recommendations from stockholders if submitted

in a timely manner in accordance with the procedures set forth in our bylaws and will apply the same criteria to all persons being considered.

The principal functions and responsibilities of

11 unchanged sentences

to fill vacancies or new positions on the Board or its committees that may occur from time to time.

During the fiscal year ended

December 31, 2023, the Nominating and Corporate Governance Committee met one time.

The Nominating and Corporate Governance Committee is

governed by a written charter approved by our Board.

A copy of the Nominating and Corporate Governance Committee Charter is posted under

the “Investors” tab under “Corporate Governance” on our website, which is located at www.avalon-globocare.com .

During the fiscal year ended December 31, 2024, the Nominating and

Corporate Governance Committee met one time.

The Nominating and Corporate Governance Committee is governed by a written charter approved

by our Board.

A copy of the Nominating and Corporate Governance Committee Charter is posted under the “Investors” tab under

“Corporate Governance” on our website, which is located at www.avalon-globocare.com .

Stockholder Nominations for Directorships

Stockholders may recommend

individuals to the Nominating and Corporate Governance Committee for consideration as potential director candidates by submitting their

names and background to the Secretary of the Company at the address set forth below under “Stockholder Communications” in

accordance with the provisions set forth in our bylaws.

All such recommendations will be forwarded to the Nominating and Corporate Governance

Committee, which will review and only consider such recommendations if appropriate biographical and other information is provided, including,

but not limited to, the items listed below, on a timely basis.

All security holder recommendations for director candidates must be received

by the Company in the timeframe(s) set forth under the heading “Stockholder Proposals” below.

Stockholders may recommend individuals to the

Nominating and Corporate Governance Committee for consideration as potential director candidates by submitting their names and background

to the Secretary of the Company at the address set forth below under “Stockholder Communications” in accordance with the provisions

set forth in our bylaws.

All such recommendations will be forwarded to the Nominating and Corporate Governance Committee, which will review

and only consider such recommendations if appropriate biographical and other information is provided, including, but not limited to, the

items listed below, on a timely basis.

● the name and address of record

14 unchanged sentences

a director if elected at such annual meeting.

Assuming that appropriate

information is provided for candidates recommended by stockholders, the Nominating and Corporate Governance Committee will evaluate those

candidates by following substantially the same process, and applying substantially the same criteria, as for candidates submitted by members

of the Board or other persons, as described above and as set forth in its written charter.

All security holder recommendations for director

candidates must be received by the Company in the timeframe(s) set forth under the heading “Stockholder Proposals” below.

Assuming that appropriate information is timely provided for candidates recommended by stockholders, the Nominating and Corporate Governance

Committee will evaluate those candidates by following substantially the same process, and applying substantially the same criteria, as

for candidates submitted by members of the Board or other persons, as described above and as set forth in its written charter.

Compensation Committee Interlocks and Insider

Participation

None of our executive officers

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

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

None of our executive officers currently serves,

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

officers on our board of directors or compensation committee.

Code of Ethics

We have adopted a written

Code of Business Conduct and Ethics that applies to our employees, officers and directors.

A copy of the Code of Business Conduct and

Ethics is posted under the “Investors” tab under “Corporate Governance” in our website, which is located at www.avalon-globocare.com.

We have adopted a written Code of Business Conduct

and Ethics that applies to our employees, officers and directors.

A copy of the Code of Business Conduct and Ethics is posted under the

“Investors” tab under “Corporate Governance” in our website, which is located at www.avalon-globocare.com .

We intend to disclose future amendments to certain provisions of our Code of Business Conduct and Ethics, or waivers of such provisions

1 unchanged sentence

similar functions, and our directors, on our website identified above or in filings with the SEC.

Anti-Hedging Policy

Under the terms of our insider

trading policy, we prohibit each officer, director and employee, and each of their family members and controlled entities, from engaging

in certain forms of hedging or monetization transactions.

Such transactions include those, such as zero-cost collars and forward sale

contracts, that would allow them to lock in much of the value of their stock holdings, often in exchange for all or part of the potential

for upside appreciation in the stock, and to continue to own the covered securities but without the full risks and rewards of ownership.

Limitation of Directors Liability and Indemnification

The Delaware General Corporation

Law authorizes corporations to limit or eliminate, subject to certain conditions, the personal liability of directors to corporations

and their stockholders for monetary damages for breach of their fiduciary duties.

Our Amended and Restated Certificate of Incorporation

(the “Certificate of Incorporation”) limits the liability of our directors to the fullest extent permitted by Delaware law.

In addition, we have entered into indemnification agreements with each of our directors and officers whereby we have agreed to indemnify

those directors and officers to the fullest extent permitted by law, including indemnification against expenses and liabilities incurred

in legal proceedings to which the director or officer was, or is threatened to be made, a party by reason of the fact that such director

or officer is or was a director, officer, employee or agent of the Company, provided that such director or officer acted in good faith

and in a manner that the director or officer reasonably believed to be in, or not opposed to, the best interests of the Company.

We have director and officer

liability insurance to cover liabilities our directors and officers may incur in connection with their services to us, including matters

arising under the Securities Act.

Our Certificate of Incorporation and bylaws also provide that we will indemnify our directors and officers

who, by reason of the fact that he or she is one of our officers or directors, is involved in any action, suit or proceeding, whether

civil, criminal, administrative or investigative related to their board role with us.

There is no pending litigation

or proceeding involving any of our directors, officers, employees or agents in which indemnification will be required or permitted.

are not aware of any threatened litigation or proceeding that may result in a claim for such indemnification.

Insider trading arrangements and

We have adopted an insider trading policy that governs the purchase,

sale, and/or other transactions of our securities by our directors, officers and employees.

A copy of our insider trading policy is filed

as Exhibit 19.1 to this Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

In addition, with regard to us trading

in our own securities, it is our policy to comply with the federal securities laws and the applicable exchange listing requirements in

all respects.

Limitation of Director Liability and Indemnification

The Delaware General Corporation Law authorizes

corporations to limit or eliminate, subject to certain conditions, the personal liability of directors to corporations and their stockholders

for monetary damages for breach of their fiduciary duties.

Our Amended and Restated Certificate of Incorporation (the “Certificate

of Incorporation”) limits the liability of our directors to the fullest extent permitted by Delaware law.

In addition, we have entered

into indemnification agreements with each of our directors and officers whereby we have agreed to indemnify those directors and officers

to the fullest extent permitted by law, including indemnification against expenses and liabilities incurred in legal proceedings to which

the director or officer was, or is threatened to be made, a party by reason of the fact that such director or officer is or was a director,

officer, employee or agent of the Company, provided that such director or officer acted in good faith and in a manner that the director

or officer reasonably believed to be in, or not opposed to, the best interests of the Company.

We have director and officer liability insurance

to cover liabilities our directors and officers may incur in connection with their services to us, including matters arising under the

Securities Act.

Our Certificate of Incorporation and bylaws also provide that we will indemnify our directors and officers who, by reason

of the fact that he or she is one of our officers or directors, is involved in any action, suit or proceeding, whether civil, criminal,

administrative or investigative related to their board role with us.

There is no pending litigation or proceeding involving

any of our directors, officers, employees or agents in which indemnification will be required or permitted.

We are not aware of any threatened

litigation or proceeding that may result in a claim for such indemnification.

Delinquent Section 16(a) Reports

16(a) of the Exchange Act requires our directors and executive, officers, and persons who are beneficial owners of more than

10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC.

These persons

are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.

solely upon our review of copies of Forms 3, 4 and 5 furnished to us, we believe that all of our directors, executive officers

and any other applicable stockholders timely filed all reports required by Section 16(a) of the Exchange Act during the fiscal

year ended December 31, 2023, except for the following:

(i) we filed a Form 3 for Lourdes Felix on March 7, 2023, covering a transaction

that required a Form 4 filing due on January 11, 2023;

(ii) we filed a Form 4 for Tevi Troy on March 8, 2023, covering a transaction that

required a Form 4 filing due on January 5, 2021;

(iii) we filed a Form 4 for William Stilley on March 8, 2023, covering a transaction

that required a Form 4 filing due on January 5, 2021;

(iv) we filed a Form 4 for William B.

Stilley, III on March 8, 2023, covering a

transaction that required a Form 4 filing due on January 5, 2021;

(v) we filed a Form 4 for Steven A.

Sanders on March 9, 2023, covering

a transaction that required a Form 4 filing due on January 5, 2021;

and (vi) we filed a Form 4 for Wilbert J.

Tauzin II on March 9, 2023,

covering a transaction that required a Form 4 filing due on January 5, 2021.

Section 16(a) of the Exchange Act requires our

directors and executive, officers, and persons who are beneficial owners of more than 10% of a registered class of our equity securities,

to file reports of ownership and changes in ownership with the SEC.

These persons are required by SEC regulations to furnish us with copies

of all Section 16(a) forms they file.

Based solely upon our review of copies of Forms 3, 4 and 5 furnished

to us, we believe that all of our directors, executive officers and 10% stockholders timely filed all reports required by Section 16(a)

of the Exchange Act during the fiscal year ended December 31, 2024.

EXECUTIVE COMPENSATION

Executive Officers’ Compensation

We are currently a “smaller

reporting company” and as such, we have opted to comply with the scaled down disclosure rules applicable to a “smaller reporting

company,” as such term is defined in the rules promulgated under the Securities Act, which require compensation disclosure

for (i) our principal executive officer, (ii) our two most highly compensated executive officers, other than the principal executive officer,

whose total compensation for 2023 exceeded $100,000 and who were serving as executive officers as of December 31, 2023, and (iii) up to

two additional individuals for whom disclosure would have been provided pursuant to the foregoing clause (ii) but for the fact that the

individual was not serving as an executive officer as of December 31, 2023.

We refer to these individuals as “named executive officers.”

Our named executive officers for the year ended December 31, 2023 were:

Executive Officer Compensation

We are currently a “smaller reporting company,”

as such term is defined in the rules promulgated under the Securities Act.

We have opted to comply with the scaled down disclosure rules

applicable to smaller reporting companies which require certain compensation disclosure for (i) our principal executive officer, (ii)

our two most highly compensated executive officers, other than the principal executive officer, whose total compensation for 2024 exceeded

$100,000 and who were serving as executive officers as of December 31, 2024, and (iii) up to two additional individuals for whom disclosure

would have been provided pursuant to the foregoing clause (ii) but for the fact that the individual was not serving as an executive officer

as of December 31, 2024.

We refer to these individuals as “named executive officers.” Our named executive officers for the

year ended December 31, 2024 were Dr.

David Jin, Luisa Ingargiola and Meng Li.

Certain information regarding their 2024 compensation is

included below.

2024 Summary Compensation Table

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Employment Agreements

December 1, 2016, the Company entered into an Executive Employment Agreement with David Jin, the Company’s CEO and President.

to the agreement, Mr.

Jin was employed as President and Chief Executive Officer of the Company, which agreement had a term initially through

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

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

Agreement with Dr.

Jin pursuant to which the term of Dr.

On December 1, 2016, the Company entered into

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

Pursuant to the agreement, Mr.

Jin was employed

as President and Chief Executive Officer of the Company, which agreement had a term initially through November 30, 2017 unless earlier

terminated pursuant to the terms of the agreement.

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

to which the term of Dr.

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

During the term of the agreement, Dr.

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

awards and to participate in employee benefits plans as the Company may institute from time to time at the discretion of the Board.

On January 3, 2019, the Company entered into a

Letter Agreement with Dr.

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

effective January 1, 2019.

During the term of the agreement,

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

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

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

Jin, pursuant to which his annual base salary set forth in his employment agreement was increased to $360,000, effective January 1,

Pursuant to the agreement, Mr.

Jin may be terminated for “cause” as defined and Mr.

Jin may resign

for “good reason” as defined.

Jin may resign for “good reason”

In the event Mr.

Jin is terminated without cause or resigns for good reason, the Company will

be required to pay Mr.

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

Jin’s salary for one

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

accrued salary and bonuses, reimbursement for all business expenses and Mr.

Jin’s salary for one year.

In the event Mr.

Jin is terminated with cause, resigns without good reason, dies or is disabled, the Company will be required to

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

Jin is terminated

with cause, resigns without good reason, dies or is disabled, the Company will be required to pay Mr.

Jin all accrued salary and bonuses

and reimbursement for all business expenses.

Under the agreement Mr.

Jin is subject to confidentiality,

non-compete and non-solicitation restrictions.

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

restrictions.

This agreement has not been extended, however Dr.

Jin is continuing his employment with

the Company at will and otherwise under the same terms and conditions, except that Dr.

Jin agreed to a salary reduction as set forth in

the table above for the year ended December 31, 2023 as part of the Company’s cost reduction measures.

Jin is continuing his employment with the Company at will and otherwise

under the same terms and conditions, except that Dr.

Jin agreed to a salary reduction as set forth in the table above for the years ended

December 31, 2024 and 2023 as part of the Company’s cost reduction measures.

Luisa Ingargiola

February 21, 2017, Ms.

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

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

On January 3, 2019, the Company

entered into a Letter Agreement with Ms.

Ingargiola, pursuant to which her annual base salary set forth in her employment agreement was

increased to $350,000 effective January 1, 2019.

employment of Ms.

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

Pursuant to the terms of Executive

Retention Agreement with Ms.

Ingargiola, the Company has agreed to provide specified severance and bonus amounts and to accelerate the

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

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

Ingargiola is entitled to receive an amount equal to 12 months of her base salary

and the target bonus then in effect for the executive officer for the year in which such termination occurs, such bonus payment to be

pro-rated to reflect the full number of months the executive remained in the Company’s employ.

In addition, the vesting on any stock

option held by the executive officer will be accelerated in full.

At the election of the executive officer, the Company will also continue

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

the event of an involuntary termination, Ms.

Ingargiola is entitled to receive an amount equal to six months of her base salary and the

target bonus then in effect for the executive officer for the six months in which such termination occurs, such bonus payment to be pro-rated

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

Such payment will be increased to 12 months

upon the one-year anniversary of the retention agreement.

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

be accelerated in full.

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

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

January 11, 2017, Avalon Shanghai entered into an Executive Employment Agreement with Meng Li, the Company’s COO and Secretary.

On February 21, 2017, Ms.

Ingargiola and the Company

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

Ingargiola agreed to serve as Chief Financial

Officer in consideration of an annual salary.

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

Ingargiola, pursuant

to which her annual base salary set forth in her employment agreement was increased to $350,000 effective January 1, 2019.

The employment of Ms.

Ingargiola is at will and

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

Pursuant to the terms of Executive Retention Agreement with Ms.

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

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

In the event of a termination upon a change

of control, Ms.

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

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

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

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

executive officer will be accelerated in full.

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

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

In the event of an involuntary termination, Ms.

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

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

executive remained in the Company’s employ.

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

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

At the election of

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

Company’s expense.

On January 11, 2017, Avalon Shanghai entered into

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

Pursuant to the agreement, Ms.

Li was employed as Chief Operating Officer and President of Avalon Shanghai initially through November

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

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

with Meng Li pursuant to which the term of Ms.

Li’s Executive Employment Agreement entered between the Company’s subsidiary

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

Li was employed

as Chief Operating Officer and President of Avalon Shanghai initially through November 30, 2019, unless earlier terminated pursuant to

the terms of the agreement.

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

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

Li dated January 11, 2017 was

extended an additional three years.

During the term of the agreement, Ms.

6 unchanged sentences

effective January 1, 2019, except that Ms.

Li agreed to a salary reduction as set forth in the table above for the year ended December

31, 2023 as part of the Company’s cost reduction measures.

Li agreed to a salary reduction as set forth in the table above for the years ended December

31, 2024 and 2023 as part of the Company’s cost reduction measures.

Pursuant to the agreement, Ms.

14 unchanged sentences

Option Exercises and Stock Vested

There were no options exercised

by our executive officers or stock vested to our executive officers during the year ended December 31, 2023.

Outstanding Equity Awards at Fiscal Year End

The following table sets forth information with

respect to the outstanding equity awards of our principal executive officers and principal financial officer during 2023, and each person

who served as an executive officer of the Company as of December 31, 2023:

There were no options exercised by our executive

officers or stock vested to our executive officers during the year ended December 31, 2024.

Outstanding Equity Awards at 2024 Fiscal Year

The following table sets forth information with respect to the outstanding

equity awards of our named executive officers at December 31, 2024:

Outstanding Equity Awards

Option Awards

Name and principal position

(#) (Exercisable)

(#) (Unexercisable)

Luisa Ingargiola,

unexercised unearned

Policies and Practices Related to the Grant of Certain Equity Awards

Close in Time to the Release of Material Nonpublic Information

We do not have any formal policy that requires us to grant, or avoid

granting, stock options at particular times.

Consistent with its annual compensation cycle, if options are to be granted, the Compensation

Committee generally seeks to grant annual stock option awards after its Annual Report on Form 10-K has been filed.

The timing of any stock

option grants in connection with new hires, promotions, or other non-routine grants is tied to the event giving rise to the award (such

as an employee’s commencement of employment or promotion effective date).

As a result, in all cases, the timing of grants of stock

options occurs independent of the release of any material nonpublic information, and we do not time the disclosure of material nonpublic

information for the purpose of affecting the value of executive compensation.

No stock options were issued to executive officers in 2024 during any

period beginning four business days before the filing of a periodic report or current report disclosing material non-public information

and ending one business day after the filing or furnishing of such report with the SEC.

No Pension Benefits

The Company does not maintain

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

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

We do not maintain any plan that provides for

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

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

No Nonqualified Deferred Compensation

The Company does not maintain

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

We do not maintain any defined contribution or

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

2024 Director Compensation

The following table sets forth

information concerning the compensation earned or paid to certain of our non-employee directors during the fiscal year ended December

The following table sets forth information concerning

the compensation earned or paid to certain of our non-employee directors during the fiscal year ended December 31, 2024:

Earned or Paid in

1 unchanged sentence

Pension Value

Wilbert Tauzin (1)

Lourdes Felix (1)

Steven Sanders (3)

Stilley, III (3)

Tauzin II (4)

Tevi Troy (5)

William Stilley (5)

Tauzin’s 2023 compensation consisted of 20,000 options vested and valued at $38,052.

Felix’s 2023 compensation consisted of cash of $68,488 and 7,803 stock options vested and valued at $23,268.

Sanders’s 2023 compensation consisted of cash of $70,000 and 8,000 options vested and valued at $33,665.

Troy’s 2023 compensation consisted of cash of $60,000 and 8,000 options vested and valued at $33,665.

Stilley’s 2023 compensation consisted of cash of $70,000 and 8,000 options vested and valued at $33,665.

SECURITY OWNERSHIP OF CERTAIN

BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Felix’s 2024 compensation consisted of cash of

$70,000 and 533 stock options vested and valued at $2,697.

Sanders’s 2024 compensation consisted of cash of

$70,000 and 533 options vested and valued at $2,697.

Stilley’s 2024 compensation consisted of cash of

$70,000 and 533 options vested and valued at $2,697.

Tauzin’s 2024 compensation consisted of cash of

$25,000 and 1,333 options vested and valued at $4,697.

Troy’s 2024 compensation consisted of cash of $60,000

and 533 options vested and valued at $2,697.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL

OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Equity Compensation Plan Information

Amended and Restated 2020 Stock Incentive Plan

On August 29, 2023, the Board

adopted the Avalon GloboCare Corp.

Amended and Restated 2020 Stock Incentive Plan (the “Amended and Restated 2020 Plan”),

subject to stockholder approval, which was received on December 19, 2023.

The Amended and Restated 2020 Plan provides for the grant of

incentive stock options that are intended to qualify under Section 422 of the Code (“ISOs”), nonstatutory stock options, stock

appreciation rights, restricted stock awards, restricted stock unit awards, performance-based stock awards and performance-based cash

ISOs may be granted only to employees.

All other awards may be granted to employees, including officers, and to the Company’s

non-employee directors, consultants and other advisors.

A total of 2,000,000 shares of our common

stock were initially available under the Amended and Restated 2020 Plan.

In addition, the number of shares of our common stock

reserved for issuance under the Amended and Restated 2020 Plan automatically increases on January 1 of each year, beginning on

January 1, 2024, by 1% of the total number of shares of our common stock outstanding on December 31 of the preceding

calendar year, or a lesser number of shares determined by our Board.

On January 1, 2024, the number of shares of our common stock

reserved for issuance under the Amended and Restated 2020 Plan was increased by an aggregate of 109,995 shares.

March 29, 2024, a total of 2,109,995 shares of our common stock are available for issuance under the Amended and Restated 2020

Plan, including shares that are the subject of outstanding awards as of such date.

On August 29, 2023, the Board adopted the Avalon

GloboCare Corp.

Amended and Restated 2020 Stock Incentive Plan (the “Amended and Restated 2020 Plan”), subject to stockholder

approval, which was received on December 19, 2023.

The Amended and Restated 2020 Plan provides for the grant of incentive stock options

that are intended to qualify under Section 422 of the Code (“ISOs”), nonstatutory stock options, stock appreciation rights,

restricted stock awards, restricted stock unit awards, performance-based stock awards and performance-based cash awards.

ISOs may be granted

only to employees.

All other awards may be granted to employees, including officers, and to the Company’s non-employee directors,

consultants and other advisors.

A total of 133,333 shares of our common stock

were initially available under the Amended and Restated 2020 Plan.

In addition, the number of shares of our common stock reserved for

issuance under the Amended and Restated 2020 Plan automatically increases on January 1 of each year, beginning on January 1, 2024, by

1% of the total number of shares of our common stock outstanding on December 31 of the preceding calendar year, or a lesser number of

shares determined by our Board.

On January 1, 2024 and 2025, the number of shares of our common stock reserved for issuance under the

Amended and Restated 2020 Plan was increased by 7,333 and 14,425 shares, respectively.

As of March 31, 2025, a total of 142,424 shares

of our common stock were available for issuance under the Amended and Restated 2020 Plan, including shares that are the subject of outstanding

awards as of such date.

Clawback/Recoupment.

granted under the Amended and Restated 2020 Plan will be subject to the requirement that the awards be forfeited or amounts repaid

to the Company after they have been distributed to the participant (i) to the extent set forth in an award agreement or (ii) to the

extent covered by any clawback or recapture policy adopted by the Company from time to time (including the Clawback Policy adopted

by the Board on November 16, 2023), or any applicable laws that impose mandatory forfeiture or recoupment, under circumstances set

forth in such applicable laws.

Awards granted

under the Amended and Restated 2020 Plan are subject to the requirement that the awards be forfeited or amounts repaid to the Company

after they have been distributed to the participant (i) to the extent set forth in an award agreement or (ii) to the extent covered by

any clawback or recapture policy adopted by the Company from time to time (including the Clawback Policy adopted by the Board on November

16, 2023), or any applicable laws that impose mandatory forfeiture or recoupment, under circumstances set forth in such applicable laws.

Amendment, Termination .

Board may at any time amend, suspend or terminate the Amended and Restated 2020 Plan for the purpose of satisfying the requirements

of the Code, or other applicable law or regulation or for any other legal purpose, provided that, without the consent of our

stockholders, the Board may not (i) increase the number of shares of our common stock available under the Amended and Restated 2020

Plan, (ii) change the group of individuals eligible to receive awards, or (iii) extend the term of the Amended and Restated 2020

may at any time amend, suspend or terminate the Amended and Restated 2020 Plan for the purpose of satisfying the requirements of the Code,

or other applicable law or regulation or for any other legal purpose, provided that, without the consent of our stockholders, the Board

may not (i) increase the number of shares of our common stock available under the Amended and Restated 2020 Plan, (ii) change the group

of individuals eligible to receive awards, or (iii) extend the term of the Amended and Restated 2020 Plan.

2020 Incentive Stock Plan

On June 12, 2020, the Board

adopted the Avalon GloboCare Corp.

2020 Incentive Stock Plan (the “2020 Plan”), subject to stockholder approval, which was

received on August 4, 2020.

The general purpose of the

2020 Plan is to provide a means whereby eligible directors, officers, employees or consultants to the Company develop a sense of proprietorship

and personal involvement in our development and financial success, and to encourage them to devote their best efforts to our business,

thereby advancing our interests and the interests of our stockholders.

We believe that the 2020 Plan advances the Company’s interests

by enhancing our ability to (i) attract, retain and reward employees, officers, directors and consultants who are in a position to make

significant contributions to our success;

(ii) encourage our employees, officers, directors and consultants to take into account our long-term

interests through ownership of our shares of our common stock;

and (iii) to provide incentives for such persons to exert maximum efforts

for our success.

The Board has reserved 500,000 shares of our

common stock for issuance under the 2020 Plan, subject to customary adjustments for stock splits, stock dividends or similar

transactions.

Under the 2020 Plan, awards may be made in the form of options to purchase shares of our common stock, as well as

restricted shares of our common stock and restricted stock units payable in shares of our common stock.

Options may be granted which

are intended to qualify as ISOs under Section 422 of the Code or which are not intended to qualify as ISOs thereunder.

However, ISOs

may only be granted to employees.

If any option granted under the 2020 Plan terminates without having been exercised in full or if

any award is forfeited, or if shares otherwise issuable are withheld to satisfy tax withholding obligations, the number of shares of

our common stock as to which such option or award was forfeited or withheld will be available for future grants under the 2020

The 2020 Plan is not a qualified

deferred compensation plan under Section 401(a) of the Code and is not subject to the provisions of the Employee Retirement Income Security

On June 12, 2020, the Board adopted the Avalon

GloboCare Corp.

2020 Incentive Stock Plan (the “2020 Plan”), subject to stockholder approval, which was received on August

The general purpose of the 2020 Plan is to provide

a means whereby eligible directors, officers, employees or consultants to the Company develop a sense of proprietorship and personal involvement

in our development and financial success, and to encourage them to devote their best efforts to our business, thereby advancing our interests

and the interests of our stockholders.

We believe that the 2020 Plan advances the Company’s interests by enhancing our ability to

(i) attract, retain and reward employees, officers, directors and consultants who are in a position to make significant contributions

to our success;

(ii) encourage our employees, officers, directors and consultants to take into account our long-term interests through

ownership of our shares of our common stock;

and (iii) to provide incentives for such persons to exert maximum efforts for our success.

The Board has reserved 33,333 shares of our common

stock for issuance under the 2020 Plan, subject to customary adjustments for stock splits, stock dividends or similar transactions.

the 2020 Plan, awards may be made in the form of options to purchase shares of our common stock, as well as restricted shares of our common

stock and restricted stock units payable in shares of our common stock.

Options may be granted which are intended to qualify as ISOs under

Section 422 of the Code or which are not intended to qualify as ISOs thereunder.

However, ISOs may only be granted to employees.

option granted under the 2020 Plan terminates without having been exercised in full or if any award is forfeited, or if shares otherwise

issuable are withheld to satisfy tax withholding obligations, the number of shares of our common stock as to which such option or award

was forfeited or withheld will be available for future grants under the 2020 Plan.

The 2020 Plan is not a qualified deferred compensation

plan under Section 401(a) of the Code and is not subject to the provisions of the Employee Retirement Income Security Act of 1974.

2019 Incentive Stock Plan

On June 7, 2019, the Board adopted the

Avalon GloboCare Corp.

2019 Incentive Stock Plan (the “2019 Plan”), subject to stockholder approval, which was received

on August 6, 2019.

There are 500,000 shares of our common stock reserved for issuance under the 2019 Plan, subject to customary

adjustments for stock splits, stock dividends or similar transactions.

As of March 29, 2024, 93,200 shares remained available for

issuance under the 2019 Plan.

The following table provides

information with respect to our 2019 Plan, 2020 Plan, and Amended and Restated 2020 Plan under which equity compensation was authorized

as of December 31, 2023:

On June 7, 2019, the Board adopted the Avalon

GloboCare Corp.

2019 Incentive Stock Plan (the “2019 Plan”), subject to stockholder approval, which was received on August

There are 33,333 shares of our common stock reserved for issuance under the 2019 Plan, subject to customary adjustments for stock

splits, stock dividends or similar transactions.

As of March 31, 2025, 6,213 shares remained available for issuance under the 2019 Plan.

The following table provides information with

respect to our 2019 Plan, 2020 Plan, and Amended and Restated 2020 Plan under which equity compensation was authorized as of December

Plan category

available for

under equity compensation plans (excluding

Equity compensation plan approved by security holders

1 unchanged sentence

Equity compensation plans not approved by security holders

Includes 324,803 shares of our common stock issuable upon exercise of

outstanding options and 47,600 shares of our common stock issuable pursuant to outstanding restricted stock units.

The weighted average exercise price does not take into account the shares issuable pursuant to outstanding restricted stock units, which have no exercise price.

Includes 402,000 shares of our common stock

issuable upon exercise of outstanding options and 4,800 shares of our common stock issuable pursuant to outstanding restricted stock

No issuances have been made as of December

31, 2023 under the Amended and Restated 2020 Plan.

Ownership of Certain Beneficial Owners and Management

Beneficial ownership is determined

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

In accordance with

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

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

options and warrants and are deemed outstanding for the purpose of computing the percentage of ownership of such person, but are not treated

as outstanding for the purpose of computing the percentage of ownership of any other person.

Subject to community property laws, where

applicable, the persons or entities named in the tables below have sole voting and investment power with respect to all shares of our

common stock indicated as beneficially owned by them.

The following table sets forth

certain information, as of March 29, 2024 with respect to the beneficial ownership of the outstanding common stock by (i) any holder of

more than five (5%) percent;

(ii) each of our executive officers and directors;

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

The numbers below reflect a 1:10 reverse stock split implemented on January 5, 2023.

(1) Includes 1,867 shares of our common stock issuable upon exercise

of outstanding options and 10,800 shares of our common stock issuable pursuant to outstanding restricted stock units.

(2) The weighted average exercise price does not take into account

the shares issuable pursuant to outstanding restricted stock units, which have no exercise price.

(3) Includes 30,047 shares of our common stock issuable upon

exercise of outstanding options and 3,174 shares of our common stock issuable pursuant to outstanding restricted stock units.

(4) Includes 26,800 shares of our common stock issuable upon exercise of outstanding options and 320 shares of our common stock issuable

pursuant to outstanding restricted stock units.

Security Ownership of Certain Beneficial Owners

and Management

Beneficial ownership is determined in accordance

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

In accordance with SEC rules,

shares of our common stock which may be acquired upon exercise of stock options or warrants which are currently exercisable or which become

exercisable within 60 days of the date of the applicable table below are deemed beneficially owned by the holders of such options and

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

for the purpose of computing the percentage of ownership of any other person.

Subject to community property laws, where applicable, the

persons or entities named in the tables below have sole voting and investment power with respect to all shares of our common stock indicated

as beneficially owned by them.

The following table sets forth certain information,

as of March 31, 2025 with respect to the beneficial ownership of the outstanding common stock by:

● Each of our named executive officers and directors;

● Our directors and executive officers as a group;

● Holders of more than 5% of our common stock

Except as otherwise indicated, each of the stockholders

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

of Beneficial Owner (1)

Name of Beneficial Owner (1)

Common Stock Beneficially Owned

Percentage of Common Stock (2)

Wenzhao Lu* (3)

7 unchanged sentences

Shareholder owning 5% or more:

FSUNSHINE TRADING PTE LTD (12)

* Officer and/or director of our

** Less than 1.0%.

Vision Capital NY Inc.

* Officer and/or director of our company

(1) Except as otherwise indicated, the address of each beneficial

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

(2) Applicable percentage ownership is based on 11,104,534 shares of our common stock outstanding as of

March 29, 2024, together with securities exercisable or convertible into shares of our common stock within 60 days of March 29, 2024

for each stockholder.

Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or

investment power with respect to securities.

Shares of common stock that are currently exercisable or exercisable within 60 days of

March 29, 2024 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage

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

(2) Applicable percentage ownership is based on 1,651,667 shares of our common stock outstanding as of March 31, 2025, together with

securities exercisable or convertible into shares of our common stock within 60 days of March 31, 2025 for each stockholder.

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

Shares of common stock that are currently exercisable or exercisable within 60 days of March 31, 2025 are deemed to be beneficially

owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated

as outstanding for the purpose of computing the percentage ownership of any other person.

(3) Wenzhao Lu holds 238,928 shares of our common stock.

(4) David Jin holds (i) 1,545,000 shares of our common stock and (ii) 40,000 vested options to acquire

40,000 shares of our common stock.

(5) Meng Li holds (i) 515,000 shares of our common stock and (ii) 30,000 vested options to acquire

30,000 shares of our common stock.

Represents 240,000 vested options to acquire 240,000 shares of our common stock.

Represents stock option to acquire 34,000 shares of our common stock, 32,000 of which have been vested and 2,000 of which will be vested within 60 days.

Represents stock option to acquire 65,000 shares of our common stock, 64,000 of which have been vested and 1,000 of which will be vested within 60 days.

Represents stock option to acquire 34,000 shares of our common stock, 32,000 of which have been vested and 2,000 of which will be vested within 60 days.

Represents stock option to acquire 9,803 shares of our common stock, 7,803 of which have been vested and 2,000 of which will be vested within 60 days.

FSUNSHINE TRADING PTE LTD holds (i) 573,646 shares of our common stock and (ii) 123,964 vested options to acquire 123,964 shares of our common stock.

(4) David Jin holds (i) 103,000 shares of our common stock and (ii)

102,667 vested options to acquire 102,667 shares of our common stock.

(5) Meng Li holds (i) 34,334 shares of our common stock and (ii)

402,000 vested options to acquire 402,000 shares of our common stock.

(6) Represents 416,000 vested options to acquire 416,000 shares

of our common stock.

(7) Represents 102,665 vested options to acquire 102,665 shares

of our common stock.

(8) Wilbert J.

Tauzin II holds (i) 1,037 shares of our common stock and

(ii) 104,533 vested options to acquire 104,533 shares of our common stock.

(9) Represents 102,665 vested options to acquire 102,665 shares

of our common stock.

(10) Represents 102,665 vested options to acquire 102,665 shares

of our common stock.

(11) Represents 101,053 vested options to acquire 101,053 shares

of our common stock.

(12) Vision Capital NY Inc.

holds 100,000 shares of our common stock.

Vision Capital NY Inc.’s address is 600 Pine Hollow Road #16-5B, East Norwich, NY 11732.

CERTAIN RELATIONSHIPS AND RELATED

TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Other than compensation arrangements

for our named executive officers and directors, we describe below each transaction or series of similar transactions, since January 1,

2022 to which we were a party or will be a party, in which:

Other than compensation arrangements for our named

executive officers and directors, we describe below each transaction or series of similar transactions, since January 1, 2023 to which

we were a party or will be a party, in which:

● the amounts involved exceeded

4 unchanged sentences

had or will have a direct or indirect material interest.

Compensation arrangements

for our named executive officers and directors are described in the section entitled “Executive Compensation.”

Compensation arrangements for our named executive

officers and directors are described in the section entitled “Executive Compensation.”

Revenue from Related Party and Rent Receivable – Related Party

The Company leases part of its commercial

real property located in New Jersey to D.P.

Capital Investments LLC, a company controlled by Wenzhao Lu, the Company’s largest shareholder

and chairman of the Board.

The Company leases space of its commercial real

property located in New Jersey to D.P.

Capital Investments LLC, which is controlled by Wenzhao Lu, the Company’s chairman of the

Board of Directors.

The term of the related party lease agreement is five years commencing on May 1, 2021 and will expire on April 30,

the years ended December 31, 2023 and 2022, the related party rental revenue amounted to $50,400 and has been included in rental

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

31, 2023 and 2022, the related party rent receivable totaled $124,500 and $74,100, respectively, which has been included in rent

receivable on the accompanying consolidated balance sheets, and no allowance for doubtful accounts was deemed to be required on the receivable.

the years ended December 31, 2024 and 2023, the related party rental revenue amounted to $50,400 and has been included in real property

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

At December 31, 2024 and 2023, the related

party rent receivable totaled $0 and $124,500, respectively, which has been included in rent receivable on the accompanying consolidated

balance sheets.

Provided by Related Party

2 unchanged sentences

As compensation for professional services provided, the Company

recognized consulting expenses of $86,528 and $144,064 for the years ended December 31, 2023 and 2022, respectively, which have

been included in professional fees on the accompanying consolidated statements of operations and comprehensive loss.

recognized consulting expenses of $63,644 and $86,528 for the years ended December 31, 2024 and 2023, respectively, which have been included

in professional fees on the accompanying consolidated statements of operations and comprehensive loss.

As of both December 31, 2024 and

2023, the accrued and unpaid services charge related to this director’s son amounted to $15,000, which have been included in accrued

professional fees on the accompanying consolidated balance sheets.

Accrued Liabilities and Other Payables –

2 unchanged sentences

for a cash payment of $450,000.

As of December 31, 2023 and 2022, the unpaid acquisition consideration of $100,000, was payable to Dr.

Yu Zhou, a former director and former co-chief executive officer and 40% owner of Genexosome, and has been included in accrued liabilities

As of both December 31, 2024 and 2023, the unpaid acquisition consideration of $100,000, was payable to

Yu Zhou, former director and former co-chief executive officer and 40% owner of Genexosome, and has been included in accrued liabilities

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

During the period from June 2023 through December

2023, Lab Services MSO paid shared expense on behalf of the Company.

As of December 31, 2023, the balance due to Lab Services MSO

amounted to $72,746, which has been included in accrued liabilities and other payables — related parties on the accompanying consolidated

balance sheets.

From time to time, Lab Services MSO paid shared

expense on behalf of the Company.

In addition, Lab Services MSO made a payment of $566,667 for equity method investment payable on behalf

of the Company in the year ended December 31, 2024.

As of December 31, 2024 and 2023, the balance due to Lab Services MSO amounted to

$632,916 and $72,746, respectively, which has been included in accrued liabilities and other payables — related parties on the accompanying

consolidated balance sheets.

As of December 31, 2024 and 2023, $0 and $33,712

$0 of accrued and unpaid interest related to borrowings from Wenzhao Lu, the Company’s largest shareholder and Chairman of

the Board, respectively, have been included in accrued liabilities and other payables — related parties on the accompanying consolidated

balance sheets.

of accrued and unpaid interest related to borrowings from Wenzhao Lu, the Company’s chairman of the Board of Directors, respectively,

have been included in accrued liabilities and other payables — related parties on the accompanying consolidated balance sheets.

Borrowings from Related Party

1 unchanged sentence

On August 29, 2019, the Company entered into a

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

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

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

purposes until the facility matures on December 31, 2024.

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

of Credit”) from Mr.

Lu, the Company’s chairman of the Board of Directors.

The Line of Credit allowed the Company to request

loans thereunder and to use the proceeds of such loans for working capital and operating expense purposes until the facility matured on

December 31, 2024.

The loans are unsecured and are not convertible into equity of the Company.

Loans drawn under the Line of Credit bear interest at an annual rate of 5% and each individual loan is payable three years from the

date of issuance.

The Company has a right to draw down on the Line of Credit and such right is not at the discretion of the related party

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

without premium or penalty.

The Line of Credit Agreement includes customary events of default.

If any such event of default occurs, the

Lender may declare all outstanding loans under the Line of Credit to be due and payable immediately.

Loans drawn under the Line of Credit bear

interest at an annual rate of 5% and each individual loan is payable three years from the date of issuance.

The Company has a right to

draw down on the line of credit and not at the discretion of Mr.

Lu, the related party lender.

The Company may, at its option, prepay

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

The Line of Credit

Agreement includes customary events of default.

If any such event of default occurs, Mr.

Lu may declare all outstanding loans under the

Line of Credit to be due and payable immediately.

In the years ended December 31, 2024 and 2023,

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Draw down from Line of Credit

Repayment of Line of Credit

Settlement of Line of Credit in shares

Outstanding principal under the Line of Credit at December 31, 2023

Draw down from Line of Credit

Repayment of Line of Credit

Reclassification of Line of Credit to advance from related party

Outstanding principal under the Line of Credit at December 31, 2024

For the years ended December 31, 2024 and 2023,

the interest expense related to related party borrowings amounted to $33,712 and $79,898, respectively, and has been reflected as

interest expense — related party on the accompanying consolidated statements of operations and comprehensive loss.

the interest expense related to related party borrowing amounted to $42,445 and $33,712, respectively, and has been reflected as interest

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

As of December 31, 2024 and 2023, the related

accrued and unpaid interest for the Line of Credit was $33,712 and $0, respectively, and has been included in accrued liabilities

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

As of December

31, 2023, the Company used approximately $6.8 million of the credit facility and has approximately $13.2 million remaining available

under the Line of Credit.

Stock Sold to Related Party for Cash

5, 2022, the Company sold 44,872 shares of its common stock at a purchase price of $7.8 per share, the fair market value

on the transaction date, to Wenzhao Lu, the Chairman of the Board, pursuant to a subscription agreement.

The Company received proceeds

of $350,000 (See Note 14 – Common Shares Sold for Cash).

A Preferred Stock Sold to Related Party for Cash

14, 2022, the Company entered into a Securities Purchase Agreement with Wenzhao Lu, the Company’s Chairman of the Board, pursuant

to which the Company sold to Mr.

Lu 4,000 shares of its Series A Preferred Stock, stated value $1,000, for gross proceeds of

$4,000,000 (See Note 14 – Series A Preferred Stock Sold for Cash).

accrued and unpaid interest for Line of Credit was $0 and $33,712, respectively, and has been included in accrued liabilities and other

payables — related parties on the accompanying consolidated balance sheets.

Membership Interest

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On November 17, 2023,

the Company entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Wenzhao Lu (the “Purchaser”),

the largest shareholder and Chairman of the Board, pursuant to which (i) the Purchaser will acquire from the Company 30% of the total

outstanding membership interests of Avalon RT 9, a wholly owned subsidiary of the Company for a cash purchase price of $3,000,000 (the

“Acquisition”), and (ii) for a period of twelve months following the closing of the Acquisition, the Purchaser shall have

the option to purchase from the Company up to an additional 70% of the outstanding membership interests of Avalon RT 9 for a purchase

price of up to $7,000,000 (the “Option”), subject to the terms and conditions of a membership interest purchase agreement

to be negotiated and entered into between the Purchaser and the Company at such time that the Purchaser desires to exercise the Option.

The Acquisition was not closed as of December 31, 2023.

The Company received $485,714 from Wenzhao Lu as of December 31, 2023, which was

recorded as advance from sale of noncontrolling interest – related party on the accompanying consolidated balance sheets.

Policies and Procedures for Related Party

Our Board has adopted a policy

that our executive officers, directors, nominees for election as a director, beneficial owners of more than 5% of any class of our common

stock, any members of the immediate family of any of the foregoing persons and any firms, corporations or other entities in which any

of the foregoing persons is employed or is a partner or principal or in a similar position or in which such person has a 5% or greater

beneficial ownership interest, are not permitted to enter into a transaction with us without the prior consent of our Board acting through

the Audit Committee or, in certain circumstances, the Chairman of the Audit Committee.

Any request for us to enter into a transaction

with a related party, in which the amount involved exceeds $100,000 and such related party would have a direct or indirect interest must

first be presented to our Audit Committee, or in certain circumstances the Chairman of our Audit Committee, for review, consideration

and approval.

In approving or rejecting any such proposal, our Audit Committee, or the Chairman of our Audit Committee, is to consider

the material facts of the transaction, including, but not limited to, whether the transaction is on terms no less favorable than terms

generally available to an unaffiliated third party under the same or similar circumstances, the extent of the benefits to us, the availability

of other sources of comparable products or services and the extent of the related party’s interest in the transaction.

ACCOUNTING FEES AND SERVICES

Marcum LLP served as

our independent auditors for the years ended December 31, 2023 and 2022.

Aggregate fees billed

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

Audit-Related Fees

All Other Fees

Consists of fees billed for

professional services rendered for the audit of our annual consolidated financial statements, review of our Annual Report on Form 10-K,

and review of the interim consolidated financial statements included in our Quarterly Reports on Form 10-Q, and services that are normally

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

the Company entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Mr.

Lu, the Company’s

chairman of the Board of Directors, pursuant to which (i) Mr.

Lu will acquire from the Company 30% of the total outstanding membership

interests of Avalon RT 9, a wholly owned subsidiary of the Company, for a cash purchase price of $3,000,000 (the “Acquisition”),

and (ii) for a period of twelve months following the closing of the Acquisition, Mr.

Lu shall have the option to purchase from the Company

up to an additional 70% of the outstanding membership interests of Avalon RT 9 for a purchase price of up to $7,000,000 (the “Option”),

subject to the terms and conditions of a membership interest purchase agreement to be negotiated and entered into between the Purchaser

and the Company at such time that the Purchaser desires to exercise the Option.

The Company received $3,108,106 and $485,714 from Wenzhao

Lu as of December 31, 2024 and 2023, respectively, which was recorded as advance from pending sale of noncontrolling interest –

related party on the accompanying consolidated balance sheets.

The Acquisition is expected to be closed in the fourth quarter of 2025.

Policies and Procedures for Related Party Transactions

Our Board has adopted a policy that our executive

officers, directors, nominees for election as a director, beneficial owners of more than 5% of any class of our common stock, any members

of the immediate family of any of the foregoing persons and any firms, corporations or other entities in which any of the foregoing persons

is employed or is a partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest,

are not permitted to enter into a transaction with us without the prior consent of our Board acting through the Audit Committee or, in

certain circumstances, the Chairman of the Audit Committee.

Any request for us to enter into a transaction with a related party, in which

the amount involved exceeds $100,000 and such related party would have a direct or indirect interest must first be presented to our Audit

Committee, or in certain circumstances the Chairman of our Audit Committee, for review, consideration and approval.

In approving or rejecting

any such proposal, our Audit Committee, or the Chairman of our Audit Committee, is to consider the material facts of the transaction,

including, but not limited to, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated

third party under the same or similar circumstances, the extent of the benefits to us, the availability of other sources of comparable

products or services and the extent of the related party’s interest in the transaction.

PRINCIPAL ACCOUNTING FEES AND SERVICES

M&K CPAS PLLC served as our independent auditors

for the year ended December 31, 2024.

Marcum LLP (“Marcum”) served as our independent auditors for the year ended December

Aggregate fees billed to the Company for professional

services rendered by M&K CPAS PLLC and Marcum LLP during the last two years were as follows:

Audit Fees (1)

Audit Related Fees (2)

Consists of fees billed for assurance and related services that are

reasonably related to the performance of the audit and or review of our consolidated financial statements and are not reported under “Audit

Fees”, such as audits and reviews in connection with the acquisition of Lab Services MSO.

Consists of fees billed for

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

All Other Fees (4)

Consists of fees for products

and services other than the services reported above.

There were no management consulting services provided in 2023 or 2022.

(1) Consists of fees billed for professional services rendered for

the audit of our annual consolidated financial statements, review of our Annual Report on Form 10-K, and review of the interim consolidated

financial statements included in our Quarterly Reports on Form 10-Q, and services that are normally provided by our independent auditors

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

(2) Consists of fees billed for assurance and related services that

are reasonably related to the performance of the audit and or review of our consolidated financial statements and are not reported under

“Audit Fees”, such as audits and reviews in connection with the acquisition of Lab Services MSO.

(3) Consists of fees billed for professional services for tax compliance,

tax advice and tax planning.

(4) Consists of fees for products and services other than the services

reported above.

Pre-Approval Policy and Procedures

The current policy of the

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

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

The current policy of the directors, acting

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

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

included in Quarterly Reports on Form 10-Q.

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

Audit Committee Chairman.

The Audit Committee is responsible

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

The Audit Committee

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

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

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

The Audit Committee

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

by the auditor.

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

December 31, 2023.

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

the Audit Committee Chairman.

The Audit Committee is responsible for the pre-approval

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

The Audit Committee will, on an

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

Thereafter, the Audit

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

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

The Audit Committee has delegated

to the Chair of the Audit Committee the authority to pre-approve, on a case-by-case basis, non-audit services to be performed by the auditor.

The Audit Committee has approved all audit and permitted non-audit services performed by the auditor for the year ended December 31, 2024.

Open Market Sale Agreement SM , dated as of December 13, 2019, by and between Avalon GloboCare Corp.

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Amended and Restated Membership Interest Purchase Agreement, dated February 9, 2023 by and among the Registrant, Laboratory Services MSO, LLC, SCBC Holdings LLC, Avalon Laboratory Services, Inc., the Zoe Family Trust, Bryan Cox and Sarah Cox (incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed on February 13, 2023).

Agreement and Plan of Merger, dated March 7, 2025, by and among Avalon GloboCare Corp., Nexus MergerSub Limited and YOOV Group Holding Limited (incorporated by reference to Exhibit 2.1 to the registrant’s Current Report on Form 8-K filed on March 10, 2025).

Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K/A filed with the Securities and Exchange Commission on April 26, 2018) .

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Certificate of Designation of Preferences, Rights and Limitations of the Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K filed on February 13, 2023) .

Certificate of amendment dated October 23, 2024 (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed with the SEC on October 29, 2024).

Certificate of Designations of Preferences and Rights of Series C Convertible Preferred Stock of the Company, as filed on December 13, 2024, with the Department of State, Division of Corporations, of the State of Delaware (incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed with the SEC on December 19, 2024).

Certificate of Designations of Preferences and Rights of Series D Convertible Preferred Stock of the Company, as filed on January 6, 2025, with the Department of State, Division of Corporations, of the State of Delaware (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on January 10, 2025).

Certificate of Elimination relating to the Series A Preferred Stock, filed with the Secretary of State of Delaware on March 7, 2025 (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed with the SEC on March 10, 2025).

Certificate of Elimination relating to the Series B Preferred Stock, filed with the Secretary of State of Delaware on March 7, 2025 (incorporated by reference to Exhibit 3.2 to the registrant’s Current Report on Form 8-K filed with the SEC on March 10, 2025).

Amendment No.

1 to the Avalon Bylaws, as adopted and approved by the Avalon Board on March 7, 2025 (incorporated by reference to Exhibit 3.3 to the registrant’s Current Report on Form 8-K filed with the SEC on March 10, 2025).

Form of Subscription Agreement by and between Avalon GloboCare Corp.

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and Wenzhao Lu dated March 28, 2022 (incorporated by reference to Exhibit 10.49 of the Form 10-K filed with the Securities and Exchange Commission on March 30, 2022) .

Consulting Agreement, dated February 9, 2023, by and between Laboratory Services MSO, LLC and Sarah Cox

Consulting Agreement, dated February 9, 2023, by and between Laboratory Services MSO, LLC and Sarah Cox (incorporated by reference to Exhibit 10.50 to the registrant’s Annual Report on Form 10-K filed on April 15, 2024).

Form of Warrant - March 2022 (incorporated by reference to Exhibit 10.3 of the Form 8-K filed with the Securities and Exchange Commission on April 29, 2022) .

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and Firstfire Global Opportunities Fund, LLC (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on March 27, 2024) .

Senior Secured Convertible Promissory Note, dated March 7, 2024, between Avalon GloboCare Corp.

and Mast Hill Fund, LP (incorporated by reference to Exhibit 10.4 of the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 31, 2024).

Security Agreement, dated March 7, 2024, between Avalon GloboCare Corp.

and Mast Hill Fund, LP.* (incorporated by reference to Exhibit 10.5 of the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 31, 2024).

Warrant, dated March 7, 2024, between Avalon GloboCare Corp.

and Mast Hill Fund, LP.* (incorporated by reference to Exhibit 10.6 of the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 31, 2024).

Securities Purchase Agreement, dated June 5, 2024, between Avalon Globocare Corp.

and Mast Hill Fund, L.P.

(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on June 5, 2024).

Security Agreement, dated June 5, 2024, among Avalon Globocare Corp., Avalon Healthcare System Inc., Avalon Laboratory Services, Inc., Avalon RT 9 Properties, LLC, Avactis Biosciences, Inc., Genexosome Technologies Inc., International Exosome Association LLC and Mast Hill Fund, L.P.

(incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on June 5, 2024).

Secured Promissory Note, dated June 5, 2024, between Avalon Globocare Corp.

and Mast Hill Fund, L.P.

(incorporated by reference to

Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on June 5, 2024).

First Warrant, dated June 5, 2024, between Avalon Globocare Corp.

and Mast Hill Fund, L.P.

(incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed with the SEC on June 5, 2024).

Second Warrant, dated June 5, 2024, between Avalon Globocare Corp.

and Mast Hill Fund, L.P.

(incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed with the SEC on June 5, 2024).

Mortgage and Security Agreement, dated June 5, 2024, between Avalon Globocare Corp.

and Mast Hill Fund, L.P.

(incorporated by reference to Exhibit 10.6 to the Registrant’s Current Report on Form 8-K filed with the SEC on June 5, 2024).

Consent, Acknowledgement, and Waiver Agreement, between the Company and Holder, dated as of December 15, 2024 (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on December 19, 2024).

Common Stock Purchase Warrant, between the Company and Holder, dated as of December 15, 2024 (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on December 19, 2024).

Securities Purchase Agreement, between the Company and Holder, dated as of December 19, 2024 (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on December 26, 2024).

Redemption and Abandonment Agreement, dated February 26, 2025, by and among Avalon GloboCare Corp., Avalon Laboratory Services, Inc., Laboratory Services MSO, LLC, SCBC Holdings LLC, the Zoe Family Trust, Bryan Cox and Sarah Cox (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on February 27, 2025).

Form of Avalon Voting and Support Agreement (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on March 10, 2025).

Form of YOOV Voting and Support Agreement (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on March 10, 2025).

Form of Lock-Up Agreement (incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed with the SEC on March 10, 2025).

Insider Trading Policy.

List of Subsidiaries (incorporated by reference to Exhibit 21.1 of the Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on July 20, 2018) .

Consent of Independent Registered Accounting Firm

Consent of Independent Registered Public Accounting

Consent of Independent Registered Public Accounting Firm.

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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Avalon GloboCare Corp.

Compensation Recovery Policy.

Compensation Recovery Policy (incorporated by reference to Exhibit 97.1 to the registrant’s Annual Report on Form 10-K filed with the SEC on April 15, 2024).

Inline XBRL Instance Document.

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* Filed herewith

This certification will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or otherwise subject to the liability of that section.

Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent specifically incorporated by reference into such filing.

Management contract or compensatory plan or arrangement.

** Furnished herewith.

† Management contract or compensatory

plan or arrangement.

FORM 10-K SUMMARY.

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AVALON GLOBOCARE CORP.

April 15, 2024

Chief Executive Officer, President and Director

March 31, 2025

Chief Executive Officer and President

(Principal Executive Officer)

April 15, 2024

March 31, 2025

/s/ Luisa Ingargiola

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(Principal Financial and Accounting Officer)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each

individual whose signature appears below constitutes and appoints David K.

Jin and Luisa Ingargiola, and each of them individually, his

or her true and lawful attorney-in-fact, with full power of substitution and re-substitution for him or her and in his or her name, place

and stead, in any and all capacities to sign any and all amendments to the Annual Report on Form 10-K and to file the same, with all exhibits

thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all

that said attorney-in-fact or his substitute may lawfully do or cause to be done by virtue thereof.

In accordance with the Exchange Act, this report

has been signed below by the following persons on April 15, 2024, on behalf of the registrant and in the capacities indicated.

has been signed below by the following persons on March 31, 2025, on behalf of the registrant and in the capacities indicated.

Chief Executive Officer, President and Director

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Chairman of the Board of Directors

Chief Operating Officer and Secretary

/s/ Steven A.

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Report of Independent Registered Public Accounting Firm (PCAOB No.

Consolidated Financial Statements:

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ACCOUNTING FIRM

To the Board of Directors and Stockholders of Avalon GloboCare

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheets of Avalon GloboCare Corp.

(the Company) as of December 31, 2024, and the related consolidated statements of operations

and comprehensive loss, changes in equity, and cash flows for the year ended December 31, 2024, and the related notes (collectively referred

to as the financial statements).

We have audited the reverse stock split presentation for year-end December 31, 2023.

We have audited

note 20 in regards to the presentation of segment information for the year-ended December 31, 2023.

In our opinion, the financial statements

present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations

and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States

The financial statements of Avalon GloboCare Corp., as of December 31, 2023, were audited by other auditors whose report dated

April 15, 2024, expressed an unqualified opinion on those financial statements.

Going Concern

The accompanying financial statements have been

prepared assuming the Company will continue as a going concern.

As discussed in Note 2 to the financial statements, the Company has yet

to achieve profitable operations, has negative cash flows from operating activities, and is dependent upon future issuances of equity

or other financings to fund ongoing operations all of which raises substantial doubt about its ability to continue as a going concern.

Management’s plans regarding these matters are also described in Note 2.

The financial statements do not include any adjustments

that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required

to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations

of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged

to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding

of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated below is

a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the

audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially

challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the

financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions

on the critical audit matter or on the accounts or disclosures to which it relates.

As discussed in the notes to the financial statements,

the Company has an equity method investment in an unconsolidated subsidiary.

Auditing management’s valuation of the carrying value of the

investment involves significant judgements and estimates to determine the proper value.

To evaluate the appropriateness of the valuation of the investment,

we evaluated management’s significant judgments and estimates to determine that the investment is properly valued.

/s/ M&K CPAS, PLLC

We have served as the Company’s auditor since 2024.

The Woodlands, TX

March 31, 2025

REPORT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance

sheets of Avalon GloboCare Corp.

(the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements

of operations and comprehensive loss, changes in equity and cash flows for each of the two years in the period ended December 31, 2023,

and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present

fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations

and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally

accepted in the United States of America.

We have audited,

before the effects of the adjustments to retrospectively apply the reverse stock split described in Note 3, and before the effects of

the retrospective adjustment for the adoption of ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

(“ASU 2023-07”) discussed in Note 3 and Note 20 to the consolidated financial statements, the accompanying consolidated balance

sheet of Avalon GloboCare Corp.

(the “Company”) as of December 31, 2023, and the related

consolidated statements of operations and comprehensive loss, changes in equity and cash flows the year ended December 31, 2023, and the

related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements, before the

effects of the adjustments to retrospectively apply the reverse stock split described in Note 3, and before the effects of the retrospective

adjustment for the adoption of ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU

2023-07”) discussed in Note 3 and Note 20 to the consolidated financial statements, present fairly, in all material respects, the

financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December

31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to audit, review, or apply

any procedures to the retrospective reverse stock split described in Note 3, or retrospective adjustment for the adoption of ASU 2023-07

discussed in Note 3 and Note 20 to the consolidated financial statements, and accordingly, we do not express an opinion or any other form

of assurance about whether such retrospective adjustments are appropriate and have been properly applied.

Those retrospective adjustments

were audited by other auditors.

Explanatory Paragraph – Going Concern

The accompanying financial statements

have been prepared assuming that the Company will continue as a going concern.

The accompanying financial statements have been

prepared assuming that the Company will continue as a going concern.

As more fully described in Note 2, the Company has a significant

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Management’s plans in

regard to these matters are also described in Note 2.

The financial statements do not include any adjustments that might result from the

outcome of this uncertainty.

regard tao these matters are also described in Note 2.

The financial statements do not include any adjustments that might result from

the outcome of this uncertainty.

Basis for Opinion

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of the Company’s management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are

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regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards

of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements

are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform,

an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal

control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control

over financial reporting.

We conducted our audit in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged

to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal

control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess

Our audit included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

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Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below are matters

arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,

subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements,

taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit

matter or on the accounts or disclosures to which it relates.

Critical Audit Matter Description

On February 9, 2023 (the “Acquisition Date”),

the Company acquired 40% of the issued and outstanding equity interests of Laboratory Services MSO, LLC (the “Labs”) for a

total consideration of approximately $21 million.

The investment was recorded on the Acquisition Date at cost with the investment being

accounted for under the equity method as the Company has significant influence over the Labs.

As disclosed in Note 7 of the accompanying

financial statements, the Company identified equity method goodwill and intangible assets, which included tradename and customer relationships,

of approximately $9.5 million and $10 million, respectively, on the Acquisition Date.

As of December 31, 2023 (the “Reporting Date”),

the Company concluded that approximately $9.2 million of the equity method goodwill was impaired.

We identified the initial allocation of purchase consideration

and the subsequent impairment assessment on such goodwill as a critical audit matter because of the significant estimates and assumptions

made by management, required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair

value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related

to the selection of the valuation techniques and assumptions utilized, growth rates, and the future operating margins.

Under the income approach, the Company utilizes the

discounted cash flow method to estimate the fair value of the Labs.

Some of the significant assumptions inherent in estimating the fair

values include the estimated future annual net cash flows for the Labs (including net sales, operating income margin, and working capital)

and a discount rate that appropriately reflects the risks inherent in each future cash flow stream.

The Company selects assumptions used

in the financial forecasts using historical data, supplemented by current and anticipated market conditions, estimated growth rates, management’s

plans, and guideline companies.

Under the market approach, fair value is derived from

metrics of publicly traded companies or historically completed transactions of comparable businesses.

The selection of comparable businesses

is based on the markets in which the reporting units operate giving consideration to risk profiles, size, geography, and diversity of

products and services.

The estimates of fair value of the reporting units

as of the Acquisition Date and Reporting Date are computed using a combination of both the income approach and market approach noted above.

How the Critical Audit Matter was Addressed in

Our audit procedures included the following:

assessed the reasonableness of the forecasted revenue growth rates and operating margins over the cash flow forecast period by comparing

them to the Labs’ actual revenues and operating margins during the recent historical periods;

(2) We evaluated the reasonableness

of the (a) valuation methodologies;

(b) revenue growth rate by comparing it to industry rates;

the mathematical accuracy of the rates used and comparing them to industry rates;

and (d) discount rates, which included testing the source

information underlying the determination of the discount rates, testing the mathematical accuracy of the calculations, and developing

a range of independent estimates and comparing those to the discount rates selected by management;

evaluated the guideline companies used and operated in a similar industry as the subject reporting unit;

(4) We sensitized the

projections and compared them to the valuation reports for reasonableness;

(5) We evaluated the disclosures

in the Company's financial statements for proper reporting.

For the Company’s impairment assessment as of

the Reporting Date, in additions to the aforementioned audit procedures, we assessed the reasonableness of t he

Company’s use of the appropriate modified capital asset pricing model and a weighted average cost of capital.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Marcum llp

We have served as the Company’s auditor since 2019.

We have served as the Company’s auditor from 2019 to 2024.

April 15, 2024

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AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE

CURRENT ASSETS:

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Equity method investments, net

Advances for equity interest purchase

Other non-current assets

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Operating lease obligation

Advance from sale of noncontrolling interest - related party

Advance from pending sale of noncontrolling interest - related party

Equity method investment payable

Derivative liability

Note payable, net

Convertible note payable, net

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Operating lease obligation - noncurrent portion

Accrued litigation settlement - noncurrent portion

Note payable, net

Note payable, net - noncurrent portion

Loan payable - related party

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Series A Convertible Preferred Stock, 9,000 shares issued and outstanding at December 31, 2024 and 2023 Liquidation preference $ 9 million at December 31, 2024

Series B Convertible Preferred Stock, 11,000 and 0 shares issued and outstanding at December 31, 2023 and 2022, respectively Liquidation preference $ 11 million at December 31, 2023

Series B Convertible Preferred Stock, 11,000 shares issued and outstanding at December 31, 2024 and 2023 Liquidation preference $ 11 million at December 31, 2024

Series C Convertible Preferred Stock, 3,500 shares issued and outstanding at December 31, 2024 Liquidation preference $ 3.5 million at December 31, 2024

Common stock, $ 0.0001 par value;

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For the Years Ended

RENTAL REVENUE

OPERATING EXPENSES

OPERATING INCOME

REAL PROPERTY RENTAL REVENUE

REAL PROPERTY OPERATING EXPENSES

REAL PROPERTY OPERATING INCOME

LOSS FROM EQUITY METHOD INVESTMENT - LAB SERVICES MSO

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Compensation and related benefits

Research and development expenses

Litigation settlement

Other general and administrative expenses

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OTHER (EXPENSE) INCOME

Interest expense - amortization of debt discount and debt issuance cost

Interest expense - amortization of debt discount and debt issuance costs

( 1,411,042 )

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Interest expense - related party

Conversion inducement expense

Loss from equity method investment - Epicon

Debt modification charge

Change in fair value of derivative liability

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Gain on debts extinguishment

Other (expense) income

Other expense

Total Other Expense, net

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See accompanying notes to the consolidated financial statements

AVALON GLOBOCARE CORP.

GLOBOCARE CORP.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Years Ended December 31, 2023 and 2022

STATEMENTS OF CHANGES IN EQUITY

the Years Ended December 31, 2024 and 2023

Avalon GloboCare Corp.

Stockholders’ Equity

Preferred Stock

Treasury Stock

Comprehensive

Noncontrolling

Preferred Stock Series B

Preferred Stock Series C

Preferred Stock Common Stock Treasury Stock Accumulated

Number of Number of Number of Number of Additional Paid-in Number of Accumulated Statutory Other

Comprehensive Noncontrolling Total

Shares Amount Shares Amount Shares Amount Shares Amount Capital Shares Amount Deficit Reserve Loss Interest Equity

Balance, January 1, 2023 9,000 $ 9,000,000 - $ - - $ - 667,572 $ 67 $ 65,950,661 ( 3,467 ) $ ( 522,500 ) $ ( 63,062,721 ) $ 6,578 $ ( 213,137 ) $ - $ 11,158,948

$ ( 522,500 )

$ ( 51,131,874 )

$ ( 165,266 )

To correct shares issued for adjustments for 1:10 reverse split - - - - - - 3,333 - - - - - - - - -

Issuance of Series B Convertible Preferred Stock for equity method investment - - 11,000 11,000,000 - - - - - - - - - - - 11,000,000

Issuance of common stock as convertible note payable commitment fee - - - - - - 11,333 1 236,399 - - - - - - 236,400

Sale of common stock, net - - - - - - 30,442 3 414,393 - - - - - - 414,396

Warrants issued with convertible

debt offering

Conversion of convertible

note payable and accrued interest into common stock

Reclassification of derivative

liability to equity

Issuance of common stock

for settlement of loan payable and accrued interest - related party

Sale of common stock - related

Sale of Series A Convertible

Preferred Stock

Issuance of common stock

Issuance of common stock for services - - - - - - 24,089 3 999,652 - - - - - - 999,655

Stock-based compensation - - - - - - - - 284,977 - - - - - - 284,977

Shares issued for adjustments

for 1:10 reverse split

Foreign currency translation

Foreign currency translation adjustment - - - - - - - - - - - - - ( 18,590 ) - ( 18,590 )

Net loss for the year - - - - - - - - - - - ( 16,707,010 ) - - - ( 16,707,010 )

( 11,930,847 )

Balance, December 31, 2023 9,000 9,000,000 11,000 11,000,000 - - 736,769 74 67,886,082 ( 3,467 ) ( 522,500 ) ( 79,769,731 ) 6,578 ( 231,727 ) - 7,368,776

( 63,062,721 )

To correct shares issued

for adjustments for 1:10 reverse split

Issuance of Series B Convertible

Preferred Stock for equity method investment

Issuance of common stock

as convertible note payable commitment fee

Issuance of common stock as convertible note payable commitment fee - - - - - - 33,800 3 320,543 - - - - - - 320,546

Sale of common stock, net - - - - - - 281,843 28 2,544,283 - - - - - - 2,544,311

Issuance of common stock

Issuance of common stock upon cashless exercise of stock warrants - - - - - - 42,381 4 ( 4 ) - - - - - - -

Issuance of common stock for services - - - - - - 145,153 15 530,335 - - - - - - 530,350

Reclassification of derivative liability to equity - - - - - - - - 2,354 - - - - - - 2,354

Sale of Series C Convertible Preferred Stock - - - - 3,500 3,500,000 - - - - - - - - - 3,500,000

Issuance of pre-funded warrants - - - - - - - - 688,794 - - - - - - 688,794

Stock-based compensation - - - - - - - - 51,159 - - - - - - 51,159

Foreign currency translation

loss for the year

( 16,707,010 )

Shares issued for adjustments for 1:15 reverse split - - - - - - 206,033 21 ( 21 ) - - - - - - -

Foreign currency translation adjustment - - - - - - - - - - - - - ( 273 ) - ( 273 )

Net loss for the year - - - - - - - - - - - ( 7,903,394 ) - - - ( 7,903,394 )

Balance, December 31, 2024 9,000 $ 9,000,000 11,000 $ 11,000,000 3,500 $ 3,500,000 1,445,979 $ 145 $ 72,023,525 ( 3,467 ) $ ( 522,500 ) $ ( 87,673,125 ) $ 6,578 $ ( 232,000 ) $ - $ 7,102,623

$ ( 522,500 )

$ ( 79,769,731 )

$ ( 231,727 )

See accompanying notes to the consolidated financial statements.

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$ ( 16,707,010 )

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

Credit loss provision

Adjustments to reconcile net loss to

net cash used in operating activities:

Change in straight-line rent receivable

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Loss from equity method investments

Impairment of equipment held for sale

Distribution of earnings from equity method investment

Impairment of equity method investment - Epicon

Amortization of debt issuance costs and debt discount

Conversion inducement expense

Change in fair market value of derivative liability

Impairment of laboratory equipment

Debt modification charge

Gain on debts extinguishment

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Accrued liabilities and other payables

( 1,165,418 )

Accrued liabilities and other payables - related parties

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Purchase of property and equipment

Additional investment in equity method investment

Payments for equity interest purchase

( 8,999,722 )

Payment for equity interest purchase

NET CASH USED IN INVESTING ACTIVITIES

( 9,053,470 )

CASH FLOWS FROM FINANCING ACTIVITIES

Repayments of note payable - related party

Proceeds from loan payable - related party

Repayments of loan payable - related party

Proceeds from issuance of convertible debt and warrants

Payments of convertible debt issuance costs

Repayments of convertible debt

Proceeds from issuance of convertible debts and warrants

Payments of convertible debts issuance costs

Repayments of convertible debts

( 3,388,222 )

Proceeds from issuance of balloon promissory note

Payments of balloon promissory note issuance costs

Advance from pending sale of noncontrolling interest in subsidiary

Proceeds from equity offering

Disbursements for equity offering costs

Advance from sale of noncontrolling interest in subsidiary

Proceeds from issuance of convertible preferred stock

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EFFECT OF EXCHANGE RATE ON CASH

NET (DECREASE) INCREASE IN CASH

NET INCREASE (DECREASE) IN CASH

( 1,705,510 )

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Accrued purchase price related to equity method investment

Warrants issued as convertible note payable finder’s fee

Warrants issued with convertible note payable recorded as debt discount

Bifurcated embedded conversion feature recorded as derivative liability and debt discount

Common stock issued as convertible note payable commitment fee

Warrants issued as convertible notes payable finder’s fee

Warrants issued with convertible notes payable recorded as debt discount

Common stock issued as convertible notes payable commitment fee

Deferred financing costs in accrued liabilities

Conversion of convertible note payable and accrued interest into common stock

Reclassification of derivative liability to equity

Related party loan and accrued interest settled in shares

Equity method investment payable paid by a related party

Reclassification of deferred offering costs

Settlement of derivative liability

Reclassification of related party loan payable and accrued expenses to advance from related party

Issuance of common stock upon cashless exercise of stock warrants

Shares issued for adjustments for 1:15 reverse split

See accompanying notes to the consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND NATURE OF

NOTE 1 – ORGANIZATION AND NATURE

OF OPERATIONS

Avalon GloboCare Corp.

“Company” or “ALBT”) is a Delaware corporation.

The Company was incorporated under the laws of the State of

Delaware on July 28, 2014.

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

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

Shareholders”), pursuant to which the Company acquired 100 % of the outstanding securities of AHS in exchange for

5,000,000 shares of the Company’s common stock (the “AHS Acquisition”).

AHS was incorporated on May 18, 2015

under the laws of the State of Delaware.

For accounting purposes, AHS was the surviving

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

surviving and continuing entity although the Company was the legal acquirer.

The Company did not recognize goodwill or any intangible

assets in connection with this transaction.

Accordingly, the Company’s historical financial statements are those of AHS and its

wholly owned subsidiary, Avalon (Shanghai) Healthcare Technology Co., Ltd.

(“Avalon Shanghai”) immediately following the consummation

of this reverse merger transaction.

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

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

Avalon Shanghai was incorporated on April 29, 2016

and was engaged in medical related consulting services for customers.

Due to the winding down of the medical related consulting services

in 2022, the Company decided to cease all operations of Avalon Shanghai and no longer has any material revenues or expenses in Avalon

As a result, Avalon Shanghai is no longer an operating entity.

The Company is a commercial stage company dedicated

to developing and delivering innovative, transformative, precision diagnostics and clinical laboratory services.

The Company is establishing

a leading role in the innovation of diagnostic testing, utilizing proprietary technology to deliver precise, genetics-driven results.

The Company also provides laboratory services, offering a broad portfolio of diagnostic tests, including drug testing, toxicology, and

a broad array of test services, from general bloodwork to anatomic pathology, and urine toxicology.

(the “Company”

or “ALBT”) was incorporated under the laws of the State of Delaware on July 28, 2014.

The Company is a commercial-stage company dedicated to developing and

delivering precision diagnostic consumer products.

The Company is currently marketing the Keto Air breathalyzer device and plans to develop

additional diagnostic uses of the breathalyzer technology.

The Company also provided laboratory services in 2024 and 2023, offering a

broad portfolio of diagnostic tests, including drug testing, toxicology, and a broad array of test services, from general bloodwork to

anatomic pathology, and urine toxicology.

On May 18, 2015, Avalon Healthcare System, Inc.

(“AHS”) was incorporated under the laws of the State of Delaware.

AHS owns 100 % of the capital stock of Avalon (Shanghai)

Healthcare Technology Co., Ltd.

(“Avalon Shanghai”), which is a wholly foreign-owned enterprise organized under the laws of

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

Avalon Shanghai was incorporated on April 29, 2016, and was engaged in medical

related consulting services for customers.

Due to the winding down of the medical related consulting services in 2022, the Company decided

to cease all operations of Avalon Shanghai and no longer has any material revenues or expenses in Avalon Shanghai.

As a result, Avalon

Shanghai is no longer an operating entity.

On February 7, 2017, the Company formed Avalon

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(“Avactis”), a Nevada corporation, which is a patent holding company.

on April 6, 2022, the Company owns 60 % of Avactis and Arbele Biotherapeutics Limited (“Arbele Biotherapeutics”) owns 40 %

on April 6, 2022, the Company owns 60 % of Avactis and Arbele Biotherapeutics Limited (“Arbele Biotherapeutics”) owns 40 % of

Avactis owns 100 % of the capital stock of Avactis Nanjing Biosciences Ltd., a company incorporated in the PRC on May 8, 2020

(“Avactis Nanjing”), which only owns a patent and is not considered an operating entity.

Currently, Avactis and Avactis Nanjing

are dormant and are in process of being dissolved.

On October 14, 2022, the Company formed a wholly

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On February 9, 2023, Avalon Lab purchased

forty percent ( 40 %) of the issued and outstanding equity interests of Laboratory Services MSO, LLC, a private limited company formed under

the laws of the State of Delaware on September 6, 2019 (“Lab Services MSO”), and its subsidiaries.

Lab Services MSO, through

its subsidiaries, is engaged in providing laboratory testing services.

40 % of the issued and outstanding equity interests of Laboratory Services MSO, LLC, a private limited company formed under the laws of

the State of Delaware on September 6, 2019 (“Lab Services MSO”), and its subsidiaries.

Lab Services MSO, through its subsidiaries,

is engaged in providing laboratory testing services.

During 2025, to preserve cash, the Company entered into discussions with Lab Services

MSO for the potential redemption of our investment and on February 26, 2025, Lab Services MSO redeemed the 40 % equity interest in Lab

Services MSO held by Avalon Lab.

See Note 22 – Subsequent Events - Redemption Agreement.

2024, the Company formed a wholly owned subsidiary, Q&A Distribution LLC (“Q&A Distribution”), a Texas company.

Distribution is engaged in distribution of KetoAir device.

AVALON GLOBOCARE CORP.

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are included in these consolidated financial statements as of December 31, 2024 are as follows:

Name of Subsidiary

Place and date of Incorporation

Percentage of Ownership

Principal Activities

Name of Subsidiary Place and date of

Incorporation Percentage of

Ownership Principal Activities

Avalon Healthcare System, Inc.

100% held by ALBT

Holding company for payroll and other expenses

Avalon RT 9 Properties LLC

(“Avalon RT 9”)

February 7, 2017

100% held by ALBT

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

(“AHS”) Delaware

May 18, 2015 100 % held by ALBT Holding company for payroll and other expenses

Avalon RT 9 Properties LLC (“Avalon RT 9”) New Jersey

February 7, 2017 100 % held by ALBT Owns and operates an income-producing real property and holds and manages the corporate headquarters

Avalon (Shanghai) Healthcare Technology Co., Ltd.

(“Avalon Shanghai”)

April 29, 2016

100% held by AHS

Is not considered an operating entity

(“Avalon Shanghai”) PRC

April 29, 2016 100 % held by AHS Is not considered an operating entity

Genexosome Technologies Inc.

(“Genexosome”)

July 31, 2017

60% held by ALBT

No current activities to report, dormant

(“Genexosome”) Nevada

July 31, 2017 60 % held by ALBT No current activities to report, dormant

Avactis Biosciences Inc.

July 18, 2018

60% held by ALBT

Patent holding company

(“Avactis”) Nevada

July 18, 2018 60 % held by ALBT Dormant, is in process of being dissolved

Avactis Nanjing Biosciences Ltd.

(“Avactis Nanjing”)

100% held by Avactis

Owns a patent and is not considered an operating entity

(“Avactis Nanjing”) PRC

May 8, 2020 100 % held by Avactis Dormant, is in process of being dissolved

Avalon Laboratory Services, Inc.

(“Avalon Lab”)

October 14, 2022

100% held by ALBT

Laboratory holding company with a 40% membership interest in Lab Services MSO

(“Avalon Lab”) Delaware

October 14, 2022 100 % held by ALBT Laboratory holding company with a 40% membership interest in Lab Services MSO (1)

Q&A Distribution LLC (“Q&A Distribution”) Texas

May 1, 2024 100 % held by ALBT Distributes KetoAir device

(1) On February 26, 2025, the Company and Lab Services MSO entered into a Redemption and Abandonment Agreement,

whereby Lab Services MSO redeemed the 40 % equity interest in Lab Services MSO held by the Company.

2 – BASIS OF PRESENTATION AND GOING CONCERN CONDITION

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Going Concern

The Company is a commercial stage company dedicated

to developing and delivering innovative, transformative, precision diagnostics and clinical laboratory services.

The Company is establishing

a leading role in the innovation of diagnostic testing, utilizing proprietary technology to deliver precise, genetics-driven results.

The Company also provides laboratory services through its 40 % equity investment in Lab Services MSO, offering a broad portfolio of diagnostic

tests, including drug testing, toxicology, and a broad array of test services, from general bloodwork to anatomic pathology, and urine

In addition, the Company owns commercial real estate that houses its headquarters in Freehold, New Jersey.

These consolidated

financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things,

the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company is a commercial-stage company dedicated to developing and

delivering precision diagnostic consumer products.

The Company is currently marketing the Keto Air breathalyzer device and plans to develop

additional diagnostic uses of the breathalyzer technology.

In addition, the Company owns commercial real estate that houses its headquarters

in Freehold, New Jersey.

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

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

As reflected in the accompanying consolidated

financial statements, the Company had a working capital deficit of approximately $ 5,912,000 at December 31, 2023 and had incurred

recurring net losses and generated negative cash flow from operating activities of approximately $ 16,707,000 and $ 6,505,000 for

the year ended December 31, 2023, respectively.

financial statements, the Company had a working capital deficit of approximately $ 10,646,000 at December 31, 2024 and had incurred recurring

net losses and generated negative cash flow from operating activities of approximately $ 7,903,000 and $ 4,969,000 for the year ended December

31, 2024, respectively.

The Company has a limited operating history and

its continued growth is dependent upon the continuation of generating rental revenue from its income-producing real estate property in

New Jersey and income from equity method investment through its forty percent ( 40 %) interest in Lab Services MSO 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

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.

New Jersey 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.

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 revenue.

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

revenue, 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 accompanying consolidated financial statements

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Accordingly, the actual results could differ significantly from those estimates.

Significant estimates during the

years ended December 31, 2023 and 2022 include the useful life of property and equipment, investment in real estate, and intangible assets,

the assumptions used in assessing impairment of long-term assets, the valuation of deferred tax assets and the associated valuation allowances,

the valuation of stock-based compensation, the assumptions used to determine fair value of warrants and embedded conversion features of

convertible note payable, and the fair value of the consideration given and assets acquired in the purchase of 40 % of Lab Services

Significant estimates during the years ended December

31, 2024 and 2023 include the useful life of investment in real estate and intangible assets, the assumptions used in assessing impairment

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

the assumptions used to determine fair value of warrants and embedded conversion features of convertible note payable, and the fair value

of the consideration given and assets acquired in the purchase of 40 % of Lab Services MSO.

AVALON GLOBOCARE CORP.

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used in measuring fair value as follows :

1-Inputs are unadjusted quoted prices in active markets

for identical assets or liabilities available at the measurement date.

2-Inputs are unadjusted quoted prices for similar assets

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

in markets that are not active, inputs other than quoted prices that are observable, and

inputs derived from or corroborated by observable market data.

3-Inputs are unobservable inputs which reflect the

reporting entity’s own assumptions on what assumptions the mark et

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

● Level 1-Inputs are

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

● Level 2-Inputs are

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

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

● Level 3-Inputs are

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

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

The fair value of the Company’s assets and

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activity of derivative liability measured at fair value for the years ended December 31, 2024 and 2023:

Unobservable Inputs

Significant Unobservable Inputs

Balance of derivative liability as of January 1, 2023

Initial fair value of derivative liability attributable to embedded conversion feature of convertible note payable

Initial fair value of derivative liability attributable to warrants issuance with May, July, and October 2023 fund raises

Gain from change in the fair value of derivative liability

Reclassification of derivative liability to equity

( 2,181,820 )

Balance of derivative liability as of December 31, 2023

Initial fair value of derivative liability attributable to warrants issuance with fund raise

Initial fair value of derivative liability attributable to warrants issuance with March and June 2024 fund raises

Reclassification of additional paid-in capital upon conversion

Gain from change in the fair value of derivative liability

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are written down to fair value when they are impaired.

held for sale.

The Company conducted an impairment assessment on the equipment held for sale based on the guidelines established in

Financial Accounting Standards Board (“FASB”) ASC Topic 360 to determine the estimated fair market value of the equipment

The Company conducted an impairment assessment on its laboratory equipment based on the guidelines established in Financial

Accounting Standards Board (“FASB”) ASC Topic 360 to determine the estimated fair market value of its laboratory equipment

as of December 31, 2024.

Upon completion of its 2024 impairment analysis, the Company determined that the carrying value exceeded the

fair market value on equipment which was held for sale.

The fair market value of equipment held for sale is a level 3 valuation.

recorded an impairment charge of $ 22,285 for the years ended December 31, 2022.

fair market value of laboratory equipment.

The fair market value of laboratory equipment is a level 3 valuation.

The Company recorded

an impairment charge of $ 111,033 for the year ended December 31, 2024, which was included in other general and administrative expenses

on the accompanying consolidated statements of operations and comprehensive loss.

AVALON GLOBOCARE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair Value of Financial

Instruments and Fair Value Measurements (continued)

method investment in Epicon Biotech Co., Ltd.

5 unchanged sentences

for the year ended December 31, 2023 was $ 454,679 .

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING

POLICIES (continued)

Fair Value of Financial

Instruments and Fair Value Measurements (continued)

There is no comparative impairment for the year ended December 31, 2024 since

the investment was fully impaired at December 31, 2023.

method investment in Laboratory Services MSO, LLC The factors used to determine

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Impairment of equity

method investment in Laboratory Services MSO, LLC for the year ended December 31, 2023 was $ 9,196,682 .

method investment in Laboratory Services MSO, LLC for the years ended December 31, 2024 and 2023 was $ 259,579 and $ 9,196,682 , respectively,

which have been included in loss from equity method investment – Lab Services MSO on the accompanying consolidated statements of

operations and comprehensive loss.

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

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Credit Risk and Uncertainties

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

Balances at state-owned banks within the PRC are

covered by insurance up to RMB 500,000 (approximately $ 71,000 ) per bank.

Any balance over RMB 500,000 per bank in

PRC will not be covered.

At December 31, 2023, cash balances held in the PRC are RMB 36,827 (approximately $ 5,000 ), which

was covered by such insurance.

The Company has not experienced any losses in such accounts and believes it is not exposed to any risks

on its cash in bank accounts.

maintains a portion of its cash on deposits with bank and financial institution within the U.S.

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

At December 31, 2023, there

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

At December 31, 2024, the Company’s

cash balances in United States bank accounts had approximately $ 2,413,000 in excess of the federally-insured limits.

The Company’s

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Rent Receivable and Reserve for Credit

Rent receivable is presented net

of reserve for credit losses.

Rent receivable balance consists of base rents, tenant reimbursements and receivables arising from straight-lining

of rents represent amounts accrued and unpaid from tenants in accordance with the terms of the respective leases, subject to the Company’s

revenue recognition policy.

A reverse for the uncollectible portion of rent receivable is determined based upon an analysis of the tenant’s

payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic

conditions in Freehold, New Jersey in which the property is located.

Management believes that the rent

receivable is fully collectable.

Therefore, no material reverse for credit losses is deemed to be required on its rent receivable at December

31, 2023 and 2022.

Rent receivable

is presented net of reserve for credit losses.

Rent receivable balance consists of base rents, tenant reimbursements and receivables arising

from straight-lining of rents represent amounts accrued and unpaid from tenants in accordance with the terms of the respective leases,

subject to the Company’s revenue recognition policy.

A reverse for the uncollectible portion of rent receivable is determined based

upon an analysis of the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in

which the tenant operates and economic conditions in Freehold, New Jersey in which the property is located.

believes that the rent receivable is fully collectable.

Therefore, no material reverse for credit losses is deemed to be required on its

rent receivable at December 31, 2024 and 2023.

AVALON GLOBOCARE CORP.

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Deferred Offering Costs

Deferred offering costs consist of legal, accounting and other costs that

are directly related to the Company’s open market sale equity financing and will be charged to stockholders’ equity upon the

completion of the equity offering.

As of December 31, 2023 and 2022, deferred offering costs amounted to $ 175,136 and $ 174,107 , of

which $ 175,136 and $ 34,821 were included in prepaid expense and other current assets and $ 0 and $ 139,286 were included in other

non-current assets, respectively.

Deferred offering costs consist of legal, accounting

and other costs that are directly related to the Company’s open market sale equity financing and will be charged to stockholders’

equity upon completion of the equity offering.

As of December 31, 2024 and 2023, deferred offering costs amounted to $ 0 and $ 175,136 ,

respectively, which were included in prepaid expense and other current assets.

Deferred Leasing Costs

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Property and Equipment

Property and equipment are carried at cost less accumulated depreciation,

and are depreciated on a straight-line basis over the estimated useful lives of the assets.

The cost of repairs and maintenance is expensed

Property and equipment are carried at cost less

accumulated depreciation, and are depreciated on a straight-line basis over the estimated useful lives of the assets.

The cost of repairs

and maintenance is expensed as incurred;

major replacements and improvements are capitalized.

When assets are retired or disposed of, the cost and accumulated depreciation

are removed from the accounts, and any resulting gains or losses are included in income in the period of disposition.

The Company examines

the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded

value may not be recoverable.

When assets are retired or disposed of,

the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the period

of disposition.

The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances

reflect the fact that their recorded value may not be recoverable.

Investment In Real

Estate and Depreciation

Investment in real estate is carried at cost less accumulated depreciation,

and consists of building and improvement.

The Company depreciates real estate building and improvement on a straight-line basis over estimated

Investment in real estate is carried at cost less

accumulated depreciation, and consists of building and improvement.

The Company depreciates real estate building and improvement on a

straight-line basis over estimated useful life.

Expenditures for ordinary repair and maintenance costs are charged to expense as incurred.

Expenditure for improvements,

renovations, and replacements of real estate asset is capitalized and depreciated over its estimated useful life if the expenditure qualifies

as betterment.

Expenditure for improvements, renovations, and replacements of real estate asset is capitalized and depreciated over its estimated useful

life if the expenditure qualifies as betterment.

Impairment of Long-lived Assets

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estimated fair value and its book value.

For the year ended December 31, 2022,

the Company incurred impairment charges in operations of $ 22,285 on the laboratory equipment.

The valuations of the laboratory equipment,

and the amounts of the impairment charge, were based on impairment assessments conducted on the equipment held for sale at December 31,

year ended December 31, 2024, the Company incurred impairment charges in operations of $ 111,033 on its laboratory equipment.

The valuation

of the laboratory equipment, and the amount of the impairment charge, were based on impairment assessment conducted on the equipment at

December 31, 2024.

Investment in Unconsolidated

The Company uses the equity method of accounting

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

The Company considers whether the fair values of its equity method investments have declined below their carrying values whenever adverse

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

If the Company considers any decline to be other

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

would be recorded to estimated fair value.

Impairment of equity method investment amounted to $ 9,651,361 and $0 for the years ended

December 31, 2023 and 2022, respectively.

See Note 7 for discussion of equity method investments.

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

The Company applies the equity method by initially recording these investments at cost, as equity method investments, subsequently adjusted

for equity in earnings and cash distributions.

The Company considers whether the fair value of

its equity method investment has declined below its carrying value whenever adverse events or changes in circumstances indicate that recorded

value may not be recoverable.

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

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

Impairment of

equity method investment amounted to $ 259,579 and $ 9,651,361 for the years ended December 31, 2024 and 2023, respectively.

for discussion of equity method investments.

The Company classifies distributions received

from equity method investments using the cumulative earnings approach.

Distributions received are considered returns on the investment

and classified as cash inflows from operating activities.

If, however, the investor’s cumulative distributions received, less distributions

received in prior periods determined to be returns of investment, exceeds cumulative equity in earnings recognized, the excess is considered

a return of investment and is classified as cash inflows from investing activities.

AVALON GLOBOCARE CORP.

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of their due dates.

As of December 31, 2023 and 2022, deferred rental income totaled $ 11,429 and $ 27,685 , respectively, which were

included in accrued liabilities and other payables on the accompanying consolidated balance sheets.

As of December 31, 2024 and 2023, deferred rental income totaled $ 38,346 and $ 11,429 , respectively, which were included

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

Real Property Rental Revenue

has determined that 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 account receivable on the consolidated balance sheets.

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

Rental income from operating leases is recognized

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

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

the term of the related leases.

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

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

When a lease contains “rent holidays”,

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Research and Development

for research and product development costs are expensed as incurred.

The Company incurred research and development expense of $ 109,618 and

$ 731,328 in the years ended December 31, 2023 and 2022, respectively.

Expenditures for research and product development

costs are expensed as incurred.

The Company incurred research and development expense of $ 0 and $ 109,618 in the years ended

December 31, 2024 and 2023, respectively.

Advertising and Marketing Costs

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POLICIES (continued)

Modifications and Extinguishments

Company modifies or extinguishes debt, it first evaluates whether the modification qualifies as a troubled debt restructuring (TDR) under

ASC Topic 470-60, which requires debt modifications to be evaluated to determine if (1) the borrower is experiencing financial difficulty,

and (2) the lender grants the borrower a concession.

If a TDR is determined not to have occurred, the Company evaluates the modification

in accordance with ASC Topic 470-50-40, which requires modification to debt instruments to be evaluated to assess whether debt modification

or debt extinguishment accounting is applicable.

This evaluation includes analyzing whether there are significant and consequential changes

to the economic substance of the note.

If the change is deemed insignificant then the change is considered a debt modification, whereas

if the change is substantial the change is reflected as a debt extinguishment.

extinguishment guidance applies, the previous debt principal amount is removed, the previously capitalized debt issuance costs are expensed,

the value of instruments exchanged are recorded, including cash, new debt, warrants and common stock, and a gain or loss on extinguishment

of debt is recorded.

If debt modification guidance applies, no gain or loss is recorded and the effective interest rate of the debt is

updated based on the carrying value of the debt and the revised future cash flows.

Any previously capitalized debt issuance costs in a

debt modification are amortized as interest expense over the term of the new debt instrument.

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

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The Company recognizes interest and penalties related to significant uncertain income tax positions in income tax expense.

no such interest and penalties were recorded as of December 31, 2023 and 2022.

such interest and penalties were recorded as of December 31, 2024 and 2023.

Foreign Currency Translation

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currency of the Company is the U.S.

The functional currency of the parent company, AHS, Avalon RT 9, and Avalon Lab is the U.S.

The functional currency of the parent company, AHS, Avalon RT 9, Avalon Lab, and Q&A Distribution

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

For Avalon Shanghai whose functional

currency is the RMB, result of operations and cash flows are translated at average exchange rates during the period, assets and liabilities

are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates.

amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the

corresponding balances on the balance sheets.

Translation adjustments resulting from the process of translating the local currency financial

statements into U.S.

For Avalon Shanghai whose

functional currency is the RMB, result of operations and cash flows are translated at average exchange rates during the period, assets

and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange

As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with

the changes in the corresponding balances on the balance sheets.

Translation adjustments resulting from the process of translating the

local currency financial statements into U.S.

dollars are included in determining comprehensive income/loss.

Transactions denominated in foreign currencies are

translated into the functional currency at the exchange rates prevailing on the transaction dates.

Assets and liabilities denominated

in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date with any

transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional

currency are included in the results of operations as incurred.

All of the Company’s revenue transactions are transacted in the

functional currency of the operating subsidiaries.

The Company does not enter into any material transaction in foreign currencies.

gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company.

Transactions denominated

in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates.

liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance

sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency

other than the functional currency are included in the results of operations as incurred.

All of the Company’s revenue transactions

are transacted in the functional currency of the operating subsidiaries.

The Company does not enter into any material transaction in foreign

Transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of

liability accounts at December 31, 2024 and 2023 were translated at 7.2980 RMB and 7.0786 RMB to $ 1.00 , respectively, which were the exchange

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statements of operations for the years ended December 31, 2024 and 2023 were 7.1889 RMB and 7.0752 RMB to $ 1.00 , respectively.

flows from the Company’s operations are calculated based upon the local currencies using the average translation rate.

from the Company’s operations are calculated based upon the local currencies using the average translation rate.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING

POLICIES (continued)

Comprehensive Loss

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amount of the assessment can be reasonably estimated.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING

POLICIES (continued)

Per Share Data

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

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

outstanding during the period.

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

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

For the years ended December

31, 2023 and 2022, potentially dilutive common shares consist of the common shares issuable upon the conversion of convertible preferred

stock and convertible note (using the if-converted method) and exercise of common stock options and warrants (using the treasury stock

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

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

outstanding as they would have had an anti-dilutive impact.

Basic net loss per share is computed by dividing

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

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

and potentially dilutive securities outstanding during each period.

For the years ended December 31, 2024 and 2023, potentially dilutive

common shares consist of the common shares issuable upon the conversion of convertible preferred stock and convertible notes (using the

if-converted method) and exercise of common stock options and warrants (using the treasury stock method).

Common stock equivalents are

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

In a period in which the Company

has a net loss, all potentially dilutive securities are excluded from the computation of diluted shares outstanding as they would have

had an anti-dilutive impact.

The calculation of basic and diluted net loss

per common share attributable to the Company common shareholders includes 150,000 of the pre-funded warrants that remain outstanding as

of December 31, 2024.

The following table summarizes the securities

that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive:

Years Ended December 31,

Options to purchase common stock

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Series B convertible preferred stock (**)

Series C convertible preferred stock (***)

Convertible notes (****)

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into shares of common stock of the Company at a conversion price of $ 150.00 per share .

(**) Assumed the Series B convertible

preferred stock was converted into shares of common stock of the Company at a conversion price of $ 3.78 per share.

(**) Assumed the Series

B convertible preferred stock was converted into shares of common stock of the Company at a conversion price of $ 56.70 per share.

(***) Assumed the Series

C convertible preferred stock was converted into shares of common stock of the Company at a conversion price of $ 2.41 per share.

(****) Assumed the convertible

notes were converted into shares of common stock of the Company at a conversion price of $ 4.50 and $ 1.50 per share for the year ended

December 31, 2023.

Assumed the convertible note was converted into shares of common stock of the Company at a conversion price of $ 6.50

notes were converted into shares of common stock of the Company at a conversion price of $ 11.25 per share for the year ended December

Assumed the convertible notes were converted into shares of common stock of the Company at a conversion price of $ 67.50 and

$ 22.50 per share for the year ended December 31, 2023.

Noncontrolling Interest

As of December 31, 2023, Dr.

Yu Zhou, former director

and former Co-Chief Executive Officer of Genexosome, who owns 40 % of the equity interests of Genexosome, which is not under the Company’s

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

AVALON GLOBOCARE CORP.

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POLICIES (continued)

Noncontrolling Interest

As of December 31, 2024, Dr.

Yu Zhou, former director

and former Co-Chief Executive Officer of Genexosome, who owns 40 % of the equity interests of Genexosome, which is not under the Company’s

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

Reclassification

Certain prior period

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

These reclassifications have no effect on the previously

reported financial position, results of operations and cash flows.

Segment Reporting

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

The management approach considers the internal

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

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

The Company’s chief operating decision maker is the Chief

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

and assessing performance for the entire Company.

During the year ended December 31, 2022, the Company

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

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

as each requires different operating strategies and management expertise.

Due to the winding down of the medical related consulting services

segment in 2022, the Company decided to cease all operations of this segment and no longer has any material revenues or expenses in this

As a result, commencing from the first quarter of 2023, the Company’s chief operating decision maker no longer reviews

medical related consulting services operating results.

reporting structure uses the Company’s management reporting structure as its foundation to reflect how the Company manages the businesses

internally and is mainly organized by services.

The Company is organized into two services-oriented strategic business units:

real property

rental services and laboratory testing services — which are led by our strategic business unit managers.

Operating segments are

defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating

decision maker (“CODM”) in deciding how to make operating decisions, allocate resources and assess performance.

On February 9, 2023, the Company purchased 40 %

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Commencing from the purchase date, February 9, 2023, the Company is active in the management of Lab Services MSO.

During the year ended December 31, 2023, the Company operated in two reportable business segments:

(1) the real property operating segment,

and (2) laboratory testing services segment (which commenced with the purchase date, February 9, 2023) since Lab Services MSO’s

During the years ended December 31, 2024 and 2023, the Company operated in two reportable business segments:

(1) the real property operating

segment, and (2) laboratory testing services segment (which commenced with the purchase date, February 9, 2023) since Lab Services MSO’s

operating results are regularly reviewed by the Company’s chief operating decision maker to determine the resources to be allocated

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which the Company accounts for under the equity method.

Reclassification

Certain prior period amounts

have been reclassified to conform to the current period presentation.

These reclassifications have no effect on the previously reported

financial position, results of operations and cash flows.

The Company’s President and Chief Executive

Officer is its CODM.

The Company reports operational data to its CODM at the segment level, which he uses to evaluate performance and

allocate resources based on real property operating income and loss from equity method investment – Lab Services MSO.

Fiscal Year End

1 unchanged sentence

Reverse Stock Split

effected a one-for-ten reverse stock split of its outstanding shares of common stock on January 5, 2023.

effectuated a 1-for-15 reverse stock split of its outstanding shares of common stock on October 28, 2024.

The reverse split did not change

the number of authorized shares of common stock or par value.

All references in these consolidated financial statements to shares, share

prices, exercise prices, and other per share information in all periods have been adjusted, on a retroactive basis, to reflect the reverse

the par value of common stock.

All references in these consolidated financial statements to shares, share prices, exercise prices, and

other per share information in all periods have been adjusted, on a retroactive basis, to reflect the reverse stock split.

Recent Accounting

2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic

470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40), to simplify accounting for certain

financial instruments.

ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion

features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts

in an entity’s own equity.

The new standard also introduces additional disclosures for convertible debt and freestanding instruments

that are indexed to and settled in an entity’s own equity.

ASU 2020-06 amends the diluted earnings per share guidance, including

the requirement to use the if-converted method for all convertible instruments.

ASU 2020-06 is effective for fiscal years beginning after

December 15, 2022, including interim periods within those fiscal years, with early adoption permitted.

The adoption of ASU 2020-06 did

not have a material effect on the Company’s consolidated financial statements and related disclosures.

AVALON GLOBOCARE CORP.

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Recent Accounting

2016, the Financial Accounting Standards

Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (“Topic 326”).

The ASU introduces a new accounting

model, the Current Expected Credit Losses model (“CECL”), which requires earlier recognition of credit losses and additional

disclosures related to credit risk.

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

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

ASU 2016-13 is effective for annual period beginning after

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

The adoption of this new guidance did not

have any material impact on the Company’s consolidated financial statements.

2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts

with Customers, which amends the accounting related to contract assets and liabilities acquired in business combinations.

requires that entities recognize and measure contract assets and contract liabilities acquired in a business combination in accordance

with ASC Topic 606, Revenue from Contracts with Customers.

ASU 2021-08 is effective for fiscal years beginning after December 15, 2022,

including interim periods within those fiscal years, and should be applied prospectively to business combinations occurring on or after

the effective date of the amendment.

Early adoption is permitted, including adoption in an interim period.

The adoption of this new guidance

did not have any material impact on the Company’s consolidated financial statements.

2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Standards (continued)

2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280).

The amendments in this update improve reportable segment disclosure

requirements, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 became effective for the Company’s

annual period beginning on January 1, 2024 and interim periods beginning after January 1, 2025.

The Company adopted this guidance in the

fourth quarter of 2024.

Refer to Note 20 - Segment Information.

The Company’s results of operations, cash flows, and financial condition

were not impacted by the adoption of this ASU.

2023, the FASB ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

This guidance is intended to enhance

the transparency and decision-usefulness of income tax disclosures.

The amendments in ASU 2023-09 address investor requests for enhanced

income tax information primarily through changes to disclosure regarding rate reconciliation and income taxes paid both in the U.S.

in foreign jurisdictions.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 on a prospective basis, with the

option to apply the standard retrospectively.

This guidance is intended to enhance the

transparency and decision-usefulness of income tax disclosures.

The amendments in ASU 2023-09 address investor requests for enhanced income

tax information primarily through changes to disclosure regarding rate reconciliation and income taxes paid both in the U.S.

and in foreign

jurisdictions.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 on a prospective basis, with the option to

apply the standard retrospectively.

Early adoption is permitted.

The company is currently evaluating this guidance to determine

the impact it may have on its consolidated financial statements disclosures.

The adoption of ASU 2023-09 did not have a material effect on the Company’s

consolidated financial statements and related disclosures.

Other accounting

13 unchanged sentences

Due from broker

Finished goods

Recoverable VAT

NOTE 5 – PROPERTY AND EQUIPMENT

1 unchanged sentence

and 2023, property and equipment consisted of the following:

December 31, 2024

December 31, 2023

Laboratory equipment

3 unchanged sentences

31, 2024 and 2023, depreciation expense of property and equipment amounted to $ 9,234 and $ 43,037 , respectively, of which, $ 8,623 and $ 7,221

$ 2,987 was included in real property operating expenses, $ 417 and $ 825 was included in other operating expenses, and $ 35,399 and

$ 158,228 was included in research and development expense, respectively.

was included in real property operating expenses, $ 611 and $ 417 was included in other operating expenses, and $ 0 and $ 35,399 was included

in research and development expense, respectively.

AVALON GLOBOCARE CORP.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6 – EQUIPMENT HELD FOR SALE

The Company measures

long-lived assets to be disposed of by sale at the lower of carrying amount or fair value, less associated costs to sell these assets.

The assets held for sale is no longer subject to depreciation as they are not used in operations.

As of December 31, 2024, the Company

committed to a plan to sell certain laboratory equipment that was used to research and development as equipment held for sale, which was

included in “Other non-current assets” on the accompanying consolidated balance sheets.

The Company evaluated equipment for

impairment at December 31, 2024.

The Company compared the estimated fair value of the equipment to its carrying value with impairment

indicators and recorded an impairment charge for the excess of carrying value over fair value.

For the year ended December 31, 2024, the

Company incurred an impairment charge in operations of $ 111,033 on laboratory equipment.

Although the Company is actively seeking and

negotiating with potential buyers, the Company can give no assurances that the sale process will be successful and, if it were successful,

there are no assurances as to the amount or timing of any potential proceeds.

7 – INVESTMENT IN REAL ESTATE

1 unchanged sentence

and 2023, investment in real estate consisted of the following:

Commercial real property building

Useful Life December 31, 2024 December 31, 2023

Commercial real property building 39 Years $ 7,708,571 $ 7,708,571

Improvement 12 Years 529,372 529,372

8,237,943 8,237,943

accumulated depreciation ( 1,215,222 ) ( 1,046,539 )

$ 7,022,721 $ 7,191,404

For both the years ended

6 unchanged sentences

As of December 31, 2023,

and 2022, the equity method investment in Epicon Biotech Co., Ltd.

(“Epicon”) amounted to $ 0 and $ 485,008 , respectively.

The investment represents the Company’s subsidiary, Avalon Shanghai’s interest in Epicon.

Epicon was incorporated on August

14, 2018 in PRC.

Avalon Shanghai and an unrelated company, Jiangsu Unicorn Biological Technology Co., Ltd.

(“Unicorn”), have

an ownership interest in Epicon of 40 % and 60 %, respectively.

Epicon is focused on cell preparation, third party testing, biological

sample repository for commercial and scientific research purposes and clinical transformation of scientific achievements.

is not involved in the management of Epicon.

Therefore, it is a passive investment.

the equity method investment in Epicon Biotech Co., Ltd.

(“Epicon”) amounted to $ 0 .

The investment represents the Company’s

subsidiary, Avalon Shanghai’s interest in Epicon.

Epicon was incorporated on August 14, 2018 in PRC.

Avalon Shanghai and an unrelated

company, Jiangsu Unicorn Biological Technology Co., Ltd.

(“Unicorn”), have an ownership interest in Epicon of 40 % and 60 %,

respectively.

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

purposes and clinical transformation of scientific achievements.

The Company is not involved in the management of Epicon.

Therefore, it

is a passive investment.

In June 2023, the Company

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losses of its equity method investments.

Investment in Laboratory

Services MSO, LLC

On February 9, 2023 (the

“Closing Date”), the Company entered into and closed an Amended and Restated Membership Interest Purchase Agreement (the “Amended

MIPA”), by and among Avalon Laboratory Services, Inc., a wholly owned subsidiary of the Company (the “Buyer”), SCBC

Holdings LLC (the “Seller”), the Zoe Family Trust, Bryan Cox and Sarah Cox as individuals (each an “Owner” and

collectively, the “Owners”), and Laboratory Services MSO, LLC.

Pursuant to the terms and

conditions set forth in the Amended MIPA, the Buyer acquired from the Seller, forty percent ( 40 %) of the issued and outstanding equity

interests of Lab Services MSO (the “Purchased Interests”).

The consideration paid by Buyer to Seller for the Purchased

Interests consisted of $ 20,666,667 , which was comprised of (i) $9,000,000 in cash, (ii) $11,000,000 pursuant to the issuance of 11,000

shares of the Company’s Series B Convertible Preferred Stock (the “Series B Preferred Stock”), stated value $1,000

(the “Series B Stated Value”), which approximated the fair value, and (iii) a $666,667 cash payment on February 9, 2024.

Series B Preferred Stock is convertible into shares of the Company’s common stock at a conversion price per share equal to $3.78,

which approximated the market price at the date of closing, or an aggregate of 2,910,053 shares of the Company’s common stock, which

are subject to a lock-up period and restrictions on sale (See Note 14 — Series B Convertible Preferred Stock Issued for Equity Method

AVALON GLOBOCARE CORP.

4 unchanged sentences

Investment in Laboratory

Services MSO, LLC (continued)

Services MSO, LLC

On February 9, 2023 (the

“Closing Date”), the Company entered into and closed an Amended and Restated Membership Interest Purchase Agreement (the “Amended

MIPA”), by and among Avalon Lab, SCBC Holdings LLC (the “Seller”), the Zoe Family Trust, Bryan Cox and Sarah Cox as

individuals (each an “Owner” and collectively, the “Owners”), and Lab Services MSO.

Pursuant to the terms

and conditions set forth in the Amended MIPA, Avalon Lab acquired from the Seller, 40 % of the issued and outstanding equity interests

of Lab Services MSO (the “Purchased Interests”).

The consideration paid by Avalon Lab to Seller for the Purchased Interests

consisted of $ 20,666,667 , which was comprised of (i) $ 9,000,000 in cash, (ii) $ 11,000,000 pursuant to the issuance of 11,000 shares

of the Company’s Series B Convertible Preferred Stock (the “Series B Preferred Stock”), stated value $ 1,000 (the

“Series B Stated Value”), which approximated the fair value, and (iii) a $ 666,667 cash payment on February 9, 2024.

Series B Preferred Stock is convertible into shares of the Company’s common stock at a conversion price per share equal to $ 56.70 ,

which approximated the market price at the date of closing, or an aggregate of 194,004 shares of the Company’s common

stock, which are subject to a lock-up period and restrictions on sale.

Lab Services MSO, through

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on a straight-line method over the estimated useful life of 15 years.

The straight-line method of amortization represents the Company’s

best estimate of the distribution of the economic value of the identifiable intangible assets.

Goodwill represents the excess of the purchase price paid over the

fair value of net assets acquired in the business acquisition of Lab Services MSO incurred on February 9, 2023.

Goodwill is not amortized,

but is tested for impairment at December 31, 2023.

In December 2023, the

Company assessed its equity method investment in Laboratory Services MSO, LLC for any impairment and concluded that there were indicators

of impairment as of December 31, 2023.

The Company calculated that the estimated undiscounted cash flows of goodwill were less than the

carrying amount of goodwill related to the equity method investment.

The Company has recognized an impairment loss of $ 9,196,682 related

to the equity method investment for the year ended December 31, 2023.

For the period from February

9, 2023 (date of investment) through December 31, 2023, the Company’s share of Lab Services MSO’s net income was $ 625,035 ,

which was included in income from equity method investment — Lab Services MSO in the accompanying consolidated statements of operations

and comprehensive loss.

In the year ended December

31, 2023, activity recorded for the Company’s equity method investment in Lab Services MSO is summarized in the following

The straight-line method of amortization represents the

Company’s best estimate of the distribution of the economic value of the identifiable intangible assets.

For the year ended December

31, 2024 and for the period from February 9, 2023 (date of investment) through December 31, 2023, amortization expense of these intangible

assets amounted to $ 666,932 and $ 611,356 , respectively, which was included in loss from equity method investment — Lab Services

MSO in the accompanying consolidated statements of operations and comprehensive loss.

Goodwill represents the

excess of the purchase price paid over the fair value of net assets acquired in the business acquisition of Lab Services MSO incurred

on February 9, 2023.

Goodwill is not amortized but is tested for impairment at least once annually, or more frequently if events or changes

in circumstances indicate that the asset might be impaired.

In September 2024 and

December 2023, the Company assessed its equity method investment in Laboratory Services MSO, LLC for any impairment and concluded that

there were indicators of impairment as of September 30, 2024 and December 31, 2023, respectively.

The Company calculated that the estimated

undiscounted cash flows of goodwill were less than the carrying amount of goodwill related to the equity method investment.

has recognized impairment loss of $ 259,579 and $ 9,196,682 related to the equity method investment for the year ended December 31,

2024 and for the period from February 9, 2023 (date of investment) through December 31, 2023, respectively, which was included in loss

from equity method investment — Lab Services MSO in the accompanying consolidated statements of operations and comprehensive loss.

For the year ended December

31, 2024 and for the period from February 9, 2023 (date of investment) through December 31, 2023, the Company’s share of Lab Services

MSO’s net income was $ 79,923 and $ 1,236,391 , respectively, which was included in loss from equity method investment —

Lab Services MSO in the accompanying consolidated statements of operations and comprehensive loss.

The Company classifies

distributions received from its investment on Lab Services MSO using the cumulative earnings approach.

Distributions received are considered

returns on the investment and classified as cash inflows from operating activities.

For the year ended December 31, 2024 and for the

period from February 9, 2023 (date of investment) through December 31, 2023, distribution of earnings from the Company’s investment

on Lab Services MSO amounted to $ 611,888 and $ 0 , respectively.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 – EQUITY

METHOD INVESTMENTS (continued)

Investment in Laboratory

Services MSO, LLC (continued)

In the years ended December

31, 2024 and 2023, activity recorded for the Company’s equity method investment in Lab Services MSO is summarized in the following

Equity investment carrying amount at January 1, 2023

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The Company’s interest in the net excess of Lab Services MSO’s fair value over net assets which was attributable to goodwill at February 9, 2023

Loss from equity method investment – Lab Services MSO:

Total payment for equity method investment

Lab Services MSO’s net income attributable to the Company

2 unchanged sentences

( 9,196,682 )

( 8,571,647 )

Equity investment carrying amount at December 31, 2023

Lab Services MSO’s net income attributable to the Company

Intangible assets amortization amount

Distribution of earnings from equity investment

Impairment of goodwill

Equity investment carrying amount at December 31, 2024

As of December 31, 2024, the Company’s carrying

1 unchanged sentence

$ 0 , respectively.

As of December 31, 2023, the Company’s carrying value of the identified intangible assets and goodwill which are

included in the equity investment carrying amount was $ 9,392,644 and $ 259,579 , respectively.

The tables below present the summarized financial

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

December 31, 2024

December 31, 2023

Current assets

2 unchanged sentences

Noncurrent liabilities

For the year Ended December 31, 2024

For the Period from

2023 (Date of Investment) through December 31, 2023

(Loss) income from operation

Net loss income

During 2025, to preserve cash, the Company entered

into discussions with Lab Services MSO for the potential redemption of our investment and on February 26, 2025, the Company and Lab Services

MSO entered into a Redemption and Abandonment Agreement (the “Redemption Agreement”), whereby Lab Services MSO redeemed the

40% equity interest in Lab Services MSO held by the Company.

See Note 22 – Subsequent Events - Redemption Agreement.

AVALON GLOBOCARE CORP.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 – EQUITY

METHOD INVESTMENTS (continued)

Investment in Laboratory

Services MSO, LLC (continued)

For the Period from

(Date of Investment) through

December 31, 2023

Income from operation

NOTE 8 – ACCRUED

LIABILITIES AND OTHER PAYABLES

NOTE 9 – ACCRUED LIABILITIES

AND OTHER PAYABLES

At December 31, 2024

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NOTE 10 – CONVERTIBLE NOTE PAYABLE

2022 Convertible Note

On March 28, 2022, the

Company entered into Securities Purchase Agreement with an accredited investor, which was amended on June 8, 2022, providing for the sale

by the Company to the investor of a Convertible Note in the amount of $ 3,718,943 (“2022 Convertible Note”).

to the 2022 Convertible Note, the investor also received a Stock Purchase Warrant (“2022 Warrant”) to acquire an aggregate

of 123,964 shares of common stock.

The 2022 Warrant is exercisable for five years at an exercise price of $ 12.5 .

financing closed with respect to:

● $ 2,669,522 of the financing on April 15, 2022,

● $ 659,581 of the financing on April 29, 2022,

● $ 199,840 of the financing on May 18, 2022, and

● $ 190,000 of the financing on May 25, 2022.

of each of the closings, the Company issued the investor a 2022 Convertible Note in the principal amount of $ 2,669,522 and a 2022

Warrant to acquire 88,984 shares of common stock dated April 15, 2022, a 2022 Convertible Note in the principal amount of $ 659,581 and

a 2022 Warrant to acquire 21,986 shares of common stock dated April 29, 2022, a 2022 Convertible Note in the principal amount

of $ 199,840 and a 2022 Warrant to acquire 6,661 shares of common stock dated May 18, 2022, and a 2022 Convertible Note

in the principal amount of $ 190,000 and a 2022 Warrant to acquire 6,333 shares of common stock dated May 25, 2022.

accrued on the principal amount at 1.0 % per annum.

The investor may elect to convert all or part of the 2022 Convertible Note, plus accrued

interest, at any time into shares of common stock of the Company at a conversion price equal to 95 % of the average of the highest

three trading prices for the common stock during the 20-trading day period ending one trading day prior to the conversion date but in

no event will the conversion price be lower than $ 0.75 per share.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 – CONVERTIBLE NOTE PAYABLE

2022 Convertible Note

agreed to restrict its ability to convert the 2022 Convertible Note and exercise the 2022 Warrant and receive shares of common stock such

that the number of shares of common stock held by the investor after such conversion or exercise does not exceed 4.99 % of the then

issued and outstanding shares of common stock.

Further, the investor agreed to not sell or transfer any or all of the shares of common

stock underlying the 2022 Convertible Note or the 2022 Warrant for a period of 90 days beginning on the closing date (the “Lock-Up

Following the expiration of the Lock-Up Period, the investor has agreed to limit its sale or transfer of such shares of

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

The Company agreed to use its reasonable best efforts to file a registration statement on Form S-3 (or other appropriate form) providing

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

the Company’s analysis of the criteria contained in ASC Topic 815-40, “Derivatives and Hedging - Contracts in an Entity’s

Own Equity”, the Company determined that all the warrants issued to the investor with this private placement were classified as

equity in additional paid in-capital.

In accordance

with ASC 470-20-25-2, proceeds from the sale of a debt instrument with stock purchase warrants are allocated to the two elements based

on the relative fair values of the debt instrument without the warrants and of the warrants themselves at time of issuance.

The portion of the proceeds so allocated to the warrants are accounted for as additional paid-in capital.

The remainder of the proceeds

are allocated to the debt instrument portion of the transaction.

values of the warrants issued to the investor with this private placement were computed using the Black-Scholes option-pricing model with

the following assumptions:

volatility of 111.94 %, risk-free rate of 2.71 % - 2.92 %, annual dividend yield of 0 % and

expected life of 5 years.

In accordance

with ASC 480-10-25-14, the Company determined that the conversion provisions contain an embedded derivative feature and the Company valued

the derivative feature separately, and recorded debt discount and derivative liabilities in accordance with the provisions of the convertible

debt (see Note 10).

The Company calculated the fair value of conversion option at the commitment dates using the Black-Scholes valuation

model with the following assumptions:

volatility of 95.97 %, risk-free rate of 2.75 % - 2.89 %, annual dividend yield of 0 %

and expected life of 10 years.

issued to the investor to purchase 123,964 shares of the Company’s common stock were treated as a discount on the convertible

note payable and were valued at $ 498,509 and had been amortized over the term of the 2022 Convertible Note.

Additionally, the fair

value of embedded conversion option at commitment dates, which was valued at $ 2,782,569 , was recorded as a discount on the convertible

note payable and had been amortized over the term of the 2022 Convertible Note.

Hence, in connection with the issuance of the 2022 Convertible

Note and 2022 Warrant, the Company recorded a total debt discount of $ 3,281,078 , which had been amortized over the term of the convertible

note payable.

25, 2022, the Company and the investor entered into a Conversion Agreement (“Conversion Agreement”) pursuant to which the

investor converted all of its Convertible Notes in the principal amount of $ 3,718,943 and unpaid interest of $ 9,751 into 573,645 shares

of common stock of the Company at a per share price of $ 6.5 (see Note 14 - Common Shares Issued for Debt Conversion).

recorded a conversion inducement charge of $ 344,264 as a result of the Conversion Agreement, representing the value of common stock

issued upon conversion in excess of the common stock issuable under the original terms of the 2022 Convertible Note.

year ended December 31, 2022, amortization of debt discount and interest expense related to the 2022 Convertible Note amounted to $ 3,281,078 and

$ 9,751 , which have been included in interest expense – amortization of debt discount and debt issuance cost and interest expense

– other, respectively, on the accompanying consolidated statements of operations and comprehensive loss.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 – CONVERTIBLE NOTE PAYABLE

May 2023 Convertible

3 unchanged sentences

senior secured promissory notes in the aggregate principal amount of $ 1,500,000 (collectively, the “May 2023 Convertible Note”)

convertible into shares of common stock, par value $ 0.0001 per share, of the Company, as well as the issuance of 75,000 shares

of common stock as a commitment fee and warrants for the purchase of 230,500 shares of common stock of the Company.

and its subsidiaries have also entered into a security agreement, creating a security interest in certain property of the Company and

its subsidiaries to secure the prompt payment, performance and discharge in full of all of the Company’s obligations under the May

2023 Convertible Note.

Principal amount and interest under the May 2023 Convertible Note are convertible into shares of common stock of

the Company at a conversion price of $ 4.50 per share unless the Company fails to make an amortization payment when due, in which

case the conversion price shall be the lower of $ 4.50 or the trading price of the shares, subject to a floor of $ 1.50 .

convertible into shares of the Company’s common stock, as well as the issuance of 5,000 shares of common stock as a commitment

fee and warrants for the purchase of 15,366 shares of common stock of the Company.

The Company and its subsidiaries also entered

into a security agreement, creating a security interest in certain property of the Company and its subsidiaries to secure the prompt payment,

performance and discharge in full of all of the Company’s obligations under the May 2023 Convertible Note.

Principal amount and

interest under the May 2023 Convertible Note were convertible into shares of common stock of the Company at a conversion price of $ 67.50 per

share unless the Company failed to make an amortization payment when due, in which case the conversion price would be the lower of $ 67.50 or

the trading price of the shares, subject to a floor of $ 22.50 .

Mast Hill acquired the

1 unchanged sentence

discount of $ 75,000 .

On May 23, 2023, the Company issued (i) a warrant to purchase 125,000 shares of common stock with

an exercise price of $ 4.50 exercisable until the five-year anniversary of May 23, 2023, (ii) a warrant to purchase 105,500 shares

of common stock with an exercise price of $ 3.20 exercisable until the five-year anniversary of May 23, 2023, which warrant shall

be cancelled and extinguished against payment of the May 2023 Convertible Note, and (iii) 75,000 shares of common stock as a

commitment fee for the purchase of the May 2023 Convertible Note, which were earned in full as of May 23, 2023.

On May 23, 2023,

the Company delivered such duly executed May 2023 Convertible Note, warrants and common stock to Mast Hill against delivery of such purchase

The Company is obligated

to make amortization payments in cash to Mast Hill towards the repayment of the May 2023 Convertible Note, as provided in the following

Payment Date:

Payment Amount:

November 23, 2023

$150,000 plus accrued interest through November 23, 2023

December 23, 2023

$150,000 plus accrued interest through December 23, 2023

January 23, 2024

$200,000 plus accrued interest through January 23, 2024

February 23, 2024

$250,000 plus accrued interest through February 23, 2024

March 23, 2024

$250,000 plus accrued interest through March 23, 2024

April 23, 2024

$300,000 plus accrued interest through April 23, 2024

The entire remaining outstanding balance of the May 2023 Convertible Note

In connection

with the issuance of the May 2023 Convertible Note, the Company incurred debt issuance costs of $ 175,162 (including the issuance

of 10,000 warrants as a finder’s fee) which is capitalized and will be amortized into interest expense over the term of

the May 2023 Convertible Note.

the Company’s analysis of the criteria contained in ASC 815, the Company determined that all the warrants issued to Mast Hill and

a third party as a finder’s fee met the definition of a derivative liability, as the Company cannot avoid a net cash settlement

under certain circumstances.

Management determined the probability of failing to make an amortization payment when due to be remote and

as such the fair value of the 105,500 warrants with an exercise price of $ 3.20 exercisable until the five-year anniversary

of May 23, 2023, which warrant shall be cancelled and extinguished against payment of the May 2023 Convertible Note, has been estimated

Accordingly, the fair value of the 135,000 warrants with an exercise price of $ 4.50 exercisable until the five-year

anniversary of May 23, 2023 was classified as derivative liability on May 23, 2023.

The fair values of the 135,000 warrants

with an exercise price of $ 4.50 exercisable until the five-year anniversary of May 23, 2023 issued on May 23, 2023 were computed

using the Black-Scholes option-pricing model with the following assumptions:

stock price of $ 1.96 , volatility of 88.80 %, risk-free

rate of 3.76 %, annual dividend yield of 0 % and expected life of 5 years.

In accordance

with ASC 470-20-25-2, proceeds from the sale of a debt instrument with stock purchase warrants are allocated to the two elements based

on the relative fair values of the debt instrument without the warrants and of the warrants themselves at time of issuance.

The portion of the proceeds allocated to the warrants are accounted for as derivative liability.

The remainder of the proceeds are allocated

to the debt instrument portion of the transaction.

On May 23, 2023, the Company issued (i) a warrant to purchase 8,333 shares of common stock with an exercise

price of $ 67.50 exercisable until the five-year anniversary of May 23, 2023 (“First Warrant”), (ii) a warrant to purchase 7,033 shares

of common stock with an exercise price of $ 48.00 exercisable until the five-year anniversary of May 23, 2023 (“Second Warrant”).The

Second Warrant was never fair valued and was cancelled and extinguished against payment of the May 2023 Convertible Note, and (iii) 5,000 shares

of common stock as a commitment fee for the purchase of the May 2023 Convertible Note, which were earned in full as of May 23, 2023.

May 23, 2023, the Company delivered such duly executed May 2023 Convertible Note, warrants and common stock to Mast Hill against delivery

of such purchase price.

The Company was obligated

to make amortization payments in cash to Mast Hill toward the repayment of the May 2023 Convertible Note, as described in the May 2023

Convertible Note.

As of December 31, 2024, the May 2023 Convertible Note was repaid in full.

In connection with the

issuance of the May 2023 Convertible Note, the Company incurred debt issuance costs of $ 175,162 (including the issuance of 667 warrants

as a finder’s fee) which was capitalized and was amortized into interest expense over the term of the May 2023 Convertible Note.

Based upon the Company’s

analysis of the criteria contained in ASC 815, the Company determined that all the warrants issued to Mast Hill and a third party as a

finder’s fee met the definition of a derivative liability, as the Company cannot avoid a net cash settlement under certain circumstances.

Accordingly, the fair value of the 9,000 warrants with an exercise price of $ 67.50 exercisable until the five-year anniversary

of May 23, 2023 was classified as derivative liability on May 23, 2023.

The fair values of the 9,000 warrants with an exercise

price of $ 67.50 exercisable until the five-year anniversary of May 23, 2023 issued on May 23, 2023 were computed using the Black-Scholes

option-pricing model with the following assumptions:

stock price of $ 29.40 , volatility of 88.80 %, risk-free rate of 3.76 %, annual

dividend yield of 0 % and expected life of 5 years.

AVALON GLOBOCARE CORP.

4 unchanged sentences

Note (continued)

In accordance

with ASC 480-10-25-14, the Company determined that the conversion provisions contain an embedded derivative feature and the Company valued

the derivative feature separately, recording debt discount and derivative liability in accordance with the provisions of the convertible

debt (see Note 10).

However, management determined the probability of failing to make an amortization payment when due to be remote and

as such the fair value of the embedded conversion feature has been estimated to be zero.

recorded a total debt discount of $ 349,654 related to the original issue discount, common shares issued and warrants issued to Mast

Hill, which will be amortized over the term of the May 2023 Convertible Note.

For the year ended December

31, 2023, amortization of debt discount and debt issuance costs and interest expense related to the May 2023 Convertible Note amounted

to $307,123 and $ 115,450 , respectively, which have been included in interest expense — amortization of debt discount and debt

issuance cost and interest expense — other on the accompanying consolidated statements of operations and comprehensive loss.

In accordance with ASC 470-20-25-2, proceeds from

the sale of a debt instrument with stock purchase warrants are allocated to the two elements based on the relative fair values of

the debt instrument without the warrants and of the warrants themselves at time of issuance.

The portion of the proceeds allocated to

the warrants are accounted for as derivative liability.

The remainder of the proceeds are allocated to the debt instrument portion of

the transaction.

The Company recorded

a total debt discount of $ 349,654 related to the original issue discount, common shares issued and warrants issued to Mast Hill,

which was amortized over the term of the May 2023 Convertible Note.

July 2023 Convertible

2 unchanged sentences

of 13.0 % senior secured promissory notes in the aggregate principal amount of $ 500,000 (collectively, the “July 2023 Convertible

Note”) convertible into shares of common stock, par value $ 0.0001 per share, of the Company, as well as the issuance of 25,000 shares

of common stock as a commitment fee and warrants for the purchase of 76,830 shares of common stock of the Company.

and its subsidiaries have also entered into a security agreement, creating a security interest in certain property of the Company and

its subsidiaries to secure the prompt payment, performance and discharge in full of all of the Company’s obligations under the July

Note”) convertible into shares of the Company’s common stock, as well as the issuance of 1,667 shares of common stock as a

commitment fee and warrants for the purchase of 5,122 shares of common stock of the Company.

The Company and its subsidiaries also entered

into a security agreement, creating a security interest in certain property of the Company and its subsidiaries to secure the prompt payment,

performance and discharge in full of all of the Company’s obligations under the July 2023 Convertible Note.

Principal amount and

interest under the July 2023 Convertible Note were convertible into shares of common stock of the Company at a conversion price of $ 67.50

per share unless the Company failed to make an amortization payment when due, in which case the conversion price would be the lower of

$ 67.50 or the trading price of the shares, subject to a floor of $ 22.50 .

FirstFire acquired the

July 2023 Convertible Note with principal amount of $ 500,000 and paid the purchase price of $ 475,000 after an original issue discount

of $ 25,000 .

On July 6, 2023, the Company issued (i) a warrant to purchase 2,778 shares of common stock with an exercise price of $ 67.50

exercisable until the five-year anniversary of July 6, 2023 (“First Warrant”), (ii) a warrant to purchase 2,344 shares of

common stock with an exercise price of $ 48.00 exercisable until the five-year anniversary of July 6, 2023 (“Second Warrant”).

The Second Warrant was never fair valued and was cancelled and extinguished against payment of the July 2023 Convertible Note, and (iii)

1,667 shares of common stock as a commitment fee for the purchase of the July 2023 Convertible Note, which were earned in full as of July

On July 6, 2023, the Company delivered such duly executed July 2023 Convertible Note, warrants and common stock to FirstFire

against delivery of such purchase price.

The Company was obligated

to make amortization payments in cash to FirstFire toward the repayment of the July 2023 Convertible Note, as described in the July 2023

Convertible Note.

Principal amount and interest under the July 2023 Convertible Note are convertible into shares of common stock

of the Company at a conversion price of $ 4.50 per share unless the Company fails to make an amortization payment when due, in which

case the conversion price shall be the lower of $ 4.50 or the trading price of the shares, subject to a floor of $ 1.50 .

Firstfire acquired

the July 2023 Convertible Note with principal amount of $ 500,000 and paid the purchase price of $ 475,000 after an original issue

discount of $ 25,000 .

On July 6, 2023, the Company issued (i) a warrant to purchase 41,665 shares of common stock with an exercise

price of $ 4.50 exercisable until the five-year anniversary of July 6, 2023, (ii) a warrant to purchase 35,165 shares of

common stock with an exercise price of $ 3.20 exercisable until the five-year anniversary of July 6, 2023, which warrant shall be

cancelled and extinguished against payment of the July 2023 Convertible Note, and (iii) 25,000 shares of common stock as a commitment

fee for the purchase of the July 2023 Convertible Note, which were earned in full as of July 6, 2023.

On July 6, 2023, the Company delivered

such duly executed July 2023 Convertible Note, warrants and common stock to Firstfire against delivery of such purchase

The Company is obligated

to make amortization payments in cash to Firstfire towards the repayment of the July 2023 Convertible Note, as provided in the following

Payment Date:

Payment Amount:

January 6, 2024

$50,000 plus accrued interest through January 6, 2024

February 6, 2024

$50,000 plus accrued interest through February 6, 2024

March 6, 2024

$66,000 plus accrued interest through March 6, 2024

April 6, 2024

$83,000 plus accrued interest through April 6, 2024

$83,000 plus accrued interest through May 6, 2024

$100,000 plus accrued interest through June 6, 2024

The entire remaining outstanding balance of the July 2023 Convertible Note

In connection with the issuance of the July 2023

Convertible Note, the Company incurred debt issuance costs of $ 74,204 (including the issuance of 3,333 warrants as a finder’s

fee), which is capitalized and will be amortized into interest expense over the term of the July 2023 Convertible Note.

As of December 31, 2024, the July 2023 Convertible Note was repaid in full.

In connection with the

issuance of the July 2023 Convertible Note, the Company incurred debt issuance costs of $ 74,204 (including the issuance of 222 warrants

as a finder’s fee), which was capitalized and was amortized into interest expense over the term of the July 2023 Convertible Note.

Based upon the Company’s

analysis of the criteria contained in ASC 815, the Company determined that all the warrants issued to Firstfire and a third party as a

finder’s fee meet the definition of a derivative liability, as the Company cannot avoid a net cash settlement under certain circumstances.

Accordingly, the fair value of the 3,000 warrants with an exercise price of $ 67.50 exercisable until the five-year anniversary

of July 6, 2023 was classified as a derivative liability on July 6, 2023.

The fair values of the 3,000 warrants with an exercise

price of $ 67.50 exercisable until the five-year anniversary of July 6, 2023 issued on July 6, 2023 were computed using the Black-Scholes

option-pricing model with the following assumptions:

stock price of $ 21.30 , volatility of 88.52 %, risk-free rate of 4.37 %, annual

dividend yield of 0 % and expected life of 5 years.

In accordance with ASC

470-20-25-2, proceeds from the sale of a debt instrument with stock purchase warrants are allocated to the two elements based on the relative

fair values of the debt instrument without the warrants and of the warrants themselves at time of issuance.

The portion of the proceeds

allocated to the warrants are accounted for as derivative liability.

The remainder of the proceeds are allocated to the debt instrument

portion of the transaction.

The Company recorded a total debt discount of

$ 89,191 related to the original issue discount, common shares issued and warrants issued to Firstfire, which was amortized over the

term of the July 2023 Convertible Note.

AVALON GLOBOCARE CORP.

2 unchanged sentences

NOTE 10 – CONVERTIBLE NOTE PAYABLE

July 2023 Convertible

Note (continued)

Convertible Note

On October 9, 2023, the

Company entered into securities purchase agreements with Mast Hill and FirstFire for the issuance of 13.0 % senior secured promissory notes

in the aggregate principal amount of $ 700,000 (collectively, the “October 2023 Convertible Note”) convertible into shares

of the Company’s common stock, as well as the issuance of 4,666 shares of common stock as a commitment fee and warrants for the

purchase of 12,834 shares of common stock of the Company.

The Company and its subsidiaries also entered into that certain security agreements,

creating a security interest in certain property of the Company and its subsidiaries to secure the prompt payment, performance and discharge

in full of all of the Company’s obligations under the October 2023 Convertible Note.

Principal amount and interest under the October

2023 Convertible Note were convertible into shares of common stock of the Company at a conversion price of $ 22.50 per share unless the

Company failed to make an amortization payment when due, in which case the conversion price would be the lower of $ 22.50 or the market

price (as defined in the October 2023 Convertible Note) of the shares.

Mast Hill acquired the

October 2023 Convertible Note with principal amount of $ 350,000 and paid the purchase price of $ 332,500 after an original issue

discount of $ 17,500 .

On October 9, 2023, the Company issued (i) a warrant to purchase 3,500 shares of common stock with an exercise

price of $ 37.50 exercisable until the five-year anniversary of October 9, 2023 (“First Warrant”), (ii) a warrant to purchase 2,917 shares

of common stock with an exercise price of $ 27.00 exercisable until the five-year anniversary of October 9, 2023 (“Second Warrant”).

The Second Warrant was never fair valued and was cancelled and extinguished against payment of the October 2023 Convertible Note, and

(iii) 2,333 shares of common stock as a commitment fee for the purchase of the October 2023 Convertible Note, which were earned

in full as of October 9, 2023.

On October 9, 2023, the Company delivered such duly executed October 2023 Convertible Note, warrants and

common stock to Mast Hill against delivery of such purchase price.

The Company was obligated to make amortization

payments in cash to Mast Hill toward the repayment of the October 2023 Convertible Note, as described in the October 2023 Convertible

As of December 31, 2024, the October 2023 Convertible Note was repaid in full.

FirstFire acquired

the October 2023 Convertible Note with principal amount of $ 350,000 and paid the purchase price of $ 332,500 after an original

issue discount of $ 17,500 .

On October 9, 2023, the Company issued (i) a warrant to purchase 3,500 shares of common stock with

an exercise price of $ 37.50 exercisable until the five-year anniversary of October 9, 2023 (“First Warrant”), (ii) a

warrant to purchase 2,917 shares of common stock with an exercise price of $ 27.00 exercisable until the five-year anniversary

of October 9, 2023 (“Second Warrant”).

The Second Warrant was never fair valued and was cancelled and extinguished against

payment of the October 2023 Convertible Note, and (iii) 2,333 shares of common stock as a commitment fee for the purchase of

the October 2023 Convertible Note, which were earned in full as of October 9, 2023.

On October 9, 2023, the Company delivered such duly

executed October 2023 Convertible Note, warrants and common stock to FirstFire against delivery of such purchase price.

The Company was obligated to make amortization

payments in cash to FirstFire toward the repayment of the October 2023 Convertible Note, as described in the October 2023 Convertible

As of December 31, 2024, the October 2023 Convertible Note was repaid in full.

In connection with the issuance of the October

2023 Convertible Note, the Company incurred debt issuance costs of $ 95,349 (including the issuance of 560 warrants as a

finder’s fee), which was capitalized and was amortized into interest expense over the term of the October 2023 Convertible Note.

Based upon the Company’s analysis of the

criteria contained in ASC 815, the Company determined that all the warrants issued to Firstfire and a third party as a finder’s

criteria contained in ASC 815, the Company determined that all the warrants issued to Mast Hill and Firstfire and a third party as a finder’s

fee meet the definition of a derivative liability, as the Company cannot avoid a net cash settlement under certain circumstances.

determined the probability of failing to make an amortization payment when due to be remote and as such the fair value of the 35,165 warrants

with an exercise price of $ 3.20 exercisable until the five-year anniversary of July 6, 2023, which warrant shall be cancelled and

extinguished against payment of the July 2023 Convertible Note, has been estimated to be zero.

Accordingly, the fair value of the 44,998 warrants

with an exercise price of $ 4.50 exercisable until the five-year anniversary of July 6, 2023 was classified as a derivative liability

on July 6, 2023.

The fair values of the 44,998 warrants with an exercise price of $ 4.50 exercisable until the five-year

anniversary of July 6, 2023 issued on July 6, 2023 were computed using the Black-Scholes option-pricing model with the following assumptions:

stock price of $ 1.42 , volatility of 88.52 %, risk-free rate of 4.37 %, annual dividend yield of 0 % and expected life of 5 years.

the fair value of the 7,560 warrants with an exercise price of $ 37.50 exercisable until the five-year anniversary of October

9, 2023 was classified as a derivative liability on October 9, 2023.

The fair values of the 7,560 warrants with an exercise

price of $ 37.50 exercisable until the five-year anniversary of October 9, 2023 issued on October 9, 2023 were computed using the

Black-Scholes option-pricing model with the following assumptions:

stock price of $ 11.55 , volatility of 89.70 %, risk-free rate of 4.75 %,

annual dividend yield of 0 % and expected life of 5 years.

In accordance with ASC 470-20-25-2, proceeds from

5 unchanged sentences

the transaction.

In accordance

with ASC 480-10-25-14, the Company determined that the conversion provisions contain an embedded derivative feature and the Company valued

the derivative feature separately, recording debt discount and derivative liability in accordance with the provisions of the convertible

debt (see Note 10).

However, management determined the probability of failing to make an amortization payment when due to be remote and

as such the fair value of the embedded conversion feature has been estimated to be zero.

recorded a total debt discount of $ 89,191 related to the original issue discount, common shares issued and warrants issued to Firstfire,

which will be amortized over the term of the July 2023 Convertible Note.

year ended December 31, 2023, amortization of debt discount and debt issuance costs and interest expense related to the July 2023 Convertible

Note amounted to $ 78,974 and $ 31,164 , respectively, which have been included in interest expense — amortization of debt discount

and debt issuance cost and interest expense — other on the accompanying consolidated statements of operations and comprehensive

Convertible Note

On October 9, 2023, the

Company entered into securities purchase agreements with Mast Hill and Firstfire for the issuance of 13.0 % senior secured promissory notes

in the aggregate principal amount of $ 700,000 (collectively, the “October 2023 Convertible Note”) convertible into shares

of common stock, par value $ 0.0001 per share, of the Company, as well as the issuance of 70,000 shares of common stock as a commitment

fee and warrants for the purchase of 192,500 shares of common stock of the Company.

The Company and its subsidiaries have entered into

that certain security agreements, creating a security interest in certain property of the Company and its subsidiaries to secure the prompt

payment, performance and discharge in full of all of the Company’s obligations under the October 2023 Convertible Note.

amount and interest under the October 2023 Convertible Note are convertible into shares of common stock of the Company at a conversion

price of $ 1.50 per share unless the Company fails to make an amortization payment when due, in which case the conversion price shall

be the lower of $ 1.50 or the market price (as defined in the October 2023 Convertible Note) of the shares.

Mast Hill acquired the October 2023 Convertible Note with principal

amount of $ 350,000 and paid the purchase price of $ 332,500 after an original issue discount of $ 17,500 .

On October 9, 2023, the Company

issued (i) a warrant to purchase 52,500 shares of common stock with an exercise price of $ 2.50 exercisable until the five-year anniversary

of October 9, 2023, (ii) a warrant to purchase 43,750 shares of common stock with an exercise price of $ 1.80 exercisable until the five-year

anniversary of October 9, 2023, which warrant shall be cancelled and extinguished against payment of the October 2023 Convertible Note,

and (iii) 35,000 shares of common stock as a commitment fee for the purchase of the October 2023 Convertible Note, which were earned in

full as of October 9, 2023.

On October 9, 2023, the Company delivered such duly executed October 2023 Convertible Note, warrants and common

stock to Mast Hill against delivery of such purchase price.

The Company recorded a total debt discount of

$ 128,748 related to the original issue discount, common shares issued and warrants issued to Mast Hill and Firstfire, which was amortized

over the term of the October 2023 Convertible Note.

AVALON GLOBOCARE CORP.

2 unchanged sentences

NOTE 10 – CONVERTIBLE NOTE PAYABLE

Convertible Note (continued)

The Company is obligated

to make amortization payments in cash to Mast Hill towards the repayment of the October 2023 Convertible Note, as provided in the following

Payment Date:

Payment Amount:

April 9, 2024

$35,000 plus accrued interest through April 9, 2024

$35,000 plus accrued interest through May 9, 2024

$46,667 plus accrued interest through June 9, 2024

$58,333 plus accrued interest through July 9, 2024

August 9, 2024

$58,333 plus accrued interest through August 9, 2024

September 9, 2024

$70,000 plus accrued interest through September 9, 2024

October 9, 2024

The entire remaining outstanding balance of the October 2023 Convertible Note

Firstfire acquired

the October 2023 Convertible Note with principal amount of $ 350,000 and paid the purchase price of $ 332,500 after an original issue discount

of $ 17,500 .

On October 9, 2023, the Company issued (i) a warrant to purchase 52,500 shares of common stock with an exercise price of $ 2.50

exercisable until the five-year anniversary of October 9, 2023, (ii) a warrant to purchase 43,750 shares of common stock with an exercise

price of $ 1.80 exercisable until the five-year anniversary of October 9, 2023, which warrant shall be cancelled and extinguished against

payment of the October 2023 Convertible Note, and (iii) 35,000 shares of common stock as a commitment fee for the purchase of the October

2023 Convertible Note, which were earned in full as of October 9, 2023.

On October 9, 2023, the Company delivered such duly executed October

2023 Convertible Note, warrants and common stock to Firstfire against delivery of such purchase price.

March 2024 Convertible

On March 7, 2024, the

Company entered into securities purchase agreements with Mast Hill for the issuance of 13.0 % senior secured promissory notes in the

aggregate principal amount of $ 700,000 (collectively, the “March 2024 Convertible Note”) convertible into shares of the

Company’s common stock, as well as the issuance of 7,000 shares of common stock as a commitment fee and warrants for the

purchase of 16,827 shares of common stock of the Company.

The Company and its subsidiaries also entered into a security agreement,

creating a security interest in certain property of the Company and its subsidiaries to secure the prompt payment, performance and discharge

in full of all of the Company’s obligations under the March 2024 Convertible Note.

Principal amount and interest under the March

2024 Convertible Note were convertible into shares of common stock of the Company at a conversion price of $ 15.00 per share unless

the Company failed to make an amortization payment when due, in which case the conversion price would be the lower of $ 15.00 or the

market price (as defined in the March 2024 Convertible Note) of the shares.

Mast Hill acquired the

March 2024 Convertible Note with principal amount of $ 700,000 and paid the purchase price of $ 665,000 after an original issue

discount of $ 35,000 .

On March 7, 2024, the Company issued (i) a warrant to purchase 8,750 shares of common stock with an exercise

price of $ 30.00 exercisable until the five-year anniversary of March 7, 2024 (“First Warrant”), (ii) a warrant to purchase 8,077 shares

of common stock with an exercise price of $ 19.50 exercisable until the five-year anniversary of March 7, 2024 (“Second Warrant”).

The Second Warrant was never fair valued and was cancelled and extinguished against payment of the March 2024 Convertible Note, and (iii) 7,000 shares

of common stock as a commitment fee for the purchase of the March 2024 Convertible Note, which were earned in full as of March 7, 2024.

On March 7, 2024, the Company delivered such duly executed March 2024 Convertible Note, warrants and common stock to Mast Hill against

delivery of such purchase price.

The Company was obligated to make amortization

payments in cash to Mast Hill toward the repayment of the March 2024 Convertible Note, as described in the March 2024 Convertible Note.

As of December 31, 2024, the March 2024 Convertible Note was repaid in full.

In connection with the issuance of the March 2024

Convertible Note, the Company incurred debt issuance costs of $ 74,379 (including the issuance of 700 warrants as a finder’s

fee) which was capitalized and was amortized into interest expense over the term of the March 2024 Convertible Note.

Based upon the Company’s analysis of the

criteria contained in ASC 815, the Company determined that all the warrants issued to Mast Hill and a third party as a finder’s

fee met the definition of a derivative liability, as the Company cannot avoid a net cash settlement under certain circumstances.

the fair value of the 9,450 warrants with an exercise price of $ 30.00 exercisable until the five-year anniversary of March

7, 2024 was classified as derivative liability on March 7, 2024.

The fair values of the 9,450 warrants with an exercise price

of $ 30.00 exercisable until the five-year anniversary of March 7, 2024 issued on March 7, 2024 were computed using the Black-Scholes

option-pricing model with the following assumptions:

stock price of $ 6.00 , volatility of 85.24 %, risk-free rate of 4.07 %, annual

dividend yield of 0 % and expected life of 5 years.

In accordance with ASC 470-20-25-2, proceeds from

the sale of a debt instrument with stock purchase warrants are allocated to the two elements based on the relative fair values of the

debt instrument without the warrants and of the warrants themselves at time of issuance.

The portion of the proceeds allocated to the

warrants are accounted for as derivative liability.

The remainder of the proceeds are allocated to the debt instrument portion of the

The Company recorded a total debt discount of

$ 97,374 related to the original issue discount, common shares issued and warrants issued to Mast Hill, which was amortized over the

term of the March 2024 Convertible Note.

June 2024 Convertible

On June 5, 2024, the

Company entered into securities purchase agreements with Mast Hill for the issuance of 13.0 % senior secured promissory notes in the

aggregate principal amount of $ 2,845,000 (collectively, the “June 2024 Convertible Note”) convertible into shares of

the Company’s common stock, as well as the issuance of 26,800 shares of common stock as a commitment fee and warrants

for the purchase of 146,667 shares of common stock of the Company.

The Company and its subsidiaries have also entered into a

security agreement, creating a security interest in certain property of the Company and its subsidiaries to secure the prompt payment,

performance and discharge in full of all of the Company’s obligations under the June 2024 Convertible Note.

Principal amount and

interest under the June 2024 Convertible Note are convertible into shares of common stock of the Company at a conversion price of $ 11.25 per

share unless the Company fails to make an amortization payment when due, in which case the conversion price shall be the lesser of $ 11.25 or

the market price (as defined in the June 2024 Convertible Note).

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – CONVERTIBLE NOTE PAYABLE

June 2024 Convertible

Note (continued)

Mast Hill acquired the

June 2024 Convertible Note with principal amount of $ 2,845,000 and paid the purchase price of $ 2,702,750 after an original issue

discount of $ 142,250 .

On June 5, 2024, the Company issued (i) a warrant to purchase 66,667 shares of common stock with an exercise

price of $ 9.75 exercisable until the five-year anniversary of June 5, 2024 (“First Warrant”), (ii) a warrant to purchase 80,000 shares

of common stock with an exercise price of $ 7.50 exercisable until the five-year anniversary of June 5, 2024 (“Second Warrant”).

The Second Warrant will not be fair valued and shall be cancelled and extinguished against payment of the June 2024 Convertible Note,

and (iii) 26,800 shares of common stock as a commitment fee for the purchase of the June 2024 Convertible Note, which were earned

in full as of June 5, 2024.

On June 5, 2024, the Company delivered such duly executed June 2024 Convertible Note, warrants and common

stock to Mast Hill against delivery of such purchase price.

The Company received

net cash amount of $ 881,210 from the June 2024 Convertible Note financing after using the proceeds to pay off all previously issued

convertible notes to Mast Hill of $ 1,206,867 and FirstFire of $ 454,673 , respectively, and to pay finder’s fee of $ 120,000 and

lender’s costs of $ 40,000 related to this financing.

The Company is obligated

to make amortization payments in cash to Firstfire towards the repayment of the October 2023 Convertible Note, as provided in the following

to make amortization payments in cash to Mast Hill toward the repayment of the June 2024 Convertible Note, as provided in the following

Payment Date:

Payment Amount:

April 9, 2024

$35,000 plus accrued interest through April 9, 2024

$35,000 plus accrued interest through May 9, 2024

$46,667 plus accrued interest through June 9, 2024

$58,333 plus accrued interest through July 9, 2024

August 9, 2024

$58,333 plus accrued interest through August 9, 2024

September 9, 2024

$70,000 plus accrued interest through September 9, 2024

October 9, 2024

The entire remaining outstanding balance of the October 2023 Convertible Note

In connection with the issuance of the October

2023 Convertible Note, the Company incurred debt issuance costs of $ 95,349 (including the issuance of 8,400 warrants as

a finder’s fee), which is capitalized and will be amortized into interest expense over the term of the October 2023 Convertible

Based upon the Company’s analysis of the

criteria contained in ASC 815, the Company determined that all the warrants issued to Mast Hill and Firstfire and a third party as a finder’s

fee meet the definition of a derivative liability, as the Company cannot avoid a net cash settlement under certain circumstances.

determined the probability of failing to make an amortization payment when due to be remote and as such the fair value of the 87,500 warrants

with an exercise price of $ 1.80 exercisable until the five-year anniversary of October 9, 2023, which warrant shall be cancelled

and extinguished against payment of the October 2023 Convertible Note, has been estimated to be zero.

December 5, 2024 $284,500 plus accrued interest through December 5, 2024

January 5, 2025 $284,500 plus accrued interest through January 5, 2025

February 5, 2025 $379,336 plus accrued interest through February 5, 2025

March 5, 2025 $474,167 plus accrued interest through March 5, 2025

April 5, 2025 $474,167 plus accrued interest through April 5, 2025

May 5, 2025 $569,000 plus accrued interest through May 5, 2025

June 5, 2025 The entire remaining outstanding balance of the June 2024 Convertible Note

In connection with the

issuance of the June 2024 Convertible Note, the Company incurred debt issuance costs of $ 224,221 (including the issuance of 5,333 warrants

as a finder’s fee) which is capitalized and will be amortized into interest expense over the term of the June 2024 Convertible Note.

Based upon the Company’s

analysis of the criteria contained in ASC 815, the Company determined that all the warrants issued to Mast Hill and a third party as a

finder’s fee meet the definition of a derivative liability, as the Company cannot avoid a net cash settlement under certain circumstances.

Management determined the probability of failing to make an amortization payment when due to be remote and as such the fair value of the 80,000 warrants

with an exercise price of $ 7.50 exercisable until the five-year anniversary of June 5, 2024, which warrant shall be cancelled and

extinguished against payment of the June 2024 Convertible Note, has been estimated to be zero.

Accordingly, the fair value of the 72,000 warrants

with an exercise price of $ 2.50 exercisable until the five-year anniversary of October 9, 2023 was classified as a derivative liability

on October 9, 2023.

with an exercise price of $ 9.75 exercisable until the five-year anniversary of June 5, 2024 was classified as derivative liability

on June 5, 2024.

The fair values of the 72,000 warrants with an exercise price of $ 9.75 exercisable until the five-year

anniversary of October 9, 2023 issued on October 9, 2023 were computed using the Black-Scholes option-pricing model with the following

anniversary of June 5 , 2024 issued on June 5, 2024 were computed using the Black-Scholes option-pricing model with the following

stock price of $ 10.39 , volatility of 85.72 %, risk-free rate of 4.31 %, annual dividend yield of 0 % and expected

life of 5 years.

In accordance with ASC

470-20-25-2, proceeds from the sale of a debt instrument with stock purchase warrants are allocated to the two elements based on the relative

fair values of the debt instrument without the warrants and of the warrants themselves at time of issuance.

The portion of the proceeds

allocated to the warrants are accounted for as derivative liability.

The remainder of the proceeds are allocated to the debt instrument

portion of the transaction.

In accordance with ASC

480-10-25-14, the Company determined that the conversion provisions contain an embedded derivative feature and the Company valued the

derivative feature separately, recording debt discount and derivative liability in accordance with the provisions of the convertible debt

(see Note 11).

However, management determined the probability of failing to make an amortization payment when due to be remote and as

such the fair value of the embedded conversion feature has been estimated to be zero.

The Company recorded

a total debt discount of $ 838,990 related to the original issue discount, common shares issued and warrants issued to Mast Hill,

which will be amortized over the term of the June 2024 Convertible Note.

AVALON GLOBOCARE CORP.

2 unchanged sentences

NOTE 10 – CONVERTIBLE NOTE PAYABLE

Convertible Note (continued)

In accordance with ASC 470-20-25-2, proceeds from

the sale of a debt instrument with stock purchase warrants are allocated to the two elements based on the relative fair values of

the debt instrument without the warrants and of the warrants themselves at time of issuance.

The portion of the proceeds allocated to

the warrants are accounted for as derivative liability.

The remainder of the proceeds are allocated to the debt instrument portion of

the transaction.

In accordance

with ASC 480-10-25-14, the Company determined that the conversion provisions contain an embedded derivative feature and the Company valued

the derivative feature separately, recording debt discount and derivative liability in accordance with the provisions of the convertible

debt (see Note 10).

However, management determined the probability of failing to make an amortization payment when due to be remote and

as such the fair value of the embedded conversion feature has been estimated to be zero.

recorded a total debt discount of $ 128,748 related to the original issue discount, common shares issued and warrants issued to Mast

Hill and Firstfire, which will be amortized over the term of the October 2023 Convertible Note.

year ended December 31, 2023, amortization of debt discount and debt issuance costs and interest expense related to the October 2023 Convertible

Note amounted to $51,356 and $20,444, respectively, which have been included in interest expense — amortization of debt discount

and debt issuance cost and interest expense — other on the accompanying consolidated statements of operations and comprehensive

June 2024 Convertible

Note (continued)

On December 15, 2024,

the Company and Mast Hill entered into that certain consent, acknowledgement, and waiver agreement (“Agreement”), pursuant

to which Mast Hill waived all amortization payments required to be made under the June 2024 Convertible Note, the Company paid a waiver

fee of $ 150,000 to Mast Hill, and the Company issued to Mast Hill a common stock purchase warrant for the purchase of up to 150,000 shares

of the Company’s common stock (“Pre-Funded Warrants”).

The Pre-Funded Warrants are immediately exercisable at issuance

and until the Pre-Funded Warrants are exercised in full and have an exercise price of $ 0.01 per share.

The Pre-Funded Warrants were classified

as a component of permanent equity on the accompanying consolidated balance sheets as they are freestanding financial instrument that

is immediately exercisable, does not embody an obligation for the Company to repurchase its own shares and permit the holder to receive

a fixed number of shares of common stock upon exercise.

All of the shares underlying the Pre-Funded Warrants have been included in the

weighted-average number of shares of common stock used to calculate net loss per share, basic and diluted, attributable to the Company’s

common stockholders because the shares may be issued for little or no consideration, are fully vested and are exercisable after the original

issuance date of the Pre-Funded Warrants.

Based on the Company’s assess, this arrangement was accounted for as a modification of

debt and, as such, $ 838,794 related to the waiver fee and Pre-Fund Warrants issued to Mast Hill were expensed.

convertible note payable as of December 31, 2024 and 2023 is as follows:

December 31, 2024

December 31, 2023

Principal amount

unamortized debt issuance costs

unamortized debt discount

Convertible note payable, net

For the years ended December

31, 2024 and 2023, amortization of debt discount and debt issuance costs related to convertible note payable amounted to $ 1,291,814 and

$ 437,453 , respectively, which have been included in interest expense — amortization of debt discount and debt issuance costs on

the accompanying consolidated statements of operations and comprehensive loss.

For the years ended December

31, 2024 and 2023, interest expense related to convertible note payable amounted to $ 325,486 and $ 167,058 , respectively, which have

been included in interest expense — other on the accompanying consolidated statements of operations and comprehensive loss.

NOTE 11 – DERIVATIVE LIABILITY

in Note 9, 2022 Convertible Note, the Company determined that the convertible note payable contained an embedded derivative feature in

the form of a conversion provision which was adjustable based on future prices of the Company’s common stock.

in Note 10, June 2024 Convertible Note, the Company determined that the convertible note payable contains an embedded derivative feature

in the form of a conversion provision which is adjustable based on future prices of the Company’s common stock.

In accordance with

ASC 815-10-25, each derivative feature was initially recorded at its fair value using the Black-Scholes option valuation method and then

re-valued at each reporting date, with changes in the fair value reported in the statements of operations.

The estimated

fair value of the derivative feature of convertible debt was $ 2,782,569 at commitment dates, which was calculated using the following

volatility of 95.97 %, risk-free rate of 2.75 % - 2.89 %, annual dividend yield of 0 % and expected life

On July 25, 2022, the Company and the 2022 Convertible Note holder entered into a Conversion Agreement pursuant

to which the investor converted all of its Convertible Notes into shares of common stock of the Company.

The estimated fair

value of the derivative feature of convertible debt was $ 2,181,820 on July 25, 2022, which was computed using the following assumptions:

volatility of 95.53 %, risk-free rate of 2.81 %, annual dividend yield of 0 % and expected life of 9.7 – 9.8 years.

Increases or decreases in fair value of the derivative

liability is included as a component of total other (expenses) income in the accompanying consolidated statements of operations and comprehensive

The change to the derivative liability for the embedded conversion option resulted in a decrease of $ 600,749 in the derivative

liability and the corresponding increase in other income as a gain for the year ended December 31, 2022.

As stated in Note 9,

May 2023 Convertible Note, July 2023 Convertible Note, and October 2023 Convertible Note, the Company determined that the convertible

note payable contains an embedded derivative feature in the form of a conversion provision which is adjustable based on future prices

of the Company’s common stock.

In accordance with ASC 815-10-25, each derivative feature is initially recorded at its fair value

using the Black-Scholes option valuation method and then re-value at each reporting date, with changes in the fair value reported in the

statements of operations.

However, on May 23, 2023, July 6, 2023, October 9, 2023, and December 31, 2023, management determined the probability

of failing to make an amortization payment when due to be remote and as such the fair value of the embedded conversion feature has been

estimated to be zero.

On May 23, 2023, the

Company issued 240,500 warrants to Mast Hill and a third party as a finder’s fee (see Note 9).

Upon evaluation, the warrants

meet the definition of a derivative liability under FASB ASC 815, as the Company cannot avoid a net cash settlement under certain circumstances.

determined the probability of failing to make an amortization payment when due to be remote and as such the fair value of the 105,500 warrants

with an exercise price of $ 3.20 exercisable until the five-year anniversary of May 23, 2023, which warrant shall be cancelled and

extinguished against payment of the May 2023 Convertible Note, has been estimated to be zero.

Accordingly, the fair value of the 135,000 warrants

with an exercise price of $ 4.50 exercisable until the five-year anniversary of May 23, 2023 was classified as a derivative liability

ASC 815-10-25, each derivative feature is initially recorded at its fair value using the Black-Scholes option valuation method and then

re-value at each reporting date, with changes in the fair value reported in the statements of operations.

However, on June 5, 2024 and

December 31, 2024, management determined the probability of failing to make an amortization payment and repayment, respectively, when

due to be remote and as such the fair value of the embedded conversion feature has been estimated to be zero.

On May 23, 2023, the Company issued 9,000 warrants

with an exercise price of $ 67.50 exercisable until the five-year anniversary of May 23, 2023 to Mast Hill and a third party as a finder’s

Upon evaluation, the warrants meet the definition of a derivative liability under FASB ASC 815, as the Company cannot avoid a net

cash settlement under certain circumstances.

Accordingly, the fair value of the 9,000 warrants was classified as a derivative liability

on May 23, 2023.

On December 31, 2023, the estimated fair value of the 9,000 warrants was $ 14,805 .

The estimated fair value of the warrants

was computed as of December 31, 2023 using Black-Scholes option-pricing model, with the following assumptions:

stock price of $ 7.24 , volatility

of 83.96 %, risk-free rate of 3.84 %, annual dividend yield of 0 % and expected life of 4.4 years.

On December 31, 2024, the estimated fair

value of the 9,000 warrants was $ 3,714 .

The estimated fair value of the warrants was computed as of December 31, 2024 using Black-Scholes

option-pricing model, with the following assumptions:

stock price of $ 3.26 , volatility of 97.00 %, risk-free rate of 4.27 %, annual dividend

yield of 0 % and expected life of 3.4 years.

AVALON GLOBOCARE CORP.

2 unchanged sentences

NOTE 11 – DERIVATIVE LIABILITY

On May 23, 2023, the

estimated fair value of the 135,000 warrants with an exercise price of $ 4.50 exercisable until the five-year anniversary

of May 23, 2023 issued were computed using the Black-Scholes option-pricing model with the following assumptions:

stock price of $ 1.96 ,

volatility of 88.80 %, risk-free rate of 3.76 %, annual dividend yield of 0 % and expected life of 5 years.

On December 31, 2023,

the estimated fair value of the 135,000 warrants with an exercise price of $ 4.50 exercisable until the five-year anniversary

of May 23, 2023 as derivative liability was $ 14,805 .

The estimated fair value of the warrants was computed as of December 31, 2023

using Black-Scholes option-pricing model, with the following assumptions:

stock price of $ 0.48 , volatility of 83.96 %, risk-free

rate of 3.84 %, annual dividend yield of 0 % and expected life of 4.4 years.

On July 6, 2023, the

Company issued 80,163 warrants to Firstfire and a third party as a finder’s fee (see Note 9).

On July 6, 2023, the Company issued 3,000 warrants

with an exercise price of $ 67.50 exercisable until the five-year anniversary of July 6, 2023 to FirstFire and a third party as a

finder’s fee.

Upon evaluation, the warrants meet the definition of a derivative liability under ASC 815, as the Company cannot avoid

a net cash settlement under certain circumstances.

Accordingly, the fair value of the 3,000 warrants was classified as a derivative

liability on July 6, 2023.

On December 31, 2023, the estimated fair value of the 3,000 warrants was $ 5,098 .

The estimated

fair value of the warrants was computed as of December 31, 2023 using Black-Scholes option-pricing model, with the following assumptions:

stock price of $ 7.24 , volatility of 83.66 %, risk-free rate of 3.84 %, annual dividend yield of 0 % and expected life of 4.5 years.

On November 18, 2024, 2,778 warrants held by FirstFire were cashless exercised.

On December 31, 2024, the estimated fair value of the rest

of 222 warrants was $ 94 .

The estimated fair value of the warrants was computed as of December 31, 2024 using Black-Scholes option-pricing

model, with the following assumptions:

stock price of $ 3.26 , volatility of 95.85 %, risk-free rate of 4.27 %, annual dividend

yield of 0 % and expected life of 3.5 years.

On October 9, 2023, the Company issued 7,560 warrants

with an exercise price of $ 37.50 exercisable until the five-year anniversary of October 9, 2023 to Mast Hill and FirstFire and a

third party as a finder’s fee.

Upon evaluation, the warrants meet the definition of a derivative liability under ASC 815, as the

Company cannot avoid a net cash settlement under certain circumstances.

Accordingly, the fair value of the 7,560 warrants was

classified as a derivative liability on October 9, 2023.

On December 31, 2023, the estimated fair value of the 7,560 warrants

was $ 20,920 .

The estimated fair value of the warrants was computed as of December 31, 2023 using Black-Scholes option-pricing

model, with the following assumptions:

stock price of $ 7.24 , volatility of 86.33 %, risk-free rate of 3.84 %, annual dividend

yield of 0 % and expected life of 4.8 years.

On November 18, 2024, 3,500 warrants held by FirstFire were cashless exercised.

On December 31, 2024, the estimated fair value of the rest of 4,060 warrants was $ 2,880 .

The estimated fair value of the warrants

was computed as of December 31, 2024 using Black-Scholes option-pricing model, with the following assumptions:

stock price of $ 3.26 , volatility

of 93.90 %, risk-free rate of 4.27 %, annual dividend yield of 0 % and expected life of 3.8 years.

On March 7, 2024, the

Company issued 9,450 warrants with an exercise price of $ 30.00 exercisable until the five-year anniversary of March 7,

2024 to Mast Hill and a third party as a finder’s fee.

Upon evaluation, the warrants meet the definition of a derivative liability

under FASB ASC 815, as the Company cannot avoid a net cash settlement under certain circumstances.

Accordingly, the fair value of the 9,450 warrants

was classified as a derivative liability on March 7, 2024.

On December 31, 2024, the estimated fair value of the 9,450 warrants

was $ 8,191 .

The estimated fair value of the warrants was computed as of December 31, 2024 using Black-Scholes option-pricing model, with

the following assumptions:

stock price of $ 3.26 , volatility of 90.43 %, risk-free rate of 4.38 %, annual dividend yield of 0 %

and expected life of 4.2 years.

On June 5, 2024, the

Company issued 152,000 warrants to Mast Hill and a third party as a finder’s fee (see Note 10).

Upon evaluation, the warrants

meet the definition of a derivative liability under FASB ASC 815, as the Company cannot avoid a net cash settlement under certain circumstances.

determined the probability of failing to make an amortization payment when due to be remote and as such the fair value of the 35,165 warrants

with an exercise price of $ 3.20 exercisable until the five-year anniversary of July 6, 2023, which warrant shall be cancelled and

extinguished against payment of the July 2023 Convertible Note, has been estimated to be zero.

meet the definition of a derivative liability under ASC 815, as the Company cannot avoid a net cash settlement under certain circumstances.

Management determined the probability of failing to make an amortization payment when due to be remote and as such the fair value of the 80,000 warrants

with an exercise price of $ 7.50 exercisable until the five-year anniversary of June 5, 2024, which warrant shall be cancelled and

extinguished against payment of the June 2024 Convertible Note, has been estimated to be zero.

Accordingly, the fair value of the 72,000 warrants

with an exercise price of $ 4.50 exercisable until the five-year anniversary of July 6, 2023 was classified as a derivative liability

on July 6, 2023.

On July 6, 2023, the

estimated fair values of the 44,998 warrants with an exercise price of $ 4.50 exercisable until the five-year anniversary

of July 6, 2023 issued were computed using the Black-Scholes option-pricing model with the following assumptions:

stock price of $ 1.42 ,

volatility of 88.52 %, risk-free rate of 4.37 %, annual dividend yield of 0 % and expected life of 5 years.

31, 2023, the estimated fair value of the 44,998 warrants with an exercise price of $ 4.50 exercisable until the five-year

anniversary of July 6, 2023 as derivative liability was $ 5,098 .

The estimated fair value of the warrants was computed as of December

31, 2023 using Black-Scholes option-pricing model, with the following assumptions:

stock price of $ 0.48 , volatility of 83.66 %,

risk-free rate of 3.84 %, annual dividend yield of 0 % and expected life of 4.5 years.

On October 9, 2023, the

Company issued 200,900 warrants to Mast Hill and Firstfire and a third party as a finder’s fee (see Note 9).

Upon evaluation,

the warrants meet the definition of a derivative liability under FASB ASC 815, as the Company cannot avoid a net cash settlement under

certain circumstances.

Management determined the probability of failing to make an amortization payment when due to be remote and

as such the fair value of the 87,500 warrants with an exercise price of $ 1.80 exercisable until the five-year anniversary

of October 9, 2023, which warrant shall be cancelled and extinguished against payment of the October 2023 Convertible Note, has been estimated

Accordingly, the fair value of the 113,400 warrants with an exercise price of $ 2.50 exercisable until the five-year

anniversary of October 9, 2023 was classified as a derivative liability on October 9, 2023.

On October 9, 2023, the

estimated fair values of the 113,400 warrants with an exercise price of $ 2.50 exercisable until the five-year anniversary

of October 9, 2023 issued were computed using the Black-Scholes option-pricing model with the following assumptions:

stock price of $ 0.77 ,

volatility of 89.70 %, risk-free rate of 4.75 %, annual dividend yield of 0 % and expected life of 5 years.

31, 2023, the estimated fair value of the 113,400 warrants with an exercise price of $ 2.50 exercisable until the five-year

anniversary of October 9, 2023 as derivative liability was $ 20,920 .

The estimated fair value of the warrants was computed as of December

31, 2023 using Black-Scholes option-pricing model, with the following assumptions:

with an exercise price of $ 9.75 exercisable until the five-year anniversary of June 5, 2024 was classified as a derivative liability

on June 5, 2024.

On December 31, 2024, the estimated fair value of the 72,000 warrants with an exercise price of $ 9.75 exercisable

until the five-year anniversary of June 5, 2024 as derivative liability was $ 112,666 .

The estimated fair value of the warrants was computed

as of December 31, 2024 using Black-Scholes option-pricing model, with the following assumptions:

stock price of $ 3.26 , volatility of 88.64 %,

risk-free rate of 4.38 %, annual dividend yield of 0 % and expected life of 4.4 years.

or decreases in fair value of the derivative liability is included as a component of total other (expenses) income in the accompanying

consolidated statements of operations and comprehensive loss.

The changes to the derivative liability resulted in a decrease of $ 188,374 in

the derivative liability and the corresponding increase in other income as a gain for the year ended December 31, 2023.

Increases or decreases

in fair value of the derivative liability are included as a component of total other (expenses) income in the accompanying consolidated

statements of operations and comprehensive loss.

The changes to the derivative liability resulted in a decrease of $ 374,365 and $ 188,374 in

the derivative liability and the corresponding increase in other income as a gain for the years ended December 31, 2024 and 2023, respectively.

NOTE 12 – NOTE PAYABLE, NET

4 unchanged sentences

The principal of $ 4,800,000 can be extended for an additional 36 months, provided that the Company has not defaulted.

may not prepay the principal of $ 4,800,00 for a period of 12 months.

The principal of $ 4,800,000 is secured by a first mortgage

on the Company’s real property located in Township of Freehold, County of Monmouth, State of New Jersey, having a street address

of 4400 Route 9 South, Freehold, NJ 07728.

The Company may

not prepay the principal of $ 4,800,00 for a period of 12 months.

The principal of $ 4,800,000 is secured by a first mortgage on the Company’s

real property located in Township of Freehold, County of Monmouth, State of New Jersey, having a street address of 4400 Route 9 South,

Freehold, NJ 07728.

AVALON GLOBOCARE CORP.

4 unchanged sentences

borrowed $ 1,000,000 from the same lender.

The principal of $ 1,000,000 accrues interest at an annual rate of 13.0 % and is

payable in monthly installments of interest-only in the amount of $ 10,833 , commencing in June 2023 and continuing through October

2025 (at which point any unpaid balance of principal, interest and other charges are due and payable).

The loan is secured by a second-lien

mortgage on certain real property and improvements located at 4400 Route 9, Freehold, Monmouth County, New Jersey.

note payable as of December 31, 2023 and 2022 is as follows:

The principal of $ 1,000,000 accrues interest at an annual rate of 13.0 % and is payable in monthly

installments of interest-only in the amount of $ 10,833 , commencing in June 2023 and continuing through October 2025 (at which point any

unpaid balance of principal, interest and other charges are due and payable).

The loan is secured by a second-lien mortgage on certain

real property and improvements located at 4400 Route 9, Freehold, Monmouth County, New Jersey.

note payable as of December 31, 2024 and 2023 was as follows:

December 31, 2024

December 31, 2023

Principal amount

1 unchanged sentence

Note payable, net

For the year ended December

Current portion

Noncurrent portion

For the years ended December

31, 2024 and 2023, amortization of debt issuance costs related to note payable amounted to $ 119,228 and $ 106,557 , respectively, which

have been included in interest expense — amortization of debt discount and debt issuance cost on the accompanying consolidated statements

of operations and comprehensive loss.

For the year ended December 31, 2023 and 2022, interest expense related to note payable amounted

to $606,722 and $ 176,000 , respectively, which have been included in interest expense - other on the accompanying consolidated statements

of operations and comprehensive loss.

have been included in interest expense — amortization of debt discount and debt issuance costs on the accompanying consolidated

statements of operations and comprehensive loss.

For the years ended December

31, 2024 and 2023, interest expense related to note payable amounted to $ 658,000 and $ 606,722 , respectively, which have been included

in interest expense - other on the accompanying consolidated statements of operations and comprehensive loss.

NOTE 13 – RELATED PARTY TRANSACTIONS

Revenue from Related Party and Rent Receivable – Related Party

The Company leases space of its commercial

real property located in New Jersey to a company, D.P.

Capital Investments LLC, which is controlled by Wenzhao Lu, the Company’s

largest shareholder and chairman of the Board of Directors.

The term of the related party lease agreement is five years commencing on

May 1, 2021 and will expire on April 30, 2026.

the years ended December 31, 2023 and 2022, the related party rental revenue amounted to $ 50,400 and has been included in rental

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

31, 2023 and 2022, the related party rent receivable totaled $ 124,500 and $ 74,100 , respectively, which has been included in rent

receivable on the accompanying consolidated balance sheets, and no allowance for doubtful accounts was deemed to be required on the receivable.

The Company leases space of its commercial real

property located in New Jersey to D.P.

Capital Investments LLC, which is controlled by Wenzhao Lu, the Company’s chairman of the

Board of Directors.

The term of the related party lease agreement is five years commencing on May 1, 2021 and will expire on April 30,

the years ended December 31, 2024 and 2023, the related party rental revenue amounted to $ 50,400 and has been included in real property

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

At December 31, 2024 and 2023, the related

party rent receivable totaled $ 0 and $ 124,500 , respectively, which has been included in rent receivable on the accompanying consolidated

balance sheets.

Provided by Related Party

2 unchanged sentences

As compensation for professional services provided, the Company

recognized consulting expenses of $ 86,528 and $ 144,064 for the years ended December 31, 2023 and 2022, respectively, which have

been included in professional fees on the accompanying consolidated statements of operations and comprehensive loss.

recognized consulting expenses of $ 63,644 and $ 86,528 for the years ended December 31, 2024 and 2023, respectively, which have been included

in professional fees on the accompanying consolidated statements of operations and comprehensive loss.

As of both December 31, 2024 and

2023, the accrued and unpaid services charge related to this director’s son amounted to $ 15,000 , which have been included in accrued

professional fees on the accompanying consolidated balance sheets.

Accrued Liabilities and Other Payables –

2 unchanged sentences

for a cash payment of $ 450,000 .

As of December 31, 2023 and 2022, the unpaid acquisition consideration of $ 100,000 , was payable to Dr.

As of both December 31, 2024 and 2023, the unpaid acquisition consideration of $ 100,000 , was payable to

Yu Zhou, former director and former co-chief executive officer and 40 % owner of Genexosome, and has been included in accrued liabilities

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

During the period from June 2023 through December

2023, Lab Services MSO paid shared expense on behalf of the Company.

As of December 31, 2023, the balance due to Lab Services MSO

amounted to $ 72,746 , which has been included in accrued liabilities and other payables — related parties on the accompanying consolidated

balance sheets.

As of December 31, 2023 and 2022, $ 33,712 and

$ 0 of accrued and unpaid interest related to borrowings from Wenzhao Lu, the Company’s largest shareholder and chairman of

the Board of Directors, respectively, have been included in accrued liabilities and other payables — related parties on the accompanying

consolidated balance sheets.

AVALON GLOBOCARE CORP.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 – RELATED PARTY

TRANSACTIONS (continued)

NOTE 13 – RELATED PARTY TRANSACTIONS

Accrued Liabilities and Other Payables –

Related Parties (continued)

From time to time, Lab Services MSO paid shared

expense on behalf of the Company.

In addition, Lab Services MSO made a payment of $ 566,667 for equity method investment payable on behalf

of the Company in the year ended December 31, 2024.

As of December 31, 2024 and 2023, the balance due to Lab Services MSO amounted to

$ 632,916 and $ 72,746 , respectively, which has been included in accrued liabilities and other payables — related parties on the accompanying

consolidated balance sheets.

As of December 31, 2024 and 2023, $ 0 and $ 33,712

of accrued and unpaid interest related to borrowings from Wenzhao Lu, the Company’s chairman of the Board of Directors, respectively,

have been included in accrued liabilities and other payables — related parties on the accompanying consolidated balance sheets.

Borrowings from Related Party

Line of Credit

On August 29, 2019, the Company entered into

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

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

of the Company.

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

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

The loans are unsecured and are not convertible

into equity of the Company.

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

is payable three years from the date of issuance.

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

of the related party Lender.

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

time prior to maturity, without premium or penalty.

The Line of Credit Agreement includes customary events of default.

If any such event

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

On August 29, 2019, the Company entered into a

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

of Credit”) from Mr.

Lu, the Company’s chairman of the Board of Directors.

The Line of Credit allowed the Company to request

loans thereunder and to use the proceeds of such loans for working capital and operating expense purposes until the facility matured on

December 31, 2024 .

The loans are unsecured and are not convertible into equity of the Company.

Loans drawn under the Line of Credit bear

interest at an annual rate of 5 % and each individual loan is payable three years from the date of issuance.

The Company has a right to

draw down on the line of credit and not at the discretion of Mr.

Lu, the related party lender.

The Company may, at its option, prepay

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

The Line of Credit

Agreement includes customary events of default.

If any such event of default occurs, Mr.

Lu may declare all outstanding loans under the

Line of Credit to be due and payable immediately.

In the years ended December 31, 2024 and 2023,

2 unchanged sentences

Draw down from Line of Credit

Repayment of Line of Credit

Settlement of Line of Credit in shares

( 2,440,262 )

Outstanding principal under the Line of Credit at December 31, 2023

Draw down from Line of Credit

Repayment of Line of Credit

Reclassification of Line of Credit to advance from related party

Outstanding principal under the Line of Credit at December 31, 2024

For the years ended December 31, 2024 and 2023,

the interest expense related to related party borrowings amounted to $ 33,712 and $ 79,898 , respectively, and has been reflected as

interest expense — related party on the accompanying consolidated statements of operations and comprehensive loss.

the interest expense related to related party borrowing amounted to $ 42,445 and $ 33,712 , respectively, and has been reflected as interest

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

As of December 31, 2024 and 2023, the related

accrued and unpaid interest for Line of Credit was $ 33,712 and $ 0 , respectively, and has been included in accrued liabilities and

other payables — related parties on the accompanying consolidated balance sheets.

As of December 31, 2023, the Company used approximately

$ 6.8 million of the credit facility and has approximately $ 13.2 million remaining available under the Line of Credit.

Common Shares Sold to Related Party for Cash

On August 5, 2022, the Company sold 44,872 shares

of its common stock at a purchase price of $ 7.8 per share, the fair market value on transaction date, to Wenzhao Lu pursuant to

a subscription agreement.

The Company received proceeds of $ 350,000 (See Note 14 – Common Shares Sold for Cash).

Series A Convertible Preferred Stock Sold

to Related Party for Cash

On December 14, 2022, the Company entered into

a Securities Purchase Agreement with Wenzhao Lu, the Company’s Chairman of the Board, pursuant to which the Company sold to Mr.

Lu 4,000 shares of its Series A Preferred Stock, stated value $ 1,000 , for the gross proceeds of $ 4,000,000 (See Note 14

– Series A Convertible Preferred Stock Sold for Cash).

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 – RELATED PARTY

TRANSACTIONS (continued)

accrued and unpaid interest for Line of Credit was $ 0 and $ 33,712 , respectively, and has been included in accrued liabilities and other

payables — related parties on the accompanying consolidated balance sheets.

Membership Interest

1 unchanged sentence

On November 17, 2023,

the Company entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Wenzhao Lu (the “Purchaser”),

the largest shareholder and Chairman of the Board of Directors of the Company, pursuant to which (i) the Purchaser will acquire from the

Company 30 % of the total outstanding membership interests of Avalon RT 9, a wholly owned subsidiary of the Company for a cash purchase

price of $ 3,000,000 (the “Acquisition”), and (ii) for a period of twelve months following the closing of the Acquisition,

the Purchaser shall have the option to purchase from the Company up to an additional 70 % of the outstanding membership interests of Avalon

RT 9 for a purchase price of up to $ 7,000,000 (the “Option”), subject to the terms and conditions of a membership interest

purchase agreement to be negotiated and entered into between the Purchaser and the Company at such time that the Purchaser desires to

exercise the Option The Acquisition was not closed as of December 31, 2023.

The Company received $ 485,714 from Wenzhao Lu as of December

31, 2023 which was recorded as advance from sale of noncontrolling interest – related party on the accompanying consolidated balance

the Company entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Mr.

Lu, the Company’s

chairman of the Board of Directors, pursuant to which (i) Mr.

Lu will acquire from the Company 30 % of the total outstanding membership

interests of Avalon RT 9, a wholly owned subsidiary of the Company, for a cash purchase price of $ 3,000,000 (the “Acquisition”),

and (ii) for a period of twelve months following the closing of the Acquisition, Mr.

Lu shall have the option to purchase from the Company

up to an additional 70 % of the outstanding membership interests of Avalon RT 9 for a purchase price of up to $ 7,000,000 (the “Option”),

subject to the terms and conditions of a membership interest purchase agreement to be negotiated and entered into between the Purchaser

and the Company at such time that the Purchaser desires to exercise the Option.

The Company received $ 3,108,106 and $ 485,714 from Wenzhao

Lu as of December 31, 2024 and 2023, respectively, which was recorded as advance from pending sale of noncontrolling interest –

related party on the accompanying consolidated balance sheets.

The Acquisition is expected to be closed in the fourth quarter of 2025.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 – INCOME

2 unchanged sentences

Under the Income Tax Laws of PRC,

Chinese companies are generally subject to an income tax at an effective rate of 25 % on income reported in the statutory financial

statements after appropriate tax adjustments.

The Company has a cumulative deficit from its foreign subsidiary of $ 3,135,027 as of

December 31, 2023, which is included in the consolidated accumulated deficit.

Chinese companies are generally subject to an income tax at an effective rate of 25 % on income reported in the statutory financial statements

after appropriate tax adjustments.

The Company has a cumulative deficit from its foreign subsidiary of $ 3,399,273 as of December 31, 2024,

which is included in the consolidated accumulated deficit.

The Company’s

2 unchanged sentences

United States loss before income taxes

$ ( 15,928,780 )

$ ( 11,567,154 )

China loss before income taxes

Total loss before income taxes

$ ( 16,707,010 )

$ ( 11,930,847 )

Components of income taxes expense (benefit) consisted

4 unchanged sentences

$ ( 3,256,007 )

$ ( 1,729,700 )

state and local

2 unchanged sentences

$ ( 4,541,842 )

$ ( 2,105,521 )

Change in valuation allowance

Total income taxes expense

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 – INCOME TAXES (continued)

The table below summarizes the differences between

9 unchanged sentences

foreign entity did not pay any income taxes during the years ended December 31, 2024 and 2023.

The Company’s components of deferred

taxes as of December 31, 2023 and 2022 were as follows:

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 – INCOME TAXES (continued)

The Company’s components of deferred taxes

as of December 31, 2024 and 2023 were as follows:

Deferred tax assets

15 unchanged sentences

Fixed assets and intangible assets book/tax basis difference

$ ( 133,406 )

$ ( 129,636 )

Right-of-use assets

7 unchanged sentences

As of December 31, 2024, the Company has $ 58,438,649 of U.S.

federal net operating loss carryovers that have no

expiration date, and $ 2,487,555 of the federal net operating loss and state net operating loss carry-forwards begin to expire in 2034.

As of December

31, 2023, the Company had net operating loss carryforwards in China of $ 2,460,636 that begin to expire in 2024.

federal net operating loss carryovers that have no expiration

date, and $ 2,487,555 of the federal net operating loss and state net operating loss carry-forwards begin to expire in 2034.

As of December 31, 2024, the Company had net operating

loss carryforwards in China of $ 2,086,886 that begin to expire in 2024.

Additionally,

as of December 31, 2023, $ 61,847 of the future utilization of the net operating loss carryforward to offset future taxable income

is subject to special tax rules which may limit their usage under IRS Section 382 (Change of Ownership) and possibly the Separate Return

Limitation Year (“SRLY”) rules.

A full valuation

allowance has been provided against the Company’s deferred tax assets at December 31, 2023 as the Company believes it is more likely

than not that sufficient taxable income will not be generated to realize these temporary differences.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 – INCOME TAXES (continued)

as of December 31, 2024, $ 61,847 of the future utilization of the net operating loss carryforward to offset future taxable income is subject

to special tax rules which may limit their usage under IRS Section 382 (Change of Ownership) and possibly the Separate Return Limitation

Year (“SRLY”) rules.

A full valuation allowance has been provided against

the Company’s deferred tax assets at December 31, 2024 as the Company believes it is more likely than not that sufficient taxable

income will not be generated to realize these temporary differences.

has been notified and assessed an IRS Section 6038 penalty of $10,000 for failure to file a foreign entity tax disclosure.

2 unchanged sentences

be successful.

Company has not been audited by any jurisdiction since its inception.

has not been audited by any jurisdiction since its inception.

The Company is open for audit by the U.S.

Internal Revenue Service

Internal Revenue Service and U.S.

state tax jurisdictions from 2021 to 2024, and open for audit by the Chinese Ministry of Finance from 2020 to 2024.

4 unchanged sentences

in a tax position.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 – EQUITY

The Company is authorized to issue an aggregate of 490,000,000 shares

of common stock and 10,000,000 shares of “blank check” preferred stock.

The Company is authorized

to issue an aggregate of 100,000,000 shares of common stock and 10,000,000 shares of “blank check” preferred

Series A Convertible

2 unchanged sentences

up to 15,000 shares of its previously undesignated preferred stock as Series A Preferred Stock.

Each share of Series A Preferred

Stock has a par value of $ 0.0001 per share and a stated value equal to $ 1,000 .

During the year ended

December 31, 2022, the Company sold an aggregate of 9,000 shares of Series A Preferred stock and received proceeds of $ 9,000,000 .

share of Series A Preferred Stock shall be convertible, at any time and from time to time from and after the later of (i) the date of

the stockholder approval, in accordance with the Nasdaq Stock Market Listing Rules, and (ii) the nine (9) month anniversary of the Closing

(the “Initial Conversion Date”), at the option of the Series A Holder, into that number of shares of common stock (subject

to the limitations set forth in Series A Certificate of Designations, determined by dividing the Stated Value of such share of Series

A Preferred Stock by the Conversion Price).

The Series A Holders may convert such shares into shares of the Company’s common stock

at a conversion price per share equal to the greater of (i) ten dollars ($ 10.0 ) and (ii) ninety percent ( 90 %) of the closing price of

the Company’s common stock on Nasdaq on the day prior to receipt of a conversion notice (collectively, the “Conversion Price”),

subject to adjustment for stock splits and similar matters.

The Company evaluated the features of the Series A Convertible Preferred

Stock under ASC 480, and classified them as permanent equity because the Series A Convertible Preferred Stock is not mandatorily or contingently

redeemable at the stockholder’s option and the liquidation preference that exists does not fall within the guidance of SEC Accounting

Series Release No.

268 – Presentation in Financial Statements of “Redeemable Preferred Stocks” (“ASR 268”).

Each share of Series A Preferred Stock

has a par value of $ 0.0001 per share and a stated value equal to $ 1,000 .

The shares of Series

A Preferred Stock have identical terms and include the terms as set forth below.

The Series A Holders are

entitled to receive, and the Company shall pay, dividends on shares of Series A Preferred Stock equal (on an as-if-converted-to-common-stock

basis, disregarding for such purpose any conversion limitations set forth in the Series A Certificate of Designations) to and in the same

form as dividends actually paid on shares of the Company’s common stock when, as and if such dividends are paid on shares of the

common stock.

No other dividends shall be paid on shares of Series A Preferred Stock.

The Company will not pay any dividends on its common

stock unless the Company simultaneously complies with the terms set forth in the Series A Certificate of Designation.

Upon any dissolution,

liquidation or winding-up of the Company, whether voluntary or involuntary (a “Liquidation”), the Series A Holders will be

entitled to receive out of the assets available for distribution to the stockholders, (i) after and subject to the payment in full of

all amounts required to be distributed to the holders of another class or series of stock of the Company ranking on liquidation prior

and in preference to the Series A Preferred Stock, (ii) ratably with any class or series of stock ranking on liquidation on parity with

the Series A Preferred Stock and (iii) in preference and priority to the holders of the shares of the Company’s common stock, an

amount equal to 100 % of the Series A Stated Value, and no more, in proportion to the full and preferential amount that all shares of the

Series A Preferred Stock are entitled to receive.

The Company shall mail written notice of any Liquidation not less than twenty (20) days

prior to the payment date stated therein, to each Series A Holder.

Each share of Series A

Preferred Stock shall be convertible, at any time and from time to time from and after the later of (i) the date of the stockholder approval

as described above, in accordance with the Nasdaq Stock Market Listing Rules, and (ii) the nine (9) month anniversary of the

Closing (the “Initial Conversion Date”), at the option of the Series A Holder, into that number of shares of common stock

(subject to the limitations set forth in Series A Certificate of Designations, determined by dividing the Stated Value of such share of

Series A Preferred Stock by the Conversion Price (as defined below)).

The Series A Holders may effect conversions by providing the Company

with the form of conversion notice attached as Annex A to the Series A Certificate of Designation.

The Series A Holders may convert such

shares into shares of the Company’s common stock at a conversion price per share equal to the greater of (i) one hundred fifty dollars

($ 150.0 ) and (ii) ninety percent ( 90 %) of the closing price of the Company’s common stock on Nasdaq on the day prior to receipt

of a conversion notice (collectively, the “Conversion Price”), subject to adjustment for stock splits and similar matters.

In addition, following the Initial Conversion Date, each Series A Holder agrees that it shall not be entitled to in any calendar month,

sell a number of Series A Conversion Shares into the open market in an amount exceeding more than ten percent ( 10 %) of the number of Series

A Conversion Shares issuable upon conversion of the Series A Preferred Stock then held by such Series A Holder.

Conversion Price Adjustment:

Stock Dividends and Stock Splits.

the Company, at any time while the Series A Preferred Stock is outstanding:

(i) pays a stock dividend or otherwise makes a distribution

or distributions payable in shares of common stock on shares of common stock or any other common stock equivalents (which, for avoidance

of doubt, shall not include any shares of common stock issued by the Company upon conversion of, or payment of a dividend on, the Series

A Preferred Stock), (ii) subdivides outstanding shares of common stock into a larger number of shares, (iii) combines (including by way

of a reverse stock split) outstanding shares of common stock into a smaller number of shares, or (iv) issues, in the event of a reclassification

of shares of the common stock, any shares of capital stock of the Company, then the conversion price of the Series A Preferred Stock shall

be multiplied by a fraction of which the numerator shall be the number of shares of common stock (excluding any treasury shares of the

Company) outstanding immediately before such event, and of which the denominator shall be the number of shares of common stock outstanding

immediately after such event.

Any of the foregoing adjustments shall become effective immediately after the record date for the determination

of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the

case of a subdivision, combination or re-classification.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 – EQUITY

Series A Convertible

Preferred Stock (continued)

Conversion Price Adjustment:

Fundamental Transaction.

time while the Series A Preferred Stock is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects

any merger or consolidation of the Company with or into another individual or corporation, partnership, trust, incorporated or unincorporated

association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other

entity of any kind (a “Person”), (ii) the Company (and all of its subsidiaries, taken as a whole), directly or indirectly,

effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one

or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company

or another Person) is completed pursuant to which holders of the Company’s common stock are permitted to sell, tender or exchange

their shares for other securities, cash or property and has been accepted by the holders of fifty percent ( 50 %) or more of the outstanding

common stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization

or recapitalization of the common stock or any compulsory share exchange pursuant to which the common stock is effectively converted into

or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates

a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization,

spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than fifty percent ( 50 %) of the outstanding

shares of common stock (not including any shares of common stock held by the other Person or other Persons making or party to, or associated

or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a

“Fundamental Transaction”), then, the Series A Holder shall have the right to receive, for each conversion share that would

have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation

set forth in the Series A Certificate of Designation on the conversion of the Series A Preferred Stock), the number of shares of common

stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and/or any additional consideration

(the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares

of common stock for which the Series A Preferred Stock is convertible immediately prior to such Fundamental Transaction (without regard

to the limitations set forth in the Series A Certificate of Designation on the conversion of the Series A Preferred Stock).

of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration

based on the amount of Alternate Consideration issuable in respect of one share of common stock in such Fundamental Transaction, and the

Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of

any different components of the Alternate Consideration.

If holders of common stock are given any choice as to the securities, cash or

property to be received in a Fundamental Transaction, then the Series A Holder shall be given the same choice as to the Alternate Consideration

it receives upon such Fundamental Transaction.

Voting Rights.

The Series A Holders

will have no voting rights, except as otherwise required by the Delaware General Corporation Law.

Notwithstanding the foregoing, as long

as any shares of Series A Preferred Stock are outstanding, the Company shall not, without the affirmative vote of the holders of a majority

of the then outstanding shares of Series A Preferred Stock, voting as a separate class, (a) alter or change adversely the powers, preferences

or rights given to the Series A Preferred Stock in the Series A Certificate of Designation, (b) increase the number of authorized shares

of Series A Preferred Stock, (c) authorize or issue an additional class or series of capital stock that ranks senior to the Series A Preferred

Stock with respect to the distribution of assets on liquidation or (d) enter into any agreement with respect to any of the foregoing.

Fractional Shares.

fractional shares or scrip representing fractional shares shall be issued upon the conversion of the Series A Preferred Stock.

fraction of a share of Company common stock which a Series A Holder would otherwise be entitled to upon such conversion, the Company will,

at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the

Conversion Price or round up to the next whole share.

Notwithstanding the foregoing, nothing shall prevent any Series A Holder from converting

fractional shares of Series A Preferred Stock.

As of December 31, 2024

and 2023, 9,000 shares of Series A Preferred Stock were issued and outstanding.

On January 9, 2025, the 9,000 shares of Series A Preferred

Stock were exchanged for 5,000 shares of Series D Preferred Stock of the Company (see Note 22 – Subsequent Events - Series D Convertible

Preferred Stock).

Series B Convertible

Preferred Stock

The Company designated up to 15,000 shares

of its previously undesignated preferred stock as Series B Preferred Stock.

Each share of Series B Preferred Stock has a par value of

$ 0.0001 per share and a stated value equal to $ 1,000 .

On February 9, 2023, the Company issued 11,000

shares of its Series B Convertible Preferred Stock as a part of consideration for the purchase of 40 % of equity interest of Lab Services

The Series B Preferred Stock is convertible into shares of the Company’s common stock at a conversion price per share equal

to $ 3.78 or an aggregate of 2,910,053 shares of the Company’s common stock and are subject to a lock-up period and restrictions

on sale (See Note — 7 - Investment in Laboratory Services MSO, LLC).

As of December 31, 2023, 11,000 shares

of Series B Preferred Stock were issued and outstanding.

The Company designated

up to 15,000 shares of its previously undesignated preferred stock as Series B Preferred Stock.

Each share of Series B Preferred Stock

has a par value of $ 0.0001 per share and a stated value equal to $ 1,000 .

AVALON GLOBOCARE CORP.

2 unchanged sentences

NOTE 15 – EQUITY

Common Shares Sold

On December 13, 2019, the Company entered into an Open Market Sale

Agreement SM (the “Sales Agreement”) with Jefferies LLC, as sales agent (“Jefferies”), pursuant

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

During the year ended December

31, 2022, Jefferies sold an aggregate of 17,064 shares of common stock at an average price of $ 7.9 per share to investors

and the Company recorded net proceeds of $ 112,328 , net of commission and other offering costs of $ 23,239 .

The Open Market Sale Agreement SM

was terminated in 2023.

On August 5, 2022, the Company sold 32,051 shares

of its common stock at a purchase price of $ 7.8 per share to an investor pursuant to a subscription agreement.

The Company received

proceeds of $ 250,000 .

On August 5, 2022, the Company sold 44,872 shares

of its common stock at a purchase price of $ 7.8 per share, the fair market value on transaction date, to Wenzhao Lu pursuant to

a subscription agreement.

The Company received proceeds of $ 350,000 (see Note 12 - Common Shares Sold to Related Party for Cash).

In June 2023, the Company entered into a sales

agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (“Roth”) under which the Company may offer

and sell from time to time shares of its common stock having an aggregate offering price of up to $ 3.5 million.

During the year

ended December 31, 2023, Roth sold an aggregate of 456,627 shares of common stock at an average price of $ 1.39 per share

to investors and the Company recorded net proceeds of $ 414,396 , net of commission and other offering costs of $ 220,995 .

Common Shares Issued for Services

During the year ended December 31, 2022, the

Company issued a total of 40,896 shares of its common stock for services rendered.

These shares were valued at $ 340,950 , the

fair market values on the grant dates using the reported closing share prices on the dates of grant, and the Company recorded stock-based

compensation expense of $ 310,950 for the year ended December 31, 2022 and reduced accrued liabilities of $ 30,000 .

During the year ended December 31, 2023, the

Company issued a total of 361,331 shares of its common stock for services rendered.

These shares were valued at $ 999,655 , the

fair market values on the grant dates using the reported closing share prices on the dates of grant, and the Company recorded stock-based

compensation expense of $ 834,784 for the year ended December 31, 2023 and reduced accrued liabilities of $ 164,871 .

Series B Convertible

Preferred Stock (continued)

The shares of Series

B Preferred Stock have identical terms and include the terms as set forth below.

The Series B Holders shall

be entitled to receive, and the Company shall pay, dividends on shares of Series B Preferred Stock equal (on an as-if-converted-to-common-stock

basis, disregarding for such purpose any conversion limitations set forth in the Series B Certificate of Designations) to and in the same

form as dividends actually paid on shares of the Company’s common stock when, as and if such dividends are paid on shares of the

common stock.

No other dividends shall be paid on shares of Series B Preferred Stock.

The Company will not pay any dividends on its common

stock unless the Company simultaneously complies with the terms set forth in the Series B Certificate of Designation.

The Series B Preferred Stock

will rank subordinate to the shares of the Company’s Series A Preferred Stock.

Upon any Liquidation,

the Series B Holders will be entitled to receive out of the assets available for distribution to stockholders, (i) after and subject to

the payment in full of all amounts required to be distributed to the holders of another class or series of stock of the Company ranking

on liquidation prior and in preference to the Series B Preferred Stock, including the Series A Preferred Stock, (ii) ratably with any

class or series of stock ranking on liquidation on parity with the Series B Preferred Stock and (iii) in preference and priority to the

holders of the shares of common stock, an amount equal to one hundred percent ( 100 %) of the Series B Stated Value and no more, in proportion

to the full and preferential amount that all shares of the Series B Preferred Stock are entitled to receive.

The Company shall mail written

notice of any such Liquidation not less than twenty (20) days prior to the payment date stated therein, to each Series B Holder.

Each share of Series B

Preferred Stock shall be convertible, at any time and from time to time from and after the later of (i) the date of the stockholder approval

and (ii) the one year anniversary of the Closing Date (the “Lock Up Period”), at the option of the Series B Holder thereof,

into that number of shares of common stock (subject to the limitations set forth in Series B Certificate of Designation determined by

dividing the Series B Stated Value of such share of Series B Preferred Stock by the conversion price of the Series B Preferred Stock).

Series B Holders may effect conversions by providing the Company with the form of conversion notice attached as Annex A to the Series

B Certificate of Designation.

The Series B Preferred Stock will be convertible into shares of the Company’s common stock at a conversion

price per share equal to $ 56.70 , subject to the adjustments set forth in the Series B Certificate of Designation.

Notwithstanding the

foregoing or the transactions contemplated by the Amended MIPA, until the consummation of the Lock Up Period, the Series B Holders shall

not, directly or indirectly, sell, transfer or otherwise dispose of any Series B Preferred Stock issued upon conversion of the Series

B Conversion Shares or pursuant to the Equity Earnout Payment (the “Restricted Securities”) without Company’s prior

written consent;

provided, however, the Series B Holders may sell, transfer or otherwise dispose of Restricted Securities to an Affiliate,

as defined in the Amended MIPA, of a Series B Holder without Company’s prior written consent;

provided, further, that such Series

B Holder provide prompt written notice to Company of such transfer, including the name and contact information of the Affiliate transferee,

and such Affiliate transferee agrees in writing to be bound by the terms of the transaction documents contemplated by the Amended MIPA

to which the Series B Holder is a party (which agreement shall also be provided to Company with such notice).

After the expiration of

the Lock Up Period, the Series B Holder agrees that it and any of its Affiliate transferees shall not be entitled to in any calendar month,

sell a number of shares of Company common stock into the open market in an amount exceeding more than ten percent (10%) of the total number

of shares of Company common stock issuable upon conversion of the Company common stock then held by the Seller and its Affiliates.

Conversion Price Adjustment:

Stock Dividends and Stock Splits.

the Company, at any time while the Series B Preferred Stock is outstanding:

(i) pays a stock dividend or otherwise makes a distribution

or distributions payable in shares of common stock on shares of common stock or any other common stock equivalents (which, for avoidance

of doubt, shall not include any shares of common stock issued by the Company upon conversion of, or payment of a dividend on, the Series

B Preferred Stock), (ii) subdivides outstanding shares of common stock into a larger number of shares, (iii) combines (including by way

of a reverse stock split) outstanding shares of common stock into a smaller number of shares, or (iv) issues, in the event of a reclassification

of shares of the common stock, any shares of capital stock of the Company, then the conversion price of the Series B Preferred Stock shall

be multiplied by a fraction of which the numerator shall be the number of shares of common stock (excluding any treasury shares of the

Company) outstanding immediately before such event, and of which the denominator shall be the number of shares of common stock outstanding

immediately after such event.

Any of the foregoing adjustments shall become effective immediately after the record date for the determination

of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the

case of a subdivision, combination or re-classification.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 – EQUITY

Series B Convertible

Preferred Stock (continued)

Conversion Price

Fundamental Transaction.

time while the Series B Preferred Stock is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects

any merger or consolidation of the Company with or into another Person, (ii) the Company (and all of its subsidiaries, taken as a whole),

directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially

all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange

offer (whether by the Company or another Person) is completed pursuant to which holders of the Company’s common stock are permitted

to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of fifty percent

( 50 %) or more of the outstanding common stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any

reclassification, reorganization or recapitalization of the common stock or any compulsory share exchange pursuant to which the common

stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in

one or more related transactions consummates a Fundamental Transaction, then, at the closing of such Fundamental Transaction, without

any action on the part of the Series B Holder, the Series B Holder shall have the right to receive, for each conversion share that would

have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation

in the Series B Certificate of Designation on the conversion of the Series B Preferred Stock), the number of shares of common stock of

the successor or acquiring corporation or of the Company, if it is the surviving corporation, and/or any Alternate Consideration receivable

as a result of such Fundamental Transaction by a holder of the number of shares of common stock for which the Series B Preferred Stock

is convertible immediately prior to such Fundamental Transaction (without regard to the limitations set forth in the Series B Certificate

of Designation on the conversion of the Series B Preferred Stock).

For purposes of any such conversion, the determination of the conversion

price of the Series B Preferred Stock shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of

Alternate Consideration issuable in respect of one share of common stock in such Fundamental Transaction, and the Company shall apportion

the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components

of the Alternate Consideration.

If holders of common stock are given any choice as to the securities, cash or property to be received

in a Fundamental Transaction, then the Series B Holder shall be given the same choice as to the Alternate Consideration it receives upon

such Fundamental Transaction.

Voting Rights .

The Series B Holders will

have no voting rights, except as otherwise required by the Delaware General Corporation Law.

Notwithstanding the foregoing, in addition,

as long as any shares of Series B Preferred Stock are outstanding, the Company shall not, without the affirmative vote of the holders

of a majority of the then outstanding shares of the Series B Preferred Stock, voting as a separate class, (a) alter or change adversely

the powers, preferences or rights given to the Series B Preferred Stock in the Series B Certificate of Designation, (b) increase the number

of authorized shares of Series B Preferred Stock, (c) except with respect to the Series A Preferred Stock, authorize or issue an additional

class or series of capital stock that ranks senior to the Series B Preferred Stock with respect to the distribution of assets on liquidation

or (d) enter into any agreement with respect to any of the foregoing.

Fractional Shares.

No fractional shares or scrip representing fractional shares shall be issued upon the conversion of the Series B Preferred Stock.

any fraction of a share which a Series B Holder would otherwise be entitled to upon such conversion, the Company shall at its election,

either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price

or round up to the next whole share.

Notwithstanding the foregoing, nothing shall prevent any Series B Holder from converting fractional

shares of Series B Preferred Stock.

As of December 31, 2024

and 2023, 11,000 shares of Series B Preferred Stock were issued and outstanding.

On February 26, 2025, all shares of the Company’s

Series B Convertible Preferred Stock were permanently surrendered and relinquished to the Company for no additional consideration (see

Note 22 – Subsequent Events - Redemption Agreement).

Series C Convertible

Preferred Stock

On December 13, 2024,

the Company filed a certificate of designations of preferences, rights, and limitations of Series C Convertible Preferred Stock (the “Series

C Certificate of Designations”) with the Department of State, Division of Corporations, of the State of Delaware, which provides

for the designation of 10,000 shares of Series C Preferred Stock of the Company, par value $ 0.0001 per share.

Each share of Series C Preferred

Stock has a stated value of $ 1,000 .

The Series C Preferred

Stock shall rank (i) senior to the Company’s common stock (the “Common Stock”) and any other class or series of capital

stock of the Company created hereafter, the terms of which specifically provide that such class or series shall rank junior to the Series

C Preferred Stock, (ii) pari passu with any class or series of capital stock of the Company created hereafter specifically ranking, by

its terms, on par with the Series C Preferred Stock, (iii) pari passu with Series B Convertible Preferred Stock of the Company (the “Series

B Preferred Stock”) with respect to its rights, preferences and restrictions, and (iv) subordinate to the Series A Convertible Preferred

Stock of the Company (the “Series A Preferred Stock”).

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 – EQUITY

Series C Convertible

Preferred Stock (continued)

Holders of the Series

C Preferred Stock shall be entitled to receive, and the Company shall pay, dividends on shares of Series C Preferred Stock equal (on an

as-if-converted-to-Common-Stock basis, disregarding for such purpose any conversion limitations hereunder) to and in the same form as

dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock.

Holders of the Series

C Preferred Stock have no voting power except as otherwise required by the Delaware General Corporation Law.

Upon any liquidation,

dissolution or winding-up of the Company, whether voluntary or involuntary (a “Liquidation”), the holders of the Series C

Preferred Stock shall be entitled to receive out of the assets available for distribution to stockholders, (i) after and subject to the

payment in full of all amounts required to be distributed to the holders of another class or series of stock of the Company ranking on

liquidation prior and in preference to the Series C Preferred Stock, including the Series A Preferred Stock, (ii) ratably with any class

or series of stock ranking on liquidation on parity with the Series C Preferred Stock and (iii) in preference and priority to the holders

of the shares of Common Stock, an amount equal to 100 % of the Stated Value of the Series C Preferred Stock, in proportion to the full

and preferential amount that all shares of the Series C Preferred Stock are entitled to receive.

Each share of Series

C Preferred Stock shall be convertible into Common Stock (the “Conversion Shares”) at a conversion per share equal to $ 2.41 ,

at the option of the holder, at any time after the later of (i) the date of the shareholder approval of the issuance of the Conversion

Shares pursuant to the rules of the Nasdaq Stock Market and (ii) the one year anniversary of the date of the first issuance of any shares

of the Series C Preferred Stock.

In addition, the holder shall not have the right to convert any portion of the Series C Preferred Stock

if, after giving effect to the conversion, such holder (together with its affiliates) would beneficially own in excess of 19.99 % of the

number of shares of the Common Stock outstanding immediately after giving effect to the issuance of the respective Conversion Shares.

As of December 31, 2024,

3,500 shares of Series C Preferred Stock were issued and outstanding.

Series B Convertible

Preferred Stock Issued for Equity Method Investment

On February 9, 2023, the Company issued 11,000 shares of its Series

B Convertible Preferred Stock as a part of consideration for the purchase of 40 % of equity interest of Lab Services MSO.

Preferred Stock is convertible into shares of the Company’s common stock at a conversion price per share equal to $ 56.70 , which

approximated the market price at the date of closing, or an aggregate of 194,004 shares of the Company’s common stock and are subject

to a lock-up period and restrictions on sale.

Series C Convertible

Preferred Stock Sold for Cash

During the year ended December 31, 2024, the Company sold an aggregate

of 3,500 shares of Series C Convertible Preferred stock and received proceeds of $ 3,500,000 .

Each share of Series C Convertible Preferred

Stock is convertible into common stock of the Company (the “Conversion Shares”) at a conversion per share equal to $ 2.41 ,

which approximated the market price at the date of transaction, at the option of the holder, at any time after the later of (i) the date

of the shareholder approval of the issuance of the Conversion Shares pursuant to the rules of the Nasdaq Stock Market (the “Shareholder

Approval”) and (ii) the one year anniversary of the date of the first issuance of any shares of the Series C Convertible Preferred

The Company evaluated

the features of the Series C Convertible Preferred Stock under ASC 480, and classified them as permanent equity because the Series C Convertible

Preferred Stock is not mandatorily or contingently redeemable at the stockholder’s option and the liquidation preference that exists

does not fall within the guidance of SEC Accounting Series Release No.

268 – Presentation in Financial Statements of “Redeemable

Preferred Stocks” (“ASR 268”).

Common Shares Issued

1 unchanged sentence

During the year ended

December 31, 2023, the Company issued a total of 170,000 shares of its common stock as commitment fee for the purchases of

convertible note.

These shares were valued at $ 236,400 , the fair market values on the grant dates using the reported closing share prices

on the dates of grant, and the Company recorded it as debt discount.

Common Shares Issued for Debt Conversion

On July 25, 2022, the Company and 2022 Convertible

Note holder entered into a Conversion Agreement pursuant to which the investor converted its Convertible Notes in the principal amount

of $ 3,718,943 and unpaid interest of $ 9,751 into 573,645 shares of common stock of the Company at a per share

price of $ 6.5 (see Note 9).

The Company recorded a conversion inducement charge of $ 344,264 as a result of the Conversion Agreement,

representing the value of common stock issued upon conversion in excess of the common stock issuable under the original terms of the

2022 Convertible Note.

Common Shares Issued Pursuant to Related Party

Debt Settlement Agreement and Release

On July 25, 2022, the Company and Mr.

entered into and closed a Debt Settlement Agreement and Release pursuant to which the Company settled $ 2,440,262 debt owed under

the Line of Credit and unpaid interest of $ 448,331 by issuance of 444,399 shares of common stock of the Company (see Note

12 - Borrowings from Related Party – Line of Credit ).

The total amount of the debt settled of $ 2,888,593 exceeded the

fair market value of the shares issued by $ 888,353 which was treated as a capital transaction due to Mr.

Lu’s relationship with

December 31, 2023, the Company issued a total of 11,333 shares of its common stock as commitment fee for the purchases of May 2023 Convertible

Note, July 2023 Convertible Note, and October 2023 Convertible Note.

These shares were valued at $ 236,400 , the fair market values on the

grant dates using the reported closing share prices on the dates of grant, and the Company recorded it as debt discount.

During the year ended

December 31, 2024, the Company issued a total of 33,800 shares of its common stock as commitment fee for the purchase of March

2024 Convertible Note and June 2024 Convertible Note.

These shares were valued at $ 320,546 , the fair market value on the grant dates using

the reported closing share prices on the dates of grant, and the Company recorded it as debt discount.

AVALON GLOBOCARE CORP.

2 unchanged sentences

NOTE 15 – EQUITY

The following table summarizes the shares of

the Company’s common stock issuable upon exercise of options outstanding at December 31, 2023:

Options Outstanding

Options Exercisable

Common Shares Sold

In June 2023, the Company entered into a sales

agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (“Roth”) under which the Company may offer and

sell from time to time shares of its common stock having an aggregate offering price of up to $ 3.5 million.

During the year ended

December 31, 2023, Roth sold an aggregate of 30,442 shares of common stock at an average price of $ 20.85 per share to investors

and the Company recorded net proceeds of $ 414,396 , net of commission and other offering costs of $ 220,995 .

During the year ended

December 31, 2024, Roth sold an aggregate of 281,843 shares of common stock at an average price of $ 10.14 per share to

investors and the Company recorded net proceeds of $ 2,544,311 , net of commission and other offering costs of $ 313,541 .

Common Shares Issued for Services

year ended December 31, 2023, the Company issued a total of 24,089 shares of its common stock for services rendered.

These shares were

valued at $ 999,655 , the fair market values on the grant dates using the reported closing share prices on the dates of grant, and the Company

recorded stock-based compensation expense of $ 834,784 for the year ended December 31, 2023 and reduced accrued liabilities of $ 164,871 .

During the year ended December 31, 2024, the Company

issued a total of 145,153 shares of its common stock for services rendered.

These shares were valued at $ 530,350 , the fair market values

on the grant dates using the reported closing share prices on the dates of grant, and the Company recorded stock-based compensation expense

of $ 470,350 for the year ended December 31, 2024 and reduced accrued liabilities of $ 60,000 .

Common Shares Issued

for Warrant Exercise

On November 18, 2024,

the Company issued 42,381 shares of its common stock upon cashless exercise of warrants to purchase 6,278 shares of common stock.

Common Shares Issued

for Adjustment for 1:15 Reverse Split

The Company issued 206,033

shares of its common stock, resulting from the rounding up of the fractional shares at the one-for-fifteen reverse stock split effected

on October 28, 2024.

Pre-Funded Warrants

Issued for Debt Modification

On December 15, 2024,

the Company issued to Mast Hill a common stock purchase warrant for the purchase of up to 150,000 shares of the Company’s common

The Pre-Funded Warrants are immediately exercisable at issuance and until the Pre-Funded Warrants are exercised in full and have

an exercise price of $ 0.01 per share.

The Pre-Funded Warrants were classified as a component of permanent equity as they are freestanding

financial instrument that is immediately exercisable, does not embody an obligation for the Company to repurchase its own shares and permit

the holder to receive a fixed number of shares of common stock upon exercise.

The following table summarizes

the shares of the Company’s common stock issuable upon exercise of options outstanding at December 31, 2024:

Options Outstanding Options Exercisable

Outstanding at

Weighted Average Remaining

Contractual Life (Years)

Weighted Average Exercise Price

Exercisable at

2024 Weighted Average Remaining Contractual Life (Years) Weighted Average

Exercise Price

Number Exercisable at

2024 Weighted Average Exercise

2 unchanged sentences

154.50 – 289.50 11,764 3.44 218.21 11,764 218.21

$ 2.93 – 289.50 52,479 2.93 $ 85.45 46,872 $ 94.41

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 – EQUITY

Options (continued)

Stock option activity

for the years ended December 31, 2023 and 2022 were as follows:

for the years ended December 31, 2024 and 2023 was as follows:

Number of Options

5 unchanged sentences

Options expected to vest

The aggregate intrinsic value of both stock options

outstanding and stock options exercisable at December 31, 2023 was $ 0 .

The aggregate intrinsic value of stock options

outstanding and stock options exercisable at December 31, 2024 was approximately $ 1,900 an $ 900 , respectively.

The fair values of options granted during the

8 unchanged sentences

The aggregate fair value of the options granted during the year ended December 31, 2023 was

For the year ended December

31, 2023 and 2022, stock-based compensation expense associated with stock options granted amounted to $ 284,977 and $ 358,113 , of

which, $ 172,943 and $ 234,856 was recorded as compensation and related benefits, $ 106,565 and $ 84,064 was recorded

as professional fees, and $ 5,469 and $ 39,193 was recorded as research and development expenses, respectively.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 – EQUITY

Options (continued)

For the years ended December 31, 2024 and 2023,

stock-based compensation expense associated with stock options granted amounted to $ 51,159 and $ 284,977 , of which, $ 19,878 and

$ 172,943 was recorded as compensation and related benefits, $ 31,281 and $ 106,565 was recorded as professional fees, and

$ 0 and $ 5,469 was recorded as research and development expenses, respectively.

A summary of the status of the Company’s

5 unchanged sentences

Nonvested at December 31, 2024

The following table summarizes the shares of

the Company’s common stock issuable upon exercise of warrants outstanding at December 31, 2023:

Warrants Outstanding

Warrants Exercisable

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 – EQUITY

Warrants (Except Pre-Funded Warrants)

The following table summarizes the shares of the

Company’s common stock issuable upon exercise of warrants outstanding at December 31, 2024:

Warrants Outstanding Warrants Exercisable

Exercise Price Number

Outstanding at

2024 Weighted Average

Contractual Life

Life (Years) Weighted

Exercise Price Number

Exercisable at

, 2024 Weighted Average Exercise

$ 7.50 – 37.50 165,510 4.40 $ 10.50 85,510 $ 13.31

67.50 9,222 3.40 67.50 9,222 67.50

Stock warrant activity for the years ended December

31, 2023 and 2022 were as follows:

187.50 8,264 2.30 187.50 8,264 187.50

$ 7.50 – 187.50 182,996 4.25 $ 21.37 102,996 $ 32.13

Stock warrant activity

for the years ended December 31, 2024 and 2023 was as follows:

Number of Warrants

2 unchanged sentences

Outstanding at December 31, 2023

Cancelled (*)

Outstanding at December 31, 2024

1 unchanged sentence

Warrants expected to vest

* Second Warrant, which was issued on May 23, 2023, July 6,

2023, October 9, 2023, and March 7, 2024, was cancelled in June 2024.

Second Warrant, which was issued on June 5, 2024, is still outstanding

as of December 31, 2024.

The aggregate intrinsic value of both stock warrants

outstanding and stock warrants exercisable at December 31, 2024 was $ 0 .

AVALON GLOBOCARE CORP.

Warrants Issued in

In connection with the

issuance of May 2023 Convertible Note (See Note 10), the Company issued (i) a warrant to purchase 8,333 shares of common stock with an

exercise price of $67.50 exercisable until the five-year anniversary of May 23, 2023, and (ii) a warrant to purchase 7,033 shares of common

stock with an exercise price of $48.00 exercisable until the five-year anniversary of May 23, 2023, which warrant was never fair valued

and was cancelled and extinguished against payment of the May 2023 Convertible Note, to Mast Hill;

and issued a warrant to purchase 667

shares of common stock with an exercise price of $67.50 exercisable until the five-year anniversary of May 23, 2023 to a third party as

a finder’s fee.

Based upon the Company’s

analysis of the criteria contained in ASC 815, the Company determined that all the warrants issued to Mast Hill and a third party as a

finder’s fee meet the definition of derivative liability, as the Company cannot avoid a net cash settlement under certain circumstances.

Accordingly, the fair value of the 9,000 warrants with an exercise price of $ 67.50 exercisable until the five-year anniversary of May

23, 2023 was classified as derivative liability on May 23, 2023.

The fair values of the 9,000 warrants with an exercise price of $ 67.50

exercisable until the five-year anniversary of May 23, 2023 issued on May 23, 2023 were computed using the Black-Scholes option-pricing

model with the following assumptions:

stock price of $ 29.40 , volatility of 88.80 %, risk-free rate of 3.76 %, annual dividend yield of 0 %

and expected life of 5 years.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 – EQUITY

Warrants (continued)

Warrants (Except Pre-Funded Warrants) (continued)

Warrants Issued in

On March 28, 2022, the Company entered into Securities

Purchase Agreement with an accredited investor, which was amended on June 8, 2022, providing for the sale by the Company to the investor

of a Convertible Note in the amount of $ 3,718,943 (“2022 Convertible Note”).

In addition to the 2022 Convertible Note,

the investor also received a Stock Purchase Warrant (“2022 Warrant”) to acquire an aggregate of 123,964 shares

of common stock.

The 2022 Warrant is exercisable for five years at an exercise price of $ 12.5 .

The fair values of the warrants

issued to the investor with this private placement were computed using the Black-Scholes option-pricing model with the following assumptions:

volatility of 111.94 %, risk-free rate of 2.71 % - 2.92 %, annual dividend yield of 0 % and expected life of 5 years.

The warrants issued to the investor to purchase 123,964 shares of the Company’s common stock were treated as a discount

on the convertible note payable and were valued at $ 498,509 and had been amortized over the term of the 2022 Convertible Note.

May 2023 (continued)

The warrants with an

exercise price of $ 67.50 exercisable until the five-year anniversary of May 23, 2023 issued to Mast Hill to purchase 8,333 shares of the

Company’s common stock were treated as a discount on the convertible note payable and were valued at $ 127,654 and were amortized

over the term of the May 2023 Convertible Note.

The warrants with an

exercise price of $ 67.50 exercisable until the five-year anniversary of May 23, 2023 issued to a third party as a finder’s fee to

purchase 667 shares of the Company’s common stock were treated as convertible debt issuance costs and were valued at $ 11,162 and

were amortized over the term of the May 2023 Convertible Note.

Warrants Issued in

In connection with the

issuance of May 2023 Convertible Note (See Note 9), the Company issued (i) a warrant to purchase 125,000 shares of common stock

with an exercise price of $4.50 exercisable until the five-year anniversary of May 23, 2023, and (ii) a warrant to purchase 105,500 shares

of common stock with an exercise price of $3.20 exercisable until the five-year anniversary of May 23, 2023, which warrant shall be cancelled

and extinguished against payment of the May 2023 Convertible Note, to Mast Hill;

and issued a warrant to purchase 10,000 shares

of common stock with an exercise price of $4.50 exercisable until the five-year anniversary of May 23, 2023 to a third party as

issuance of July 2023 Convertible Note (See Note 10), the Company issued (i) a warrant to purchase 2,778 shares of common stock with an

exercise price of $67.50 exercisable until the five-year anniversary of July 6, 2023, and (ii) a warrant to purchase 2,344 shares of common

stock with an exercise price of $48.00 exercisable until the five-year anniversary of July 6, 2023, which warrant was never fair valued

and was cancelled and extinguished against payment of the July 2023 Convertible Note, to Firstfire;

and issued a warrant to purchase 222

shares of common stock with an exercise price of $67.50 exercisable until the five-year anniversary of July 6, 2023 to a third party as

a finder’s fee.

Based upon the Company’s

analysis of the criteria contained in ASC 815, the Company determined that all the warrants issued to Mast Hill and a third party

as a finder’s fee meet the definition of derivative liability, as the Company cannot avoid a net cash settlement under certain

circumstances.

Management determined the probability of failing to make an amortization payment when due to be remote and as such the

fair value of the 105,500 warrants with an exercise price of $ 3.20 exercisable until the five-year anniversary of May

23, 2023, which warrant shall be cancelled and extinguished against payment of the May 2023 Convertible Note, has been estimated to be

Accordingly, the fair value of the 135,000 warrants with an exercise price of $ 4.50 exercisable until the five-year

anniversary of May 23, 2023 was classified as derivative liability on May 23, 2023.

The fair values of the 135,000 warrants

with an exercise price of $ 4.50 exercisable until the five-year anniversary of May 23, 2023 issued on May 23, 2023 were computed

using the Black-Scholes option-pricing model with the following assumptions:

stock price of $ 1.96 , volatility of 88.80 %, risk-free

rate of 3.76 %, annual dividend yield of 0 % and expected life of 5 years.

The warrants with

an exercise price of $ 4.50 exercisable until the five-year anniversary of May 23, 2023 issued to Mast Hill to purchase 125,000 shares

of the Company’s common stock were treated as a discount on the convertible note payable and were valued at $ 127,654 and will

be amortized over the term of the May 2023 Convertible Note.

The warrants with

an exercise price of $ 4.50 exercisable until the five-year anniversary of May 23, 2023 issued to a third party as a finder’s

fee to purchase 10,000 shares of the Company’s common stock were treated as convertible debt issuance costs and were

valued at $ 11,162 and will be amortized over the term of the May 2023 Convertible Note.

analysis of the criteria contained in ASC 815, the Company determined that all the warrants issued to Firstfire and a third party as a

finder’s fee meet the definition of derivative liability, as the Company cannot avoid a net cash settlement under certain circumstances.

Accordingly, the fair value of the 3,000 warrants with an exercise price of $ 67.50 exercisable until the five-year anniversary of July

6, 2023 was classified as derivative liability on July 6, 2023.

The fair values of the 3,000 warrants with an exercise price of $ 67.50

exercisable until the five-year anniversary of July 6, 2023 issued on July 6, 2023 were computed using the Black-Scholes option-pricing

model with the following assumptions:

stock price of $ 21.30 , volatility of 88.52 %, risk-free rate of 4.37 %, annual dividend yield of 0 %

and expected life of 5 years.

The warrants with an

exercise price of $ 67.50 exercisable until the five-year anniversary of July 6, 2023 issued to Firstfire to purchase 2,778 shares of the

Company’s common stock were treated as a discount on the convertible note payable and were valued at $ 28,691 and were amortized

over the term of the July 2023 Convertible Note.

The warrants with an exercise price of $ 67.50

exercisable until the five-year anniversary of July 6, 2023 issued to a third party as a finder’s fee to purchase 222 shares of

the Company’s common stock were treated as convertible debt issuance costs and were valued at $ 2,435 and were amortized over the

term of the July 2023 Convertible Note.

Warrants Issued in

In connection with the

issuance of July 2023 Convertible Note (See Note 9), the Company issued (i) a warrant to purchase 41,665 shares of common stock

with an exercise price of $4.50 exercisable until the five-year anniversary of July 6, 2023, and (ii) a warrant to purchase 35,165 shares

of common stock with an exercise price of $3.20 exercisable until the five-year anniversary of July 6, 2023, which warrant shall be cancelled

and extinguished against payment of the July 2023 Convertible Note, to Firstfire;

and issued a warrant to purchase 3,333 shares

of common stock with an exercise price of $4.50 exercisable until the five-year anniversary of July 6, 2023 to a third party as

a finder’s fee.

AVALON GLOBOCARE CORP.

issuance of October 2023 Convertible Note (See Note 10), the Company issued (i) a warrant to purchase 7,000 shares of common stock with

an exercise price of $37.50 exercisable until the five-year anniversary of October 9, 2023, (ii) a warrant to purchase 5,834 shares of

common stock with an exercise price of $27.00 exercisable until the five-year anniversary of October 9, 2023, which warrant was never

fair valued and was cancelled and extinguished against payment of the October 2023 Convertible Note, to Mast Hill and Firstfire;

a warrant to purchase 560 shares of common stock with an exercise price of $37.50 exercisable until the five-year anniversary of October

9, 2023 to a third party as a finder’s fee.

Based upon the Company’s analysis of the

criteria contained in ASC 815, the Company determined that all the warrants issued to Mast Hill and Firstfire and a third party as a finder’s

fee meet the definition of a derivative liability, as the Company cannot avoid a net cash settlement under certain circumstances.

the fair value of the 7,560 warrants with an exercise price of $ 37.50 exercisable until the five-year anniversary of October 9, 2023 was

classified as a derivative liability on October 9, 2023.

The fair values of the 7,560 warrants with an exercise price of $ 37.50 exercisable

until the five-year anniversary of October 9, 2023 issued on October 9, 2023 were computed using the Black-Scholes option-pricing model

with the following assumptions:

stock price of $ 11.55 , volatility of 89.70 %, risk-free rate of 4.75 %, annual dividend yield of 0 % and

expected life of 5 years.

The warrants with an

exercise price of $ 37.50 exercisable until the five-year anniversary of October 9, 2023 issued to Mast Hill and Firstfire to purchase

7,000 shares of the Company’s common stock were treated as a discount on the convertible note payable and were valued at $ 39,848

and were amortized over the term of the October 2023 Convertible Note.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 – EQUITY

Warrants (continued)

Warrants (Except Pre-Funded Warrants) (continued)

Warrants Issued in

July 2023 (continued)

Based upon the Company’s

analysis of the criteria contained in ASC 815, the Company determined that all the warrants issued to Firstfire and a third party

as a finder’s fee meet the definition of derivative liability, as the Company cannot avoid a net cash settlement under certain

circumstances.

Management determined the probability of failing to make an amortization payment when due to be remote and as such the

fair value of the 35,165 warrants with an exercise price of $ 3.20 exercisable until the five-year anniversary of July

6, 2023, which warrant shall be cancelled and extinguished against payment of the July 2023 Convertible Note, has been estimated to be

Accordingly, the fair value of the 44,998 warrants with an exercise price of $ 4.50 exercisable until the five-year

anniversary of July 6, 2023 was classified as derivative liability on July 6, 2023.

The fair values of the 44,998 warrants

with an exercise price of $ 4.50 exercisable until the five-year anniversary of July 6, 2023 issued on July 6, 2023 were computed

using the Black-Scholes option-pricing model with the following assumptions:

stock price of $ 1.42 , volatility of 88.52 %, risk-free

rate of 4.37 %, annual dividend yield of 0 % and expected life of 5 years.

The warrants with

an exercise price of $ 4.50 exercisable until the five-year anniversary of July 6, 2023 issued to Firstfire to purchase 41,665 shares

of the Company’s common stock were treated as a discount on the convertible note payable and were valued at $ 28,691 and

will be amortized over the term of the July 2023 Convertible Note.

The warrants with an exercise price of $ 4.50 exercisable

until the five-year anniversary of July 6, 2023 issued to a third party as a finder’s fee to purchase 3,333 shares of

the Company’s common stock were treated as convertible debt issuance costs and were valued at $ 2,435 and will be amortized

over the term of the July 2023 Convertible Note.

October 2023 (continued)

The warrants with an exercise price of $ 37.50

exercisable until the five-year anniversary of October 9, 2023 issued to a third party as a finder’s fee to purchase 560 shares

of the Company’s common stock were treated as convertible debt issuance costs and were valued at $ 3,380 and were amortized over

the term of the October 2023 Convertible Note.

Warrants Issued in

In connection with the

issuance of October 2023 Convertible Note (See Note 9), the Company issued (i) a warrant to purchase 105,000 shares of common

stock with an exercise price of $2.50 exercisable until the five-year anniversary of October 9, 2023, (ii) a warrant to purchase 87,500

shares of common stock with an exercise price of $1.80 exercisable until the five-year anniversary of October 9, 2023, which warrant

shall be cancelled and extinguished against payment of the October 2023 Convertible Note, to Mast Hill and Firstfire;

and issued a warrant

to purchase 8,400 shares of common stock with an exercise price of $2.50 exercisable until the five-year anniversary of

October 9, 2023 to a third party as a finder’s fee.

Based upon the Company’s analysis of the

criteria contained in ASC 815, the Company determined that all the warrants issued to Mast Hill and Firstfire and a third party as a

issuance of March 2024 Convertible Note (See Note 10), the Company issued (i) a warrant to purchase 8,750 shares of common stock

with an exercise price of $30.00 exercisable until the five-year anniversary of March 7, 2024 (“First Warrant”), (ii) a warrant

to purchase 8,077 shares of common stock with an exercise price of $19.50 (“Second Warrant”), which warrant was never fair

valued and was cancelled and extinguished against payment of the March 2024 Convertible Note, to Mast Hill;

and issued a warrant to purchase

700 shares of common stock with an exercise price of $30.00 exercisable until the five-year anniversary of March 7, 2024 to a third party

as a finder’s fee.

Based upon the Company’s

analysis of the criteria contained in ASC 815, the Company determined that all the warrants issued to Mast Hill and a third party as a

finder’s fee meet the definition of a derivative liability, as the Company cannot avoid a net cash settlement under certain circumstances.

Management determined the probability of failing to make an amortization payment when due to be remote and as such the fair value of

the 87,500 warrants with an exercise price of $ 1.80 exercisable until the five-year anniversary of October 9, 2023, which

warrant shall be cancelled and extinguished against payment of the October 2023 Convertible Note, has been estimated to be zero.

the fair value of the 113,400 warrants with an exercise price of $ 2.50 exercisable until the five-year anniversary of

October 9, 2023 was classified as a derivative liability on October 9, 2023.

The fair values of the 113,400 warrants with an

exercise price of $ 2.50 exercisable until the five-year anniversary of October 9, 2023 issued on October 9, 2023 were computed using

the Black-Scholes option-pricing model with the following assumptions:

stock price of $ 0.77 , volatility of 89.70 %, risk-free rate

of 4.75 %, annual dividend yield of 0 % and expected life of 5 years.

The warrants with

an exercise price of $ 2.50 exercisable until the five-year anniversary of October 9, 2023 issued to Mast Hill and Firstfire to purchase 105,000 shares

of the Company’s common stock were treated as a discount on the convertible note payable and were valued at $ 39,848 and

will be amortized over the term of the October 2023 Convertible Note.

The fair value of the 9,450 warrants with an exercise price of $ 30.00 exercisable until the five-year anniversary of March

7, 2024 was classified as a derivative liability on March 7, 2024.

The fair values of the 9,450 warrants with an exercise price

of $ 30.00 exercisable until the five-year anniversary of March 7, 2024 issued on March 7, 2024 were computed using the Black-Scholes

option-pricing model with the following assumptions:

stock price of $ 6.00 , volatility of 85.24 %, risk-free rate of 4.07 %, annual

dividend yield of 0 % and expected life of 5 years.

The warrants with an

exercise price of $ 30.00 exercisable until the five-year anniversary of March 7, 2024 issued to Mast Hill to purchase 8,750 shares

of the Company’s common stock were treated as a discount on the convertible note payable and were valued at $ 20,374 and were

amortized over the term of the March 2024 Convertible Note.

The warrants with an

exercise price of $ 30.00 exercisable until the five-year anniversary of March 7, 2024 issued to a third party as a finder’s

fee to purchase 700 shares of the Company’s common stock were treated as convertible debt issuance costs and were valued

at $ 1,679 and were amortized over the term of the March 2024 Convertible Note.

Warrants Issued in

In connection with the issuance of June 2024 Convertible

Note (See Note 10), the Company issued (i) a warrant to purchase 66,667 shares of common stock with an exercise price of $9.75 exercisable

until the five-year anniversary of June 5, 2024 (“First Warrant”), (ii) a warrant to purchase 80,000 shares of common stock

with an exercise price of $7.50 exercisable until the five-year anniversary of June 5, 2024 (“Second Warrant”), which warrant

shall be cancelled and extinguished against payment of the June 2024 Convertible Note, to Mast Hill;

and issued a warrant to purchase

5,333 shares of common stock with an exercise price of $9.75 exercisable until the five-year anniversary of June 5, 2024 to a third party

as a finder’s fee.

Based upon the Company’s analysis of the

criteria contained in ASC 815, the Company determined that all the warrants issued to Mast Hill and a third party as a finder’s

fee meet the definition of a derivative liability, as the Company cannot avoid a net cash settlement under certain circumstances.

determined the probability of failing to make an amortization payment when due to be remote and as such the fair value of the 80,000 warrants

with an exercise price of $ 7.50 exercisable until the five-year anniversary of June 5, 2024, which warrant shall be cancelled and

extinguished against payment of the June 2024 Convertible Note, has been estimated to be zero.

Accordingly, the fair value of the 72,000 warrants

with an exercise price of $ 9.75 exercisable until the five-year anniversary of June 5, 2024 was classified as a derivative liability

on June 5, 2024.

The fair values of the 72,000 warrants with an exercise price of $ 9.75 exercisable until the five-year

anniversary of June 5 , 2024 issued on June 5, 2024 were computed using the Black-Scholes option-pricing model with the following assumptions:

stock price of $ 10.39 , volatility of 85.72 %, risk-free rate of 4.31 %, annual dividend yield of 0 % and expected life of 5 years.

The warrants with an exercise price of $ 9.75 exercisable

until the five-year anniversary of October 9, 2023 issued to a third party as a finder’s fee to purchase 8,400 shares

of the Company’s common stock were treated as convertible debt issuance costs and were valued at $ 3,380 and will be amortized

over the term of the October 2023 Convertible Note.

AVALON GLOBOCARE CORP.

until the five-year anniversary of June 5, 2024 issued to Mast Hill to purchase 66,667 shares of the Company’s common

stock were treated as a discount on the convertible note payable and were valued at $ 418,194 and will be amortized over the term

of the June 2024 Convertible Note.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 – EQUITY

Warrants (continued)

Warrants Issued in October 2023 (continued)

Warrants (Except Pre-Funded Warrants) (continued)

Warrants Issued in

June 2024 (continued)

The warrants with an exercise price of $ 9.75 exercisable

until the five-year anniversary of June 5, 2024 issued to a third party as a finder’s fee to purchase 5,333 shares of

the Company’s common stock were treated as convertible debt issuance costs and were valued at $ 39,221 and will be amortized

over the term of the June 2024 Convertible Note.

Warrants Cancelled

As of June 5, 2024, the

Company paid in full of its outstanding May 2023 Convertible Note, July 2023 Convertible Note, October 2023 Convertible Note, and March

2024 Convertible Note and cancelled 23,288 warrants since these convertible notes were fully extinguished.

Warrants Exercised

in November 2024

On November 18, 2024,

6,278 warrants were cashless exercised.

A summary of the status

of the Company’s nonvested stock warrants issued as of December 31, 2023 and changes during the years ended December 31, 2023

and 2022 is presented below:

of the Company’s nonvested stock warrants issued as of December 31, 2024 and changes during the years ended December 31, 2024 and

2023 was presented below:

Number of Warrants

Weighted Average Exercise Price

Nonvested at January 1, 2023

3 unchanged sentences

RESERVE AND RESTRICTED NET ASSETS

The Company’s

PRC subsidiary, Avalon Shanghai, is restricted in its ability to transfer a portion of its net asset to the Company.

The Company’s PRC

subsidiary, Avalon Shanghai, is restricted in its ability to transfer a portion of its net asset to the Company.

The payment of dividends

8 unchanged sentences

until the reserve is equal to 50 % of the entity’s registered capital.

Appropriations to the discretionary surplus reserve

are made at the discretion of the Board of Directors.

The statutory reserve may be applied against prior year losses, if any, and may

be used for general business expansion and production or increase in registered capital, but are not distributable as cash dividends.

The Company did not make any appropriation to statutory reserve for Avalon Shanghai during the years ended December 31, 2023 and 2022

as it incurred net loss in the periods.

As of December 31, 2023 and 2022, the restricted amount as determined pursuant to PRC statutory

laws totaled $ 6,578 .

Appropriations to the discretionary surplus reserve are

made at the discretion of the Board of Directors.

The statutory reserve may be applied against prior year losses, if any, and may be used

for general business expansion and production or increase in registered capital, but are not distributable as cash dividends.

did not make any appropriation to statutory reserve for Avalon Shanghai during the years ended December 31, 2024 and 2023 as it incurred

net loss in the periods.

As of both December 31, 2024 and 2023, the restricted amount as determined pursuant to PRC statutory laws totaled

Relevant PRC laws and

3 unchanged sentences

As of December 31, 2024 and 2023, total restricted net assets amounted to $ 1,206,578 and $ 1,106,578 , respectively.

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17 – NONCONTROLLING

As of December 31, 2023, Dr.

Yu Zhou, former

director and former co-chief executive officer of Genexosome, who owns 40 % of the equity interests of Genexosome, which is not under

the Company’s control.

During the years ended December 31, 2023 and 2022, the Company did not allocate any net loss and foreign

currency translation adjustment to the noncontrolling interest holder due to its inability to satisfy these deficits.

NOTE 17 – CONDENSED FINANCIAL INFORMATION

OF THE PARENT COMPANY

As of December

31, 2024, Dr.

Yu Zhou, former director and former co-chief executive officer of Genexosome, who owns 40 % of the equity interests of Genexosome,

which is not under the Company’s control.

During the years ended December 31, 2024 and 2023, the Company did not allocate any net

loss and foreign currency translation adjustment to the noncontrolling interest holder due to its inability to satisfy these deficits.

NOTE 18 – CONDENSED

FINANCIAL INFORMATION OF THE PARENT COMPANY

Pursuant to the requirements

of Rule 12-04(a), 5-04(c) and 4-08(e)(3) of Regulation S-X, the condensed financial information of the parent company shall be filed

when the restricted net assets of consolidated subsidiary exceed 25 percent of consolidated net assets as of the end of the

most recently completed fiscal year.

For purposes of this test, restricted net assets of consolidated subsidiary shall mean that amount

of the Company’s proportionate share of net assets of consolidated subsidiary (after intercompany eliminations) which as of the

end of the most recent fiscal year may not be transferred to the parent company by subsidiary in the form of loans, advances or cash

dividends without the consent of a third party.

of Rule 12-04(a), 5-04(c) and 4-08(e)(3) of Regulation S-X, the condensed financial information of the parent company shall be filed when

the restricted net assets of consolidated subsidiary exceed 25 % of consolidated net assets as of the end of the most recently completed

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

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

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

of a third party.

The Company performed

a test on the restricted net assets of consolidated subsidiary in accordance with such requirement and concluded that it was not applicable

to the Company as the restricted net assets of the Company’s PRC subsidiary did not exceed 25 % of the consolidated net assets

of the Company, therefore, the condensed financial statements for the parent company have not been required.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONCENTRATIONS

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

for the years ended December 31, 2023 and 2022.

to the Company as the restricted net assets of the Company’s PRC subsidiary did not exceed 25 % of the consolidated net assets of

the Company, therefore, the condensed financial statements for the parent company have not been required.

NOTE 19 - CONCENTRATIONS

The following

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

31, 2024 and 2023.

Years Ended December 31,

Two customers, of which,

one is a related party and the other is a third party, whose outstanding receivable accounted for 10% or more of the Company’s

total outstanding rent receivable at December 31, 2023, accounted for 80.6 % of the Company’s total outstanding rent receivable

at December 31, 2023.

One customer, which is

a third party, whose outstanding receivable accounted for 10 % or more of the Company’s total outstanding rent receivable at December

31, 2024, accounted for 76.9 % of the Company’s total outstanding rent receivable at December 31, 2024.

Two customers, of which

one is a related party and the other is a third party, whose outstanding receivable accounted for 10% or more of the Company’s

total outstanding rent receivable at December 31, 2022, accounted for 81.4 % of the Company’s total outstanding rent receivable

at December 31, 2022.

No supplier accounted for 10% or more of the

Company’s purchase during the years ended December 31, 2023 and 2022.

NOTE 19 – SEGMENT INFORMATION

For the year ended December 31, 2022, the Company

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

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

They are managed

separately based on the fundamental differences in their operations.

Due to the winding down of the medical related

consulting services segment in 2022, the Company decided to cease all operations of this segment and no longer has any material revenues

or expenses in this segment.

As a result, commencing from the first quarter of 2023, the Company’s chief operating decision maker

no longer reviews medical related consulting services operating results.

On February 9, 2023,

the Company purchased 40 % of Lab Services MSO.

Commencing from the purchase date, February 9, 2023, the Company is active in the

management of Lab Services MSO.

During the year ended December 31, 2023, the Company operated in two reportable business segments:

the real property operating segment, and (2) laboratory testing services segment (which commenced with the purchase date, February 9,

2023) since Lab Services MSO’s operating results are regularly reviewed by the Company’s chief operating decision maker to

make decisions about resources to be allocated to the segment and assess its performance.

The Company regularly reviews the operating

results and performance of Lab Services MSO, which is the Company’s an equity method investee.

AVALON GLOBOCARE CORP.

one is a related party and the other is a third party, whose outstanding receivables accounted for 10 % or more of the Company’s

total outstanding rent receivable at December 31, 2023, accounted for 80.6 % of the Company’s total outstanding rent receivable at

December 31, 2023.

accounted for 10 % or more of the Company’s purchase during the years ended December 31, 2024 and 2023.

20 – SEGMENT INFORMATION

The segment reporting structure uses the Company’s

management reporting structure as its foundation to reflect how the Company manages the businesses internally.

The management reporting

structure is composed of two strategic business units, mainly organized by services, led by the Company’s President and Chief Executive

Officer, who is its Chief Operating Decision Maker.

Using the accounting guidance on segment reporting, the Company determined that its

two operating segments are aligned with its two reportable segments corresponding to its strategic business units.

GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 20 – SEGMENT

INFORMATION (continued)

Information with respect

to these reportable business segments for the years ended December 31, 2023 and 2022 was as follows:

Year Ended December 31, 2023

Real Property Operations

Lab Services MSO

Corporate / Other

Real property rental revenue

Real property operating expenses

( 1,017,493 )

Real property operating income

Loss from equity method investment - Lab Services MSO

( 8,571,647 )

Other operating expenses

( 7,072,868 )

( 7,420,224 )

Other (expense) income:

Interest expense

( 1,351,502 )

$ ( 1,028,038 )

$ ( 8,571,647 )

$ ( 7,107,325 )

$ ( 16,707,010 )

Year Ended December 31, 2022

Real Property Operations

Medical Related Consulting Services

Corporate / Other

Real property rental revenue

Real property operating expenses

Real property operating income

Other operating expenses

( 8,309,470 )

( 9,065,623 )

Other (expense) income:

Interest expense

( 3,576,333 )

$ ( 225,575 )

$ ( 11,625,983 )

$ ( 11,930,847 )

Identifiable long-lived tangible assets at December 31, 2023 and 2022

Real property operations

Medical related consulting services

Corporate/Other

Identifiable long-lived tangible assets at December 31, 2023 and 2022

United States

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 20 – COMMITMENTS

AND CONTINCENGIES

Operating Leases Commitment

The Company is a party to leases for office

These lease agreements will expire through February 2025.

Rent expense under all operating leases amounted to approximately $ 129,000 and

$ 141,000 for the years ended December 31, 2023 and 2022, respectively.

Supplemental cash flow information related to

leases for the years ended December 31, 2023 and 2022 is as follows:

Years Ended December 31,

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

Operating cash flows paid for operating lease

Right-of-use assets obtained in exchange for lease obligation:

Operating lease

The following table summarizes the lease term

and discount rate for the Company’s operating lease as of December 31, 2023:

Operating Lease

Weighted average remaining lease term (in years)

Weighted average discount rate

The following table summarizes the maturity of lease liabilities under

operating lease as of December 31, 2023:

For the Year Ending December 31:

Operating Lease

Total lease payments

Amount of lease payments representing interest

Total present value of operating lease liabilities

Current portion

Long-term portion

Joint Venture – Avactis Biosciences

On July 18, 2018, the

Company formed a wholly owned subsidiary, Avactis Biosciences Inc.

(“Avactis”), a Nevada corporation, which focuses on accelerating

commercial activities related to cellular therapies as well as cellular immunotherapy including CAR-T, CAR-NK, TCR-T and others.

formed, Avactis was designed to integrate and optimize the Company’s global scientific and clinical resources to further advance

the use of cellular therapies to treat certain cancers, however the Company is no longer pursuing any commercial activities with respect

to cellular immunotherapy and CAR-T, in particular.

As of April 6, 2022, the Company owns 60 % of Avactis and Arbele Biotherapeutics

Limited (“Arbele Biotherapeutics”) owns 40 % of Avactis.

Avactis owns 100 % of the capital stock of Avactis Nanjing

Biosciences Ltd., a company incorporated in the PRC on May 8, 2020 (“Avactis Nanjing”), which only owns a patent and is not

considered an operating entity.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 20 – COMMITMENTS

AND CONTINCENGIES (continued)

Joint Venture – Avactis Biosciences

The Company is required

to contribute $ 10 million (or equivalent in RMB) in cash and/or services, which shall be contributed in tranches based on milestones

to be determined jointly by Avactis and the Company in writing subject to the Company’s cash reserves.

Within 30 days, Arbele Biotherapeutics

shall make contribution of $ 6.66 million in the form of entering into a License Agreement with Avactis granting Avactis an exclusive

right and license in China to its technology and intellectual property pertaining to CAR-T/CAR-NK/TCR-T/universal cellular immunotherapy

technology and any additional technology developed in the future with terms and conditions to be mutually agreed upon the Company and

Avactis and services.

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

In addition, the Company

is responsible for contributing registered capital of RMB 5,000,000 (approximately $ 0.7 million) for working capital purposes

as required by local regulation, which is not required to be contributed immediately and will be contributed subject to the Company’s

As of the date hereof, Avactis’ activities have been limited to that of a patent holding company and there is no other

activity or planned contributions in 2024.

NOTE 21 – SUBSEQUENT

The Company evaluated

subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued.

Based upon this review, other than as described below, the Company did not identify any subsequent events that would have required adjustment

or disclosure in the financial statements.

March 2024 Convertible

Note Financing

In March 2024, the Company

entered into security purchase agreement with a lender (the “March 2024 Lender”) and closed on the issuance of 13.0 % senior

secured convertible promissory note in the principal amount of $ 700,000 (the “March 2024 Note”), as well as the issuance

of 105,000 shares of common stock as a commitment fee and warrants for the purchase of up to 252,404 shares of the Company’s common

The Company and its subsidiaries have also entered into security agreements, creating a security interest in certain property

of the Company and its subsidiaries to secure the prompt payment, performance and discharge in full of all of the Company’s obligations

under the March 2024 Note.

On February 9, 2023, the Company purchased 40 %

of Lab Services MSO.

Commencing from the purchase date, February 9, 2023, the Company was active in the management of Lab Services MSO.

During the years ended December 31, 2024 and 2023, the Company operated in two reportable business segments:

(1) the real property operating

segment, and (2) laboratory testing services segment (which commenced with the purchase date, February 9, 2023) since Lab Services MSO’s

operating results are regularly reviewed by the Company’s chief operating decision maker to make decisions about resources to be

allocated to the segment and assess its performance.

The Company regularly reviews the operating results and performance of Lab Services

MSO, which is the Company’s equity method investee.

See Note 22—Subsequent Events—Redemption Agreement.

The accounting policies for the segments are the

same as those described in Note 3.

Our reportable segments are aligned principally around the differences in services.

Real property operating

income is calculated by subtracting real property operating expenses from real property rental revenue;

loss from equity method investment

– Lab Services MSO is calculated by subtracting amortization of intangible assets acquired from acquisition and impairment of goodwill

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

What changed 10-K

Item 9A. Controls and Procedures