What changed in this filing

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Item 1. Financial Statements

2025-05-13 compared with 2024-11-12 · 1391 added, 1222 removed, 324 unchanged (89% of the section changed)

Financial Statements.

GLOBOCARE CORP.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

September 30,

CURRENT ASSETS:

Rent receivable

Receivable from sale of equity method investment, current portion

Prepaid expense and other current assets

2 unchanged sentences

Operating lease right-of-use assets, net

Receivable from sale of equity method investment, noncurrent portion

Property and equipment, net

3 unchanged sentences

Total Non-current Assets

LIABILITIES AND EQUITY

LIABILITIES AND (DEFICIT) EQUITY

CURRENT LIABILITIES:

5 unchanged sentences

Accrued liabilities and other payables - related parties

Operating lease obligation

Operating lease obligation, current portion

Advance from pending sale of noncontrolling interest - related party

Equity method investment payable

Derivative liability

4 unchanged sentences

Operating lease obligation, noncurrent portion

Note payable, net - noncurrent portion

Loan payable - related party

Total Non-current Liabilities

1 unchanged sentence

Commitments and Contingencies (Note 15)

(DEFICIT) EQUITY:

Preferred stock, $ 0.0001 par value;

10,000,000 shares authorized;

Series A Convertible Preferred Stock, 9,000 shares issued and outstanding at September 30, 2024 and December 31, 2023

Liquidation preference $ 9 million at September 30, 2024

Series B Convertible Preferred Stock, 11,000 shares issued and outstanding at September 30, 2024 and December 31, 2023

Liquidation preference $ 11 million at September 30, 2024

Series A convertible preferred stock, 0 and 9,000 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

Series B convertible preferred stock, 0 and 11,000 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

Series C convertible preferred stock, 3,500 shares issued and outstanding at March 31, 2025 and December 31, 2024;

Liquidation preference $ 3.5 million at March 31, 2025

Series D convertible preferred stock, 5,000 and 0 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively;

Liquidation preference $ 5 million at March 31, 2025

Common stock, $ 0.0001 par value;

100,000,000 shares authorized;

1,097,688 shares issued and 1,094,221 shares outstanding at September 30, 2024;

1,655,134 shares issued and 1,651,667 shares outstanding at March 31, 2025;

1,445,979 shares issued and 1,442,512 shares outstanding at December 31, 2024

1 unchanged sentence

common stock held in treasury, at cost;

3,467 shares at September 30, 2024 and December 31, 2023

3,467 shares at March 31, 2025 and December 31, 2024

Accumulated deficit

( 90,155,236 )

( 87,673,125 )

Statutory reserve

1 unchanged sentence

Total Avalon GloboCare Corp.

stockholders' equity

stockholders’ (deficit) equity

( 3,891,270 )

Noncontrolling interest

Total Liabilities and Equity

See accompanying notes to the condensed consolidated

financial statements.

GLOBOCARE CORP.

Total (Deficit) Equity

( 3,891,270 )

Total Liabilities and (Deficit) Equity

See accompanying notes to the condensed consolidated financial statements.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

For the Three Months Ended

For the Nine Months Ended

September 30,

REAL PROPERTY RENTAL REVENUE

1 unchanged sentence

REAL PROPERTY OPERATING INCOME

(LOSS) INCOME FROM EQUITY METHOD INVESTMENT - LAB SERVICES MSO

INCOME FROM EQUITY METHOD INVESTMENT - LAB SERVICES MSO

OTHER OPERATING EXPENSES:

6 unchanged sentences

( 1,806,775 )

( 1,141,136 )

( 3,617,386 )

( 5,962,831 )

OTHER (EXPENSE) INCOME

Interest expense - amortization of debt discount and debt issuance costs

( 1,115,433 )

Interest expense - other

1 unchanged sentence

Change in fair value of derivative liability

Impairment of equity method investment - Epicon

Other (expense) income

Other expense

Total Other Expense, net

( 1,561,353 )

( 1,189,045 )

LOSS BEFORE INCOME TAXES

3 unchanged sentences

$ ( 1,367,513 )

$ ( 1,679,200 )

$ ( 1,485,075 )

NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST

NET LOSS AFTER NONCONTROLLING INTEREST

( 2,482,111 )

( 1,367,513 )

NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST

DEEMED CONTRIBUTION ON EXCHANGE OF EQUITY INSTRUMENTS

NET LOSS ATTRIBUTABLE TO AVALON GLOBOCARE CORP.

2 unchanged sentences

$ ( 1,367,513 )

$ ( 5,178,739 )

$ ( 7,151,876 )

NET LOSS PER COMMON SHARE ATTRIBUTABLE TO AVALON GLOBOCARE CORP.

6 unchanged sentences

$ ( 1,367,513 )

$ ( 5,178,739 )

$ ( 7,151,876 )

OTHER COMPREHENSIVE INCOME (LOSS)

3 unchanged sentences

( 1,370,433 )

( 5,175,910 )

( 7,167,902 )

COMPREHENSIVE LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST

3 unchanged sentences

$ ( 1,370,433 )

$ ( 5,175,910 )

$ ( 7,167,902 )

accompanying notes to the condensed consolidated financial statements.

GLOBOCARE CORP.

See accompanying notes to the condensed consolidated financial statements.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

the Three and Nine Months Ended September 30, 2024

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

(DEFICIT) EQUITY

For the Three Months Ended March 31, 2025

Avalon GloboCare Corp.

Stockholders' Equity

Series A Preferred Stock Series B Preferred Stock Common Stock Treasury Stock Accumulated

Additional Other

Number of Number of Number of Paid-in Number of Accumulated Statutory Comprehensive Noncontrolling Total

Shares Amount Shares Amount Shares Amount Capital Shares Amount Deficit Reserve Loss Interest Equity

Stockholders’ (Deficit) Equity

Series A Preferred Stock

Series B Preferred Stock

Series C Preferred Stock

Series D Preferred Stock

Treasury Stock

Comprehensive

Noncontrolling

Balance, January 1, 2025

Issuance of common stock as convertible note payable commitment fee - - - - 7,000 1 41,999 - - - - - - 42,000

$ ( 522,500 )

$ ( 87,673,125 )

$ ( 232,000 )

Issuance of common stock upon cashless exercise of stock warrants

Issuance of common stock for services

Reclassification of derivative liability to equity

Series D Convertible Preferred Stock issued in exchange of Series A Convertible Preferred Stock

( 9,000,000 )

Series B Convertible Preferred Stock extinguished related to sale of equity method investment

( 11,000,000 )

( 8,651,305 )

Stock-based compensation

1 unchanged sentence

Net loss for the three months ended March 31, 2025

( 2,482,111 )

Balance, March 31, 2025

Issuance of common stock as convertible note payable commitment fee - - - - 26,800 2 278,544 - - - - - - 278,546

Stock-based compensation - - - - - - 12,256 - - - - - - 12,256

Beneficial conversion feature related to convertible note payable - - - - - - 201,595 - - - - - - 201,595

Foreign currency translation adjustment - - - - - - - - - - - 2,706 - 2,706

Net loss for the three months ended June 30, 2024 - - - - - - - - - ( 2,132,026 ) - - - ( 2,132,026 )

Balance, June 30, 2024 9,000 9,000,000 11,000 11,000,000 770,569 77 68,434,009 ( 3,467 ) ( 522,500 ) ( 83,269,270 ) 6,578 ( 231,941 ) - 4,416,953

Sale of common stock, net - - - - 281,843 28 2,544,283 - - - - - - 2,544,311

To correct beneficial conversion feature related to convertible note payable - - - - - - ( 201,595 ) - - - - - - ( 201,595

Issuance of common stock for services - - - - 45,153 5 306,345 - - - - - - 306,350

Stock-based compensation - - - - - - 11,542 - - - - - - 11,542

Shares issued for adjustments for 1:15 reverse split - - - - 123 - - - - - - - - -

Foreign currency translation adjustment - - - - - - - - - - - 3,043 - 3,043

Net loss for the three months ended September 30, 2024 - - - - - - - - - ( 1,679,200 ) - - - ( 1,679,200 )

Balance, September 30, 2024 9,000 $ 9,000,000 11,000 $ 11,000,000 1,097,688 $ 110 $ 71,094,584 ( 3,467 ) $ ( 522,500 ) $ ( 84,948,470 ) $ 6,578 $ ( 228,898 ) $ - $ 5,401,404

accompanying notes to the condensed consolidated financial statements.

GLOBOCARE CORP.

$ ( 522,500 )

$ ( 90,155,236 )

$ ( 231,721 )

$ ( 3,891,270 )

See accompanying notes to the condensed consolidated financial statements.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

the Three and Nine Months Ended September 30, 2023

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

For the Three Months Ended March 31, 2024

Avalon GloboCare Corp.

Stockholders’ Equity

Series A Preferred Stock Series B Preferred Stock Common Stock Treasury Stock Accumulated

Additional Other

Number of Number of Number of Paid-in Number of Accumulated Statutory Comprehensive Non-controlling Total

Shares Amount Shares Amount Shares Amount Capital Shares Amount Deficit Reserve Loss Interest Equity

Series A Preferred Stock

Series B Preferred Stock

Treasury Stock

Comprehensive

Noncontrolling

Balance, January 1, 2024

Issuance of Series B Convertible Preferred Stock for equity method investment - - 11,000 11,000,000 - - - - - - - - - 11,000,000

Issuance of common stock for services - - - - 13,515 1 463,375 - - - - - - 463,376

$ ( 522,500 )

$ ( 79,769,731 )

$ ( 231,727 )

Issuance of common stock as convertible note payable commitment fee

Stock-based compensation

1 unchanged sentence

Net loss for the three months ended March 31, 2024

( 1,367,513 )

Balance, March 31, 2024

To correct shares issued for adjustments for 1:10 reverse split - - - - 3,333 - - - - - - - - -

Issuance of common stock for services - - - - 10,573 1 536,279 - - - - - - 536,280

Issuance of common stock as convertible note payable commitment fee - - - - 5,000 1 146,999 - - - - - - 147,000

Stock-based compensation - - - - - - 112,015 - - - - - - 112,015

Foreign currency translation adjustment - - - - - - - - - - - ( 11,011 ) - ( 11,011 )

Net loss for the three months ended June 30, 2023 - - - - - - - - - ( 2,747,057 ) - - - ( 2,747,057 )

Balance, June 30, 2023 9,000 9,000,000 11,000 11,000,000 699,993 70 67,277,591 ( 3,467 ) ( 522,500 ) ( 68,729,522 ) 6,578 ( 220,478 ) - 17,811,739

Sale of common stock, net - - - - 30,442 3 414,393 - - - - - - 414,396

Issuance of common stock as convertible note payable commitment fee - - - - 1,667 - 35,500 - - - - - - 35,500

Stock-based compensation - - - - - - 54,653 - - - - - - 54,653

Foreign currency translation adjustment - - - - - - - - - - - ( 8,685 ) - ( 8,685 )

Net loss for the three months ended September 30, 2023 - - - - - - - - - ( 1,485,075 ) - - - ( 1,485,075 )

Balance, September 30, 2023 9,000 $ 9,000,000 11,000 $ 11,000,000 732,102 $ 73 $ 67,782,137 ( 3,467 ) $ ( 522,500 ) $ ( 70,214,597 ) $ 6,578 $ ( 229,163 ) $ - $ 16,822,528

accompanying notes to the condensed consolidated financial statements.

GLOBOCARE CORP.

$ ( 522,500 )

$ ( 81,137,244 )

$ ( 234,647 )

See accompanying notes to the condensed consolidated financial statements.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended

September 30,

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

$ ( 1,367,513 )

Adjustments to reconcile net loss to

net cash used in operating activities:

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

Change in straight-line rent receivable

1 unchanged sentence

Stock-based compensation and service expense

Loss (income) from equity method investments

income from equity method investment

Distribution of earnings from equity method investment

Impairment of equity method investment - Epicon

Amortization of debt issuance costs and debt discount

6 unchanged sentences

Accrued liabilities and other payables

( 1,176,402 )

Accrued liabilities and other payables - related parties

2 unchanged sentences

( 1,801,926 )

( 5,708,402 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment

Payment for equity interest purchase

NET CASH USED IN INVESTING ACTIVITIES

Proceeds from sale of equity method investment

NET CASH PROVIDED BY INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from loan payable - related party

Proceeds from issuance of convertible debts and warrants

Payments of convertible debts issuance costs

Repayments of convertible debts

( 3,100,000 )

Proceeds from issuance of balloon promissory note

Payments of balloon promissory note issuance costs

Proceeds from issuance of convertible debt and warrants

Payments of convertible debt issuance costs

Repayments of convertible debt

Advance from pending sale of noncontrolling interest in subsidiary

Proceeds from equity offering

Disbursements for equity offering costs

NET CASH PROVIDED BY FINANCING ACTIVITIES

EFFECT OF EXCHANGE RATE ON CASH

NET INCREASE (DECREASE) IN CASH

NET (DECREASE) INCREASE IN CASH

( 1,486,723 )

6 unchanged sentences

Common stock issued for accrued liabilities

Reclassification of advances for equity interest purchase to equity method investment

Series B Convertible Preferred Stock issued related to equity method investment

Accrued purchase price related to equity method investment

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

Receivable related to sale of equity method investment

Related party payable extinguished upon sale of equity method investment

Series B Convertible Preferred Stock extinguished related to sale of equity method investment

Series D Convertible Preferred Stock issued in exchange of Series A Convertible Preferred Stock

Warrants issued as convertible note payable finder’s fee

Warrants issued with convertible note payable recorded as debt discount

Common stock issued as convertible note payable commitment fee

Equity method investment payable paid by a related party

Reclassification of deferred offering costs

accompanying notes to the condensed consolidated financial statements.

GLOBOCARE CORP.

Settlement of derivative liability

Issuance of common stock upon cashless exercise of stock warrants

Initial ROU asset and lease liability

See accompanying notes to the condensed consolidated financial statements.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 – ORGANIZATION AND NATURE OF OPERATIONS

GloboCare Corp.

(the “Company” or “ALBT”) was incorporated under the laws of the State of Delaware on July 28,

Company is a commercial stage company dedicated to developing and delivering innovative, transformative, precision diagnostics and clinical

laboratory services.

The Company is working to establish 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.

May 18, 2015, Avalon Healthcare System, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION

AND NATURE OF OPERATIONS

Avalon GloboCare Corp.

(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 and the advancement of intellectual property in cellular therapy.

The Company is currently marketing the KetoAir™ breathalyzer device and plans to develop additional diagnostic uses of the breathalyzer

The KetoAir TM is registered with the U.S.

Food and Drug Administration as a Class I medical device.

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.

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.

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

6 unchanged sentences

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

September 30, 2024, the occupancy rate of the building is 98.5 %.

July 18, 2018, the Company formed a wholly owned subsidiary, Avactis Biosciences Inc.

(“Avactis”), a Nevada corporation,

which is a patent holding company.

Commencing on 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.

Avactis and Avactis Nanjing are dormant and are in process of being dissolved.

October 14, 2022, the Company formed a wholly owned subsidiary, Avalon Laboratory Services, Inc.

(“Avalon Lab”), a Delaware

On February 9, 2023, Avalon Lab purchased 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.

March 31, 2025, the occupancy rate of the building is 96.2 %.

On July 18, 2018, the Company formed a wholly

owned subsidiary, Avactis Biosciences Inc.

(“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 % 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

owned subsidiary, Avalon Laboratory Services, Inc.

(“Avalon Lab”), a Delaware company.

On February 9, 2023, Avalon Lab purchased

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 the first quarter of 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.

May 1, 2024, the Company formed a wholly owned subsidiary, Q&A Distribution LLC (“Q&A Distribution”), a Texas company.

Q&A Distribution is engaged in distribution of KetoAir device.

GLOBOCARE CORP.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 – ORGANIZATION AND NATURE OF OPERATIONS (continued)

of the Company’s subsidiaries which are included in these condensed consolidated financial statements as of September 30, 2024

are as follows:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION

AND NATURE OF OPERATIONS (continued)

Details of the Company’s subsidiaries which

are included in these condensed consolidated financial statements as of March 31, 2025 are as follows:

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 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;

Avactis Biosciences Inc.

July 18, 2018

60 % held by ALBT Dormant,

is in process of being dissolved

(“Avactis”) Nevada July 18, 2018 60 % held by ALBT Dormant;

in process of being dissolved

Avactis Nanjing Biosciences Ltd.

(“Avactis Nanjing”)

100 % held by Avactis Dormant,

is in process of being dissolved

(“Avactis Nanjing”) PRC May 8, 2020 100 % held by Avactis Dormant;

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

Distribution LLC

(“Q&A Distribution”)

100 % held by ALBT Distributes KetoAir device

(“Avalon Lab”) Delaware October 14, 2022 100 % held by ALBT No current activities to report;

Q&A Distribution LLC (“Q&A Distribution”) Texas May 1, 2024 100 % held by ALBT Distributes KetoAir device

2 – BASIS OF PRESENTATION AND GOING CONCERN CONDITION

of Presentation

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

In the opinion of management,

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

consolidated financial statements have been included.

The results reported in the condensed consolidated financial statements for any

interim periods are not necessarily indicative of the results that may be reported for the entire year.

The accompanying condensed consolidated

financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”)

and do not include all information and footnotes necessary for a complete presentation of financial statements in conformity with accounting

principles generally accepted in the United States (“U.S.

The Company’s condensed consolidated financial statements

include the accounts of the Company and its subsidiaries.

All significant intercompany accounts and transactions have been eliminated

in consolidation.

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

Basis of Presentation

These interim condensed consolidated financial

statements of the Company and its subsidiaries are unaudited.

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

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

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

results that may be reported for the entire year.

The accompanying condensed consolidated financial statements have been prepared in accordance

with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and do not include all information and

footnotes necessary for a complete presentation of financial statements in conformity with accounting principles generally accepted in

the United States (“U.S.

The Company’s condensed consolidated financial statements include the accounts of the

Company and its subsidiaries.

All significant intercompany accounts and transactions have been eliminated in consolidation.

Certain information and footnote disclosures normally

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

GAAP have been condensed or omitted.

These condensed consolidated financial statements should be read in conjunction with the Company’s

audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended

December 31, 2023 filed with the SEC on April 15, 2024.

GLOBOCARE CORP.

These condensed

consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and

notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Company is a commercial stage company dedicated to developing and delivering innovative, transformative, precision diagnostics and clinical

laboratory services.

The Company is working to establish 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 toxicology.

In addition, the Company owns commercial real estate that houses

its headquarters in Freehold, New Jersey.

These unaudited condensed consolidated financial statements have been prepared assuming that

the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction

of liabilities in the normal course of business.

As reflected in the accompanying unaudited condensed consolidated financial

statements, the Company had a working capital deficit of approximately $ 10,935,000 at September 30, 2024 and had incurred recurring net

losses and generated negative cash flow from operating activities of approximately $ 5,179,000 and $ 3,891,000 for the nine months ended

September 30, 2024, respectively.

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 40 % interest in Lab Services

MSO and obtaining additional financing to fund future obligations and pay liabilities arising from normal business operations.

the current cash balance cannot be projected to cover the operating expenses for the next twelve months from the release date of this

Quarterly Report on Form 10-Q.

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

The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital, implement

its business plan, and generate significant revenues.

There are no assurances that the Company will be successful in its efforts to generate

significant revenues, maintain sufficient cash balance or report profitable operations or to continue as a going concern.

plans to raise 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.

Going Concern

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 condensed consolidated financial statements have been prepared

assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the

satisfaction of liabilities in the normal course of business.

As reflected in the accompanying

condensed consolidated financial statements, the Company had a working capital deficit of approximately $ 11,655,000 at March 31, 2025

and had incurred recurring net losses and generated negative cash flow from operating activities of approximately $ 2,482,000 and $ 1,802,000

for the three months ended March 31, 2025, 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, generating revenue for selling of Keto Air, 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 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.

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.

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

1 unchanged sentence

a going concern.

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

GAAP requires management to make estimates and assumptions

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

NOTE 3 – SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation

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

GAAP requires management to make estimates and assumptions that

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

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

Changes in these estimates and assumptions

may have a material impact on the condensed consolidated financial statements and accompanying notes.

Changes in these estimates and assumptions may

have a material impact on the condensed consolidated financial statements and accompanying notes.

Making estimates requires management

3 unchanged sentences

change in the near term due to one or more future confirming events.

Accordingly, the actual results could differ significantly from

those estimates.

Significant estimates during

the three and nine months ended September 30, 2024 and 2023 include the useful life of investment in real estate and intangible assets,

Accordingly, the actual results could differ significantly from those

estimates during the three months ended March 31, 2025 and 2024 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.

GLOBOCARE CORP.

the valuation of stock-based compensation, the valuation of Series D convertible preferred stock (“Series D Preferred Stock”),

and the assumptions used to determine fair value of warrants and embedded conversion features of convertible note payable .

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Value of Financial Instruments and Fair Value Measurements

Company adopted the guidance of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification

(“ASC”) 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair

value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

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

available at the measurement date.

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

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

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

by observable market data.

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

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

on the best available information.

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

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

due to their short-term nature.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

Fair Value of Financial Instruments and Fair Value Measurements

The Company adopted the

guidance of the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Codification (“ASC”)

820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes

a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

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

approximates the carrying amounts represented in the accompanying condensed consolidated financial statements, primarily due to their

short-term nature.

and liabilities measured at fair value on a recurring basis.

Certain assets and liabilities are measured at fair value on

a recurring basis.

These assets and liabilities are measured at fair value on an ongoing basis.

These assets and liabilities include

derivative liability.

Derivative liability is carried at fair value and measured on an ongoing basis.

The table below reflects the activity

of derivative liability measured at fair value for the nine months ended September 30, 2024:

assets and liabilities are measured at fair value on a recurring basis.

These assets and liabilities are measured at fair value on an

ongoing basis.

These assets and liabilities include derivative liability.

Derivative liability is carried at fair value and measured on an ongoing

The table below reflects the activity of derivative liability measured at fair value for the three months ended March 31, 2025:

Significant Unobservable Inputs

Balance of derivative liability as of January 1, 2025

Initial fair value of derivative liability attributable to warrants issuance with March and June 2024 fund raises

Gain from change in the fair value of derivative liability

Balance of derivative liability as of September 30, 2024

and liabilities measured at fair value on a nonrecurring basis.

Certain assets and liabilities are measured at fair value

on a nonrecurring basis.

These assets and liabilities are not measured at fair value on an ongoing basis, but are subject to fair value

adjustments in certain circumstances.

These assets and liabilities include equity method investment that is written down to fair value

when it is impaired.

method investment in Laboratory Services MSO, LLC The factors used to determine fair value are subject to management’s

judgment and expertise.

These assumptions represent Level 3 inputs.

Impairment of equity method investment in Laboratory Services MSO,

LLC for the nine months ended September 30, 2024 was $ 259,579 .

Reclassification of additional paid-in capital upon conversion

Loss from change in the fair value of derivative liability

Balance of derivative liability as of March 31, 2025

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

at fair value (fair value option).

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

a new election date occurs.

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

be reported in earnings at each subsequent reporting date.

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

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

and Cash Equivalents

September 30, 2024 and December 31, 2023, the Company’s cash balances by geographic area were as follows:

September 30, 2024

December 31, 2023

The fair value option may be elected on an instrument -by-instrument

basis and is irrevocable, unless a new election date occurs.

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

losses for that instrument should be reported in earnings at each subsequent reporting date.

The Company did not elect to apply the fair

value option to any outstanding instruments.

Cash and Cash Equivalents

March 31, 2025 and December 31 , 2024, the Company’s cash balances by geographic area were as follows:

United States

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

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

The Company had no cash equivalents at September

30, 2024 and December 31, 2023.

Risk and Uncertainties

For purposes of the condensed

consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less when

purchased and money market accounts to be cash equivalents.

The Company had no cash equivalents at March 31, 2025 and December 31, 2024.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

Credit Risk and Uncertainties

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

1 unchanged sentence

limits of $ 250,000 .

The Company manages this credit risk by concentrating its cash balances in high quality financial institutions and

by periodically evaluating the credit quality of the primary financial institutions holding such deposits.

The Company has not experienced

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

At September 30, 2024, the

Company’s cash balances in United States bank accounts had approximately $ 514,000 in excess of the federally-insured limits.

Company’s concentrations of credit risk with respect to its rent receivable is limited due to short-term payment terms.

also performs ongoing credit evaluations of its tenants to help further reduce credit risk.

in Unconsolidated Company

Company uses the equity method of accounting 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.

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 $ 0 for the nine months ended

September 30, 2024 and 2023, respectively.

See Note 5 for discussion of equity method investments.

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.

Property Rental Revenue

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

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

Lease payments under tenant leases

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

The cumulative difference between lease revenue recognized

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

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

and Contingencies

the normal course of business, the Company is subject to contingencies, such as legal proceedings and claims arising out of its business,

that cover a wide range of matters.

Liabilities for such contingencies are recorded when it is probable that a liability has been incurred

and the amount of the assessment can be reasonably estimated.

The Company manages this credit risk by concentrating its cash balances

in high quality financial institutions and by periodically evaluating the credit quality of the primary financial institutions holding

such deposits.

The Company has not experienced any losses in such bank accounts and believes it is not exposed to any risks on its cash

in bank accounts.

At March 31, 2025, the Company’s cash balances in United States bank accounts had approximately $ 840,000 in excess

of the federally-insured limits.

The Company’s

concentrations of credit risk with respect to its rent receivable is limited due to short-term payment terms.

The Company also performs

ongoing credit evaluations of its tenants to help further reduce credit risk.

Investment in Unconsolidated

uses the equity method of accounting 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.

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

in circumstances indicate that recorded value may not be recoverable.

If the Company considers any decline to be other than temporary

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

recorded to estimated fair value.

See Note 5 for discussion of equity method investment.

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.

Receivable from Sale of Equity Method Investment

the first quarter of 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 for cash and the

surrender of its Series B convertible preferred stock (“Series B Preferred Stock”) having a carrying value of $ 11,000,000 .

The aggregate cash amount to the Company for the redemption was $ 1,745,000 , to be paid as follows:

one payment of $ 95,000 at the closing

of the redemption and, beginning in March 2025, monthly payments of $ 75,000 until December 2026.

In addition, pursuant to the terms of

the Redemption Agreement, all shares of the Company’s Series B Preferred Stock previously issued to SCBC Holdings LLC as partial

consideration for the equity interests of Laboratory Services MSO, were permanently surrendered and relinquished to the Company for no

additional consideration.

The difference of $ 2,348,695 between the carrying value of the extinguished Series B Preferred Stock, the aggregate

cash amount to the Company for the redemption, net of the payables due to Lab Services MSO of $ 632,916 , totaling $ 13,377,916 , and the

carrying value of the equity method investment of $ 11,029,221 was accounted for as an increase to additional paid-in capital (See Note

10 - Series B Convertible Preferred Stock Extinguished Related to Sale of Equity Method Investment).

Accordingly, beginning in February

2025, the Company no longer offers laboratory services.

As of March 31, 2025, the receivable from sale of equity method investment amounted

to $ 1,650,000 , of which $ 975,000 was included in current assets and $ 675,000 was included in non-current assets.

Management believes

that the receivable is fully collectable.

Therefore, no material allowance for doubtful accounts was deemed to be required on the receivable

at March 31, 2025.

Per Share Data

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

3 unchanged sentences

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

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

stock outstanding during the period.

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

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

For the three and nine

months ended September 30, 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.

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

potential shares was antidilutive:

Three Months Ended

September 30,

Nine Months Ended

September 30,

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

Per Share Data (continued)

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.

The Company had $ 162,473 in

deemed contribution during the three months ended March 31, 2025, which increases the numerator in the net loss per share calculation.

For the three months ended March 31, 2025 and 2024, potentially dilutive common shares consisted 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 remained outstanding as of March 31, 2025.

following table summarizes the securities that were excluded from the diluted per share calculation

because the effect of including these potential shares was antidilutive:

Three Months Ended March 31,

Options to purchase common stock

2 unchanged sentences

Series B convertible preferred stock (**)

Convertible notes (***)

Series C convertible preferred stock (***)

Series D convertible preferred stock (****)

Convertible notes and related accrued interest (*****)

Potentially dilutive securities

the Series A convertible preferred stock was converted into shares of common stock of the Company at a conversion price of $ 150.00 per

the Series B convertible preferred stock was converted into shares of common stock of the Company at a conversion price of $ 56.70 per

(*) Assumed the Series A convertible preferred stock (“Series

A Preferred Stock”) was converted 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 $ 56.70 per share.

(***) Assumed the Series C convertible

preferred stock (“Series C Preferred Stock”) was converted into shares of common stock of the Company at a conversion price

of $ 2.41 per share.

(****) Assumed the Series D 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 $ 67.50 and $ 22.50 and $ 15.00

and $ 11.25 per share for the three and nine months ended September 30, 2024.

the convertible notes were converted into shares of common stock of the Company at a conversion price of $ 11.25 per share for the three

and nine months ended September 30, 2023.

Reclassification

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

These reclassifications have no effect on

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

GLOBOCARE CORP.

months ended March 31, 2025.

Assumed the convertible notes were converted into shares of

common stock of the Company at a conversion price of $ 67.50 and $ 22.50 and $ 15.00 per share for the three months ended March 31, 2024.

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 rent receivable on the condensed consolidated balance sheets.

AVALON GLOBOCARE

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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

The management approach considers the

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

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

The Company’s chief operating decision maker

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

allocating resources and assessing performance for the entire Company.

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 three and nine months ended September 30, 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 to the segment and assess its performance.

The Company regularly

reviews the operating results and performance of Lab Services MSO, for which the Company accounts for under the equity method.

The Company effectuated a 1-for-15 reverse stock split of its outstanding

shares of common stock on October 28, 2024.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

Commitments and Contingencies

In the normal

course of business, the Company is subject to contingencies, such as legal proceedings and claims arising out of its business, that cover

a wide range of matters.

Liabilities for such contingencies are recorded when it is probable that a liability has been incurred and the

amount of the assessment can be reasonably estimated.

Segment Reporting

reporting structure uses the Company’s management reporting structure as its foundation to reflect how the Company manages the businesses

internally and was mainly organized by services.

During the three months ended March 31, 2025 and 2024, the Company is organized into

two services-oriented strategic business units:

real property rental services and laboratory testing services (which ended on the redemption

date, February 26, 2025) — 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.

9, 2023, the Company purchased 40 % of Lab Services MSO.

During the first quarter of 2025, to preserve cash, the Company entered into discussions

with Lab Services MSO for the potential redemption of Avalon Lab’s investment and on February 26, 2025, Lab Services MSO redeemed

the 40 % equity interest in Lab Services MSO held by Avalon Lab.

Commencing from the purchase date, February 9, 2023, through the redemption

date, February 26, 2025, the Company was active in the management of Lab Services MSO.

During the three months ended March 31, 2025 and

2024, the Company operated in two reportable business segments:

(1) the real property operating segment, and (2) laboratory testing services

segment (which ended on the redemption date, February 26, 2025) 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 to the segment and assess its performance.

Prior to February 26, 2025, the Company regularly reviewed the operating results and performance of Lab Services MSO, for which the Company

accounted for under the equity method.

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 income from equity method investment – Lab Services MSO.

Reverse Stock Split

The Company 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 par value of common stock.

All references in these condensed

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.

Accounting Standards

In August 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

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.

GLOBOCARE CORP.

references in these condensed 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 Standards

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 eliminated the then-current models that required separation of beneficial conversion and cash conversion

features from convertible instruments and simplified the derivative scope exception guidance pertaining to equity classification of contracts

in an entity’s own equity.

ASU 2020-06 also introduced additional disclosures for convertible debt and freestanding instruments

that are indexed to and settled in an entity’s own equity.

ASU 2020-06 amended the diluted earnings per share guidance, including

the requirement to use the if-converted method for all convertible instruments.

ASU 2020-06 was effective for fiscal years beginning after

December 15, 2023, 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 condensed consolidated financial statements and related disclosures.

November 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.

The Company’s results of operations, cash flows, and financial condition were not impacted by the adoption

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Standards (continued)

December 2023, the FASB ASU 2023-09, Income Taxes (Topic 740):

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (continued)

Recent Accounting Standards (continued)

In December 2023, the

FASB issued 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.

Early adoption is permitted.

The Company is currently evaluating this guidance to determine

the impact it may have on its condensed consolidated financial statements disclosures.

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

a material impact on the consolidated financial statements upon adoption.

The Company does not discuss recent pronouncements that are

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

4 – PREPAID EXPENSE AND OTHER CURRENT ASSETS

September 30, 2024 and December 31, 2023, prepaid expense and other current assets consisted of the following:

September 30,

Advance to supplier

This guidance was intended to enhance the transparency

and decision-usefulness of income tax disclosures.

The amendments in ASU 2023-09 addressed 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 was effective for fiscal years beginning after December 15, 2024 on a prospective basis, with the option to apply the standard

retrospectively.

Early adoption was permitted.

The adoption of ASU 2023-09 did not have a material effect on the Company’s condensed

consolidated financial statements and related disclosures.

Other accounting

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

impact on the condensed consolidated financial statements upon adoption.

The Company does not discuss recent pronouncements that are not

anticipated to have an impact on or are unrelated to its condensed consolidated financial condition, results of operations, cash flows

or disclosures.

NOTE 4 – PREPAID EXPENSE

AND OTHER CURRENT ASSETS

March 31, 2025 and December 31, 2024, prepaid expense and other current assets consisted of the following:

Prepaid professional fees

1 unchanged sentence

Prepaid NASDAQ listing fee

Deferred offering costs

Deferred leasing costs

1 unchanged sentence

Due from broker

5 – EQUITY METHOD INVESTMENTS

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.

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.

The 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.

Services MSO, through its subsidiaries, is engaged in providing laboratory testing services.

Avalon Lab and an unrelated company, have

an ownership interest in Lab Services MSO of 40 % and 60 %, respectively.

GLOBOCARE CORP.

Finished goods

Recoverable value-added tax

NOTE 5 – EQUITY METHOD INVESTMENT

On February 9, 2023, 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 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.

The Series B Preferred Stock was 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 were subject to a lock-up period and restrictions on sale.

During the first quarter

of 2025, to preserve cash, the Company entered into discussions with Lab Services MSO for the potential redemption of the Company’s

investment and 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 (See Note 3 - Receivable from Sale of Equity Method

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5 – EQUITY METHOD INVESTMENTS (continued)

accordance with ASC 810, the Company determined that Lab Services MSO does not qualify as a variable interest entity, nor does it have

a controlling financial interest over the legal entity.

However, the Company determined that it does have significant influence as a

result of its board representation.

Therefore, the Company treats the equity investment in the consolidated financial statements under

the equity method.

Under the equity method, the investment is initially recorded at cost, adjusted for any excess of the Company’s

share of the purchased-date fair values of the investee’s identifiable net assets over the cost of the investment (if any).

February 9, 2023 (date of investment), the excess of the Company’s share of the fair values of the investee’s identifiable

net assets over the cost of the investment was approximately $ 19,460,000 which was attributable to intangible assets and goodwill.

the investment is adjusted for the post purchase change in the Company’s share of the investee’s net assets and any impairment

loss relating to the investment.

assets consist of the valuation of identifiable intangible assets acquired, representing trade names and customers relationships, which

are being amortized 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.

For the three months

ended September 30, 2024 and 2023, amortization expense of these intangible assets amounted to $ 166,733 and $ 203,744 , respectively, which

was included in (loss) income from equity method investment — Lab Services MSO in the accompanying condensed consolidated statements

of operations and comprehensive loss.

For the nine months ended September 30, 2024 and for the period from February 9, 2023 (date of

investment) through September 30, 2023, amortization expense of these intangible assets amounted to $ 500,199 and $ 543,318 , respectively,

which was included in (loss) income from equity method investment — Lab Services MSO in the accompanying condensed consolidated

statements of operations and comprehensive loss.

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.

September 2024, 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.

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 $ 259,579 related to the equity method investment for the nine months ended September 30, 2024.

the three months ended September 30, 2024 and 2023, the Company’s share of Lab Services MSO’s net loss was $ 21,597 and $ 558,244 ,

respectively, which was included in (loss) income from equity method investment — Lab Services MSO in the accompanying condensed

consolidated statements of operations and comprehensive loss.

the nine months ended September 30, 2024 and for the period from February 9, 2023 (date of investment) through September 30, 2023, the

Company’s share of Lab Services MSO’s net income was $ 90,001 and $ 913,378 , respectively, which was included in (loss) income

from equity method investment — Lab Services MSO in the accompanying condensed consolidated statements of operations and comprehensive

the nine months ended September 30, 2024, activity recorded for the Company’s equity method investment in Lab Services MSO is summarized

in the following table:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 – EQUITY METHOD INVESTMENT

Lab Services MSO, through

its subsidiaries, was engaged in providing laboratory testing services.

During the period from February 9, 2023 (date of investment) through

February 26, 2025 (date of sale), Avalon Lab and an unrelated company, had an ownership interest in Lab Services MSO of 40 % and 60 %, respectively.

In accordance with ASC

810, the Company determined that Lab Services MSO did not qualify as a variable interest entity, nor did it have a controlling financial

interest over the legal entity.

However, the Company determined that it does have significant influence as a result of its board representation.

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

the equity method, the investment is initially recorded at cost, adjusted for any excess of the Company’s share of the purchased-date

fair values of the investee’s identifiable net assets over the cost of the investment (if any).

At February 9, 2023 (date of investment),

the excess of the Company’s share of the fair values of the investee’s identifiable net assets over the cost of the investment

was approximately $ 19,460,000 which was attributable to intangible assets and goodwill.

Thereafter, the investment was adjusted for the

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

assets consisted of the valuation of identifiable intangible assets acquired, representing trade names and customers relationships,

which were being amortized 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.

period from January 1, 2025 through February 26, 2025 (date of sale) and for the three months ended March 31, 2024, amortization expense

of these intangible assets amounted to $ 111,156 and $ 166,733 , respectively, which was included in income from equity method investment

— Lab Services MSO in the accompanying condensed 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.

the period from January 1, 2025 through February 26, 2025 (date of sale) and for the three months ended March 31, 2024, the Company’s

share of Lab Services MSO’s net income was $ 503,833 and $ 274,202 , respectively, which was included in income from equity method

investment — Lab Services MSO in the accompanying condensed 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 period from January 1, 2025 through February

26, 2025 (date of sale) and for the three months ended March 31, 2024, distribution of earnings from the Company’s investment on

Lab Services MSO amounted to $ 0 and $ 160,788 , respectively.

the three months ended March 31, 2025, activity recorded for the Company’s equity method investment in Lab Services MSO is

summarized in the following table:

Equity investment carrying amount at January 1, 2025

1 unchanged sentence

Intangible assets amortization amount

Distribution of earnings from equity investment

Impairment of goodwill

Equity investment carrying amount at September 30, 2024

of September 30, 2024, the Company’s carrying value of the identified intangible assets and goodwill which are included in the

equity investment carrying amount was $ 8,892,445 and $ 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 ,

Sale of equity investment

( 11,029,221 )

Equity investment carrying amount at March 31, 2025

As of December 31, 2024, the Company’s carrying

value of the identified intangible assets and goodwill which are included in the equity investment carrying amount was $ 8,725,712 and

$ 0 , respectively.

GLOBOCARE CORP.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5 – EQUITY METHOD INVESTMENTS (continued)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 – EQUITY METHOD INVESTMENT

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

September 30,

Current assets

Noncurrent assets

Current liabilities

Noncurrent liabilities

September 30,

(Date of Investment)

September 30,

Income (loss) from operation

Net (loss) income

For the Period

from January 1,

(Date of Sale)

For the Three

Income from operation

6 – CONVERTIBLE NOTE PAYABLE

2023 Convertible Note

May 23, 2023, the Company entered into securities purchase agreements with Mast Hill Fund, L.P.

(“Mast Hill”) for the issuance

of 13.0 % senior secured promissory notes in the aggregate principal amount of $ 1,500,000 (collectively, the “May 2023 Convertible

Note”) 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.

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 .

Hill acquired the May 2023 Convertible Note with principal amount of $ 1,500,000 and paid the purchase price of $ 1,425,000 after an original

issue discount of $ 75,000 .

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.

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 price.

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 September 30, 2024, the May 2023 Convertible Note was repaid in full.

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6 – CONVERTIBLE NOTE PAYABLE (continued)

2023 Convertible Note

On July 6, 2023, the Company entered into securities purchase agreements

with FirstFire Global Opportunities Fund, LLC (“FirstFire”) for the issuance 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 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 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 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.

As of September 30,

2024, the July 2023 Convertible Note was repaid in full.

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.

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.

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

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.

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 Note.

As of September 30, 2024, the October 2023 Convertible Note was repaid in full.

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6 – CONVERTIBLE NOTE PAYABLE (continued)

Convertible Note (continued)

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 Note.

As of September 30, 2024, the October 2023 Convertible Note was repaid in full .

2024 Convertible Note

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.

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

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.

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 September 30, 2024, the March 2024 Convertible Note was repaid in full.

2024 Convertible Note

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).

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6 – CONVERTIBLE NOTE PAYABLE (continued)

2024 Convertible Note (continued)

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

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.

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.

Company is obligated to make amortization payments in cash to Mast Hill toward the repayment of the June 2024 Convertible Note, as provided

in the following table :

Payment Date:

Payment Amount:

June 2024 Convertible Note

On June 5, 2024, the

Company entered into securities purchase agreements with Mast Hill Fund L.P.

(“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).

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 June 5, 2029 (“First Warrant”), (ii) a warrant to purchase 80,000 shares of common stock with an exercise

price of $ 7.50 exercisable until June 5, 2029 (“Second Warrant”), 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.

The Second Warrant is not fair valued

and shall be cancelled and extinguished against payment of the June 2024 Convertible Note.

On June 5, 2024, the Company delivered such

duly executed June 2024 Convertible Note, warrants and common stock to Mast Hill against delivery of the 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 of $ 1,661,540 , 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 Mast Hill toward the repayment of the June 2024 Convertible Note, as provided in the following

Payment Date Payment Amount

December 5, 2024 $284,500 plus accrued interest through December 5, 2024

5 unchanged sentences

June 5, 2025 The entire remaining outstanding balance of the June 2024 Convertible Note

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.

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

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

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6 – CONVERTIBLE NOTE PAYABLE (continued)

June 2024 Convertible Note (continued)

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 $ 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 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.

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.

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.

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 7).

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.

GLOBOCARE CORP.

as such the fair value of the 80,000 warrants with an exercise price of $ 7.50 exercisable until June 5, 2029, 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 June 5, 2029 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 June 5, 2029 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.

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.

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 7).

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 $ 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.

15, 2024, the Company and Mast Hill entered into that certain consent, acknowledgement, and waiver 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 instruments that are immediately exercisable,

do 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 March 31, 2025 and December 31, 2024 was as follows:

Principal amount

unamortized debt issuance costs

unamortized debt discount

Convertible note payable, net

three months ended March 31, 2025 and 2024, amortization of debt discount and debt issuance costs related to convertible note payable

amounted to $ 283,755 and $ 242,389 , respectively, which have been included in interest expense — amortization of debt discount and

debt issuance costs on the accompanying condensed consolidated statements of operations and comprehensive loss.

three months ended March 31, 2025 and 2024, interest expense related to convertible note payable amounted to $ 81,956 and $ 71,715 , respectively,

which have been included in interest expense — other on the accompanying condensed consolidated statements of operations and comprehensive

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6 – CONVERTIBLE NOTE PAYABLE (continued)

2024 Convertible Note (continued)

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.

For the three months ended September

30, 2024 and 2023, amortization of debt discount and debt issuance costs related to convertible note payable amounted to $ 249,004 and

$ 169,329 , respectively, which have been included in interest expense — amortization of debt discount and debt issuance costs on

the accompanying condensed consolidated statements of operations and comprehensive loss.

For the nine months ended September

30, 2024 and 2023, amortization of debt discount and debt issuance costs related to the convertible note payable amounted to $ 1,026,012

and $ 214,044 , respectively, which have been included in interest expense — amortization of debt discount and debt issuance costs

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

the three months ended September 30, 2024 and 2023, interest expense related to convertible note payable amounted to $ 93,222 and $ 64,644 ,

respectively, which have been included in interest expense — other on the accompanying condensed consolidated statements of operations

and comprehensive loss.

the nine months ended September 30, 2024 and 2023, interest expense related to convertible note payable amounted to $ 233,276 and $ 85,480 ,

respectively, which have been included in interest expense — other on the accompanying condensed consolidated statements of operations

and comprehensive loss.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7 – DERIVATIVE LIABILITY

stated in Note 6, 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 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 September 30, 2024, 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.

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 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

9,000 warrants was classified as a derivative liability on May 23, 2023 .

On September 30, 2024, the estimated fair value of the 9,000 warrants was $ 2,735 .

The estimated

fair value of the warrants was computed as of September 30, 2024 using Black-Scholes option-pricing model, with the following assumptions:

stock price of $ 3.12 , volatility of 89.35 %, risk-free rate of 3.58 %, annual dividend yield of 0 % and expected life of 3.6 years.

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 September 30, 2024, the estimated fair value of the 3,000 warrants was $ 937 .

The estimated

fair value of the warrants was computed as of September 30, 2024 using Black-Scholes option-pricing model, with the following assumptions:

stock price of $ 3.12 , volatility of 88.35 %, risk-free rate of 3.58 %, annual dividend yield of 0 % and expected life of 3.8 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

stated in Note 6, 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 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 March 31, 2025, 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

May 23, 2023, the Company issued 9 ,000 warrants with an exercise price of $ 67.50 exercisable

until May 23, 2028 to Mast Hill 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 9,000 warrants was classified as a derivative liability on May 23, 2023.

In March 2025, 8,333 warrants held by Mast Hill were cashless

On March 31, 2025, the estimated fair value of the rest of 667 warrants was $ 701 .

The estimated fair value of the warrants

was computed as of March 31, 2025 using Black-Scholes option-pricing model, with the following assumptions:

stock price of $ 4.80 , volatility

of 108.28 %, risk-free rate of 3.89 %, annual dividend yield of 0 % and expected life of 3.1 years.

6, 2023, the Company issued 222 warrants with an exercise price of $ 67.50 exercisable until July 6, 2028 to a third party as a finder’s

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 222 warrants was classified as a derivative liability on July

On March 31, 2025, the estimated fair value of the 222 warrants was $ 237 .

The estimated fair value of the warrants was computed

as of March 31, 2025 using Black-Scholes option-pricing model, with the following assumptions:

stock price of $ 4.80 , volatility of 106.65 %,

risk-free rate of 3.89 %, annual dividend yield of 0 % and expected life of 3.3 years.

On October 9, 2023, the

Company issued 4,060 warrants with an exercise price of $ 37.50 exercisable until October 9, 2028 to Mast Hill and a third party as a finder’s

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 4,060 warrants was classified as a derivative liability on

October 9, 2023.

On September 30, 2024, the estimated fair value of the 7,560 warrants was $ 4,060 .

The estimated fair value of the warrants

was computed as of September 30, 2024 using Black-Scholes option-pricing model, with the following assumptions:

stock price of $ 3.12 ,

volatility of 85.84 %, risk-free rate of 3.58 %, annual dividend yield of 0 % and expected life of 4.0 years.

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7 – DERIVATIVE LIABILITY (continued)

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 September 30, 2024, the estimated fair value of the 9,450

warrants was $ 6,886 .

The estimated fair value of the warrants was computed as of September 30, 2024 using Black-Scholes option-pricing

On March 26, 2025, 3,500 warrants held by Mast Hill were cashless exercised.

On March 31, 2025, the estimated fair value

of the rest of 560 warrants was $ 866 .

The estimated fair value of the warrants was computed as of March 31, 2025 using Black-Scholes option-pricing

model, with the following assumptions:

1 unchanged sentence

0 % and expected life of 3.5 years.

March 7, 2024, the Company issued 9,450 warrants with an exercise price of $ 30.00 exercisable until March 7, 2029 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 March 31, 2025, the estimated fair value of the 9,450 warrants was $ 17,134 .

The estimated

fair value of the warrants was computed as of March 31, 2025 using Black-Scholes option-pricing model, with the following assumptions:

stock price of $ 4.80 , volatility of 99.62 %, risk-free rate of 3.89 %, annual dividend yield of 0 % and expected life of 3.9 years.

June 5, 2024, the Company issued 152,000 warrants to Mast Hill and a third party as a finder’s fee (see Note 6).

3 unchanged sentences

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.

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.

On September 30, 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 $ 108,888 .

The estimated

fair value of the warrants was computed as of September 30, 2024 using Black-Scholes option-pricing model, with the following assumptions:

stock price of $ 3.12 , volatility of 88.45 %, risk-free rate of 3.58 %, annual dividend yield of 0 % and expected life of 4.7 years.

fair value of the 80,000 warrants with an exercise price of $ 7.50 exercisable until June 5, 2029, 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 June 5, 2029 was classified as a derivative liability on June 5, 2024.

31, 2025, 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 $ 204,114 .

The estimated fair value of the warrants was computed as of March 31, 2025 using

Black-Scholes option-pricing model, with the following assumptions:

stock price of $ 4.80 , volatility of 97.66 %, risk-free rate of 3.96 %,

annual dividend yield of 0 % and expected life of 4.2 years.

or decreases in fair value of the derivative liability are included as a component of total other (expenses) income in the accompanying

condensed consolidated statements of operations and comprehensive loss.

The changes to the derivative liability resulted in a decrease

of $ 169,209 and $ 87,173 in the derivative liability and the corresponding increase in other income as a gain for the three months ended

September 30, 2024 and 2023, respectively.

The changes to the derivative liability resulted in a decrease of $ 380,758 and $ 128,894 in

the derivative liability and the corresponding increase in other income as a gain for the nine months ended September 30, 2024 and 2023,

respectively.

8 – NOTE PAYABLE, NET

September 1, 2022, the Company issued a balloon promissory note in the form of a mortgage on its headquarters to a third party company

in the principal amount of $ 4,800,000 , which carries interest of 11.0 % per annum.

Interest is due in monthly payments of $ 44,000 beginning

November 1, 2022 and payable monthly thereafter until September 1, 2025 when the principal outstanding and all remaining interest is

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.

May 2023, the Company 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 September 30, 2024 and December 31, 2023 was as follows:

September 30,

The changes to the derivative liability resulted in an increase

of $ 114,360 in the derivative liability and the corresponding increase in other expense as a loss for the three months ended March 31,

The changes to the derivative liability resulted in a decrease of $ 31,212 in the derivative liability and the corresponding increase

in other income as a gain for the three months ended Marc h 31, 2024.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 – NOTE PAYABLE, NET

On September 1, 2022,

the Company issued a balloon promissory note in the form of a mortgage on its headquarters to a third party company in the principal amount

of $ 4,800,000 , which carries interest of 11.0 % per annum.

Interest is due in monthly payments of $ 44,000 beginning November 1, 2022 and

payable monthly thereafter until September 1, 2025 when the principal outstanding and all remaining interest is due.

The principal of

$ 4,800,000 can be extended for an additional 36 months, provided that the Company has not defaulted.

The Company may not prepay the principal

of $ 4,800,000 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 at 4400 Route 9 South, Freehold, Monmouth County, New Jersey..

In May 2023, the Company

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 South, Freehold, Monmouth County, New Jersey.

note payable as of March 31, 2025 and December 31, 2024 was as follows:

Principal amount

1 unchanged sentence

Note payable, net

Current portion

Long-term portion

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8 – NOTE PAYABLE, NET (continued)

the three months ended September 30, 2024 and 2023, amortization of debt issuance costs related to note payable amounted to $ 29,807 and

$ 29,807 , respectively, which have been included in interest expense — amortization of debt discount and debt issuance costs on

the accompanying condensed consolidated statements of operations and comprehensive loss.

the nine months ended September 30, 2024 and 2023, amortization of debt issuance costs related to note payable amounted to $ 89,421 and

$ 76,750 , respectively, which have been included in interest expense — amortization of debt discount and debt issuance costs on

the accompanying condensed consolidated statements of operations and comprehensive loss.

the three months ended September 30, 2024 and 2023, interest expense related to note payable amounted to $ 164,500 and $ 164,500 , respectively,

which have been included in interest expense - other on the accompanying condensed consolidated statements of operations and comprehensive

the nine months ended September 30, 2024 and 2023, interest expense related to note payable amounted to $ 493,500 and $ 442,222 , respectively,

which have been included in interest expense - other on the accompanying condensed consolidated statements of operations and comprehensive

9 – RELATED PARTY TRANSACTIONS

For the three months ended March 31, 2025 and

2024, amortization of debt issuance costs related to note payable amounted to $ 29,807 and $ 29,807 , respectively, which have been included

in interest expense — amortization of debt discount and debt issuance costs on the accompanying condensed consolidated statements

of operations and comprehensive loss.

For the three months ended March 31, 2025 and

2024, interest expense related to note payable amounted to $ 164,500 and $ 164,500 , respectively, which have been included in interest expense

- other on the accompanying condensed consolidated statements of operations and comprehensive loss.

NOTE 9 – RELATED PARTY TRANSACTIONS

Revenue from Related Party and Rent Receivable – Related Party

Company leases space of its commercial real property located in New Jersey to 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.

both the three months ended September 30, 2024 and 2023, the related party rental revenue amounted to $ 12,600 and has been included in

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

nine months ended September 30, 2024 and 2023, the related party rental revenue amounted to $ 37,800 and has been included in real property

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

At September 30, 2024 and

December 31, 2023, the related party rent receivable totaled $ 0 and $ 124,500 , respectively, which has been included in rent receivable

on the accompanying condensed consolidated balance sheets.

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,

For both the three months ended March 31, 2025

and 2024, the related party rental revenue amounted to $ 12,600 and has been included in real property rental revenue on the accompanying

condensed consolidated statements of operations and comprehensive loss.

Provided by Related Party

time to time, Wilbert Tauzin, a director of the Company, and his son provide consulting services to the Company.

As compensation for

professional services provided, the Company recognized consulting expenses of $ 10,738 and $ 20,049 for the three months ended September

30, 2024 and 2023, respectively, which have been included in professional fees on the accompanying condensed consolidated statements

of operations and comprehensive loss.

As compensation for professional services provided, the Company recognized consulting expenses

of $ 48,004 and $ 68,691 for the nine months ended September 30, 2024 and 2023, respectively, which have been included in professional

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

As of both September 30, 2024 and December

31, 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 condensed consolidated balance sheets.

Liabilities and Other Payables – Related Parties

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

As of September 30, 2024 and December 31, 2023, the unpaid

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

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

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

consolidated balance sheets.

As compensation for professional

services provided, the Company recognized consulting expenses of $ 15,597 and $ 16,731 for the three months ended March 31, 2025 and 2024,

respectively, which have been included in professional fees on the accompanying condensed consolidated statements of operations and comprehensive

As of March 31, 2025 and December 31, 2024, the accrued and unpaid services charge related to this director’s son amounted

to $ 2,615 and $ 15,000 , respectively, which have been included in accrued professional fees on the accompanying condensed consolidated

balance sheets.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 – RELATED PARTY TRANSACTIONS (continued)

Accrued Liabilities and Other Payables –

Related Parties

In 2017, the Company acquired Beijing Jieteng

(Genexosome) Biotech Co., Ltd.

(“Beijing GenExosome”) for a cash payment of $ 450,000 .

As of both March 31, 2025 and December

31, 2024, the unpaid acquisition consideration of $ 100,000 , was payable to Dr.

Yu Zhou, former director and former co-chief executive

officer and 40 % owner of Genexosome, and has been included in accrued liabilities and other payables — related parties on the accompanying

condensed consolidated balance sheets.

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 nine months ended September 30, 2024.

As of September 30, 2024 and

December 31, 2023, the balance due to Lab Services MSO amounted to $ 597,662 and $ 72,746 , respectively, which has been included in accrued

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

GLOBOCARE CORP.

for equity method investment payable on behalf of the Company in 2024.

During the first quarter of 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, whereby Lab Services MSO redeemed the 40 % equity interest in Lab

Services MSO held by the Company for cash and the surrender of its Series B Preferred Stock having a carrying value of $ 11,000,000 .

aggregate cash amount to the Company for the redemption was $ 1,745,000 , to be paid as follows:

one payment of $ 95,000 at the closing of

the redemption and, beginning in March 2025, monthly payments of $ 75,000 until December 2026.

In addition, pursuant to the terms of the

Redemption Agreement, all shares of the Company’s Series B Preferred Stock previously issued to SCBC Holdings LLC as partial consideration

for the equity interests of Laboratory Services MSO, were permanently surrendered and relinquished to the Company for no additional consideration.

The difference of $ 2,348,695 between the carrying value of the extinguished Series B Preferred Stock, the aggregate cash amount to the

Company for the redemption, net of payables due to Lab Services MSO of $ 632,916 , totaling $ 13,377,916 , and the carrying value of the equity

method investment of $ 11,029,221 was accounted for as an increase to additional paid-in capital (See Note 10 - Series B Convertible

Preferred Stock Extinguished Related to Sale of Equity Method Investment).

As of March 31, 2025 and December 31, 2024, the balance due

to Lab Services MSO amounted to $0 and $ 632,916 , respectively, which has been included in accrued liabilities and other payables —

related parties on the accompanying condensed consolidated balance sheets.

Membership Interest

Purchase Agreement

17, 2023, the Company entered into a Membership Interest 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 Mr.

Lu and the Company

at such time that Mr.

Lu desires to exercise the Option.

The Company received $ 3,328,078 and $ 3,108,106 from Mr.

Lu as of March 31, 2025

and December 31, 2024, respectively, which was recorded as advance from pending sale of noncontrolling interest – related party

on the accompanying condensed consolidated balance sheets.

The Acquisition is expected to close in the fourth quarter of 2025.

D Convertible Preferred Stock Issued in Exchange of Series A Convertible Preferred Stock

January 9, 2025, the Company entered into an exchange agreement with Wenzhao Lu, the Company’s

chairman of the Board of Directors, pursuant to which Mr.

Lu exchanged 9,000 shares

of Series A Preferred Stock of the Company, having a carrying value of $ 9,000,000 , for 5,000 shares

of Series D Preferred Stock of the Company.

The Company determined that the exchange of the Series A Preferred Stock for the Series

D Preferred Stock resulted in the extinguishment of the Series A Preferred Stock.

As a result, the difference between the carrying amount

of the Series A Preferred Stock and the fair value of the Series D Preferred Stock of $ 162,473 was recognized as a deemed contribution

in the three months ended March 31, 2025 that increased additional paid-in capital and income available to common shareholders in calculating

earnings per share (See Note 10 - Series D Convertible Preferred Stock Issued in Exchange of Series A Convertible Preferred Stock).

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9 – RELATED PARTY TRANSACTIONS (continued)

Liabilities and Other Payables – Related Parties (continued)

of September 30, 2024 and December 31, 2023, $ 15,617 and $ 33,712 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 condensed consolidated balance sheets.

from Related Party

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 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 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

If any such event of default occurs, Mr.

Lu may declare all outstanding loans under the Line of Credit to be due and payable

was no Line of Credit activity during the nine months ended September 30, 2024.

As of both September 30, 2024 and December 31, 2023,

the outstanding principal balance was $ 850,000 .

both the three months ended September 30, 2024 and 2023, the interest expense related to related party borrowing amounted to $ 10,712 ,

and has been reflected as interest expense — related party on the accompanying condensed consolidated statements of operations

and comprehensive loss.

the nine months ended September 30, 2024 and 2023, the interest expense related to related party borrowing amounted to $ 31,904 and $ 23,000 ,

respectively, and has been reflected as interest expense — related party on the accompanying condensed consolidated statements

of operations and comprehensive loss.

of September 30, 2024 and December 31, 2023, the related accrued and unpaid interest for Line of Credit was $ 15,617 and $ 33,712 , respectively,

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

of September 30, 2024, the Company has used approximately $ 6.8 million of the credit facility, and has approximately $ 13.2 million remaining

available under the Line of Credit.

Interest Purchase Agreement

17, 2023, the Company entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Mr.

Lu, the Company’s

largest shareholder and Chairman of the Board of Directors of the Company, 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.

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 Company received $ 2,508,159 and $ 485,714 from Wenzhao Lu as of September 30, 2024 and December 31, 2023, respectively,

which was recorded as advance from pending sale of noncontrolling interest – related party on the accompanying condensed consolidated

balance sheets.

The Acquisition is expected to be closed in 2025.

GLOBOCARE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – EQUITY

Company is authorized to issue an aggregate of 100 ,000,000 shares of common stock and 10,000,000 shares of “blank check”

preferred stock.

Series A Convertible

Preferred Stock

The Company designated

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 .

The shares of Series

A Preferred Stock have identical terms and include the terms as set forth below.

of Series A Preferred Stock (each, a “Series A Holder” and collectively, 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

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 Designations.

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.

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 Designations.

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, 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:

Dividends and Stock Splits.

If the Company, at any time while the Series A Preferred Stock is outstanding:

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

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Shares Issued as Convertible Note Payable Commitment Fee

the nine months ended September 30, 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.

Shares Sold for Cash

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 nine months ended September 30, 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

Shares Issued for Services

the nine months ended September 30, 2024, the Company issued a total of 45,153 shares of its common stock for services rendered and to

These shares were valued at $ 306,350 , 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 $ 217,471 for the nine months ended September 30,

2024 and reduced accrued liabilities of $ 60,000 and recorded prepaid expense of $ 28,879 as of September 30, 2024 which will be amortized

over the rest of corresponding service periods.

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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – EQUITY (continued)

Series A Convertible

Preferred Stock (continued)

If, at any 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 Designations 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 Designations on the conversion

of the Series A Preferred Stock).

For purposes 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.

The Series A Holders will have no voting rights, except as otherwise required by the Delaware General Corporation

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 Designations,

(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.

No fractional shares or scrip representing fractional shares shall be issued upon the conversion of the Series

A Preferred Stock.

As to any 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, 9,000 shares

of Series A Preferred Stock were issued and outstanding.

On January 9, 2025, the Company entered into an exchange agreement with Wenzhao

Lu, the Company’s chairman of the Board of Directors, pursuant to which Mr.

Lu exchanged 9,000 shares of Series A Preferred Stock

of the Company for 5,000 shares of Series D Preferred Stock of the Company (See Note 10 - Series D Convertible Preferred Stock Issued

in Exchange of Series A Convertible Preferred Stock).

As of March 31, 2025, there were no shares of Series A Preferred Stock remain outstanding.

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 .

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – EQUITY (continued)

Series B Convertible

Preferred Stock (continued)

The shares of Series

B Preferred Stock have identical terms and include the terms as set forth below.

holders of Series B Preferred Stock (each, a “Series B Holder” and collectively, 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 Designations.

Series B Preferred Stock will rank subordinate to the shares of the Company’s Series A Preferred Stock.

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.

shall mail written notice of any such Liquidation not less than twenty (20) days prior to the payment date stated therein, to each Series

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) February 9, 2024 (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 Designations 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).

Holders may effectuate conversions by providing the Company with the form of conversion notice attached as Annex A to the Series B Certificate

of Designations.

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 Designations.

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;

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:

Dividends and Stock Splits.

If the Company, at any time while the Series B Preferred Stock is outstanding:

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 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – EQUITY (continued)

Series B Convertible

Preferred Stock (continued)

If, at any 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 Designations 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 Designations 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.

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 Designations, (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.

No fractional shares or scrip representing fractional shares shall be issued upon the conversion of the Series

B Preferred Stock.

As to 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.

of December 31, 2024, 11,000 shares of Series B Preferred Stock were issued and outstanding.

During the first quarter of 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, whereby Lab Services MSO redeemed the

40 % equity interest in Lab Services MSO held by the Company for cash and the surrender of its Series B Preferred Stock having a carrying

value of $ 11,000,000 .

Pursuant to the terms of the Redemption Agreement, all shares of the Company’s Series B Preferred Stock previously

issued to SCBC Holdings LLC as partial consideration for the equity interests of Laboratory Services MSO, were permanently surrendered

and relinquished to the Company for no additional consideration (See Note 10 - Series B Convertible Preferred Stock Extinguished Related

to Sale of Equity Method Investment).

As of March 31, 2025, there were no shares of Series B Preferred Stock remain outstanding.

Series C Convertible

Preferred Stock

On December 13, 2024,

the Company filed a certificate of designations of preferences, rights, and limitations of Series C 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 .

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – EQUITY (continued)

Series C Convertible

Preferred Stock (continued)

The Series C Preferred

Stock shall rank (i) senior to the Company’s 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 Preferred Stock of the Company with respect to its rights, preferences and restrictions,

and (iv) subordinate to the Series A Preferred Stock of the Company.

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.

of the Series C Preferred Stock have no voting power except as otherwise required by the Delaware General Corporation Law.

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.

share of Series C Preferred Stock shall be convertible into common stock (the “Series C 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 Series C 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 Series C Conversion

of both March 31, 2025 and December 31, 2024, 3,500 shares

of Series C Preferred Stock were issued and outstanding.

Series D Convertible

Preferred Stock

January 6, 2025, the Company filed a certificate of designations of preferences, rights, and limitations of Series D Preferred Stock (the

“Series D Certificate of Designations”) with the Department of State, Division of Corporations, of the State of Delaware,

which provides for the designation of 5,000 shares

of Series D Preferred Stock of the Company, par value $ 0.0001 per share, upon the terms

and conditions as set forth in the Series D Certificate of Designations.

Each share of Series D Preferred Stock has a stated value of

The Series D Preferred

Stock shall rank (i) senior to the Company’s 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 D 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

D Preferred Stock, (iii) pari passu with the Series B Preferred Stock of the Company with respect to its rights, preferences and restrictions,

and (iv) pari passu with the Series C Preferred Stock of the Company.

of the Series D Preferred Stock have no voting power except as otherwise required by the Delaware General Corporation Law.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – EQUITY (continued)

Series D Convertible

Preferred Stock (continued)

any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a “Liquidation”), the holders

of the Series D 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 D 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 D 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 D Preferred Stock, in proportion to the full and preferential amount that all shares of the Series D

Preferred Stock are entitled to receive.

share of Series D Preferred Stock shall be convertible into common stock (the “Series D Conversion Shares”) at a conversion

per share equal to $ 2.41 ,

at the option of the holder, at any time after the Company has obtained shareholder approval for the issuance of the Series D Conversion

Shares pursuant to the rules of the Nasdaq Stock Market.

In addition, the holder shall not have the right to convert any portion of the

Series D Preferred Stock if, after giving effect to the conversion, such holder (together with its affiliates) would beneficially own

in excess of 4.99 % of the number of shares of the common stock outstanding immediately

after giving effect to the issuance of the respective Series D Conversion Shares.

of March 31, 2025, 5,000 shares of Series D Preferred Stock were issued and outstanding.

D Convertible Preferred Stock Issued in Exchange of Series A Convertible Preferred Stock

January 9, 2025, the Company entered into an exchange agreement with Wenzhao Lu, the Company’s

chairman of the Board of Directors, pursuant to which Mr.

Lu exchanged 9,000 shares

of Series A Preferred Stock of the Company, having a carrying value of $ 9,000,000 , for 5,000 shares

of Series D Preferred Stock of the Company.

The Company determined that the exchange of the Series A Preferred Stock for the Series D

Preferred Stock resulted in the extinguishment of the Series A Preferred Stock.

As a result, the difference between the carrying amount

of the Series A Preferred Stock and the fair value of the Series D Preferred Stock of $ 162,473 was recognized as a deemed contribution

in the three months ended March 31, 2025 that increased additional paid-in capital and income available to common shareholders in calculating

earnings per share.

share of Series D Preferred Stock is convertible into common stock of the Company (the “Series D 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 Company has obtained

shareholder approval for the issuance of the Series D Conversion Shares pursuant to the rules of the Nasdaq Stock Market.

The Company evaluated

the features of the Series D Preferred Stock under ASC 480, and classified them as permanent equity because the Series D 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”).

B Convertible Preferred Stock Extinguished Related to Sale of Equity Method Investment

the first quarter of 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, whereby

Lab Services MSO redeemed the 40 % equity interest in Lab Services MSO held by the Company for cash and the surrender of its Series

B Preferred Stock having a carrying value of $ 11,000,000 .

The aggregate cash amount to the Company for the redemption was $ 1,745,000 ,

to be paid as follows:

one payment of $ 95,000 at the closing of the redemption and, beginning in March 2025, monthly payments of

$ 75,000 until December 2026.

In addition, pursuant to the terms of the Redemption Agreement, all shares of the Company’s Series

B Preferred Stock previously issued to SCBC Holdings LLC as partial consideration for the equity interests of Laboratory Services MSO,

were permanently surrendered and relinquished to the Company for no additional consideration.

The difference of $ 2,348,695 between the

carrying value of the extinguished Series B preferred stock, the aggregate cash amount to the Company for the redemption, net of payables

due to Lab Services MSO of $ 632,916 , totaling $ 13,377,916 , and the carrying value of the equity method investment of $ 11,029,221 was accounted

for as an increase to additional paid-in capital.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – EQUITY (continued)

Common Shares Issued

the three months ended March 31, 2025, the Company issued a total of 22,278 shares of its common stock for services rendered and to be

These shares were valued at $ 111,232 , 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 $ 17,212 for the three months ended March 31, 2025

and reduced accrued liabilities of $ 42,385 and recorded prepaid expense of $ 51,635 as of March 31, 2025 which will be amortized over the

rest of corresponding service periods.

Shares Issued for Warrant Exercise

In March 2025, pursuant to the terms of related

warrant agreements, the Company issued 186,877 shares of its common stock upon cashless exercise of warrants.

The following table summarizes

the shares of the Company’s common stock issuable upon exercise of options outstanding at March 31, 2025:

Options Outstanding Options Exercisable

Exercise Price Number

Outstanding at

September 30,

2025 Weighted

1 unchanged sentence

(Years) Weighted

Exercise Price

Exercisable at

September 30,

2025 Weighted

Exercise Price

$ 2.93 – 31.20 21,010 3.48 $ 12.19 17,078 $ 14.28

2 unchanged sentences

$ 2.93 – 264.00 51,425 2.87 $ 77.79 47,493 $ 83.97

option activity for the nine months ended September 30, 2024 was as follows:

Number of Options

Weighted Average Exercise Price

Stock option activity

for the three months ended March 31, 2025 was as follows:

Outstanding at January 1, 2025

Outstanding at September 30, 2024

Options exercisable at September 30, 2024

Expired / cancelled

Outstanding at March 31, 2025

Options exercisable at March 31, 2025

Options expected to vest

aggregate intrinsic value of stock options outstanding and stock options exercisable at September 30, 2024 was approximately $ 1,000 an

$ 300 , respectively.

GLOBOCARE CORP.

The aggregate intrinsic value of stock options

outstanding and stock options exercisable at March 31, 2025 was approximately $ 17,000 an $ 10,000 , respectively.

The fair values of options granted during the

three months ended March 31, 2025 were estimated at the date of grant using the Black-Scholes option-pricing model with the following

volatility of 105.10 %, risk-free rate of 4.29 %, annual dividend yield of 0 %, and expected life of 3.00 years.

The aggregate

fair value of the options granted during the three months ended March 31, 2025 was $ 6,115 .

The fair values of options granted during the

three months ended March 31, 2024 were estimated at the date of grant using the Black-Scholes option-pricing model with the following

volatility of 91.17 %, risk-free rate of 3.93 %, annual dividend yield of 0 %, and expected life of 5.00 years.

The aggregate

fair value of the options granted during the three months ended March 31, 2024 was $ 12,137 .

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

10 – EQUITY (continued)

fair values of options granted during the nine months ended September 30, 2024 were estimated at the date of grant using the Black-Scholes

option-pricing model with the following assumptions:

volatility of 83.10 % - 91.17 %, risk-free rate of 3.47 % - 4.79 %, annual dividend

yield of 0 %, and expected life of 3.00 - 5.00 years.

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

30, 2024 was $ 26,548 .

fair values of options granted during the nine months ended September 30, 2023 were estimated at the date of grant using the Black-Scholes

option-pricing model with the following assumptions:

volatility of 79.76 % - 96.37 %, risk-free rate of 3.58 % - 3.96 %, annual dividend

yield of 0 %, and expected life of 3.00 - 5.00 years.

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

30, 2023 was $ 313,144 .

the three months ended September 30, 2024 and 2023, stock-based compensation expense associated with stock options granted amounted to

$ 11,542 and $ 54,654 , of which $ 3,798 and $ 42,906 was recorded as compensation and related benefits and $ 7,744 and $ 11,748 was recorded

as professional fees, respectively.

the nine months ended September 30, 2024 and 2023, stock-based compensation expense associated with stock options granted amounted to

$ 37,331 and $ 234,931 , of which, $ 13,389 and $ 132,433 was recorded as compensation and related benefits, $ 23,942 and $ 97,029 was recorded

as professional fees, and $ 0 and $ 5,469 was recorded as research and development expenses, respectively.

summary of the status of the Company’s nonvested stock options granted as of September 30, 2024 and changes during the nine months

ended September 30, 2024 is presented below:

Number of Options

Weighted Average Exercise Price

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – EQUITY (continued)

Options (continued)

For the three months ended March 31, 2025 and

2024, stock-based compensation expense associated with stock options granted amounted to $ 9,159 and $ 13,533 , of which, $ 4,858 and $ 5,103

was recorded as compensation and related benefits, $ 4,301 and $ 8,430 was recorded as professional fees, respectively.

A summary of the status of the Company’s

nonvested stock options granted as of March 31, 2025 and changes during the three months ended March 31, 2025 is presented below:

Nonvested at January 1, 2025

Nonvested at September 30, 2024

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

Nonvested at March 31, 2025

Warrants (Except Pre-Funded Warrants)

The following table summarizes the shares of the

Company’s common stock issuable upon exercise of warrants outstanding at March 31, 2025:

Warrants Outstanding Warrants Exercisable

Exercise Price Number

Outstanding at

September 30,

2024 Weighted Average

2025 Weighted

Contractual Life

1 unchanged sentence

Exercisable at

September 30,

2025 Weighted

3 unchanged sentences

$ 7.50 – 187.50 171,163 4.06 $ 18.79 91,163 $ 28.70

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

10 – EQUITY (continued)

warrant activity for the nine months ended September 30, 2024 was as follows:

Number of Warrants

Weighted Average Exercise Price

Stock warrant activity

for the three months ended March 31, 2025 was as follows:

Outstanding at January 1, 2025

Cancelled (*)

Outstanding at September 30, 2024

Warrants exercisable at September 30, 2024

Outstanding at March 31, 2025

Warrants exercisable at March 31, 2025

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.

Warrant, which was issued on May 23, 2023, July 6, 2023, October 9, 2023, and March 7, 2024, is still outstanding as of September 30,

First Warrant and Second Warrant, which are issued on June 5, 2024, are still outstanding as of September 30, 2024.

aggregate intrinsic value of both stock warrants outstanding and stock warrants exercisable at September 30, 2024 was $ 0 .

Issued in March 2024

connection with the issuance of March 2024 Convertible Note (See Note 6), 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 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.

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.

The 8,077 warrants with an exercise price of $ 19.50 were cancelled and extinguished against payment of the

March 2024 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.

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.

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.

Issued in June 2024

connection with the issuance of June 2024 Convertible Note (See Note 6), 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.

GLOBOCARE CORP.

aggregate intrinsic value of both stock warrants outstanding and stock warrants exercisable at March 31, 2025 was $ 0 .

Warrants Exercised

in March 2025

March 2025, pursuant to the terms of related warrant agreements, the Company issued 186,877 shares of its common stock upon cashless

exercise of warrants.

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

10 – EQUITY (continued)

Issued in June 2024 (continued)

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 $ 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.

warrants with an exercise price of $ 9.75 exercisable 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.

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.

Cancelled in June 2024

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.

summary of the status of the Company’s nonvested stock warrants issued as of September 30, 2024 and changes during the nine months

ended September 30, 2024 is presented below:

Number of Warrants

Weighted Average Exercise Price

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – EQUITY (continued)

Warrants (Except Pre-Funded Warrants) (continued)

A summary of the status

of the Company’s nonvested stock warrants issued as of March 31, 2025 and changes during the three months ended March 31, 2025 is

presented below:

Nonvested at January 1, 2025

Nonvested at September 30, 2024

11 – STATUTORY RESERVE AND RESTRICTED NET ASSETS

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 by entities organized in China is subject to limitations, procedures and formalities.

Regulations in the PRC

currently permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and regulations

Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus

reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC

Appropriations to the statutory surplus reserve are required to be at least 10 % of the after-tax net income determined

in accordance with PRC GAAP until the reserve is equal to 50 % of the entity’s registered capital.

Appropriations to the discretionary

surplus reserve are made at the discretion of the Board of Directors.

The statutory reserve may be applied against prior year losses,

if any, and may be used for general business expansion and production or increase in registered capital, but are not distributable as

cash dividends.

The Company did not make any appropriation to statutory reserve for Avalon Shanghai during the nine months ended September

30, 2024 as it incurred net loss in the period.

As of both September 30, 2024 and December 31, 2023, the restricted amount as determined

pursuant to PRC statutory laws totaled $ 6,578 .

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11 – STATUTORY RESERVE AND RESTRICTED NET ASSETS (continued)

PRC laws and regulations restrict the Company’s PRC subsidiary, Avalon Shanghai, from transferring a portion of its net assets,

equivalent to its statutory reserve and its share capital, to the Company’s shareholders in the form of loans, advances or cash

Only PRC entity’s accumulated profit may be distributed as dividend to the Company’s shareholders without the

consent of a third party.

As of both September 30, 2024 and December 31, 2023, total restricted net assets amounted to $ 1,106,578 .

Nonvested at March 31, 2025

Pre-Funded Warrants

As of March 31, 2025,

there were 150,000 pre-funded warrants outstanding with an exercise price of $ 0.01 per share.

There was no activity related to these warrants

during the three months ended March 31, 2025.

NOTE 11 - STATUTORY

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 payment of dividends by entities organized in

China is subject to limitations, procedures and formalities.

Regulations in the PRC currently permit payment of dividends only out of

accumulated profits as determined in accordance with accounting standards and regulations in China.

The Company is required to make appropriations

to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income

determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”).

Appropriations to the statutory

surplus reserve are required to be at least 10 % of the after-tax net income determined in accordance with PRC GAAP until the reserve is

equal to 50 % of the entity’s registered capital.

Appropriations to the discretionary surplus reserve are made at the discretion

of the Board of Directors.

The statutory reserve may be applied against prior year losses, if any, and may be used for general business

expansion and production or increase in registered capital, but are not distributable as cash dividends.

The Company did not make any

appropriation to statutory reserve for Avalon Shanghai during the three months ended March 31, 2025 as it incurred net loss in the period.

As of both March 31, 2025 and December 31, 2024, the restricted amount as determined pursuant to PRC statutory laws totaled $ 6,578 .

Relevant PRC laws and regulations restrict the

Company’s PRC subsidiary, Avalon Shanghai, from transferring a portion of its net assets, equivalent to its statutory reserve and

its share capital, to the Company’s shareholders in the form of loans, advances or cash dividends.

Only PRC entity’s accumulated

profit may be distributed as dividend to the Company’s shareholders without the consent of a third party.

As of both March 31, 2025

and December 31, 2024, total restricted net assets amounted to $ 1,206,578 .

12 – CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY

to the requirements of Rule 12-04(a), 5-04(c) and 4-08(e)(3) of Regulation S-X, the condensed financial information of the parent company

shall be filed when the restricted net assets of consolidated subsidiary exceed 25 % of consolidated net assets as of the end of the most

recently completed fiscal year.

For purposes of this test, restricted net assets of consolidated subsidiary shall mean that amount of

the Company’s proportionate share of net assets of consolidated subsidiary (after intercompany eliminations) which as of the end

of the most recent fiscal year may not be transferred to the parent company by subsidiary in the form of loans, advances or cash dividends

without the consent of a third party.

Company performed a test on the restricted net assets of consolidated subsidiary in accordance with such requirement and concluded that

it was not applicable to the Company as the restricted net assets of the Company’s PRC 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.

13 – CONCENTRATIONS

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

and nine months ended September 30, 2024 and 2023.

Three Months Ended

September 30,

Nine Months Ended

September 30,

customer, which is a third party, whose outstanding receivable accounted for 10% or more of the Company’s total outstanding rent

receivable at September 30, 2024, accounted for 74.9 % of the Company’s total outstanding rent receivable at September 30, 2024.

customers, of which 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.

supplier accounted for 10% or more of the Company’s purchase during the three and nine months ended September 30, 2024 and 2023.

14 – SEGMENT INFORMATION

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 % 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

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 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 - CONCENTRATIONS

The following

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

March 31, 2025 and 2024.

Three Months Ended March 31,

customer, which is a third party, whose outstanding receivable accounted for 10 %

or more of the Company’s total outstanding rent receivable at March 31, 2025, accounted for 79.8 %

of the Company’s total outstanding rent receivable at March 31, 2025.

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.

supplier accounted for 10 % or more of the Company’s purchase during the three months ended March 31, 2025 and 2024.

NOTE 14 – SEGMENT INFORMATION

The segment reporting

structure uses the Company’s management reporting structure as its foundation to reflect how the Company manages the businesses

During the three months ended March 31, 2025 and 2024, the management reporting structure was 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

Using the accounting guidance on segment reporting, the Company determined that its two operating segments were aligned with its

two reportable segments corresponding to its strategic business units.

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 three and nine months ended September 30, 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.

regularly reviews the operating results and performance of Lab Services MSO, which is the Company’s equity method investee.

GLOBOCARE CORP.

During the first quarter of 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, whereby Lab Services MSO redeemed the 40 % equity interest in Lab

Services MSO held by the Company.

During the three months ended March 31, 2025 and 2024, the Company operated in two reportable

business segments:

(1) the real property operating segment, and (2) laboratory testing services segment (which ended on February 26, 2025)

since Lab Services MSO’s operating results were 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 reviewed the operating results

and performance of Lab Services MSO, which was the Company’s equity method investee.

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

Real property operating income is calculated by subtracting real property operating expenses from real property rental revenue;

income from equity method investment – Lab Services MSO is calculated by subtracting amortization of intangible assets acquired

from acquisition and distribution of earnings from equity investment from the Company’s share of Lab Services MSO’s net income.

The assets and certain expenses related to corporate activities are not allocated to the segments.

Information with respect to these reportable

business segments for the three months ended March 31, 2025 and 2024 was as follows:

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

14 – SEGMENT INFORMATION (continued)

with respect to these reportable business segments for the three and nine months ended September 30, 2024 and 2023 was as follows:

Three Months Ended September 30, 2024

Real Property Operations

Lab Services MSO

Corporate / Other

Real property rental revenue

Real property operating expenses

Real property operating income

Loss from equity method investment - Lab Services MSO

Other operating expenses

Other (expense) income:

Interest expense

$ ( 166,464 )

$ ( 447,909 )

$ ( 1,064,827 )

$ ( 1,679,200 )

Three Months Ended September 30, 2023

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 – SEGMENT INFORMATION

Three Months Ended March 31, 2025

Real Property Operations

10 unchanged sentences

Interest expense

Other income (expense)

Net (loss) income

1 unchanged sentence

$ ( 2,659,357 )

Nine Months Ended September 30, 2024

Real Property Operations

Lab Services MSO

Corporate / Other

Real property rental revenue

Real property operating expenses

Real property operating income

Loss from equity method investment - Lab Services MSO

Other operating expenses

$ ( 2,482,111 )

( 3,141,101 )

Other (expense) income:

Interest expense

( 1,291,192 )

( 1,874,113 )

Other (expense) income

$ ( 669,702 )

$ ( 669,777 )

$ ( 3,839,260 )

$ ( 5,178,739 )

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

14 – SEGMENT INFORMATION (continued)

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Real Property Operations

7 unchanged sentences

( 1,001,993 )

( 6,485,320 )

Other (expense) income:

5 unchanged sentences

$ ( 1,367,513 )

Identifiable long-lived tangible assets at September 30, 2024 and December 31, 2023

September 30,

Identifiable long-lived tangible assets at March 31, 2025 and December 31, 2024

Real property operations

Corporate/Other

Identifiable long-lived tangible assets at September 30, 2024 and December 31, 2023

September 30,

Identifiable long-lived tangible assets at March 31, 2025 and December 31, 2024

United States

15 – COMMITMENTS AND CONTINGENCIES

Leases Commitment

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 – COMMITMENTS

AND CONTINGENCIES

From time to time, the Company is subject to ordinary

routine litigation incidental to its normal business operations.

The Company is not currently a party to, and its property is not subject

to, any material legal proceedings, except as set forth below.

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

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

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

Further, on October 25, 2017,

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

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

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

Zhou pertaining to the business of researching, developing and commercializing

exosome technologies.

In consideration of the assets, Genexosome paid Dr.

Zhou $ 876,087 in cash, transferred 3,333 shares

of common stock of the Company to Dr.

Zhou and issued Dr.

Zhou 400 shares of common stock of Genexosome.

Zhou was terminated

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

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

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

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

The Company, Genexosome and the Research

Institute entered into a Settlement Agreement dated June 7, 2022 (the “Settlement Date”) whereby the Company agreed to pay

the Research Institute $ 450,000 on each of the sixty-day, one year and two-year anniversaries of the Settlement Date.

the Company agreed to pay the Research Institute 30 % of the Company’s initial pre-tax profit of $ 3,333,333 , 20 % of the

Company’s second pre-tax profit of $ 3,333,333 and 10 % of the Company’s third pre-tax profit of $ 3,333,333 .

provided a mutual release as well.

As of both March 31, 2025 and December 31, 2024, the accrued litigation settlement amounted to $ 373,450 .

Operating Leases Commitment

Company is a party to leases for office space.

These lease agreements will expire through February 2025.

Rent expense under all operating

leases amounted to approximately $ 96,000 and $ 97,000 for the nine months ended September 30, 2024 and 2023, respectively.

cash flow information related to leases for the nine months ended September 30, 2024 and 2023 is as follows:

Nine Months Ended

September 30,

These lease agreements expire through December 2025.

Rent expense under all operating leases

amounted to approximately $ 32,000 for both the three months ended March 31, 2025 and 2024.

cash flow information related to leases for the three months ended March 31, 2025 and 2024 is as follows:

Three Months Ended March 31,

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

2 unchanged sentences

Operating lease

GLOBOCARE CORP.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

15 – COMMITMENTS AND CONTINGENCIES (continued)

Leases Commitment (continued)

following table summarizes the lease term and discount rate for the Company’s operating lease as of September 30, 2024:

Operating Lease

The following table summarizes the lease term

and discount rate for the Company’s operating lease as of March 31, 2025:

Weighted average remaining lease term (in years) 1.75

Weighted average discount rate 13.0 %

following table summarizes the maturity of lease liabilities under operating lease as of September 30, 2024:

For the Twelve-month Period Ending September 30:

Operating Lease

AVALON GLOBOCARE CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 – COMMITMENTS

AND CONTINGENCIES (continued)

Operating Leases Commitment (continued)

The following table summarizes the maturity of lease liabilities under

operating lease as of March 31, 2025:

For the Twelve-month Period Ending March 31:

2028 and thereafter

1 unchanged sentence

Amount of lease payments representing interest

Total present value of operating lease liabilities (current liability)

Venture – Avactis Biosciences Inc.

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.

When 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.

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.

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

Total present value of operating lease liabilities

Current portion

Long-term portion

Joint Venture – Avactis Biosciences Inc.

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.

When 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.

Commencing on 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.

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

1 unchanged sentence

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

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 discretion.

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 the rest of 2024 or into the foreseeable future.

16 – SUBSEQUENT EVENTS

Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements

Based upon this review, other than as described below, the Company did not identify any subsequent events that would have

required adjustment or disclosure in the financial statements.

to Article of Incorporation

On October 23, 2024, the Company filed a certificate of amendment (the

“Amendment”) to its Certificate of Incorporation with the Secretary of State of the State of Delaware to effectuate the reverse

stock split at a ratio of 1-for-15 as well as the decrease of the number of authorized shares of common stock from 490,000,000 shares

to 100,000,000 shares.

The Amendment became effective at 5:00 PM ET on October 25, 2024.

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 discretion.

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 the rest of

2025 or into the foreseeable future.

NOTE 16 – 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.

Common Shares Issued for Warrant Exercise

In April 2025, the Company issued 242,304 shares

of its common stock upon the exercise of warrants on a cashless basis.

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

What changed 10-Q

Item 1. Financial Statements