☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

AsSecurities registered pursuant to Section 12(b) of ~~November 14, 2017, 67,218,622~~the Act:

State the number of shares outstanding of each of the issuer’s classes of common ~~stock, par value $0.0001 per share, were issued and outstanding.~~equity, as of the latest practicable date.

See accompanying notes ~~are an integral part of these unaudited~~to the condensed consolidated financial statements.

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

NOTES TO ~~UNAUDITED~~ CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2017~~

Avalon GloboCare Corp. ~~(f/k/a Global Technologies Corp.)~~ (the “Company” or “AVCO”) is a Delaware corporation. The Company was incorporated under the laws of the State of Delaware on July 28, 2014. ~~On October 18, 2016, the Company changed its name to Avalon GloboCare Corp. and completed a reverse split its shares of common stock at a ratio of 1:4.~~ On October 19, 2016, the Company entered into and closed a Share Exchange Agreement with the shareholders of Avalon Healthcare System, Inc., a Delaware corporation (“AHS”), each of which ~~are~~were accredited investors (“AHS Shareholders”) pursuant to which we acquired 100% of the outstanding securities of AHS in exchange for 50,000,000 shares of ~~our~~the Company’s common stock (the “AHS Acquisition”). AHS was incorporated on May 18, 2015 under the laws of the State of Delaware. As a result of such acquisition, the Company’s operations now are focused on integrating and managing global healthcare services and resources, as well as empowering high-impact biomedical innovations and technologies to accelerate their clinical applications. Operating through two major platforms, namely “Avalon Cell”, and “Avalon Rehab”, our “technology + service” ecosystem covers the areas of regenerative medicine, cell-based immunotherapy, exosome technology, as well as fertility and rehabilitation medicine. We plan to integrate these services through joint ventures and acquisitions that bring shareholder value both in the short term, through operational entities as part of Avalon Rehab and in the long term, through biomedical innovations as part of Avalon Cell. 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 is engaged in medical related consulting services for customers.

For accounting purposes, AHS was the surviving entity. The transaction was accounted for as a recapitalization of AHS pursuant to which AHS was treated as the accounting acquirer, surviving and continuing entity although the Company is the legal acquirer. The Company did not recognize goodwill or any intangible assets in connection with this transaction. Accordingly, the Company’s historical financial statements are those of AHS and its wholly-owned subsidiary, Avalon ~~Shanghai~~(Shanghai) Healthcare Technology Co., Ltd. (“Avalon Shanghai”) immediately following the consummation of this reverse merger transaction. AHS owns 100% of the capital stock of Avalon Shanghai, which is a wholly foreign-owned enterprise organized under the laws of the People’s Republic of China (“PRC”). Avalon Shanghai was incorporated on April 29, 2016 and is engaged in medical related consulting services for customers.

The Company is a clinical-stage, vertically integrated, leading CellTech bio-developer dedicated to advancing and empowering innovative, transformative immune effector cell therapy, exosome technology, as well as Coronavirus (“COVID-19”) related diagnostics and therapeutics. The Company also provides strategic advisory and outsourcing services to facilitate and enhance its clients’ growth and development, as well as competitiveness in healthcare and CellTech industry markets. Through its subsidiary structure with unique integration of verticals from innovative research and development (“R&D”) to automated bioproduction and accelerated clinical development, the Company is establishing a leading role in the fields of cellular immunotherapy (including CAR-T/NK), exosome technology (ACTEX™), and regenerative therapeutics.

On January 23, 2017, the Company incorporated Avalon (BVI) ~~Ltd,~~Ltd., a British Virgin Island company. There was no activity for the subsidiary since its incorporation through September 30, ~~2017.~~2020. Avalon (BVI) Ltd. is dormant and is in process of being dissolved.

On February 7, 2017, the Company formed Avalon RT 9 Properties, LLC (“Avalon RT 9”), a New Jersey limited liability company. On May 5, 2017, Avalon RT 9 purchased a real property located in Township of Freehold, County of Monmouth, State of New Jersey, having a street address of 4400 Route ~~9S,~~9 South, Freehold, NJ 07728. This property was purchased to serve as the Company’s world-wide headquarters for all corporate administration and operations. In addition, the property generates rental income. Avalon RT 9 owns this office building. Currently, Avalon RT 9’s business consists of the ownership and operation of the income-producing real estate property in New Jersey. ~~Avalon RT 9 owns an office~~As of September 30, 2020, the occupancy rate of the building ~~in New Jersey.~~is 87.0%.

On July 31, 2017, the Company formed ~~GenExosome~~Genexosome Technologies Inc. (“~~GenExosome”~~Genexosome”) in Nevada.

On ~~October 25, 2017, GenExosome and~~July 18, 2018, the Company ~~entered into~~formed a ~~Securities Purchase Agreement pursuant~~wholly owned subsidiary, Avactis Biosciences Inc., a Nevada corporation, which will focus on accelerating commercial activities related to ~~which~~cellular therapies, including regenerative medicine with stem/progenitor cells as well as cellular immunotherapy including CAR-T, CAR-NK, TCR-T and others. The subsidiary is designed to integrate and optimize our global scientific and clinical resources to further advance the use of cellular therapies to treat certain cancers.

On June 13, 2019, the Company ~~acquired 60% of~~formed a wholly owned subsidiary, International Exosome Association LLC, a Delaware company. There was no activity for the ~~total equity ownership of GenExosome. There were no operations for GenExosome~~subsidiary since its incorporation through September 30, ~~2017.~~2020.

Details of the Company’s subsidiaries which are included in these consolidated financial statements as of September 30, 2020 are as follows:

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 unaudited 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 unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission 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. GAAP”). The Company’s unaudited 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 unaudited 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, ~~2016~~2019 filed with the Securities and Exchange Commission on ~~March 28, 2017.~~April 6, 2020.

NOTES TO ~~UNAUDITED~~ CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2017~~

TheCompany ~~currently has limited operations.~~is a clinical-stage, vertically integrated, leading CellTech bio-developer dedicated to advancing and empowering innovative, transformative immune effector cell therapy, exosome technology, as well as COVID-19 related diagnostics and therapeutics. The ~~Company’s operations now are focused on providing outsourced, customized international healthcare~~Company also provides strategic advisory and outsourcing services to facilitate and enhance its clients’ growth and development, as well as competitiveness in healthcare and CellTech industry markets. The Company also develops related products for sale and licensure in the ~~rapidly changing health care industry primarily focused in~~United States and the People’s Republic of ~~China and~~China. In addition, the Company owns commercial real estate ~~property ownership and operation~~that houses its headquarters in ~~the United States.~~Freehold, New Jersey. The Company ~~is also pursuing~~did not generate any revenue from medical related consulting services segment and development services and sales of developed products segment during the ~~provision of healthcare services in the United States.~~nine months ended September 30, 2020. 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~~.business.

As reflected in the accompanying unaudited condensed consolidated financial statements, the Company had ~~working capital deficit (total current liabilities in excess of total current assets) and~~ an accumulated deficit of ~~$5,294,818 and $1,743,939~~$38,941,059 at September 30, ~~2017, respectively,~~2020, and ~~had a~~has incurred recurring net loss and ~~net~~negative cash flow ~~used in~~from operating activities of ~~$1,690,570~~$9,579,122 and ~~$747,056~~$6,185,198 for the nine months ended September 30, ~~2017,~~2020, respectively. The Company has a limited operating history and its continued growth is dependent upon the ~~continuation~~re-commencing of ~~providing~~ medical consulting services which was completed in December 2019 to its only ~~three~~few clients who are related parties and generating rental revenue from its income-producing real estate property in New ~~Jersey;~~Jersey and performing development services for hospitals and other customers and sales of developed products to hospitals and other customers; hence generating revenues, and obtaining additional financing to fund future obligations and pay liabilities arising from normal business operations. In addition, the current cash balance cannot be projected to cover the operating expenses for the next twelve months from the release date of this report. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital, implement its business plan, and generate significant revenues. There are no assurances that the Company will be successful in its efforts to generate significant revenues, maintain sufficient cash balance or report profitable operations or to continue as a going concern. The Company plans on raising capital through the sale of equity ~~or debt instruments~~ to implement its business plan. However, there is no assurance these plans will be realized and that any additional financings will be available to the Company on satisfactory terms and conditions, if any.

The occurrence of an uncontrollable event such as the COVID-19 pandemic had negatively impact on the Company’s operations. Some tenants have delayed on rent payment and our occupancy of our rental property has decreased. Our general development operations have continued during the COVID-19 pandemic and we have not had significant disruption. However, we are uncertain if the COVID-19 pandemic will impact future operations at our laboratory, or our ability to collaborate with other laboratories and universities. In addition, we are unsure if the COVID-19 pandemic will impact future clinical trials. Given the dynamic nature of these circumstances, the duration of business disruption and reduced traffic, the related financial effect cannot be reasonably estimated at this time but is expected to adversely impact the Company’s business for the year of 2020.

The accompanying unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.

The preparation of the unaudited condensed consolidated financial statements in conformity with ~~generally accepted accounting principles in the United States of America~~U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Significant estimates during the nine months ended September 30, ~~2017~~2020 and ~~2016~~2019 include the allowance for doubtful accounts, the useful life of property ~~plant,~~and equipment and investment in real estate, assumptions used in assessing impairment of long-term assets, valuation of deferred tax assets ~~accruals for taxes due,~~and the associated valuation allowances, and valuation of ~~options.~~stock-based compensation.

Fair ~~value~~Value of ~~financial instruments~~Financial Instruments and ~~fair value measurements~~Fair Value Measurements

The Company adopted the guidance of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as ~~follows~~:follows:

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2017~~

The carrying amounts reported in the unaudited condensed consolidated balance sheets for cash, ~~accounts~~rent receivable, ~~– related parties, tenants receivable, security deposit,~~deferred financing costs, prepaid expenses and other ~~accounts payable,~~current assets, accrued liabilities and other payables, accrued liabilities and other payables – related parties, ~~deferred rental income, loan payable, income taxes payable, Value Added Tax (“VAT”) and other taxes payable,~~operating lease obligation, tenants’ security ~~deposit, due to related parties, and refundable~~ deposit, approximate their fair market value based on the short-term maturity of these instruments. ~~The Company did not have any non-financial assets or liabilities that are measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016~~.

ASC 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 ~~instruments~~.

A portion of the Company’s cash ~~on hand and~~is maintained with state-owned banks within the PRC. Balances at state-owned banks within the PRC are covered by insurance up to RMB 500,000 (approximately $74,000) per bank. Any balance over RMB 500,000 per bank in PRC will not be covered. At September 30, 2020, cash ~~in banks. The Company maintains cash with various financial institutions~~balances held in the PRC ~~and United States. At September 30, 2017 and December 31, 2016, cash balances in PRC~~ are ~~$128,301 and $2,525,630, respectively, are uninsured. At September 30, 2017 and December 31, 2016, cash balances in United States are $228,521 and $360,559, respectively.~~RMB 1,302,475 (approximately $192,000), of which, RMB 793,010 (approximately $117,000) was not covered by such limited insurance. The Company has not experienced any losses in ~~bank~~such accounts and believes it is not exposed to any risks on its cash in bank accounts.

~~Concentrations~~The Company maintains a portion of its cash in bank and financial institution deposits within U.S. that at times may exceed federally-insured limits of $250,000. 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, 2020, the Company’s cash balances in United States bank accounts had approximately $539,000 in excess of the federally-insured limits.

At September 30, 2020, the Company’s cash balances by geographic area were as follows:

Currently, a portion of the Company’s operations are carried out in PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC’s economy. The Company’s operations in PRC are subject to specific considerations and significant risks not typically associated with companies in North America. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other ~~things~~.things.

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of ~~cash and~~ trade accounts receivable. A portion of the Company’s cash is maintained with state-owned banks within the PRC, and none of these deposits are covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts. A portion of the Company’s sales are credit sales which is to the customer whose ability to pay is dependent upon the industry economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts ~~receivables~~receivable is limited due to generally short payment terms. The Company also performs ongoing credit evaluations of its customers to help further reduce credit ~~risk~~.risk.

~~At September 30, 2017 and December 31, 2016, the Company’s cash balances by geographic area were as follows:~~Investment in Unconsolidated Company – Epicon Biosciences Co., Ltd.

The Company uses the equity method of accounting for its investment in, and earning or loss of, company that it does not control but over which it does exert significant influence. The Company considers whether the fair value of its equity method investment has declined below its carrying value whenever adverse events or changes in circumstances indicate that recorded value may not be recoverable. If the Company considers any decline to be other than temporary (based on various factors, including historical financial results and the overall health of the investee), then a write-down would be recorded to estimated fair value. See Note 5 for discussion of equity method investment.

The Company recognizes revenue under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of this new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:

In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised goods or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” goods or service (or bundle of goods or services) if both of the following criteria are met:

If a goods or service is not distinct, the goods or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct.

NOTES TO ~~UNAUDITED~~ CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2017~~

~~Accounts receivable – related parties and allowance for doubtful accounts~~Revenue Recognition (continued)

~~Accounts receivable – related~~The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties ~~are presented net of an allowance for doubtful accounts.~~(for example, some sales taxes). The ~~Company maintains allowances for doubtful accounts for estimated losses. The Company reviews~~consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. Variable consideration is included in the ~~accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as~~transaction price only to the ~~collectability~~extent that it is probable that a significant reversal in the amount of ~~individual balances. In evaluating~~cumulative revenue recognized will not occur when the ~~collectability of individual receivable balances,~~uncertainty associated with the Company considers many factors, including the age of the balance, a customer’s historical payment history, its current credit-worthiness and current economic trends. Accounts are written off after exhaustive efforts at collection.variable consideration is subsequently resolved.

~~Management believes~~The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate.

The Company has determined that the ~~accounts receivable~~ASC 606 does not apply to rental contracts, which are fully collectable. Therefore, no allowance for doubtful accounts is deemed to be required on its accounts receivable – related parties at September 30, 2017 and December 31, 2016. The Company historically has not experienced uncollectible accounts from customers granted with credit sales.within the scope of other revenue recognition accounting standards.

~~Tenants receivable~~Rental income from operating leases is recognized on a straight-line basis under the guidance of ASC 842. Lease payments under tenant leases are presented net of an allowance for doubtful accounts. Tenants receivable balance consists of base rents, tenant reimbursements and receivables arising from straight-lining of rents primarily represent amounts accrued and unpaid from tenants in accordance with the terms of the respective leases, subject to the Company’s revenue recognition policy. An allowance for the uncollectible portion of tenant receivable is determined based upon an analysis of the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in Freehold, New Jersey in which the property is located.

~~Management believes that the tenants receivable is fully collectable. Therefore, no allowance for doubtful accounts is deemed to be required on its tenants receivable at September 30, 2017.~~

~~Property, plant and equipment are carried at cost and are depreciated~~recognized on a straight-line basis over the ~~estimated useful lives~~term of the ~~assets.~~related leases. The ~~cost of repairs~~cumulative difference between lease revenue recognized under the straight-line method and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or lossescontractual lease payments are included in ~~income in~~rent receivable on the year of disposition. The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.

Investment in real estate is carried at cost less accumulated depreciation. The Company depreciates real estate building on a straight-line basis over estimated useful life. The Company capitalizes all capital improvements associated with replacements, improvements or major repairs to real property that extend its useful life and depreciate them using the straight-line method over its estimated useful life. Real estate depreciation expense was $20,066 and $53,009 for the three and nine months ended September 30, 2017, respectively.

~~The Company charges maintenance and repair costs that do not extend an asset’s useful life to expense as incurred~~.

In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not record any impairment charge for the three and nine months ended September 30, 2017 and 2016.

Deferred rental income represents rental income collected but not earned as of the report date. The Company defers the revenue related to lease payments received from tenants in advance of their due dates. As of September 30, 2017 and December 31, 2016, deferred rental income totaled $19,914 and $0, respectively.

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2017~~

~~The Company is subject to a value added tax (“~~~~VAT~~~~”) of 6% for providing consulting service. The amount of~~~~VAT~~~~liability is determined by applying the applicable tax rate to the invoiced amount of consulting services provided (output~~~~VAT~~~~) less~~~~VAT~~~~paid on purchases made with the relevant supporting invoices (input~~~~VAT~~~~). The Company reports revenue net of PRC’s value added tax for all the periods presented in the unaudited condensed~~ consolidated ~~statements of operations and comprehensive (loss) income~~.

Pursuant to the guidance of ASC Topic 605, the Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been provided, the purchase price is fixed or determinable and collectability is reasonably assured.balance sheets.

The Company ~~provides medical related consulting services~~does not offer promotional payments, customer coupons, rebates or other cash redemption offers to its clients. The Company is paid for its services by its clients pursuant to the terms of the written consulting agreements. Each contract calls for a fixed payment in a fixed period of time. The Company recognizes revenue by providing medical related consulting services under written service contracts with its customers. Revenue related to its service offerings is recognized as the services are performed and amounts are earned, using the straight-line method over the term of the related services agreement. Prepayments, if any, received from customers prior to the services being performed are recorded as advance from customers. In these cases, when the services are performed, the amount recorded as advance from customers is recognized as revenue.

The Company leases commercial property under operating leases with terms of generally two years or more. The Company recognizes rental revenue from its commercial leases on a straight-line basis over the life of the lease including rent holidays, if any. Straight-line rent receivable consists of the difference between the tenants’ rents calculated on a straight-line basis from the date of lease commencement over the remaining terms of the related leases and the tenants’ actual rents due under the lease agreements and is included in tenants receivable in the accompanying consolidated balance sheets. Revenues associated with operating expense recoveries are recognized in the period in which the expenses are incurred.

Costs of consulting services includes the cost of internal labor and related benefits, travel expenses related to consulting services, subcontractor costs, other related consulting costs, and other overhead costs. Subcontractor costs were costs related to consulting services incurred by our subcontractor, such as medical professional’s compensation and travel costs.

Real property operating expenses consist of property management fees, property insurance, real estate taxes, depreciation, repairs and maintenance fees, utilities and other expenses related to the Company’s rental properties.

Stock based compensation is accounted for based on the requirements of the Share-Based Payment topic of Accounting Standards Codification (“ASC”) 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award. The Accounting Standards Codification also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the period of services or the vesting period, whichever is applicable. Until the measurement date is reached, the total amount of compensation expense remains uncertain.

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2017~~

Expenditures for research and product development costs are expensed as incurred. The Company did not incur any research and development costs during the three and nine months ended September 30, 2017 and 2016.

~~All costs related to advertising are expensed as incurred. The Company did not incur any advertising expenses during the three and nine months ended September 30, 2017 and 2016~~.

The Company accounts for income taxes using the asset/liability method prescribed by ASC 740, “Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.

The Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes”. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. As of September 30, 2017 and December 31, 2016, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the financial statements. Tax year that remains subject to examination is the years ended December 31, 2016 and 2015. The Company recognizes interest and penalties related to uncertain income tax positions in other expense. However, no such interest and penalties were recorded as of September 30, 2017 and December 31, 2016.

The reporting currency of the Company is the U.S. dollar. The functional currency of the parent company and its wholly-owned U.S. subsidiaries, Avalon Healthcare System Inc., Avalon RT 9 Properties, LLC, and Avalon (BVI) Ltd., is the U.S. dollar and the functional currency of the Company’s wholly-owned PRC subsidiary, Avalon (Shanghai) Healthcare Technology Co., Ltd., is the Chinese Renminbi (“RMB”). For the subsidiary whose functional currency is the RMB, result of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balances on the balance sheets. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income/loss. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

All of the Company’s revenue transactions are transacted in the functional currency of the operating subsidiaries. The Company does not enter into any material transaction in foreign currencies. Transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company.

Asset and liability accounts at September 30, 2017 and December 31, 2016 were translated at 6.6536 RMB to $1.00 and at 6.9448 RMB to $1.00, respectively, which were the exchange rates on the balance sheet dates. Equity accounts were stated at their historical rates. The average translation rates applied to the statements of operations for the nine months ended September 30, 2017 and 2016 were 6.8071 RMB and 6.57924 RMB to $1.00, respectively. Cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rate.

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2017~~

Comprehensive (loss) income is comprised of net (loss) income and all changes to the statements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. For the Company, comprehensive (loss) income for the three and nine months ended September 30, 2017 and 2016 consisted of net (loss) income and unrealized gain (loss) from foreign currency translation adjustment.

ASC Topic 260 “Earnings per Share,” requires presentation of both basic and diluted earnings per share (“EPS”) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the ~~entity~~.entity.

Basic net ~~(loss) income~~loss per share are computed by dividing net ~~(loss) income~~loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net ~~(loss) income~~loss per share is computed by dividing net ~~(loss) income~~loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. Potentially dilutive common shares consist of the common shares issuable upon the exercise of common stock options and warrants (using the treasury stock method). Common stock equivalents are not included in the calculation of diluted net loss per share if their effect would be anti-dilutive. In a period in which the Company has a net loss, all potentially dilutive securities are excluded from the computation of diluted shares outstanding as they would have had an anti-dilutive impact. ~~The following table presents a reconciliation of basic and diluted net (loss) income per share~~:

For the three and nine months ended September 30, 2017, stock options to purchase 484,448 shares of common stock have been excluded from the computation of diluted loss per share as their effect would be anti-dilutive.

~~The~~Company uses “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments.

The ~~Company has determined~~following table summarizes the securities that ~~it has two reportable business segments: real property operating segment and medical related consulting services segment. These reportable segments offer different types~~were excluded from the diluted per share calculation because the effect of ~~service, have different types of revenue, and are managed separately as each requires different operating strategies and management expertise.~~including these potential shares was antidilutive:

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all significant related party transactions.

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2017~~

Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications have no effect on the previously reported financial position, results of operations and cash flows.

~~TheCompany effected a one-for-four reverse stock split of its common stock on October 18, 2016. All share and per share information has been retroactively adjusted to reflect this reverse stock split~~.

~~In February 2016, the Financial~~ Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”), which modified lease accounting for both lessees and lessors to increase transparency and comparability by recognizing lease assets and lease liabilities by lessees for those leases classified as operating leases under previous accounting standards and disclosing key information about leasing arrangements. This pronouncement is effective for reporting periods beginning after December 15, 2018 using a modified retrospective adoption method. The Company is currently evaluating the impact of adopting the new lease standard on its consolidated financial statements.

In August ~~2016,~~2018, the FASB issued ASU ~~2016-15, Statement~~No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The objective of ~~Cash Flows (Topic 230): Classification~~ASU 2018-13 is to improve the effectiveness of ~~Certain Cash Receipts~~disclosures in the notes to the financial statements by removing, modifying, and ~~Cash Payments. This ASU addresses~~adding certain fair value disclosure requirements to facilitate clear communication of the classification of certain specific cash flow issues including debt prepayment or extinguishment costs, settlement of certain debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of certain insurance claims and distributions received from equity method investees. This ASU isinformation required by generally accepted accounting principles. The amendments are effective for all entities for fiscal years, ~~beginning after December 15, 2017,~~ and interim periods within those fiscal years, beginning after December 15, 2019 with early adoption ~~permitted. An entity that elects early~~permitted upon issuance of this ASU. The adoption ~~must adopt all~~ of ASU 2018 – 13 did not have a material impact on the ~~amendments in the same period. The Company is currently evaluating the impact it may have on its~~Company’s consolidated financial statements.

In ~~May 2017,~~June 2016, the FASB issued ASU ~~No. 2017-09, Compensation – Stock Compensation: Scope~~2016-13, Financial Instruments - Credit Losses (“Topic 326”). The ASU introduces a new accounting model, the Current Expected Credit Losses model (“CECL”), which requiresearlier recognition of ~~Modification Accounting.~~credit losses and additional disclosures related to credit risk. The ~~guidance clarifies when changes to~~CECL model utilizes a lifetime expected credit loss measurement objective for the ~~terms~~recognition of credit losses at the time the financial asset is originated or conditions of a share-based payment award must be accounted for as modifications. Entities will apply the modification accounting guidance if the value, vesting conditions or classification of the award changes. This guidanceacquired. ASU 2016-13 is effective for annual ~~periods,~~period beginning after December 15, 2022, including interim reporting periods within those annual ~~periods, beginning after December 15, 2017. Early adoption is permitted.~~reporting periods. The Company ~~is currently evaluating~~expects that the adoption will not have a material impact ~~it may have~~ on ~~its~~the Company’s consolidated financial statements.

Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures.

~~At September 30, 2017 and December 31, 2016, prepaid expenses and other consisted of the following:~~

NOTES TO ~~UNAUDITED~~ CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2017~~

NOTE 54 –~~PROPERTY, PLANT~~PREPAID EXPENSES AND ~~EQUIPMENT~~OTHER CURRENT ASSETS

At September 30, ~~2017~~2020 and December 31, ~~2016, property, plant~~2019, prepaid expenses and ~~equipment~~other current assets consisted of the following:

As of September 30, 2020 and December 31, 2019, the equity method investment amounted to $488,374 and $483,101, respectively. The investment represents the Company’s subsidiary, Avalon Shanghai’s interest in Epicon Biotech Co., Ltd. (“Epicon”). Epicon was incorporated on August 14, 2018 in PRC. Avalon Shanghai and the other unrelated company, Jiangsu Unicorn Biological Technology Co., Ltd. (“Unicorn”), accounted for 40% and 60% of the total ownership, respectively. Epicon is focused on cell preparation, third party testing, biological sample repository for commercial and scientific research purposes and the clinical transformation of scientific achievements.

The Company treats the equity investment in the consolidated financial statements under the equity method. Under the equity method, the investment is initially recorded at cost, adjusted for any excess of the Company’s share of the incorporated-date fair values of the investee’s identifiable net assets over the cost of the investment (if any). Thereafter, the investment is adjusted for the post incorporation change in the Company’s share of the investee’s net assets and any impairment loss relating to the investment.

For the three months ended September 30, 2020 and 2019, the Company’s share of Epicon’s net loss was $14,966 and $25,266, respectively, which was included in loss from equity-method investment in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss. For the nine months ended September 30, ~~2017, depreciation expense amounted to $4,256~~2020 and ~~$5,469, respectively,~~2019, the Company’s share of ~~which, $502~~Epicon’s net loss was $35,382 and $502 was included in real property operating expenses and $3,754 and $4,967 was included in other operating expenses, respectively. For the three and nine months ended September 30, 2016, the Company did not have any depreciation expense.

~~At September 30, 2017 and December 31, 2016, investment in real estate consisted of the following:~~

~~For the three and nine months ended September 30, 2017, depreciation expense amounted to $20,066 and $53,009,~~$48,353, respectively, which was included in ~~real property operating expenses.~~loss from equity-method investment in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss.

Activity recorded for the Company’s equity method investment in Epicon is summarized in the following table:

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

At September 30, ~~2017~~2020 and December 31, ~~2016,~~2019, accrued liabilities and other payables consisted of the following:

On April 19, 2017, the Company entered into a loan agreement, providing for the issuance of a loan in the principal amount of $2,100,000. The term of the loan is one year. The annual interest rate for the loan is 10%. The loan is guaranteed by the Company’s Chairman, Mr. Wenzhao Lu. At September 30, 2017, the outstanding principal balance of the loan and related accrued and unpaid interest for the loan was $2,100,000 and $94,932, respectively.

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2017~~

~~At September 30, 2017 and December 31, 2016, VAT and other taxes payable consisted of the following:~~

Medical Related Consulting Services Revenue from ~~related parties~~Related Parties and ~~accounts receivable~~Accounts Receivable – ~~related parties~~Related Party

During the three and nine months ended September 30, ~~2017~~2020 and ~~2016,~~2019, medical related consulting services revenue from related parties was as follows:

Accounts receivable – related ~~parties, net of allowance for doubtful accounts,~~party at September 30, ~~2017~~2020 and December 31, ~~2016~~2019 amounted to ~~$166,874~~$0 and ~~$70,228,~~$215,418, respectively, and were related to consulting services provided to Beijing Nanshan and Shanghai Daopei, two Chinese entities whose chairman is Wenzhao Lu, the major shareholder of the Company. Management believes that the accounts receivable are fully collectable. Therefore, no allowance for doubtful accounts is deemed to be required on ~~its~~ accounts receivable – related ~~parties~~party at September 30, ~~2017~~2020 and December 31, ~~2016.~~2019.

Accrued ~~liabilities~~Liabilities and ~~other payables~~Other Payables – ~~related parties~~Related Parties

AtAs of September 30, ~~2017~~2020 and December 31, ~~2016,~~2019, the Company owed David Jin, its shareholder, chief executive officer, president and board member, ~~of $19,420~~$33,968 and $6,278, respectively, for travel and other miscellaneous reimbursements which have been included in accrued liabilities and other payable – related parties on the accompanying consolidated balance sheets.

~~At September 30, 2017 and December 31, 2016, the Company owed Meng Li, its shareholder, chief operating officer and board member, of $2,214 and $309,~~$24,254, respectively, for travel and other miscellaneous reimbursements, which have been included in accrued liabilities and other payables – related parties on the accompanying consolidated balance sheets.

On October 17, 2016, the Company entered into a lease for office space in New Jersey with a related party (the “AHS Office Lease”). Pursuant to the AHS Office Lease, the monthly rent was $1,000. The AHS Office Lease was terminated in August 2017. As of September 30, ~~2017~~2020 and December 31, ~~2016,~~2019, the ~~accrued~~Company owed Meng Li, its shareholder and ~~unpaid rent expense related to this AHS Office Lease amounted to $10,000~~chief operating officer, $0 and ~~$2,000,~~$10,473, respectively, for travel and other miscellaneous reimbursements, which ~~was~~have been included in accrued liabilities and other payables – related parties on the accompanying consolidated balance sheets.

At September 30, 2020 and December 31, 2019, the Company owed Yu Zhou, director and former co-chief executive officer and 40% owner of Genexosome, of $3,121 for travel and other miscellaneous reimbursements, which have been included in accrued liabilities and other payables – related parties on the accompanying consolidated balance sheets.

The Company acquired Beijing Genexosome for a cash payment of $450,000. As of September 30, 2020 and December 31, 2019, the unpaid acquisition consideration of $100,000, was payable to Yu Zhou, director and former co-chief executive officer and 40% owner of Genexosome, and has been included in accrued liabilities and other payables – related parties on the accompanying consolidated balance sheets.

As of September 30, 2020 and December 31, 2019, the accrued and unpaid interest related to borrowings from Wenzhao Lu, the Company’s largest shareholder and chairman of the Board of Directors, amounted to $125,363 and $49,194, respectively, and have been included in accrued liabilities and other payables – related parties on the accompanying consolidated balance sheets.

On March 18, 2019, the Company issued Wenzhao Lu, the Company’s largest shareholder and Chairman of the Board of Directors, a Promissory Note in the principal amount of $1,000,000 (“Promissory Note”) in consideration of cash in the amount of $1,000,000. The Promissory Note accrues interest at the rate of 5% per annum and matures March 19, 2022. The Company repaid principal of $410,000 and $200,000 in the third quarter of 2019 and second quarter of 2020, respectively. As of September 30, 2020 and December 31, 2019, the outstanding principal balance was $390,000 and $590,000, respectively.

On August 29, 2019, the Company entered into a Line of Credit Agreement (the “Line of Credit Agreement”) providing the Company with a $20 million line of credit (the “Line of Credit”) from Wenzhao Lu (the “Lender”), the largest shareholder and Chairman of the Board of Directors of the Company. The Line of Credit allows the Company to request loans thereunder and to use the proceeds of such loans for working capital and operating expense purposes until the facility matures on December 31, 2024. The loans are unsecured and are not convertible into equity of the Company. Loans drawn under the Line of Credit bears interest at an annual rate of 5% and each individual loan will be payable three years from the date of issuance. The Company has a right to draw down on the line of credit and not at the discretion of the related party Lender. The Company may, at its option, prepay any borrowings under the Line of Credit, in whole or in part at any time prior to maturity, without premium or penalty. The Line of Credit Agreement includes customary events of default. If any such event of default occurs, the Lender may declare all outstanding loans under the Line of Credit to be due and payable immediately. As of September 30, 2020 and December 31, 2019, $2,900,000 and $2,600,000 was outstanding under the Line of Credit, respectively.

For the three months ended September 30, 2020 and 2019, the interest expense related to above borrowings amounted to $41,531 and $8,842, respectively, and has been included in interest expense – related party on the accompanying unaudited condensed consolidated statements of operations and comprehensive loss. For the nine months ended September 30, 2020 and 2019, the interest expense related to above borrowings amounted to $126,169 and $23,425, respectively, and has been included in interest expense – related party on the accompanying unaudited condensed consolidated statements of operations and comprehensive loss.

NOTES TO ~~UNAUDITED~~ CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2017~~

~~From time to time, David Jin, shareholder, chief executive officer, president and board member~~Line of the Company, provided advances to the Company to supplement its working capital needs. Those advances are short-term in nature, non-interest bearing, unsecured and payable on demand. During the nine months ended September 30, 2017, the Company repaid $500 working capital advance to David Jin. Credit (continued)

As of September 30, ~~2017~~2020 and December 31, ~~2016,~~2019, the ~~working capital advance balance~~related accrued and unpaid interest for above borrowings was $0$125,363 and ~~$500,~~$49,194, respectively, ~~which was reflected as due to~~and has been included in accrued liabilities and other payables – related parties on the accompanying condensed consolidated balance ~~sheets~~.sheets.

~~From time~~Common Shares Sold to ~~time, Meng Li, shareholder, chief operating officer and board member of~~Related Party

On April 1, 2020, the Company ~~provided advances~~sold 645,161 shares of its common stock to the Company to supplement its working capital needs. Those advances are short-term in nature, non-interest bearing, unsecured and payable on demand. The working capital advance of $87,650 at September 30, 2017 and December 31, 2016, was reflected as due to related parties on the accompanying consolidated balance sheets.

~~From time to time,~~WLM Limited (“WLM”), an entity owned by Wenzhao Lu, ~~major shareholder and chairman~~Chairman of the Board of Directors of the Company, ~~provided advances to the Company to supplement its working capital needs. Those advances are short-term in nature, non-interest bearing, unsecured and payable on demand. The working capital advance~~at a price per share of ~~$29,000 and $9,000, respectively, at September 30, 2017 and December 31, 2016, was reflected as due to related parties on the accompanying consolidated balance sheets~~$1.55 for an aggregate purchase price of $1,000,000 (See Note 8 – Common Shares Sold for Cash).

Beijing Genexosome uses office space of a related party, free of rent, which is considered immaterial.

The Company held its annual meeting on August 4, 2020. During ~~the nine months ended September 30, 2017,~~its annual meeting, the Company ~~received advance from~~approved 2020 Incentive Stock Plan and reserved 5,000,000 shares of common stock for issuance thereunder.

On April 1, 2020, the Company entered into a ~~company, which is controlled~~Subscription Agreement with WLM, an entity owned by Wenzhao Lu, ~~the Company’s major shareholder and chairman~~Chairman of the Board of Directors of the Company, of $190,000 for general working capital purpose. The advance is unsecured, non-interest bearing and repayable on demand. The working capital advance of $190,000 at September 30, 2017 was reflected as due to related parties on the accompanying consolidated balance sheets.

On October 17, 2016, AHS entered into a lease for office space in New Jersey with a related party (the “AHS Office Lease”). Pursuant to the AHS Office Lease, the monthly rent is $1,000. The AHS Office Lease was terminated in August 2017. For the three and nine months ended September 30, 2017, rent expense related to the AHS Office Lease amounted to $2,000 and $8,000, respectively.

The Company pays a company, which is controlled by Wenzhao Lu, the Company’s major shareholder and chairman of the Board of Directors, for the management of its commercial real property located in New Jersey. The monthly property management fee is $5,417. The term of the property management agreement is two years commencing on May 5, 2017 and will expire on May 4, 2019. For the three and nine months ended September 30, 2017, the management fee related to the property management agreement amounted to $16,251 and $27,085, respectively.

~~The Company is authorized to issue 10,000,000 shares of preferred stock and 490,000,000 shares of common shares with a par value of $0.0001.~~

~~There are no shares of its preferred stock issued and outstanding as of September 30, 2017 and December 31, 2016.~~

~~There are 64,628,622 and 61,628,622 shares of its common stock issued and outstanding as of September 30, 2017 and December 31, 2016, respectively.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2017~~

~~On March 3, 2017, the Company entered into and closed a Subscription Agreement with an accredited investor (the “March 2017 Accredited Investor”)~~ pursuant to which ~~the March 2017 Accredited Investor~~WLM purchased ~~3,000,000~~645,161 shares of the Company’s common stock ~~(“March 2017 Shares”)~~at a price per share of $1.55 for aan aggregate purchase price of ~~$3,000,000 (the “Purchase Price”).~~$1,000,000. The closing occurred on April 1, 2020.

~~The offer, sale and issuance of the above securities was made to an accredited investor and~~On December 13, 2019, the Company ~~relied upon~~ entered into an Open Market Sale Agreement^SM(the ~~exemptions contained in Section 4(2) of~~“Sales Agreement”) with Jefferies LLC, as sales agent (“Jefferies”), pursuant to which the ~~Securities Act and/or Rule 506 of Regulation D promulgated there under with regard to the sale. No advertising or general solicitation was employed in offering the securities. The~~Company may offer and ~~sale was made~~sell, from time to ~~an accredited investor and transfer~~time, through Jefferies, shares of ~~the~~its common stock, ~~issued was restricted by~~par value $0.0001 per share, having an aggregate offering price of up to $20.0 million. On April 6, 2020, the date on which the Company ~~in accordance with~~filed its Annual Report on Form 10-K for the ~~requirements of the Securities Act of 1933, as amended.~~

The Company, Avalon (Shanghai) Healthcare Technology Co., Ltd. (“Avalon Shanghai”), Beijing DOING Biomedical Technology Co., Ltd. (“DOING”), who is an unaffiliated third party, and the March 2017 Accredited Investor entered into a Share Subscription Agreement whereby the parties acknowledged, among other things, that DOING agreed to transfer the Purchase Price to Avalon Shanghai on behalf of the March 2017 Accredited Investor and the March 2017 Accredited Investor agreed to transfer the March 2017 Shares to DOING upon DOING completing the registration of the acquisition of the March 2017 Shares with the Beijing Commerce Commission (“BCC”) and obtaining an Enterprise Overseas Investment Certificate (the “Investment Certificate”) from BCC. If DOING fails to complete the registration and acquire the Investment Certificate within onefiscal year of the closing then Avalon Shanghai shall transfer $3,000,000 with an annual interest of 20% to DOING upon the request of DOING (the “BCC Repayment Obligation”). As of the date hereof, the Company is obligated to DOING in the principal amount of $3,000,000. The BCC Repayment Obligation is a debt obligation arising other than in the ordinary course of business, which constitutes a direct financial obligation of the Company. Further, Wenzhao Lu, a director and shareholder of the Company, and DOING entered into a Warranty Agreement. Pursuant to the Warranty Agreement, Mr. Lu agreed to (i) cause the Company to be liable to DOING in the event the March 2017 Accredited Investor defaults in its obligations to DOING, (ii) cause the March 2017 Accredited Investor to transfer the March 2017 Shares to DOING upon DOING’s receipt of the Investment Certificate from BCC, (iii) within three years from the date of the Warranty Agreement, DOING may require Mr. Lu to acquire the March 2017 Shares at $1.20 per share upon three-month notice, and (iv) in the event Mr. Lu does not acquire the March 2017 Shares within the three-month period, interest of 15% per annum will be added to the purchase price.

The Company received cash payment of $3,000,000 as an earnest money from DOING in connection with the 3,000,000 common stock issued to the March 2017 Accredited Investor who is an entrusted party that holds the shares on behalf of DOING and recorded the $3,000,000 as refundable deposit on the accompanying condensed consolidated balance sheets. Upon DOING completing the registration of the acquisition of the March 2017 Shares with the BCC and obtaining an Enterprise Overseas Investment Certificate from BCC, the Company will cancel the stock certificate issued under the March 2017 Accredited Investor’s name as an entrusted holder of the shares and the Company will issue a new stock certificate under DOING’s name. The $3,000,000 refundable deposit, which paid by DOING as an earnest money will be applied as the proceeds for issuance of the 3,000,000 shares ofended December 31, 2019, the Company’s ~~common stock under DOING’s name at the closing date~~.

~~The Company is~~registration statement became subject to the ~~contingency~~offering limits set forth in General Instruction I.B.6 of ~~paying interest liability upon~~Form S-3. During the ~~request~~nine months ended September 30, 2020, Jefferies sold an aggregate of ~~DOING if DOING fails~~3,468,315 shares of common stock at an average price of $1.80 per share to ~~complete the registration and obtain the Enterprise Overseas Investment Certificate within one year.~~investors. The Company ~~records accrual for such contingency based upon the assessment~~recorded net proceeds of ~~the probability~~$5,875,755, net of ~~occurrence~~commission and ~~where determinable, an estimate~~other offering costs of ~~the liability. Management may consider many factors in making these assessments including past history and the specifics of this matter. The Company did not accrue any interest for theBCC Repayment Obligation sincemanagement has evaluated the claim and concluded the likelihood of the claim is remote.~~$357,923.

During the nine months ended September 30, ~~2017,~~2020, the Company ~~granted~~issued a total of ~~444,448 options~~1,032,577 shares of its common stock for services rendered and to be rendered. These shares were valued at $1,309,480, the ~~Company’s Chief Financial Officer (“CFO”) at a fixed exercise price~~fair market values on the grant dates using the reported closing share prices on the dates of $0.50 per share and granted a total of 40,000 options to the Company’s two directors at a fixed exercise price of $1.49 per share. The 444,448 options granted to the Company’s CFO are exercisable for ten yearsgrant and the ~~40,000 options granted to~~Company recorded stock-based compensation expense of $1,248,159 for the ~~Company’s two directors are exercisable for five years. The fair value~~nine months ended September 30, 2020 and reduced accrued liabilities of $35,325 and recorded prepaid expense of $25,996 as of September 30, 2020 which will be amortized over the ~~options was $602,224 which was determined using the Black-Scholes option-pricing model and using the following assumptions:~~rest of corresponding service periods.

NOTES TO ~~UNAUDITED~~ CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2017~~

In connection with the option grant, for the three and nine months ended September 30, 2017, the Company recognized stock-based compensation of $335,757 and $602,224, respectively, on the accompanying condensed consolidated statements of operations because the options were deemed fully earned and non-cancellable on the grant date. Stock Option activities for the nine months ended September 30, 2017 were as follows:

~~The total intrinsic value of the stock options outstanding and exercisable at September 30, 2017 was $1,098,853.~~

The following table summarizes the shares of the Company’s common stock issuable upon exercise of options outstanding at September 30, ~~2017:~~2020:

Stock option activities for the nine months ended September 30, 2020 were as follows:

The aggregate intrinsic values of both stock options outstanding and stock options exercisable at September 30, 2020 was $1,597,500.

The fair values of options granted during the nine months ended September 30, 2020 were estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions: volatility of 134.32% - 139.58%, risk-free rate of 0.25% - 1.67%, annual dividend yield of 0% and expected life of 3.00 – 10.00 years. The aggregate fair value of the options granted during the nine months ended September 30, 2020 was $2,702,401.

Stock-based compensation expense associated with stock options granted amounted to $739,362 and $1,916,193, of which, $605,555 and $1,803,829 was recorded as compensation and related benefits, $110,970 and $112,364 was recorded as professional fees, $22,837 and $0 was recorded as research and development expenses, for the three months ended September 30, 2020 and 2019, respectively.

Stock-based compensation expense associated with stock options granted amounted to $2,251,312 and $5,713,079, of which, $1,975,245 and $5,155,983 was recorded as compensation and related benefits, $240,162 and $557,096 was recorded as professional fees, $35,905 and $0 was recorded as research and development expenses, for the nine months ended September 30, 2020 and 2019, respectively.

A summary of the status of the Company’s nonvested stock options granted as of September 30, 2020 and changes during the nine months ended September 30, 2020 is presented below:

Avalon Shanghai ~~operates~~and Beijing Genexosome operate in the PRC, are required to reserve 10% of ~~its~~their net profit after income tax, as determined in accordance with the PRC accounting rules and regulations. Appropriation to the statutory reserve by the Company is based on profit arrived at under PRC accounting standards for business enterprises for each year.

The profit arrived at must be set off against any accumulated losses sustained by the Company in prior years, before allocation is made to the statutory reserve. Appropriation to the statutory reserve must be made before distribution of dividends to shareholders. The appropriation is required until the statutory reserve reaches 50% of the registered capital. This statutory reserve is not distributable in the form of cash dividends. The Company did not make any appropriation to statutory reserve for Avalon Shanghai and Beijing Genexosome during the nine months ended September 30, ~~2017 since it~~2020 as they incurred ~~a loss~~net losses in the period.

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2017~~NOTE 10 – RESTRICTED NET ASSETS

~~NOTE 13 –SEGMENT INFORMATION~~A portion of the Company’s operations are conducted through its PRC subsidiaries, which can only pay dividends out of their retained earnings determined in accordance with the accounting standards and regulations in the PRC and after they have met the PRC requirements for appropriation to statutory reserve. In addition, a portion of the Company’s businesses and assets are denominated in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts. These currency exchange control procedures imposed by the PRC government authorities may restrict the ability of the Company’s PRC subsidiaries to transfer their net assets to the Parent Company through loans, advances or cash dividends.

Schedule I of Article 5-04 of Regulation S-X requires the condensed financial information of the parent company to be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. For purposes of this test, restricted net assets of consolidated subsidiaries shall mean that amount of the ~~three and nine months ended September 30, 2017,~~registrant’s proportionate share of net assets of its consolidated subsidiaries (after intercompany eliminations) which as of the ~~Company operated~~end of the most recent fiscal year may not be transferred to the parent company in ~~two reportable business segments - (1)~~ the ~~real property operating segment, and (2)~~form of loans, advances or cash dividends without the medical related consulting services segment. For the three and nine months ended September 30, 2016, the Company operated in one reportable business segment – the medical related consulting services segment. The Company’s reportable segments are strategic business units that offer different services. They are managed separately based on the fundamental differences in their operations. Information with respect to these reportable business segments for the three and nine months ended September 30, 2017 and 2016 was as follows:

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2017~~consent of a third party.

The Company has employment agreements with certain employees that provided severance payments upon termination of employment under certain circumstances, as defined in the applicable agreements. The Company has estimated its possible severance payments of approximately $302,000Company’s PRC subsidiaries’ net assets as of September 30, ~~2017~~2020 and December 31, ~~2016, which have~~2019 did not ~~been reflected in its~~exceed 25% of the Company’s consolidated net assets. Accordingly, the Parent Company’s condensed consolidated financial statements ~~since the Company concluded that the likelihood is remote at this moment~~.have not been required in accordance with Rule 5-04 and Rule 12-04 of SEC Regulation S-X.

On November 22, 2016, the Company entered into a legal service agreement with a law firm who has agreed to provide legal and corporate advisory services to the Company. The term of this agreement is on a month to month basis. In accordance to this service agreement, the Company pays a flat cash fee of $15,000 per month. At September 30, 2017 and December 31, 2016, the accrued legal service fees related to the service agreement was $60,000 and $10,000, respectively, which was included in accrued liabilities and other payables on the accompanying condensed consolidated balance sheets.

On October 17, 2016, the Company entered into a one-year consulting service agreement with a consultant who has agreed to provide financial consulting service to the Company. In accordance with this agreement, the Company pays a flat fee of $4,800 per month commencing on October 20, 2016. On April 19, 2017, the Company renewed the consulting agreement. In accordance with the renewed agreement, the Company pays a flat fee of $10,000 per month commencing on April 19, 2017. At September 30, 2017 and December 31, 2016, the accrued service fees related to the service agreement was $34,000 and $1,600, respectively, which was included in accrued liabilities and other payables on the accompanying condensed consolidated balance sheets.

On June 6, 2017, the Company entered into a two-year real property management agreement with a related party which agreed to provide real property management service to the Company. In accordance with this agreement, the Company pays a flat fee of $5,417 per month commencing on May 5, 2017 (see Note 10 for real property management agreement).

On January 19, 2017, Avalon Shanghai entered into a lease for office space in Beijing, China with a third party (the “Beijing Office Lease”). Pursuant to the Beijing Office Lease, the monthly rent is RMB 50,586 (approximately $7,600) with a required security deposit of RMB 164,764 (approximately $24,800). In addition, Avalon Shanghai needs to pay monthly maintenance fees of RMB 4,336 (approximately $700). The term of the Beijing Office Lease is 26 months commencing on January 1, 2017 and will expire on February 28, 2019 with two months of free rent in the months of December 2017 and February 2019. For the three and nine months ended September 30, 2017, rent expense and maintenance fees related to the Beijing Office Lease amounted to approximately $21,900 and $64,400, respectively. Future minimum rental payment required under the Beijing Office Lease is as follows:

In December 2016, Avalon Shanghai entered into a lease for office space in Shanghai, China with a third party (the “Shanghai Office Lease”). Pursuant to the Shanghai Office Lease, the monthly rent is RMB 20,000 (approximately $3,000). The term of the Shanghai Office Lease is one year commencing on January 1, 2017 and will expire on December 31, 2017. For the three and nine months ended September 30, 2017, rent expense related to the Shanghai Office Lease amounted to approximately $8,600 and $25,200, respectively. Future minimum rental payment required under the Shanghai Office Lease is as follows:

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2017~~

The following table sets forth information as to each customer that accounted for 10% or more of the Company’s ~~revenue~~revenues for the three and nine months ended September 30, ~~2017~~2020 and ~~2016.~~2019.

Two customers, ~~one of which was a related party,~~whose outstanding receivable accounted for ~~86.1%~~10% or more of the Company’s total outstanding accounts receivable, accounts receivable – related party, and ~~tenants~~rent receivable at September 30, ~~2017~~.

~~One customer, who was a related party,~~2020, accounted for ~~100%~~62.6% of the Company’s total outstanding accounts receivable, accounts receivable – related party, and rent receivable at September 30, 2020.

Two customers, whose outstanding receivable accounted for 10% or more of the Company’s total outstanding accounts receivable, accounts receivable – related party, and rent receivable at December 31, ~~2016.~~2019, accounted for 93.0% of the Company’s total outstanding accounts receivable, accounts receivable – related party, and rent receivable at December 31, 2019.

No supplier accounted for 10% or more of the Company’s purchase during the three and nine months ended September 30, ~~2017~~2020 and ~~2016~~.2019.

~~Two suppliers~~One supplier, whose outstanding payable accounted for ~~89.4%~~10% or more of the Company’s total outstanding accounts payable at September 30, ~~2017.~~2020, accounted for 93.6% of the Company’s total outstanding accounts payable at September 30, 2020.

NoOne supplier, whose outstanding payable accounted for 10% or more of the Company’s total outstanding accounts payable at December 31, ~~2016.~~

~~At September 30, 2017 and~~the Company’s total outstanding accounts payable at December 31, 2016, cash balances in the PRC are $128,301 and $2,525,630, respectively, are uninsured. The Company has not experienced any losses in PRC bank accounts and believes it is not exposed to any risks on its cash in PRC bank accounts.2019.

The Company maintains its cash in United States bank and financial institution deposits that at times may exceed federally insured limits. At September 30, 2017 and December 31, 2016, the Company’s cash balances in United States bank accounts had approximately $0 and $80,000 in excess of the federally-insured limits, respectively. The Company has not experienced any losses in its United States bank accounts through and as of the date of this report.

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2017~~

~~A portion~~For the three and nine months ended September 30, 2020 and 2019, the Company operated in three reportable business segments - (1) the real property operating segment, (2) the medical related consulting services segment, and (3) the performing development services for hospitals and other customers and sales of developed products to hospitals and other customers segment. The Company’s reportable segments are strategic business units that offer different services and products. They are managed separately based on the fundamental differences in their operations. Information with respect to these reportable business segments for the three and nine months ended September 30, 2020 and 2019 was as follows:

From time to time, the Company is subject to ordinary routine litigation incidental to its normal business operations. The Company is not currently a party to, and its property is not subject to, any material legal proceedings, except as set forth below.

On October 25, 2017, Genexosome entered into and closed a Stock Purchase Agreement with Beijing Genexosome and Yu Zhou, MD, PhD, the sole shareholder of Beijing Genexosome, pursuant to which Genexosome acquired all of the ~~Company’s operations are conducted through its PRC subsidiary, which can only pay dividends out~~issued and outstanding securities of ~~its retained earnings determined~~Beijing Genexosome in ~~accordance with the accounting standards and regulations~~consideration of a cash payment in the ~~PRC~~amount of $450,000, of which $100,000 is still owed. Further, on October 25, 2017, Genexosome entered into and ~~after~~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 500,000 shares of common stock of the Company to Dr. Zhou and issued Dr. Zhou 400 shares of common stock of Genexosome. Further, The Company had not been able to realize the financial projections provided by Dr. Zhou at the time of the acquisition and has decided to impair the intangible asset associated with this acquisition to zero. Dr. Zhou was terminated as Co-CEO of Genexosome on August 14, 2019. Further, on October 28, 2019, Research Institute at Nationwide Children’s Hospital (“Research Institute”) filed a Complaint in the United States District Court for the Southern District of Ohio Eastern Division against Dr. Zhou, Li Chen, the Company and Genexosome with various claims against the Company and Genexosome including misappropriation of trade secrets in violation of the Defend Trade Secrets Act of 2016 and violation of Ohio Uniform Trade Secrets Act. Research Institute is seeking monetary damages, injunctive relief, exemplary damages, injunctive relief and other equitable relief. The Company intends to vigorously defend against this action and pursue all available legal remedies. The civil case against Avalon is stayed pending resolution of the criminal proceedings against Dr. Zhou and Li Chen, and while there can be no assurances, the Company believes it has ~~met~~substantial legal and factual defenses to the ~~PRC requirements~~Research Institute’s claims and the likelihood of any findings of liability for ~~appropriation~~the Company cannot be assessed at this time.

On February 24, 2020, Avalon Shanghai entered into a lease for office space in Beijing, China, with a third party (the “Beijing Office Lease”). Pursuant to ~~statutory reserve.~~the Beijing Office Lease, the monthly rent is RMB 50,586 (approximately $7,000) with a required security deposit of RMB 164,764 (approximately $24,000). In addition, ~~a portion~~Avalon Shanghai needs to pay monthly maintenance fees of RMB 4,336 (approximately $600). The term of the Beijing Office Lease is 12 months commencing on March 1, 2020 and expires on February 28, 2021. For the three and nine months ended September 30, 2020, rent expense and maintenance fees related to the Beijing Office Lease amounted to approximately $36,000 and $67,000, respectively. As of September 30, 2020, the future minimum rental payment required under this Beijing Office Lease is $40,438.

In December 2019, the Company entered into a lease in New York, U.S., with a third party (the “New York Lease”). Pursuant to the New York Lease, the monthly rent is $6,000. The term of the New York Lease is 3 years commencing on January 1, 2020 and expires on December 31, 2022. For the three and nine months ended September 30, 2020, rent expense related to the New York Lease amounted to $18,000 and $54,000, respectively.

Operating lease right-of-use asset related to the New York Lease is included in “Right-of-use asset, operating lease” and is included in the accompanying consolidated balance sheets. With respect to lease liability, operating lease liability is included in “Operating lease obligation” and “Operating lease obligation – noncurrent portion,” in the accompanying consolidated balance sheets. The Company’s ~~businesses~~leases as of December 31, 2019 did not meet the requirements to be recorded as a right-of-use asset and ~~assets are denominated~~operating lease obligation as they were immaterial and less than 12 months in term.

Supplemental cash flow information related to the New York lease for the nine months ended September 30, 2020 is as follows:

Supplemental balance sheet information related to the New York Lease as of September 30, 2020 is as follows:

The following table summarizes the maturity of lease liability under the New York Lease as of September 30, 2020:

On May 29, 2018, Avalon Shanghai entered into a Joint Venture Agreement with Jiangsu Unicorn Biological Technology Co., Ltd. (“Unicorn”), pursuant to which a company named Epicon Biotech Co., Ltd. (“Epicon”) was formed on August 14, 2018. Epicon is owned 60% by Unicorn and 40% by Avalon Shanghai. Within five years of execution of the Joint Venture Agreement, Unicorn shall invest cash into Epicon in an amount not less than RMB ~~which~~8,000,000 (approximately $1.2 million) and the premises of the laboratories of Nanjing Hospital of Chinese Medicine for exclusive use by Epicon, and Avalon Shanghai shall invest cash into Epicon in an amount not less than RMB 10,000,000 (approximately $1.5 million). Epicon is ~~not freely convertible into foreign currencies. All foreign exchange transactions take place either through~~focused on cell preparation, third party testing, biological sample repository for commercial and scientific research purposes and the ~~People’s Bank~~clinical transformation of ~~China or other banks authorized~~scientific achievements. As of September 30, 2020, Avalon Shanghai has contributed RMB 4,300,000 (approximately $0.6 million) that was included in equity method investment on the accompanying consolidated balance sheets. Avalon Shanghai intends to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions requires submitting a payment application formuse its present working capital together with ~~suppliers’ invoices, shipping documents~~borrowings from related party and ~~signed contracts. These currency exchange control procedures imposed by~~equity raises to fund the ~~PRC government authorities may restrict the ability~~project cost.

On October 23, 2018, Avactis Biosciences, Inc. (“Avactis”), a wholly-owned subsidiary of the ~~Company’s PRC subsidiary to transfer its net assets~~Company, and Arbele Limited (“Arbele”) agreed to the ~~Parent Company through loans, advances or cash dividends.~~

~~Schedule I~~establishment of ~~Article 5-04 of Regulation S-X requires the condensed financial information~~AVAR BioTherapeutics (China) Co. Ltd. (“AVAR”), a Sino-foreign equity joint venture, pursuant to an Equity Joint Venture Agreement (the “AVAR Agreement”), which will be owned 60% by Avactis and 40% by Arbele. The purpose and business scope of the ~~parent company~~Joint Venture is to research, develop, produce, sell, distribute and generally commercialize CAR-T/CAR-NK/TCR-T/universal cellular immunotherapy in China. Avactis is required to contribute $10 million (or equivalent in RMB) in cash and/or services, which shall be contributed in tranches based on milestones to be ~~filed when the restricted net assets~~determined jointly by AVAR and Avactis in writing subject to Avactis’ cash reserves. Within 30 days, Arbele shall make a contribution of consolidated subsidiary exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. For purposes of this test, restricted net assets of consolidated subsidiary shall mean that amount of the registrant’s proportionate share of net assets of its consolidated subsidiary (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company$6.66 million in the form of ~~loans, advances or cash dividends without~~entering into a License Agreement with AVAR granting AVAR with an exclusive right and license in China to its technology and intellectual property pertaining to CAR-T/CAR-NK/TCR-T/universal cellular immunotherapy technology and any additional technology developed in the ~~consent of a third party.~~future with terms and conditions to be mutually agreed upon Avactis and AVAR and services.

~~The Company’s PRC subsidiary’s net assets~~In addition, Avactis is responsible for:

As of September 30, ~~2017~~2020, Avactis has paid $900,000 to Arbele as research and development fee, and License Agreement has not been finalized.

On August 29, 2019, the Company entered into a Line of Credit Agreement (the “Line of Credit Agreement”) providing the Company with a $20 million line of credit (the “Line of Credit”) from Wenzhao Lu (the “Lender”), a significant shareholder and director of the Company. The Line of Credit allows the Company to request loans thereunder and to use the proceeds of such loans for working capital and operating expense purposes until the facility matures on December 31, ~~2016 did~~2024. The loans are unsecured and are not ~~exceed 25%~~convertible into equity of the ~~Company’s consolidated net assets. Accordingly, Parent Company’s condensed consolidated financial statements have~~Company. Loans drawn under the Line of Credit bears interest at an annual rate of 5% and each individual loan will be payable three years from the date of issuance. The Company has a right to draw down on the line of credit and not ~~been required~~at the discretion of the related party Lender. The Company may, at its option, prepay any borrowings under the Line of Credit, in ~~accordance with Rule 5-04~~whole or in part at any time prior to maturity, without premium or penalty. The Line of Credit Agreement includes customary events of default. If any such event of default occurs, the Lender may declare all outstanding loans under the Line of Credit to be due and ~~Rule 12-04~~payable immediately. As of ~~SEC Regulation S-X.~~September 30, 2020, $2,900,000 was outstanding under the Line of Credit.

On October 20, 2017, the Company entered into Subscription Agreements with accredited investors (the “October 2017 Accredited Investors”) pursuant to which the October 2017 Accredited Investors agreed to purchase 3,750,000 shares of the Company’s common stock (“October 2017 Shares”) for a purchase price of $3,750,000 (the “Purchase Price”). The closing with respect to $200,000 of the Purchase occurred on October 24, 2017. As of November 10, 2017, the Company has received $2,090,000 of the Purchase Price. The balance of the Purchase Price is expected to close on or before December 6, 2017 if not sooner.

The offer, sale and issuance of the above securities was made to accredited investors and the Company relied upon the exemptions contained in Section 4(2) of the Securities Act and/or Rule 506 of Regulation D promulgated there under with regard to the sale. No advertising or general solicitation was employed in offering the securities. The offer and sale was made to accredited investors and transfer of the common stock issued was restricted by the Company in accordance with the requirements of the Securities Act of 1933, as amended.~~The accredited investors acknowledged that they were not aware of nor did it review any registration statement or prospectus filed by the Company with the SEC.~~

On December 13, 2019, the Company entered into an Open Market Sale Agreement^SM(the “Sales Agreement”) with Jefferies LLC, as sales agent (“Jefferies”). From October 1, 2020 to November 9, 2020, Jefferies sold an aggregate of 41,909 shares of common stock at an average price of ~~the Company.~~$1.55 per share to investors. The Company ~~is required~~received net cash proceeds of $63,197, net of commission paid to ~~pay $876,087~~sales agent of the cash purchase price by November 24, 2017 and $450,000 of the cash purchase price by December 24, 2017. In addition, the Company is required to deliver the 500,000 shares of its common stock no later than November 24, 2017.

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2017~~$1,955.

~~GenExosome Technologies Inc. (continued)~~

On October 25, 2017, GenExosome entered into and closed an Asset Purchase Agreement with Yu Zhou, MD, PhD, pursuant to which the Company acquired all assets, including all intellectual property, held by Dr. Zhou pertaining to the business of researching, developing and commercializing exosome technologies including, but not limited to, patent application number CN 2016 1 0675107.5 (application of an Exosomal MicroRNA in plasma as biomaker to diagnosis liver cancer), patent application number CN 2016 1 0675110.7 (clinical application of circulating exosome carried miRNA-33b in the diagnosis of liver cancer), patent application number CN 2017 1 0330847.X (saliva exosome based methods and composition for the diagnosis, staging and prognosis of oral cancer) and patent application number CN 2017 1 0330835.7 (a novel exosome-based therapeutics against proliferative oral diseases). In consideration of the assets, GenExosome agreed to pay Dr. Zhou $876,087 in cash no later than November 24, 2017, transfer 500,000 shares of common stock of the Company to Dr. Zhou no later than November 24, 2017 and issue Dr. Zhou 400 shares of common stock of GenExosome no later than November 24, 2017. As a result of the above transactions, the Company holds 60% of GenExosome and Dr. Zhou holds 40% of GenExosome.

On October 25, 2017, GenExosome entered into and closed a Stock Purchase Agreement with Beijing Jieteng (GenExosome) Biotech Co. Ltd., a corporation incorporated in the People’s Republic of China (“Beijing GenExosome”) and Dr. Zhou, 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, which shall be paid upon Beijing GenExosome recording the change in ownership with the Ministry of Commerce of the People’s Republic of China in accordance with the Interim Measures for Record Management regarding the Establishment and Change of Foreign-invested Enterprises.

On October 25, 2017, GenExosome increased its size of its board of directors from one to four and appointed Wenzhao “Daniel” Lu, Meng Li and Dr. Zhou to the board of directors. In addition, Dr. Zhou was appointed as Co-Chief Executive Officer of GenExosome.

On October 25, 2017, Dr. Zhou and GenExosome entered into an Executive Retention Agreement pursuant to which Dr. Zhou agreed to serve as Co-Chief Executive Officer in consideration of an annual salary of $160,000. Dr. Zhou and GenExosome also entered into an Invention Assignment, Confidentiality, Non-Compete and Non-Solicit Agreement.

Beijing GenExosome is engaged in the development of exosome technology to improve diagnosis and management of diseases. Exosomes are tiny, subcellular, membrane-bound vesicles in diameter of 30-150 nm that are released by almost all cell types and that can carry membrane and cellular proteins, as well as genetic materials that are representative of the cell of origin. Profiling various bio-molecules in exosomes may serve as useful biomarkers for a wide variety of diseases. Beijing GenExosome’s research kits are designed to be used by researchers for biomarker discovery and clinical diagnostic development, and the advancement of targeted therapies. Currently, research kits and service are available to isolate exosomes or extract exosomal RNA/protein from serum/plasma, urine and saliva samples. Beijing GenExosome is seeking to decode proteomic and genomic alterations underlying a wide-range of pathologies, thus allowing for the introduction of novel non-invasive “liquid biopsies”. Its mission is focused toward diagnostic advancements in the fields of oncology, infectious diseases and fibrotic diseases, and discovery of disease-specific exosomes to provide disease origin insight necessary to enable personalized clinical management. There is no guarantee that Beijing GenExosome will be able to successfully achieve its stated mission.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of ~~the~~our financial condition and results of operations ~~and financial condition of Avalon GloboCare Corp.~~ for the three and nine months ended September 30, ~~2017~~2020 and ~~2016~~2019 should be read in conjunction with ~~the Avalon GloboCare Corp.~~our unaudited condensed consolidated financial statements and ~~the~~related notes ~~thereto contained~~to those unaudited condensed consolidated financial statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Special Note Regarding Forward-Looking Statements and Business sections in our Form 10-K as filed with the Securities and Exchange Commission on ~~March 28, 2017.~~April 6, 2020. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

~~Unless otherwise indicated, references to the “Company,” “us” or “we” refer to Avalon GloboCare Corp.~~Impact of COVID-19 on our Operations, Financial Condition, Liquidity and ~~its subsidiaries.~~Results of Operations

The ultimate impact of the COVID-19 pandemic on our operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or us, may determine are needed.

The occurrence of COVID-19 pandemic had negatively impact on our operations. Some tenants have delayed on rent payment. Our general development operations have continued during the COVID-19 pandemic and we have not had significant disruption. However, we are uncertain if the COVID-19 pandemic will impact future operations at our laboratory, or our ability to collaborate with other laboratories and universities. In addition, we are unsure if the COVID-19 pandemic will impact future clinical trials. Given the dynamic nature of these circumstances, the duration of business disruption and reduced traffic, the related financial effect cannot be reasonably estimated at this time but is expected to adversely impact the Company’s business for the year of 2020.

We have limited cash available to fund planned operations and although we have other sources of capital described below under “Liquidity and Capital Resources,” management continues to pursue various financing alternatives to fund our operations so we can continue as a going concern. However, the COVID-19 pandemic has created significant economic uncertainty and volatility in the credit and capital markets. Management plans to secure the necessary financing through the issue of new equity and/or the entering into of strategic partnership arrangements but the ultimate impact of the COVID-19 pandemic on our ability to raise additional capital is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak and new information which may emerge concerning the severity of the COVID-19 pandemic. We may not be able to raise sufficient additional capital and may tailor our operations based on the amount of funding we are able to raise in the future. Nevertheless, there is no assurance that these initiatives will be successful. Further, there is no assurance that capital available to us in any future financing will be on acceptable terms.

Overview

We are ~~Overview~~a clinical-stage, vertically integrated, leading CellTech bio-developer dedicated to advancing and empowering innovative, transformative immune effector cell therapy, exosome technology, as well as COVID-19 related diagnostics and therapeutics. We also provide strategic advisory and outsourcing services to facilitate and enhance our clients' growth and development, as well as competitiveness in healthcare and CellTech industry markets. Through our subsidiary structure with unique integration of verticals from innovative R&D to automated bioproduction and accelerated clinical development, we are establishing a leading role in the fields of cellular immunotherapy (including CAR-T/NK), exosome technology (ACTEX™), and regenerative therapeutics.

Avalon ~~GloboCare~~achieves and fosters seamless integration of unique verticals to bridge and accelerate innovative research, bio-process development, clinical programs and product commercialization. Avalon’s upstream innovative research includes:

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Co-development of Avalon Clinical-grade Tissue-specific Exosome (“ACTEX™”) with Weill Cornell Medicine.

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Novel therapeutic and diagnostic targets development utilizing QTY-code protein design technology with Massachusetts Institute of Technology (MIT) including using the QTY code protein design technology for development of a hemofiltration device to treat Cytokine Storm.

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Co-development of next generation, transposon-based, multi-target CAR-T, CAR-NK and other immune effector cell therapeutic modalities with Arbele Corp

●

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

Avalon’s midstream bio-processing and bio-production facility is ~~dedicated to integrating~~located in Nanjing, China with state-of-the-art, automated GMP and ~~managing global healthcare services and resources,~~QC/QA infrastructure for standardized bio-manufacturing of clinical-grade cellular products involved in our clinical programs in immune effector cell therapy, regenerative therapeutics, as well as ~~empowering high-impact biomedical innovations~~bio-banking.

Avalon’s downstream medical team and ~~technologies to accelerate their clinical applications. Operating through two major platforms, namely “Avalon Cell”,~~facility consists of top-rated affiliated hospital network and ~~“Avalon Rehab”, our “Technology + Service” ecosystem covers the areas of regenerative medicine, cell-based~~experts specialized in hematology, oncology, cellular immunotherapy, ~~exosome technology, telemedicine with medical second opinion/referral services,~~hematopoietic stem/progenitor cell transplant, as well as fertility and rehabilitation medicine. We plan to integrate these services through joint ventures and accretive acquisitions that bring shareholder value both in the short term, through operational entities as part of Avalon Rehab, and long term, through biomedical innovation development as part of Avalon Cell.regenerative therapeutics. Our major clinical programs include:

●

AVA-001: Avalon has initiated its first-in-human clinical trial of CD19 CAR-T candidate, AVA-001 in August 2019 at the Hebei Yanda Lu Daopei Hospital and Beijing Lu Daopei Hospital in China (the world’s single largest CAR-T treatment network with over 600 patients being treated with CAR-T) for the indication of relapsed/refractory B-cell acute lymphoblastic leukemia and non-Hodgkin Lymphoma. The AVA-001 candidate (co-developed with China Immunotech Co. Ltd) is characterized by the utilization of 4-1BB (CD137) co-stimulatory signaling pathway, conferring a strong anti-cancer activity during pre-clinical study. It also features a shorter bio-manufacturing time which leads to the advantage of prompt treatment to patients where timing is important related hematologic malignancies. Avalon has plans to recruit 20 patients (under registered clinical trial NCT03952923) for safety and efficacy studies.

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AVA-101: Avalon’s transposon-based, multi-targeted CAR-T candidate, AVA-101 (co-developed with Arbele Corp.) will enter pre-clinical process development and validation phase. AVA-101 features non-viral, transposon-engineered CAR-T with multiple anti-cancer targets, as well as possessing molecular safety-switch mechanism to minimize the side effects, such as cytokine release syndrome and neurotoxicity, often associated with conventional CAR-T cellular therapy. Following the pre-clinical process development and validation phase, Avalon anticipates that it intends to pursue first-in-human clinical study of this next generation of potentially more effective and safer CAR-T candidate.

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ACTEX™: Stem cell-derived Avalon Clinical-grade Tissue-specific Exosomes (ACTEX™) is one of the core technology platforms that has been co-developed by Avalon GloboCare and Weill Cornell Medicine. The Company formed a strategic partnership with HydroPeptide, LLC, a leading epigenetics skin care company, to engage in co-development and commercialization of a series of clinical-grade, exosome-based cosmeceutical and orthopedic products. As part of this agreement, the Company signed a three-way Material Transfer Agreement between Avalon GloboCare, HydroPeptide and Weill Cornell Medicine.

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FLASH-CAR™: The Company advanced its next generation immune cell therapy using FLASH-CAR™ technology co-developed with the Company’s strategic partner Arbele Limited. The adaptable FLASH-CAR™ platform can be used to create personalized cell therapy from a patient’s own cells, as well as off-the-shelf cell therapy from a universal donor.

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AVA-Trap™: Avalon’s AVA-Trap™ therapeutic program plans to enter animal model testing followed by expedited clinical studies with the goal of providing an effective therapeutic option to combat COVID-19 and other life-threatening conditions involving cytokine storms. The Company initiated a sponsored research and co-development project with Massachusetts Institute of Technology (MIT) led by Professor Shuguang Zhang as Principal Investigator in May 2019. Using the unique QTY code protein design platform, six water-soluble variant cytokine receptors have been successfully designed and tested to show binding affinity to the respective cytokines.

We ~~currently produce~~generated revenue ~~through~~by providing medical related ~~party strategic relationships in the Peoples Republic of China (“China”) that provide consultative~~consulting services in advanced areas of immunotherapy and second opinion/referral ~~services. Our~~ services ~~include research studies; executive education; daily online executive briefings; tailored expert advisory services; and consulting and management services. We typically charge an annual fee. Through~~through our services we attempt to focus our clients on important problems by providing an analysis of the evolving healthcare industry and the methods prevalent in the industry to solve those problems through counsel, business planning and support.

wholly-owned subsidiary Avalon (Shanghai) Healthcare Technology Co., Ltd., or Avalon Shanghai. We also own and operate rental commercial real property in New ~~Jersey.~~Jersey, where we are headquartered. We discontinued sales of exosome isolation systems in China and the United States through our joint venture Genexosome Technologies, Inc. However, we are actively developing other unrelated proprietary exosome related products for sale or licensure.

The value of the Renminbi (“RMB”), the main currency used in China, fluctuates and is affected by, among other things, changes in China’s political and economic conditions. The conversion of RMB into foreign currencies such as the U.S. dollar have generally been based on rates set by the People’s Bank of China, which are set daily based on the previous day’s interbank foreign exchange market rates and current exchange rates on the world financial markets.

~~Going Concern~~

We have a limited operating history and our continued growth is dependent upon the continuation of providing medical consulting services to our only three clients who are our related parties, and real estate property ownership and operation; hence generating revenues, and obtaining additional financing to fund future obligations and pay liabilities arising from normal business operations. We had working capital deficit (total current liabilities in excess of total current assets) and an accumulated deficit of $5,294,818 and $1,743,939 at September 30, 2017, respectively, and had a net loss and net cash flow used in operating activities of $1,690,570 and $747,056 for the nine months ended September 30, 2017, respectively. 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 factors, among others, raised substantial doubt about our ability to continue as a going concern. Our unaudited condensed consolidated financial statements appearing elsewhere in this report do not include any adjustments that might result from the outcome of this uncertainty. There are no assurances we will be successful in our efforts to generate significant revenues or report profitable operations or to continue as a going concern, in which event investors would lose their entire investment in our company.

Our ability to continue as a going concern is dependent upon our ability to carry out our business plan, achieve profitable operations, obtain additional working capital funds from our significant shareholders, and or through debt and equity financings. However, there can be no assurance that any additional financings will be available to us on satisfactory terms and conditions, if any.

Critical Accounting Policies ~~and Estimates~~

Use of Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our ~~unaudited~~ consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these ~~unaudited~~ consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate our estimates, including those related to the allowance for doubtful accounts, the useful life of property ~~plant,~~and equipment and investment in real estate, assumptions used in assessing impairment of long-term assets, valuation of deferred tax assets ~~accruals for taxes due,~~and the associated valuation allowances, and valuation of ~~options~~.stock-based compensation.

We base our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. ~~We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the unaudited consolidated financial statements.~~

Revenue Recognition

We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable and collectability is reasonably assured.

We ~~provide medical related consulting~~recognize revenue under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of this new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to ~~our clients. We~~customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are ~~paid~~applied to achieve that core principle:

●

Step 1: Identify the contract with the customer

●

Step 2: Identify the performance obligations in the contract

●

Step 3: Determine the transaction price

●

Step 4: Allocate the transaction price to the performance obligations in the contract

●

Step 5: Recognize revenue when the company satisfies a performance obligation

●

The customer can benefit from the goods or service either on its own or together with other resources that are readily available to the customer (i.e., the goods or service is capable of being distinct).

●

The entity’s promise to transfer the goods or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the goods or service is distinct within the context of the contract).

If a goods or service is not distinct, the goods or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct.

The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for ~~our~~transferring promised goods or services ~~by our clients pursuant~~to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes). The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. Variable consideration is included in the transaction price only to the ~~terms~~extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the ~~written consulting agreements. Each contract calls for~~uncertainty associated with the variable consideration is subsequently resolved.

The transaction price is allocated to each performance obligation on a ~~fixed payment in a fixed period of time. We recognize revenue by providing medical related consulting services under written service contracts with our customers. Revenue related~~relative standalone selling price basis. The transaction price allocated to ~~our service offerings~~each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate.

Types of revenue:

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Service fees under consulting agreements with related parties to provide medical related consulting services to our clients. We are paid for our services by our clients pursuant to the terms of the written consulting agreements. Each contract calls for a fixed payment.

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Service fees under agreements to perform development services for hospitals and other customers. We do not perform contracts that are contingent upon successful results.

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Sales of developed products to hospitals and other customers.

Revenue recognition criteria:

●

We recognize revenue by providing medical related consulting services under written service contracts with our customers. Revenue related to our service offerings is recognized as the services are performed.

●

Revenue from development services performed under written contracts is recognized as services are provided.

●

Revenue from sales of developed items to hospitals and other customers is recognized when items are shipped to customers and titles are transferred.

We have determined that the ~~services~~ASC 606 does not apply to rental contracts, which are ~~performed and amounts~~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 ~~earned, using the~~recognized on a straight-line ~~method~~basis over the term of the related ~~services agreement. Prepayments, if any, received from customers prior to~~leases. The cumulative difference between lease revenue recognized under the ~~services being performed~~straight-line method and contractual lease payments are ~~recorded as advance from customers. In these cases, when~~included in rent receivable on the ~~services are performed, the amount recorded as advance from customers is recognized as revenue.~~consolidated balance sheets.

We ~~lease commercial property under operating leases with terms of generally two years~~do not offer promotional payments, customer coupons, rebates or ~~more. We recognize rental revenue from~~other cash redemption offers to our commercial leases on a straight-line basis over the life of the lease including rent holidays, if any. Straight-line rent receivable consists of the difference between the tenants’ rents calculated on a straight-line basis from the date of lease commencement over the remaining terms of the related leases and the tenants’ actual rents due under the lease agreements and is included in tenants receivable in the accompanying consolidated balance sheets. Revenues associated with operating expense recoveries are recognized in the period in which the expenses are incurred.customers.

Income Taxes

We are governed by the income tax laws of ~~the PRC~~China and the United States. Income taxes are accounted for pursuant to ASC 740 “Accounting for Income Taxes,” which is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. The charge for taxes is based on the results for the period as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet ~~date~~.date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences, and deferred tax assets are recognized to the extent that it is probably that taxable profit will be available against which deductible temporary differences can be utilized.

Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which case the deferred tax is changed to equity. Deferred tax assets and liabilities are offset when they related to income taxes levied by the same taxation authority and we intend to settle its current tax assets and liabilities on a net ~~basis~~.

~~Stock-based Compensation~~basis.

~~Stock based compensation is accounted for based on the requirements of the Share-Based Payment topic of~~Recent Accounting Standards Codification (“ASC”) 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award. The Accounting Standards Codification also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

~~Pursuant~~For details of applicable new accounting standards, please, refer to ~~ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the period~~ Recent Accounting Standards in Note 3of ~~services or the vesting period, whichever is applicable. Until the measurement date is reached, the total amount of compensation expense remains uncertain.~~our unaudited condensed consolidatedfinancial statements accompanying this report.

~~Recent Accounting Pronouncements~~

RESULTS OF OPERATIONS

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”), which modified lease accounting for both lessees and lessors to increase transparency and comparability by recognizing lease assets and lease liabilities by lessees for those leases classified as operating leases under previous accounting standards and disclosing key information about leasing arrangements. This pronouncement is effective for reporting periods beginning after December 15, 2018 using a modified retrospective adoption method. We are currently evaluating the impact of adopting the new lease standard on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU addresses the classification of certain specific cash flow issues including debt prepayment or extinguishment costs, settlement of certain debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of certain insurance claims and distributions received from equity method investees. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. An entity that elects early adoption must adopt all of the amendments in the same period. We are currently evaluating the impact it may have on our consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation: Scope of Modification Accounting. The guidance clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Entities will apply the modification accounting guidance if the value, vesting conditions or classification of the award changes. This guidance is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the impact it may have on our consolidated financial statements.

Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption. We do not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to our consolidated financial condition, results of operations, cash flows or disclosures.

~~RESULTS OF OPERATIONS~~

Comparison of Results of Operations for the Three and Nine Months Ended September 30, ~~2017~~2020 and ~~2016~~2019

Revenues

~~We generated revenue from medical related consulting services commencing on July 2016 and~~For the three months ended September 30, 2020, we ~~generated~~had real property rental revenue ~~commencing~~of $324,982, as compared to $264,141 for the three months ended September 30, 2019, an increase of $60,841, or 23.0%. For the nine months ended September 30, 2020, we had real property rental revenue of $923,205, as compared to $795,656 for the nine months ended September 30, 2019, an increase of $127,549, or 16.0%. The increase was primarily attributable to the increase of tenants in 2020 periods. We expect that our revenue from real property rent will remain in its current quarterly level with minimal increase in the near future. We are unsure of the short and long term financial impact of COVID -19 on ~~May 2017.~~our ability to collect rental income or on our overall building occupancy rate.

For the three and nine months ended September 30, ~~2017,~~2020, we ~~had real property rental revenue of $315,284 and $537,538, respectively. We~~ did not ~~generate~~have any ~~real property rental~~medical related consulting services revenue since there was no demand for our consulting service from our related parties and there was no order for our medical related consulting services from third party in these periods. Although we maintain close working relationships with our related parties, the consulting agreements with our related parties expired as of December 31, 2019. There was no order from related party and third party customers in the nine months ended September 30, 2020. Currently, we are negotiating with our potential customers and expect to enter consulting services agreements in the first quarter of 2021. For the three and nine months ended September 30, ~~2016.~~

~~For the three months ended September 30, 2017,~~2019, we had medical related consulting services revenue from related parties of ~~$2,166, as compared to consulting services revenue from related parties of $326,667 for~~$108,520 and $234,214, respectively.

For the three ~~months ended September 30, 2016, a decrease of $324,501, or 99.3%. For the~~and nine months ended September 30, ~~2017,~~2020, we ~~had consulting services~~did not have any revenue from ~~related parties~~contract services through performing development services for hospitals and other customers and sales of ~~$220,949, as compared~~developed products to ~~consulting services revenue from related parties of $326,667 for~~hospitals and other customers. For the three and nine months ended September 30, ~~2016, a decrease~~2019, we had revenue from contract services through performing development services for hospitals and other customers and sales of ~~$105,718, or 32.4%. The decrease was mainly attributable~~developed products to ~~the decreased demand for our consulting service~~hospitals and other customers of $10,555 and $37,237, respectively. Feedback received from our research partners is that our exosome isolation system does not produce consistent results and does not deliver high exosome yields and concentrations and needs revision. We have discontinued sales of our exosome isolation system product. However, we are actively developing other unrelated proprietary exosome related ~~parties.~~products for sale or licensure.

Costs and Expenses

For the three ~~and nine~~ months ended September 30, ~~2017,~~2020, our real property operating expenses amounted to $180,722 and $342,576, respectively. Since we started generating real property rental revenue during the second quarter of 2017, we had neither real property rental revenue nor real property operating expenses in$135,821, as compared to $193,738 for the three months ended September 30, 2019, a decrease of $57,917, or 29.9%. The decrease was mainly due to a decrease in maintenance fees of approximately $10,000, and a decrease in other miscellaneous items of approximately $48,000.

For the nine months ended September 30, ~~2016.~~2020, our real property operating expenses amounted to $663,086, as compared to $617,173 for the nine months ended September 30, 2019, an increase of $45,913, or 7.4%. The increase was mainly due to an increase in real property repairs and maintenance expenses of approximately $9,000, an increase in electric utility of approximately $14,000, and an increase in other miscellaneous items of approximately $23,000.

Costs of medical related consulting services ~~includes~~include the cost of internal labor and related benefits, travel expenses related to medical related consulting services, subcontractor costs, other related consulting costs, and other overhead costs. Subcontractor costs were costs related to medical related consulting services incurred by our subcontractor, such as medical professional’s compensation and travel costs.

~~Costs of consulting services for~~For the three ~~months ended September 30, 2017 was $47,033, representing an increase of $13,485, or 40.2%, as compared to $33,548 for the three months ended September 30, 2016. Costs of consulting services for the~~and nine months ended September 30, ~~2017 was $271,845, representing an increase~~2019, costs of ~~$238,297, or 710.3%, as compared~~medical related consulting services amounted to ~~$33,548 for the nine months ended September 30, 2016. The increase was primarily attributable to the allocation of fixed costs, mainly consisting of internal labor~~$94,442 and $202,908, respectively. There were no comparative revenue and related ~~benefits, to~~costs of revenue from our ~~cost of~~medical related consulting ~~services.~~

~~Real Property Operating Income~~

~~Our real property operating income was $134,562 and $194,962, respectively,~~services for the three and nine months ended September 30, ~~2017. We did not generate any real property operating income~~2020 since there was no demand for ~~the three~~our consulting service from our related parties in these periods and ~~nine months ended September 30, 2016.~~there was no order for our medical related consulting services from third party.

~~Gross Profit (Loss) from Consulting Services~~Costs of development services and ~~Gross Margin~~

~~Our gross loss from consulting services for the three months ended September 30, 2017 was $44,867, representing a change~~sales of ~~$337,986, or (115.3)%, as compared to gross profit of $293,119 for the three months ended September 30, 2016, mainly due to the significant decrease in our consulting services revenue~~developed products include inventory costs, materials and ~~the increase in our consulting services costs. Gross margin decreased to (2,071.4)% for the three months ended September 30, 2017 from 89.7% for the three months ended September 30, 2016.~~

Our gross loss from consulting services for the nine months ended September 30, 2017 was $50,896, representing a change of $344,015, or (117.4)%, as compared to gross profit of $293,119 for the nine months ended September 30, 2016, mainly due to the decrease in our consulting services revenue and increase in our consulting services costs. Gross margin decreased to (23.0)% for the nine months ended September 30, 2017 from 89.7% for the nine months ended September 30, 2016.

The decrease in gross margin for the three and nine months ended September 30, 2017 as compared to the three and nine months ended September 30, 2016 was primarily resulted from low consulting services revenue and the allocation of fixedsupplies costs, ~~mainly consisting of~~ internal labor and related benefits, todepreciation, other overhead costs ~~of the low level of consulting revenue.~~

~~Other Operating Expenses~~and shipping and handling costs incurred.

For the three and nine months ended September 30 ~~2017~~2019, costs of development services for hospitals and ~~2016,~~other customers and sales of developed products to hospitals and other customers amounted to $41,808 and $103,899, respectively. We had neither revenue nor cost of revenue from this segment in the three and nine months ended September 30, 2020.

Real Property Operating Income

Our real property operating income for the three months ended September 30, 2020 was $189,161, representing an increase of $118,758, or 168.7%, as compared to $70,403 for the three months ended September 30, 2019. The increase was mainly attributable to the increase in rental revenue resulting from the increase of tenants and the decrease in real property operating expenses as described above. Our real property operating income for the nine months ended September 30, 2020 was $260,119, representing an increase of $81,636, or 45.7%, as compared to $178,483 for the nine months ended September 30, 2019. The increase was mainly attributable to the increase in rental revenue resulting from the increase of tenants as described above, offset by the increase in real property operating expenses. We expect our real property operating income will remain in its current quarterly level with minimal decrease in the near future. We are unsure of the short and long term financial impact of COVID -19 on our ability to collect rental income or on our overall building occupancy rate.

Gross Profit from Medical Related Consulting Services and Gross Margin

We did not generate any gross profit from medical related consulting services in the three months ended September 30, 2020. Our gross profit from medical related consulting services for the three months ended September 30, 2019 was $14,078, with a gross margin of 13.0%.

We did not generate any gross profit from medical related consulting services in the nine months ended September 30, 2020. Our gross profit from medical related consulting services for the nine months ended September 30, 2019 was $31,306, with a gross margin of 13.4%.

Gross Loss from Development Services and Sales of Developed Products and Gross Margin

We did not generate any gross profit from development services and sales of developed products in the three months ended September 30, 2020. Our gross loss from development services and sales of developed products for the three months ended September 30, 2019 was $31,253, with a gross margin of (296.1)%.

We did not generate any gross profit from development services and sales of developed products in the nine months ended September 30, 2020. Our gross loss from development services and sales of developed products for the nine months ended September 30, 2019 was $66,662, with a gross margin of (179.0)%.

Other Operating Expenses

For the three and nine months ended September 30, 2020 and 2019, other operating expenses consisted of the following:

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017 2016 2017 2016
Selling expense $ 148 $ 121 $ 15,138 $ 121
Compensation and related benefits 468,837 — 857,237 —
Professional fees 186,208 84,038 566,131 161,113
Rent 34,846 — 103,173 —
Other general and administrative 57,575 1,127 141,907 29,583
$ 747,614 $ 85,286 $ 1,683,586 $ 190,817

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Our selling expense consisted of salaries of sales personnel and travel and entertainment costs incurred by our sales department. For the three months ended September 30, 2017 and 2016, we had nominal selling expense. Selling expense for the nine months ended September 30, 2017 was $15,138, representing an increase of $15,017 as compared to $121 for the nine months ended September 30, 2016. In the nine months ended September 30, 2017, we hired a sales representative to enhance our visibility and to market our services in order to generate orders for our consulting services. Therefore, our selling expense increased.

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Our compensation and related benefits amounted to $468,837 and $857,237 for the three and nine months ended September 30, 2017. We did not incur any compensation and related benefits during the three and nine months ended September 30, 2016.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Professional fees	$	1,753,182	$	1,630,827	$	4,868,530	$	3,891,539
Compensation and related benefits		1,058,570		2,187,959		3,241,090		6,388,292
Research and development		238,432		265,139		674,935		1,367,310
Advertising expenses		102,472		141,100		216,317		606,922
Amortization		-		81,892		-		245,678
Travel and entertainment		32,735		92,087		137,548		389,101
Directors and officers liability insurance premium		78,862		55,057		194,887		122,720
Other general and administrative		115,466		65,503		342,389		406,966
Impairment loss		-		1,010,011		-		1,010,011
	$	3,379,719	$	5,529,575	$	9,675,696	$	14,428,539

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Professional fees primarily consisted of accounting fees, audit fees, legal service fees, consulting fees, investor relations service charges and other fees incurred for service related to ~~becoming and~~ being a public company. For the three months ended September 30, ~~2017,~~2020, professional fees increased by ~~$102,170~~$122,355, or ~~121.6%~~7.5%, as compared to the three months ended September 30, ~~2016.~~2019. The increase was ~~mainly~~primarily attributable to an increase in ~~accounting~~consulting fees of approximately ~~$17,000 incurred for services performed by our financial consultant, an increase in audit fees incurred of approximately $81,000~~$690,000 mainly due to the increase in ~~audit fee related to potential acquisition~~use of consulting service providers, offset by a ~~target company and Form S-1 registration statement of approximately $69,000, an increase~~decrease in legal services fees of approximately ~~$25,000,~~$486,000 primarily due to the decrease in use of legal service providers, and ~~an increase~~a decrease in other miscellaneous items of approximately ~~$9,000, offset by a decrease in investor relations charge of approximately $30,000 due to the termination investor relations service agreement in the third quarter of 2017.~~$82,000. For the nine months ended September 30, ~~2017,~~2020, professional fees increased by ~~$405,018,~~$976,991, or ~~251.4%~~25.1%, as compared to the nine months ended September 30, ~~2016.~~2019. The increase was ~~mainly~~primarily attributable to an increase in ~~accounting~~consulting fees of approximately ~~$58,000 incurred for services performed by our financial consultant,~~$840,000 mainly due to the increase in stock-based consulting fees, an increase in ~~audit fees incurred~~accounting service charges of approximately ~~$229,000 mainly due to an~~$89,000 as a result of the increase in audit fee related to potential acquisition of a target company and Form S-1 registration statement of approximately $129,000 and an increase in service incurred and completed for 2016 year end audit of approximately $75,000, an increase in legal servicesstock-based accounting fees ~~of approximately $110,000,~~ and an increase in other miscellaneous items of approximately ~~$38,000 resulting from~~$48,000. We expect that our ~~business expansion, offset~~professional fees will remain in its current quarterly level with minimal increase in the near future.

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For the three months ended September 30, 2020, compensation and related benefits decreased by $1,129,389, or 51.6%, as compared to the three months ended September 30, 2019. The significant decrease was primarily attributable to a decrease in ~~investor relations charge~~stock-based compensation of approximately ~~$30,000 due~~$1,198,000 which reflected the value of options granted and vested to our management. For the nine months ended September 30, 2020, compensation and related benefits decreased by $3,147,202, or 49.3%, as compared to the ~~termination investor relations service agreement~~nine months ended September 30, 2019. The significant decrease was primarily attributable to a decrease in stock-based compensation of approximately $3,181,000 which reflected the value of options granted and vested to our management. We expect that our compensation and related benefits will remain at its current quarterly level in the ~~third quarter~~rest of 2017. We expect professional fees to increase as we incur significant costs associated with our public company reporting requirements, and costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission.2020.

●

~~Rent expense totaled $34,846 and $103,173 for~~For the three months ended September 30, 2020, research and development expenses decreased by $26,707, or 10.1%, as compared to the three months ended September 30, 2019. For the nine months ended September 30, ~~2017. We did not incur any rent expense since we did not rent any office space during~~2020, research and development expenses decreased by $692,375, or 50.6%, as compared to the ~~three and~~ nine months ended September 30, ~~2016.~~2019. Our first project with Arbele was completed in January 2020 and no further research and development project was incurred in the nine months ended September 30, 2020. Our research and development contract with Weill Cornell Medicine expired as of November 2019 and expect to enter another agreement by the end of fourth quarter of 2020. Therefore, our research and development expenses in 2020 periods decreased as compared to the corresponding periods of 2019. We expect our research and development expenses will increase in the near future.

●

For the three months ended September 30, 2020, advertising expenses decreased by $38,628 or 27.4% as compared to the three months ended September 30, 2019. For the nine months ended September 30, 2020, advertising expenses decreased by $390,605 or 64.4% as compared to the nine months ended September 30, 2019. The decrease was primarily due to decreased advertising activities incurred as a result of stricter control on corporation spending. We expect that our advertising expenses will continue to decrease in the near future.

●

For the three months ended September 30, 2020, amortization expense from intangible assets decreased by $81,892, or 100.0%, as compared to the three months ended September 30, 2019. For the nine months ended September 30, 2020, amortization expense from intangible assets decreased by $245,678, or 100.0%, as compared to the nine months ended September 30, 2019. At the end of September 2019, our intangible assets were impaired to zero and therefore, no amortization expense was recorded related to intangible assets in the nine months ended September 30, 2020.

●

For the three months ended September 30, 2020, travel and entertainment expense decreased by $59,352, or 64.5%, as compared to the three months ended September 30, 2019. For the nine months ended September 30, 2020, travel and entertainment expense decreased by $251,553, or 64.6%, as compared to the nine months ended September 30, 2019. The decrease was mainly due to decreased business travel activities and decreased entertainment expenditure resulting from COVID-19. In the nine months ended September 30, 2020, the spread of COVID-19 has caused public health officials to recommend precautions to mitigate the spread of the virus, such as, cease traveling to non-essential jobs and curtail all unnecessary travel, and stay at home as much as possible.

●

For the three months ended September 30, 2020, directors and officers liability insurance premium increased by $23,805, or 43.2%, as compared to the three months ended September 30, 2019. For the nine months ended September 30, 2020, directors and officers liability insurance premium increased by $72,167, or 58.8%, as compared to the nine months ended September 30, 2019. The increase was mainly due to different insurance provider with different premium.

●

Other general and administrative expenses mainly consisted of ~~travel and entertainment, office supplies, miscellaneous taxes, bank service charge~~NASDAQ listing fee, academic sponsorship, and other miscellaneous items. For the three months ended September 30, ~~2017,~~2020, other general and administrative expenses increased by ~~$56,448,~~$49,963, or ~~5,008.7%~~76.3%, as compared to the three months ended September 30, ~~2016,~~2019, which was mainly due to ~~our business expansion.~~an increase in fee from NASDAQ of approximately $29,000, and an increase in other miscellaneous items of approximately $21,000. For the nine months ended September 30, ~~2017,~~2020, other general and administrative expenses ~~increased~~decreased by ~~$112,324,~~$64,577, or ~~379.7%~~15.9%, as compared to the nine months ended September 30, ~~2016. The increase~~2019, which was ~~primarily~~mainly due to ~~an increase~~a decrease in ~~our travel and entertainment expense~~academic sponsorship expenditure of approximately ~~$56,000 and~~$95,000, offset by an increase in other miscellaneous items of approximately ~~$56,000 resulting from~~$30,000.

●

In September 2019, we assessed our ~~business expansion.~~intangible assets for any impairment and concluded that there were indicators of impairment as of September 30, 2019 and we calculated that the estimated undiscounted cash flows were less than the carrying amount of those intangible assets. We have not been able to realize the financial projections provided by Dr. Zhou at the time of the intangible assets purchase and have decided to impair the intangible assets to zero. Based on our analysis, we recognized an impairment loss of $1,010,011 for the three and nine months ended September 30, 2019, which reduced the value of intangible assets purchased to zero. We did not record any impairment charge for the three and nine months ended September 30, 2020.

~~(Loss) Income~~Loss from Operations

As a result of the foregoing, for the three months ended September 30, ~~2017,~~2020, loss from operations amounted to ~~$657,919,~~$3,190,558, as compared to ~~income from operations of $207,833~~$5,476,347 for the three months ended September 30, ~~2016,~~2019, a ~~change~~decrease of ~~$865,752,~~$2,285,789, or ~~416.6%~~41.7%.

As a result of the foregoing, for the nine months ended September 30, ~~2017,~~2020, loss from operations amounted to ~~$1,539,520,~~$9,415,577, as compared to ~~income from operations of $102,302~~$14,285,412 for the nine months ended September 30, ~~2016,~~2019, a ~~change~~decrease of ~~$1,641,822,~~$4,869,835, or ~~1,604.9%~~34.1%.

Other Income (Expense)

Other income (expense) mainly includes interest ~~income~~expense, change in fair value of warrants liabilities, allocated financing costs, and loss from ~~bank deposits, interest expense generated from loan payable, and foreign currency transaction loss.~~ equity-method investment.

Other expense, net, totaled ~~$52,810~~$61,401 for the three months ended September 30, ~~2017,~~2020, as compared to other income, net, of ~~$41~~$1,142,289 for the three months ended September 30, ~~2016,~~2019, a ~~change~~decrease of ~~$52,851,~~$1,203,690, or 105.4%, which was ~~mainly~~primarily attributable to a decrease in change in fair value of warrants liabilities of approximately $1,160,000, an increase in interest expense of approximately ~~$53,000~~.$30,000, a decrease in other income approximately $24,000, offset by a decrease in loss from equity method investment of approximately $10,000.

Other expense, net, totaled ~~$151,050~~$163,545 for the nine months ended September 30, ~~2017,~~2020, as compared to other income, net, of ~~$101~~$1,007,602 for the nine months ended September 30, ~~2016,~~2019, a ~~change~~decrease of ~~$151,151,~~$1,171,147, or 116.2%, which was ~~mainly~~primarily attributable to a decrease in change in fair value of warrants liabilities of approximately $1,622,000, an increase in interest expense of approximately ~~$95,000, and an increase~~$66,000, a decrease in ~~foreign currency transaction loss~~other income approximately $22,000, offset by a decrease in allocated financing expense of approximately ~~$57,000, offset by an increase~~$525,000 and a decrease in ~~interest income~~loss from equity method investment of approximately ~~$1,000~~.$13,000.

Income Taxes

We did not have any income taxes expense for the three and nine months ended September 30, ~~2017~~2020 and ~~2016~~2019 since we ~~did not generate any taxable income~~incurred losses in the ~~periods~~.periods.

Net Loss

As a result of the factors described above, our net loss was $710,729, or $(0.011) per share (basic and diluted), for the three months ended September 30, 2017. Our net income was $207,874, or $0.004 per share (basic and diluted), for the three months ended September 30, 2016.

As a result of the factors described above, our net loss was ~~$1,690,570,~~$3,251,959 for the three months ended September 30, 2020, as compared to $4,334,058 for the three months ended September 30, 2019, a decrease of $1,082,099 or ~~$(0.026) per share (basic and diluted),~~25.0%.

As a result of the factors described above, our net loss was $9,579,122 for the nine months ended September 30, ~~2017. Our net income was $102,403, or $0.002 per share (basic and diluted),~~2020, as compared to $13,277,810 for the nine months ended September 30, ~~2016.~~2019, a decrease of $3,698,688 or 27.9%.

Net Loss Attributable to Avalon GloboCare Corp. Common Shareholders

The net loss attributable to Avalon GloboCare Corp. common shareholders was $3,251,959 or $(0.04) per share (basic and diluted) for the three months ended September 30, 2020, as compared with $3,858,195, or $(0.05) per share (basic and diluted) for the three months ended September 30, 2019, a change of $606,236 or 15.7%.

The net loss attributable to Avalon GloboCare Corp. common shareholders was $9,579,122 or $(0.12) per share (basic and diluted) for the nine months ended September 30, 2020, as compared with $12,621,235, or $(0.17) per share (basic and diluted) for the nine months ended September 30, 2019, a change of $3,042,113 or 24.1%.

Foreign Currency Translation Adjustment

Our reporting currency is the U.S. dollar. The functional currency of our parent company, ~~and our wholly-owned U.S. subsidiaries, Avalon Healthcare System Inc.,~~AHS, Avalon RT 9, ~~Properties, LLC,~~Genexosome, Avactis, and ~~Avalon (BVI) Ltd.,~~Exosome, is the U.S. dollar and the functional currency of ~~our wholly-owned PRC subsidiary,~~ Avalon ~~(Shanghai) Healthcare Technology Co., Ltd. which is incorporated in China,~~Shanghai and Beijing Genexosome, is the Chinese Renminbi (“RMB”). The financial statements of our ~~subsidiary~~subsidiaries whose functional currency is the RMB are translated to U.S. dollars using period end rates of exchange for assets and liabilities, average rate of exchange ~~(for the period)~~ for ~~revenue,~~revenues, costs, and expenses and cash flows, and at historical exchange rates for equity. Net gains and losses resulting from foreign exchange transactions are included in the results of operations. As a result of foreign currency translations, which are a non-cash adjustment, we reported a foreign currency translation gain of ~~$6,151~~$39,698 and ~~$216~~a foreign currency translation loss of $69,388 for the three months ended September 30, ~~2017~~2020 and ~~2016,~~2019, respectively. As a result of foreign currency translations, which are a non-cash adjustment, we reported a foreign currency translation ~~loss~~gain of ~~$25,973~~$20,941 and a foreign currency translation ~~gain~~loss of ~~$431~~$60,009 for the nine months ended September 30, ~~2017~~2020 and ~~2016,~~2019, respectively. This non-cash ~~gain had the effect of decreasing our reported comprehensive loss and increasing our reported comprehensive income. This non-cash~~ gain/loss had the effect of decreasing/increasing our reported comprehensive ~~loss and decreasing our reported comprehensive income.~~loss.

Comprehensive ~~(Loss) Income~~Loss

As a result of our foreign currency translation adjustment, we had comprehensive loss of ~~$704,578~~$3,212,261 and ~~comprehensive income of $208,090~~$4,403,446 for the three months ended September 30, ~~2017~~2020 and ~~2016,~~2019, respectively.

As a result of our foreign currency translation adjustment, we had comprehensive loss of ~~$1,716,543~~$9,558,181 and ~~comprehensive income of $102,834~~$13,337,819 for the nine months ended September 30, ~~2017~~2020 and ~~2016,~~2019, respectively.

Liquidity and Capital Resources

The Company has a limited operating history and its continued growth is dependent upon the re-commencing of medical consulting services which was completed in December 2019 to its only few clients who are related parties and generating rental revenue from its income-producing real estate property in New Jersey and performing development services for hospitals and other customers and sales of developed products to hospitals and other customers; hence generating revenues, and obtaining additional financing to fund future obligations and pay liabilities arising from normal business operations. In addition, the current cash balance cannot be projected to cover the operating expenses for the next twelve months from the release date of this report. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital, implement its business plan, and generate significant revenues. There are no assurances that the Company will be successful in its efforts to generate significant revenues, maintain sufficient cash balance or report profitable operations or to continue as a going concern. The Company plans on raising capital through the sale of equity to implement its business plan. However, there is no assurance these plans will be realized and that any additional financings will be available to the Company on satisfactory terms and conditions, if any.

The occurrence of an uncontrollable event such as the COVID-19 pandemic is likely to negatively affect the Company’s operations. Efforts to contain the spread of the coronavirus have intensified, including social distancing, travel bans and quarantine, and these are likely to negatively impact our tenants, employees and consultants. These, in turn, will not only impact our operations, financial condition and demand for our medical related consulting services but our overall ability to react timely to mitigate the impact of this event. Given the dynamic nature of these circumstances, the duration of business disruption and reduced traffic, the related financial effect cannot be reasonably estimated at this time but is expected to adversely impact our business for the year of 2020.

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis. At September 30, ~~2017~~2020 and December 31, ~~2016,~~2019, we had cash balance of approximately ~~$357,000~~$1,396,000 and ~~$2,886,000,~~$765,000, respectively. These funds are kept in financial institutions located as follows:

Country:	September 30, 2017				December 31, 2016				September 30, 2020				December 31, 2019
United States	$	228,521	64.0	%	$	360,559	12.5	%	$	1,203,710	86.3	%	$	371,929	48.6	%
China		128,301	36.0	%		2,525,630	87.5	%		191,800	13.7	%		392,962	51.4	%
Total cash	$	356,822	100.0	%	$	2,886,189	100.0	%	$	1,395,510	100.0	%	$	764,891	100.0	%

Under applicable PRC regulations, foreign invested enterprises, or FIEs, in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a foreign invested enterprise in China is required to set aside at least 10% of its after-tax profit based on PRC accounting standards each year to its general reserves until the cumulative amount of such reserves reach 50% of its registered capital. These reserves are not distributable as cash ~~dividends~~.dividends.

In addition, a portion of our businesses and assets are denominated in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts. These currency exchange control procedures imposed by the PRC government authorities may restrict the ability of our PRC subsidiary to transfer its net assets to the Parent Company through loans, advances or cash ~~dividends~~.dividends.

The current PRC Enterprise Income Tax (“EIT”) Law and its implementing rules generally provide that a 10% withholding tax applies to China-sourced income derived by non-resident enterprises for PRC enterprise income tax purposes unless the jurisdiction of incorporation of such enterprises’ shareholder has a tax treaty with China that provides for a different withholding ~~arrangement~~.arrangement.

The following table sets forth a summary of changes in our working capital from December 31, ~~2016~~2019 to September 30, ~~2017:~~2020:

						December 31, 2016 to September 30, 2017						September 30,			December 31,			Changes in
	September 30, 2017			December 31, 2016		Change			Percentage Change			2020			2019			Amount			Percentage
Working capital (deficit):
Working capital deficit:
Total current assets	$	622,361		$	3,706,213	$	(3,083,852	)		(83.2	)%	$	2,153,499		$	1,571,095		$	582,404			37.1	%
Total current liabilities		5,917,179			160,317		5,756,862			3,590.9	%		2,439,494			2,835,463			(395,969	)		(14.0	)%
Working capital (deficit):	$	(5,294,818	)	$	3,545,896	$	(8,840,714	)		(249.3	)%
Working capital deficit												$	(285,995	)	$	(1,264,368	)	$	978,373			(77.4	)%

Our working capital deficit ~~increased~~decreased by ~~$8,840,714~~$978,373 to ~~working capital deficit $5,294,818~~$285,995 at September 30, ~~2017~~2020 from ~~working capital $3,545,896~~$1,264,368 at December 31, ~~2016.~~2019. The ~~increase~~decrease in working capital deficit was primarily attributable to ~~a decrease~~an increase in cash of approximately ~~$2,529,000 mainly due to cash payment made for acquisition~~$631,000, an increase in rent receivable of ~~New Jersey real property, a decrease~~approximately $74,000, an increase in prepaid expenses and other current assets of approximately ~~$713,000 primarily due to the~~$181,000, a decrease in ~~prepayment for acquisition of real property~~accrued professional fees of approximately ~~$700,000,~~$280,000, a decrease in accrued research and development fees of approximately $208,000, a decrease in accrued payroll liability of approximately $127,000, offset by a decrease in accounts receivable – related party of approximately $215,000, a decrease in deferred financing costs of approximately $83,000, an increase in accrued liabilities and other payables of approximately ~~$321,000 resulting from the~~$66,000, an increase in accrued ~~professional fees of approximately $226,000~~liabilities and the increase in accrued interest for our outstanding loan of approximately $95,000, an increase in loan payable of approximately $2,100,000 borrowed in connection with our purchase of New Jersey real property, an increase in tenants’ security deposit of approximately $92,000, an increase in due toother payables – related parties of approximately ~~$210,000 mainly due to the increase in working capital advance from our related parties,~~$75,000, and an increase in ~~refundable deposit~~operating lease obligation of approximately $3,000,000 related to our March 2017 Subscription Agreement (see note 11 – Common shares issued for Share Subscription Agreement), offset by an increase in accounts receivable – related parties, net of allowance for doubtful accounts, of approximately $97,000, and an increase in tenants receivable, net of allowance for doubtful accounts, of approximately $56,000.$76,000.

Because the exchange rate conversion is different for the consolidated balance sheets and the consolidated statements of cash flows, the changes in assets and liabilities reflected on the consolidated statements of cash flows are not necessarily identical with the comparable changes reflected on the consolidated balance sheets.

Cash Flows for the Nine Months Ended September 30, ~~2017~~2020 Compared to the Nine Months Ended September 30, ~~2016~~2019

The following summarizes the key components of our cash flows for the nine months ended September 30, ~~2017~~2020 and ~~2016:~~2019:

	Nine Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2020			2019
Net cash (used in) provided by operating activities	$	(747,056	)	$	327,898
Net cash used in operating activities							$	(6,185,198	)	$	(5,318,165	)
Net cash used in investing activities		(7,059,565	)		(230,395	)		(28,594	)		(538,368	)
Net cash provided by financing activities		5,309,500			150,000			6,841,783			4,693,704
Effect of exchange rate on cash		(32,246	)		(1,262	)		2,628			(17,118	)
Net (decrease) increase in cash	$	(2,529,367	)	$	246,241
Net increase (decrease) in cash							$	630,619		$	(1,179,947	)

Net cash flow used in operating activities for the nine months ended September 30, ~~2017~~2020 was ~~$747,056,~~$6,185,198, which primarily reflected our consolidated net loss of approximately ~~$1,691,000,~~$9,579,000, and the changes in operating assets and liabilities, primarily consisting of an increase in rent receivable of approximately $94,000, an increase in prepaid expenses and other current assets of approximately $353,000, a decrease in accrued liabilities and other payables of approximately $681,000, offset by a decrease in accounts receivable – related party of approximately $214,000, an increase in accrued liabilities and other payables – related parties of approximately $75,000, and the non-cash items adjustment primarily consisting of depreciation and amortization of approximately $233,000, and stock-based compensation and service expense of approximately $3,965,000.

Net cash flow used in operating activities for the nine months ended September 30, 2019 was $5,318,165, which primarily reflected our consolidated net loss of approximately $13,278,000, the non-cash item adjustment consisting of change in warrants derivative liabilities of approximately $1,622,000, and the changes in operating assets and liabilities, primarily consisting of an increase in accounts receivable – related parties of approximately ~~$91,000, an increase~~$175,000, offset by a decrease in ~~tenants receivable~~prepaid expenses and other current assets of approximately ~~$56,000, an increase~~$241,000, a decrease in security deposit of approximately ~~$30,000,~~$101,000, and ~~a decrease in income taxes payable of approximately $21,000, offset by an increase in accounts payable of approximately $22,000,~~ an increase in accrued liabilities and other payables of approximately $321,000 resulting from the increase in accrued professional fees of approximately $226,000 and the increase in accrued interest for our outstanding loan of approximately $95,000, an increase in accrued liabilities and other payables – related parties of approximately $23,000, and an increase in tenants’ security deposit of approximately $92,000,$327,000, and the add-back of non-cash items mainly consisting of depreciation and amortization of approximately $430,000, stock-based compensation and service expense of approximately ~~$58,000 and stock-based compensation~~$7,003,000, allocated financing costs of approximately ~~$602,000~~.$525,000, and impairment loss of approximately $1,010,000.

~~Net~~

We expect our cash ~~flow provided by~~used in operating activities ~~for~~to increase due to the nine months ended September 30, 2016 was $327,898, which primarily reflected our net income of approximately $102,000, and changes in operating assets and liabilities consisting of an increase in accrued liabilities and other payables – related parties of approximately $6,000, and an increase in advance from customers – related parties of approximately $227,000, offset by changes in operating assets and liabilities consisting of an increase in prepaid expenses and other of approximately $5,000, and a decrease in accrued liabilities and other payables of approximately $3,000.following:

●

the development and commercialization of new products;

●

an increase in professional staff and services; and

●

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

Net cash flow used in investing activities was ~~$7,059,565~~$28,594 for the nine months ended September 30, ~~2017~~2020 as compared to ~~$230,395~~$538,368 for the nine months ended September 30, ~~2016.~~2019. During the nine months ended September 30, ~~2017,~~2020, we made ~~payments for purchase of property, plant and equipment~~additional investment in equity method investment of approximately ~~$51,000, and made payments for purchase of commercial real estate of approximately $7,009,000.~~$29,000. During the nine months ended September 30, ~~2016,~~2019, we made payment for~~the purchase of Avalon GloboCare Corp.’s shares of $230,000 and made payments for the~~ purchase of property ~~plant~~ and equipment of ~~$395.~~approximately $379,000, made payment for improvement of commercial real estate of approximately $16,000, made prepayment for purchase of long-term assets of approximately $26,000, and made payment for equity method investment of approximately $117,000.

Net cash flow provided by financing activities was ~~$5,309,500~~$6,841,783 for the nine months ended September 30, ~~2017~~2020 as compared to ~~$150,000~~$4,693,704 for the nine months ended September 30, ~~2016.~~2019. During the nine months ended September 30, ~~2017,~~2020, we received ~~$2,100,000~~ proceeds from ~~loan payable,~~related party borrowings of $300,000 and ~~received $210,000 advance~~net proceeds from ~~related parties,~~equity offering of approximately $6,742,000 (net of cash paid for commission and ~~received $3,000,000 proceeds~~offering costs of refundable deposit as earnest money in connection with the Share Subscription Agreement related to the 3,000,000 common stock issued to the March 2017 Accredited Investor who is an entrusted party that holds the shares on behalf of DOING,approximately $492,000), offset by ~~repayment~~repayments made for note payable – related ~~parties’ advance~~party of ~~$500.~~$200,000. During the nine months ended September 30, ~~2016,~~2019, we received proceeds from note payable – related ~~parties’ advance~~party of ~~$9,000~~$1,000,000, and ~~received~~net proceeds ~~from AHS’s founders’ contribution~~for equity offering of ~~$141,000, in funding our operations.~~approximately $5,104,000, offset by repayments made for note payable – related party of $410,000, and repayments for loan payable of $1,000,000.

Our capital requirements for the next twelve months primarily relate to working capital requirements, including salaries, fees related to third parties’ professional services, reduction of accrued liabilities, mergers, acquisitions and the development of business opportunities. ~~In addition, we expect~~These uses of cash will depend on numerous factors including our sales and other revenues, and our ability to ~~use cash to pay salaries and fees related to third parties’ professional services.~~control costs. All funds received have been expended in the furtherance of growing the business. The following trends are reasonably likely to result in a material decrease in our liquidity over the near to long ~~term~~:term:

●

Anan increase in working capital requirements to finance our current ~~business;~~business, including ongoing research and development programs, clinical studies, as well as commercial strategies;

●

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

●

~~Addition~~addition of administrative ~~and sales~~ personnel as the business grows; and

●

~~The~~the cost of being a public company.

In the third quarter of 2019, we had secured a $20 million credit facility (Line of Credit) provided by our Chairman, Wenzhao Lu. The unsecured credit facility bears interest at a rate of 5% and provides for maturity on drawn loans 36 months after funding. The note is not convertible to equity. As of September 30, 2020, the total principal amount outstanding under the Credit Line was $2.9 million and we have approximately $17.1 million remaining available under the Line Credit.

On December 13, 2019, we entered into an Open Market Sale Agreement^SM(the “Sales Agreement”) with Jefferies LLC, as sales agent (“Jefferies”), pursuant to which we may offer and sell, from time to time, through Jefferies, shares of our common stock, par value $0.0001 per share, having an aggregate offering price of up to $20.0 million. On April 6, 2020, the date on which we filed our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, our registration statement became subject to the offering limits set forth in General Instruction I.B.6 of Form S-3. As of April 6, 2020, the aggregate market value of our outstanding common stock held by non-affiliates, or public float, was $39,564,237, based on 23,691,160 shares of our outstanding common stock that were held by non-affiliates on such date and a price of $1.67 per share, which was the price at which our common stock was last sold on The Nasdaq Capital Market on February 19, 2020 (a date within 60 days of the date hereof), calculated in accordance with General Instruction I.B.6 of Form S-3. We ~~will need~~have not offered any securities pursuant to ~~raise additional funds, particularly if~~General Instruction I.B.6 of Form S-3 in the 12 calendar months preceding the date of this prospectus supplement. We filed a prospectus supplement to amend and supplement the information in our prospectus and original prospectus supplement based on the amount of securities that we are ~~unable~~eligible to ~~generate positive cash flow as a result~~sell under General Instruction I.B.6 of Form S-3. After giving effect to the $13,000,000 offering limit imposed by General Instruction I.B.6 of Form S-3, we may offer and sell additional shares of our ~~operations.~~ common stock having an aggregate offering price of up to $13,000,000 from time to time through Jefferies acting as our sales agent in accordance with the terms of the sales agreement. As of September 30, 2020, we sold a total of 3,606,910 shares of our common stock through Jefferies with an aggregate offering price of $6,507,414 and we have approximately $8.5 million offering price remaining available under the Sales Agreement.

We estimate that based on current plans and assumptions, that our available cash will be insufficient to satisfy our cash requirements under our present operating ~~expectations.~~expectations through cash available under our Credit Line and sales of equity through our Sales Agreement. Other than funds received from the sale of our equity and advances from our related ~~parties,~~party, and cash resource generating from our operations, we presently have no other significant alternative source of working capital. We have used these funds to fund our operating expenses, pay our obligations and grow our company. We will need to raise significant additional capital to fund our operations and to provide working capital for our ongoing operations and obligations. Therefore, our future operation is dependent on our ability to secure additional financing. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital may restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we will be required to cease our operations. To date, we have not considered this alternative, nor do we view it as a likely ~~occurrence~~.occurrence.

Contractual Obligations and Off-Balance Sheet Arrangements

Contractual Obligations

We have certain fixed contractual obligations and commitments that include future estimated payments. Changes in our business needs, cancellation provisions, and other factors may result in actual payments differing from the estimates. We cannot provide certainty regarding the timing and amounts of payments. We have presented below a summary of the most significant assumptions used in our determination of amounts presented in the tables, in order to assist in the review of this information within the context of our consolidated financial position, results of operations, and cash flows. The following tables summarize our contractual obligations as of September 30, ~~2017,~~2020, and the effect these obligations are expected to have on our liquidity and cash flows in future periods.

Payments Due by Period
Contractual obligations: Total Less than 1 year 1-3 years 3-5 years 5⁺years
Legal service contract $ 60,000 $ 60,000 $ — $ — $ —
Financial consulting service contract 34,000 34,000 — — —
Real property management agreement 102,923 65,004 37,919 — —
Office leases commitment 134,137 100,468 33,669 — —
Loan payable (principal) 2,100,000 2,100,000 — — —
Accrued interest for loan 94,932 94,932 — — —
Total $ 2,525,992 $ 2,454,404 $ 71,588 $ — $ —

	Payments Due by Period
Contractual obligations:	Total		Less than 1 year		1-3 years		3-5 years		5⁺ years
Operating lease commitment	$	202,438	$	112,438	$	90,000	$	-	$	-
Acquisition consideration		100,000		100,000		-		-		-
Borrowings from related party (principal)		3,290,000		-		3,290,000		-		-
Accrued interest – related party		125,363		125,363		-		-		-
Epicon equity investment obligation		839,371		279,790		559,581		-		-
AVAR joint venture commitment		10,736,290		736,290		5,000,000		5,000,000		-
Total	$	15,293,462	$	1,353,881	$	8,939,581	$	5,000,000	$	-

Off-balance Sheet Arrangements

We presently do not have off-balance sheet arrangements.

Foreign Currency Exchange Rate Risk

A portion of our operations are in China. Thus, a portion of our ~~revenue~~revenues and operating results may be impacted by exchange rate fluctuations between RMB and US dollars. For the ~~nine~~three months ended September 30, ~~2017~~2020 and ~~2016,~~2019, we had an unrealized foreign currency translation gain of approximately $40,000 and an unrealized foreign currency translation loss of approximately ~~$26,000~~$69,000, respectively, because of changes in the exchange rate. For the nine months ended September 30, 2020 and 2019, we had an unrealized foreign currency translation gain of approximately ~~$400,~~$21,000 and an unrealized foreign currency translation loss of approximately $60,000, respectively, because of changes in the exchange rate.

Inflation

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in reports filed or submitted under the Securities Exchange Act of 1934, as amended (“Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed under the Exchange Act is accumulated and communicated to management, including the principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

In connection with the preparation of the quarterly report on Form 10-Q for the quarter ended September 30, ~~2017,~~2020, our management, including our principal executive officer and principal financial officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures, which are defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required ~~disclosure~~.disclosure.

Based on this evaluation, management concluded that our internal control over financial reporting were not effective as of September 30, ~~2017~~2020 due to the significant deficiencies which aggregate to a material weakness weand was previously reported in our ~~2016~~Form 10-K ~~which has~~Annual Report for the year ended December 31, 2019 (“2019 10-K”), that have not yet been remediated. In our 2016 10-K we reported that we did not maintain a sufficient complement of personnel with an appropriate level of experience and training in the application of U.S. GAAP commensurate with our financial reporting requirements and we did not form a formal audit committee.

Changes in Internal Controls Over Financial Reporting

There were no changes ~~(including corrective actions with regard to material weakness)~~ in our internal controls over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are subject to ordinary routine litigation incidental to our normal business operations. We are not currently a party to, and our property is not subject to, any ~~litigation~~material legal proceedings, except as set forth below.

On October 25, 2017, Genexosome entered into and closed a Stock Purchase Agreement with Beijing Genexosome and Yu Zhou, MD, PhD, the ~~outcome~~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 ~~if determined adversely~~$100,000 is still owed. Further, on October 25, 2017, Genexosome entered into and closed an Asset Purchase Agreement with Dr. Zhou, pursuant to ~~us, would individually or~~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 500,000 shares of common stock of the Company to Dr. Zhou and issued Dr. Zhou 400 shares of common stock of Genexosome. Further, The Company had not been able to realize the financial projections provided by Dr. Zhou at the time of the acquisition and has decided to impair the intangible asset associated with this acquisition to zero. Dr. 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 ~~aggregate~~United States District Court for the Southern District of Ohio Eastern Division against Dr. Zhou, Li Chen, the Company and Genexosome with various claims against the Company and Genexosome including misappropriation of trade secrets in violation of the Defend Trade Secrets Act of 2016 and violation of Ohio Uniform Trade Secrets Act. Research Institute is seeking monetary damages, injunctive relief, exemplary damages, injunctive relief and other equitable relief. The case number is 2:19-cv-4574. The Company intends to vigorously defend against this action and pursue all available legal remedies. The civil case against Avalon is stayed pending resolution of the criminal proceedings against Dr. Zhou and Li Chen, and while there can be ~~reasonably expected~~no assurances, the Company believes it has substantial legal and factual defenses to ~~have a material adverse effect on our business, operating results, cash flows or financial condition~~.the Research Institute’s claims.

ITEM 1A. RISK FACTORS

AsThere were no material changes from the risk factors set forth under Part I, Item 1A., “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. You should carefully consider these factors in addition to the other information set forth in this report which could materially affect our business, financial condition or future results. The risks and uncertainties described in this report and in our Annual Report on Form 10-K for the year ended December 31, 2019, as well as other reports and statements that we file with the SEC, are not the only risks and uncertainties facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also have a ~~smaller reporting company, as defined in Rule 12b-2~~material adverse effect on our financial position, results of operations or cash flows.

Amidst the COVID-19 outbreak, some tenants have delayed on rent payment. Our general development operations have continued during the COVID-19 pandemic and we have not had significant disruption. Currently we are unable to accurately predict the future impact of COVID-19 due to the developing circumstances and uncertainty surrounding this current pandemic, including the ultimate geographic spread of COVID-19, the severity of the ~~Exchange Act,~~disease, the duration of the outbreak, and effectiveness of the actions that may be taken by governmental authorities. Our management has been closely monitoring the impact caused by COVID-19 and we ~~are not required~~will continue to ~~provide the information required by this Item.~~operate our business as steadily and safely as we can.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Common Shares Issued for Services

On February 21, 2017, Ms. Ingariola and the Company entered into an Executive Retention Agreement effective February 9, 2017 pursuant to which Ms. Ingariola agreed to serve as Chief Financial Officer. As partial compensation, the Company granted Ms. Ingariola a Stock Option to acquire 2,000,000 shares of common stock at an exercise price of $0.50 per share for a period of ten years. The Stock Options vest in 36 equal tranches commencing on the grant date. On April 28, 2017, Steven P. Sukel and Yancen Lu were appointed to the Board of Directors of our company to serve as directors. Mr. Sukel and Mr. Yancen Lu both entered into agreements pursuant to which they will serve as directors. The director agreements provide that they will receive options to receive 40,000 shares of common stock per year at an exercise price equal to the closing price on December 31st of the prior year. The options shall vest in equal amounts quarterly and shall be exercisable for a period of five years.During the nine months ended September 30, ~~2017,~~2020, we ~~granted~~issued a total of ~~444,448 options~~1,032,577 shares of our common stock for services rendered and to ~~our Chief Financial Officer~~be rendered. These shares were valued at ~~a fixed exercise price~~$1,309,480, the fair market values on the grant dates using the reported closing share prices on the dates of ~~$0.50 per share~~grant and granted a total of 40,000 options to our two directors at a fixed exercise price of $1.49 per share. The 444,448 options granted to our Chief Financial Officer are exercisable for ten years and the 40,000 options granted to our two directors are exercisable for five years. In connection with the option vest, we recorded stock-based compensation expense of ~~$602,224~~$1,248,159 for the nine months ended September 30, ~~2017.~~2020 and reduced accrued liabilities of $35,325 and recorded prepaid expense of $25,996 as of September 30, 2020 which will be amortized over the rest of corresponding service periods.

~~DOING Biomedical Technology Co., Ltd.~~Common Shares Sold for Cash

~~DOING Biomedical Technology Co., Ltd. (“DOING”) and Avalon discussed DOING potentially investing in Avalon. However, prior to such investment, DOING needed to obtain~~On April 1, 2020, the required approvals from the government, which is a timely and costly process. In lieu of acquiring shares directly from Avalon, DOING agreed to fund the purchase of shares of common stock of Avalon on behalf of an accredited investor (the “March 2017 Accredited Investor”), which is permitted under Chinese law.

~~Accordingly, we~~Company entered into ~~and closed~~ a Subscription Agreement with the March 2017 Accredited Investor pursuant to which the March 2017 Accredited Investor purchased 3,000,000 shares of common stock (“March 2017 Shares”) for a purchase price of $3,000,000 (the “Purchase Price”). The closing occurred on March 3, 2017.

Avalon Shanghai, DOING, the March 2017 Accredited Investor and our company entered into a Share Subscription Agreement whereby the parties acknowledged, among other things, that DOING agreed to transfer the Purchase Price to Avalon Shanghai on behalf of the March 2017 Investor and the March 2017 Accredited Investor agreed to transfer the March 2017 Shares to DOING upon DOING completing the registration of the acquisition of the March 2017 Shares with the Beijing Commerce Commission (“BCC”).

~~The BCC is responsible for guiding foreign investment, trade and technology transfer in China. DOING is required to obtain~~WLM, an ~~Enterprise Overseas Investment Certificate (the “Investment Certificate”) from BCC in order to acquire the March 2017 Shares.~~

If DOING fails to complete the registration and acquire the Investment Certificate within one year of the closing then Avalon Shanghai shall transfer $3,000,000 with interest of 20% to DOING upon the request of DOING (the “BCC Repayment Obligation”). As of the date hereof, the Company is obligated to DOING in the principal amount of $3,000,000. The BCC Repayment Obligation is a debt obligation arising other than in the ordinary course of business, which constitutes a direct financial obligation of our company. In the event we are required to repay the BCC Repayment Obligation, our operations will be negatively impacted.

~~Further,~~entity owned by Wenzhao Lu, ~~major shareholder and chairman~~Chairman of the Board of Directors of our company, and DOING entered into a Warranty Agreement. Pursuant to the Warranty Agreement, Mr. Wenzhao Lu agreed to (i) cause us to be liable to DOING in the event the March 2017 Accredited Investor defaults in its obligations to DOING, (ii) cause the March 2017 Accredited Investor to transfer the March 2017 Shares to DOING upon DOING’s receipt of the Investment Certificate from BCC, (iii) within three years from the date of the Warranty Agreement, DOING may require Mr. Wenzhao Lu to acquire the March 2017 Shares at $1.20 per share upon three months notice, and (iv) in the event Mr. Wenzhao Lu does not acquire the March 2017 Shares within the three month period, interest of 15% per annum will be added to the purchase price.

~~October 2017 Private Placement~~

~~On October 20, 2017,~~ the Company, ~~entered into Subscription Agreements with accredited investors (the “October 2017 Accredited Investors”)~~ pursuant to which ~~the October 2017 Accredited Investors agreed to purchase 3,750,000~~WLM purchased 645,161 shares of the Company’s common stock ~~(“October 2017 Shares”)~~at a price per share of $1.55 for aan aggregate purchase price of ~~$3,750,000 (the “Purchase Price”).~~$1,000,000. The closing ~~with respect to $200,000 of the Purchase~~ occurred on October 24, 2017. As of November 10, 2017, the Company has received $2,090,000 of the Purchase Price. The balance of the Purchase Price is expected to close on or before December 6, 2017 if not sooner.April 1, 2020.

~~GenExosome Technologies Inc.~~

In July 2017, the Company formed GenExosome Technologies Inc., a Nevada corporation (“GenExosome”). On September 29, 2017, Dr. David K. Jin was appointed as the sole director and as the Chief Executive Officer, Chief Medical Officer and President, Meng Li was appointed as Chief Operating Officer and Secretary and Luisa Ingargiola was appointed as Chief Financial Officer. On October 25, 2017, GenExosome and the Company entered into a Securities Purchase Agreement pursuant to which the Company acquired 600 shares of GenExosome in consideration of $1,326,087 and 500,000 shares of common stock of the Company. The Company is required to deliver the 500,000 shares of its common stock no later than November 24, 2017. On October 25, 2017, GenExosome entered into and closed an Asset Purchase Agreement with Yu Zhou, MD, PhD, pursuant to which the Company acquired all assets, including all intellectual property, held by Dr. Zhou pertaining to the business of researching, developing and commercializing exosome technologies including, but not limited to, patent application number CN 2016 1 0675107.5 (application of an Exosomal MicroRNA in plasma as biomaker to diagnosis liver cancer), patent application number CN 2016 1 0675110.7 (clinical application of circulating exosome carried miRNA-33b in the diagnosis of liver cancer), patent application number CN 2017 1 0330847.X (saliva exosome based methods and composition for the diagnosis, staging and prognosis of oral cancer) and patent application number CN 2017 1 0330835.7 (a novel exosome-based therapeutics against proliferative oral diseases). In consideration of the assets, GenExosome agreed to pay Dr. Zhou $876,087 in cash no later than November 24, 2017, transfer 500,000 shares of common stock of the Company to Dr. Zhou no later than November 24, 2017 and issue Dr. Zhou 400 shares of common stock of GenExosome no later than November 24, 2017.

The offers, sales, and issuances of the securities described above were deemed to be exempt from registration under the Securities Act of 1933 in reliance on Section 4(a)(2) of the Securities Act of 1933 or Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions. Each of the recipients of securities in these transactions was an accredited or sophisticated person and had adequate access, through employment, business or other relationships, to information about us.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

On ~~April 19, 2017,~~October 20, 2020, the Company entered into a ~~loan agreement, providing~~Distribution Agreement with Adial Pharmaceuticals, Inc. (“Adial”) (the “Adial Agreement”). Pursuant to the Adial Agreement, the Company was appointed as a non-exclusive sub-distributor of Adial’s SARS-CoV-2 antibody tests and antigen tests and other medical devices and equipment worldwide. Mr. Stilley, a director of the Company as well as a member of the Nominating and Corporate Governance Committee and Audit Committee, is the Chief Executive Officer and a director of Adial.

On August 17, 2020, the Company entered into a Commercialization Partnership Agreement with Cellex, Inc. (“Cellex”), which was dated August 10, 2020 (the “Cellex Agreement”). Pursuant to the Cellex Agreement, the Company was granted a right to promote, market, transfer, distribute, and/or sell Cellex’s qSARS-COV-2 IgG/IgM Rapid Test Kit and Kit Control on a non-exclusive basis. The Cellex Agreement provides that the Company may purchase the products at a set per unit price and, in the event of bulk sales or tender offers, the Company may receive a commission.

On December 13, 2019, the Company entered into an Open Market Sale Agreement^SM(the “Sales Agreement”) with Jefferies LLC, as sales agent (“Jefferies”), pursuant to which the Company may offer and sell, from time to time, through Jefferies, shares of its common stock, par value $0.0001 per share, having an aggregate offering price of up to $20.0 million. On April 6, 2020, the date on which the Company filed its Annual Report on Form 10-K for the ~~issuance of a loan in the principal amount of $2,100,000. The term of the loan is one year. The annual interest rate for the loan is 10%. The loan is guaranteed by~~fiscal year ended December 31, 2019, the Company’s ~~Chairman, Mr. Wenzhao Lu. At~~registration statement became subject to the offering limits set forth in General Instruction I.B.6 of Form S-3. During the nine months ended September 30, ~~2017, the outstanding principal balance~~2020, Jefferies sold an aggregate of ~~the loan~~3,468,315 shares of common stock at an average price of $1.80 per share to investors. The Company recorded net proceeds of $5,875,755, net of commission and ~~related accrued and unpaid interest for the loan was $2,100,000 and $94,932, respectively.~~other offering costs of $357,923. From October 1, 2020 to November 9, 2020, Jefferies sold an aggregate of 41,909 shares of common stock at an average price of $1.55 per share to investors. The Company received net cash proceeds of $63,197, net of commission paid to sales agent of $1,955.

ITEM 6. EXHIBITS

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

Exhibit ~~No.~~ Number	~~Exhibit~~	Description

~~3.1~~ 1.1		~~Certificate~~Open Market Sale AgreementSM, dated as of ~~Incorporation (2)~~December 13, 2019, by and between Avalon GloboCare Corp. and Jefferies LLC. (incorporated by reference to Exhibit 1.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 13, 2019)

~~3.2~~3.1		~~Certificate of Amendment of~~Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K/A filed ~~pursuant to Delaware General Corporation Law (1)~~with the Securities and Exchange Commission on April 26, 2018)

~~3.3~~3.2		~~Certificate~~Amended and Restated Bylaws of ~~Correction~~the Registrant (incorporated by reference to Exhibit 3.2 of the ~~Certificate of Amendment of Certificate of Incorporation~~Current Report on Form 8-K/A filed ~~pursuant to Delaware General Corporation Law (1)~~with the Securities and Exchange Commission on April 26, 2018)

~~3.4~~	~~Bylaws (3)~~

4.1		Form of Subscription Agreement by and between Avalon GloboCare Corp. and the December 2016 Accredited Investors ~~(5)~~(incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 21, 2016)

4.2 †		Stock Option issued to Luisa Ingargiola dated February 21, 2017 ~~(8)~~(incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2017)

4.3		Form of Subscription Agreement by and between Avalon GloboCare Corp. and the March 2017 Accredited Investor ~~(9)~~(incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 7, 2017)

4.4		Share Subscription Agreement between Avalon GloboCare Corp., Avalon (Shanghai) Healthcare Technology Co., Ltd., Beijing DOING Biomedical Technology Co., Ltd. and Daron Liang ~~(9)~~(incorporated by reference to Exhibit 4.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 7, 2017)

4.5		Warranty Agreement between Lu Wenzhao and Beijing DOING Biomedical Technology Co., Ltd. ~~(9)~~(incorporated by reference to Exhibit 4.3 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 7, 2017)

4.6		Form of Subscription Agreement between Avalon GloboCare Corp. and the October 2017 Accredited Investors ~~(14)~~(incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 26, 2017)

4.7		~~10.1~~Form of Warrant to Boustead Securities, LLC in connection with the private placements (incorporated by reference to Exhibit 4.8 of the Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on July 27, 2018)

4.8		Form of Warrant (April 2019) (Incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 26, 2019)

10.1

Share Exchange Agreement dated as of October 19, 2016 by and among Avalon Healthcare System, Inc., the shareholders of Avalon Healthcare System, Inc. and Avalon GloboCare Corp. ~~(1)~~(incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 19, 2016)


10.2 †		Executive Employment Agreement, effective December 1, 2016, by and between Avalon GloboCare Corp. and David Jin ~~(4)~~(incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 2, 2016)

10.3		Agreement of Sale by and between Freehold Craig Road Partnership, as Seller, and Avalon GloboCare Corp., as Buyer dated as of December 22, 2016 ~~(6)~~(incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 23, 2016)

10.4 †		Executive Employment Agreement by and between Avalon (Shanghai) Healthcare Technology Ltd. and Meng Li dated January 11, 2017 ~~(7)~~(incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 11, 2017)

10.5 †		Executive Retention Agreement by and between Avalon GloboCare Corp. and Luisa Ingargiola dated February 21, 2017 ~~(8)~~(incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2017)

10.6 †		Indemnification Agreement by and between Avalon GloboCare Corp. and Luisa Ingargiola dated February 21, 2017 ~~(8)~~(incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2017)

10.7 †		Director Agreement by and between Avalon GloboCare Corp. and Steven P. Sukel dated April 28, 2017 ~~(11)~~(incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 28, 2017)

10.8 †		Director Agreement by and between Avalon GloboCare Corp. and Yancen Lu dated April 28, 2017 ~~(11)~~(incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 28, 2017)

10.9		Consultation Service Contract between Daopei Investment Management (Shanghai) Co., Ltd. and Avalon HealthCare System Inc. dated April 1, 2016 (English translation) ~~(12)~~(incorporated by reference to Exhibit 10.8 of Amendment No. 1 to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on July 7, 2017)

10.10		Consultation Service Contract between Hebei Yanda Ludaopei Hospital Co., Ltd and Avalon HealthCare System Inc. dated April 1, 2016 (English translation) ~~(12)~~(incorporated by reference to Exhibit 10.9 of Amendment No. 1 to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on July 7, 2017)

10.11		Consultation Service Contract between Nanshan Memorial Stem Cell Biotechnology Co., ~~Ltd.and~~Ltd. and Avalon HealthCare System Inc. dated April 1, 2016 (English translation) ~~(12)~~(incorporated by reference to Exhibit 10.10 of Amendment No. 1 to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on July 7, 2017)

10.12		Loan Agreement between Lotus Capital Overseas Limited and Avalon (Shanghai) Healthcare Technology Co., Ltd. dated April 19, 2017 (English translation) ~~(13)~~(incorporated by reference to Exhibit 10.12 of the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2017)

10.13		Securities Purchase Agreement between Avalon GloboCare Corp. and ~~GenExosome~~Genexosome Technologies Inc. dated October 25, 2017 ~~(14)~~(incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 26, 2017)

10.14		Asset Purchase Agreement between ~~GenExosome~~Genexosome Technologies Inc. and Yu Zhou dated October 25, 2017 ~~(14)~~(incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 26, 2017)

10.15		Stock Purchase Agreement between ~~GenExosome~~Genexosome Technologies Inc., Beijing Jieteng ~~(GenExosome)~~(Genexosome) Biotech Co. Ltd. and Yu Zhou dated October 25, 2017 ~~(14)~~(incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 26, 2017)

10.16 †		Executive Retention Agreement between ~~GenExosome~~Genexosome Technologies Inc. and Yu Zhou dated October 25, 2017 ~~(14)~~(incorporated by reference to Exhibit 10.4 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 26, 2017)

10.17		Invention Assignment, Confidentiality, Non-Compete and Non-Solicit Agreement between ~~GenExosome~~Genexosome Technologies Inc. and Yu Zhou dated October 25, 2017 ~~(14)~~

~~14.1~~	~~Code of Ethics (1)~~

~~21.1~~	~~List of Subsidiaries (10)~~

31.1*	~~Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act~~

31.2*	~~Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act~~

32.1*	~~Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act~~

~~(1)~~	~~Incorporated~~(incorporated by reference to Exhibit 10.5 of the Current Report on Form 8-K ~~Current Report~~ filed with the Securities and Exchange Commission on October ~~19, 2016.~~26, 2017)
~~(2)~~	~~Incorporated~~
10.18 †		Director Agreement by and between Avalon GloboCare Corp. and Wilbert J. Tauzin II dated November 1, 2017 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on November 7, 2017)

10.19		Agreement between Avalon GloboCare Corp. and Tauzin Consultants, LLC dated November 1, 2017 (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on November 7, 2017)

10.20 †		Letter Agreement by and between Avalon GloboCare Corp. and David Jin dated April 3, 2018 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 4, 2018)

10.21 †		Letter Agreement by and between Avalon GloboCare Corp. and Meng Li dated April 3, 2018 (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 4, 2018)

10.22		Advisory Service Contract between Ludaopei Hematology Research Institute Co., Ltd. and Avalon (Shanghai) Healthcare Technology Co., Ltd. dated April 1, 2018 (English translation) (Incorporated by reference to that Form S-1 Registration Statement filed with the Securities and Exchange Commission on ~~March 26, 2015.~~April 19, 2018)
~~(3)~~	~~Incorporated~~
10.23		Form of Subscription Agreement by and between Avalon GloboCare Corp. and the April 2018 Accredited Investors (incorporated by reference to Exhibit 4.1 of the Current Report on Form ~~S-1~~8-K filed with the Securities and Exchange Commission on April 18, 2018)

10.24		Supplementary Agreement Related to Share Subscription by and between Avalon GloboCare Corp., Avalon (Shanghai) Healthcare Technology Co., Ltd., Beijing DOING Biomedical Technology Co., Ltd. and Daron Liang dated April 23, 2018 (English translation) (incorporated by reference to Exhibit 4.2 of the Current Report on Form 8-K/A filed with the Securities and Exchange Commission on April 26, 2018)

10.25		Loan Extension Agreement between Lotus Capital Overseas Limited and Avalon (Shanghai) Healthcare Technology Co., Ltd. dated May 3, 2018 (English translation) (incorporated by reference to Exhibit 10.18 of the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 11, 2018)

10.26 †		Director Agreement by and between Avalon GloboCare Corp. and Tevi Troy dated June 4, 2018 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on June 6, 2018)

10.27		Joint Venture Agreement by and between Avalon (Shanghai) Healthcare Technology Co., Ltd. and Jiangsu Unicorn Biological Technology Co., Ltd. dated May 29, 2018 (English translation) (incorporated by reference to Exhibit 99.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on June 6, 2018)

10.28 †		Director Agreement by and between Avalon GloboCare Corp. and William Stilley, III dated July 5, 2018 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 10, 2018)

10.29 †		Director Agreement by and between Avalon GloboCare Corp. and Steven A. Sanders dated July 30, 2018 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 31, 2018)

10.30		Loan Extension Agreement between Lotus Capital Overseas Limited and Avalon (Shanghai) Healthcare Technology Co., Ltd. dated August 3, 2018 (English translation) (incorporated by reference to Exhibit 10.30 of the Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on August 7, 2018)

10.31		Strategic Partnership Agreement between Avalon GloboCare Corp. and Weill Cornell Medical College of Cornell University dated August 6, 2018 (incorporated by reference to Exhibit 10.31 of the Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on August 7, 2018)

10.32		Equity Joint Venture Agreement by and between Avactis Biosciences, Inc., a wholly-owned subsidiary of Avalon GloboCare Corp., and Arbele Limited for the establishment of AVAR (China) BioTherapeutics Ltd. dated October 23, 2018 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 29, 2018)

10.33		Letter Agreement by and between Avalon GloboCare Corp. and David Jin dated January 3, 2019 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 4, 2019)

10.34		Letter Agreement by and between Avalon GloboCare Corp. and Luisa Ingargiola dated January 3, 2019 (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 4, 2019)

10.35		Letter Agreement by and between Avalon (Shanghai) Healthcare Technology Co. Ltd. and Meng Li dated January 3, 2019 (incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 4, 2019)

10.36		Promissory Note issued to Daniel Lu dated Mach 18, 2019 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 22, 2019)

10.37†		Director Agreement by and between Avalon GloboCare Corp. and Meng Li dated April 5, 2019 (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 8, 2019)

10.38†		Director Agreement by and between Avalon GloboCare Corp. and Yue “Charles” Li dated April 5, 2019 (Incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 8, 2019)

10.39		Form of Securities Purchase Agreement dated April 25, 2019 (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 26, 2019)

10.40		Revolving Line of Credit Agreement dated as of August 29, 2019 between Avalon GloboCare Corp. and Wenzhao “Daniel” Lu dated August 29, 2019 (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on September 3, 2019)

10.41		Form of Warrant Redemption and Cancellation Agreement (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 21, 2019)

10.42		Letter Agreement by and between Avalon GloboCare Corp. and David Jin dated February 20, 2020 (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on February ~~19, 2015.~~24, 2020)
~~(4)~~	~~Incorporated~~
10.43		Letter Agreement by and between Avalon GloboCare Corp. and Meng Li dated February 20, 2020 (Incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K ~~Current Report filed with the Securities and Exchange Commission on December 2, 2016.~~
~~(5)~~	~~Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on December 21, 2016.~~
~~(6)~~	~~Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on December 23, 2016.~~
~~(7)~~	~~Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on January 11, 2017.~~
~~(8)~~	~~Incorporated by reference to the Form 8-K Current Report~~ filed with the Securities and Exchange Commission on February ~~21, 2017.~~24, 2020)
~~(9)~~	~~Incorporated~~
10.44		Letter Agreement by and between Avalon GloboCare Corp. and Luisa Ingargiola dated February 20, 2020 (Incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K ~~Current Report~~ filed with the Securities and Exchange Commission on ~~March 7, 2017.~~February 24, 2020)

~~(10)~~

~~Incorporated~~43

21.1		List of Subsidiaries (incorporated by reference to Exhibit 21.1 of the ~~Form 10-K Annual Report filed with the Securities and Exchange Commission on March 28, 2017.~~
~~(11)~~	~~Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on April 28, 2017.~~
~~(12)~~	~~Incorporated by reference to the Amendment No. 1 to the Form S-1~~ Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on July ~~7, 2017.~~20, 2018)
~~(13)~~	~~Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on August 14, 2017.~~
~~(14)~~31.1*	~~Incorporated by reference~~	Certification of Chief Executive Officer pursuant to Section 302 of the ~~Form 8-K Current Report filed with~~Sarbanes Oxley Act

31.2*		Certification of Chief Financial Officer pursuant to Section 302 of the ~~Securities~~Sarbanes Oxley Act

32.1*		Certification of Chief Executive Officer and ~~Exchange Commission on October 26, 2017.~~Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act


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Filed herewith

†

Management contract or compensatory plan or arrangement.

* Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	AVALON GLOBOCARE CORP.
	(Registrant)

Date: November ~~14, 2017~~9, 2020	By:	/s/ David K. Jin
		David K. Jin
		Chief Executive Officer, President and Director (Principal Executive Officer)

Date: November ~~14, 2017~~9, 2020	By:	/s/ Luisa Ingargiola
		Luisa Ingargiola
		Chief Financial Officer ~~(Principal~~ (Principal Financial and Accounting Officer)

Delaware		47-1685128
~~(State~~ (State of incorporation)		(I.R.S. Employer Identification No.)

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐~~(Do not check if a smaller reporting company)~~☒	Smaller reporting company	☒
		Emerging growth company	☒

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, $0.0001 par value per share		AVCO		The NASDAQ Capital Market

Class		Outstanding November 9, 2020
Common Stock, $0.0001 par value per share		81,398,764 shares

		Page No.
PART I. - FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of September 30, ~~2017~~2020 (Unaudited) and December 31, ~~2016~~2019	1
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive ~~(Loss) Income~~Loss for the Three and Nine Months Ended September 30, ~~2017~~2020 and ~~2016~~2019	2
	Unaudited Condensed Consolidated Statement of Changes in ~~Stockholders’~~ Equity for the Three and Nine Months Ended September 30, ~~2017~~2020 and 2019	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2017~~2020 and ~~2016~~2019	45
	Notes to Unaudited Condensed Consolidated Financial Statements	56
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2325
Item 3	Quantitative and Qualitative Disclosures About Market Risk	3137
Item 4	Controls and Procedures	3137

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	3238
Item 1A.	Risk Factors	3238
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3239
Item 3.	Defaults upon Senior Securities	3439
Item 4.	Mine Safety Disclosures	3439
Item 5.	Other Information	3440
Item 6.	Exhibits	3440

~~AVALON GLOBOCARE CORP. AND SUBSIDIARIES~~
~~UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME~~1

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2017			2016		2017			2016

REVENUES
Real property rental revenue	$	315,284		$	—	$	537,538		$	—
Consulting services revenue - related parties		2,166			326,667		220,949			326,667
Total Revenues		317,450			326,667		758,487			326,667

COSTS AND EXPENSES
Real property operating expenses		180,722			—		342,576			—
Consulting services costs - related parties		47,033			33,548		271,845			33,548
Total Costs and Expenses		227,755			33,548		614,421			33,548

REAL PROPERTY OPERATING INCOME		134,562			—		194,962			—
GROSS (LOSS) PROFIT FROM CONSULTING SERVICES		(44,867	)		293,119		(50,896	)		293,119

OTHER OPERATING EXPENSES:
Selling expense		148			121		15,138			121
Compensation and related benefits		468,837			—		857,237			—
Professional fees		186,208			84,038		566,131			161,113
Other general and administrative		92,421			1,127		245,080			29,583

Total Other Operating Expenses		747,614			85,286		1,683,586			190,817

(LOSS) INCOME FROM OPERATIONS		(657,919	)		207,833		(1,539,520	)		102,302

OTHER INCOME (EXPENSE)
Interest income		122			41		1,126			101
Interest expense		(52,932	)		—		(94,932	)		—
Foreign currency transaction loss		—			—		(57,244	)		—

Total Other (Expense) Income, net		(52,810	)		41		(151,050	)		101

(LOSS) INCOME BEFORE INCOME TAXES		(710,729	)		207,874		(1,690,570	)		102,403

INCOME TAXES		—			—		—			—

NET (LOSS) INCOME	$	(710,729	)	$	207,874	$	(1,690,570	)	$	102,403

COMPREHENSIVE (LOSS) INCOME
NET (LOSS) INCOME		(710,729	)		207,874		(1,690,570	)		102,403
OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized foreign currency translation gain (loss)		6,151			216		(25,973	)		431
COMPREHENSIVE (LOSS) INCOME	$	(704,578	)	$	208,090	$	(1,716,543	)	$	102,834

NET (LOSS) INCOME PER COMMON SHARES:
Basic and diluted	$	(0.011	)	$	0.004	$	(0.026	)	$	0.002

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted		64,628,622			50,000,000		63,958,292			50,000,000

	Preferred Stock				Common Stock				Additional								Accumulated			Total
	Number of				Number of				Paid-in			Accumulated			Statutory		Other			Stockholders’
	Shares		Amount		Shares		Amount		Capital			Deficit			Reserve		Comprehensive Loss			Equity

Balance, December 31, 2016		—	$	—		61,628,622	$	6,163	$	3,681,387		$	(53,369	)	$	6,578	$	(94,568	)	$	3,546,191

Common shares issued in connection with Share Subscription Agreement		—		—		3,000,000		300		(300	)		—			—		—			—

Options granted for service		—		—		—		—		602,224			—			—		—			602,224

Foreign currency translation adjustment		—		—		—		—		—			—			—		(25,973	)		(25,973	)

Net loss for the nine months ended September 30, 2017		—		—		—		—		—			(1,690,570	)		—		—			(1,690,570	)

Balance, September 30, 2017		—	$	—		64,628,622	$	6,463	$	4,283,311		$	(1,743,939	)	$	6,578	$	(120,541	)	$	2,431,872

	Avalon GloboCare Corp. Stockholders’ Equity
	Preferred Stock				Common Stock						Treasury Stock											Accumulated
	Number				Number				Additional		Number											Other
	of				of				Paid-in		of						Accumulated			Statutory		Comprehensive			Non-controlling		Total
	Shares		Amount		Shares		Amount		Capital		Shares			Amount			Deficit			Reserve		Loss			Interest		Equity

Balance, January 1, 2020		-	$	-		76,730,802	$	7,673	$	34,593,006		(520,000	)	$	(522,500	)	$	(29,361,937	)	$	6,578	$	(257,747	)	$	-	$	4,465,073

Sale of common stock, net		-		-		980,358		98		1,539,153		-			-			-			-		-			-		1,539,251

Issuance of common stock for services		-		-		222,577		22		213,278		-			-			-			-		-			-		213,300

Stock-based compensation		-		-		-		-		785,350		-			-			-			-		-			-		785,350

Foreign currency translation adjustment		-		-		-		-		-		-			-			-			-		(22,066	)		-		(22,066	)

Net loss for the three months ended March 31, 2020		-		-		-		-		-		-			-			(3,270,781	)		-		-			-		(3,270,781	)

Balance, March 31, 2020		-		-		77,933,737		7,793		37,130,787		(520,000	)		(522,500	)		(32,632,718	)		6,578		(279,813	)		-		3,710,127

Sale of common stock, net		-		-		1,795,150		180		2,959,687		-			-			-			-		-			-		2,959,867

Issuance of common stock for services		-		-		380,000		38		398,692		-			-			-			-		-			-		398,730

Stock-based compensation		-		-		-		-		726,600		-			-			-			-		-			-		726,600

Foreign currency translation adjustment		-		-		-		-		-		-			-			-			-		3,309			-		3,309

Net loss for the three months ended June 30, 2020		-		-		-		-		-		-			-			(3,056,382	)		-		-			-		(3,056,382	)

Balance, June 30, 2020		-		-		80,108,887		8,011		41,215,766		(520,000	)		(522,500	)		(35,689,100	)		6,578		(276,504	)		-		4,742,251

Sale of common stock, net		-		-		1,337,968		134		2,376,503		-			-			-			-		-			-		2,376,637

Issuance of common stock for services		-		-		430,000		43		697,407		-			-			-			-		-			-		697,450

Stock-based compensation		-		-		-		-		739,362		-			-			-			-		-			-		739,362

Foreign currency translation adjustment		-		-		-		-		-		-			-			-			-		39,698			-		39,698

Net loss for the three months ended September 30, 2020		-		-		-		-		-		-			-			(3,251,959	)		-		-			-		(3,251,959	)

Balance, September 30, 2020		-	$	-		81,876,855	$	8,188	$	45,029,038		(520,000	)	$	(522,500	)	$	(38,941,059	)	$	6,578	$	(236,806	)	$	-	$	5,343,439

	For the Nine Months Ended September 30,
	2017			2016

CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(1,690,570	)	$	102,403
Adjustments to reconcile net (loss) income from operations to
net cash (used in) provided by operating activities:
Depreciation expense		58,478			—
Options granted for service		602,224			—
Changes in operating assets and liabilities:
Accounts receivable - related parties		(91,463	)		—
Tenants receivable		(56,239	)		—
Prepaid expenses and other		14,151			(5,125	)
Security deposit		(30,081	)		—
Accounts payable		21,600			—
Accrued liabilities and other payables		320,505			(2,790	)
Accrued liabilities and other payables - related parties		22,990			6,226
Deferred rental income		19,914			—
Advance from customers - related parties		—			227,184
Income taxes payable		(21,400	)		—
VAT and other taxes payable		(9,453	)		—
Tenants’ security deposit		92,288			—

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES		(747,056	)		327,898

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Avalon GloboCare Corp.’s shares		—			(230,000	)
Purchase of property, plant and equipment		(50,994	)		(395	)
Purchase of commercial real estate		(7,008,571	)		—

NET CASH USED IN INVESTING ACTIVITIES		(7,059,565	)		(230,395	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds received from loan payable		2,100,000			—
Proceeds received from related parties’ advance		210,000			9,000
Repayment for related parties’ advance		(500	)		—
Proceeds received from AHS’s founders’ contribution		—			141,000
Refundable deposit in connection with Share Subscription Agreement		3,000,000			—

NET CASH PROVIDED BY FINANCING ACTIVITIES		5,309,500			150,000

EFFECT OF EXCHANGE RATE ON CASH		(32,246	)		(1,262	)

NET (DECREASE) INCREASE IN CASH		(2,529,367	)		246,241

CASH - beginning of period		2,886,189			109,586

CASH - end of period	$	356,822		$	355,827

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest	$	—		$	—
Income taxes	$	21,400		$	—

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Stock issued in connection with Share Subscription Agreement	$	300		$	—
Distribution of Avalon GloboCare Corp.’s shares to owners	$	—		$	230,000
Acquisition of real estate by decreasing prepayment for property	$	700,000		$	—

	Avalon GloboCare Corp. Stockholders’ Equity
	Preferred Stock				Common Stock							Treasury Stock											Accumulated
	Number				Number				Additional			Number											Other
	of				of				Paid-in			of						Accumulated			Statutory		Comprehensive			Non-controlling			Total
	Shares		Amount		Shares		Amount		Capital			Shares			Amount			Deficit			Reserve		Loss			Interest			Equity

Balance, January 1, 2019		-	$	-		73,830,751	$	7,383	$	24,153,378			(520,000	)	$	(522,500	)	$	(11,291,776	)	$	6,578	$	(236,860	)	$	(862,200	)	$	11,254,003

Issuance of common stock upon cashless exercise of stock warrants		-		-		350,856		35		(35	)		-			-			-			-		-			-			-

Issuance of common stock upon cashless exercise of stock options		-		-		158,932		16		(16	)		-			-			-			-		-			-			-

Stock-based compensation		-		-		-		-		2,272,747			-			-			-			-		-			-			2,272,747

Foreign currency translation adjustment		-		-		-		-		-			-			-			-			-		44,680			(1,198	)		43,482

Net loss for the three months ended March 31, 2019		-		-		-		-		-			-			-			(4,405,816	)		-		-			(99,113	)		(4,504,929	)

Balance, March 31, 2019		-		-		74,340,539		7,434		26,426,074			(520,000	)		(522,500	)		(15,697,592	)		6,578		(192,180	)		(962,511	)		9,065,303

Stock-based compensation		-		-		-		-		1,524,139			-			-			-			-		-			-			1,524,139

Issuance of common stock for service		-		-		120,812		13		313,788			-			-			-			-		-			-			313,801

Sale of common stock		-		-		1,714,288		171		1,411,710			-			-			-			-		-			-			1,411,881

Foreign currency translation adjustment		-		-		-		-		-			-			-			-			-		(36,003	)		1,900			(34,103	)

Net loss for the three months ended June 30, 2019		-		-		-		-		-			-			-			(4,357,224	)		-		-			(81,599	)		(4,438,823	)

Balance, June 30, 2019		-		-		76,175,639		7,618		29,675,711			(520,000	)		(522,500	)		(20,054,816	)		6,578		(228,183	)		(1,042,210	)		7,842,198

Stock-based compensation		-		-		-		-		1,916,193			-			-			-			-		-			-			1,916,193

Issuance of common stock for service		-		-		115,417		11		391,856			-			-			-			-		-			-			391,867

Foreign currency translation adjustment		-		-		-		-		-			-			-			-			-		(73,840	)		4,452			(69,388	)

Net loss for the three months ended September 30, 2019		-		-		-		-		-			-			-			(3,858,195	)		-		-			(475,863	)		(4,334,058	)

Balance, September 30, 2019		-	$	-		76,291,056	$	7,629	$	31,983,760			(520,000	)	$	(522,500	)	$	(23,913,011	)	$	6,578	$	(302,023	)	$	(1,513,621	)	$	5,746,812

Name of Subsidiary	Place and date of Incorporation	Percentage of Ownership	Principal Activities
Avalon Healthcare System, Inc. (“AHS”)	Delaware May 18, 2015	100% held by AVCO	Provides medical related consulting services and developing Avalon Cell and Avalon Rehab in United States of America (“USA”)

Avalon (BVI) Ltd. (“Avalon BVI”)	British Virgin Island January 23, 2017	100% held by AVCO	Dormant, is in process of being dissolved

Avalon RT 9 Properties LLC (“Avalon RT 9”)	New Jersey February 7, 2017	100% held by AVCO	Owns and operates an income-producing real property and holds and manages the corporate headquarters

Avalon (Shanghai) Healthcare Technology Co., Ltd. (“Avalon Shanghai”)	PRC April 29, 2016	100% held by AHS	Provides medical related consulting services and developing Avalon Cell and Avalon Rehab in China

Genexosome Technologies Inc. (“Genexosome”)	Nevada July 31, 2017	60% held by AVCO	Develops proprietary diagnostic and therapeutic products using exosomes

Beijing Jieteng (Genexosome) Biotech Co., Ltd. (“Beijing Genexosome”)	PRC August 7, 2015	100% held by Genexosome	Provides development services for hospitals and other customers and sells developed items to hospitals and other customers in China

Avactis Biosciences Inc. (“Avactis”)	Nevada July 18, 2018	100% held by AVCO	Integrate and optimize global scientific and clinical resources to further advance cellular therapies, including regenerative medicine with stem/progenitor cells as well as cellular immunotherapy including CAR-T, CAR-NK, TCR-T and others to treat certain cancers

International Exosome Association LLC (“Exosome”)	Delaware June 13, 2019	100% held by AVCO	Promotes standardization related to exosome industry

Country:	September 30, 2020
United States	$	1,203,710	86.3	%
China		191,800	13.7	%
Total cash	$	1,395,510	100.0	%

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2017			2016		2017			2016
Net (loss) income for basic and diluted net (loss) income per share of common stock	$	(710,729	)	$	207,874	$	(1,690,570	)	$	102,403
Weighted average common stock outstanding - basic and diluted		64,628,622			50,000,000		63,958,292			50,000,000
Net (loss) income per common shares - basic and diluted	$	(0.011	)	$	0.004	$	(0.026	)	$	0.002

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Stock options		7,020,000		5,070,000		7,020,000		5,070,000
Warrants		-		1,714,288		-		1,714,288
Potentially dilutive securities		7,020,000		6,784,288		7,020,000		6,784,288

	September 30, 2017		December 31, 2016
Prepayment for acquisition of real property	$	—	$	700,000
Other		36,414		49,796
	$	36,414	$	749,796

	Useful life	September 30, 2017			December 31, 2016
Office equipment	3 – 10 Years	$	27,966		$	320
Leasehold improvement	1.75 Years		24,009			—
			51,975			320
Less: accumulated depreciation			(5,610	)		(25	)
		$	46,365		$	295

	September 30, 2020		December 31, 2019
Prepaid professional fees	$	139,274	$	153,478
Prepaid research and development fees		90,915		-
Prepaid directors and officers liability insurance premium		67,820		4,990
Prepaid VAT on purchase		47,026		40,602
Security deposit		25,478		24,847
Prepaid NASDAQ listing fee		23,417		-
Other		38,365		27,223
Total	$	432,295	$	251,140

Equity investment carrying amount at January 1, 2020	$	483,101
Payment made for equity method investment		28,594
Epicon's net loss attributable to the Company		(35,382	)
Foreign currency fluctuation		12,061
Equity investment carrying amount at September 30, 2020	$	488,374

	September 30, 2020		December 31, 2019
Current assets	$	8,414	$	77,272
Noncurrent assets		268,969		247,590
Current liabilities		6,264		324
Noncurrent liabilities		-		-
Equity		271,119		324,538

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2020		2019		2020		2019
Net revenue	$	-	$	-	$	-	$	-
Gross profit		-		-		-		-
Loss from operation		37,418		63,165		88,587		120,882
Net loss		37,417	��	63,165		88,456		120,882

	September 30, 2017		December 31, 2016
Accrued professional fees	$	239,927	$	14,080
Accrued interest		94,932		—
Other		8,143		8,254
	$	343,002	$	22,334

	September 30, 2017		December 31, 2016
VAT tax payable	$	—	$	8,768
Other taxes payable		2,091		2,502
	$	2,091	$	11,270

~~Dividend rate~~	0
~~Terms (in years)~~	~~5.0-10.0~~
~~Volatility~~	~~327.82% to 534.84%~~
~~Risk-free interest rate~~	~~1.88% to 2.40%~~

	Number of Options		Weighted Average Exercise Price
Balance at December 31, 2016		—	$	—
Granted		484,448		0.58
Exercised		—		—
Balance at September 30, 2017		484,448		0.58
Option exercisable at September 30, 2017		484,448	$	0.58

Options Outstanding									Options Outstanding							Options Exercisable
Range of Exercise Price									Range of Exercise Price	Number Outstanding at September 30, 2020		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number Exercisable at September 30, 2020		Weighted Average Exercise Price
$									0.50		2,000,000		6.36	$	0.50		2,000,000	$	0.50
									1.00 – 1.93		2,250,000		6.01		1.47		1,748,334		1.43
	Options Outstanding					Options Exercisable			2.00 – 2.80		2,740,000		3.02		2.17		2,740,000		2.17
	Range of Exercise Price	Number Outstanding at September 30, 2017	Range of Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price	Number Exercisable at September 30, 2017		Weighted Average Exercise Price	4.76		30,000		3.51		4.76		30,000		4.76
$	0.50	444,448	9.71	$	0.50	444,448	$	0.50	0.50 – 4.76		7,020,000		4.93	$	1.48		6,518,334	$	1.47
	1.49	40,000	4.63		1.49	40,000		1.49
$	0.50–1.49	484,448	9.29	$	0.58	484,448	$	0.58

	Number of Options		Weighted Average Exercise Price
Outstanding at January 1, 2020		5,260,000	$	1.45
Granted		1,760,000		1.57
Terminated / Exercised		-		-
Outstanding at September 30, 2020		7,020,000	$	1.48
Options exercisable at September 30, 2020		6,518,334	$	1.47
Options expected to vest		501,666	$	1.59

	Number of Options			Weighted Average Exercise Price
Nonvested at January 1, 2020		264,723		$	2.00
Granted		1,760,000			1.57
Vested		(1,523,057	)		(1.63	)
Nonvested at September 30, 2020		501,666		$	1.59

Identifiable long-lived tangible assets at September 30, 2017 and December 31, 2016	September 30, 2017		December 31, 2016
Real property operating	$	7,677,995	$	—
Medial related consulting services		23,932		295
	$	7,701,927	$	295

Twelve-month Period Ending September 30:	Amount
2018	$	91,450
2019		33,669
Total	$	125,119

	Three Months Ended September 30,						Nine Months Ended September 30,
Customer	2017			2016			2017			2016
A (Beijing Nanshan, a related party)		*			33	%		20	%		33	%
B (Shanghai Daopei, a related party)		*			38	%		*			38	%
C (Hebei Yanda, a related party)		*			29	%		*			29	%
D		27	%		0			18	%		0
E		16	%		0			11	%		0
F		13	%		0			*			0

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating lease	$	48,000
Right-of-use asset obtained in exchange for lease obligation:
Operating lease	$	201,028

Operating Lease:
Operating lease right-of-use asset	$	153,556

Current portion of operating lease liability	$	76,379
Long-term operating lease liability		83,177
Total operating lease liability	$	159,556

Weighted Average Remaining Lease Term (in years):
Operating lease		2.25

Weighted Average Discount Rate:
Operating lease		5.0	%

For the Year Ending September 30:	Operating Lease
2021	$	72,000
2022		72,000
2023		18,000
2024 and thereafter		-
Total lease payments		162,000
Amount of lease payments representing interest		(8,444	)
Total present value of operating lease liability	$	153,556