8-K/A - ALBT - Equibles

UNITED

STATES

SECURITIES

AND EXCHANGE COMMISSION

Washington,

DC 20549

FORM

8-K/A

(AmendmentNo. 2)

CURRENT

REPORT

Pursuant

to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 9, 2023

AVALON

GLOBOCARE CORP.

(Exact name of registrant as specified in its charter)

Delaware	001-38728	47-1685128
(State<br> or other jurisdiction	(Commission File<br> Number)	(I.R.S.<br> Employer
of<br> incorporation)		Identification<br> No.)
4400 Route 9 South, Suite 3100<br><br> <br>Freehold, NJ	07728
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(Address<br> of principal executive offices)	(Zip<br> Code)

(732)

780-4400

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐	Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐	Pre-commencement<br> communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbols	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	ALBT	The<br> Nasdaq Capital Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐

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. ☐

Explanatory

Note

Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our,” “Avalon,” and the “Company” refer to Avalon GloboCare Corp., a Delaware corporation.

On February 9, 2023 (the “Closing Date”), the Company entered into and closed on an Amended and Restated Membership Interest Purchase Agreement (the “Amended MIPA”), by and among Avalon Laboratory Services, Inc., a wholly-owned subsidiary of the Company (the “Buyer”), SCBC Holdings LLC (the “Seller”), the Zoe Family Trust, Bryan Cox and Sarah Cox as individuals and Laboratory Services MSO, LLC (“Laboratory Services MSO”). Pursuant to the terms and conditions set forth in the Amended MIPA, Buyer acquired, on the Closing Date, forty percent (40%) of all the issued and outstanding equity interests of Laboratory Services MSO from the Seller, free and clear of all liens (the “Transaction”).

The Amended MIPA was filed as Exhibit 2.1 to the Current Report on Form 8-K with the Securities Exchange Commission (the “SEC”) on February 13, 2023 (the “Original Form 8-K”). The Original Form 8-K was filed with respect to the Amended MIPA, the Transaction and related matters contemplated therein.

Amendment No. 1 to the Original Form 8-K (“Amendment No. 1”) was filed on April 26, 2023 to include: (i) the audited consolidated financial statements of Laboratory Services MSO for the fiscal years ended December 31, 2022 and 2021, respectively, as Exhibit 99.1 and (ii) the unaudited pro forma condensed combined financial information of the Company and Laboratory Services MSO, as of and for the fiscal year ended December 31, 2022 as Exhibit 99.2.

This Amendment No. 2 is being filed solely to replace the unaudited pro forma condensed combined financial information of the Company and Laboratory Services MSO, as of and for the fiscal year ended December 31, 2022, included as Exhibit 99.2 to Amendment No 1.

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Item9.01. Financial Statements and Exhibits.

(b) Pro Forma Financial Information.

The unaudited pro forma consolidated financial information of the Company, as of and for the fiscal year ended December 31, 2022 are filed herewith as Exhibit 99.2, which is incorporated herein by reference.

This Amendment No. 2 is being filed solely to replace the unaudited pro forma financial information included in Amendment No. 1 as Exhibit 99.2. The unaudited pro forma condensed combined financial information previously reflected management’s estimates based on its analysis and information at the consummation of the Transaction. The Company is updating the unaudited pro forma financial information upon completion of such analyses to reflect treatment of its investment in Laboratory Services MSO under the equity method instead of the acquisition method.

All other information contained in the Original Form 8-K and Amendment No 1. remains unchanged.

(d) Exhibits.

Exhibit	Description
99.2*	Unaudited pro forma consolidated financial information for the Company, as of and for the fiscal year ended December 31, 2022.
104	Cover<br> Page Interactive Data File (embedded within the Inline XBRL document)
*	Filed<br> herewith.
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SIGNATURE

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.

Date:<br> May 26, 2023
	By:	/s/ Luisa Ingargiola
	Name:	Luisa<br>Ingargiola
	Title:	Chief<br> Financial Officer

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Exhibit 99.2

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

On February 9, 2023 (the “Closing Date”), Avalon GloboCare Corp. (the “Company”) entered into and closed an Amended and Restated Membership Interest Purchase Agreement (the “Amended MIPA”), by and among Avalon Laboratory Services, Inc., a wholly-owned subsidiary of the Company (the “Buyer”), SCBC Holdings LLC (the “Seller”), the Zoe Family Trust, Bryan Cox and Sarah Cox as individuals (each an “Owner” and collectively, the “Owners”), and Laboratory Services MSO, LLC. The Amended MIPA amends and restates, in its entirety, that certain Membership Interest Purchase Agreement, dated November 7, 2022 (the “Original MIPA”).

Pursuant to the terms and conditions set forth in the Amended MIPA, Buyer acquired from the Seller, forty percent (40%) of all the issued and outstanding equity interests of Laboratory Services MSO, LLC (the “Purchased Interests”), free and clear of all liens (the “Transaction”). The consideration paid by Buyer to Seller for the Purchased Interests consisted of $21,000,000, which comprised of (i) $9,000,000 in cash, (ii) $11,000,000 pursuant to the issuance of 11,000 shares of the Company’s newly designated Series B Convertible Preferred Stock (the “Series B Preferred Stock”), stated value $1,000 (the “Series B Stated Value”), and (iii) a $1,000,000 cash payment on February 9, 2024 (the “Anniversary Payment”). The Series B Preferred Stock will be convertible into shares of the Company’s common stock at a conversion price per share equal to $3.78 or an aggregate of 2,910,053 shares of the Company’s common stock and are subject to the Lock Up Period. The Seller is also eligible, under the terms set forth in the Amended MIPA, to receive certain earnout payments upon achievement of certain operating results, which may be comprised of up to $10,000,000 of which (x) up to $5,000,000 will be paid in cash and (y) up to $5,000,000 will be paid pursuant to the issuance of the number of shares of Company common stock valued at $5,000,000, calculated using the closing price of the Company’s common stock on December 31, 2023, rounded down to the nearest whole share (collectively, the “Earnout Payments”).

In addition, at any time during the period beginning on the Closing Date and ending on the date nine (9) months after the Closing Date, the Buyer, or its designated affiliates under the Amended MIPA, may purchase from the Seller twenty percent (20%) of the total issued and outstanding equity interests of Laboratory Services MSO, LLC for the purchase price of (i) $6,000,000 in cash and (ii) the issuance of an additional 4,000 shares of Series B Preferred Stock valued at $4,000,000, in accordance with the terms and conditions set forth in the Amended MIPA.

The following unaudited pro forma consolidated financial statements present the historical consolidated financial statements of Avalon GloboCare Corp. and Subsidiaries (“Avalon”), adjusted as if Avalon had purchased 40% of Laboratory Services MSO, LLC.

The unaudited pro forma consolidated balance sheet reflects the historical consolidated balance sheet of Avalon, giving effect to the purchase as if it had been consummated on December 31, 2022. The unaudited pro forma consolidated statement of operations and comprehensive loss for the year ended December 31, 2022 reflect the historical consolidated statement of operations and comprehensive loss of Avalon, giving effect to the purchase as if it had been consummated on January 1, 2022, the beginning of the earliest period presented. The historical financial statements have been adjusted in the unaudited pro forma consolidated financial statements to give pro forma effect to events that are: (1) directly attributable to the investment; (2) factually supportable; and (3) with respect to the statement of operations, expected to have a continuing impact on Avalon’s results following the completion of the purchase.

The unaudited pro forma consolidated financial statements have been developed from and should be read in conjunction with:

●	The accompanying notes to the unaudited pro forma consolidated financial statements; and
●	The historical consolidated financial statements and related notes of Avalon as of December 31, 2022, and for the year ended December 31, 2022, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in Avalon’s Annual Report on Form 10-K for the year ended December 31, 2022, which were filed with the Securities and Exchange Commission.
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AVALON GLOBOCARE CORP. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

As of December 31, 2022

			Pro Forma
			Pro Forma Adjustments						Pro Forma
			Dr.			Cr.			Combined
ASSETS
CURRENT ASSETS:
Cash	1,990,910		$	-		$	278	a	$	1,990,632
Rent receivable	60,526			-			-			60,526
Rent receivable - related party	74,100			-			-			74,100
Other current assets	247,990			-			-			247,990
Total Current Assets	2,373,526			-			278			2,373,248
NON-CURRENT ASSETS:
Operating lease right-of-use assets, net	10,885			-			-			10,885
Property and equipment, net	138,294			-			-			138,294
Investment in real estate, net	7,360,087			-			-			7,360,087
Equity method investment	485,008			23,537,253	a, c		-			24,022,261
Advances for equity interest purchase	8,999,722			-			8,999,722	a		-
Other non-current assets	384,383			-			-			384,383
Total Non-current Assets	17,378,379			23,537,253			8,999,722			31,915,910
Total Assets	19,751,905		$	23,537,253		$	9,000,000		$	34,289,158
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accrued professional fees	1,673,411		$	-		$	950,000	b	$	2,623,411
Accrued research and development fees	838,001			-			-			838,001
Accrued payroll liability and directors’ compensation	223,722			-			-			223,722
Accrued litigation settlement	450,000			-			-			450,000
Accrued liabilities and other payables	283,234			-			1,000,000	a		1,283,234
Accrued liabilities and other payables - related parties	100,000			-			-			100,000
Operating lease obligation	11,437			-			-			11,437
Total Current Liabilities	3,579,805			-			1,950,000			5,529,805
NON-CURRENT LIABILITIES:
Accrued litigation settlement - noncurrent portion	450,000			-			-			450,000
Note payable, net	4,563,152			-			-			4,563,152
Total Non-current Liabilities	5,013,152			-			-			5,013,152
Total Liabilities	8,592,957			-			1,950,000			10,542,957
SHAREHOLDERS’ EQUITY:
Preferred stock, 0.0001 par value; 10,000,000 shares authorized; Series A<br> Convertible Preferred Stock, 0.0001 par value; 9,000 shares issued and outstanding. Liquidation preference 9 million	9,000,000			-			-			9,000,000
Series B Convertible Preferred Stock, 0.0001 par value;<br> 11,000 pro forma shares issued and outstanding. Liquidation preference 11 million	-			-			11,000,000	a		11,000,000
Common stock, 0.0001 par value; 490,000,000 shares authorized; 10,013,576<br> shares issued and 9,961,576 shares outstanding; 10,013,576 pro forma shares issued and 9,961,576 pro forma shares<br> outstanding;	1,005			-			-			1,005
Additional paid-in capital	65,949,723			-			-			65,949,723
Less: common stock held in treasury, at cost; 52,000 shares	(522,500	)		-			-			(522,500	)
Accumulated deficit	(63,062,721	)		950,000	b		2,537,253	c		(61,475,468	)
Statutory reserve	6,578			-			-			6,578
Accumulated other comprehensive loss	(213,137	)		-			-			(213,137	)
Total shareholders’ equity	11,158,948			950,000			13,537,253			23,746,201
Total Liabilities and Shareholders’ Equity	19,751,905		$	950,000		$	15,487,253		$	34,289,158

All values are in US Dollars.

AVALON GLOBOCARE CORP. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS

Year Ended December 31, 2022

	Historical<br><br>Avalon<br><br>GloboCare Corp.			Pro Forma
	and			Pro Forma Adjustments					Pro Forma
	Subsidiaries			Dr.		Cr.			Combined
RENTAL<br> REVENUE	$	1,202,169		$	-	$	-		$	1,202,169
OPERATING<br> EXPENSES		929,441			-		-			929,441
OPERATING<br> INCOME		272,728			-		-			272,728
OTHER OPERATING EXPENSES:
Advertising and marketing		1,325,313			-		-			1,325,313
Professional fees		2,909,652			-		-			2,909,652
Compensation and related benefits		1,863,188			-		-			1,863,188
Research and development expenses		731,328			-		-			731,328
Litigation settlement		1,350,000			-		-			1,350,000
Other<br> general and administrative		886,142			-		-			886,142
Total<br> Other Operating Expenses		9,065,623			-		-			9,065,623
LOSS<br> FROM OPERATIONS		(8,792,895	)		-		-			(8,792,895	)
OTHER (EXPENSE) INCOME
Interest expense -<br> amortization of debt discount and debt issuance cost		(3,310,684	)		-		-			(3,310,684	)
Interest expense -<br> other		(185,751	)		-		-			(185,751	)
Interest expense - related<br> party		(79,898	)		-		-			(79,898	)
Conversion inducement expense		(344,264	)		-		-			(344,264	)
(Loss) income from equity<br> method investment		(41,863	)		-		2,537,253	a		2,495,390
Change in fair value of derivative<br> liability		600,749			-		-			600,749
Other<br> income		223,759			-		-			223,759
Total<br> Other Expense, net		(3,137,952	)		-		2,537,253			(600,699	)
LOSS BEFORE INCOME TAXES		(11,930,847	)		-		2,537,253			(9,393,594	)
INCOME<br> TAXES		-			-		-			-
NET LOSS	$	(11,930,847	)	$	-	$	2,537,253		$	(9,393,594	)
LESS:<br> NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST		-			-		-			-
NET<br> LOSS ATTRIBUTABLE TO AVALON GLOBOCARE CORP. COMMON SHAREHOLDERS	$	(11,930,847	)	$	-	$	2,537,253		$	(9,393,594	)
COMPREHENSIVE LOSS:
NET LOSS	$	(11,930,847	)	$	-	$	2,537,253		$	(9,393,594	)
OTHER COMPREHENSIVE LOSS
Unrealized foreign currency translation loss		(47,871	)		-		-			(47,871	)
COMPREHENSIVE LOSS		(11,978,718	)		-		2,537,253			(9,441,465	)
LESS:<br> COMPREHENSIVE LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST		-			-		-			-
COMPREHENSIVE<br> LOSS ATTRIBUTABLE TO AVALON GLOBOCARE CORP. COMMON SHAREHOLDERS	$	(11,978,718	)	$	-	$	2,537,253		$	(9,441,465	)
NET LOSS PER COMMON SHARE:
Basic<br> and diluted	$	(1.28	)						$	(1.01	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic<br> and diluted		9,328,609								9,328,609

[1] Basis of Pro Forma Presentation

The unaudited pro forma consolidated financial statements have been prepared assuming the purchase is accounted for as equity method investment. For equity method investment, purchase-related transaction costs are not included as a component of consideration given but are accounted for as expenses in the periods in which such costs are incurred. Purchase-related transaction costs include advisory, legal, accounting fee and others.

The unaudited pro forma consolidated financial statements reflect adjustments, based on available information and certain assumptions that Avalon believes are reasonable, attributable to the following:

·	The purchase of 40% of Laboratory Services MSO, LLC, which will be accounted for as equity method investment;<br>and
·	The incurrence of purchase-related expenses.
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The pro forma adjustments represent management’s estimates based on information available as of the date of this filing and are subject to change as additional information becomes available and additional analyses are performed. The pro forma financial statements are provided for illustrative purposes only and are not intended to represent what Avalon’s financial position or results of operations would have been had the purchase actually been consummated on the assumed dates nor do they purport to project the future operating results or financial position of Avalon following the purchase. The pro forma financial statements do not reflect future events that may occur after the purchase, including, but not limited to, the anticipated realization of ongoing savings from potential operating efficiencies, cost savings, or economies of scale that Avalon may achieve with respect to the combined operations. Specifically, the pro forma statements of operations do not include the synergies expected to be achieved as a result of the purchase and any associated costs that may be incurred to achieve the identified synergies. Additionally, Avalon cannot assure that additional charges will not be incurred in excess of those included in the pro forma additional legal, accounting, and advisory fees of $950,000 related to the purchase, Avalon’s efforts to achieve operational synergies, or that management will be successful in its efforts to integrate the operations. The pro forma statement of operations also excludes the effects of costs associated with any restructuring and integration activities that may result from the purchase. Further, the pro forma financial statements do not reflect the effect of any regulatory actions that may impact the results of Avalon following the purchase.

Assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma consolidated financial statements. In Avalon’s opinion, all adjustments that are necessary to present fairly the pro forma information have been made. The historical financial statements have been adjusted in the unaudited pro forma consolidated financial statements to give effect to the purchase. These adjustments are directly attributable to the purchase, factually supportable and, with respect to the unaudited pro forma consolidated statements of operations, expected to have a continuing impact on Avalon following the purchase.

[2] Pro Forma Adjustments and Assumptions

Pro FormaAdjustments to the Consolidated Balance Sheet at December 31, 2022:

a.	Reflects the issuance of 11,000 shares of Avalon series B convertible<br>preferred stock at a stated value of $1,000 per share. A summary of the fair value of the consideration given in the purchase is as follows:

Preliminary consideration:

Cash	$	9,000,000
Value of Avalon series B preferred stock issued to Seller		11,000,000
Payable		1,000,000
Total consideration	$	21,000,000

The estimated earnout liability amounted to $0 since the minimum thresholds as defined in the agreement are unlikely to be met.

b.	Represents the accrual of $950,000 in estimated legal, accounting, and advisory fees that are payable<br>as a result of the purchase of Laboratory Services MSO, LLC, which were not reflected in Avalon’s historical financial statements.
c.	Represents Avalon’s share of Laboratory Services MSO, LLC’s net income for the year ended<br>December 31, 2022 as a result of the purchase of 40% of Laboratory Services MSO, LLC, which was not reflected in Avalon’s historical<br>financial statements.
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Pro FormaAdjustments to the Consolidated Statement of Operations and Comprehensive Loss for the Year Ended December 31, 2022:

a.	Represents Avalon’s share of Laboratory Services MSO, LLC’s<br>net income for the year ended December 31, 2022.

[3] Unaudited Pro Forma Adjustment Reflectsthe Following Three Transactions:

Transaction 1:

Equity method investment	21,000,000
Advances for equity interest purchase		9,000,000
Payable		1,000,000
Series B convertible preferred stock		11,000,000

Transaction 2:

Accumulated deficit	950,000
Accrued professional fee		950,000

To accrue $950,000 estimated additional legal, accounting, and advisory fees that are payable as a result of the purchase of Laboratory Services MSO, LLC, which were not reflected in Avalon’s historical financial statements.

Transaction 3:

Equity method investment	2,537,253
Income from equity method investment		2,537,253

To reflect 40% of Laboratory Services MSO, LLC’s net income for the year ended December 31, 2022 of $6,343,133.