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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 14, 2022
AVALON GLOBOCARE CORP.
(Exact name of registrant as specified in its charter)
| Delaware |
|
001-38728 |
|
47-1685128 |
(State or Other Jurisdiction
of Incorporation) |
|
(Commission File Number) |
|
(IRS Employer
Identification No.) |
4400 Route 9 South, Suite 3100
Freehold, NJ 07728
(Address of principal executive offices)
Registrant’s telephone number, including area
code: (732) 780-4400
N/A
(Former name or former address, if changed since
last report.)
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:
| ☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which
registered |
| Common Stock, $0.0001 par value per share |
|
ALBT |
|
The 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 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange
Act of 1934 (17 CFR §240.12b-2).
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.
As previously disclosed in the Current Report on Form 8-K filed by Avalon GloboCare Corp.,
a Delaware corporation (the “Company”), with the Securities and Exchange Commission (the “SEC”)
on November 8, 2022, the Company entered into a Membership Interest Purchase Agreement, dated as of November 7, 2022, (the “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, and Bryan Cox and Sarah Cox as individuals (each an “Owner”
and collectively, the “Owners”), and Laboratory Services MSO, LLC (“Laboratory Services MSO”), pursuant
to which, subject to the terms and conditions set forth in the MIPA, the Buyer shall acquire from the Seller, sixty percent (60%) of all
the issued and outstanding equity interests of the Laboratory Services MSO (the “Purchased Interests”), free and clear
of all liens (the “Transaction”).
The closing of the Transaction
(the “Closing”) is subject to customary conditions to closing, including completion of financing for the remainder
of the cash purchase price. The Transaction is subject to a ninety (90) day right of extension if the Closing has not occurred on or prior
to the date that is the thirtieth (30) day following the execution of the MIPA (the “Outside Date”). On December 7,
2022, the Buyer elected to extend the Outside Date in its sole discretion by an additional ninety (90) days by delivering written notice
to the Seller of such extension, in accordance with the terms set forth in the MIPA.
As previously disclosed in its
Current Report on Form 8-K filed with the SEC on November 8, 2022, the Company, as a condition to the Closing of the Transaction, conducted
a private placement offering concurrently with the execution of the MIPA on November 7, 2022 for shares of its newly designated Series
A Convertible Preferred Stock (the “Series A Preferred Stock”), at a purchase price of $1,000 per share, and entered
into its form of securities purchase agreement (the “Securities Purchase Agreement”), with the accredited investor
named therein, pursuant to which the Company sold 5,000 shares of its Series A Preferred Stock for gross proceeds of $5,000,000.
Item 1.01 Entry into a Material Definitive Agreement.
In accordance with the Securities
Purchase Agreement, the Company may sell and issue up to an additional 10,000 shares of its of Series A Preferred Stock to additional
purchasers in order to complete the Transaction. On December 14, 2022, the Company entered into a Securities Purchase Agreement with Wenzhao
Lu, the Company’s Chairman of the Board, pursuant to which the Company sold to Mr. Lu 4,000 shares of its Series A Preferred Stock,
stated value $1,000, for the gross proceeds of $4,000,000 (the “Private Placement”). In accordance with the Securities
Purchase Agreement and the Series A Certificate of Designation, as defined below, the Series A Preferred Stock is convertible into shares
of the Company’s common stock at a conversion price per share equal to the greater of (i) one dollar ($1.00), and (ii) ninety percent
(90%) of the closing price of the Company’s common stock on the Nasdaq Stock Market (“Nasdaq”) on the day prior
to receipt of the conversion notice from the Investor, subject to adjustment for stock splits and similar matters. The preferences, rights
and limitations applicable to the Series A Preferred Stock are set forth in the Certificate of Designation (as described below).
The Company intends to raise an additional $6.0 million through the sale of additional shares of Series A Preferred Stock in order to
fund the remaining portion of the purchase price to consummate the Closing of the Transaction within the extension period referenced above.
The Company’s common stock
is listed on the Nasdaq Capital Market and previously traded through the close of business on November 9, 2022 under the ticker symbol
“AVCO” and commenced trading on the Nasdaq Capital Market under the ticker symbol “ALBT” on November 10, 2022.
Conversion of the Series A Preferred
Stock into shares of the Company’s common stock is subject to restriction pursuant to the Nasdaq Stock Market Listing Rules as set
for the below. The terms of the Series A Preferred Stock are further described under Item 5.03 set forth below.
The foregoing description of the
Securities Purchase Agreement does not purport to be complete is qualified by reference to the full text of the Form of Securities Purchase
Agreement that was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 8, 2022, which
is incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth in Item
1.01 of this Current Report on Form 8-K with respect to the issuances of the Company’s shares of Series A Preferred Stock is incorporated
by reference into this Item 3.02.
The issuance of the Series A Preferred
Stock, as described in this Current Report on Form 8-K, was exempt from the registration requirements of the Securities Act of 1933, as
amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act.
Item 5.03 Amendments to Articles of Incorporation or Bylaws: Change
in Fiscal Year.
The information set forth in Item 1.01 of this Current
Report on Form 8-K is incorporated by reference into this Item 5.03.
Series A Preferred Stock
As described
above, in conjunction with the Transaction, on November 3, 2022 the Company filed a Certificate of Designation of Preferences, Rights
and Limitations of the Series A Preferred Stock (the “Series A Certificate of Designation”), which became effective
immediately with the Secretary of State of the State of Delaware, attached hereto as Exhibit 3.1. Pursuant to the Series A Certificate
of Designation, the Company designated up to 15,000 shares of the Company’s previously undesignated preferred stock as Series A
Preferred Stock. The Series A Preferred Stock is not subject to increase without the written consent of the holders of a majority of the
then outstanding shares of the Series A Preferred Stock voting as a separate class (each, a “Series A Holder” and collectively,
the “Series A Holders”). Each share of Series A Preferred Stock shall have a par value of $0.0001 per share and a stated
value equal to $1,000 (the “Series A Stated Value”). The shares of Series A Preferred Stock previously issued on November
7, 2022 and the shares of Series A Preferred Stock issued in the Private Placement shall have identical terms and
include the terms as set forth below.
Dividends. The Series A
Holders are entitled to receive, and the Company shall pay, dividends on shares of Series A Preferred Stock equal (on an as-if-converted-to-common-stock
basis, disregarding for such purpose any conversion limitations set forth in the Series A Certificate of Designations) to and in the same
form as dividends actually paid on shares of the Company’s common stock when, as and if such dividends are paid on shares of the
common stock. No other dividends shall be paid on shares of Series A Preferred Stock. The Company will not pay any dividends on its common
stock unless the Company simultaneously complies with the terms set forth in the Series A Certificate of Designation.
Liquidation. Upon any dissolution,
liquidation or winding-up of the Company, whether voluntary or involuntary (a “Liquidation”), the Series A Holders
will be entitled to receive out of the assets available for distribution to the stockholders, (i) after and subject to the payment in
full of all amounts required to be distributed to the holders of another class or series of stock of the Company ranking on liquidation
prior and in preference to the Series A Preferred Stock, (ii) ratably with any class or series of stock ranking on liquidation on parity
with the Series A Preferred Stock and (iii) in preference and priority to the holders of the shares of the Company’s common stock,
an amount equal to 100% of the Series A Stated Value, and no more, in proportion to the full and preferential amount that all shares of
the Series A Preferred Stock are entitled to receive. The Company shall mail written notice of any Liquidation not less than twenty (20)
days prior to the payment date stated therein, to each Series A Holder.
Conversion. Each share
of Series A Preferred Stock shall be convertible, at any time and from time to time from and after the later of (i) the date of the stockholder
approval as described above, in accordance with the Nasdaq Stock Market Listing Rules, and (ii) the nine (9) month anniversary of the
Closing (the “Initial Conversion Date”), at the option of the Series A Holder, into that number of shares of common
stock (subject to the limitations set forth in Series A Certificate of Designations, determined by dividing the Stated Value of such share
of Series A Preferred Stock by the Conversion Price (as defined below)). The Series A Holders may effect conversions by providing the
Company with the form of conversion notice attached as Annex A to the Series A Certificate of Designation. The Series A Holders may convert
such shares into shares of the Company’s common stock at a conversion price per share equal to the greater of (i) one dollar ($1.00)
and (ii) ninety percent (90%) of the closing price of the Company’s common stock on Nasdaq on the day prior to receipt of a conversion
notice (collectively, the “Conversion Price”), subject to adjustment for stock splits and similar matters. In addition,
following the Initial Conversion Date, each Series A Holder agrees that it shall not be entitled to in any calendar month, sell a number
of Series A Conversion Shares into the open market in an amount exceeding more than ten percent (10%) of the number of Series A Conversion
Shares issuable upon conversion of the Series A Preferred Stock then held by such Series A Holder.
Conversion Price Adjustment:
Stock Dividends and Stock Splits.
If the Company, at any time while the Series A Preferred Stock is outstanding: (i) pays a stock dividend or otherwise makes a distribution
or distributions payable in shares of common stock on shares of common stock or any other common stock equivalents (which, for avoidance
of doubt, shall not include any shares of common stock issued by the Company upon conversion of, or payment of a dividend on, the Series
A Preferred Stock), (ii) subdivides outstanding shares of common stock into a larger number of shares, (iii) combines (including by way
of a reverse stock split) outstanding shares of common stock into a smaller number of shares, or (iv) issues, in the event of a reclassification
of shares of the common stock, any shares of capital stock of the Company, then the conversion price of the Series A Preferred Stock shall
be multiplied by a fraction of which the numerator shall be the number of shares of common stock (excluding any treasury shares of the
Company) outstanding immediately before such event, and of which the denominator shall be the number of shares of common stock outstanding
immediately after such event. Any of the foregoing adjustments shall become effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the
case of a subdivision, combination or re-classification.
Fundamental Transaction.
If, at any time while the Series A Preferred Stock is outstanding, (i) the Company, directly or indirectly, in one or more related transactions
effects any merger or consolidation of the Company with or into another individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind (a “Person”), (ii) the Company (and all of its subsidiaries, taken as a whole), directly
or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of
its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether
by the Company or another Person) is completed pursuant to which holders of the Company’s common stock are permitted to sell, tender
or exchange their shares for other securities, cash or property and has been accepted by the holders of fifty percent (50%) or more of
the outstanding common stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the common stock or any compulsory share exchange pursuant to which the common stock is effectively
converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related
transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than fifty percent (50%)
of the outstanding shares of common stock (not including any shares of common stock held by the other Person or other Persons making or
party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business
combination) (each a “Fundamental Transaction”), then, the Series A Holder shall have the right to receive, for each
conversion share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction
(without regard to any limitation set forth in the Series A Certificate of Designation on the conversion of the Series A Preferred Stock),
the number of shares of common stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation,
and/or any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction
by a holder of the number of shares of common stock for which the Series A Preferred Stock is convertible immediately prior to such Fundamental
Transaction (without regard to the limitations set forth in the Series A Certificate of Designation on the conversion of the Series A
Preferred Stock). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply
to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of common stock in such
Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate Consideration. If holders of common stock are given any choice
as to the securities, cash or property to be received in a Fundamental Transaction, then the Series A Holder shall be given the same choice
as to the Alternate Consideration it receives upon such Fundamental Transaction.
Voting Rights. The Series
A Holders will have no voting rights, except as otherwise required by the Delaware General Corporation Law. Notwithstanding the foregoing,
as long as any shares of Series A Preferred Stock are outstanding, the Company shall not, without the affirmative vote of the holders
of a majority of the then outstanding shares of Series A Preferred Stock, voting as a separate class, (i) alter or change adversely the
powers, preferences or rights given to the Series A Preferred Stock in the Series A Certificate of Designation, (ii) increase the number
of authorized shares of Series A Preferred Stock, (iii) authorize or issue an additional class or series of capital stock that ranks senior
to the Series A Preferred Stock with respect to the distribution of assets on liquidation or (iv) enter into any agreement with respect
to any of the foregoing.
Fractional Shares. No fractional
shares or scrip representing fractional shares shall be issued upon the conversion of the Series A Preferred Stock. As to any fraction
of a share of Company common stock which a Series A Holder would otherwise be entitled to upon such conversion, the Company will, at its
election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion
Price or round up to the next whole share. Notwithstanding the foregoing, nothing shall prevent any Series A Holder from converting fractional
shares of Series A Preferred Stock.
A copy of the Series A Certificate of Designation
is attached hereto as Exhibit 3.1 and incorporated herein by reference. The foregoing description of the Series A Certificate of Designation
is qualified in its entirety by reference to Exhibit 3.1 attached hereto.
Item 7.01 Regulation FD Disclosure.
In connection with the Private
Placement, the Company issued a press release on December 14, 2022. The full text of the press release
issued in connection with the Private Placement is being furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated
herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
| Exhibit No. |
|
Description of Exhibit |
| 2.1 |
|
Membership Interest Purchase Agreement, dated November 7, 2022, by and among the Registrant, Laboratory Services MSO, LLC, SCBC Holdings LLC, Avalon Laboratory Services, Inc., The Zoe Family Trust, Bryan Cox and Sarah Cox (incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed on November 8, 2022). |
| 3.1 |
|
Certificate of Designation of Preferences, Rights and Limitations of the Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed on November 8, 2022). |
| 10.1 |
|
Form of Securities Purchase Agreement for the purchase of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed on November 8, 2022). |
| 99.1 |
|
Press Release issued by the Registrant, dated December 14, 2022. |
| 104 |
|
Cover Page Interactive Date File (embedded within the Inline XRBL document). |
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. |
| |
|
| Date: December 14, 2022 |
By: |
/s/ Luisa Ingargiola |
| |
|
Name: |
Luisa Ingargiola |
| |
|
Title: |
Chief Financial Officer |
