UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 14C
Information Statement Pursuant to Section 14 (c)
of the Securities Exchange Act of 1934
Filed by the Registrant ☐
Filed by a party other than the Registrant ☐
Check the appropriate box:
| ☒ |
Preliminary Information
Statement |
| ☐ |
Confidential, for Use of the
Commission Only (as permitted by Rule 14c-5(d)(2)) |
| ☐ |
Definitive Information
Statement |
AVALON
GLOBOCARE CORP.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
| ☐ |
Fee paid previously with
preliminary materials. |
| ☐ |
Fee computed on table in exhibit
required by Item 25(b) of Schedule 14A (17 CFR 240.14a-101) per
Item 1 of this Schedule and Exchange Act Rules 14c-5(g) and
0-11 |
AVALON GLOBOCARE CORP.
4400 Route 9, Suite 3100
Freehold, New Jersey 07728
NOTICE OF ACTION BY
WRITTEN CONSENT OF MAJORITY STOCKHOLDERS
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
THIS IS NOT A NOTICE OF A MEETING OF STOCKHOLDERS AND NO
STOCKHOLDERS’
MEETING WILL BE HELD TO CONSIDER ANY MATTER DESCRIBED
HEREIN.
To the Stockholders of Avalon GloboCare Corp.:
The accompanying Information Statement is being furnished to the
holders (“Stockholders”) of shares of the common stock, par value
$0.0001 per share (“Common Stock”), of Avalon GloboCare Corp., a
Delaware corporation (the “Company”). The Board of Directors of the
Company (the “Board”) is not soliciting your proxy and you are
requested not to send us a proxy. The purpose of this Information
Statement is to notify you that on October 19, 2022, the Company
received: (i) written consent in lieu of a meeting of Stockholders
(the “Written Consent”) from holders of shares of common stock
representing approximately 61.4% of the total issued and
outstanding shares of common stock of the Company and (ii) an
unanimous written consent of the Board to approving the granting of
discretionary authority to the Board, at any time for a period of
12 months after the date of the Written Consent, to authorize the
adoption of an amendment to the Company’s Amended and Rested
Certificate of Incorporation, as amended (the “Certificate of
Incorporation”), to effect a reverse stock split of the Company’s
common stock at a ratio between 1 for 2 to 1 for 10, such ratio to
be determined by the Board, or to determine not to proceed with the
reverse stock split (the “Reverse Stock Split” or the
“Action”).
The Reverse Stock Split is more fully described in the accompanying
Information Statement. The Written Consent was in accordance with
Delaware General Corporation Law (“DGCL”), our Amended and Restated
Certificate of Incorporation and our bylaws, each of which permits
that any action that may be taken at a meeting of the stockholders
may also be taken by the written consent of the holders of a
majority of the common stock to approve the action at a meeting.
The accompanying Information Statement is being furnished to all
our stockholders in accordance with Section 14C of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and the
rules promulgated by the U.S. Securities and Exchange Commission
thereunder, solely for the purpose of informing our Stockholders of
the action taken by the Written Consent before they become
effective. We are furnishing this Information Statement to
Stockholders in satisfaction of the notice requirement under
Section 228 of the DGCL. No additional action will be undertaken by
us with respect to the receipt of written consents, and no
dissenters’ rights with respect to the receipt of the written
consents are afforded to Stockholders as a result of the approval
of the Actions.
Pursuant to Rule 14c-2 promulgated under the Exchange Act, the
earliest date the Action may be taken, including the filing of an
amendment implementing the Reverse Stock Split (the “Reverse Stock
Split Amendment”) with the Secretary of State of the State of
Delaware and become effective is twenty (20) calendar days after
this Information Statement is first sent to Stockholders. A form of
the Reverse Stock Split Amendment is attached to this Information
Statement as Annex A. This is not a notice of a special meeting of
stockholders and no stockholder meeting will be held to consider
any matter which is described herein.
THE ACCOMPANYING INFORMATION STATEMENT IS BEING MAILED TO
STOCKHOLDERS ON OR ABOUT *, 2022. WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
| |
By
Order of the Board of Directors |
| |
|
| *,
2022 |
/s/ Wenzhao
Lu |
| |
Wenzhao Lu |
| |
Chairman of the Board of Directors |
AVALON GLOBOCARE CORP.
4400 Route 9, Suite 3100
Freehold, New Jersey 07728
INFORMATION STATEMENT
*, 2022
Action by Written Consent of Majority Stockholders
WE ARE NOT ASKING YOU FOR A
PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY
GENERAL INFORMATION
In this Information Statement we refer to Avalon GloboCare Corp., a
Delaware corporation, as the “Company,” “we,” “us,” or “our.”
This Information Statement is being furnished by the Board of
Directors of the Company (the “Board”), to inform the holders
(“Stockholders”) of common stock, par value $0.0001 per share (the
“Common Stock”), as of October 19, 2022, of action already approved
by written consent (the “Written Consent”) of holders of shares of
common stock representing approximately 61.4% of the total issued
and outstanding shares of common stock of the Company on October
19, 2022.
Action by Written Consent
The following action was approved by holders of shares of common
stock representing approximately 61.4% of the total issued and
outstanding shares of common stock of the Company pursuant to the
Written Consent, in lieu of a special meeting:
| |
● |
the
granting of discretionary authority to the Board, at any time for a
period of 12 months after the date of the Written Consent, to
authorize the adoption of an amendment to the Company’s Amended and
Restated Certificate of Incorporation, as amended (the “Certificate
of Incorporation”), to effect a reverse stock split of the
Company’s common stock at a ratio between 1 for 2 to 1 for 10, such
ratio to be determined by the Board, or to determine not to proceed
with the reverse stock split (the “Reverse Stock
Split”). |
This Information Statement is being furnished to all of our
Stockholders in accordance with Section 14C of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and the
rules promulgated by the U.S. Securities and Exchange Commission
(the “SEC”) thereunder, solely for the purpose of informing our
Stockholders of the Actions taken by the Written Consent before
they become effective.
The Board has fixed the close of business on October 19, 2022, as
the record date (the “Record Date”) for the determination of
Stockholders who are entitled to receive this Information
Statement. This Information Statement will be mailed on or about
* , 2022 to Stockholders of Record as of the Record
Date.
Pursuant to the Written Consent, holders of shares of common stock
representing approximately 61.4% of the total issued and
outstanding shares of common stock of the Company approved the
Reverse Stock Split.
The Actions were unanimously approved by our Board on October 19,
2022.
This Information Statement contains a brief summary of the material
aspects of the Actions approved by the Board and the holders of
shares of common stock representing approximately 61.4% of the
total issued and outstanding shares of common stock of the
Company.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO
SEND A PROXY
ABOUT THE INFORMATION STATEMENT
What is the Purpose of the Information Statement?
Section 228 of the DGCL provides that the written consent of the
holders of outstanding shares of common stock having not less than
the minimum number of votes which would be necessary to authorize
or take such action at a meeting at which all shares entitled to
vote thereon were present and voted can approve an action in lieu
of conducting a special stockholders’ meeting convened for the
specific purpose of such action. The DGCL, however, requires that
in the event an action is approved by written consent, a company
must provide prompt notice of the taking of any corporate action
without a meeting to the stockholders of record who have not
consented in writing to such action and who, if the action had been
taken at a meeting, would have been entitled to notice of the
meeting if the record date for such meeting had been the date that
written consents signed by a sufficient number of holders to take
the action were delivered to a company.
This Information Statement is being furnished to you pursuant to
Section 14C of the Securities Exchange Act of 1934, as amended, to
notify our Stockholders of certain corporate actions taken by the
holders of shares of common stock representing approximately 61.4%
of the total issued and outstanding shares of common stock of the
Company pursuant to the Written Consent. In order to eliminate the
costs and management time involved in obtaining proxies and in
order to effect the Actions as early as possible to accomplish the
purposes hereafter described, the Board elected to seek the written
consent of the holders of shares of common stock representing
approximately 61.4% of the total issued and outstanding shares of
common stock of the Company to reduce the costs and implement the
Actions in a timely manner.
Who is Entitled to Notice?
Each outstanding share of Common Stock as of record on the Record
Date is entitled to notice of the Actions to be taken pursuant to
the Written Consent.
What Vote is Required to Approve the Actions?
As of the Record Date, there were 99,984,439 shares of our Common
Stock issued and outstanding. There are no shares of preferred
stock outstanding. Pursuant to Section 228 of the DGCL, at least a
majority of the common stock of the Company, or at least 50,092,204
votes, are required to approve the Action by written consent.
Our majority stockholders consist of our Chairman, Wenzhao Lu, our
Chief Executive Officer and a director, David Jin, our Chief
Operating Officer and a director, Meng Li and a director, Yancen Lu
(collectively, the “Majority Stockholders”). Yancen Lu holds his
shares through Emerald Vest LLC. As of the Record Date, the
Majority Stockholders held 61,437,869 shares of Common Stock (and
therefore having 61.4% of all outstanding common stock), have voted
in favor of the Actions thereby satisfying the requirement that at
least a majority of the common stock vote in favor of a corporate
action by written consent. Therefore, no other stockholder consents
will be obtained in connection with this Information Statement.
|
Name of Majority Stockholders |
|
Number of Shares of Common Stock that Voted in Favor of the
Actions |
|
|
Percentage of Common Stock that Voted in Favor of the Actions |
|
|
Wenzhao Lu |
|
|
35,837,869 |
|
|
|
35.8 |
% |
| David Jin |
|
|
15,450,000 |
|
|
|
15.4 |
% |
| Meng Li |
|
|
5,150,000 |
|
|
|
5.2 |
% |
| Emerald Vest
LLC (1) |
|
|
5,000,000 |
|
|
|
5.0 |
% |
| Total |
|
|
61,437,869 |
|
|
|
61.4 |
% |
| (1) |
Yancen
Lu, a director of the Company, is the sole member and manager of
Emerald Vest LLC. |
Do I have appraisal rights?
Neither the DGCL nor our Certificate of Incorporation or bylaws
provide our Stockholders with appraisal rights in connection with
any of the Actions discussed in this Information Statement.
ACTIONS TO BE TAKEN
This Information Statement contains a brief summary of the material
aspects of the Action approved by the Board and the Majority
Stockholders.
ACTION 1
THE GRANTING OF DISCRETIONARY AUTHORITY TO THE BOARD, AT ANY
TIME FOR A PERIOD OF 12 MONTHS AFTER THE DATE OF THE WRITTEN
CONSENT, TO AUTHORIZE THE ADOPTION OF AN AMENDMENT TO THE COMPANY’S
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION (THE “CERTIFICATE
OF INCORPORATION”), TO EFFECT A REVERSE STOCK SPLIT OF THE
COMPANY’S COMMON STOCK AT A RATIO BETWEEN 1 FOR 2 TO 1 FOR 10, SUCH
RATIO TO BE DETERMINED BY THE BOARD, OR TO DETERMINE NOT TO PROCEED
WITH THE REVERSE STOCK SPLIT
The Board approved a resolution to authorize the adoption of an
amendment to the Certificate of Incorporation to effect a reverse
stock split of the Common Stock at any time during the next 12
months at a ratio between 1:2 to 1:10, such ratio to be determined
by the Board, or to determine not to proceed with the Reverse Stock
Split (the “Reverse Stock Split”).
PLEASE NOTE THAT THE REVERSE STOCK SPLIT WILL NOT CHANGE YOUR
PROPORTIONATE EQUITY INTERESTS IN THE COMPANY, EXCEPT AS MAY RESULT
FROM THE TREATMENT OF FRACTIONAL SHARES, AS EXPLAINED BELOW UNDER
THE CAPTION “FRACTIONAL SHARES.”
PLEASE NOTE THAT THE REVERSE STOCK SPLIT WILL HAVE THE EFFECT OF
SUBSTANTIALLY INCREASING THE NUMBER OF SHARES THE COMPANY WILL BE
ABLE TO ISSUE TO NEW OR EXISTING STOCKHOLDERS BECAUSE THE NUMBER OF
AUTHORIZED SHARES MAY REMAIN THE SAME WHILE THE NUMBER OF SHARES
ISSUED AND OUTSTANDING WILL BE REDUCED.
Reasons for Reverse Stock Split
To maintain our listing on The NASDAQ Capital
Market. By potentially increasing our stock price, the
Reverse Stock Split would reduce the risk that our common stock
could be delisted from The NASDAQ Capital Market (“Nasdaq”).
To continue our listing on The NASDAQ Capital Market, we must
comply with NASDAQ Marketplace Rules, which requirements include a
minimum bid price of $1.00 per share. On February 9, 2022, the
Company received a letter from the Listing Qualifications
Department (the “Staff”) of Nasdaq therein indicating that, based
upon the closing bid price of the Company’s common stock for the
prior 30 consecutive business days, the Company was not in
compliance with the requirement to maintain a minimum bid price of
$1.00 per share for continued listing on Nasdaq, as set forth in
Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price
Requirement”). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the
Company was granted 180 calendar days, or until August 8, 2022, to
regain compliance. On August 9, 2022, the Company received a second
letter from the Staff advising that the Company had been granted an
additional 180 calendar days, or to February 6, 2023, to regain
compliance with the Minimum Bid Price Requirement, in accordance
with Nasdaq Listing Rule 5810(c)(3)(A).
To regain compliance, our common stock must close at or above the
$1.00 minimum bid price for at least 10 consecutive days or more at
the discretion of NASDAQ. If we do not regain compliance by
February 6, 2023, NASDAQ will notify us that our common stock will
be subject to delisting. In the event that we are delisted from
NASDAQ, our common stock may be delisted and trade on the OTC
Markets or other small trading markets, such as the pink
sheets.
The Board of Directors has considered the potential harm to us and
our stockholders should NASDAQ delist our common stock. Delisting
could adversely affect the liquidity of our common stock since
alternatives, such as the OTC Markets are generally considered to
be less efficient markets. An investor likely would find it less
convenient to sell, or to obtain accurate quotations in seeking to
buy, our common stock on an over-the-counter market. Many investors
likely would not buy or sell our common stock due to difficulty in
accessing over-the-counter markets, policies preventing them from
trading in securities not listed on a national exchange or for
other reasons.
The Board of Directors believes that the proposed Reverse Stock
Split is a potentially effective means for us to maintain
compliance with the $1.00 minimum bid requirement and to avoid, or
at least mitigate, the likely adverse consequences of our common
stock being delisted from NASDAQ by producing the immediate effect
of increasing the bid price of our common stock.
To potentially improve the marketability and liquidity of our
common stock. Our Board of Directors believes that the
increased market price per share of our common stock expected as a
result of implementing a Reverse Stock Split could improve the
marketability and liquidity of our common stock and encourage
interest and trading in our common stock. A Reverse Stock Split
could allow a broader range of institutions to invest in our common
stock (namely, funds that are prohibited from buying stocks whose
price is below a certain threshold), potentially increasing trading
volume and liquidity of our common stock. A Reverse Stock Split
could help increase analyst and broker interest in our common stock
as their internal policies might discourage them from following or
recommending companies with low stock prices. Because of the
trading volatility often associated with low-priced stocks, many
brokerage houses and institutional investors have internal policies
and practices that either prohibit them from investing in
low-priced stocks or tend to discourage individual brokers from
recommending low-priced stocks to their customers. Some of those
policies and practices may make the processing of trades in
low-priced stocks economically unattractive to brokers.
Additionally, because brokers’ commissions on low-priced stocks
generally represent a higher percentage of the stock price than
commissions on higher-priced stocks, a low average price per share
of common stock can result in individual stockholders paying
transaction costs representing a higher percentage of their total
share value than would be the case if the share price were
higher.
Criteria to be Used for Determining Whether to Implement Reverse
Stock Split
In determining whether to implement the Reverse Stock Split and
which Reverse Stock Split ratio to implement, if any, our Board of
Directors may consider, among other things, various factors, such
as:
| |
● |
the
historical trading price and trading volume of our common
stock; |
| |
● |
the
then-prevailing trading price and trading volume of our common
stock and the expected impact of the Reverse Stock Split on the
trading market for our common stock in the short- and
long-term; |
| |
● |
the
continued listing requirements for our common stock on The NASDAQ
Stock Market; |
| |
● |
which
Reverse Stock Split ratio would result in the least administrative
cost to us; and |
| |
● |
prevailing
general market and economic conditions. |
Implementation and Effects of the Reverse Stock
Split
If the Board elects to implement a Reverse Stock Split, which the
Board may choose not to do at its discretion, the Reverse Stock
Split would have the following effects:
| |
● |
the
number of shares of the Common Stock owned by each Stockholder will
automatically be reduced proportionately based on the reverse stock
split ratio determined by the Board; |
| |
|
|
| |
● |
a
proportionate adjustment will be made to the par value of the
Common Stock, such that the stated value of the Company’s capital
will be reduced; |
| |
|
|
| |
● |
the
number of shares of the Common Stock issued and outstanding will be
reduced proportionately; |
| |
|
|
| |
● |
proportionate
adjustments will be made to the per share exercise price and the
number of shares issuable upon the exercise of all outstanding
options and warrants entitling the holders thereof to purchase
shares of the Common Stock, which will result in approximately the
same aggregate price being required to be paid for such options or
warrants upon exercise of such options or warrants immediately
preceding the reverse stock split. |
The table set forth below illustrates the Company’s hypothetical
capitalization subsequent to a reverse stock split in varying
ratios with the ratio of 1-for-10 being the maximum ratio which may
be effectuated by the Board pursuant to the Written Consent. This
hypothetical model is based on the total number of shares issued
and outstanding as of the Record Date and gives effect to the
Reverse Stock Split, as well as shares of Common Stock issued and
outstanding and issuable upon the exercise of options and
warrants.
| Hypothetical
Reverse Stock Split Ratio |
|
Shares of common stock issued and outstanding following Reverse
Stock Split |
|
|
Shares of common stock issued and outstanding and issuable upon the
exercise of options and warrants |
|
|
Shares of common stock available for future issuance following
Reverse Stock Split |
|
| 1: |
|
|
2 |
|
|
|
49,992,220 |
|
|
|
54,684,544 |
|
|
|
435,315,456 |
|
| 1: |
|
|
2.5 |
|
|
|
39,993,776 |
|
|
|
43,747,635 |
|
|
|
446,252,365 |
|
| 1: |
|
|
5 |
|
|
|
19,996,888 |
|
|
|
21,873,817 |
|
|
|
468,126,183 |
|
| 1: |
|
|
7.5 |
|
|
|
13,331,259 |
|
|
|
14,582,545 |
|
|
|
475,417,455 |
|
| 1: |
|
|
10 |
|
|
|
9,998,444 |
|
|
|
10,936,909 |
|
|
|
479,063,091 |
|
The Reverse Stock Split will be effected simultaneously for all of
the Common Stock and the reverse split ratio will be the same for
all of the Common Stock. The Reverse Stock Split will affect all of
the Stockholders uniformly and will not affect any stockholder’s
percentage ownership interests in the Company, except to the extent
that the Reverse Stock Split results in any of the Company’s
stockholders owning a fractional share. We will not issue
fractional shares in connection with the Reverse Stock Split.
Instead, the Company will issue one full share of the post-reverse
split common stock to any stockholder of record who would have been
entitled to receive a fractional share as a result of the process.
The Company will continue to be subject to the periodic reporting
requirements of the Securities and Exchange Act of 1934, as
amended.
The Board may decide not to proceed with the Reverse Stock Split
for various reasons including general stock market/business
conditions, or if it were to enter into a strategic transaction or
financing.
Potential for Significant Dilution of Equity Interest
The Reverse Stock Split will not affect the rights of Stockholders
or any Stockholder’s proportionate equity interest in the Company,
subject to the treatment of fractional shares. At this time the
Company has no plans to issue such additional shares, other than
(i) as required for existing and additional financings, (ii) for
exercise of outstanding options and (iii) as compensation and
incentives to employees and directors under the Company’s existing
stock incentive plans and other arrangements that may be
undertaken.
The future issuance of such authorized shares may have the effect
of diluting the Company’s earnings per share and book value per
share, as well as the stock ownership and voting rights of the
current holders of outstanding shares of the Common Stock. The
effective increase in the number of authorized but unissued shares
of the Common Stock may be construed as having an anti-takeover
effect by permitting the issuance of shares to purchasers who might
oppose a hostile takeover bid or oppose any efforts to amend or
repeal certain provisions of the Certificate of Incorporation or
the Company’s By-laws.
Fractional Shares
We will not issue fractional shares in connection with the Reverse
Stock Split. Instead, the Company will issue one full share of the
post-reverse split common stock to any stockholder of record who
would have been entitled to receive a fractional share as a result
of the process.
Authorized Shares
As of the Record Date, we had 490,000,000 shares of Common Stock
authorized, 99,984,439 shares of our Common Stock issued and
outstanding, 7,925,000 shares of our Common Stock reserved for
issuance pursuant to stock option agreements and 1,239,647 shares
of our Common Stock reserved for issuance pursuant to warrant
agreements. As a result of the reverse stock split, the number of
shares remaining available for future issuance under the Company’s
authorized pool of Common Stock would increase.
These authorized but unissued shares of common and preferred stock
would be available for issuance from time to time for corporate
purposes such as raising additional capital, acquisitions of
businesses or assets and sales of stock or securities convertible
into Common Stock. The Company believes that the availability of
the authorized but unissued shares will provide it with the
flexibility to meet business needs as they arise, to take advantage
of favorable opportunities and to respond to a changing corporate
environment. If the Company issues additional shares, the ownership
interests of holders of the Common Stock may be diluted. Also, if
the Company issues shares of its preferred stock, the issued shares
may have rights, preferences and privileges senior to those of its
Common Stock.
Other Effects on Issued and Outstanding Shares
If the Reverse Stock Split is implemented, the rights and
preferences of the issued and outstanding shares of the Common
Stock would remain the same after the Reverse Stock Split. Each
share of Common Stock issued pursuant to the Reverse Stock Split
would be fully paid and non-assessable.
In addition, the Reverse Stock Split would result in some
stockholders owing “odd-lots” of fewer than 100 shares of the
Common Stock. Brokerage commissions and other costs of transactions
in odd-lots are generally higher than the costs of transactions in
“round-lots” of even multiples of 100 shares.
Procedure for Effecting Reverse Stock Split and Exchange of
Stock Certificates
If the Board chooses to effect the Reverse Stock Split, it would be
implemented by filing the Certificate of Amendment to the Restated
Charter with the Secretary of State of the State of Delaware. The
Reverse Stock Split will become effective at the time specified in
the Certificate of Amendment, which will most likely be immediately
after the filing of the Certificate of Amendment and which the
Company refers to as the “effective time.” Beginning at the
effective time, each certificate representing shares of the Common
Stock before the reverse stock split will automatically be deemed
for all corporate purposes to evidence ownership based on the
reverse stock split ratio, between 1-for-2 to 1-for-10 shares of
the Common Stock after the Reverse Stock Split. All shares issuable
upon exercise of outstanding options or other securities will
automatically be adjusted.
As soon as practicable after the effective time, stockholders will
be notified that the Reverse Stock Split has been effected. The
Company expects that its transfer agent will act as exchange agent
for purposes of implementing the exchange of stock certificates.
Stockholders of record will receive a letter of transmittal
requesting that they surrender the stock certificates they
currently hold for stock certificates reflecting the adjusted
number of shares as a result of the Reverse Stock Split. Persons
who hold their shares in brokerage accounts or “street name” will
not be required to take any further actions to effect the exchange
of their certificates. No new certificates will be issued to a
stockholder until the stockholder has surrendered the stockholder’s
outstanding certificate(s) together with the properly completed and
executed letter of transmittal to the exchange agent. Until
surrender, each certificate representing shares before the Reverse
Stock Split will continue to be valid and will represent the
adjusted number of shares rounded down to the nearest whole share.
Stockholders should not destroy any stock certificate and should
not submit any certificates until they receive a letter of
transmittal.
Federal Income Tax Consequences of the Reverse Stock
Split
The following is a summary of certain material United States
federal income tax consequences of the Reverse Stock Split. It does
not purport to be a complete discussion of all the possible United
States federal income tax consequences of the Reverse Stock Split
and is included for general information only. Further, it does not
address any state, local or foreign income or other tax
consequences. This discussion does not address the tax consequences
to holders that are subject to special tax rules, such as banks,
insurance companies, regulated investment companies, personal
holding companies, foreign entities, nonresident alien individuals,
broker-dealers and tax-exempt entities. The discussion is based on
the provisions of the United States federal income tax law as of
the date hereof, which is subject to change retroactively as well
as prospectively. This summary also assumes that the shares of our
Common Stock held by our Stockholders before the Reverse Stock
Split were, and the shares of our Common Stock held after the
Reverse Stock Split will be, held as “capital assets,” as defined
in the Internal Revenue Code of 1986, as amended (i.e., generally,
property held for investment). The tax treatment of a Stockholder
may vary depending upon the particular facts and circumstances of
such Stockholder. Each stockholder is urged to consult with such
Stockholder’s own tax advisor with respect to the tax consequences
of the Reverse Stock Split.
Other than the cash payments for fractional shares discussed below,
no gain or loss will be recognized by a Stockholder upon such
Stockholder’s exchange of shares held before the Reverse Stock
Split for shares after the Reverse Stock Split. The aggregate tax
basis of the shares of the Common Stock received in the Reverse
Stock Split (including any fraction of a share deemed to have been
received) will be the same as the Stockholder’s aggregate tax basis
in the shares of our Common Stock exchanged therefor. In general,
Stockholders who receive cash instead of their fractional share
interests in the shares of our Common Stock as a result of the
Reverse Stock split will recognize a gain or loss based on their
adjusted basis in the fractional share interests redeemed. The
Stockholder’s holding period for the shares of our Common Stock
after the Reverse Stock Split will include the period during which
the Stockholder held the shares of our Common Stock surrendered in
the Reverse Stock Split.
This summary of certain material United States federal income tax
consequence of the Reverse Stock Split is not binding on the
Internal Revenue Service, the Company or the courts. Accordingly,
each Stockholder should consult with his or her own tax advisor
with respect to all of the potential tax consequences to him or her
of the Reverse Stock Split.
INTEREST OF CERTAIN PERSONS IN OR OPPOSITION TO MATTERS TO BE
ACTED UPON
As disclosed under the section entitled “Action by Written
Consent,” the Board and Majority Stockholders of the Company
further approved the Actions. The Company’s officers and directors
hold common stock that provides them with voting control of the
Company.
As of the Record Date our officers and directors have voting
control over our common shares in which they own 61,437,869 shares
of common stock or 61.4% of the total issued and outstanding shares
of common stock.
Except the foregoing and disclosed elsewhere in this Information
Statement, since January 1, 2021, being the commencement of our
last financial year, none of the following persons has any
substantial interest, direct or indirect, by security holdings or
otherwise in any matter to be acted upon:
| 1. |
Any
director or officer of our corporation; |
| |
|
| 2. |
Any
proposed nominee for election as a director of our corporation;
and |
| |
|
| 3. |
Any
associate or affiliate of any of the foregoing persons. |
The shareholdings of our directors and officers are listed below in
the section entitled “Security Ownership of Certain Beneficial
Owners and Management.”
OUTSTANDING VOTING SECURITIES
As of the Record Date related to the Written Consent, the Company
had 99,984,439 shares of Common Stock issued and outstanding. Each
share of outstanding Common Stock is entitled to one vote on
matters submitted for Stockholder approval.
On October 19, 2022, the holders of 61.4% of the common stock, or
61,437,869 shares of common stock executed and delivered to the
Company the Written Consent approving the Actions set forth herein.
Since the Actions have been approved by the Majority Stockholders,
no proxies are being solicited with this Information Statement.
The DGCL provides in substance that unless the Company’s
certificate of incorporation provides otherwise, stockholders may
take action without a meeting of stockholders and without prior
notice if a consent or consents in writing, setting forth the
action so taken, is signed by the holders of outstanding stock
having not less than the minimum number of votes that would be
necessary to take such action at a meeting at which all shares
entitled to vote thereon were present.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information known to us
regarding beneficial ownership of shares of our Common Stock as of
the Record Date by:
| |
● |
each
of our directors; |
| |
|
|
| |
● |
each
of our named executive officers; |
| |
|
|
| |
● |
all
of our executive officers and directors as a group; and |
| |
|
|
| |
● |
each
person, or group of affiliated persons, known to us to be the
beneficial owner of more than 5% of our outstanding shares of
Common Stock. |
Beneficial ownership is determined in accordance with the rules and
regulations of the SEC and includes voting and investment power
with respect to the securities. In computing the number of shares
beneficially owned by a person and the percentage ownership of that
person, shares of Common Stock subject to options or warrants held
by that person that are currently exercisable or exercisable within
60 days of the Record Date are deemed outstanding. Such shares,
however, are not deemed outstanding for purposes of computing the
percentage ownership of any other person. To our knowledge, except
as indicated in the footnotes to this table and subject to
community property laws where applicable, the persons named in the
table have sole voting and investment power with respect to all
shares of our Common Stock shown opposite such person’s name. The
percentage of beneficial ownership is based on 99,984,439 shares of
our Common Stock outstanding as of the Record Date. Unless
otherwise noted below, the address of the persons and entities
listed in the table is c/o Avalon GloboCare Corp., 4400 Route 9,
Suite 3100, Freehold, New Jersey 07728.
The beneficial owners of all issued shares have voting rights over
such shares, whether or not such owners have dispositive powers
with respect to the shares, and such shares are included in each
person’s beneficial ownership amount. For the avoidance of doubt,
if a beneficial owner does not have dispositive powers with respect
to certain shares, each such person maintains voting control over
these shares, and such shares are included in the determination the
person’s beneficial ownership amount.
|
Name of Beneficial Owner (1) |
|
Common Stock
Beneficially
Owned |
|
|
Percentage of
Common Stock
(2) |
|
|
Wenzhao Lu*(3) |
|
|
37,337,869 |
|
|
|
34.8 |
% |
| David Jin,
MD, PhD*(4) |
|
|
16,000,000 |
|
|
|
14.9 |
% |
| Meng
Li*(5) |
|
|
5,600,000 |
|
|
|
5.2 |
% |
| Luisa
Ingargiola*(6) |
|
|
2,400,000 |
|
|
|
2.2 |
% |
| Yancen
Lu*(7) |
|
|
5,460,000 |
|
|
|
5.1 |
% |
| Steven A.
Sanders*(8) |
|
|
290,000 |
|
|
|
** |
|
| Wilbert J.
Tauzin II* (9) |
|
|
720,000 |
|
|
|
** |
|
| William B.
Stilley III*(10) |
|
|
290,000 |
|
|
|
** |
|
| Tevi
Troy*(11) |
|
|
290,000 |
|
|
|
** |
|
| Yue
(Charles) Li*(12) |
|
|
250,000 |
|
|
|
** |
|
| All officers and directors as a
group (ten persons) |
|
|
68,637,869 |
|
|
|
64.0 |
% |
| |
|
|
|
|
|
|
|
|
| 5% or
greater beneficial owner |
|
|
|
|
|
|
|
|
| FSUNSHINE
TRADING PTE LTD |
|
|
5,736,452 |
|
|
|
5.4 |
% |
|
* |
Officer and/or director of our
company. |
| (1) |
Except as otherwise indicated, the
address of each beneficial owner is c/o Avalon GloboCare Corp.,
4400 Route 9 South, Suite 3100, Freehold, New Jersey 07728. |
| (2) |
Applicable percentage ownership is
based on 99,984,439 shares of common stock outstanding as of the
Record Date, together with securities exercisable or convertible
into shares of common stock within 60 days of the Record Date for
each stockholder. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission
and generally includes voting or investment power with respect to
securities. Shares of common stock that are currently
exercisable or exercisable within 60 days of the Record Date are
deemed to be beneficially owned by the person holding such
securities for the purpose of computing the percentage of ownership
of such person, but are not treated as outstanding for the purpose
of computing the percentage ownership of any other person. |
| (3) |
Wenzhao Lu holds (i) 35,837,869 shares of
common stock and (ii) 1,500,000 vested options to acquire 1,500,000
shares of common stock of our company. |
| (4) |
David Jin holds (i) 15,450,000 shares of
common stock and (ii) 550,000 vested options to acquire 550,000
shares of common stock of our company. |
| (5) |
Meng Li holds (i) 5,150,000 shares of
common stock and (ii) 450,000 vested options to acquire 450,000
shares of common stock of our company. |
| (6) |
Represents 2,400,000 vested options to
acquire 2,400,000 shares of common stock of our
company. |
| (7) |
Yancen Lu holds (i) 5,000,000 shares of
common stock and (ii) 460,000 vested options to acquire 460,000
shares of common stock of our company. |
| (8) |
Represents 290,000 vested options to
acquire 290,000 shares of common stock of our company. |
| (9) |
Represents 720,000 vested options to
acquire 720,000 shares of common stock of our company. |
| (10) |
Represents 290,000 vested options to
acquire 290,000 shares of common stock of our company. |
| (11) |
Represents 290,000 vested options to
acquire 290,000 shares of common stock of our company. |
| (12) |
Represents 250,000 vested options to
acquire 250,000 shares of common stock of our company. |
INFORMATION STATEMENT COSTS
The cost of delivering this Information Statement, including the
preparation, assembly and mailing of the Information Statement, as
well as the cost of forwarding this material to the beneficial
owners of our Common Stock will be borne by us. We may reimburse
brokerage firms and others for expenses in forwarding Information
Statement materials to the beneficial owners of our Common
Stock.
HOUSEHOLDING OF INFORMATION STATEMENT
Some banks, brokers and other nominee record holders may be
participating in the practice of “householding” information
statements. This means that only one copy of our information
statement may have been sent to multiple stockholders in each
household. We will promptly deliver a separate copy of either
document to any stockholder upon written or oral request to c/o
Avalon GloboCare Corp., 4400 Route 9, Suite 3100, Freehold, New
Jersey 07728. Any stockholder who wants to receive separate copies
of our Information Statement in the future, or any stockholder who
is receiving multiple copies and would like to receive only one
copy per household, should contact the stockholder’s bank, broker,
or other nominee record holder, or the stockholder may contact us
at the above address or calling Meng Li at (646) 762-4517.
| |
By
Order of the Board of Directors |
| |
|
| *
, 2022 |
/s/
Wenzhao Lu |
| |
Wenzhao
Lu |
| |
Chairman
of the Board of Directors |
| |
|
ANNEX A
FORM OF THE CERTIFICATE OF AMENDMENT
TO
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
AVALON GLOBOCARE CORP.
Avalon GloboCare Corp., a corporation organized and existing under
and by virtue of the Delaware General Corporation Law, through its
duly authorized officer and by authority of its Board of Directors,
does hereby certify that:
1. The name of the corporation (hereinafter called the
“Corporation”) is Avalon GloboCare Corp., formerly known as Global
Technologies Corp. The date of filing of the Corporation’s original
Certificate of Incorporation with the Secretary of State of the
State of Delaware was July 28, 2014.
2. The date of filing of the Amendment and Restated Certificate of
Incorporation was April 25, 2018.
2. The Board of Directors of the Corporation duly adopted
resolutions setting forth proposed amendments (the “Certificate of
Amendment”) to the Amended and Restated Certificate of
Incorporation (the “Certificate of Incorporation”), declaring said
amendments to be advisable and directing that said amendments be
submitted to the stockholders of the Corporation for consideration
thereof. The resolutions setting forth the proposed amendments are
as follows:
RESOLVED, that the Amended and Restated Certificate of
Incorporation be amended by changing Section 4.1 of Article “IV” so
that, as amended, Article IV, Section A shall be and read as
follows:
“ARTICLE IV
CAPITAL STOCK
The total number of shares of capital stock which the Corporation
shall have authority to issue is Five Hundred Million
(500,000,000), of which (i) Four Hundred Ninety Million
(490,000,000) shares shall be a class designated as common stock,
par value $0.0001 per share (the “Common Stock”), and (ii) Ten
Million (10,000,000) shares shall be a class designated as
undesignated preferred stock, par value $0.0001 per share (the
“Undesignated Preferred Stock”).
Except as otherwise provided in any certificate of designations of
any series of Undesignated Preferred Stock, the number of
authorized shares of the class of Common Stock or Undesignated
Preferred Stock may from time to time be increased or decreased
(but not below the number of shares of such class outstanding) by
the affirmative vote of the holders of a majority in voting power
of the outstanding shares of capital stock of the Corporation
irrespective of the provisions of Section 242(b)(2) of the
DGCL.
The powers, preferences and rights of, and the qualifications,
limitations and restrictions upon, each class or series of stock
shall be determined in accordance with, or as set forth below in,
this Article IV.
A. COMMON STOCK
Subject to all the rights, powers and preferences of the
Undesignated Preferred Stock and except as provided by law or in
this Certificate (or in any certificate of designations of any
series of Undesignated Preferred Stock):
(a) the holders of the Common Stock shall have the exclusive
right to vote for the election of directors of the Corporation (the
“Directors”) and on all other matters requiring stockholder action,
each outstanding share entitling the holder thereof to one vote on
each matter properly submitted to the stockholders of the
Corporation for their vote; provided , however ,
that, except as otherwise required by law, holders of Common Stock,
as such, shall not be entitled to vote on any amendment to this
Certificate (or on any amendment to a certificate of designations
of any series of Undesignated Preferred Stock) that alters or
changes the powers, preferences, rights or other terms of one or
more outstanding series of Undesignated Preferred Stock if the
holders of such affected series of Undesignated Preferred Stock are
entitled to vote, either separately or together with the holders of
one or more other such series, on such amendment pursuant to this
Certificate (or pursuant to a certificate of designations of any
series of Undesignated Preferred Stock) or pursuant to the
DGCL;
(b) dividends may be declared and paid or set apart for
payment upon the Common Stock out of any assets or funds of the
Corporation legally available for the payment of dividends, but
only when and as declared by the Board of Directors or any
authorized committee thereof; and
(c) upon the voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the net assets of the Corporation
shall be distributed pro rata to the holders of the Common
Stock.
(d) Effective at 12:01 a.m. on [ ], 202_ (the “Effective
Time”), every [ ] shares of Common Stock issued and outstanding
immediately prior to the Effective Time (“Old Common Stock”) shall
automatically be combined, without any action on the part of the
holder thereof, into one (1) validly issued, fully paid and
non-assessable share of Common Stock (“New Common Stock”), subject
to the treatment of fractional share interests as described below
(the “Reverse Stock Split”). No fractional shares of Common Stock
shall be issued in connection with the Reverse Stock Split. No
stockholder of the Corporation shall transfer any fractional shares
of Common Stock. The Corporation shall not recognize on its stock
record books any purported transfer of any fractional share of
Common Stock. A holder of Old Common Stock who otherwise would be
entitled to receive fractional shares of New Common Stock because
they hold a number of shares of Old Common Stock not evenly
divisible by the Reverse Stock Split ratio will be entitled to
receive a cash payment equal to the product obtained by multiplying
(a) the number of shares of Old Common Stock held by such holder
that would otherwise have been exchanged for such fractional share
interest, by (b) the volume weighted average price of the Old
Common Stock as reported on The Over the Counter Bulletin Board, or
other principal market of the Old Common Stock, as applicable, on
the date of the Effective Time of the Reverse Stock Split. Each
certificate that immediately prior to the Effective Time
represented shares of Old Common Stock (“Old Certificates”), shall
thereafter represent that number of shares of New Common Stock into
which the shares of Old Common Stock represented by the Old
Certificate shall have been combined.”
3. The Certificate of Amendment has been duly adopted by the
corporation’s Board of Directors and by the stockholders in
accordance with Sections 242 and 245 of the Delaware General
Corporation Law, with the approval of the corporation’s
stockholders having been given by written consent without a meeting
in accordance with Section 228 of the Delaware General Corporation
Law.
NOW, THEREFORE, the Corporation has caused this Certificate of
Amendment to be signed this ____ day of ____, 2022.
| |
AVALON
GLOBOCARE CORP. |
| |
|
|
| |
By: |
|
| |
Name: |
|
| |
Title: |
|
A-2
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