Quarterly report pursuant to Section 13 or 15(d)

Subsequent Events

Subsequent Events

6 Months Ended

Jun. 30, 2022

NOTE 16 – SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, other than as described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

Common Shares Issued for Debt Conversion

On July 25, 2022, the Company and a convertible note holder entered into a Conversion Agreement pursuant to which the convertible note holder converted its Convertible Notes in the principal amount of $3,718,943 and unpaid interest of $9,751 into 5,736,452 shares of common stock of the Company at a per share price of $0.65.

Common Shares Issued Pursuant to Related Party Debt Settlement Agreement and Release

On July 25, 2022, the Company and Mr. Lu entered into and closed a Debt Settlement Agreement and Release pursuant to which the Company settled $2,440,262 debt owed under the Line of Credit and unpaid interest of $448,331 by issuance of 4,443,990 shares of common stock, with a fair value of $2,888,593, of the Company at a per share price of $0.65.

Unaudited Pro Forma Condensed Consolidated Balance Sheet As of June 30, 2022

On July 25, 2022, the Company and Mr. Lu entered into and closed a Debt Settlement Agreement and Release pursuant to which the Company settled $2,440,262 debt owed under the Line of Credit and unpaid interest of $448,331 by issuance of 4,443,990 shares of common stock of the Company at a per share price of $0.65. The 4,443,990 shares issued had a fair value of $2,888,593.

The unaudited pro forma condensed consolidated balance sheet as of June 30, 2022 combines the historical unaudited condensed consolidated balance sheet as of June 30, 2022 and the debt conversion transactions mentioned above, giving effect to the conversions as if they had been consummated on June 30, 2022.

AVALON GLOBOCARE CORP. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

As of June 30, 2022

				Pro Forma Adjustments
	Historical			Dr.		Cr.		Pro Forma
ASSETS

CURRENT ASSETS:
Cash	$	1,180,208		$	-	$	-	$	1,180,208
Rent receivable		24,778			-		-		24,778
Rent receivable - related party		58,500			-		-		58,500
Deferred financing costs, net		139,170			-		-		139,170
Prepaid expenses and other current assets		250,302			-		-		250,302

Total Current Assets		1,652,958			-		-		1,652,958

NON-CURRENT ASSETS:
Rent receivable - noncurrent portion		147,964			-		-		147,964
Deferred financing costs - noncurrent portion, net		74,937			-		-		74,937
Deferred leasing costs		97,216			-		-		97,216
Operating lease right-of-use assets, net		74,348			-		-		74,348
Property and equipment, net		265,709			-		-		265,709
Investment in real estate, net		7,444,428			-		-		7,444,428
Equity method investment		517,442			-		-		517,442

Total Non-current Assets		8,622,044			-		-		8,622,044

Total Assets	$	10,275,002		$	-	$	-	$	10,275,002

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable	$	376,386		$	-	$	-	$	376,386
Accrued professional fees		1,485,695			-		-		1,485,695
Accrued research and development fees		609,222			-		-		609,222
Accrued payroll liability and directors' compensation		374,601			-		-		374,601
Accrued settlement of lawsuit		900,000			-		-		900,000
Accrued liabilities and other payables		344,352			7,204		-		337,148
Accrued liabilities and other payables - related parties		539,974			439,974		-		100,000
Operating lease obligation		74,348			-		-		74,348
Convertible note payable, net		492,550			3,718,943		3,226,393		-
Derivative liability		2,013,300			2,013,300		-		-

Total Current Liabilities		7,210,428			6,179,421		3,226,393		4,257,400

NON-CURRENT LIABILITIES:
Accrued settlement of lawsuit - noncurrent portion		450,000			-		-		450,000
Loan payable - related party		2,440,262			2,440,262		-		-

Total Non-current Liabilities		2,890,262			2,440,262		-		450,000

Total Liabilities		10,100,690			8,619,683		3,226,393		4,707,400

STOCKHOLDERS' EQUITY:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding		-			-		-		-
Common stock, $0.0001 par value; 490,000,000 shares authorized; 89,554,766 shares issued and 89,034,766 shares outstanding; 99,735,208 pro forma shares issued and 99,215,208 pro forma shares outstanding		8,955			-		1,016		9,971
Additional paid-in capital		56,118,913			-		8,618,667		64,737,580
Less: common stock held in treasury, at cost; 520,000 shares		(522,500	)		-		-		(522,500	)
Accumulated deficit		(55,230,886	)		3,226,393		-		(58,457,279	)
Statutory reserve		6,578			-		-		6,578
Accumulated other comprehensive loss		(206,748	)		-		-		(206,748	)

Total Stockholders' Equity		174,312			3,226,393		8,619,683		5,567,602

Total Liabilities and Stockholders' Equity	$	10,275,002		$	11,846,076	$	11,846,076	$	10,275,002

AVALON GLOBOCARE CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Unaudited Pro Forma Adjustment Reflects the Following Four Transactions:

Transaction 1:

Derivative liability			2,013,300
Additional paid-in capital							2,013,300

The transaction reflects the embedded conversion option derivative liability was reclassified to additional paid-in capital upon the related note conversion.

Transaction 2:

Interest expense			3,226,393
Discount on convertible note payable							3,226,393

To amortize the discount upon conversion.

Transaction 3:

Convertible note payable	3,718,943
Interest payable	7,204
Common stock		573
Additional paid-in capital		3,725,574

The transaction reflects the principal and unpaid interest were converted into shares of common stock of the Company pursuant to a Conversion Agreement.

Transaction 4:

Loan payable - related party	2,440,262
Accrued liabilities and other payables - related parties	439,974
Common stock		443
Additional paid-in capital		2,879,793

The transaction reflects debt owed under the Line of Credit and unpaid interest were settled by issuance of shares of common stock of the Company pursuant to a Debt Settlement Agreement and Release.