Item 3.02
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Unregistered
Sales of Equity Securities
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October
2017 Private Placement
On
October 20, 2017, Avalon GloboCare Corp. (the “Company”) entered into Subscription Agreements with accredited investors
(the “October 2017 Accredited Investors”) pursuant to which the October 2017 Accredited Investors agreed to purchase
3,750,000 shares of the Company’s common stock (“October 2017 Shares”) for a purchase price of $3,750,000 (the
“Purchase Price”). The closing with respect to $200,000 of the Purchase occurred on October 24, 2017. The balance
of the Purchase Price is expected to close on or before December 6, 2017 if not sooner.
The
offer, sale and issuance of the above securities was made to accredited investors and the Company relied upon the exemptions contained
in Section 4(2) of the Securities Act and/or Rule 506 of Regulation D promulgated there under with regard to the sale. No advertising
or general solicitation was employed in offering the securities. The offer and sale was made to accredited investors and transfer
of the common stock issued was restricted by the Company in accordance with the requirements of the Securities Act of 1933, as
amended.
The accredited investors acknowledged
that they were not aware of nor did it review any registration statement or prospectus filed by the Company with the SEC.
GenExosome Technologies Inc.
In July 2017, the Company formed GenExosome
Technologies Inc., a Nevada corporation (“GenExosome”). On September 29, 2017, Dr. David K. Jin was appointed as the
sole director and as the Chief Executive Officer, Chief Medical Officer and President, Meng Li was appointed as Chief Operating
Officer and Secretary and Luisa Ingargiola was appointed as Chief Financial Officer. On October 25, 2017, GenExosome and the Company
entered into a Securities Purchase Agreement pursuant to which the Company acquired 600 shares of GenExosome in consideration
of $1,326,087 and 500,000 shares of common stock of the Company. The Company is required to pay $876,087 of the cash purchase
price by November 24, 2017 and $450,000 of the cash purchase price by December 24, 2017. In addition, the Company is required
to deliver the 500,000 shares of its common stock no later than November 24, 2017.
On October 25, 2017, GenExosome entered into
and closed an Asset Purchase Agreement with Yu Zhou, MD, PhD, pursuant to which the Company acquired all assets, including all
intellectual property, held by Dr. Zhou pertaining to the business of researching, developing and commercializing exosome technologies
including, but not limited to, patent application number CN 2016 1 0675107.5 (application of an Exosomal MicroRNA in plasma as
biomaker to diagnosis liver cancer), patent application number CN 2016 1 0675110.7 (clinical application of circulating exosome
carried miRNA-33b in the diagnosis of liver cancer), patent application number CN 2017 1 0330847.X (saliva exosome based methods
and composition for the diagnosis, staging and prognosis of oral cancer) and patent application number CN 2017 1 0330835.7 (a novel
exosome-based therapeutics against proliferative oral diseases). In consideration of the assets, GenExosome agreed to pay Dr. Zhou
$876,087 in cash no later than November 24, 2017, transfer 500,000 shares of common stock of the Company to Dr. Zhou no later than
November 24, 2017 and issue Dr. Zhou 400 shares of common stock of GenExosome no later than November 24, 2017. As a result of the above transactions, the Company holds 60% of GenExosome and Dr. Zhou holds 40% of GenExosome.
On October 25, 2017, GenExosome entered into
and closed a Stock Purchase Agreement with Beijing Jieteng (GenExosome) Biotech Co. Ltd., a corporation incorporated in the People’s
Republic of China (“Beijing GenExosome”) and Dr. Zhou, the sole shareholder of Beijing GenExosome, pursuant to which
GenExosome acquired all of the issued and outstanding securities of Beijing GenExosome in consideration of a cash payment in the
amount of $450,000, which shall be paid upon Beijing GenExosome recording the change in ownership with the Ministry of Commerce
of the People’s Republic of China in accordance with the Interim Measures for Record Management regarding the Establishment
and Change of Foreign-invested Enterprises (revised).
On October 25, 2017, GenExosome increased its size of its board
of directors from one to four and appointed Wenzhao “Daniel” Lu, Meng Li and Dr. Zhou to the board of directors. In
addition, Dr. Zhou was appointed as Co-Chief Executive Officer of GenExosome.
On October 25, 2017, Dr. Zhou and GenExosome
entered into an Executive Retention Agreement pursuant to which Dr. Zhou agreed to serve as Co-Chief Executive Officer in consideration
of an annual salary of $160,000. Dr. Zhou and GenExosome
also entered into an Invention Assignment,
Confidentiality, Non-Compete and Non-Solicit Agreement.
Beijing GenExosome is engaged in the development
of exosome technology to improve diagnosis and management of diseases. Exosomes are tiny, subcellular, membrane-bound vesicles
in diameter of 30-150 nm that are released by almost all cell types and that can carry membrane and cellular proteins, as well
as genetic materials that are representative of the cell of origin. Profiling various bio-molecules in exosomes may serve as useful
biomarkers for a wide variety of diseases. Beijing GenExosome’s research kits are designed to be used by researchers for
biomarker discovery and clinical diagnostic development, and the advancement of targeted therapies. Currently, research kits and
service are available to isolate exosomes or extract exosomal RNA/protein from serum/plasma, urine and saliva samples. Beijing
GenExosome is seeking to decode proteomic and genomic alterations underlying a wide-range of pathologies, thus allowing for the
introduction of novel non-invasive “liquid biopsies”. Its mission is focused toward diagnostic advancements in the
fields of oncology, infectious diseases and fibrotic diseases, and discovery of disease-specific exosomes to provide disease origin
insight necessary to enable personalized clinical management. There is no guarantee that Beijing GenExosome will be able to successfully
achieve its stated mission.
The
foregoing information is a summary of the agreements involved in the transactions described above, is not complete, and is qualified
in its entirety by reference to the full text of the agreements, which are attached an exhibit to this Current Report on Form
8-K. Readers should review the agreements for a complete understanding of the terms and conditions associated with
this transaction.