SCHEDULE
14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
☐
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Preliminary
Proxy Statement
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☐
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Confidential,
for the use of the Commission only (as permitted by Rule 14a-6(e)(2))
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☒
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Definitive
Proxy Statement
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☐
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Definitive
Additional Materials
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☐
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Soliciting
Material Pursuant to §240.14a-12
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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):
☒
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No
fee required.
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☐
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title
of each class of securities to which transaction applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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☐
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Fee
paid previously with preliminary materials.
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☐
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Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-1l (a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date
of its filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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Avalon
GloboCare Corp.
2020
NOTICE
OF ANNUAL MEETING
AND
PROXY
STATEMENT
August
4, 2020
at
11:00 a.m. Eastern Time
Avalon
GloboCare Corp.
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON AUGUST 4, 2020
The
2020 Annual Meeting of Stockholders (the “Annual Meeting”) of Avalon GloboCare Corp. (“Avalon” or the
“Company”) will be held on August 4, 2020, at 11:00 a.m. Eastern Time, to consider the below proposals. Due to
the public health impact of the coronavirus outbreak (COVID-19) and to support the health and well-being of our employees and
stockholders, the Annual Meeting will be held in a virtual meeting format at www.virtualshareholdermeeting.com/AVCO2020. The
proposals are as follows:
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(1)
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To
elect the nine director nominees named in the Proxy Statement to hold office until the next annual meeting of stockholders
and until their successors are duly elected and qualified;
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(2)
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To
ratify the appointment of Marcum LLP as the Company’s independent auditors for the fiscal year ending December 31, 2020;
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(3)
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To
approve the 2020 Incentive Stock Plan (the “2020 Incentive Plan”) and to authorize 5,000,000 shares of Common
Stock for issuance thereunder; and
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(4)
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To
act on such other matters as may properly come before the meeting or any adjournment thereof.
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All
stockholders are cordially invited to attend the Annual Meeting. Whether or not you expect to attend the Annual Meeting, we hope
you will vote as soon as possible. Information about voting methods is set forth in the accompanying Proxy Statement.
These
proposals are fully set forth in the accompanying Proxy Statement which you are urged to read thoroughly. For the reasons set
forth in the Proxy Statement, your Board of Directors recommends a vote “FOR” the election of the named nominees as
directors and for Proposals 2 and 3. A list of all stockholders entitled to vote at the Annual Meeting will be available at the
principal office of the Company during usual business hours for examination by any stockholder for any purpose germane to the
Annual Meeting for 10 days prior to the date thereof. After reading the enclosed Proxy Statement, please sign, date, and return
promptly the enclosed Proxy in the accompanying postpaid envelope we have provided for your convenience or vote via the Internet
as instructed herein to ensure that your shares will be represented. We suggest that you provide your vote electronically through
the Internet by following the instructions set out on the enclosed Proxy Card.
IF
YOU PLAN TO ATTEND:
To
be admitted to the Annual Meeting at https: www.virtualshareholdermeeting.com/AVCO2020 you must have your control number available
and follow the instructions found on your proxy card or voting instruction form. You may vote during the Annual Meeting but suggest
you vote beforehand by following the instructions available on the meeting website during the meeting. Please allow sufficient
time before the Annual Meeting to complete the online check-in process. Your vote is very important.
Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held August 4, 2020. In addition
to the copies you have received, the Proxy Statement and our 2018 Annual Report on Form 10-K to Stockholders are available at:www.proxyvote.com.
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By
Order of the Board of Directors
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/s/
Wenzhao “Daniel” Lu
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Wenzhao
“Daniel” Lu
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Chairman
of the Board of Directors
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WHETHER
OR NOT YOU PLAN ON ATTENDING THE MEETING IN PERSON, PLEASE VOTE AS PROMPTLY AS POSSIBLE TO ENSURE THAT YOUR VOTE IS COUNTED.
Whether
or not you expect to attend the Annual Meeting in person, we urge you to vote your shares via proxy at your earliest convenience.
This will ensure the presence of a quorum at the Annual Meeting. Promptly voting your shares will save the Company the expenses
and extra work of additional solicitation. Submitting your proxy now will not prevent you from voting your shares at the Annual
Meeting if you desire to do so, as your proxy is revocable at your option. Your vote is important, so please act today!
Avalon
GloboCare Corp.
4400 Route 9 South, Suite 3100
Freehold,
New Jersey 07728
(732)
780-4400
Important
Notice Regarding the Availability of Proxy Materials for the
Annual
Meeting of Shareholders on August 4, 2020:
Our
Notice of 2020 Annual Meeting of Shareholders, Proxy Statement, and
2019
Annual Report on Form 10-K are available at
www.proxyvote.com
Proxy
materials or a Notice of Internet Availability of Proxy Materials (the “Notice”) are being first released or mailed
on or about June 22, 2020, to all shareholders entitled to vote at the Annual Meeting. In accordance with rules and regulations
adopted by the Securities and Exchange Commission (the “SEC”), instead of mailing a printed copy of our proxy materials
to each record shareholder, we may furnish proxy materials by providing internet access to those documents. The Notice contains
instructions on how to access our proxy materials and vote online, or in the alternative, request a paper copy of the proxy materials
and a proxy card.
PROXY
STATEMENT
This
Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Avalon GloboCare Corp.
(“Avalon” or the “Company”) to be voted at the Annual Meeting of Stockholders (the “Annual Meeting”)
which will be held on August 4, 2020, at 11:00 a.m. Eastern Time, and at any postponements or adjournments thereof. The proxy
materials will be furnished to stockholders on or about June 22, 2020. This year’s annual meeting of shareholders will
be held as a virtual meeting. Shareholders attending the virtual meeting will be afforded the same rights and opportunities to
participate as they would at an in-person meeting. You will be able to attend and participate in the annual meeting online
via a live webcast by visiting www.virtualshareholdermeeting.com/AVCO2020. In addition to voting by submitting your proxy prior
to the annual meeting, you also will be able to vote your shares electronically during the annual meeting.
REVOCABILITY
OF PROXY AND SOLICITATION
Any
stockholder executing a proxy that is solicited hereby has the power to revoke it prior to the voting of the proxy. Revocation
may be made by attending the Annual Meeting by attending the webcast voting the shares at such time, or by delivering to the Chief
Financial Officer of the Company at the principal office of the Company prior to the Annual Meeting a written notice of revocation
or a later-dated, properly executed proxy. Solicitation of proxies may be made by directors, officers and other employees of the
Company by personal interview, telephone, facsimile transmittal or electronic communications. No additional compensation will
be paid for any such services. This solicitation of proxies is being made by the Company, which will bear all costs associated
with the mailing of this Proxy Statement and the solicitation of proxies.
RECORD
DATE
Stockholders
of record at the close of business on June 12, 2020 will be entitled to receive notice of, attend and vote at the Annual Meeting.
INFORMATION
ABOUT THE ANNUAL MEETING AND VOTING
Why
am I receiving these materials?
Avalon
has furnished these materials to you by mail, in connection with the Company’s solicitation of proxies for use at the Annual
Meeting of Stockholders to be held on August 4, 2020, at 11:00 a.m. local time. This year’s annual meeting of shareholders
will be held as a virtual meeting. Shareholders attending the virtual meeting will be afforded the same rights and opportunities
to participate as they would at an in-person meeting. You will be able to attend and participate in the annual meeting online
via a live webcast by visiting www.virtualshareholdermeeting.com/AVCO2020. These materials have also been made available to you
on the Internet. These materials describe the proposals on which the Company would like you to vote and also give you information
on these proposals so that you can make an informed decision. We are furnishing our proxy materials on or about June 22, 2020
to all stockholders of record entitled to vote at the Annual Meeting.
What
is included in these materials?
These
materials include:
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this
Proxy Statement for the Annual Meeting; and
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the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
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Notice
of Internet Availability (Notice and Access)
Instead
of mailing a printed copy of our proxy materials to each shareholder, we are furnishing proxy materials via the Internet. This
reduces both the costs and the environmental impact of sending our proxy materials to our shareholders. If you received a “Notice
of Internet Availability,” you will not receive a printed copy of the proxy materials unless you specifically request a
printed copy. The Notice of Internet Availability will instruct you how to access and review all of the important information
contained in the proxy materials. The Notice of Internet Availability also instructs you how to submit your proxy on the Internet
and how to vote by telephone.
If
you would like to receive a printed or emailed copy of our proxy materials, you should follow the instructions for requesting
such materials included in the Notice of Internet Availability. In addition, if you received paper copies of our proxy materials
and wish to receive all future proxy materials, proxy cards and annual reports electronically, please follow the electronic delivery
instructions on www.proxyvote.com. We encourage shareholders to take advantage of the availability of the proxy materials
on the Internet to help reduce the cost and environmental impact of our annual shareholder meetings.
The
Notice of Internet Availability is first being sent to shareholders on or about June 22, 2020. Also on or about June 22, 2020,
we will first make available to our shareholders this Proxy Statement and the form of proxy relating to the 2020 Annual Meeting
filed with the SEC on June 22, 2020.
What
is the proxy card?
The
proxy card enables you to appoint David Jin, our Chief Executive Officer, and Luisa Ingargiola, our Chief Financial Officer, as
your representatives at the Annual Meeting. By completing and returning a proxy card, you are authorizing these individuals to
vote your shares at the Annual Meeting in accordance with your instructions on the proxy card. This way, your shares will be voted
whether or not you attend the Annual Meeting.
What
is the purpose of the Annual Meeting?
At
our Annual Meeting, stockholders will act upon the matters outlined in the Notice of Annual Meeting on the cover page of this
Proxy Statement, including:
(i)
the election of nine persons named herein as nominees for directors of the Company, to hold office subject to the provisions of
the bylaws of the Company, until the next annual meeting of stockholders and until their successors are duly elected and qualified;
(ii)
ratification of the appointment of Marcum LLP as the Company’s independent auditors for the fiscal year ending December
31, 2020; and
(iii)
to approve the 2020 Incentive Plan and to authorize 5,000,000 shares of Common Stock for issuance thereunder.
In
addition, management will act on such other matters as may properly come before the meeting or any adjournment thereof, report
on the performance of the Company during fiscal year 2018 and respond to questions from stockholders.
What
constitutes a quorum?
The
presence at the meeting, in person or by proxy, of the holders of a majority of the number of shares of common stock issued and
outstanding on the record date will constitute a quorum permitting the meeting to conduct its business. As of the record date,
there were 79,364,765 shares of Avalon common stock issued and outstanding. Thus, the presence of the holders of common stock
representing at least 39,761,747 votes will be required to establish a quorum.
What
is the difference between a stockholder of record and a beneficial owner of shares held in street name?
Most
of our stockholders hold their shares in an account at a brokerage firm, bank or other nominee holder, rather than holding share
certificates in their own name. As summarized below, there are some distinctions between shares held of record and those owned
beneficially in street name.
How
can I get electronic access to the proxy materials?
The
Notice provides you with instructions regarding how to:
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view
the Company’s proxy materials for the Annual Meeting on the Internet;
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request
hard copies of the materials; and
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instruct
the Company to send future proxy materials to you electronically by email.
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Choosing
to receive future proxy materials by email will save the Company the cost of printing and mailing documents to you and will reduce
the impact of the Company’s annual meetings on the environment. If you choose to receive future proxy materials by email,
you will receive an email message next year with instructions containing a link to those materials and a link to the proxy voting
website. Your election to receive proxy materials by email will remain in effect until you terminate it.
Stockholder
of Record
If
on June 12, 2020, your shares were registered directly in your name with our transfer agent, Vstock Transfer Inc., Inc., you are
considered a stockholder of record with respect to those shares, and the Notice of Annual Meeting and Proxy Statement was sent
directly to you by the Company. As the stockholder of record, you have the right to direct the voting of your shares by returning
the proxy card to us. Whether or not you plan to attend the Annual Meeting, if you do not vote over the Internet, please complete,
date, sign and return a proxy card to ensure that your vote is counted.
Beneficial
Owner of Shares Held in Street Name
If
on June 12, 2020, your shares were held in an account at a brokerage firm, bank, broker-dealer, or other nominee holder, then
you are considered the beneficial owner of shares held in “street name,” and the Notice of Annual Meeting & Proxy
statement was forwarded to you by that organization. The organization holding your account is considered the stockholder of record
for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to instruct that organization on how
to vote the shares held in your account. However, since you are not the stockholder of record, you may not vote these shares in
person at the Annual Meeting unless you receive a valid proxy from the organization.
How
do I vote?
Stockholders
of Record. If you are a stockholder of record, you may vote by any of the following methods:
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Via
the Internet. You may vote by proxy via the Internet by following the instructions provided on the enclosed Proxy Card.
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By
Mail. You may vote by completing, signing, dating and returning your proxy card in the pre-addressed, postage-paid envelope
provided.
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Online
at the Meeting. You can vote at the meeting at www.virtualshareholdermeeting.com/AVCO2020.
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Beneficial
Owners of Shares Held in Street Name. If you are a beneficial owner of shares held in street name, you may vote by any of
the following methods:
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Via
the Internet. You may vote by proxy via the Internet by following the instructions provided on the enclosed Proxy Card.
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By
Mail. You may vote by proxy by filling out the vote instruction form and returning it in the pre-addressed, postage-paid
envelope provided.
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Online
at the Meeting. You can vote at the meeting at www.virtualshareholdermeeting.com/AVCO2020.
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What
are abstentions and broker non-votes?
While
the inspector of elections will treat shares represented by proxies that reflect abstentions or include “broker non-votes”
as shares that are present and entitled to vote for purposes of determining the presence of a quorum, abstentions or “broker
non-votes” do not constitute a vote “for” or “against” any matter and thus will be disregarded in
any calculation of “votes cast.” However, abstentions and “broker non-votes” will have the effect of a
negative vote if an item requires the approval of a majority of a quorum or of a specified proportion of all issued and outstanding
shares.
Brokers
holding shares of record for customers generally are not entitled to vote on “non-routine” matters, unless they receive
voting instructions from their customers (see What happens if I do not give specific voting instructions). As used herein,
“uninstructed shares” means shares held by a broker who has not received voting instructions from its customers on
a proposal. A “broker non-vote” occurs when a nominee holding uninstructed shares for a beneficial owner does not
vote on a particular proposal because the nominee does not have discretionary voting power with respect to that non-routine matter.
What
happens if I do not give specific voting instructions?
Stockholders
of Record. If you are a stockholder of record and you:
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indicate
when voting on the Internet that you wish to vote as recommended by the Board of Directors, or
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sign
and return a proxy card without giving specific voting instructions, then the proxy holders will vote your shares in the manner
recommended by the Board of Directors on all matters presented in this Proxy Statement and as the proxy holders may determine
in their discretion with respect to any other matters properly presented for a vote at the Annual Meeting.
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Beneficial
Owners of Shares Held in Street Name. If you are a beneficial owner of shares held in street name and do not provide the organization
that holds your shares with specific voting instructions, under the rules of various national and regional securities exchanges,
the organization that holds your shares may generally vote on routine matters, but not on non-routine matters. Under New York
Stock Exchange (“NYSE”) rules, if your shares are held by a member organization, as that term is defined under NYSE
rules, responsibility for making a final determination as to whether a specific proposal constitutes a routine or non-routine
matter rests with that organization, or third parties acting on its behalf.
What
are the Board’s recommendations?
The
Board’s recommendation is set forth together with the description of each item in this Proxy Statement. In summary, the
Board recommends a vote:
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for
election of the nine director nominees named in the Proxy Statement to hold office until the next annual meeting of stockholders
and until their successors are duly elected and qualified;
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for
ratification of the appointment of Marcum LLP as the Company’s independent auditors for the fiscal year ending December
31, 2020; and
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to
approve the 2020 Incentive Plan and to authorize 5,000,000 shares of Common Stock for issuance thereunder.
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With
respect to any other matter that properly comes before the Annual Meeting, the proxy holders will vote as recommended by the Board
of Directors or, if no recommendation is given, in their own discretion.
How
are proxy materials delivered to households?
Only
one copy of the Company’s Notice of Internet Availability, Annual Report on Form 10-K for the fiscal year ending December
31, 2019 and this Proxy Statement will be delivered to an address where two or more stockholders reside with the same last name
or who otherwise reasonably appear to be members of the same family based on the stockholders’ prior express or implied
consent.
We
will deliver promptly upon written or oral request a separate copy of the Company’s Annual Report on Form 10-K for the fiscal
year ending December 31, 2019 and this Proxy Statement. If you share an address with at least one other stockholder, currently
receive one copy of our Annual Report on Form 10-K and Proxy Statement at your residence, and would like to receive a separate
copy of our Annual Report on Form 10-K and Proxy Statement for future stockholder meetings of the Company, please specify such
request in writing and send such written request to Avalon GloboCare Corp., 4400 Route 9 South, Suite 3100, Freehold, New Jersey
07728; Attention: Chief Financial Officer.
If
you want to receive separate copies of the Notice of Internet Availability, proxy statement and annual report in the future, or
if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank,
broker or other nominee record holder, or you may contact us at the above address and telephone number.
Interest
of Officers and Directors in matters to be acted upon
Except
for the election to our Board of the nine nominees, none of our officers or directors has any interest in any of the matters to
be acted upon at the Annual Meeting.
How
much stock is owned by 5% stockholders, directors, and executive officers?
The
following table sets forth the number of shares known to be beneficially owned by all persons who own at least 5% of Avalon’s
outstanding common stock, the Company’s directors, the Company’s executive officers, and the directors and executive
officers as a group as of June 12, 2020, unless otherwise noted. Unless otherwise indicated, the stockholders listed in the table
have sole voting and investment power with respect to the shares indicated.
Name
of Beneficial Owner (1)
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Common
Stock
Beneficially Owned
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Percentage
of
Common Stock (2)
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Wenzhao
Lu* (3)
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29,400,000
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36.4
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%
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David
Jin, MD, PhD* (4)
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15,766,667
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19.8
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%
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Meng
Li* (5)
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5,425,000
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6.8
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%
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Luisa
Ingargiola* (6)
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2,166,667
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2.7
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%
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Yancen
Lu* (7)
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5,303,333
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6.7
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%
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Steven
A. Sanders* (8)
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103,333
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**
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Wilbert
J. Tauzin II* (9)
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546,667
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**
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William
B. Stilley III* (10)
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103,333
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**
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Tevi
Troy* (11)
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103,333
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**
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Yue
“Charles” Li* (12)
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63,333
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**
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All
officers and directors as a group (10 persons)
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58,981,666
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73.4
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%
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*
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Officer
and/or director of our company.
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(1)
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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.
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(2)
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Applicable
percentage ownership is based on 79,364,765 shares of common stock outstanding as of June 12, 2020, together with securities
exercisable or convertible into shares of common stock within 60 days of June 12, 2020 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 June
12, 2020 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.
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(3)
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Wenzhao
Lu holds (i) 27,900,000 shares of common stock and (ii) vested options to acquire 1,500,000 shares of common stock of our
company.
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(4)
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David
Jin holds (i) 15,450,000 shares of common stock and (ii) 316,667 options, of which 250,000 shares have vested and an additional
66,667 shares shall vest within 60 days.
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(5)
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Meng
Li holds (i) 5,150,000 shares of common stock and (ii) 275,000 options, of which 225,000 shares have vested and an additional
50,000 shares shall vest within 60 days.
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(6)
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Represents
stock option to acquire 2,166,667 shares of common stock of our company, which included 66,667 shares to be vested within
60 days.
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(7)
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Yancen
Lu holds (i) 5,000,000 shares of common stock and (ii) 303,333 options, of which 290,000 shares have vested and an additional
13,333 shares shall vest within 60 days.
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(8)
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Represents
stock option to acquire 103,333 shares of common stock of our company, which included 13,333 shares to be vested within 60
days.
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(9)
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Represents
stock option to acquire 546,667 shares of common stock of our company, which included 6,667 shares to be vested within 60
days.
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(10)
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Represents
stock option to acquire 103,333 shares of common stock of our company, which included 13,333 shares to be vested within 60
days.
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(11)
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Represents
stock option to acquire 103,333 shares of common stock of our company, which included 13,333 shares to be vested within 60
days.
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(12)
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Represents
stock option to acquire 63,333 shares of common stock of our company, which included 13,333 shares to be vested within 60
days.
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INFORMATION
ABOUT THE BOARD OF DIRECTORS
The
Board of Directors oversees our business and affairs and monitors the performance of management. In accordance with corporate
governance principles, the Board does not involve itself in day-to-day operations. The directors keep themselves informed through
discussions with the Chief Executive Officer and other key executives, visits to the Company’s facilities, by reading the
reports and other materials that we send them and by participating in Board and committee meetings. Each director’s term
will continue until the election and qualification of his or her successor, or his or her earlier death, resignation or removal.
Biographical information about our directors is provided in “Proposal No. 1 — Proposal for the Election of Nine Directors”
on page 20. Except as set forth in this Proxy Statement, none of our directors held directorships in other reporting companies
or registered investment companies at any time during the past five years. Our Board currently consists of nine persons, all of
whom have been nominated by the Company to stand for re-election.
Name
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Age
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Position
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Wenzhao
“Daniel” Lu
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62
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Chairman
of the Board of Directors
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David
Jin, MD, PhD
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52
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Chief
Executive Officer, President and Director
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Meng
Li
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42
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Chief
Operating Officer, Secretary and Director
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Steven
A. Sanders
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74
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Director
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Yancen
Lu
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45
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Director
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Wilbert
J. Tauzin II
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75
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Director
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William
B. Stilley, III
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52
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Director
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Tevi
Troy
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52
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Director
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Yue
“Charles” Li
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46
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|
Director
|
Board
Composition
Our
business and affairs are organized under the direction of our board of directors, which currently consists of nine members. The
primary responsibility of our board of directors is to provide oversight, strategic guidance, counseling, and direction to our
management team. Our board of directors meets on a regular basis and additionally as required.
A
majority of the authorized number of directors constitutes a quorum of the Board of Directors for the transaction of business.
The directors must be present at the meeting to constitute a quorum. However, any action required or permitted to be taken by
the Board of Directors may be taken without a meeting if all members of the Board of Directors individually or collectively consent
in writing to the action.
Director
Independence
Our
board of directors currently consists of nine (9) members. Our board of directors has determined that Yancen Lu, William
B. Stilley, III, Steven A. Sanders, Tevi Troy and Yue “Charles” Li, qualify as independent directors in accordance
with the Nasdaq Capital Market (“Nasdaq”) listing requirements. Mr. Wenzhao “Daniel” Lu, Dr. David Jin
Mr. Wilbert J. Tauzin II and Ms. Meng Li are not considered independent. Nasdaq’s independence definition includes a series
of objective tests, such as that the director is not, and has not been for at least three (3) years, one of our employees
and that neither the director nor any of his or her family members has engaged in various types of business dealings with us.
In addition, as required by Nasdaq rules, our board of directors has made a subjective determination as to each independent director
that no relationships exist that, in the opinion of our board of directors, would interfere with the exercise of independent judgment
in carrying out the responsibilities of a director. In making these determinations, our board of directors reviewed and discussed
information provided by the directors and us with regard to each director’s business and personal activities and relationships
as they may relate to us and our management. There are no family relationships among any of our directors or executive officers.
As
required under Nasdaq rules and regulations, our independent directors meet in regularly scheduled executive sessions at which
only independent directors are present.
Family
Relationships
There
are no family relationships among our directors or executive officers.
Board
Leadership Structure and Role in Risk Oversight
Our
Board of Directors, or the Board, is primarily responsible for overseeing our risk management processes on behalf of our company.
The Board receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate
regarding our company’s assessment of risks. In addition, the Board focuses on the most significant risks facing our company
and our company’s general risk management strategy, and also ensures that risks undertaken by our company are consistent
with the board’s appetite for risk. While the Board oversees our company’s risk management, management is responsible
for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing
the risks facing our company and that our board leadership structure supports this approach.
Involvement
in Certain Legal Proceedings
To
our knowledge, our directors and executive officers have not been involved in any of the following events during the past ten
years:
|
●
|
any
bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive
officer either at the time of the bankruptcy or within two years prior to that time;
|
|
●
|
any
conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other
minor offenses);
|
|
●
|
being
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or
banking activities or to be associated with any person practicing in banking or securities activities;
|
|
●
|
being
found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have
violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
|
|
●
|
being
subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently
reversed, suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or
regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting
mail or wire fraud or fraud in connection with any business entity; or
|
|
●
|
being
subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization,
any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over
its members or persons associated with a member.
|
Board
Committees
Establishment
of Board Committees and Adoption of Charters
In
November 2018, the Company established a Nominating and Corporate Governance Committee, a Compensation Committee and an Audit
Committee (collectively, the “Committees”) and approved and adopted charters to govern each of the Committees.
In
connection with the establishment of the Nominating and Corporate Governance Committee, Compensation Committee and Audit
Committee, the Board of Directors of the Company appointed members to each such committee. Currently, all three committees
are comprised of at least three (3) directors meeting the requirements set forth in each applicable charter. The membership of
these three standing committees of the Board of Directors of the Company is as follows:
Nominating
and Corporate
Governance Committee
|
|
Compensation
Committee
|
|
Audit
Committee
|
Steven
Sanders (Chairman)
|
|
Yancen
Lu (Chairman)
|
|
William
Stilley (Chairman)
|
Tevi
Troy
|
|
Steven
Sanders
|
|
Yancen
Lu
|
William
Stilley
|
|
Tevi
Troy
|
|
Steve
Sanders
|
Nominating
and Corporate Governance Committee
Our
board of directors has determined that each of the members of the Nominating and Governance Committee (the “Governance Committee”)
are “independent directors” as defined by Nasdaq. The Governance Committee generally responsible for recommending
to our full board of directors’ policies, procedures, and practices designed to help ensure that our corporate governance
policies, procedures, and practices continue to assist the board of directors and our management in effectively and efficiently
promoting the best interests of our stockholders. The Governance Committee is also responsible for selecting and recommending
for approval by our board of directors and our stockholders a slate of director nominees for election at each of our annual meetings
of stockholders, and otherwise for determining the board committee members and chairmen, subject to board of directors ratification,
as well as recommending to the board director nominees to fill vacancies or new positions on the board of directors or its committees
that may occur or be created from time to time, all in accordance with our bylaws and applicable law. The Governance Committee’s
principal functions include:
|
●
|
developing
and maintaining our corporate governance policy guidelines;
|
|
|
|
|
●
|
developing
and maintaining our codes of conduct and ethics;
|
|
|
|
|
●
|
overseeing
the interpretation and enforcement of our Code of Conduct and our Code of Ethics for Chief Executive Officer and Senior Financial
and Accounting Officers;
|
|
|
|
|
●
|
evaluating
the performance of our board of directors, its committees, and committee chairmen and our directors; and
|
|
|
|
|
●
|
selecting
and recommending a slate of director nominees for election at each of our annual meetings of the stockholders and recommending
to the board director nominees to fill vacancies or new positions on the board of directors or its committees that may occur
from time to time.
|
During
2019, the Nominating and Corporate Governance Committee meet one time. The Governance Committee is governed by a written charter
approved by our board of directors. A copy of the Governance Committee’s charter is posted on the Company’s website
at www.avalon-globocare.com in the “Investors” section of the website. In identifying potential independent board
of directors’ candidates with significant senior-level professional experience, the Governance Committee solicits candidates
from the board of directors, senior management and others and may engage a search firm in the process. The Governance Committee
reviews and narrows the list of candidates and interviews potential nominees. The final candidate is also introduced and interviewed
by the board of directors and the lead director if one has been appointed. In general, in considering whether to recommend any
particular candidate for inclusion in our board of directors’ slate of recommended director nominees, the Governance Committee
will apply the criteria set forth in our corporate governance guidelines. These criteria include the candidate’s integrity,
business acumen, commitment to understanding our business and industry, experience, conflicts of interest and the ability to act
in the interests of our stockholders. Further, specific consideration is given to, among other things, diversity of background
and experience that a candidate would bring to our board of directors. The Governance Committee does not assign specific weights
to particular criteria and no particular criterion is a prerequisite for each prospective nominee. We believe that the backgrounds
and qualifications of our directors, considered as a group, should provide a composite mix of experience, knowledge and abilities
that will allow our board of directors to fulfill its responsibilities. Stockholders may recommend individuals to the Governance
Committee for consideration as potential director candidates by submitting their names, together with appropriate biographical
information and background materials to our Governance Committee. Assuming that appropriate biographical and background material
has been provided on a timely basis, the Governance Committee will evaluate stockholder recommended candidates by following substantially
the same process, and applying substantially the same criteria, as it follows for candidates submitted by others.
Audit
Committee
We
have a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). Our board of directors has determined that the members are all “independent
directors” as defined by the rules of Nasdaq applicable to members of an audit committee and Rule 10A-3(b)(i) under the
Exchange Act. In addition, Mr. Stilley is an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation
S-K and demonstrates “financial sophistication” as defined by the rules of The NASDAQ Stock Market, Inc. The Audit
Committee is appointed by our board of directors to assist our board of directors in monitoring (1) the integrity of our financial
statements, (2) our compliance with legal and regulatory requirements, and (3) the independence and performance of our internal
and external auditors. The Audit Committee’s principal functions include:
|
●
|
reviewing
our annual audited financial statements with management and our independent auditors, including major issues regarding accounting
and auditing principles and practices and financial reporting that could significantly affect our financial statements;
|
|
|
|
|
●
|
reviewing
our quarterly financial statements with management and our independent auditor prior to the filing of our Quarterly Reports
on Form 10-Q, including the results of the independent auditors’ reviews of the quarterly financial statements;
|
|
|
|
|
●
|
recommending
to the board of directors the appointment of, and continued evaluation of the performance of, our independent auditor;
|
|
|
|
|
●
|
approving
the fees to be paid to our independent auditor for audit services and approving the retention of our independent auditor for
non-audit services and all fees for such services;
|
|
|
|
|
●
|
reviewing
periodic reports from our independent auditor regarding our auditor’s independence, including discussion of such reports
with the auditor;
|
|
|
|
|
●
|
reviewing
the adequacy of our overall control environment, including internal financial controls and disclosure controls and procedures;
and
|
|
|
|
|
●
|
reviewing
with our management and legal counsel legal matters that may have a material impact on our financial statements or our compliance
policies and any material reports or inquiries received from regulators or governmental agencies.
|
During
2019, the audit committee met four times. A copy of the Audit Committee’s charter is posted on the Company’s website
at www.avalon-globocare.com in the “Investors” section of the website.
Meetings
may be held from time to time to consider matters for which approval of our Board of Directors is desirable or is required by
law.
Compensation
Committee
Our
compensation committee consists of Yancen Lu, Steven Sanders and Tevi Troy. Our board of directors has determined that each of
the members are an “independent director” as defined by the Nasdaq rules applicable to members of a compensation committee.
The Compensation Committee is responsible for establishing the compensation of our senior management, including salaries, bonuses,
termination arrangements, and other executive officer benefits as well as director compensation. The Compensation Committee also
administers our equity incentive plans. During the year ended December 31, 2019, the Compensation Committee met three times. The
Compensation Committee is governed by a written charter approved by the board of directors. A copy of the Compensation Committee’s
charter is posted on the Company’s website at www.avalon-globocare.com in the “Investors” section of the
website. The Compensation Committee works with the Chairman of the Board and Chief Executive Officer and reviews and approves
compensation decisions regarding senior management including compensation levels and equity incentive awards. The Compensation
Committee also approves employment and compensation agreements with our key personnel and directors. The Compensation Committee
has the power and authority to conduct or authorize studies, retain independent consultants, accountants or others, and obtain
unrestricted access to management, our internal auditors, human resources and accounting employees and all information relevant
to its responsibilities.
The
responsibilities of the Compensation Committee, as stated in its charter, include the following:
|
●
|
review
and approve the Company’s compensation guidelines and structure;
|
|
|
|
|
●
|
review
and approve on an annual basis the corporate goals and objectives with respect to compensation for the Chief Executive Officer;
|
|
●
|
review
and approve on an annual basis the evaluation process and compensation structure for the Company’s other officers, including
salary, bonus, incentive and equity compensation; and
|
|
|
|
|
●
|
periodically
review and make recommendations to the Board of Directors regarding the compensation of non-management directors.
|
The
Compensation Committee is responsible for developing the executive compensation philosophy and reviewing and recommending to the
Board of Directors for approval all compensation policies and compensation programs for the executive team.
Compensation
Committee Interlocks and Insider Participation
None
of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation
committee of any entity that has one or more executive officers on our board of directors or compensation committee.
Code
of Ethics
We
have a code of ethics that applies to all of our employees, including our principal executive officer, principal financial officer
and principal accounting officer, and the Board. A copy of this code is available in our employee handbook and under the “About
Us – Code of Conduct” section of our website at www.avalon-globocare.com. In addition, we intend to post on our website
all disclosures that are required by law or the listing standards of our applicable trading market concerning any amendments to,
or waivers from, any provision of the code. The reference to our website address does not constitute incorporation by reference
of the information contained at or available through our website, and you should not consider it to be a part of this report.
Indemnification
of Directors and Officers
Our
directors and executive officers are indemnified as provided by the Delaware law and our Bylaws. These provisions state that our
directors may cause us to indemnify a director or former director against all costs, charges and expenses, including an amount
paid to settle an action or satisfy a judgment, actually and reasonably incurred by him or her as a result of him or her acting
as a director. The indemnification of costs can include an amount paid to settle an action or satisfy a judgment. Such indemnification
is at the discretion of our board of directors and is subject to the Securities and Exchange Commission’s policy regarding
indemnification.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons
controlling us pursuant to the foregoing provisions, or otherwise. We have been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
COMPENSATION
OF DIRECTORS
The
following table sets forth compensation information for our directors for the year ended December 31, 2019.
Name
|
|
Fees
Earned or
Paid in
Cash
$
|
|
|
Stock
Awards
$
|
|
|
Option
Awards
$
|
|
|
Non-equity
Incentive Plan
Compensation
$
|
|
|
Change
in
Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings
$
|
|
|
All
Other
Compensation
$
|
|
|
Total
$
|
|
Yue
“Charles” Li (1)
|
|
|
44,333
|
|
|
|
-
|
|
|
|
128,412
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
172,745
|
|
Yancen
Lu (2)
|
|
|
70,000
|
|
|
|
-
|
|
|
|
513,133
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
583,133
|
|
Wilbert
Tauzin (3)
|
|
|
-
|
|
|
|
-
|
|
|
|
236,122
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
236,122
|
|
Wenzhao
Lu (4)
|
|
|
100,000
|
|
|
|
-
|
|
|
|
3,947,216
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,047,216
|
|
David
Jin
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Meng
Li (5)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Steven
Sanders (6)
|
|
|
70,000
|
|
|
|
-
|
|
|
|
118,412
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
188,412
|
|
Tevi
Troy (7)
|
|
|
60,000
|
|
|
|
-
|
|
|
|
118,412
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
178,412
|
|
William
Stilley (8)
|
|
|
70,000
|
|
|
|
-
|
|
|
|
118,412
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
188,412
|
|
(1)
|
Mr.
Li’s 2019 compensation consisted of cash of $44,333 and 30,000 options vested and valued at $128,412. Mr. Li has been
our director since April 5, 2019.
|
(2)
|
Mr.
Lu’s 2019 compensation consisted of cash of $70,000 and 200,000 options vested and valued at $513,133. Mr. Lu has been
our director since April 28, 2017.
|
(3)
|
Mr.
Tauzin’s 2019 compensation consisted of 200,000 options vested and valued at $236,122. Mr. Tauzin has been our director
since November 1, 2017.
|
(4)
|
Mr.
Lu’s 2019 compensation consisted of cash of $100,000 and 1,500,000 options vested and valued at $3,947,216. Mr. Lu has
been our director since October 10, 2016.
|
(5)
|
Ms.
Li has been our director since April 5, 2019.
|
(6)
|
Mr.
Sanders’s 2019 compensation consisted of cash of $70,000 and 50,000 options vested and valued at $118,412. Mr. Sanders
has been our director since July 30, 2018.
|
(7)
|
Mr.
Troy’s 2019 compensation consisted of cash of $60,000 and 50,000 options vested and valued at $118,412. Mr. Troy has
been our director since June 4, 2018
|
(8)
|
Mr.
Stilley’s 2019 compensation consisted of cash of $70,000 and 50,000 options vested and valued at $118,412. Mr. Stilley
has been our director since July 5, 2018.
|
On
February 19, 2020, the Board of Directors of the Company approved an increase in the number of shares of common stock to be acquired
pursuant to option grants for all independent Directors from 50,000 shares to 80,000 shares annually going forward, which shall
vest at the rate of 20,000 shares under such option per quarter.
REPORT
OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The
Audit Committee, on behalf of our Board of Directors, serves as an independent and objective party to monitor and provide general
oversight of the integrity of our consolidated financial statements, our independent registered public accounting firm’s
qualifications and independence, the performance of our independent registered public accounting firm and our standards of business
conduct. The Audit Committee performs these oversight responsibilities in accordance with its Audit Committee Charter.
Our
management is responsible for preparing our consolidated financial statements and managing our financial reporting process. Our
independent registered public accounting firm is responsible for expressing an opinion on the conformity of our audited consolidated
financial statements to generally accepted accounting principles in the United States of America. The Audit Committee met with
our independent registered public accounting firm, with and without management present, to discuss the results of their examinations
and the overall quality of our financial reporting.
In
this context, the Audit Committee reviewed and discussed our audited consolidated financial statements for the year ended December
31, 2019 with management and with our independent registered public accounting firm. The Audit Committee has discussed with our
independent registered public accounting firm the matters required to be discussed by the statement on PCAOB AS 16 (Communications
with Audit Committees), as adopted by the Public Company Accounting Oversight Board in Rule 3200T, which includes, among other
items, matters related to the conduct of the audit of our annual consolidated financial statements.
The
Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required
by applicable requirements of the Public Company Accounting Oversight Board regarding such independent registered public accounting
firm’s communications with the Audit Committee concerning independence, and has discussed with the independent registered
public accounting firm its independence from us and our management.
Based
on its review of the audited financial statements and the various discussions noted above, the Audit Committee recommended to
our Board of Directors that our audited consolidated financial statements be included in our Annual Report on Form 10-K for the
year ended December 31, 2019.
Respectfully
submitted by the Audit Committee,
William
Stilley (Chairman)
Yancen
Lu
Steve
Sanders
The
foregoing Audit Committee Report does not constitute soliciting material and shall not be deemed filed or incorporated by reference
into any other filing of our Company under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange
Act, except to the extent we specifically incorporate this Audit Committee Report by reference therein.
INFORMATION
ABOUT THE EXECUTIVE OFFICERS
The
executive officers are appointed annually by our Board of Directors and hold office until their successors are elected and duly
qualified unless otherwise specified in an individual’s employment agreement. There are no family relationships between
any of our directors or executive officers. The current executive officers of the Company, and their ages as of June 12, 2020
are as follows:
Name
|
|
Age
|
|
Position
|
David
Jin, MD, PHD
|
|
52
|
|
Chief
Executive Officer and President
|
Meng
Li
|
|
42
|
|
Chief
Operating Officer and Secretary
|
Luisa
Ingargiola
|
|
52
|
|
Chief
Financial Officer
|
Biographical
information regarding our executive officers as of June 12, 2020 is set forth below:
David
Jin, Chief Executive Officer, President and Director
Dr.
David Jin, MD, PhD, is our Chief Executive Officer, President and a member of the Board of Directors. From 2009 to 2017, Dr. Jin
has served as the Chief Medical Officer of BioTime, Inc. (NYSE American: BTX), a clinical stage regenerative medicine company
with a focus on pluripotent stem cell technology. Dr. Jin also acts as a senior translational clinician-scientist at the Howard
Hughes Medical Institute and the Ansary Stem Cell Center at Weill Cornell Medical College of Cornell University. Prior to his
current endeavors, Dr. Jin was Chief Consultant/Advisor for various biotech/pharmaceutical companies regarding hematology, oncology,
immunotherapy and stem cell-based technology development. Dr. Jin has been Principle Investigator in more than 15 pre-clinical
and clinical trials, as well as author/co-author of over 80 peer-reviewed scientific abstracts, articles, reviews, and book chapters.
Dr. Jin studied medicine at SUNY Downstate College of Medicine in Brooklyn, New York. He received his clinical training and subsequent
faculty tenure at the New York-Presbyterian Hospital (the teaching hospital for both Cornell and Columbia Universities) in the
areas of internal medicine, hematology, and clinical oncology. Dr. Jin was honored as Top Chief Medical Officer by ExecRank in
2012, as well as recognized by Leading Physicians of the World in 2015. Dr. Jin is qualified to serve as a director because of
his role with us, and his extensive operational knowledge of, and executive level management experience in, the healthcare industry.
Meng
Li, Chief Operating Officer and Secretary
Ms.
Meng Li is our Chief Operating Officer and Secretary and a former member of the Board of Directors. Ms. Li has over 15 years of
executive experience in international marketing, branding, communications, and media investment consultancy. Ms. Li served as
Managing Director at Maxus/GroupM (a WPP Group company) where she was responsible for business P&L and corporate management
from 2006 to 2015. Prior to joining Maxus/Group M, Ms. Li worked for Zenith Media (a Publicis Group company) from 2000 to 2006
as Senior Manager. Ms. Li received a Bachelor of Arts in International Economic Law from Dalian Maritime University in China.
Luisa
Ingargiola, Chief Financial Officer
Luisa
Ingargiola is our Chief Financial Officer. Ms. Ingargiola graduated in 1989 from Boston University with a Bachelor’s degree
in Business Administration and a concentration in Finance. In 1996, she received her MBA in Health Administration from the University
of South Florida. In 1990, Ms. Ingargiola joined Boston Capital Partners as an Investment Advisor in their Limited Partnership
Division. In this capacity, she worked with investors and partners to report investment results, file tax forms, and recommend
investments. In 1992, Ms. Ingargiola joined MetLife Insurance Company as a Budget and Expense Manager. In this capacity she managed
a $30 million annual budget. Her responsibilities included budget implementation, expense and variance analysis and financial
reporting. From 2007 through 2016, Ms. Ingargiola served as the Chief Financial Officer at MagneGas Corporation (Nasdaq: MNGA)
and continues to serve as a director. Ms. Ingargiola serves as the Audit Committee Chair of several companies including Electrameccanica
Vehicles Corp. (NASDAQ:SOLO)).
EXECUTIVE
COMPENSATION
Executive
Officers’ Compensation
The
following table sets forth information concerning the annual and long-term compensation earned by or paid to our Chief Executive
Officer and to other persons who served as executive officers as at and/or during the fiscal year ended December 31, 2019 or who
earned compensation exceeding $100,000 during fiscal year 2019 (the “named executive officers”), for services as executive
officers for the last two fiscal years.
Summary
Compensation Table
Name
and
Principal
Position
|
|
Fiscal
Year
|
|
|
Salary
|
|
|
Stock
Award
|
|
|
Option
Awards
|
|
|
Non-Equity
Incentive Plan
Compensation
|
|
|
Change
in
Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings
|
|
|
All
Other
Compensation
|
|
|
Total
|
|
|
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
Dr.
David Jin
|
|
2019
|
|
|
|
540,000
|
|
|
|
—
|
|
|
|
394,722
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
934,722
|
|
CEO
|
|
2018
|
|
|
|
400,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
400,000
|
|
Luisa
Ingargiola
|
|
2019
|
|
|
|
490,000
|
|
|
|
—
|
|
|
|
833,333
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,323,333
|
|
CFO
|
|
2018
|
|
|
|
450,000
|
|
|
|
—
|
|
|
|
833,333
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,283,333
|
|
Meng
Li
|
|
2019
|
|
|
|
374,000
|
|
|
|
—
|
|
|
|
394,722
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
768,722
|
|
COO
and Secretary
|
|
2018
|
|
|
|
200,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
200,000
|
|
Dr.
Yu Zhou
|
|
2019
|
|
|
|
93,333
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
93,333
|
|
Former
Co-CEO of Genexosome
|
|
2018
|
|
|
|
182,356
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
182,356
|
|
Employment
Agreements
David
Jin
On
December 1, 2016, the Company entered into an Executive Employment Agreement with David Jin, the Company’s CEO and President.
Pursuant to the agreement, Mr. Jin will be employed as President and Chief Executive Officer of the Company until November 30,
2017 unless earlier terminated pursuant to the terms of the agreement. During the term of the agreement, Mr. Jin will be entitled
to a base salary at the annualized rate of $200,000 and will be eligible for a discretionary performance bonus, equity awards
and to participate in employee benefits plans as the Company may institute from time to time at the discretion of the Company’s
Board of Directors. Pursuant to the agreement, Mr. Jin may be terminated for “cause” as defined and Mr. Jin may resign
for “good reason” as defined. In the event Mr. Jin is terminated without cause or resigns for good reason, the Company
will be required to pay Mr. Jin all accrued salary and bonuses, reimbursement for all business expenses and Mr. Jin’s salary
for one year. In the event Mr. Jin is terminated with cause, resigns without good reason, dies or is disabled, the Company will
be required to pay Mr. Jin all accrued salary and bonuses and reimbursement for all business expenses. Under the agreement Mr.
Jin is subject to confidentiality, non-compete and non-solicitation restrictions.
On
January 3, 2019, the Company entered into a Letter Agreement with Dr. Jin, pursuant to which his annual base salary set forth
in his employment agreement was increased to $360,000 effective January 1, 2019. Further, the Company agreed to grant Dr. Jin
stock options to acquire 150,000 shares of common stock at an exercise price of $2.00 per share.
On
February 20, 2020, the Company entered into a Letter Agreement with Dr. Jin pursuant to which the term of Dr. Jin’s Executive
Employment Agreement entered between the Company and Dr. Jin dated December 1, 2016 was extended an additional three years and
granted Dr. Jin a Stock Option to acquire 400,000 shares of common stock at an exercise price of $1.52 per share for a period
of ten years.
Meng
Li
On
January 11, 2017, Avalon Shanghai entered into an Executive Employment Agreement with Meng Li, the Company’s COO and Secretary.
Pursuant to the agreement, Ms. Li will be employed as Chief Operating Officer and President of Avalon Shanghai through November
30, 2019, unless earlier terminated pursuant to the terms of the agreement. During the term of the agreement, Ms. Li will be entitled
to a base salary at the annualized rate of $100,000 and will be eligible for a discretionary performance bonus, equity awards
and to participate in employee benefits plans as the Avalon Shanghai may institute from time to time at the discretion of its
Board of Directors. Pursuant to the agreement, Ms. Li may be terminated for “cause” as defined and Ms. Li may resign
for “good reason” as defined. In the event Ms. Li is terminated without cause or resigns for good reason, Avalon Shanghai
will be required to pay Ms. Li all accrued salary and bonuses, reimbursement for all business expenses and Ms. Li’s salary
for one year. In the event Ms. Li is terminated with cause, resigns without good reason, dies or is disabled, Avalon Shanghai
will be required to pay Ms. Li all accrued salary and bonuses and reimbursement for all business expenses. Under the agreement
Ms. Li is subject to confidentiality, non-compete and non-solicitation restrictions.
On
January 3, 2019, the Company entered into a Letter Agreement with Ms. Li, pursuant to which her annual base salary set forth in
her employment agreement was increased to $340,000 effective January 1, 2019. Further, the Company agreed to grant Ms. Li stock
options to acquire 150,000 shares of common stock at an exercise price of $2.00 per share.
On
February 20, 2020, the Company entered into a Letter Agreement with Meng Li pursuant to which the term of Ms. Li’s Executive
Employment Agreement entered between the Company’ subsidiary and Ms. Li dated January 11, 2017 was extended an additional
three years and granted Ms. Li a Stock Option to acquire 300,000 shares of common stock at an exercise price of $1.52 per share
for a period of ten years.
Luisa
Ingargiola
On
February 21, 2017, Ms. Ingargiola and the Company entered into an Executive Retention Agreement effective February 9, 2017 pursuant
to which Ms. Ingargiola agreed to serve as Chief Financial Officer in consideration of an annual salary of $200,000 to be increased
to $225,000 on the 60-day anniversary. The Company has agreed to provide a bonus of 50% of her base salary upon the Company timely
filing its annual report on Form 10-K for the year ended December 31, 2017 and the Company raising gross proceeds of $20 million
in debt and/or equity capital and a bonus of 100% of her base salary upon the Company achieving (i) any merger or sale of the
Company or its assets, (ii) the Company achieving adjusted EBITDA of $10 million in a fiscal year, (iii) the Company achieving
a listing on a national exchange and then or subsequently raising gross proceeds in the amount of $10 million. The Company also
granted Ms. Ingargiola a Stock Option to acquire two million shares of common stock of the Company at an exercise price of $0.50
per share for a period of ten years. The Stock Options vest in 36 equal tranches commencing on the grant date. The Company and
Ms. Ingargiola also entered into an Indemnification Agreement.
The
employment of Ms. Ingargiola is at will and may be terminated at any time, with or without formal cause. Pursuant to the terms
of executive retention agreement with Ms. Ingargiola, the Company has agreed to provide specified severance and bonus amounts
and to accelerate the vesting on their equity awards upon termination upon a change of control or an involuntary termination,
as each term is defined in the agreements.
In
the event of a termination upon a change of control, Ms. Ingargiola is entitled to receive an amount equal to 12 months of her
base salary and the target bonus then in effect for the executive officer for the year in which such termination occurs, such
bonus payment to be pro-rated to reflect the full number of months the executive remained in the Company’s employ. In addition,
the vesting on any stock option held by the executive officer will be accelerated in full. At the election of the executive officer,
the Company will also continue to provide health related employee insurance coverage for twelve months, at the Company’s
expense.
In
the event of an involuntary termination, Ms. Ingargiola is entitled to receive an amount equal to six months of her base salary
and the target bonus then in effect for the executive officer for the six months in which such termination occurs, such bonus
payment to be pro-rated to reflect the full number of months the executive remained in the Company’s employ. Such payment
will be increased to 12 months upon the one-year anniversary of the retention agreement. In addition, the vesting on any stock
option held by the executive officer will be accelerated in full. At the election of the executive officer, the Company will also
continue to provide health related employee insurance coverage for twelve months, at the Company’s expense.
On
January 3, 2019, the Company entered into a Letter Agreement with Ms. Ingargiola, pursuant to which her annual base salary set
forth in her employment agreement was increased to $350,000 effective January 1, 2019.
On
February 20, 2020, the Company entered into a Letter Agreement with Ms. Ingargiola granting Ms. Ingargiola a Stock Option to acquire
400,000 shares of common stock at an exercise price of $1.52 per share for a period of ten years.
Yu
Zhou
On
October 25, 2017, Dr. Yu 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 $160,000. Dr. Zhou and Genexosome also entered into
an Invention Assignment, Confidentiality, Non-Compete and Non-Solicit Agreement. On August 14, 2019, Genexosome terminated Yu
Zhou as Co-Chief Executive Officer. In addition, Dr. Zhou’s Executive Retention Agreement was also terminated and he was
not elected to serve as a director for the year ended 2020.
Grants
of Plan Based Awards
The
following table provides information regarding grants of share based awards to the Named Executive Officers in 2019.
Name
|
|
Grant
Date
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
All
Other
Stock
Awards:
Number of
Shares of
Stock or
Units
#
|
|
|
All
Other
Stock
Awards:
Number of
Securities
Underlying
(#)
|
|
|
Exercise
Price
of
Options
Awards
($/sh)
|
|
|
Grant
Data
Fair Value
of
Stock and
Options
Awards $
(1)
|
|
David
Jin, CEO
|
|
01/03/2019
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
150,000
|
|
|
|
—
|
|
|
$
|
2.00
|
|
|
|
394,722
|
|
Luisa
Ingargiola, CFO
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Meng
Li, COO and Secretary
|
|
01/03/2019
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
150,000
|
|
|
|
—
|
|
|
$
|
2.00
|
|
|
|
394,722
|
|
|
(1)
|
Represents
the aggregate grant date fair value of the award computed in accordance with FASB ASC Topic 718.
|
Option
Exercises and Stock Vested
There
were no options exercised by our executive officers or stock vested to our executive officers during the year ended December 31,
2019.
Equity
Compensation Plan Information
The
following table provides information as of December 31, 2019 with respect to shares of common stock that may be issued under our
2019 Equity Compensation Program, which has been approved by the Company’s shareholders.
Plan
Category
|
|
(a)
Number of Securities to
be Issued Upon
Exercise
of Outstanding
Options, Warrants and
Rights
|
|
|
(b)
Weighted-Average
Exercise Price of
Outstanding
Options,
Warrants and Rights
|
|
|
(c)
Number
of Securities
Remaining Available
For
Future
Issuance Under Equity
Compensation
Plans
(Excluding
Securities
Reflected
in Column (a))
|
|
Equity
Compensation Plans Approved by Security Holders
|
|
|
2,260,000
|
|
|
$
|
2.11
|
|
|
|
2,352.620
|
|
Equity
Compensation Plans Not Approved by Security Holders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
2,260,000
|
|
|
$
|
2.11
|
|
|
|
2,352.620
|
|
Outstanding
Equity Awards
The
following table sets forth information with respect to the outstanding equity awards of our principal executive officers and principal
financial officer during 2018, and each person who served as an executive officer of the Company as of December 31, 2019:
|
|
Outstanding
Equity Awards
|
|
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
Name
and principal position
|
|
Number
of securities underlying unexercised options
Exercisable
(#)
|
|
|
Number
of securities underlying unexercised options Unexercisable
(#)
|
|
|
Equity
incentive plan awards:
Number of securities underlying unexercised options
(#)
|
|
|
Options
exercise price
($)
|
|
|
Option
expiration Date
|
|
|
Number
of shares or units of stock that have not vested
(#)
|
|
|
Market
value of shares or units of stock that have not vested
($)
|
|
|
Equity
incentive plan awards: Number of unearned shares other rights that have not vested
(#)
|
|
|
Equity
incentive plan
awards:
Market or
payout value
of unearned
shares,
units
or other
rights that
have not
vested
($)
|
|
Luisa
Ingargiola, CFO
|
|
|
1,944,444
|
|
|
|
55,556
|
|
|
|
2,000,000
|
|
|
|
0.50
|
|
|
|
2/8/2027
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
David
Jin, CEO
|
|
|
150,000
|
|
|
|
-
|
|
|
|
150,000
|
|
|
|
2.00
|
|
|
|
1/2/2024
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Meng
Li, COO and Secretary
|
|
|
150,000
|
|
|
|
-
|
|
|
|
150,000
|
|
|
|
2.00
|
|
|
|
1/2/2024
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Yu
Zhou, Former Co-CEO of Genexosome
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
No
Pension Benefits
The
Company does not maintain any plan that provides for payments or other benefits to its executive officers at, following or in
connection with retirement and including, without limitation, any tax-qualified defined benefit plans or supplemental executive
retirement plans.
No
Nonqualified Deferred Compensation
The
Company does not maintain any defined contribution or other plan that provides for the deferral of compensation on a basis that
is not tax-qualified.
Director
Compensation
Name
|
|
Fees
Earned or
Paid in
Cash
$
|
|
|
Stock
Awards
$
|
|
|
Option
Awards
$
|
|
|
Non-equity
Incentive Plan
Compensation
$
|
|
|
Change
in
Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings
$
|
|
|
All
Other
Compensation
$
|
|
|
Total
$
|
|
Yue
“Charles” Li (1)
|
|
|
44,333
|
|
|
|
-
|
|
|
|
128,412
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
172,745
|
|
Yancen
Lu (2)
|
|
|
70,000
|
|
|
|
-
|
|
|
|
513,133
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
583,133
|
|
Wilbert
Tauzin (3)
|
|
|
-
|
|
|
|
-
|
|
|
|
236,122
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
236,122
|
|
Wenzhao
Lu (4)
|
|
|
100,000
|
|
|
|
-
|
|
|
|
3,947,216
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,047,216
|
|
David
Jin
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Meng
Li (5)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Steven
Sanders (6)
|
|
|
70,000
|
|
|
|
-
|
|
|
|
118,412
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
188,412
|
|
Tevi
Troy (7)
|
|
|
60,000
|
|
|
|
-
|
|
|
|
118,412
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
178,412
|
|
William
Stilley (8)
|
|
|
70,000
|
|
|
|
-
|
|
|
|
118,412
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
188,412
|
|
(1)
|
Mr.
Li’s 2019 compensation consisted of cash of $44,333 and 30,000 options vested and valued at $128,412. Mr. Li has been
our director since April 5, 2019.
|
(2)
|
Mr.
Lu’s 2019 compensation consisted of cash of $70,000 and 200,000 options vested and valued at $513,133. Mr. Lu has been
our director since April 28, 2017.
|
(3)
|
Mr.
Tauzin’s 2019 compensation consisted of 200,000 options vested and valued at $236,122. Mr. Tauzin has been our director
since November 1, 2017.
|
(4)
|
Mr.
Lu’s 2019 compensation consisted of cash of $100,000 and 1,500,000 options vested and valued at $3,947,216. Mr. Lu has
been our director since October 10, 2016.
|
(5)
|
Ms.
Li has been our director since April 5, 2019.
|
(6)
|
Mr.
Sanders’s 2019 compensation consisted of cash of $70,000 and 50,000 options vested and valued at $118,412. Mr. Sanders
has been our director since July 30, 2018.
|
(7)
|
Mr.
Troy’s 2019 compensation consisted of cash of $60,000 and 50,000 options vested and valued at $118,412. Mr. Troy has
been our director since June 4, 2018
|
(8)
|
Mr.
Stilley’s 2019 compensation consisted of cash of $70,000 and 50,000 options vested and valued at $118,412. Mr. Stilley
has been our director since July 5, 2018.
|
On
February 19, 2020, the Board of Directors of the Company approved an increase in the number of shares of common stock to be acquired
pursuant to option grants for all independent Directors from 50,000 shares to 80,000 shares annually going forward, which shall
vest at the rate of 20,000 shares under such option per quarter.
ACTIONS
TO BE TAKEN AT THE MEETING
PROPOSAL
NO. 1
PROPOSAL
FOR ELECTION OF NINE DIRECTORS
At
this year’s Annual Meeting, the Board of Directors proposes that the nominees listed below be elected to hold office until
the next annual meeting of stockholders and until their successors are duly elected and qualified. All of the nominees are currently
serving as directors. All nominees have consented to being named in this Proxy Statement and to serve if elected.
Assuming
a quorum is present, the nine nominees receiving the highest number of affirmative votes of shares entitled to be voted for such
persons will be elected as directors of the Company to hold office until the next annual meeting of stockholders and until their
successors are duly elected and qualified. Unless marked otherwise, proxies received will be voted “FOR” the election
of the nominees named below. In the event that additional persons are nominated for election as directors, the proxy holders intend
to vote all proxies received by them in such a manner as will ensure the election of the nominees listed below, and, in such event,
the specific nominees to be voted for will be determined by the proxy holders.
Information
With Respect to Director Nominees
Listed
below are the nominees for election to our Board with information showing the principal occupation or employment of the nominees
for director, the principal business of the corporation or other organization in which such occupation or employment is carried
on, and such nominees’ business experience during the past five years. Such information has been furnished to the Company
by the director nominees.
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
Wenzhao
“Daniel” Lu
|
|
62
|
|
Chairman
of the Board of Directors
|
|
|
|
|
|
David
Jin, MD, PhD
|
|
52
|
|
Chief
Executive Officer, President and Director
|
|
|
|
|
|
Meng
Li
|
|
42
|
|
Chief
Operating Officer, Secretary and Director
|
|
|
|
|
|
Steven
A. Sanders
|
|
74
|
|
Director
|
|
|
|
|
|
Yancen
Lu
|
|
45
|
|
Director
|
|
|
|
|
|
Wilbert
J. Tauzin II
|
|
75
|
|
Director
|
|
|
|
|
|
William
B. Stilley, III
|
|
52
|
|
Director
|
|
|
|
|
|
Tevi
Troy
|
|
52
|
|
Director
|
|
|
|
|
|
Yue
“Charles” Li
|
|
46
|
|
Director
|
Officers
are elected annually by the Board of Directors (subject to the terms of any employment agreement), at our annual meeting, to hold
such officer until an officer’s successor has been duly appointed and qualified, unless an officer sooner dies, resigns
or is removed by the Board.
The
principal occupation and business experience during at least the past five years for our executive officers and directors is as
follows:
Wenzhao
“Daniel” Lu, Chairman of the Board of Directors
Mr.
Wenzhao Lu is our Chairman of the Board. He is a seasoned healthcare entrepreneur with extensive operational knowledge and experience
in China. He has been serving as Chairman of the Board for the Daopei Medical Group, or DPMG, since 2010. Under his leadership,
DPMG has recently expanded its clinical network involving a state-of-the-art stem cell bank at Wuhan Biolake, three top-ranked
private hospitals (located in Beijing, Shanghai, and Hebei), specialty hematology laboratories, as well as a hematology research
institute, with more than 100 partnering and collaborating hospitals in China. DPMG was founded by Professor Daopei Lu, a renowned
hematologist pioneering in hematopoietic stem cell transplant and member of the Academy of Engineering in China. Mr. Wenzhao Lu
received a Bachelor of Arts from Temple University Tyler School of Arts in 1988 and subsequently worked as senior Art Director
at Ogilvy & Mather Advertising Company. Prior to joining DPMG, Mr. Lu served as Chief Operating Officer for BioTime Asia Limited,
which is a subsidiary of BioTime, Inc. (NYSE American: BTX) in 2009. Mr. Lu is qualified to serve as a director because of his
extensive operational knowledge of, and executive level management experience in, the healthcare industry.
David
Jin, Chief Executive Officer, President and Director
Dr.
David Jin, MD, PhD, is our Chief Executive Officer, President and a member of the Board of Directors. From 2009 to 2017, Dr. Jin
has served as the Chief Medical Officer of BioTime, Inc. (NYSE American: BTX), a clinical stage regenerative medicine company
with a focus on pluripotent stem cell technology. Dr. Jin also acts as a senior translational clinician-scientist at the Howard
Hughes Medical Institute and the Ansary Stem Cell Center at Weill Cornell Medical College of Cornell University. Prior to his
current endeavors, Dr. Jin was Chief Consultant/Advisor for various biotech/pharmaceutical companies regarding hematology, oncology,
immunotherapy and stem cell-based technology development. Dr. Jin has been Principle Investigator in more than 15 pre-clinical
and clinical trials, as well as author/co-author of over 80 peer-reviewed scientific abstracts, articles, reviews, and book chapters.
Dr. Jin studied medicine at SUNY Downstate College of Medicine in Brooklyn, New York. He received his clinical training and subsequent
faculty tenure at the New York-Presbyterian Hospital (the teaching hospital for both Cornell and Columbia Universities) in the
areas of internal medicine, hematology, and clinical oncology. Dr. Jin was honored as Top Chief Medical Officer by ExecRank in
2012, as well as recognized by Leading Physicians of the World in 2015. Dr. Jin is qualified to serve as a director because of
his role with us, and his extensive operational knowledge of, and executive level management experience in, the healthcare industry.
Meng
Li, Chief Operating Officer, Secretary and Director
Ms.
Meng Li is our Chief Operating Officer and Secretary and a former member of the Board of Directors. Ms. Li has over 15 years of
executive experience in international marketing, branding, communications, and media investment consultancy. Ms. Li served as
Managing Director at Maxus/GroupM (a WPP Group company) where she was responsible for business P&L and corporate management
from 2006 to 2015. Prior to joining Maxus/Group M, Ms. Li worked for Zenith Media (a Publicis Group company) from 2000 to 2006
as Senior Manager. Ms. Li received a Bachelor of Arts in International Economic Law from Dalian Maritime University in China.
Steven
A. Sanders, Director
Steven
A. Sanders is a member of the Board of Directors. Since January 2017, Mr. Sanders has been Of Counsel to the law firm of Ortoli
Rosenstadt LLP. From July 2007 until January 2017, Mr. Sanders was a Senior Partner of Ortoli Rosenstadt LLP. From January 1,
2004 until June 30, 2007, he was Of Counsel to the law firm of Rubin, Bailin, Ortoli, LLP. From January 1, 2001 to December 31,
2003, he was Counsel to the law firm of Spitzer & Feldman PC. Mr. Sanders also serves as a Director of Helijet International,
Inc. and Electrameccanica Vehicles Corp. (Nasdaq: SOLO). Additionally, he has been a director at the American Academy of Dramatic
Arts since October 2013 and has been a director of the Bay Street Theater since February 2015. Mr. Sanders received his JD from
Cornell University and his BBA from The City College of New York. Mr. Sanders is qualified to serve as a director because of his
corporate, securities and international law experience, including working with companies in the life sciences industry.
Yancen
Lu, Director
Yancen
Lu is a member of the Board of Directors. Mr. Lu has more than 20 years of experience in investment banking and equity investment
management. He is the Founder and CEO of PagodaTree Partners, a healthcare PE fund. Before this, Mr.Lu was the Managing Director
of Fountain Vest Partners. In addition to his professionalism in securities, investment and capital management, Mr. Lu has a special
focus and comprehensive understanding of the global medical and healthcare industry. He served as Director of leading healthcare
corporations including Sino Hospital Investment Corporation (Hong Kong), Chang’an Hospital (the largest private hospital
in Northwest China), and DIH Medical Technologies. Mr. Lu received Bachelor’s and Master’s degrees in Engineering
Economics from Tianjin University. Mr. Lu is qualified to serve as a director because of his extensive operational knowledge of,
and executive level management experience in, the healthcare industry.
Wilbert
J. Tauzin II, Director
Wilbert
J. Tauzin II is a member of the Board of Directors. From December 2010 until March 1, 2014, Congressman Tauzin served as Special
Legislative Counsel to Alston & Bird LLP. From December 2004 to June 2010, Congressman Tauzin was President and Chief Executive
Officer of the Pharmaceutical Research and Manufacturers of America, a trade group that serves as one of the pharmaceutical industry’s
top lobbying groups. He served 13 terms in the U.S. House of Representatives, representing Louisiana’s 3rd Congressional
District since being first sworn in in 1980. From January 2001 through February 2004, Congressman Tauzin served as Chairman of
the House Committee on Energy and Commerce. He also served as a senior member of the House Resources Committee and Deputy Majority
Whip. Prior to serving as a member of Congress, Congressman Tauzin was a member of the Louisiana State Legislature, where he served
as Chairman of the House Natural Resources Committee and Chief Administration Floor Leader. He currently serves as a director
of LHC Group, Inc., publicly-traded companies, and Lenitiv Scientific, LLC a privately-held companies. Congressman Tauzin received
a Bachelor of Arts Degree from Nicholls State University and a Juris Doctor degree from Louisiana State University. Congressman
Tauzin is qualified to serve as a director because of his extensive knowledge of the pharmaceutical industry and his experience
as a director of several publicly-traded and privately-held companies.
William
B. Stilley, III, Director
William
B. Stilley is a member of the Board of Directors. Mr. Stilley has been the chief executive officer and member of the board of
directors of Adial Pharmaceuticals, Inc. since December 2010. From August 2008 until December 2010, he was the vice president,
business development and strategic projects at Clinical Data, Inc. (NASDQ: CLDA). From February 2002, Mr. Stilley was the COO
and CFO of Adenosine Therapeutics, LLC until certain assets of Adenosine Therapeutics were acquired by Clinical Data, Inc. in
August 2008. Mr. Stilley has advised both public and private companies on financing and M&A transactions, has been the interim
CFO of a public company, the interim Chief Business Officer of Diffusion Pharmaceuticals from September 2015 through December
2015, and the COO and CFO of a number of private companies. Before entering the business community, Mr. Stilley served as Captain
in the U.S. Marine Corps. Mr. Stilley has an MBA with honors from the Darden School of Business and a B.S. in Commerce/Marketing
from the McIntire School of Commerce at the University of Virginia. He currently serves on the Board of Virginia BIO, the statewide
biotechnology organization. Mr. Stilley is qualified to serve as a director because of his extensive knowledge of the biotechnology
industry, significant executive leadership and operational experience, and knowledge of, and experience in, financing and M&A
transactions.
Tevi
Troy, Director
Tevi
Troy is a member of the Board of Directors. Since February 2018, Dr. Troy has served as Vice President of Public Policy for Juul
Labs. From 2014 to 2018, Dr. Troy was the founder and CEO of the American Health Policy Institute. Before that, Dr. Troy was Senior
Fellow at Hudson Institute, where he remains an Adjunct Fellow. On August 3, 2007, Dr. Troy was unanimously confirmed by the U.S.
Senate as the Deputy Secretary of the U.S. Department of Health and Human Services. As Deputy Secretary, Dr. Troy was the chief
operating officer of the largest civilian department in the federal government, with a budget of $716 billion and over 67,000
employees. Dr. Troy has extensive White House experience, having served in several high-level positions over a five-year period,
culminating in his service as Deputy Assistant and then Acting Assistant to the President for Domestic Policy. Dr. Troy has held
high-level positions on Capitol Hill as well. From 1998 to 2000, Dr. Troy served as the Policy Director for Senator John Ashcroft.
From 1996 to 1998, Dr. Troy was Senior Domestic Policy Adviser and later Domestic Policy Director for the House Policy Committee,
chaired by Christopher Cox. In addition to his senior level government work and health care expertise, Dr. Troy is also a best-selling
presidential historian and the author of five books. Dr. Troy’s many other affiliations include: contributing editor for
Washingtonian magazine; member of the publication committee of National Affairs; member of the Board of Fellows of the Jewish
Policy Center; a Senior Fellow at the Potomac Institute; and a member of the Bipartisan Commission on Biodefense. Dr. Troy has
a B.S. in Industrial and Labor Relations from Cornell University and an M.A and Ph.D. in American Civilization from the University
of Texas at Austin. Dr. Troy is qualified to serve as a director because of his extensive knowledge of the healthcare industry
and his significant leadership experience.
Yue
“Charles” Li
Mr.
Li has about 20 years of experience in M&A and capital markets in China and the U.S. Mr. Li currently is a Managing Director
at PagodaTree Partners, a private equity company with a focus on healthcare in Beijing. Prior to PagodaTree, he was a senior executive
at a major conglomerate in China where he successfully closed $2 billion M&A transactions in healthcare and insurance areas.
Previously, Mr. Li spent 8 years in Deloitte, as a director of financial advisory services in Beijing and capital markets in New
York. His key clients included Merrill Lynch, Blackrock, KKR etc. In his early career, Mr. Li served for top tier financial institutions
such as Credit Suisse and Fannie Mae, responsible for asset allocation strategy and risk management for multibillion USD portfolios.
Mr. Li received Master’s degree from the Olin School of Business at Washington University in 2000 and a Bachelor of Engineering
from Tianjin University in 1996. He is a CFA charter holder. Mr. Li is qualified to serve as a director because of his extensive
investment and executive level management experience.
Required
Vote
The
election of the directors of the Company requires the affirmative vote of a plurality of the shares of the Company’s common
stock present or represented by Proxy at the Annual Meeting, which will be the nominees receiving the largest number of votes,
which may or may not constitute a majority.
RECOMMENDATION
OF THE BOARD FOR PROPOSAL NO. 1:
THE
BOARD RECOMMENDS A VOTE FOR THE ELECTION OF ALL THE NOMINEES DESCRIBED ABOVE.
PROPOSAL
NO. 2
RATIFICATION
OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The
audit committee of our board of directors has appointed Marcum LLP (“Marcum”) as our independent registered public
accounting firm to audit our consolidated financial statements for the fiscal years ending December 31, 2019. RBSM LLP served
as our independent auditors for the year ended December 31, 2018. At the Annual Meeting, stockholders will be asked to ratify
the appointment of Marcum as our independent registered public accounting firm for the year ending December 31, 2020. Stockholder
ratification of the appointment of our independent registered public accounting firm is not required by our bylaws or other applicable
legal requirements. However, our board of directors submits the appointment of Marcum to our stockholders for ratification as
a matter of good corporate governance. If this appointment is not ratified by the affirmative vote of a majority of the shares
present or by proxy at the Annual Meeting and entitled to vote, the appointment will be reconsidered by our audit committee. Even
if the appointment is ratified, our audit committee, in its sole discretion, may appoint another independent registered public
accounting firm at any time during the fiscal year ending December 31, 2020 if our audit committee believes that such a change
would be in the best interests of the Company and its stockholders. A representative of Marcum is expected to be present at the
Annual Meeting, will have an opportunity to make a statement if he or she wishes to do so, and is expected to be available to
respond to appropriate questions from stockholders.
Fees
Paid to Independent Registered Public Accounting Firm
Marcum
served as our independent auditors for the year ended December 31, 2019. RBSM LLP served as our independent auditors for the year
ended December 31, 2018. Aggregate fees billed to the Company for professional services rendered by Marcum LLP and RBSM LLP, during
the last two fiscal years were as follows:
|
|
2019
|
|
|
2018
|
|
Audit Fees
|
|
|
|
|
|
|
RBSM
|
|
$
|
317,000
|
|
|
$
|
234,500
|
|
Marcum
|
|
|
165,000
|
|
|
|
-
|
|
Audit
Related Fees
|
|
|
|
|
|
|
|
|
RBSM
|
|
|
-
|
|
|
|
-
|
|
Marcum
|
|
|
-
|
|
|
|
-
|
|
Tax
Fees
|
|
|
|
|
|
|
|
|
RBSM
|
|
|
18,000
|
|
|
|
15,000
|
|
Marcum
|
|
|
2,575
|
|
|
|
-
|
|
All
Other Fees
|
|
|
|
|
|
|
|
|
RBSM
|
|
|
-
|
|
|
|
-
|
|
Marcum
|
|
|
-
|
|
|
|
-
|
|
Totals
|
|
|
|
|
|
|
|
|
RBSM
|
|
|
335,000
|
|
|
|
249,500
|
|
Marcum
|
|
$
|
167,575
|
|
|
$
|
-
|
|
AUDIT
FEES. Consists of fees billed for professional services rendered for the audit of our annual consolidated financial statements,
review of the Form 10-K, and review of the interim consolidated financial statements included in quarterly reports, and services
that are normally provided by our independent auditors in connection with statutory and regulatory filings or engagements, including
registration statements.
AUDIT-RELATED
FEES. Consists of fees billed for assurance and related services that are reasonably related to the performance of the audit and
or review of our consolidated financial statements and are not reported under “Audit Fees”, such as audits and reviews
in connection with acquisitions.
TAX
FEES. Consists of fees billed for professional services for tax compliance, tax advice and tax planning.
ALL
OTHER FEES. Consists of fees for products and services other than the services reported above. There were no management consulting
services provided in fiscal 2019 or 2018.
POLICY
ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES OF INDEPENDENT AUDITORS. The current policy of the
directors, acting as the audit committee, is to approve the appointment of the principal auditing firm and any permissible audit-related
services. The audit and audit related fees include fees for the annual audit of the financial statements and review of financial
statements included in 10Q filings. Fees charged by the auditor were approved by the Board with engagement letters signed by the
audit committee chairman.
The
Audit Committee is responsible for the pre-approval of audit and permitted non-audit services to be performed by the Company’s
independent auditor. The Audit Committee will, on an annual basis, consider and, if appropriate, approve the provision of audit
and non-audit services by the auditor. Thereafter, the Audit Committee will, as necessary, consider and, if appropriate, approve
the provision of additional audit and non-audit services by the auditor which are not encompassed by the Audit Committee’s
annual pre-approval and are not prohibited by law. The Audit Committee has delegated to the Chair of the Audit Committee the authority
to pre-approve, on a case-by-case basis, non-audit services to be performed by the auditor. The Audit Committee has approved all
audit and permitted non-audit services performed by the auditor for the year ended December 31, 2019.
RECOMMENDATION
OF THE BOARD FOR PROPOSAL NO. 2:
THE
BOARD RECOMMENDS A VOTE FOR RATIFICATION OF APPOINTMENT OF MARCUM LLP AS OUR INDEPENDENT AUDITORS FOR THE YEAR ENDED DECEMBER
31, 2020.
PROPOSAL
NO. 3
APPROVAL
OF THE AVALON GLOBOCARE INC. 2020 INCENTIVE STOCK PLAN AND THE RESERVATION OF 5,000,000 SHARES OF COMMON STOCK FOR ISSUANCE THEREUNDER
At
the Annual Meeting, the Company’s stockholders are being asked to approve the 2020 Incentive Stock Plan (the “2020
Incentive Plan”) and to authorize 5,000,000 shares of Common Stock for issuance thereunder. The following description of
the principal terms of the 2020 Incentive Plan is a summary and is qualified in its entirety by the full text of the 2020 Incentive
Plan, which is attached as Appendix A to this proxy statement. This summary does not purport to be a complete description of all
the provisions of the 2020 Incentive Plan.
General
The
2020 Incentive Plan was adopted by our board of directors on June 12, 2020, subject to the approval of our stockholders. The board
believes that the 2020 Incentive Plan will advance the Company’s interests by enhancing our ability to (a) attract, retain
and reward employees, officers, directors and consultants who are in a position to make significant contributions to our success;
and (b) encourage our employees, officers, directors and consultants to take into account our long-term interests through ownership
of our shares of Common Stock.
The
board has reserved 5,000,000 shares of Common Stock for issuance under the 2020 Incentive Plan, subject to customary adjustments
for stock splits, stock dividends or similar transactions. Under the 2020 Incentive Plan, awards may be made in the form of options
to purchase shares of our Common Stock, as well as restricted shares of our Common Stock and restricted stock units payable in
shares of our Common Stock (collectively, “awards”). Options may be granted which are intended to qualify as Incentive
Stock Options (“ISOs”) under Section 422 of the Internal Revenue Code of 1986 (the “Code”) or which are
not (“Non-ISOs”) intended to qualify as Incentive Stock Options thereunder. However, ISOs may only be granted to employees.
If any option granted under the 2020 Incentive Plan terminates without having been exercised in full or if any award is forfeited,
or if shares otherwise issuable are withheld to satisfy tax withholding obligations, the number of shares of Common Stock as to
which such option or award was forfeited or withheld will be available for future grants under the 2020 Plan.
The
2020 Incentive Plan is not a qualified deferred compensation plan under Section 401(a) of the Internal Revenue Code and is not
subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).
Purpose
The
primary purpose of the 2020 Incentive Plan is to attract and retain the best available personnel for the Company in order to promote
the success of the Company’s business and to facilitate the ownership of the Company’s Common Stock by employees,
officers, directors and consultants in order for them to acquire a proprietary interest in the success of the Company. In the
event that the 2020 Incentive Plan is not adopted, the Company will be required to rely on granting equity under the 2019 Incentive
Stock Plan and may have considerable difficulty in attracting and retaining qualified personnel, officers, directors and consultants.
Administration
The
2020 Incentive Plan is administered by the Compensation Committee of our board of directors. The Compensation Committee has authority
to determine the kind of awards to grant, the persons who will receive awards, and the terms and conditions of each award. The
Compensation Committee may adopt, amend and rescind rules and regulations for the administration of the 2020 Incentive Plan. All
questions of interpretation of the 2020 Incentive Plan are determined by the Compensation Committee, and its decisions are final
and binding upon all participants.
Eligibility
Awards
under the 2020 Incentive Plan may be granted to employees, officers, directors and consultants of the Company and its subsidiaries,
as provided in the 2020 Incentive Plan. As of December 31, 2019, our Company and its subsidiaries
had a total of eight employees, including three executive officers. As awards under the 2020 Incentive Plan are
within the discretion of the Compensation Committee, we cannot determine how many individuals in each of the categories described
above will receive awards.
Terms
of Options
The
term of each Option granted under the Plan will be contained in a stock option grant agreement between the optionee and the Company,
the terms of which will be determined by the Compensation Committee consistent with the provisions of the Plan, including the
following:
(a)
PURCHASE PRICE. The Compensation Committee will determine the exercise price of each option granted under the 2020 Plan. The exercise
price of an option may not be less than the fair market value of a share of Common Stock on the date of grant, as set forth in
the 2020 Incentive Plan (or 110% of the fair market value per share in the case of an ISO granted to a ten-percent or more shareholder).
If on the date of grant the Common Stock is listed on a stock exchange or is quoted on the automated quotation system of NASDAQ,
the fair market value shall generally be the closing sale price on the date of grant (or, if no trades were made on the date of
grant, for the last trading day before the date of grant). If no such prices are available, the fair market value shall be determined
in good faith by the Compensation Committee based on the reasonable application of a reasonable valuation method. On June 16,
2020, the closing sale price of a share of Common Stock on the NASDAQ Stock Market was $1.64.
Generally,
the exercise price may be paid (a) in cash or by check, (b) through delivery of shares of our Common Stock having a fair market
value equal to the purchase price, or (c) a combination of these methods. The Compensation Committee is also authorized to establish
a cashless exercise program and to permit the exercise price to be satisfied by reducing from the shares otherwise issuable upon
exercise a number of shares having a fair market value equal to the exercise price.
(b)
VESTING. The dates on which each option (or portion thereof) may become exercisable and the conditions precedent to such exercise,
if any, shall be determined by the Compensation Committee, in its discretion, at the time such option is granted. No employee
may receive ISOs that first become exercisable in any calendar year in an amount exceeding $100,000. An option may be granted
with a right that allows the optionee to exercise the option in full or in part before it becomes vested, in which case the shares
acquired will be subject to repurchase by the Company if the optionee’s employment or service terminates before the original
exercise date(s) of the option.
(c)
EXPIRATION. The expiration date of each option will be determined by the Compensation Committee, in its discretion, at the time
such option is granted; however, unless otherwise determined by the Compensation Committee at the time such option is granted,
an option shall be exercisable for ten (10) years after the date on which it was granted (five years in the case of an ISO granted
to a ten-percent or more shareholder). Each option will be subject to earlier termination as expressly provided in the 2020 Incentive
Plan or as determined by the Compensation Committee, in its discretion, at the time such option is granted.
(d)
TRANSFERABILITY. Options are not transferable, except by will or the laws of descent and distribution, and any option may be exercised
during the lifetime of the optionee only by him or her. No option granted under the Plan may be subject to execution, attachment
or other process.
Terms
and Conditions of Other Stock Awards.
The
Compensation Committee may also grant restricted stock awards and restricted stock unit awards under the Plan. Under a restricted
stock award, shares of Common Stock that are the subject of the award are generally subject to forfeiture to the extent that the
recipient terminates employment or service with us prior to the award having vested or if any performance goals established by
the Compensation Committee as a condition of vesting are not achieved. Shares of Common Stock subject to a restricted stock award
cannot be sold, transferred, assigned, pledged or otherwise encumbered or disposed of by the recipient of the award unless and
until the applicable restrictions lapse. Unless otherwise determined by the Compensation Committee, holders of restricted shares
will have the right to vote such shares and to receive any cash dividends with respect thereto during the restriction period.
Any stock dividends will be subject to the same restrictions as the underlying shares of restricted stock.
Under
a restricted stock unit award, restricted stock units that are the subject of the award are generally subject to forfeiture to
the extent that the recipient terminates employment or service with us prior to the award having vested or if the performance
goals established by the Compensation Committee as a condition of vesting are not achieved. To the extent that the award of restricted
stock units vests, the recipient shall become entitled to receive a number of shares of Common Stock equal to the number of restricted
stock units that became vested. Restricted stock units cannot be sold, transferred, assigned, pledged or otherwise encumbered
or disposed of by the recipient of the award and during a recipient’s lifetime may be exercised only by the recipient. Prior
to the delivery of shares of Common Stock with respect to an award of restricted stock units, the recipient shall have no rights
as a shareholder of our Company. The Compensation Committee may award restricted stock units with rights to cash dividend equivalents
which may be paid during the applicable vesting period or accumulated and paid at the end of the applicable vesting period.
Effect
of a Change in Control. The Compensation Committee may, at the time of the grant of an award provide for the effect of a change
in control (as defined in the 2020 Incentive Plan) on any award, including (i) accelerating or extending the time periods for
exercising, vesting in, or realizing gain from any award, (ii) eliminating or modifying the performance or other conditions of
an award, or (iii) providing for the cash settlement of an award for an equivalent cash value, as determined by the Compensation
Committee. The Compensation Committee may, in its discretion and without the need for the consent of any recipient of an award,
also take one or more of the following actions contingent upon the occurrence of a change in control: (a) cause any or all outstanding
options to become immediately exercisable, in whole or in part; (b) cause any other awards to become non-forfeitable, in
whole or in part; (c) cancel any option in exchange for a substitute option; (d) cancel any award of restricted stock or restricted
stock units in exchange for a similar award of the capital stock of any successor corporation; (e) cancel or terminate any award
for cash and/or other substitute consideration in exchange for an amount of cash and/or property equal to the amount, if any,
that would have been attained upon the exercise of such award or realization of the participant’s rights as of the date
of the occurrence of the change in control, but if the change in control consideration with respect to any option does not exceed
its exercise price, the option may be canceled without payment of any consideration; or (f) make such other modifications, adjustments
or amendments to outstanding awards as the Compensation Committee deems necessary or appropriate.
Clawback/Recoupment.
Awards granted under the 2020 Incentive Plan will be subject to the requirement that the awards be forfeited or amounts repaid
to the Company after they have been distributed to the participant (i) to the extent set forth in an award agreement or (ii) to
the extent covered by any clawback or recapture policy adopted by the Company from time to time, or any applicable laws that impose
mandatory forfeiture or recoupment, under circumstances set forth in such applicable laws.
Termination,
Modification and Amendment. The 2020 Incentive Plan (but not awards previously granted under the Plan) shall terminate ten
(10) years from the date on which the Plan is approved by stockholders, and no award may be granted after termination of the Plan.
Subject to certain restrictions, the Plan may at any time be terminated and from time to time be modified or amended by the affirmative
vote of the holders of a majority of the outstanding shares of the capital stock of the Company present, or represented, and entitled
to vote at a meeting duly held in accordance with the applicable laws of the State of Delaware.
FEDERAL
INCOME TAX ASPECTS OF THE 2020 INCENTIVE PLAN
THE
FOLLOWING IS A BRIEF SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION UPON THE PARTICIPANTS AND THE COMPANY WITH RESPECT TO THE
PURCHASE OF SHARES UNDER THE 2020 INCENTIVE PLAN. THIS SUMMARY DOES NOT PURPORT TO BE COMPLETE AND DOES NOT ADDRESS THE FEDERAL
INCOME TAX CONSEQUENCES TO TAXPAYERS WITH SPECIAL TAX STATUS. IN ADDITION, THIS SUMMARY DOES NOT DISCUSS THE PROVISIONS OF THE
INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE, AND DOES NOT DISCUSS ESTATE,
GIFT OR OTHER TAX CONSEQUENCES OTHER THAN INCOME TAX CONSEQUENCES. THE COMPANY ADVISES EACH PARTICIPANT TO CONSULT HIS OR HER
OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF PARTICIPATION IN THE 2020 INCENTIVE PLAN AND FOR REFERENCE TO APPLICABLE PROVISIONS
OF THE CODE.
Incentive
Stock Options
The
recipient of an incentive stock option generally will not be taxed upon grant of the option. Federal income taxes are generally
imposed only when the shares of common stock from exercised incentive stock options are disposed of, by sale or otherwise. The
amount by which the fair market value of the common stock on the date of exercise exceeds the exercise price is, however, included
in determining the option recipient’s liability for the alternative minimum tax. If the incentive stock option recipient
does not sell or dispose of the shares of common stock until more than one year after the receipt of the shares and two years
after the option was granted, then, upon sale or disposition of the shares, the difference between the exercise price and the
market value of the shares of common stock as of the date of exercise will be treated as a capital gain, and not ordinary income.
If a recipient fails to hold the shares for the minimum required time the recipient will recognize ordinary income in the year
of disposition generally in an amount equal to any excess of the market value of the common stock on the date of exercise (or,
if less, the amount realized or disposition of the shares) over the exercise price paid for the shares. Any further gain (or loss)
realized by the recipient generally will be taxed as short-term or long-term gain (or loss) depending on the holding period. We
will generally be entitled to a tax deduction at the same time and in the same amount as ordinary income is recognized by the
option recipient, if any.
Nonstatutory
Stock Options
The
recipient of stock options not qualifying as incentive stock options generally will not be taxed upon the grant of the option.
Federal income taxes are generally due from a recipient of nonstatutory stock options when the stock options are exercised. The
excess of the fair market value of the common stock purchased on such date over the exercise price of the option is taxed as ordinary
income. Thereafter, the tax basis for the acquired shares is equal to the amount paid for the shares plus the amount of ordinary
income recognized by the recipient. We will generally be entitled to a tax deduction at the same time and in the same amount as
ordinary income is recognized by the option recipient by reason of the exercise of the option.
Other
Awards
Recipients
who receive restricted stock unit awards will generally recognize ordinary income when they receive shares upon settlement of
the awards, in an amount equal to the fair market value of the shares at that time. Recipients who receive awards of restricted
shares subject to a vesting requirement will generally recognize ordinary income at the time vesting occurs, in an amount equal
to the fair market value of the shares at that time minus the amount, if any, paid for the shares. However, a recipient who receives
restricted shares which are not vested may, within 30 days of the date the shares are transferred, elect in accordance with Section
83(b) of the Code to recognize ordinary compensation income at the time of transfer of the shares rather than upon the vesting
dates. We will generally be entitled to a tax deduction at the same time and in the same amount as ordinary income is recognized
by the recipient.
Restrictions
on Resale
Certain
officers and directors of the Company may be deemed to be “affiliates” of the Company as that term is defined under
the Securities Act. The Common Stock acquired under the 2020 Incentive Plan by an affiliate may be reoffered or resold only pursuant
to an effective registration statement or pursuant to Rule 144 under the Securities Act or another exemption from the registration
requirements of the Securities Act. It is intended that the shares issuable pursuant to the 2020 Incentive Plan will be registered
under the Securities Act of 1933, as amended.
Potential
Limitation on Company Deductions
Section
162(m) of the Code generally disallows a tax deduction for compensation in excess of $1 million paid in a taxable year by a publicly
held corporation to its chief executive officer and certain other “covered employees”. Our board of directors and
Compensation Committee intend to consider the potential impact of Section 162(m) on grants made under the 2020 Incentive Plan,
but reserve the right to approve grants of options and other awards for an executive officer that exceeds the deduction limit
of Section 162(m).
Tax
Withholding
As
and when appropriate, we shall have the right to require each optionee purchasing shares of Common Stock and each grantee receiving
an award of Common Stock under the 2020 Incentive Plan to pay any federal, state or local taxes required by law to be withheld.
New
Plan Benefits
No
awards will be granted under the 2020 Incentive Plan prior to its approval by our shareholders. The grant of options and other
awards under the 2020 Incentive Plan is discretionary, and we cannot determine now the number or type of options or other awards
to be granted in the future to any particular person or group.
Securities
Issuable Pursuant to Other Equity Compensation Plans
For
information regarding securities issuable pursuant to our 2019 Incentive Plan, please see the information in this proxy statement
set forth under the caption “Executive Compensation - Equity Compensation Plan Information.”
Required
Vote
The
affirmative vote of a majority of shares of Common Stock present or represented by proxy at the meeting and entitled to vote on
this proposal is required for the approval of the 2020 Incentive Plan.
RECOMMENDATION
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE AVALON GLOBOCARE CORP. 2020
INCENTIVE PLAN AND THE RESERVATION OF 5,000,000 SHARES OF COMMON STOCK FOR ISSUANCE THEREUNDER.
OTHER
MATTERS
The
Board of Directors knows of no other business which will be presented at the Annual Meeting. If any other matters properly come
before the meeting, the persons named in the enclosed Proxy, or their substitutes, will vote the shares represented thereby in
accordance with their judgment on such matters.
ADDITIONAL
INFORMATION
Annual
Reports on Form 10-K
Additional
copies of Avalon’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 may be obtained without charge
by writing to the Chief Financial Officer, Avalon GloboCare Corp., 4400 Route 9 South, Suite 3100, Freehold, New Jersey 07728.
Avalon’s Annual Report on Form 10-K can also be found on Avalon’s website: www.avalon-globocare.com.
Stockholders
Proposals for the 2021 Annual Meeting.
Stockholder
proposals intended to be presented at the Company’s 2020 annual meeting must be received by the Company no later than February
22, 2021 (pursuant to Rule 14a-8 of the Exchange Act, 120 days before the anniversary of the prior year’s mailing date)
to be eligible for inclusion in the Company’s proxy statement and form of proxy for next year’s meeting. Proposals
should be addressed to Avalon GloboCare Corp., Attn. Chief Financial Officer, 4400 Route 9 South, Suite 3100, Freehold, New Jersey
07728.
For
any proposal that is not submitted for inclusion in next year’s proxy statement (as described in the preceding paragraph),
but is instead sought to be presented directly at the 2020 annual meeting, the federal securities laws require stockholders to
give advance notice of such proposals. The required notice must (pursuant to Rule 14a-4 of the Exchange Act) be given no less
than 45 days in advance of the one year anniversary date of the date on which the Company first sent its proxy materials for the
immediately preceding annual meeting. Accordingly, with respect to the Company’s 2021 annual meeting of stockholders, notice
must be provided to Avalon GloboCare Corp., Attn. Chief Financial Officer, 4400 Route 9 South, Suite 3100, Freehold, New Jersey
07728 no later than May 8, 2021. If a stockholder fails to provide timely notice of a proposal to be presented at the 2020 annual
meeting, the chair of the meeting will declare it out of order and disregard any such matter.
Proxy
Solicitation Costs
The
proxies being solicited hereby are being solicited by the Company. The Company will bear the entire cost of solicitation of proxies
including preparation, assembly, printing and mailing of the Notice, the Proxy Statement, the Proxy card and establishment of
the Internet site hosting the proxy material. Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of common stock beneficially owned by others to forward to such beneficial owners.
Officers and regular employees of the Company may, but without compensation other than their regular compensation, solicit proxies
by further mailing or personal conversations, or by telephone, telex, facsimile or electronic means. We will, upon request, reimburse
brokerage firms and others for their reasonable expenses in forwarding solicitation material to the beneficial owners of stock.
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By
Order of the Board of Directors,
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/s/
Wenzhao “Daniel” Lu
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Wenzhao
“Daniel” Lu
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Chairman
of the Board of Directors
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YOUR
VOTE IS IMPORTANT. PLEASE VOTE TODAY.
Vote
by Internet – QUICK ☐ EASY
IMMEDIATE – 24 Hours a Day, 7 Days a Week or by Mail
Avalon
GloboCare Corp.
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As
a shareholder of Avalon GloboCare Corp., you have the option of voting your shares electronically through the Internet, eliminating
the need to return the proxy card. Your electronic vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed, dated and returned the proxy card. Votes submitted electronically over the Internet must be received
by 7:00 p.m., Eastern Time, on August 3, 2020.
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INTERNET/MOBILE
–
https://[************]
Use the Internet to vote your proxy. Have your proxy card available when you access the above website. Follow the prompts
to vote your shares.
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PLEASE
DO NOT RETURN THE PROXY CARD IF YOU
ARE VOTING ELECTRONICALLY.
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MAIL
– Mark, sign and date your proxy card and return it in the postage-paid envelope provided.
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ONLINE
AT THE MEETING - You can vote at the meeting at www.virtualshareholdermeeting.com/AVCO2020.
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☐
FOLD HERE ● DO NOT SEPARATE ● INSERT IN ENVELOPE PROVIDED ☐
PROXY
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF THE NAMED NOMINEES AS DIRECTORS AND “FOR” PROPOSALS 2 AND 3.
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1.Election
of Directors
(1)
Wenzhao “Daniel” Lu FOR ☐ WITHHOLD ☐
(2)
David Jin FOR ☐ WITHHOLD ☐
(3)
Meng Li FOR ☐ WITHHOLD ☐
(4)
Yancen Lu FOR ☐ WITHHOLD ☐
(5)
Steven A. Sanders FOR ☐ WITHHOLD ☐
(6)
Wilbert J. Tauzin, II FOR ☐ WITHHOLD ☐
(7)
William B. Stilley, III FOR ☐ WITHHOLD ☐
(8)
Tevi Troy FOR ☐ WITHHOLD ☐
(9)
Yue “Charles” Li FOR ☐ WITHHOLD ☐
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2.
Proposal to ratify the appointment of Marcum LLP as the Company’s independent auditors
for the fiscal year ending December 31, 2020.
FOR AGAINST ABSTAIN
☐ ☐ ☐
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3.
Proposal to approve the 2020 Incentive Stock Plan and to authorize 5,000,000 shares of
Common Stock for issuance thereunder.
FOR AGAINST ABSTAIN
☐ ☐ ☐
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COMPANY
ID:
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PROXY
NUMBER:
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ACCOUNT
NUMBER:
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Signature
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Signature,
if held jointly
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Date
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,
2020.
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Note:
Please sign exactly as name appears hereon. When shares are held by joint owners, both should sign. When signing as attorney,
executor, administrator, trustee, guardian, or corporate officer, please give title as such.
☐
FOLD HERE ● DO NOT SEPARATE ● INSERT IN ENVELOPE PROVIDED ☐ PROXY
Avalon
GloboCare Corp.
PROXY
FOR ANNUAL MEETING TO BE HELD ON AUGUST 4, 2020
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The
undersigned shareholder hereby appoints David Jin and Luisa Ingargiola or either of them (each with full power to act alone),
as attorneys and proxies for the undersigned, with the power to appoint his or her substitute, to represent and to vote all the
shares of the common stock of Avalon GloboCare Corp. (the “Company”), which the undersigned would be entitled to vote,
at the Company’s Annual Meeting of Stockholders to be held on August 4, 2020 at 11:00 a.m., Eastern Time, and any adjournments
thereof, subject to the directions indicated on the reverse side hereof. Due to the public health impact of the coronavirus
outbreak (COVID-19) and to support the health and well-being of our employees and stockholders, the Annual Meeting will be held
in a virtual meeting format at www.virtualshareholdermeeting.com/AVCO2020.
In
their discretion, the Proxy is authorized to vote upon any other matter that may properly come before the meeting or any adjournments
thereof.
This
proxy, when properly executed, will be voted in the manner directed on the reverse side by the undersigned shareholder. If
no direction is made, this proxy will be voted FOR the election of the named nominees as directors and FOR Proposals 2 and 3.
PLEASE
MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(IMPORTANT
— This Proxy must be signed and dated on the reverse side.)
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