Exhibit 99.3
AVALON GLOBOCARE CORP.
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
June 30, 2017
(Unaudited)
AVALON GLOBOCARE CORP.
INDEX TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
June 30, 2017
| 1 |
AVALON GLOBOCARE CORP.
Introduction to Unaudited Pro Forma Condensed Combined Financial Statements
June 30, 2017
In July 2017, Avalon GloboCare Corp. (the “Company”) formed GenExosome Technologies Inc., a Nevada corporation (“GenExosome”). On September 29, 2017, Dr. David K. Jin was appointed as the sole director and as the Chief Executive Officer, Chief Medical Officer and President, Meng Li was appointed as Chief Operating Officer and Secretary and Luisa Ingargiola was appointed as Chief Financial Officer. On October 25, 2017, GenExosome and the Company entered into a Securities Purchase Agreement pursuant to which the Company acquired 600 shares of GenExosome in consideration of $1,326,087 and 500,000 shares of common stock of the Company. The Company is required to pay $876,087 of the cash purchase price by November 24, 2017 and $450,000 of the cash purchase price by December 24, 2017. In addition, the Company is required to deliver the 500,000 shares of its common stock no later than November 24, 2017.
On October 25, 2017, GenExosome entered into and closed an Asset Purchase Agreement with Yu Zhou, MD, PhD, pursuant to which the Company acquired all assets, including all intellectual property, held by Dr. Zhou pertaining to the business of researching, developing and commercializing exosome technologies including, but not limited to, patent application number CN 2016 1 0675107.5 (application of an Exosomal MicroRNA in plasma as biomaker to diagnosis liver cancer), patent application number CN 2016 1 0675110.7 (clinical application of circulating exosome carried miRNA-33b in the diagnosis of liver cancer), patent application number CN 2017 1 0330847.X (saliva exosome based methods and composition for the diagnosis, staging and prognosis of oral cancer) and patent application number CN 2017 1 0330835.7 (a novel exosome-based therapeutics against proliferative oral diseases). In consideration of the assets, GenExosome agreed to pay Dr. Zhou $876,087 in cash no later than November 24, 2017, transfer 500,000 shares of common stock of the Company to Dr. Zhou no later than November 24, 2017 and issue Dr. Zhou 400 shares of common stock of GenExosome no later than November 24, 2017. As a result of the above transactions, the Company holds 60% of GenExosome and Dr. Zhou holds 40% of GenExosome.
On October 25, 2017, GenExosome entered into and closed a Stock Purchase Agreement with Beijing Jieteng (GenExosome) Biotech Co. Ltd., a corporation incorporated in the People’s Republic of China (“Beijing GenExosome”) and Dr. Zhou, the sole shareholder of Beijing GenExosome, pursuant to which GenExosome acquired all of the issued and outstanding securities of Beijing GenExosome in consideration of a cash payment in the amount of $450,000, which shall be paid upon Beijing GenExosome recording the change in ownership with the Ministry of Commerce of the People’s Republic of China in accordance with the Interim Measures for Record Management regarding the Establishment and Change of Foreign-invested Enterprises (revised).
The following unaudited pro forma condensed combined financial statements are presented to illustrate the pro forma effects of our having entered into and closed an acquisition with GenExosome, hence consummation of the acquisition. We have derived our historical financial data as of June 30, 2017, for the three and six months ended June 30, 2017 and for the year ended December 31, 2016 from our financial statements contained on Form 10-Q and Form 10-K, respectively, as filed with the Securities and Exchange Commission. We have derived Beijing GenExosome historical financial statements as of June 30, 2017, for the three and six months ended June 30, 2017, and for the year ended December 31, 2016 from Beijing GenExosome financial statements contained elsewhere in this Form 8-K/A. Currently, Beijing GenExosome engages in contract services through performing development services for hospitals and sales of related products developed to hospitals.
The unaudited pro forma condensed combined statement of operations and comprehensive loss for the three and six months ended June 30, 2017 assumes that the acquisition consummated on such period. The unaudited pro forma condensed combined balance sheet as of June 30, 2017 assumes the acquisition consummated on such period. The unaudited pro forma condensed combined statement of operations and comprehensive (loss)/income for the year ended December 31, 2016 assumes that the acquisition consummated on such period.
The information presented in the unaudited pro forma condensed combined financial statements does not purport to represent what our financial position or results of operations would have been had the acquisition, nor is it indicative of our future financial position or results of operations for any period. You should not rely on this information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined companies will experience after the acquisition.
| 2 |
The unaudited pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances. These unaudited pro forma condensed combined financial statements should be read in conjunction with the accompanying notes and assumptions and the historical financial statements and related notes of Avalon GloboCare Corp. and Beijing GenExosome.
| 3 |
AVALON GLOBOCARE CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
June 30, 2017
| Avalon | Beijing Jieteng | |||||||||||||||||||
| GloboCare Corp. | (GenExosome) | |||||||||||||||||||
| and Subsidiaries | Biotech Co., Ltd. | |||||||||||||||||||
| June 30, | June 30, | Pro Forma Adjustments | Pro Forma | |||||||||||||||||
| 2017 | 2017 | Dr. | Cr. | Balances | ||||||||||||||||
| ASSETS | ||||||||||||||||||||
| CURRENT ASSETS: | ||||||||||||||||||||
| Cash | $ | 381,954 | $ | 90,468 | $ | — | $ | 450,000 | $ | 22,422 | ||||||||||
| Accounts receivable - related parties, net of allowance for doubtful accounts | 235,163 | — | — | — | 235,163 | |||||||||||||||
| Tenants receivable, net of allowance for doubtful accounts | 25,433 | — | — | — | 25,433 | |||||||||||||||
| Inventories | — | 350 | — | — | 350 | |||||||||||||||
| Prepaid expenses and other | 28,485 | 5,160 | — | — | 33,645 | |||||||||||||||
| Security deposit | — | 738 | — | — | 738 | |||||||||||||||
| Total Current Assets | 671,035 | 96,716 | — | 450,000 | 317,751 | |||||||||||||||
| OTHER ASSETS: | ||||||||||||||||||||
| Security deposit - non-current portion | 30,204 | — | — | — | 30,204 | |||||||||||||||
| Property, plant and equipment, net | 27,245 | 3,474 | — | — | 30,719 | |||||||||||||||
| Investment in real estate, net | 7,675,628 | — | — | — | 7,675,628 | |||||||||||||||
| Intangible assets | — | — | 1,376,087 | — | 1,376,087 | |||||||||||||||
| Goodwill | — | — | 393,566 | — | 393,566 | |||||||||||||||
| Total Other Assets | 7,733,077 | 3,474 | 1,769,653 | — | 9,506,204 | |||||||||||||||
| Total Assets | $ | 8,404,112 | $ | 100,190 | $ | 1,769,653 | $ | 450,000 | $ | 9,823,955 | ||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
| CURRENT LIABILITIES: | ||||||||||||||||||||
| Accounts payable | $ | 22,646 | $ | — | $ | — | $ | — | $ | 22,646 | ||||||||||
| Accrued liabilities and other payables | 169,085 | 2,746 | — | — | 171,831 | |||||||||||||||
| Accrued liabilities and other payables - related parties | 40,923 | — | — | — | 40,923 | |||||||||||||||
| Deferred rental income | 4,178 | — | — | — | 4,178 | |||||||||||||||
| Loan payable | 2,100,000 | — | — | — | 2,100,000 | |||||||||||||||
| Income taxes payable | — | 3,388 | — | — | 3,388 | |||||||||||||||
| VAT and other taxes payable | 7,649 | — | — | — | 7,649 | |||||||||||||||
| Tenants’ security deposit | 92,288 | — | — | — | 92,288 | |||||||||||||||
| Due to related parties | 166,650 | — | — | 876,087 | 1,042,737 | |||||||||||||||
| Refundable deposit | 3,000,000 | — | — | — | 3,000,000 | |||||||||||||||
| Total Current Liabilities | 5,603,419 | 6,134 | — | 876,087 | 6,485,640 | |||||||||||||||
| Commitments and Contingencies | ||||||||||||||||||||
| STOCKHOLDERS’ EQUITY: | ||||||||||||||||||||
| Preferred stock, $0.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding at June 30, 2017 | — | — | — | — | — | |||||||||||||||
| Common stock, $0.0001 par value; 490,000,000 shares authorized; 64,628,622 and 65,128,622 pro forma shares issued and outstanding at June 30, 2017, respectively | 6,463 | — | — | 50 | 6,513 | |||||||||||||||
| Additional paid-in capital | 3,947,554 | — | — | 499,950 | 4,447,504 | |||||||||||||||
| Registered paid-in capital | — | 462,543 | 462,543 | — | — | |||||||||||||||
| Due from founders in connection with registered paid-in capital | — | (385,137 | ) | — | 385,137 | — | ||||||||||||||
| (Accumulated deficit)/Retained earnings | (1,033,210 | ) | 17,457 | 17,457 | — | (1,033,210 | ) | |||||||||||||
| Statutory reserve | 6,578 | 4,064 | 4,064 | — | 6,578 | |||||||||||||||
| Accumulated other comprehensive loss - foreign currency translation adjustment | (126,692 | ) | (4,871 | ) | — | 4,871 | (126,692 | ) | ||||||||||||
| Total Avalon GloboCare Corp. Stockholders’ Equity | 2,800,693 | 94,056 | 484,064 | 890,008 | 3,300,693 | |||||||||||||||
| Non-controlling interest | — | — | — | 37,622 | 37,622 | |||||||||||||||
| Total Stockholders’ Equity | 2,800,693 | 94,056 | 484,064 | 927,630 | 3,338,315 | |||||||||||||||
| Total Liabilities and Stockholders’ Equity | $ | 8,404,112 | $ | 100,190 | $ | 484,064 | $ | 1,803,717 | $ | 9,823,955 | ||||||||||
See accompanying notes to unaudited pro forma condensed combined financial statements.
4
AVALON GLOBOCARE CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
| Avalon | Beijing Jieteng | Avalon | Beijing Jieteng | |||||||||||||||||||||||||
| GloboCare Corp. | (GenExosome) | GloboCare Corp. | (GenExosome) | |||||||||||||||||||||||||
| and Subsidiaries | Biotech Co., Ltd. | and Subsidiaries | Biotech Co., Ltd. | |||||||||||||||||||||||||
| For the Three Months | For the Three Months | For the Six Months | For the Six Months | |||||||||||||||||||||||||
| Ended | Ended | Pro Forma | Ended | Ended | Pro Forma | |||||||||||||||||||||||
| June 30, 2017 | June 30, 2017 | Balances | June 30, 2017 | June 30, 2017 | Balances | |||||||||||||||||||||||
| REVENUES | ||||||||||||||||||||||||||||
| Real property rental revenue | $ | 222,254 | $ | — | $ | 222,254 | $ | 222,254 | $ | — | $ | 222,254 | ||||||||||||||||
| Consulting services revenue - related parties | 152,497 | — | 152,497 | 218,783 | — | 218,783 | ||||||||||||||||||||||
| Total Revenues | 374,751 | — | 374,751 | 441,037 | — | 441,037 | ||||||||||||||||||||||
| COSTS AND EXPENSES | ||||||||||||||||||||||||||||
| Real property operating expenses | 161,854 | — | 161,854 | 161,854 | — | 161,854 | ||||||||||||||||||||||
| Consulting services costs - related parties | 125,231 | — | 125,231 | 224,812 | — | 224,812 | ||||||||||||||||||||||
| Total Costs and Expenses | 287,085 | — | 287,085 | 386,666 | — | 386,666 | ||||||||||||||||||||||
| REAL PROPERTY OPERATING INCOME | 60,400 | — | 60,400 | 60,400 | — | 60,400 | ||||||||||||||||||||||
| GROSS PROFIT (LOSS) FROM CONSULTING SERVICES | 27,266 | — | 27,266 | (6,029 | ) | — | (6,029 | ) | ||||||||||||||||||||
| OTHER OPERATING EXPENSES: | ||||||||||||||||||||||||||||
| Selling expense | 6,279 | — | 6,279 | 14,990 | — | 14,990 | ||||||||||||||||||||||
| Compensation and related benefits | 205,473 | 6,429 | 211,902 | 388,400 | 12,834 | 401,234 | ||||||||||||||||||||||
| Professional fees | 172,705 | 582 | 173,287 | 379,923 | 582 | 380,505 | ||||||||||||||||||||||
| Other general and administrative | 91,927 | 3,941 | 95,868 | 152,659 | 5,857 | 158,516 | ||||||||||||||||||||||
| Total Other Operating Expenses | 476,384 | 10,952 | 487,336 | 935,972 | 19,273 | 955,245 | ||||||||||||||||||||||
| LOSS FROM OPERATIONS | (388,718 | ) | (10,952 | ) | (399,670 | ) | (881,601 | ) | (19,273 | ) | (900,874 | ) | ||||||||||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||||||||||||||
| Interest income | 210 | 76 | 286 | 1,004 | 157 | 1,161 | ||||||||||||||||||||||
| Interest expense | (42,000 | ) | — | (42,000 | ) | (42,000 | ) | — | (42,000 | ) | ||||||||||||||||||
| Foreign currency transaction loss | — | — | — | (57,244 | ) | — | (57,244 | ) | ||||||||||||||||||||
| Total Other (Expense) Income, net | (41,790 | ) | 76 | (41,714 | ) | (98,240 | ) | 157 | (98,083 | ) | ||||||||||||||||||
| LOSS BEFORE INCOME TAXES | (430,508 | ) | (10,876 | ) | (441,384 | ) | (979,841 | ) | (19,116 | ) | (998,957 | ) | ||||||||||||||||
| INCOME TAXES | — | — | — | — | — | — | ||||||||||||||||||||||
| NET LOSS | $ | (430,508 | ) | $ | (10,876 | ) | $ | (441,384 | ) | $ | (979,841 | ) | $ | (19,116 | ) | $ | (998,957 | ) | ||||||||||
| COMPREHENSIVE LOSS | ||||||||||||||||||||||||||||
| NET LOSS | (430,508 | ) | (10,876 | ) | (441,384 | ) | (979,841 | ) | (19,116 | ) | (998,957 | ) | ||||||||||||||||
| OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||||||||||||||
| Unrealized foreign currency translation gain (loss) | 7,647 | 1,588 | 9,235 | (32,124 | ) | 2,432 | (29,692 | ) | ||||||||||||||||||||
| COMPREHENSIVE LOSS | $ | (422,861 | ) | $ | (9,288 | ) | $ | (432,149 | ) | $ | (1,011,965 | ) | $ | (16,684 | ) | $ | (1,028,649 | ) | ||||||||||
| NET LOSS PER COMMON SHARES: | ||||||||||||||||||||||||||||
| Basic and diluted | $ | (0.007 | ) | $ | (0.007 | ) | $ | (0.015 | ) | $ | (0.016 | ) | ||||||||||||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||||||||||||||
| Basic and diluted | 64,628,622 | 65,128,622 | 63,617,572 | 64,117,572 | ||||||||||||||||||||||||
See accompanying notes to unaudited pro forma condensed combined financial statements.
5
AVALON GLOBOCARE CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)/INCOME
| Avalon | Beijing Jieteng | |||||||||||||||
| GloboCare Corp. | (GenExosome) | |||||||||||||||
| and Subsidiaries | Biotech Co., Ltd. | |||||||||||||||
| For the Year | For the Year | |||||||||||||||
| Ended | Ended | Pro Forma | ||||||||||||||
| December 31, 2016 | December 31, 2016 | Balances | ||||||||||||||
| REVENUE | ||||||||||||||||
| Revenue | $ | — | $ | 55,417 | $ | 55,417 | ||||||||||
| Revenue - related parties | 616,446 | — | 616,446 | |||||||||||||
| Total Revenue | 616,446 | 55,417 | 671,863 | |||||||||||||
| COST OF REVENUE | ||||||||||||||||
| Cost of revenue | — | 21,584 | 21,584 | |||||||||||||
| Cost of revenue - related parties | 73,066 | — | 73,066 | |||||||||||||
| Total Cost of Revenue | 73,066 | 21,584 | 94,650 | |||||||||||||
| GROSS PROFIT | 543,380 | 33,833 | 577,213 | |||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| Selling expense | 6,894 | — | 6,894 | |||||||||||||
| Professional fees | 395,780 | 301 | 396,081 | |||||||||||||
| Other general and administrative | 63,773 | 22,493 | 86,266 | |||||||||||||
| Total Operating Expenses | 466,447 | 22,794 | 489,241 | |||||||||||||
| INCOME FROM OPERATIONS | 76,933 | 11,039 | 87,972 | |||||||||||||
| OTHER INCOME | ||||||||||||||||
| Interest Income | 575 | 235 | 810 | |||||||||||||
| Grant income | — | 30,105 | 30,105 | |||||||||||||
| Total Other Income | 575 | 30,340 | 30,915 | |||||||||||||
| INCOME BEFORE INCOME TAXES | 77,508 | 41,379 | 118,887 | |||||||||||||
| INCOME TAXES | 21,927 | 4,138 | 26,065 | |||||||||||||
| NET INCOME | $ | 55,581 | $ | 37,241 | $ | 92,822 | ||||||||||
| COMPREHENSIVE (LOSS)/INCOME | ||||||||||||||||
| NET INCOME | 55,581 | 37,241 | 92,822 | |||||||||||||
| OTHER COMPREHENSIVE LOSS | ||||||||||||||||
| Unrealized foreign currency translation loss | (94,568 | ) | (6,867 | ) | (101,435 | ) | ||||||||||
| COMPREHENSIVE (LOSS)/INCOME | $ | (38,987 | ) | $ | 30,374 | $ | (8,613 | ) | ||||||||
| NET INCOME PER COMMON SHARES: | ||||||||||||||||
| Basic and diluted | $ | 0.001 | $ | 0.002 | ||||||||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||
| Basic and diluted | 51,139,475 | 51,639,475 | ||||||||||||||
See accompanying notes to unaudited pro forma condensed combined financial statements.
6
AVALON GLOBOCARE CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMAT CONDENSED COMBINED FINANCIAL STATEMETNS
June 30, 2017
[1] Basis of presentation.
The unaudited pro forma condensed combined financial statements have been prepared in order to present combined financial position and results of operations of Avalon GloboCare Corp. and subsidiaries and Beijing GenExosome as if the acquisition had occurred as of June 30, 2017 for the unaudited pro forma condensed combined balance sheet, to give effect to the acquisition of Beijing GenExosome as if the transaction had taken place at January 1, 2016 for the unaudited pro forma condensed combined statement of operations and comprehensive (loss)/income for the year ended December 31, 2016, and to give effect to the acquisition of Beijing GenExosome as if the transaction had taken place at January 1, 2017 for the unaudited pro forma condensed combined statement of operations and comprehensive loss for the three and six months ended June 30, 2017.
The condensed financial statements of Avalon GloboCare Corp. and subsidiaries as of June 30, 2017, for the three and six months ended June 30, 2017 and for the year ended December 31, 2016 were derived from the financial statements contained on Form 10-Q and 10-K, respectively, as filed with the Securities and Exchange Commission.
The condensed financial statements of Beijing GenExosome as of June 30, 2017, for the three and six months ended June 30, 2017 and for the year ended December 31, 2016 were derived from Beijing GenExosome’s financial statements contained elsewhere in this Form 8-K/A.
The following unaudited pro forma adjustments are incorporated into the unaudited pro forma condensed combined balance sheet as of June 30, 2017, the unaudited pro forma condensed combined statements of operations and comprehensive (loss)/income for the three and six months ended June 30, 2017 and for the year ended December 31, 2016.
[2] The allocation of the purchase price is as follows:
| Cash | $ | 90,468 | ||
| Inventories | 350 | |||
| Prepaid expenses | 5,160 | |||
| Security deposit | 738 | |||
| Property, plant and equipment, net | 3,474 | |||
| Goodwill | 393,566 | |||
| Total assets acquired | 493,756 | |||
| Accrued liabilities and other payables | 2,746 | |||
| Income taxes payable | 3,388 | |||
| Non-controlling interest | 37,622 | |||
| Net assets acquired | $ | 450,000 |
| 7 |
[3] Unaudited pro forma adjustment reflects the following transaction:
| Intangible assets | 1,376,087 | |||||
| Goodwill | 393,566 | |||||
| Registered paid-in capital | 462,543 | |||||
| Retained earnings | 17,457 | |||||
| Statutory reserve | 4,064 | |||||
| Due to related party | 876,087 | |||||
| Cash | 450,000 | |||||
| Due from founders in connection with registered paid-in capital | 385,137 | |||||
| Accumulated other comprehensive loss - foreign currency translation adjustment | 4,871 | |||||
| Common stock | 50 | |||||
| Additional paid-in capital | 499,950 | |||||
| Non-controlling interest | 37,622 |
8