| DISCONTINUED OPERATIONS AND DISPOSALS |
NOTE
5 – DISCONTINUED OPERATIONS AND DISPOSALS
On
February 18, 2026, the Company and Wenzhao Lu, the Company’s chairman of the Board of Directors, entered into an Amended and Restated
Membership Interest Purchase Agreement (the “Amended MIPA”), pursuant to which the Company sold to Mr. Lu 100% of the membership
interests of Avalon RT 9 for $9,000,000.
The
subsidiary comprises our real property operations segment. As a result of the planned disposition of the subsidiary, the real property
operations segment met the criteria under ASC 205-20 to be classified as discontinued operations. Accordingly, the historical results
of operations of the real property operations segment have been reflected as discontinued operations in our condensed consolidated financial
statement for all periods prior to the Amended MIPA on February 18, 2026.
The table below outlines the gain on sale described above.
| Carrying amount of assets and liabilities: | |
| |
| Cash | |
$ | 288,099 | |
| Rent receivable | |
| 58,735 | |
| Prepaid expense | |
| 7,331 | |
| Deferred Leasing Costs | |
| 32,600 | |
| Property and equipment, net | |
| 2,473 | |
| Investment in real estate, net | |
| 6,904,683 | |
| Accrued liabilities | |
| 78,154 | |
| Tenants’ security deposit | |
| 77,033 | |
| Total carrying amount (net) | |
| 7,138,734 | |
| | |
| | |
| Consideration from sale of subsidiary | |
| 9,000,000 | |
| Gain on sale of subsidiary | |
$ | 1,861,266 | |
The Company recorded the gain on sale of subsidiary of $1,861,266 to
additional paid-in capital as a result of the capital transaction with related party under applicable SEC regulations.
Details
of the net loss from discontinued operations were as follows:
| | |
Three Months Ended June 30, | | |
Six Months Ended June 30, | |
| | |
2026 | | |
2025 | | |
2026 | | |
2025 | |
| REAL PROPERTY RENTAL REVENUE | |
$ | 253,839 | | |
$ | 350,406 | | |
$ | 253,839 | | |
$ | 700,206 | |
| REAL PROPERTY OPERATING EXPENSES | |
| (153,903 | ) | |
| (251,077 | ) | |
| (153,903 | ) | |
| (531,467 | ) |
| REAL PROPERTY OPERATING INCOME | |
| 99,936 | | |
| 99,329 | | |
| 99,936 | | |
| 168,739 | |
| OTHER OPERATING EXPENSES: | |
| | | |
| | | |
| | | |
| | |
| Professional fees | |
| 45,617 | | |
| 47,402 | | |
| 45,617 | | |
| 106,766 | |
| Compensation and related benefits | |
| 20,932 | | |
| 31,398 | | |
| 20,932 | | |
| 62,796 | |
| Total Other Operating Expenses | |
| 66,549 | | |
| 78,800 | | |
| 66,549 | | |
| 169,562 | |
| INCOME (LOSS) FROM OPERATIONS | |
| 33,387 | | |
| 20,529 | | |
| 33,387 | | |
| (823 | ) |
| OTHER (EXPENSE) INCOME | |
| | | |
| | | |
| | | |
| | |
| Interest expense - amortization of debt discount and debt issuance costs | |
| - | | |
| (29,807 | ) | |
| - | | |
| (59,614 | ) |
| Interest expense - other | |
| (136,402 | ) | |
| (164,500 | ) | |
| (136,402 | ) | |
| (329,000 | ) |
| Other (expense) income | |
| - | | |
| (209 | ) | |
| - | | |
| 19 | |
| Total Other Expense, net | |
| (136,402 | ) | |
| (194,516 | ) | |
| (136,402 | ) | |
| (388,595 | ) |
| LOSS BEFORE INCOME TAXES | |
| (103,015 | ) | |
| (173,987 | ) | |
| (103,015 | ) | |
| (389,418 | ) |
| INCOME TAXES | |
| - | | |
| - | | |
| - | | |
| - | |
| NET LOSS | |
$ | (103,015 | ) | |
$ | (173,987 | ) | |
$ | (103,015 | ) | |
$ | (389,418 | ) |
The
following table summarizes the assets and liabilities of the discontinued operations:
| | |
June 30,
2026 | | |
December 31,
2025 | |
| ASSETS | |
| | |
| |
| CURRENT ASSETS | |
| | |
| |
| Cash | |
$ | - | | |
$ | 258,999 | |
| Rent receivable | |
| - | | |
| 84,898 | |
| Prepaid expense and other current assets | |
| - | | |
| 12,719 | |
| Total Current Assets | |
| - | | |
| 356,616 | |
| NON-CURRENT ASSETS: | |
| | | |
| | |
| Property and equipment, net | |
| - | | |
| 3,478 | |
| Investment in real estate, net | |
| - | | |
| 6,925,768 | |
| Deferred leasing costs and other non-current assets | |
| - | | |
| 8,523 | |
| Total Non-current Assets | |
| - | | |
| 6,937,769 | |
| Total Assets | |
$ | - | | |
$ | 7,294,385 | |
| LIABILITIES | |
| | | |
| | |
| CURRENT LIABILITIES: | |
| | | |
| | |
| Accrued liabilities and other payables | |
$ | - | | |
$ | 261,077 | |
| Note payable, net | |
| - | | |
| 5,800,000 | |
| Total Current Liabilities | |
| - | | |
| 6,061,077 | |
| NON-CURRENT LIABILITIES: | |
| | | |
| | |
| Deferred rental income | |
| - | | |
| 23,515 | |
| Total Non-current Liabilities | |
| - | | |
| 23,515 | |
| Total Liabilities | |
$ | - | | |
$ | 6,084,592 | |
The
above tables exclude intercompany payables that are eliminated within our condensed consolidated balance sheets.
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