Item 1.01. Entry into a Material Definitive
Agreement.
Balloon Mortgage Note
On
May 18, 2023, the Company, as sole member of Avalon RT9 Properties, LLC, a New Jersey limited liability company (“Avalon RT9”),
authorized Avalon RT9 to execute and deliver, that certain balloon mortgage note, dated May 24, 2023 in favor of S&P Principal LLC
(the “Lender”) in the original principal amount of $1,000,000.00 (the “Balloon Mortgage Note”),
which Balloon Mortgage Note shall accrue interest at the annual rate of 13.0% and be paid in monthly installments of interest-only in
the amount of $10,833.33 commencing in June, 2023 and continuing through October, 2025 (at which point any unpaid balance of principal,
interest and other charges shall be due and payable), and be secured by a second-lien mortgage on certain real property and improvements
located at 4400 Route 9, Freehold, Monmouth County, New Jersey, as evidenced by that Second Mortgage and Security Agreement dated May
24, 2023 (the “Mortgage”). Further, the Company and Avalon RT9, in their own respective capacities, executed and delivered
that certain guaranty dated May 24, 2023 (the “Guaranty”). The Guaranty sets forth Avalon RT9’s obligations under
the Balloon Mortgage Note, the Mortgage and such other loan documents to be executed and delivered to the Lender in connection with the
foregoing. The Company and Avalon RT9 also executed and delivered that certain hazardous material guaranty and indemnification agreement,
dated May 24, 2023 (the “Hazardous Material Guaranty and Indemnification Agreement”), which contains customary representations
and warranties regarding the use of hazardous materials and the parties’ continued compliance with environmental laws, rules and
regulations.
The
foregoing description of the Balloon Mortgage Note, the Mortgage, the Guaranty and the Hazardous Material Guaranty and Indemnification
Agreement is qualified in its entirety by reference to the full text of such agreements, copies of which are filed as Exhibits 10.6, 10.7,
10.8 and 10.9, respectively, to this Current Report on Form 8-K and incorporated herein by reference.
Convertible Note Financing
On May 23, 2023, AVALON GLOBOCARE
CORP. (the “Company”) entered into securities purchase agreements (the “Securities Purchase Agreements”)
with Mast Hill Fund, L.P. (“Mast Hill”) for the issuance of 13% senior secured promissory notes in the aggregate principal
amount of $1,500,000.00 (collectively the “Notes”) convertible into shares of common stock, par value $0.0001 per share,
of the Company, as well as the issuance of up to 75,000 shares of common stock as a commitment fee and warrants for the purchase of up
to 230,000 shares of common stock of the Company. The Company and its subsidiaries have entered into that certain security agreement (the
“Security Agreement”), creating a security interest in certain property of the Company and its subsidiaries to secure
the prompt payment, performance and discharge in full of all of the Company’s obligations under the Notes. The transaction closed
on May 23, 2023 (the “Closing Date”). Principal amount and interest under the Notes are convertible into shares of
common stock of the company at a conversion price of $4.5 per share unless the Company fails to make an amortization payment when due,
in which case the conversion price shall be the lower of $4.5 or the trading price of the shares, subject to a floor of $1.5.
Mast Hill acquired the Notes
with principal amount of $1,500,000.00 and paid the purchase price of $1,425,000.00 after an original issue discount of $75,000.00. On
the same Closing Date, the Company issued (i) a warrant to purchase 125,000 shares of common stock with an exercise price of $4.50 exercisable
until the five-year anniversary of the Closing Date, (ii) a warrant to purchase 105,500 shares of common stock with an exercise price
of $3.20 exercisable until the five-year anniversary of the Closing Date, which warrant shall be cancelled and extinguished against payment
of the Notes, and (iii) 75,000 shares of common stock to Mast Hill as additional consideration for the purchase of the Note, which were
earned in full as of the Closing Date. On the Closing Date, the Company delivered such duly executed Notes, warrants and common stock
to Mast Hill against delivery of such purchase price.
The Securities Purchase Agreement
contains customary representations and warranties and agreements and obligations of the parties. The proceeds of this Note financing will
be used for general corporate purposes. The foregoing description of the Securities Purchase Agreement, the Security Agreement, the Note
and the Warrants is qualified in its entirety by reference to the full text of such agreements, copies of which are filed as Exhibits
10.1, 10.2, 10.3, 10.4 and 10.5, respectively, to this Current Report on Form 8-K and incorporated herein by reference.
