AKAO 2017 Annual Report

135 In August 2017, the Company’s Chief Executive Officer, a related party, exercised these warrants to purchase 35,363 shares of common stock. The Company received $129,429 in proceeds from these warrant exercises. For further detail of the warrants issued in connection with the Private Placement, refer to Note 3. 15. Subsequent Events In January 2018, pursuant to the Sales Agreement with Cowen, the Company recommenced the ATM equity program under which Cowen has acted as a sales agent. In January and February 2018, the Company sold 2,144,454 shares of common stock at a weighted-average price of approximately $11.51 per share for gross proceeds of $24.7 million and net proceeds of $24.0 million after deducting the sales commissions and offering expenses. As of February 27, 2018, no shares remain available for sale under the Sales Agreement. On February 26, 2018 (the “Closing Date”), the Company entered into a loan and security agreement (the “Loan Agreement”) with Silicon Valley Bank. The Loan Agreement provides for (i) a $25.0 million Term A loan facility with a maturity of five years (the “Term A Loan”) and (ii) an up to $25.0 million Term B loan facility, which may be drawn, subject to certain conditions, by the Company during the first 12 months after the Closing Date ( the “Term B Loans” and together with the Term A Loan, the “Term Loans”). Each Term B Loan has a maturity of four years. Borrowings under the Term A Loan bear interest at a floating per annum rate equal to the greater of (a) the prime rate minus 1.50% and (b) 3.00%, and the Term B Loans bear interest through maturity at a floating per annum rate equal to the greater of (a) 1.00% above the prime rate and (b) 5.50%. In addition to paying interest on outstanding principal, the Company will be required to pay an unused Term B Loan fee of 1.00% of the commitments under the Term B Loans if the Company does not borrow any Term B Loans. The Company is permitted to make interest-only payments on the Term A Loan through February 2020 and the Term B Loans for the first twenty-four (24) months following the funding date of each respective Term B Loan after which the Company will be required to repay the Term A Loan in 36 consecutive equal monthly installments of principal and repay any Term B Loans in 24 consecutive equal monthly installments of principal. The Company is obligated to pay a fee equal to 6.00% of the funded Term Loans upon the earliest to occur of the maturity date, the prepayment or repayment of such Term Loans or the termination of the Loan Agreement. The Company may voluntarily prepay all, but not less than all, of the outstanding Term Loans. The Loan Agreement contains customary representations, warranties and covenants. The Company is required to have cash on deposit at Silicon Valley Bank equal to the greater of (a) $48.0 million and (b) the “Monthly Cash Burn,” which is defined as the difference of (1)(i) net loss plus (ii) unfinanced capital expenditures minus (2)(i) depreciation and amortization expenses, (ii) non- cash stock compensation expense and (iii) other non-cash expenses as approved by Silicon Valley Bank. If at any time the Company’s aggregate balances at Silicon Valley Bank are less than the foregoing, the Company is required to deposit at Silicon Valley Bank cash collateral in an amount equal to the outstanding Term A Loan. The Term Loans are secured by substantially all of the Company’s assets, except for its intellectual property which is subject to a negative pledge and certain other customary exclusions. On February 26, 2018, the Company terminated the Loan and Security Agreement dated August 5, 2015 with Solar Capital Ltd. and repaid $20.9 million of the outstanding principal and interest. On February 27, 2018, the Company filed an amended Registration Statement on Form S-3 (the “2018 Shelf Registration Statement”) covering the offering of up to $250.0 million of common stock, preferred stock, debt securities, warrants and units. In addition, on February 27, 2018, the Company filed a prospectus supplement to the 2018 Shelf Registration Statement covering the offering, issuance and sale of up to $50.0 million shares of its common stock in ATM offerings pursuant to a Common Stock Sales Agreement entered into with Cowen and Company, LLC on February 27, 2018.