outstanding principal amount plus accrued interest will be due and payable to the Bank at maturity on April 1, 2020. At maturity,
OncoCyte will also pay the Bank an additional final payment fee of 5.8% of the original principal borrowed. OncoCyte accrued the
$116,000 final payment fee included in the loan payable as a deferred financing cost on March 23, 2017 draw date.
may prepay in full the outstanding principal balance at any time, subject to a prepayment fee equal to 2.0% of the outstanding
principal balance if prepaid after February 21, 2018 but not later than February 21, 2019, or 1.0% of the outstanding principal
balance if prepaid after February 21, 2019. Any amounts borrowed and repaid may not be reborrowed. There are no amounts available
to be borrowed on the Loan Agreement.
outstanding principal amount of the loan, with interest accrued, the final payment fee, and the prepayment fee may become due
and payable prior to the applicable maturity date if an “Event of Default” as defined in the Loan Agreement occurs
and is not cured within any applicable cure period. Upon the occurrence and during the continuance of an Event of Default, all
obligations due to the Bank will bear interest at a rate per annum which is 5% above the then applicable interest rate. An Event
of Default includes, among other events, failure to pay interest and principal when due, material adverse changes, which include
a material adverse change in OncoCyte’s business, operations, or condition (financial or otherwise), failure to provide
the bank with timely financial statements and copies of filings with the Securities and Exchange Commission, as required, legal
judgments or pending or threatened legal actions of $50,000 or more, insolvency, and delisting from the NYSE American. OncoCyte’s
obligations under the Loan Agreement are collateralized by substantially all of its assets other than intellectual property such
as patents and trade secrets that OncoCyte owns. Accordingly, if an Event of Default were to occur and not be cured, the Bank
could foreclose on its security interest in the collateral. OncoCyte was in compliance with the Loan Agreement as of the filing
date of this Report.
the provisions of the Loan Agreement, as consented by the Bank on October 26, 2017, any proceeds received by OncoCyte from sales
of BioTime shares may be used by OncoCyte to fund its operations.
February 21, 2017 and in conjunction with the $2.0 million becoming available under the Loan Agreement, OncoCyte issued common
stock purchase warrants to the Bank (the “Bank Warrants”) entitling the Bank to purchase shares of OncoCyte common
stock in tranches related to the loan tranches under the Loan Agreement. In conjunction with the availability of the loan, the
Bank was issued warrants to purchase 8,247 shares of OncoCyte common stock at an exercise price of $4.85 per share, through February
21, 2027. On March 23, 2017, in conjunction with borrowing $2 million, the Bank was issued warrants to purchase an additional
7,321 shares at an exercise price of $5.46 per share, through March 23, 2027. The Bank may elect to exercise the Bank Warrants
on a “cashless exercise” basis and receive a number of shares determined by multiplying the number of shares for which
the applicable tranche is being exercised by (A) the excess of the fair market value of the common stock over the applicable exercise
price, divided by (B) the fair market value of the common stock. The fair market value of the common stock will be the last closing
or sale price on a national securities exchange, interdealer quotation system, or over-the-counter market.
Bank Warrants are classified as equity since, among other factors, they are not mandatorily redeemable, cannot be settled in cash
or other assets and require settlement by issuing a fixed number of shares of common stock of OncoCyte. OncoCyte determined the
fair value of the Bank Warrants using the Black-Scholes option pricing model to be approximately $62,000, which was recorded as
a deferred financing cost against the loan payable balance. Aggregate deferred financing costs of $196,000, recorded against the
loan payable balance, are amortized to interest expense over the term of the loan using the effective interest method. As of December
31, 2017, unamortized deferred financing costs were $113,000.