In August 2014, the Company entered into a Loan and Security Agreement (the “Growth Term Loan”) with a syndicate of two lending institutions, Oxford Finance LLC and Silicon Valley Bank, which was amended in August 2015 and June 2016. The first tranche of the Growth Term Loan (“Growth Term Loan A”) of $11.0 million was funded in August 2014. The second tranche of $5.0 million (“Growth Term Loan B”) was funded in March 2016. With the August 2015 amendment, the interest-only payment period for the Growth Term Loan was extended until April 1, 2016. Following the interest-only payment period, the Company became obligated to make equal monthly payments of principal and interest amortized over the remaining term of the loan for all funds drawn under the Growth Term Loan. Growth Term Loan A and B bore interest at fixed rates of 8.5% and 8.75% per annum, respectively, and were scheduled to mature in September 2018. The amended agreement also included a prepayment fee of 1% of the principal amount repaid if the Growth Term Loan was repaid after the second anniversary of the August 2015 amendment and prior to maturity.

The debt discount was being amortized to interest expense using the effective interest method, over the term of the related Growth Term Loan tranche. The aggregate amortization of debt discount associated with the Growth Term Loan was approximately $0 and $62,951 for the years ended December 31, 2019 and 2018, respectively.

In March 2018, the Company repaid all principal and interest amounts outstanding under the Growth Term Loan in an aggregate amount equal to approximately $4.3 million, including collateral agent legal fees and prepayment fees. The repayment was funded with net proceeds from the MidCap Credit Facility (see description of the MidCap Credit Facility below). As a result of the repayment, the Company recorded a loss on extinguishment of the Growth Term Loan of $105,064, including remaining unamortized discounts of $67,272 and prepayment and other Growth Term Loan lender fees in the accompanying consolidated statements of operations for the year ended December 31, 2018. All obligations under the Growth Term Loan were terminated upon extinguishment of the Growth Term Loan.

On March 26, 2018 (the “MidCap Closing Date”), the Company entered into a Credit and Security Agreement (Term Loan) (the “MidCap Term Loan”) and a Credit and Security Agreement (Revolving Loan) (the “MidCap Revolving Loan” and together with the MidCap Term Loan, the “MidCap Credit Facility”) with MidCap Financial Trust, as agent. MidCap Financial Trust subsequently assigned its rights and obligations as agent to MidCap Funding IV Trust.

The MidCap Term Loan provided a secured term loan facility in an aggregate principal amount of up to $20.0 million. The Company borrowed the first advance of $7.0 million (“MidCap Tranche 1”) on the MidCap Closing Date. Under the terms of the MidCap Term Loan, the second advance of $13.0 million (“MidCap Tranche 2”) was to be available to the Company on or before September 30, 2019, subject to the Company’s satisfaction of certain conditions described in the MidCap Term Loan, including (a) the Company achieving the first commercial sale of an FDA-approved diagnostic assay utilizing next-generation sequencing under its Governing Agreement with QML, and (b) delivery of subordination documents with respect to the QNAH Convertible Note (or the satisfaction of alternative arrangements as provided in the MidCap Term Loan, as described below). As the Company did not satisfy these conditions, MidCap Tranche 2 was not made available to the Company for borrowing.

MidCap Tranche 1 was used to repay in full all outstanding amounts and fees due under the Growth Term Loan. The proceeds remaining from MidCap Tranche 1 are being used for working capital and general corporate purposes.

MidCap Tranche 1 bears interest at a floating rate equal to 7.25% per annum, plus the greater of (i) 1.25% or (ii) the one-month LIBOR. As LIBOR is currently scheduled to be phased out in 2021, the Company expects to modify the MidCap Credit Facility to replace LIBOR with a new reference rate, which has yet to be established. The consequences of these developments cannot be entirely predicted but might result in higher interest rates on our borrowings under the MidCap Credit Facility.

Interest on MidCap Tranche 1 is due and payable monthly in arrears and was calculated at a rate of 8.9% for interest accrued as of December 31, 2019. Principal on this term loan advance was payable in 36 equal monthly installments beginning April 1, 2020 until paid in full on March 1, 2023 prior to amendment of the MidCap Credit Facility in February 2020. Prepayments of the term loan under the MidCap Term Loan, in whole or in part, will be subject to early termination fees in an amount equal to 2.0% of principal prepaid if prepayment occurs after the first anniversary of the MidCap Closing Date but on or prior to the second anniversary of the MidCap Closing Date, and 1.0% of principal prepaid if prepayment occurs after the second anniversary of the MidCap Closing Date and prior to or on the third anniversary of the MidCap Closing Date. In connection with execution of the MidCap Term Loan, the Company paid MidCap a $100,000 origination fee.

The MidCap Credit Facility was amended to, amongst other things, extend the interest-only payments on the term loan advances by an additional 11 months, with principal on each term loan advance payable in 25 equal monthly installments beginning March 1, 2021 until paid in full on March 1, 2023 (see Note 17). As such, the principal repayments remaining due under the MidCap Term Loan as of December 31, 2019 have been classified as long-term debt within MidCap Term Loan payable, net of discount and debt issuance costs in the accompanying consolidated balance sheet as of December 31, 2019. The remaining principal repayments due under the MidCap Term Loan, following amendment of this agreement in February 2020, are as follows:

2020		—
2021		2,800,000
2022		3,360,000
2023		840,000
Total MidCap Term Loan payments		7,000,000
Less discount and deferred financing costs		(443,455	)
Plus final fee premium		315,000
Total MidCap Term Loan, net	$	6,871,545

Upon termination of the MidCap Term Loan, the Company is required to pay an exit fee equal to 4.50% of the principal amount of all term loans advanced to the Company under the MidCap Term Loan.

The MidCap Term Loan also required that the Company deliver subordination documents with respect to the QNAH Convertible Note, or that the QNAH Convertible Note otherwise be converted or prepaid, on or before June 30, 2018, and required the Company to deposit approximately $3.3 million into an escrow account by July 15, 2018 if neither event occurred by such date. As neither event occurred prior to June 30, 2018, the Company deposited approximately $3.3 million into an escrow account on July 11, 2018. Such escrowed funds will be released to the Company upon subsequent delivery of the requisite subordination documents or conversion of the QNAH Convertible Note. If neither delivery of the subordination documents or conversion of the QNAH Convertible Note occurs, such funds will be applied by the escrow agent to repay in full the QNAH Convertible Note at maturity (or in connection with a prepayment at the direction of the Company after September 1, 2020), subject to (i) our having at least $18.0 million of unrestricted cash and cash equivalents and (ii) there being no default under the MidCap Credit Facility.

The MidCap Revolving Loan provides a secured revolving credit facility in an aggregate principal amount of up to $2.0 million. The Company may request an increase in the total commitments under the MidCap Revolving Loan by up to an additional $8.0 million, subject to agent and lender approval and the satisfaction of certain conditions. Availability of the revolving credit facility under the MidCap Revolving Loan will be based upon a borrowing base formula and periodic borrowing base certifications valuing certain of the Company’s accounts receivable and inventory, as reduced by certain reserves, if any. Further, although the revolving credit facility was made available following establishment of required lockbox arrangements by the Company in June 2018, there were no amounts outstanding under the MidCap Revolving Loan as of either December 31, 2019 or 2018. The proceeds of any loans under the MidCap Revolving Loan may be used for working capital and general corporate purposes.

Loans under the MidCap Revolving Loan accrue interest at a floating rate equal to 4.25% per annum, plus the greater of (i) 1.25% or (ii) the one-month LIBOR. Accrued interest on the revolving loans will be paid monthly and revolving loans may be borrowed, repaid and re-borrowed until March 1, 2023, when all outstanding amounts must be repaid. Subject to certain exceptions, termination or permanent reductions of the revolving loan commitment under the MidCap Revolving Loan will be subject to termination fees in an amount equal to 2.0% of the commitment amount terminated or reduced if such termination or reduction occurs after the first anniversary of the MidCap Closing Date but on or prior to the second anniversary of the MidCap Closing Date, and 1.0% of the commitment amount terminated or reduced if such termination or reduction occurs after the second anniversary of the MidCap Closing Date and prior to or on the third anniversary of the MidCap Closing Date.

In connection with the MidCap Revolving Loan, the Company is required to pay customary fees, including an origination fee of 0.50% of the original commitment amount at closing (and an equivalent origination fee with respect to any increased commitments at the time of the applicable increase), a monthly unused line fee of 0.50% per annum based upon the average daily unused portion of the revolving credit facility and a monthly collateral management fee of 0.50% per annum based upon the average daily used portion of the revolving credit facility. The Company is also required to maintain a minimum drawn balance of not less 20% of availability under the revolving line. If the Company does not maintain such minimum drawn balance, it is required to pay monthly interest and fees as if an amount equal to 20% of availability had been drawn down under the revolving line.

The Company’s obligations under the MidCap Credit Facility are secured by a security interest in substantially all of its assets, including intellectual property. Additionally, the Company’s future subsidiaries, if any, may be required to become co-borrowers or guarantors under the MidCap Credit Facility.

The MidCap Credit Facility contains customary affirmative covenants and customary negative covenants limiting the Company’s ability and the ability of the Company’s subsidiaries, if any, to, among other things, dispose of assets, undergo a change in control, merge or consolidate, make acquisitions, incur debt, incur liens, pay dividends, repurchase stock and make investments, in each case subject to certain exceptions.

The MidCap Credit Facility also contains customary events of default relating to, among other things, payment defaults, breaches of covenants, a material adverse change, delisting of the Company’s common stock, bankruptcy and insolvency, cross defaults with certain material indebtedness and certain material contracts, judgments, and inaccuracies of representations and warranties. Upon an event of default, agent and the lenders may declare all or a portion of the Company’s outstanding obligations to be immediately due and payable and exercise other rights and remedies provided for under the agreement. During the existence of an event of default, interest on the obligations could be increased by 3.0%.

In March 2018, the Company granted the lender ten-year warrants to purchase 18,123 shares of the Company’s common stock at $7.73 per share as a result of Tranche 1. The fair value of the warrants on the date of issuance was approximately $74,000, determined using the Black-Scholes option-pricing model, and was recorded as a discount to the MidCap Term Loan.

The Company has recognized approximately $443,455 and $610,359 of unamortized debt discount associated with the MidCap Term Loan, resulting from fees and debt issuance costs, in the accompanying consolidated balance sheets as of December 31, 2019 and 2018, respectively. Amortization of the debt discount associated with the MidCap Term Loan was approximately $166,904 and $121,611 for the years ended December 31, 2019 and 2018, respectively, and was included in interest expense in the accompanying consolidated statements of operations. Unamortized costs incurred in connection with the issuance of the Midcap Revolving Loan of $50,970 and $67,068 as of December 31, 2019 and 2018, respectively, are presented in other non-current assets in the accompanying consolidated balance sheets. Amortization of deferred MidCap revolving loan costs was $16,098 and $12,352 for the years ended December 31, 2019 and 2018, respectively, and is included in interest expense in the accompanying consolidated statements of operations.

In October 2017, the Company issued a subordinated convertible promissory note to QNAH in the principal amount of $3.0 million against receipt of cash proceeds equal to such principal amount. The QNAH Convertible Note bears simple interest at the rate of 3.0% per annum and matures on October 26, 2020 (the “Maturity Date”). Neither interest nor principal payment are due until the Maturity Date, subject to earlier conversion. QNAH may elect to convert all or any portion of the outstanding principal balance of the QNAH Convertible Note and all unpaid accrued interest thereon at any time prior to the Maturity Date into shares of the Company’s common stock at a conversion price of $3.984 per share.

Debt issuance costs of $12,333 and $25,787 relating to the QNAH Convertible Note are being presented as a direct reduction of Convertible Note – net of debt issuance costs - current as of December 31, 2019 and of Convertible note – net of debt issuance costs – non-current as of December 31, 2018, respectively. Amortization of the QNAH Convertible Note deferred financing costs was $13,454 and $13,453 for the years ended December 31, 2019 and 2018, respectively. Interest accrued on the QNAH Convertible Note for the years ended December 31, 2019 and 2018 was $188,630 and $98,630, respectively. Both amounts were included in interest expense in the accompanying consolidated statements of operations.