9. Long-Term Debt

In 2012, the Company entered into a credit facility, as amended, that consists of up to $23.0 million in term loan borrowings and a $2.0 million accounts receivable revolving line of credit. All borrowings under the credit facility have a maturity date of July 2016. The term loans bear interest at fixed rates based on the three-month LIBOR rate plus 8.39% (subject to a LIBOR floor of 0.50%) at the time of borrowing and borrowings under the revolving line of credit bear interest at the Prime Rate plus 3.70% (subject to a floor of 6.95%). At December 31, 2013, the Prime Rate was equal to 3.25%. We are also required to pay a fee of 0.075% per month on the unused portion of the revolver borrowings. Through January 2014, the Company is required to only pay interest on all outstanding term borrowings. Following the expiration of the interest only payment period, the Company is required to pay principal and interest in 30 equal monthly payments, plus an end of term payment equal to 5.5% of the amount borrowed. The Company may at its option prepay all of the term loan borrowings by paying the lender, among other things, all principal and accrued interest, the end of term payment plus a make-whole premium.

During 2012, the Company incurred $13.0 million in term loan borrowings at an interest rate of 8.89%. In connection with the credit facility, the Company issued warrants to purchase an aggregate of 76,940 shares of Series D preferred stock at an exercise price of $8.45 per share and 20,837 shares of Series E preferred stock at an exercise price of $14.40 per share. The warrants have a ten-year term and an aggregate fair value at issuance of $648,000. The warrants were valued at the date of issuance using the Black-Scholes option pricing model with the following assumptions: fair value of preferred stock equal to exercise price of warrant, volatility of 58.0 to 61.0% and a risk free interest rates of 1.63 to 2.20%. The warrants were treated as debt discount and are being amortized over the term of the debt. In connection with the Company’s initial public offering, these warrants became exercisable for shares of the Company’s common stock.

In April 2013, the Company incurred an additional $5.0 million in term loan borrowings under the credit facility at an interest rate of 8.89%. In connection with this borrowing, the Company issued warrants to purchase an aggregate of 10,418 shares of Series E preferred stock, which were valued at the date of issuance at $138,000 using the Black-Scholes option pricing model with the following assumptions: fair value of preferred stock equal to the exercise price of the warrants, volatility of 57.0% and a risk-free interest rate of 1.7%. In connection with the Company’s initial public offering, these warrants became exercisable for shares of the Company’s common stock.

The credit facility contains customary conditions to borrowing, events of default and covenants, including covenants that restrict the Company’s ability to dispose of assets, merge with or acquire other entities, incur indebtedness, incur encumbrances, make distributions to holders of the Company’s capital stock, make investments or engage in transactions with its affiliates. In addition, the Company must comply with a financial covenant based on non-Prosigna revenue. This financial covenant is measured monthly on a trailing three month basis. The Company was in compliance with all covenants as of December 31, 2013. The Company’s obligations under the credit facility are collateralized by substantially all of its assets other than intellectual property.

In August 2013, the Company entered into an equipment lease of hardware, software and capitalized installation costs over a lease term of three years expiring July 2016. The amount financed totaled approximately $410,000 and is being repaid over the term of the lease. The lease is interest free and ownership of the property transfers to the Company at the end of the term.

Pursuant to an office building lease, the owner of the building financed a portion of tenant improvements under an arrangement in which the Company is obligated to pay the amount financed over the term of the lease. The amount financed totaled $843,000 and is being repaid over the original five-year term of the lease. Interest accrues on the unpaid balance at a rate of 10% per annum.

Borrowings, including current portion, consisted of the following at December 31:


	2013			2012
	(In thousands)
Landlord payable	$	49		$	235
Capital lease		410			—
Term loans payable		18,348			13,115

		18,807			13,350
Less: Unamortized debt discount		(514	)		(591	)
Current portion		(6,136	)		(2,789	)

Non-current portion	$	12,157		$	9,970

Scheduled future payments for principal obligations under outstanding debt facilities were as follows at December 31:


	2013
	(In thousands)
2014	$	6,342
2015		7,458
2016		5,007
2017		—
2018		—

	$	18,807