10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

Or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-35817

CANCER GENETICS, INC.

(Exact name of registrant as specified in its charter)

Delaware	04-3462475
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

201 Route 17 North 2nd Floor

Rutherford, NJ 07070

(201) 528-9200

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  ý

As of May 1, 2015, there were 9,827,169 shares of common stock, par value $0.0001 of Cancer Genetics, Inc. outstanding.

CANCER GENETICS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations	2
	Consolidated Statements of Cash Flows	3
	Notes to Unaudited Consolidated Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds from Sales of Registered Securities	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	24
SIGNATURE		25
INDEX TO EXHIBITS		26

PART I — FINANCIAL INFORMATION

Item 1.    Financial Statements (Unaudited)

Cancer Genetics, Inc. and Subsidiaries

Consolidated Balance Sheets (Unaudited)

	March 31, 2015			December 31, 2014
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	22,311,730		$	25,554,064
Accounts receivable, net of allowance for doubtful accounts	4,824,394			5,028,620
Other current assets	1,149,428			1,172,750
Total current assets	28,285,552			31,755,434
FIXED ASSETS, net of accumulated depreciation	4,045,565			4,310,126
OTHER ASSETS
Restricted cash	6,300,000			6,300,000
Patents	534,101			502,767
Investment in joint venture	840,286			1,047,744
Goodwill	3,187,495			3,187,495
Security deposits	1,564			1,564
Total other assets	10,863,446			11,039,570
Total Assets	$	43,194,563		$	47,105,130
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	3,753,224		$	3,762,567
Obligations under capital leases, current portion	59,652			58,950
Deferred revenue	267,396			544,446
Total current liabilities	4,080,272			4,365,963
Obligations under capital leases	285,188			300,385
Deferred rent payable	330,125			347,840
Line of credit	6,000,000			6,000,000
Warrant liability	67,000			52,000
Acquisition note payable	634,394			560,341
Deferred revenue, long-term	825,787			924,850
Total liabilities	12,222,766			12,551,379
STOCKHOLDERS’ EQUITY
Preferred stock, authorized 9,764,000 shares, $0.0001 par value, none issued	—			—
Common stock, authorized 100,000,000 shares, $0.0001 par value, 9,831,169 and 9,821,169 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively	982			982
Additional paid-in capital	113,216,621			112,520,268
Accumulated (deficit)	(82,245,806		)	(77,967,499		)
Total Stockholders’ Equity	30,971,797			34,553,751
Total Liabilities and Stockholders’ Equity	$	43,194,563		$	47,105,130

See Notes to Unaudited Consolidated Financial Statements.

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Cancer Genetics, Inc. and Subsidiaries

Consolidated Statements of Operations (Unaudited)

	Three Months Ended March 31,
	2015			2014
Revenue	$	4,370,327		$	1,430,375
Cost of revenues	3,141,735			1,290,062
Gross profit	1,228,592			140,313
Operating expenses:
Research and development	1,277,926			596,771
General and administrative	2,986,897			2,731,404
Sales and marketing	1,115,813			748,979
Total operating expenses	5,380,636			4,077,154
Loss from operations	(4,152,044		)	(3,936,841		)
Other income (expense):
Interest expense	(33,967		)	(341,177		)
Interest income	12,618			22,184
Change in fair value of acquisition note payable	(89,914		)	—
Change in fair value of warrant liability	(15,000		)	(44,000		)
Total other (expense)	(126,263		)	(362,993		)
Loss before income taxes	(4,278,307		)	(4,299,834		)
Income tax provision (benefit)	—			(1,813,941		)
Net (loss)	$	(4,278,307	)	$	(2,485,893	)
Basic net (loss) per share	$	(0.44	)	$	(0.27	)
Diluted net (loss) per share	$	(0.44	)	$	(0.27	)
Basic Weighted-Average Shares Outstanding	9,703,576			9,276,643
Diluted Weighted-Average Shares Outstanding	9,703,576			9,276,643

See Notes to Unaudited Consolidated Financial Statements.

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Cancer Genetics, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited) 

	Three Months Ended March 31,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss)	$	(4,278,307	)	$	(2,485,893	)
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
Depreciation	347,710			96,800
Amortization	8,725			6,702
Provision for bad debts	221,395			—
Equity-based consulting and compensation expenses	696,353			530,122
Change in fair value of acquisition note payable	89,914			—
Change in fair value of Gentris contingent consideration	(162,000		)	—
Change in fair value of warrant liability	15,000			44,000
Amortization of loan guarantee and financing fees	—			310,500
Deferred rent	(17,715		)	(3,210		)
Loss in equity method investment	207,458			11,755
Change in working capital components:
Accounts receivable	(17,169		)	(251,057		)
Other current assets	23,322			(64,844		)
Accounts payable, accrued expenses and deferred revenue	(239,317		)	(131,799		)
Net cash (used in) operating activities	(3,104,631		)	(1,936,924		)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets	(83,149		)	(144,018		)
Increase in restricted cash	—			(6,000,000		)
Patent costs	(40,059		)	(36,809		)
Net cash (used in) investing activities	(123,208		)	(6,180,827		)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on capital lease obligations	(14,495		)	(7,490		)
Proceeds from warrant exercises	—			950
Proceeds from option exercises	—			2,020
Principal payments on notes payable	—			(22,298		)
Net cash (used in) financing activities	(14,495		)	(26,818		)
Net (decrease) in cash and cash equivalents	(3,242,334		)	(8,144,569		)
CASH AND CASH EQUIVALENTS
Beginning	25,554,064			49,459,564
Ending	$	22,311,730		$	41,314,995
SUPPLEMENTAL CASH FLOW DISCLOSURE
Cash paid for interest	$	33,940		$	30,677
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Cashless exercise of derivative warrants	—			125,000

See Notes to Unaudited Consolidated Financial Statements.

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Notes to Unaudited Consolidated Financial Statements

Note 1.     Organization, Description of Business, Basis of Presentation and Acquisitions

We are an oncology diagnostics company focused on developing, commercializing and providing DNA-based tests and services to improve the personalization of cancer treatment and to better inform biopharmaceutical companies of genomic factors influencing subject responses to therapeutics. Our vision is to become the oncology diagnostics partner for companies and clinicians by participating in the entire care continuum from bench to bedside. We believe the diagnostic industry is undergoing a metamorphosis in its approach to oncology testing, embracing individualized medicine as a means to drive higher standards of patient treatment and disease management. Similarly, biopharma companies are increasingly engaging companies such as ours to provide information on clinical trial participants’ DNA profiles in order to identify genomic variations that may be responsible for differing responses to pharmaceuticals, and particularly to oncology drugs, thereby increasing the efficiency of trials while lowering related costs. We believe tailored therapeutics can revolutionize oncology medicine through DNA-based testing services, enabling physicians and researchers to target the factors that make each patient and disease unique. We have created a unique position in the industry by providing targeted somatic analysis of tumor sample cells alongside germline analysis of an individuals' non-cancerous cells' DNA as we attempt to reach the next milestone in personalized medicine. Individuals are born with germline mutations and somatic mutations arise in tissues over the course of a lifetime.

We were incorporated in the State of Delaware on April 8, 1999 and have offices and state-of-the-art laboratories located in New Jersey, North Carolina, Shanghai (China), and Hyderabad, India. Our laboratories comply with the highest regulatory standards as appropriate for the services they deliver including CLIA, CAP, NY State and NABL (India).We have two advisory boards to counsel our scientific and clinical direction. Our Scientific Advisory Board is comprised of preeminent scientists and physicians from the fields of cancer biology, cancer pathology, cancer medicine and molecular genetics. Our Clinical Advisory Board is comprised of clinicians and scientists focused on clinical implementation of our proprietary tests and services and mapping those tests and services to patient needs.  Our services are built on a foundation of world-class scientific knowledge and intellectual property in solid and blood-borne cancers, as well as strong academic relationships with major cancer centers such as Memorial Sloan-Kettering, Mayo Clinic, and the National Cancer Institute.

Basis of Presentation

The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for interim reporting as prescribed by the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2014, filed with the Securities and Exchange Commission on March 16, 2015. The consolidated balance sheet as of December 31, 2014, included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by GAAP. Interim financial results are not necessarily indicative of the results that may be expected for any future interim period or for the year ending December 31, 2015.

2014 Acquisitions

On July 16, 2014, we purchased substantially all of the assets of Gentris Corporation, (“Gentris”), with its principal place of business in North Carolina, for approximately $4.8 million. There were no changes in the preliminary purchase price allocation or goodwill impairment for Gentris during the three months ended March 31, 2015.

On August 18, 2014, we acquired BioServe Biotechnologies (India) Private Limited, an Indian corporation (“BioServe”) for an aggregate purchase price of approximately $1.1 million. During the three months ended March 31, 2015, there was no goodwill impairment for BioServe, and the preliminary allocation of the purchase price was retrospectively adjusted for a measurement period adjustment to increase goodwill by approximately $193,000, reduce fixed assets by approximately $136,000, reduce other assets by approximately $38,000 and reduce other current assets by approximately $19,000. The fair value of the assets acquired and liabilities assumed as of August 18, 2014 are now as follows:

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	Amount
Accounts receivable	$	151,002
Other current assets	102,064
Fixed assets	488,481
Other assets	378,440
Goodwill	734,925
Current liabilities	(758,614		)
Other liabilities	(22,049		)
Total Purchase Price	$	1,074,249

The results of operations for the three months ended March 31, 2015 include the operations of Gentris and BioServe and include combined revenues of $2,166,665 and a combined net loss of $185,502. The following table provides certain pro forma financial information for the Company as if the acquisitions discussed above occurred on January 1, 2014:

	Three Months Ended
	March 31, 2014
Revenue	$	2,272,584
Net loss	(2,720,296		)
Basic and diluted net loss per share	$	(0.29	)

Note 2.     Revenue and Accounts Receivable

Revenue by service type for the three months ended March 31, 2015 and 2014 is comprised of the following:

	Three Months Ended March 31,
	2015		2014
Biopharma Services	$	3,331,090	$	491,250
Clinical Services	873,041		939,125
Discovery Services	166,196		—
	$	4,370,327	$	1,430,375

Accounts receivable by service type at March 31, 2015 and December 31, 2014 consists of the following:

	March 31, 2015			December 31, 2014
Biopharma Services	$	3,389,388		$	3,203,335
Clinical Services	1,763,461			1,925,176
Discovery Services	144,116			151,285
Allowance for doubtful accounts	(472,571		)	(251,176		)
	$	4,824,394		$	5,028,620

Allowance for Doubtful Accounts
Balance, December 31, 2014	$	251,176
Bad debt expense	221,395
Balance, March 31, 2015	$	472,571

Biopharma Services are customized solutions provided to biopharmaceutical companies for patient stratification and treatment selection through an extensive suite of DNA-based testing services. Clinical Services are tests performed to provide information on diagnosis, prognosis and theranosis of cancers to guide patient management. These tests can be billed to Medicare, another third party insurer or the referring community hospital or other healthcare facility. Discovery Services are

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services that provide the tools and testing methods for companies and researchers seeking to identify new DNA-based biomarkers for disease.

We have historically derived a significant portion of our revenue from a limited number of test ordering sites. Test ordering sites account for all of our Clinical Services revenue along with a portion of our Biopharma Services revenue. Our test ordering sites are hospitals, cancer centers, reference laboratories, physician offices and biopharmaceutical companies. The top five test ordering sites during the three months ended March 31, 2015 and 2014 accounted for 72% and 63% respectively, of our testing volumes, with 24% and 32%, respectively, of the volume coming from community hospitals. During the three months ended March 31, 2015, there were two biopharmaceutical companies which accounted for approximately 51% of our total revenue. These two biopharmaceutical companies accounted for approximately 29% and 22% of total revenue, respectively. During the three months ended March 31, 2014, there was one biopharmaceutical company which accounted for approximately 33% of our total revenue. While we have agreements with our Biopharma clients, volumes from these clients are subject to the progression and continuation of the trials which can impact testing volume. We generally do not have formal written agreements with other testing sites and, as a result, we may lose these significant test ordering sites at any time.

The breakdown of our Clinical Services revenue (as a percent of total revenue) is as follows:

	Three Months Ended March 31,
	2015	2014
Medicare	6%	18%
Other insurers	7%	20%
Other healthcare facilities	7%	28%
	20%	66%

Note 3.     Earnings Per Share

For purposes of this calculation, stock warrants, outstanding stock options and unvested restricted shares are considered common stock equivalents using the treasury stock method, and are the only such equivalents outstanding. For all periods presented, all equivalent units outstanding were anti-dilutive.

The following table summarizes equivalent units outstanding that were excluded from the earnings per share calculation because their effects were anti-dilutive:

	Three Months Ended March 31,
	2015	2014
Common stock purchase warrants	1,136,078	1,781,199
Stock options	1,888,375	848,092
Restricted shares of common stock	121,667	5,000
	3,146,120	2,634,291

Note 4. Sale of Net Operating Losses

In January 2014, we executed a sale of $22,301,643 of gross state NOL carryforwards resulting in the receipt of $1,813,941. The Company transferred the NOL carryforwards through the Technology Business Tax Certificate Transfer Program sponsored by the New Jersey Economic Development Authority.

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Note 5. Equity Incentive Plans

We have two equity incentive plans: the 2008 Stock Option Plan (the “2008 Plan”) and the 2011 Equity Incentive Plan (the “2011 Plan”, and together with the 2008 Plan, the “Stock Option Plans”). The Stock Option Plans are meant to provide additional incentive to officers, employees and consultants to remain in our employment. Options granted are generally exercisable for up to 10 years.

At March 31, 2015, 323,267 shares remain available for future awards under the 2011 Plan and 92,911 shares remain available for future awards under the 2008 Plan. Our board of directors increased availability under the 2011 Plan by 650,000 shares, subject to approval by our stockholders at the May 2015 annual meeting. As of March 31, 2015, no stock appreciation rights and 237,500 shares of restricted stock have been awarded under the Stock Option Plans.

A summary of employee and non-employee stock option activity for the three months ended March 31, 2015 is as follows:

	Options Outstanding				Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
	Number of Shares		Weighted- Average Exercise Price
Outstanding January 1, 2015	1,839,458		$	10.58	8.49	$	618,250
Granted	97,000		9.18
Canceled or expired	(48,083	)	10.74
Outstanding March 31, 2015	1,888,375		$	10.50	8.30	$	1,325,605
Exercisable March 31, 2015	739,928		$	9.57	6.79	$	806,090

Aggregate intrinsic value represents the difference between the estimated fair value of our common stock and the exercise price of outstanding, in-the-money options. The fair value of our common stock was $7.81 at March 31, 2015 and $6.68 at December 31, 2014, based on the closing price on the NASDAQ Capital Market. During the year ended December 31, 2014, we received $79,018 from the exercise of options. Also during the year ended December 31, 2014, an option holder exercised options to purchase 12,000 shares of common stock with an exercise price of $10.00 per share using the net issue exercise method whereby the option holder surrendered 11,429 shares in payment in full of the exercise price resulting in net issuance of 571 shares of common stock. The options exercised in 2014 had a total intrinsic value of $120,510. No options were exercised in the three months ended March 31, 2015.

As of March 31, 2015, total unrecognized compensation cost related to non-vested stock options granted to employees was $5,899,360 which we expect to recognize over the next 3.63 years.

As of March 31, 2015, total unrecognized compensation cost related to non-vested stock options granted to non-employees was $700,164 which we expect to recognize over the next 2.76 years. The estimate of unrecognized non-employee compensation is based on the fair value of the non-vested options as of March 31, 2015.

The fair value of options granted to employees is estimated on the grant date using the Black-Scholes option valuation model. This valuation model requires us to make assumptions and judgments about the variables used in the calculation, including the expected term (the period of time that the options granted are expected to be outstanding), the volatility of our common stock, a risk-free interest rate, and expected dividends. To the extent actual forfeitures differ from the estimates, the difference will be recorded as a cumulative adjustment in the period estimates are revised. No compensation cost is recorded for options that do not vest. We use the simplified calculation of expected life described in the SEC’s Staff Accounting Bulletin No. 107, Share-Based Payment, and volatility is based on an average of the historical volatilities of the common stock of three entities with characteristics similar to those of the Company. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. We use an expected dividend yield of zero, as we do not anticipate paying any dividends in the foreseeable future. Expected forfeitures are assumed to be zero due to the small number of plan participants and the plan design which has monthly vesting after an initial cliff vesting period.

The following table presents the weighted-average assumptions used to estimate the fair value of options granted to employees during the periods presented:

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	Three Months Ended March 31,
	2015
Volatility	68.98%
Risk free interest rate	1.70%
Dividend yield	0.00%
Term (years)	6.31
Weighted-average fair value of options granted during the period	5.83

In May 2014, we issued 200,000 options to our Director, Raju Chaganti, with an exercise price of $15.89. See Note 10 for additional information. The following table presents the weighted-average assumptions used to estimate the fair value of options reaching their measurement date for non-employees during the periods presented:

	Three Months Ended March 31,
	2015		2014
Volatility	70.50	%	72.66	%
Risk free interest rate	1.88	%	2.73	%
Dividend yield	0.00	%	0.00	%
Term (years)	9.09		9.53

Restricted stock awards have been granted to employees, directors and consultants as compensation for services. At March 31, 2015, there was $831,472 of unrecognized compensation cost related to non-vested restricted stock granted to employees; we expect to recognize the cost over 2.88 years. At March 31, 2015, there was $10,324 of unrecognized compensation cost related to non-vested restricted stock granted to non-employees; we expect to recognize the cost over 0.53 years.

The following table summarizes the activities for our non-vested restricted stock awards for the three months ended March 31, 2015:

	Non-vested Restricted Stock Awards
	Number of Shares		Weighted-Average Grant Date Fair Value
Non-vested at January 1, 2015	132,500		$	8.14
Granted	10,000		8.42
Vested	(20,833	)	10.40
Non-vested at March 31, 2015	121,667		$	7.80

The following table presents the effects of stock-based compensation related to stock option and restricted stock awards to employees and non-employees on our Statement of Operations during the periods presented:

	Three Months Ended March 31,
	2015		2014
Cost of revenues	$	49,186	$	20,412
Research and development	95,073		14,102
General and administrative	520,737		468,855
Sales and marketing	31,357		26,753
Total stock-based compensation	$	696,353	$	530,122

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Note 6. Warrants

We have issued certain warrants which contain an exercise price adjustment feature in the event we issue additional equity instruments at a price lower than the exercise price of the warrant. The warrants are described herein as derivative warrants. For all derivative warrants, in the event equity instruments are issued at a price lower than the exercise price of the warrant, the exercise price is adjusted to the price of the new equity instruments issued (price adjustment feature). For certain of these warrants, the number of shares underlying the warrant is also adjusted to an amount computed by dividing the proceeds of the warrant under its original terms by the revised exercise price (share adjustment feature). These warrants are initially recorded as a warrant liability at fair value with a corresponding entry to the loan guarantee fee asset, debt discount, additional paid-in capital or expense dependent upon the service provided in exchange for the warrant grant. As of March 31, 2015 all warrants with a share adjustment feature have either expired or have been exercised.

The following table summarizes the warrant activity for the three months ended March 31, 2015:

Issued With / For	Exercise Price			Warrants Outstanding January 1, 2015	2015 Warrants Exercised	Warrants Outstanding March 31, 2015
Non-Derivative Warrants:
Financing	$	10.00		243,334	—	243,334
Financing	15.00			436,079	—	436,079
Debt Guarantee	15.00			352,312	—	352,312
Consulting	10.00			29,138	—	29,138
Total Non-Derivative Warrants	$	13.72	B	1,060,863	—	1,060,863
Derivative Warrants:
Financing	$	10.00	A	60,000	—	60,000
Series B Pref. Stock	10.00		A	15,015	—	15,015
Consulting	10.00		A	200	—	200
Total Derivative Warrants	10.00		B	75,215	—	75,215
Total	$	13.47	B	1,136,078	—	1,136,078

A These warrants are subject to fair value accounting and contain an exercise price adjustment feature. See Note 7.

B Weighted-average exercise prices are as of March 31, 2015.

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Note 7. Fair Value of Warrants

The following table summarizes the derivative warrant activity subject to fair value accounting for the three months ended March 31, 2015:

Issued with/for	Fair value of warrants outstanding as of December 31, 2014		Change in fair value of warrants		Fair value of warrants outstanding as of March 31, 2015
Series B Preferred Stock	$	8,000	$	3,000	$	11,000
Financing	44,000		12,000		56,000
	$	52,000	$	15,000	$	67,000

The following tables summarize the assumptions used in computing the fair value of derivative warrants subject to fair value accounting at the date of issue or exercise during the three months ended March 31, 2015 and 2014, and at March 31, 2015 and December 31, 2014.

Issued with Debt Guarantee	Exercised During the Three Months Ended March 31, 2014
Exercise Price	$	10.00
Expected life (years)	0.60
Expected volatility	49.01		%
Risk-free interest rate	0.08		%
Expected dividend yield	—		%

Issued with Series B Preferred Shares	As of March 31, 2015			As of December 31, 2014			Exercised During the Three Months Ended March 31, 2014
Exercise Price	$	10.00		$	10.00		$	10.00
Expected life (years)	0.63			0.88			1.72
Expected volatility	49.12		%	49.95		%	46.60		%
Risk-free interest rate	0.14		%	0.25		%	0.33		%
Expected dividend yield	—		%	—		%	—		%

Issued for Consulting	As of March 31, 2015			As of December 31, 2014
Exercise Price	$	10.00		$	10.00
Expected life (years)	0.90			1.14
Expected volatility	46.92		%	49.25		%
Risk-free interest rate	0.26		%	0.25		%
Expected dividend yield	—		%	—		%

Issued with Financing	As of March 31, 2015			As of December 31, 2014
Exercise Price	$	10.00		$	10.00
Expected life (years)	0.98			1.23
Expected volatility	46.69		%	50.23		%
Risk-free interest rate	0.26		%	0.25		%
Expected dividend yield	—		%	—		%

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The assumed Company stock price used in computing the fair value of warrants exercised during the three months ended March 31, 2014 was $15.20 – $19.86. In determining the fair value of warrants issued at each reporting date, the Company stock price was $7.81 at March 31, 2015 and $6.68 at December 31, 2014 based on the closing price on the NASDAQ Capital Market.

Note 8. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards Codification requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect our own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, the Topic establishes a fair value hierarchy for valuation inputs that give the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that we have the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect our own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The following table summarizes the financial liabilities measured at fair value on a recurring basis segregated by the level of valuation inputs within the fair value hierarchy utilized to measure fair value:

	March 31, 2015
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Warrant liability	$	67,000	$	—	$	—	$	67,000
Gentris contingent consideration	131,400		—		—		131,400
Note payable to VenturEast	625,301		—		—		625,301
	$	823,701	$	—	$	—	$	823,701
	December 31, 2014
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Warrant liability	$	52,000	$	—	$	—	$	52,000
Gentris contingent consideration	293,400		—		—		293,400
Note payable to VenturEast	534,828		—		—		534,828
	$	880,228	$	—	$	—	$	880,228

The warrant liability consists of stock warrants we issued that contain an exercise price adjustment feature. In accordance with derivative accounting for warrants, we calculated the fair value of warrants and the assumptions used are described in Note 7, “Fair Value of Warrants”. Realized and unrealized gains and losses related to the change in fair value of the warrant liability are included in Other income (expense) on the Statement of Operations.

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The value of the Gentris consideration was determined using a discounted cash flow of the expected payments required by the purchase agreement. During the three months ended March 31, 2015, we recognized a gain of $162,000 due to the decrease in probability of paying the contingent consideration.

The ultimate payment to VenturEast will be the value of 84,278 shares of common stock at the time of payment. The value of the note payable to VenturEast was determined using the fair value of our common stock less a discount for credit risk. During the three months ended March 31, 2015, we recognized a loss of approximately $90,000 due to the increase in value of the note.

Realized and unrealized gains and losses related to the change in fair value of the Gentris contingent consideration are included in general and administrative expense, while realized and unrealized gains and losses related to the VenturEast note are included in other income (expense) on the Consolidated Statement of Operations.

A table summarizing the activity for the derivative warranty liability which is measured at fair value using Level 3 inputs is presented in Note 7. The following table summarizes the activity of the notes payable to VenturEast and Gentris consideration which were measured at fair value using Level 3 inputs:

	Note Payable		Gentris Contingent
	to VenturEast		Consideration
Fair value at December 31, 2014	$	534,828	$	293,400
Change in fair value	90,473		(162,000		)
Fair value at March 31, 2015	$	625,301	$	131,400

Note 9. Joint Venture Agreement

In November 2011, we entered into an affiliation agreement with the Mayo Foundation for Medical Education and Research (“Mayo”), subsequently amended. Under the agreement, we formed a joint venture with Mayo in May 2013 to focus on developing oncology diagnostic services and tests utilizing next generation sequencing. The joint venture is a limited liability company, with each party initially holding fifty percent of the issued and outstanding membership interests of the new entity (the “JV”). In exchange for our membership interest in the JV, we made an initial capital contribution of $1.0 million in October 2013. In addition, we issued 10,000 shares of our common stock to Mayo pursuant to our affiliation agreement and recorded an expense of approximately $175,000. We also recorded additional expense of approximately $231,000 during the fourth quarter of 2013 related to shares issued to Mayo in November 2011 as the JV achieved certain performance milestones. In the third quarter of 2014, we made an additional $1.0 million capital contribution.

The agreement also requires aggregate total capital contributions by us of up to an additional $4.0 million. We currently anticipate that we will make capital contributions of $1.0 million in the third quarter of 2015. The timing of the remaining installments is subject to the JV’s achievement of certain operational milestones agreed upon by the board of governors of the JV. In exchange for its membership interest, Mayo’s capital contribution will take the form of cash, staff, services, hardware and software resources, laboratory space and instrumentation, the fair market value of which will be approximately equal to $6.0 million. Mayo’s continued contribution will also be conditioned upon the JV’s achievement of certain milestones.

Our share of the JV’s net loss was approximately $207,000 and $12,000 for the three months ended March 31, 2015 and 2014, respectively, and is included in research and development expense on the Consolidated Statement of Operations. We have a net receivable due from the JV of approximately $0 and $10,000 at March 31, 2015 and December 31, 2014, respectively, which is included in other current assets in the Consolidated Balance Sheets.

The joint venture is considered a variable interest entity under ASC 810-10, but we are not the primary beneficiary as we do not have the power to direct the activities of the JV that most significantly impact its performance. Our evaluation of ability to impact performance is based on our equal board membership and voting rights and day-to-day management functions which are performed by the Mayo personnel.

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Note 10. Related Party Transactions

John Pappajohn, a member of the Board of Directors and stockholder, had personally guaranteed our revolving line of credit with Wells Fargo Bank through March 31, 2014. As consideration for his guarantee, as well as each of the eight extensions of this facility through March 31, 2014, Mr. Pappajohn received warrants to purchase an aggregate of 1,051,506 shares of common stock of which Mr. Pappajohn assigned warrants to purchase 284,000 shares of common stock to certain third parties. Warrants to purchase 440,113 shares of common stock have been exercised by Mr. Pappajohn through March 31, 2015. After adjustment pursuant to the terms of the warrants in conjunction with our IPO, the number of these warrants outstanding retained by Mr. Pappajohn was 352,312 at $15.00 per share.

In addition, John Pappajohn also had loaned us an aggregate of $6,750,000 (all of which was converted into 675,000 shares of common stock at the IPO price of $10.00 per share). In connection with these loans, Mr. Pappajohn received warrants to purchase an aggregate of 202,630 shares of common stock. After adjustment pursuant to the terms of the warrants in conjunction with our IPO, the number of warrants outstanding was 436,079 at $15.00 per share at March 31, 2015.

Effective January 6, 2014, the Board of Directors appointed John Pappajohn to serve as the Chairman of the Board. As compensation for serving as the Chairman of the Board, the Company will pay Mr. Pappajohn $100,000 per year and granted to Mr. Pappajohn 25,000 restricted shares of the Company's common stock, and options to purchase an aggregate of 100,000 shares of the Company's common stock. The options have a term of ten years from the date on which they were granted. The restricted stock and the options each vest in two equal installments on the one-year anniversary and the two-year anniversary of the date on which Mr. Pappajohn became the Chairman of the Board.

In August 2010, we entered into a consulting agreement with Equity Dynamics, Inc. (“EDI”), an entity controlled by John Pappajohn, pursuant to which EDI received a monthly fee of $10,000. The consulting agreement was terminated effective March 31, 2014. Subsequently, the Company entered into a new consulting agreement with EDI effective April 1, 2014 pursuant to which it will receive a monthly fee of $10,000. Total expenses for the three months ended March 31, 2015 and 2014 were $30,000. As of March 31, 2015, we owed EDI $0.

On September 15, 2010, we entered into a three-year consulting agreement with Dr. Chaganti which was subsequently renewed through December 31, 2016 pursuant to which Dr. Chaganti receives $5,000 per month for providing consulting and technical support services. Total expenses for each of the quarterly periods ended March 31, 2015 and 2014 were $15,000. Pursuant to the terms of the renewed consulting agreement, Dr. Chaganti received an option to purchase 200,000 shares of our common stock at a purchase price of $15.89 per share vesting over a period of four years. Total non-cash stock-based compensation recognized under the consulting agreement for each of the three months ended March 31, 2015 and 2014 were $62,500 and $0, respectively. Also pursuant to the consulting agreement, Dr. Chaganti assigned to us all rights to any inventions which he may invent during the course of rendering consulting services to us. In exchange for this assignment, if the USPTO issues a patent for an invention on which Dr. Chaganti is listed as an inventor, we are required to pay Dr. Chaganti (i) a one-time payment of $50,000 and (ii) 1% of any net revenues we receive from any licensed sales of the invention. In 2015, we paid Dr. Chaganti $150,000 which was recognized as an expense in fiscal 2014 when three patents were issued.

Note 11. Contingencies

In the normal course of business, the Company may become involved in various claims and legal proceedings. In the opinion of management, the ultimate liability or disposition thereof is not expected to have a material adverse effect on our financial condition, results of operations, or liquidity.

Note 12. Subsequent Event

On May 7, 2015, the Company entered into a new debt financing facility with Silicon Valley Bank to refinance the Company’s cash collateralized loan from Wells Fargo and to provide an additional working capital line of credit. The Silicon Valley Bank loan provides for a $6 million term note (“Term Note”) and a line of credit (“Line of Credit”) of up to $4 million. The Term Note requires interest-only payments through April 30, 2016 and beginning May 1, 2016, monthly principal payments of approximately $167,000 will be required plus interest through maturity on April 1, 2019. The interest rate of the Term Note is the Wall Street Journal prime plus 2%, with a floor of 5.25% and an additional deferred interest payment of $180,000 will be due upon maturity. The Line of Credit requires monthly interest-only payments of the Wall Street Journal prime plus 1.5% and matures on May 7, 2017. The new loan agreement requires us to maintain certain financial ratios and has a first security interest in substantially all Company assets (other than our intellectual property). Pursuant to the new loan agreement, the Company will no longer be required to maintain restricted cash accounts.

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Item 2.        Management's Discussion and Analysis of Financial Condition and Results of Operations

As used herein, the “Company,” “we,” “us,” “our” or similar terms, refer to Cancer Genetics, Inc. and its wholly owned subsidiaries: Cancer Genetics Italia, S.r.l., Gentris, LLC and BioServe Biotechnologies (India) Private Limited, except as expressly indicated or unless the context otherwise requires. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help facilitate an understanding of our financial condition and our historical results of operations for the periods presented. This MD&A should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Reporting on Form10-K filed with the SEC on March 16, 2015. This MD&A may contain forward-looking statements that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements” below.

Overview

We are an oncology diagnostics company focused on developing, commercializing and providing DNA-based tests and services to improve the personalization of cancer treatment and to better inform biopharmaceutical companies of genomic factors influencing subject responses to therapeutics. Our vision is to become the oncology diagnostics partner for companies and clinicians by participating in the entire care continuum from bench to bedside. We believe the diagnostic industry is undergoing a metamorphosis in its approach to oncology testing, embracing individualized medicine as a means to drive higher standards of patient treatment and disease management. Similarly, biopharma companies are increasingly engaging companies such as ours to provide information on clinical trial participants’ DNA profiles in order to identify genomic variations that may be responsible for differing responses to pharmaceuticals, and particularly to oncology drugs, thereby increasing the efficiency of trials while lowering related costs. We believe tailored therapeutics can revolutionize oncology medicine through DNA-based testing services, enabling physicians and researchers to target the factors that make each patient and disease unique. We have created a unique position in the industry by providing targeted somatic analysis of tumor sample cells alongside germline analysis of an individuals' non-cancerous cells' DNA as we attempt to reach the next milestone in personalized medicine.

Our services are performed at our state-of-the-art laboratories located in New Jersey, North Carolina, Shanghai (China), and Hyderabad, India. Our laboratories comply with the highest regulatory standards as appropriate for the services they deliver including CLIA, CAP, NY State and NABL (India).We have two advisory boards to counsel our scientific and clinical direction. Our Scientific Advisory Board is comprised of preeminent scientists and physicians from the fields of cancer biology, cancer pathology, cancer medicine and molecular genetics. Our Clinical Advisory Board is comprised of clinicians and scientists focused on clinical implementation of our proprietary tests and services and mapping those tests and services to patient needs. Our services are built on a foundation of world-class scientific knowledge and intellectual property in solid and blood-borne cancers, as well as strong academic relationships with major cancer centers such as Memorial Sloan-Kettering, Mayo Clinic, and the National Cancer Institute.

Our clinical offerings include our portfolio of proprietary tests targeting hematological, urogenital and HPV-associated cancers, in conjunction with ancillary non-proprietary tests. Our proprietary tests target cancers that are difficult to prognose and predict treatment outcomes through currently available mainstream techniques. We provide our proprietary tests and services, along with a comprehensive range of non-proprietary oncology-focused tests and laboratory services, to oncologists and pathologists at hospitals, cancer centers, and physician offices, as well as biotech and pharmaceutical companies to support their clinical trials. Our proprietary tests are based principally on our expertise in specific cancer types, test development methodologies and proprietary algorithms correlating genetic events with disease specific information. Our portfolio primarily includes comparative genomic hybridization (CGH) microarrays and next generation sequencing (NGS) panels, and DNA fluorescentin situhybridization (FISH) probes.

The non-proprietary testing services we offer are focused in part on specific oncology categories where we are developing our proprietary arrays and probe panels. We believe that there is significant synergy in developing and marketing a complete set of tests and services that are disease- and treatment-focused and delivering those tests and services in a comprehensive manner to help with patient management decisions. The insight that we develop in delivering the non-proprietary services are often leveraged in the development of our proprietary programs and now increasingly in the validation of our proprietary programs for clinical use.

We expect to continue to incur significant losses for the near future. We incurred losses of $16.6 million and $12.4 million for fiscal years ended December 31, 2014 and 2013, respectively, and $4.3 million for the three months ended March 31, 2015. 

As of March 31, 2015, we had an accumulated deficit of $82.2 million. 

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Acquisitions

On July 16, 2014, we purchased substantially all of the assets of Gentris Corporation, a Delaware corporation (“Gentris”), with its principal place of business in North Carolina, for aggregate consideration of approximately $4.8 million.

On August 18, 2014, we acquired BioServe Biotechnologies (India) Private Limited, an Indian corporation (“BioServe”) for an aggregate purchase price of approximately $1.1 million.

Key Factors Affecting our Results of Operations and Financial Condition

Our overall long-term growth plan is predicated on our ability to develop and commercialize our proprietary tests, penetrate the Biopharma community to achieve more revenue supporting clinical trials and develop and penetrate the Indian market. In 2014, we acquired Gentris to increase our penetration in the Biopharma space. Our proprietary tests include CGH microarrays, NGS panels, and DNA FISH probes.We continue to develop additional proprietary tests. To facilitate market adoption of our proprietary tests, we anticipate having to successfully complete additional studies with clinical samples and publish our results in peer-reviewed scientific journals. Our ability to complete such studies is dependent upon our ability to leverage our collaborative relationships with leading institutions to facilitate our research and obtain data for our quality assurance and test validation efforts.

We believe that the factors discussed in the following paragraphs have had and are expected to continue to have a material impact on our results of operations and financial condition.

Revenues

Our revenue is primarily generated through our Clinical Services and Biopharma Services. Clinical Services can be billed to Medicare, another third party insurer or the referring community hospital or other healthcare facility in accordance with state and federal law. Biopharma Services are billed to the customer directly. We also derive limited revenue from Discovery Services, which are services provided in the development of new testing assays and methods. Discovery Services are billed directly to the customer.

We have historically derived a significant portion of our revenue from a limited number of test ordering sites, although the test ordering sites that generate a significant portion of our revenue have changed from period to period. Test ordering sites account for all of our Clinical Services revenue along with a portion of the Biopharma Services revenue. Our test ordering sites are hospitals, cancer centers, reference laboratories, physician offices and biopharmaceutical companies. Oncologists and pathologists at these sites order the tests on behalf of the needs of their oncology patients or as part of a clinical trial sponsored by a biopharmaceutical company in which the patient is being enrolled.

The top five test ordering clients during the three months ended March 31, 2015 and 2014 accounted for 72% and 63%, respectively, of our testing volumes, with 24% and 32%, respectively, of the test volume coming from community hospitals. During the three months ended March 31, 2015, two Biopharma clients accounted for approximately 29% and 22%, respectively, of our revenue. During the three months ended March 31, 2014, one Biopharma client accounted for approximately 33% of our revenue. The loss of our largest client would materially adversely affect our results of operations; however, the loss of any other test ordering client would not materially adversely affect our results of operations.

We receive revenue for our Clinical Services from Medicare, other insurance carriers and other healthcare facilities.  Some of our customers choose, generally at the beginning of our relationship, to pay for laboratory services directly as opposed to having patients (or their insurers) pay for those services and providing us with the patients’ insurance information.  A hospital may elect to be a direct bill customer and pay our bills directly, or may provide us with patient information so that their patients pay our bills, in which case we generally expect payment from their private insurance carrier or Medicare. In a few instances, we have arrangements where a hospital may have two accounts with us, so that certain tests are billed directly to the hospital, and certain tests are billed to and paid by a patient’s insurer. The billing arrangements generally are dictated by our customers and in accordance with state and federal law.

For the three months ended March 31, 2015, Medicare accounted for approximately 6% of our total revenue, other insurance accounted for approximately 7% of our total revenue and other healthcare facilities accounted for 7% of our total revenue.   As we expand our portfolio of tests and services and our sales activities, we expect the percentage of revenue from other healthcare facilities may decrease over the long term.  However, the addition of new customers, particularly a community hospital or other large volume client, could offset this trend seen in prior years. On average, we generate less revenue per test from other

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healthcare facilities billed directly, than from other insurance payors.  However, we have reduced sales cost associated with direct bill clients as well as significantly reduced collections risk. Typically, we negotiate discounts with directly billed healthcare facilities depending on the volume of business.

Cost of Revenues

Our cost of revenues consists principally of internal personnel costs, including stock-based compensation, laboratory consumables, shipping costs, overhead and other direct expenses, such as specimen procurement and third party validation studies. We are pursuing various strategies to reduce and control our cost of revenues, including automating our processes through more efficient technology and attempting to negotiate improved terms with our suppliers. We completed two acquisitions in 2014; Gentris in North Carolina and BioServe in India. With these two acquisitions, we intend to integrate our resources and services in an effort to reduce costs. We will continue to assess how geographic advantage can help us improve our cost structure.

Operating Expenses

We classify our operating expenses into three categories: research and development, sales and marketing, and general and administrative. Our operating expenses principally consist of personnel costs, including stock-based compensation, outside services, laboratory consumables and overhead, development costs, marketing program costs and legal and accounting fees.

Research and Development Expenses.We incur research and development expenses principally in connection with our efforts to develop our proprietary tests. Our primary research and development expenses consist of direct personnel costs, laboratory equipment and consumables and overhead expenses. We anticipate that research and development expenses will increase in the near-term, principally as a result of hiring additional personnel to develop and validate tests in our pipeline and to perform work associated with our research collaborations. In addition, we expect that our costs related to collaborations with research and academic institutions will increase. For example, in 2013, we entered into a joint venture with the Mayo Foundation for Medical Education and Research, with a focus on developing oncology diagnostic services and tests utilizing next generation sequencing. All research and development expenses are charged to operations in the periods they are incurred.

Sales and Marketing Expenses. Our sales and marketing expenses consist principally of personnel and related overhead costs for our sales team and their support personnel, travel and entertainment expenses, and other selling costs including sales collaterals and trade shows. We have started to increase our sales and marketing and clinical efforts since our IPO and we expect our sales and marketing expenses to increase significantly as we expand into new geographies and add new clinical tests and services.

General and Administrative Expenses. General and administrative expenses consist principally of personnel-related expenses, professional fees, such as legal, accounting and business consultants, occupancy costs, bad debt and other general expenses. We have incurred increases in our general and administrative expenses and anticipate further increases as we expand our business operations.

Seasonality

Our business experiences decreased demand during spring vacation season, summer months and the December holiday season when patients are less likely to visit their health care providers. We expect this trend in seasonality to continue for the foreseeable future.

Results of Operations

Three Months Ended March 31, 2015 and 2014

The following table sets forth certain information concerning our results of operations for the periods shown:

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	Three Months Ended March 31,						Change
(dollars in thousands)	2015			2014			$			%
Revenue	$	4,370		$	1,430		$	2,940		206	%
Cost of revenues	3,141			1,290			1,851			143	%
Research and development expenses	1,278			597			681			114	%
General and administrative expenses	2,987			2,731			256			9	%
Sales and marketing expenses	1,116			749			367			49	%
Loss from operations	(4,152		)	(3,937		)	(215		)	5	%
Interest income (expense)	(21		)	(319		)	298			(93	)%
Change in fair value of acquisition note payable	(90		)	—			(90		)	100	%
Change in fair value of warrant liability	(15		)	(44		)	29			(66	)%
Loss before income taxes	(4,278		)	(4,300		)	22			(1	)%
Income tax provision (benefit)	—			(1,814		)	1,814			(100	)%
Net (loss)	$	(4,278	)	$	(2,486	)	$	(1,792	)	72	%

Revenue

The breakdown of our revenue is as follows:

	Three Months Ended March 31,								Change
	2015				2014
(dollars in thousands)	$		%		$		%		$			%
Biopharma Services	$	3,331	76	%	$	491	34	%	$	2,840		578	%
Clinical Services	873		20	%	939		66	%	(66		)	(7	)%
Discovery Services	166		4	%	—		—	%	166			—	%
Total Revenue	$	4,370	100	%	$	1,430	100	%	$	2,940		206	%

Revenue increased 206%, or $2,940,000, to $4,370,000 for the three months ended March 31, 2015, from $1,430,000 for the three months ended March 31, 2014, principally due to the acquisitions of Gentris and BioServe, whose revenue accounted for $2,167,000 of the increase. Our average revenue (excluding grant revenue and probe revenue) per test increased to $593 per test for the three months ended March 31, 2015 from $506 per test for the three months ended March 31, 2014, principally due to an increase in the average revenue per test from one of our Biopharma customers. Test volume increased by 32% from 2,772 tests for the three months ended March 31, 2014 to 3,647 tests for the three months ended March 31, 2015.

Revenue from Biopharma Services increased 578%, or $2.84 million, to $3.33 million for the three months ended March 31, 2015, from $0.49 million for the three months ended March 31, 2014, principally due to the acquisition of Gentris whose revenue accounted for $2.0 million of the $2.84 million increase in Biopharma Services. Revenue from Clinical Services customers decreased 7%, or $66,000, to $873,000 for the three months ended March 31, 2015, from $939,000 for the three months ended March 31, 2014, principally due to a decrease in the average reimbursement rate per test from Medicare and private insurance companies. Revenue from Discovery Services, our new line of business, was $166,000 for the three months ended March 31, 2015, representing 4% of total revenue.

Cost of Revenues

Cost of revenues increased 143%, or $1.85 million, for the three months ended March 31, 2015, principally due to the following: costs of revenue from the acquired businesses of $1.24 million; lab supplies expenses increased by $280,000 or 83% as a result of higher test volumes; shipping costs increased by $134,000 or 203% as a result of increased test volume; and compensation costs increased by $100,000 or 17% as a result of us securing the additional expertise needed to continue to deliver high quality test results. Gross margin improved during the three months ended March 31, 2015 due to better utilization of costs in our New Jersey laboratory along with the margin contributed from our acquired business.

Operating Expenses

Research and development expenses increased 114%, or $681,000, to $1,278,000 for the three months ended March 31, 2015, from $597,000 for the three months ended March 31, 2014, principally due to the following: our share of the loss from

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Oncospire, our joint venture with Mayo Clinic, increased $196,000, as it incurred a full quarter of research expenses related to the pursuit of developing new clinical tests. (In 2014, the costs associated with our joint venture started in late March); compensation costs increased by $95,000 or 26% as a result of us building up our R&D team; supplies costs increased by $152,000 or 133% as a result of us accelerating the development of our proprietary tests; stock-based compensation increased by $69,000; other collaboration costs increased by $81,000 as we improve our proprietary tests; and costs associated with the acquired businesses by $63,000.

Sales and marketing expenses increased 49%, or $367,000, to $1,116,000 for the three months ended March 31, 2015, from $749,000 for the three months ended March 31, 2014, principally due to the following: costs from the acquired businesses of $232,000; compensation costs increased by $61,000 as a result of additional head count; and consulting costs increased by $56,000 as a result of us building and developing our team.

General and administrative expenses increased 9%, or $256,000, to $2,987,000 for the three months ended March 31, 2015, from $2,731,000 for the three months ended March 31, 2014, principally due to the following: costs from the acquired businesses of $583,000 and an increase to our allowance for doubtful accounts of $221,000 ; off-set by reductions in compensation costs of $328,000 primarily due to a severance agreement for a former officer in 2014; off-set by the Gentris contingent consideration gain of $162,000; and off-set by reductions in other costs of $58,000.

Interest Income (Expense)

Net interest expense decreased 93%, or $298,000, principally due to the amortization of loan guarantee and financing fees during the three months ended March 31, 2014.

Change in Fair Value of Acquisition Note Payable

The change in fair value of note payable resulted in $90,000 in non-cash expense for the three months ended March 31, 2015. The fair value of the note representing part of the purchase price for BioServe increased as a consequence of an increase in our stock price.

Change in Fair Value of Warrant Liability

The change in the fair market value of our warrant liability resulted in $15,000 in non-cash expense for the three months ended March 31, 2015, as compared to non-cash expense of $44,000 for the three months ended March 31, 2014. The fair market value of these common stock warrants increased as a consequence of an increase in our stock price.

Income Taxes

During the three months ended March 31, 2014, we received $1.8 million from sales of state NOL’s. No such sales occurred in the first quarter of 2015.

Liquidity and Capital Resources

Sources of Liquidity

Our primary sources of liquidity have been funds generated from our debt financings and equity financings. In addition, we have generated funds from the following sources: (i) cash collections from customers; (ii) cash received from sale of state NOL’s; and (iii) grants from the National Institutes of Health.

During January 2014, we received $1.8 million in cash from sales of state NOL’s.

In general, our primary uses of cash are providing for operating expenses, working capital purposes and servicing debt. As of March 31, 2015, we have maximized our borrowings under our revolving credit line of $6.0 million. Our largest source of operating cash flow is cash collections from our customers.

Cash Flows

Our net cash flow from operating, investing and financing activities for the periods below were as follows:

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	Three Months Ended   March 31,
(in thousands)	2015			2014
Cash (used in):
Operating activities	$	(3,105	)	$	(1,937	)
Investing activities	(123		)	(6,181		)
Financing activities	(14		)	(27		)
Net (decrease) in cash and cash equivalents	$	(3,242	)	$	(8,145	)

We had cash and cash equivalents of $22.3 million at March 31, 2015, and $25.6 million at December 31, 2014.

The $3.2 million decrease in cash and cash equivalents for the three months ended March 31, 2015, principally resulted from $3.1 million of net cash used in operations.

The $8.1 million decrease in cash and cash equivalents for the three months ended March 31, 2014, principally resulted from

an increase in our restricted cash of $6.0 million related to the collateralization of our line of credit with Wells Fargo and

$1.9 million of net cash used in operations.

At March 31, 2015, we had total indebtedness of $6.6 million, excluding capital lease obligations.

Cash Used in Operating Activities

Net cash used in operating activities was $3.1 million for the three months ended March 31, 2015. We used $2.87 million in net cash to fund our core operations, which included $34,000 in cash paid for interest. We incurred additional uses of cash when adjusting for working capital items as follows: a net increase in accounts receivable of $17,000; a decrease in other current assets of $23,000 which includes prepayments for our insurance policies; and a net decrease in accounts payable, accrued expenses and deferred revenue of $239,000.

For the three months ended March 31, 2014, we used $3.3 million in net cash to fund our core operations after adjusting for

the $1.8 million in proceeds on the sale of certain state NOL carryforwards in January 2014 and working capital items as

follows: a net increase in accounts receivable of $251,000; a net decrease in accounts payable, accrued expenses (including

the payout of 2013 accrued performance bonuses) and deferred revenue of $132,000; and an increase in other current assets

of $65,000 which includes prepayments for our insurance policies.

Cash Used in Investing Activities

Net cash used in investing activities was $123,000 for the three months ended March 31, 2015 and principally resulted from the purchase of fixed assets.

Net cash used in investing activities was $6.2 million for the three months ended March 31, 2014 and principally resulted

from an increase in our restricted cash of $6.0 million related to the collateralization of our line of credit with Wells Fargo.

Cash Used in Financing Activities

Net cash used in financing activities was $14,000 for the three months ended March 31, 2015, and principally resulted from payments made on capital leases of $127,000.

Net cash used in financing activities was $27,000 for the three months ended March 31, 2014, and principally resulted from

payments of notes payable of $22,000.

Capital Resources and Expenditure Requirements

We expect to continue to incur substantial operating losses in the future. It may take several years, if ever, to achieve positive operational cash flow. Until we can generate a sufficient amount of revenue to finance our cash requirements, which we may never do, we may need to continue to raise additional capital to fund our operations.

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We also expect to use significant cash to fund acquisitions. On July 16, 2014, we purchased substantially all of the assets of Gentris, with its principal place of business in North Carolina for approximately $4.8 million. On August 18, 2014, we acquired BioServe, an Indian corporation, for an aggregate purchase price of approximately $1.1 million.

We recently improved our liquidity by entering into a line of credit with Silicon Valley Bank. See Note 12 of Notes to Unaudited Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.

We believe our cash and cash equivalents are sufficient to satisfy our liquidity requirements at our current level of operations for at least 24 months.

We expect our operating expenses, particularly those relating to sales and marketing, to increase as we hire additional sales and marketing personnel and increase sales and marketing activities.

Our forecast of the period of time through which our current financial resources will be adequate to support our operations and our expected operating expenses are forward-looking statements and involve risks and uncertainties. Actual results could vary materially and negatively as a result of a number of factors, including:

• our ability to achieve revenue growth and profitability;

• our ability to obtain approvals for our new diagnostic tests;

• our ability to execute on our marketing and sales strategy for our genomic tests and gain acceptance of our tests in the market;

• our ability to obtain adequate reimbursement from governmental and other third-party payors for our tests and services;

• the costs, scope, progress, results, timing and outcomes of the clinical trials of our diagnostic tests;

• the costs of operating and enhancing our laboratory facilities;

• the costs for funding the operations we recently acquired and our ability to successfully integrate those operations with and into our own;

• the costs of additional general and administrative personnel;

• the timing of and the costs involved in regulatory compliance, particularly if the regulations change;

• the costs of maintaining, expanding and protecting our intellectual property portfolio, including potential litigation costs and liabilities;

• our ability to manage the costs of manufacturing our NGS panels, microarrays and FHACT® probe;

• our rate of progress in, and cost of research and development activities associated with, products in research and early development;

• the effect of competing technological and market developments;

• costs related to international expansion;

• our ability to secure financing and the amount thereof; and

• other risks and uncertainties discussed under the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K for the year ended December 31, 2014 and other reports we file with the Securities and Exchange Commission.

We expect that our operating expenses and capital expenditures will increase in the future as we expand our business and integrate our recent acquisitions. We plan to increase our sales and marketing headcount to promote our new clinical tests and services and to expand into new geographies and to increase our research and development headcount to develop and validate

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the proprietary tests currently in our pipeline, to expand our pipeline and to perform work associated with our research collaborations.

We may raise additional capital to fund our current operations, to repay certain outstanding indebtedness and to fund expansion of our business to meet our long-term business objectives through public or private equity offerings, debt financings, borrowings or strategic partnerships coupled with an investment in our Company or a combination thereof. If we raise additional funds through the issuance of convertible debt securities, or other debt securities, these securities could be secured and could have rights senior to those of our common stock. In addition, any new debt incurred by the Company could impose covenants that restrict our operations and increase our interest expense. The issuance of any new equity securities will also dilute the interest of our current stockholders. Given the risks associated with our business, including our unprofitable operating history and our ability to develop additional proprietary tests, additional capital may not be available when needed on acceptable terms, or at all. If adequate funds are not available, we will need to curb our expansion plans or limit our research and development activities, which would have a material adverse impact on our business prospects and results of operations.

Income Taxes

Over the past several years, we have generated operating losses in all jurisdictions in which we may be subject to income taxes. As a result, we have accumulated significant net operating losses and other deferred tax assets. Because of our history of losses and the uncertainty as to the realization of those deferred tax assets, a full valuation allowance has been recognized. We do not expect to report a benefit related to the deferred tax assets until we have a history of earnings, if ever, that would support the realization of our deferred tax assets.

Off-Balance Sheet Arrangements

Since inception, we have not engaged in any off-balance sheet activities as defined in Item 303(a)(4) of Regulation S-K.

Critical Accounting Policies and Significant Judgment and Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates based on historical experience and make various assumptions, which management believes to be reasonable under the circumstances, which form the basis for judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Section 107 of the JOBS Act provides that an “emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we have chosen to “opt out” of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

The notes to our audited consolidated financial statements contain a summary of our significant accounting policies. We consider the following accounting policies critical to the understanding of the results of our operations:

• Revenue recognition;

• Accounts receivable and bad debts;

• Stock-based compensation; and

• Warrant liability.

Cautionary Note Regarding Forward-Looking Statements

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

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This report on Form 10-Q contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include all statements that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential,” or the negative of those terms, and similar expressions and comparable terminology intended to identify forward-looking statements. These statements reflect our current views with respect to future events. There are a number of important factors that could cause the actual results to differ materially from those expressed in any forward-looking statement made by us. These factors include, but are not limited to:

• our ability to achieve profitability by increasing sales of our laboratory tests and services and to continually develop and commercialize novel and innovative genomic-based diagnostic tests and services for cancer patients;

• our ability to raise additional capital to meet our liquidity needs;

• our ability to clinically validate our pipeline of genomic microarray tests currently in development;

• our ability to execute on our marketing and sales strategy for our genomic tests and gain acceptance of our tests in the market;

• our ability to keep pace with rapidly advancing market and scientific developments;

• our ability to satisfy U.S. (including FDA) and international regulatory requirements with respect to our tests and services, many of which are new and still evolving;

• our ability to obtain reimbursement from governmental and other third-party payors for our tests and services;

• competition from clinical laboratory services companies, genomic-based diagnostic tests currently available or new tests that may emerge;

• our ability to maintain our clinical collaborations and enter into new collaboration agreements with highly regarded organizations in the cancer field so that, among other things, we have access to thought leaders in the field and to a robust number of samples to validate our genomic tests;

• our ability to maintain our present customer base and obtain new customers;

• potential product liability or intellectual property infringement claims;

• our dependency on third-party manufacturers to supply or manufacture our products;

• our ability to manage significant fluctuations in our quarterly operating results, which may occur as a result of the timing, size and duration of our contracts with biopharmaceutical companies and clinical research organizations;

• our ability to attract and retain a sufficient number of scientists, clinicians, sales personnel and other key personnel with extensive experience in oncology, who are in short supply;

• our ability to obtain or maintain patents or other appropriate protection for the intellectual property in our proprietary tests and services;

• our dependency on the intellectual property licensed to us or possessed by third parties;

• our ability to expand internationally and launch our tests in emerging markets, such as India and Brazil;

• our ability to adequately support future growth; and

• the factors listed under the heading “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K for the year ended December 31, 2014 and other reports that we file with the Securities and Exchange Commission.

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Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements represent our estimates and assumptions only as of the date of this quarterly report on Form 10-Q and, except as required by law, we undertake no obligation to update or review publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this quarterly report on Form 10-Q. You should read this quarterly report on Form 10-Q and the documents referenced herein and filed as exhibits completely and with the understanding that our actual future results may be materially different from what we expect.

Item 3.        Quantitative and Qualitative Disclosures About Market Risk

We have exposure to financial market risks, including changes in foreign currency exchange rates and interest rates.

Foreign Exchange Risk

We conduct business in foreign markets through our subsidiary in India (BioServe Biotechnologies (India) Private Limited) and in Italy through our subsidiary (Cancer Genetics Italia, S.r.l.). For the three months ended March 31, 2015 and 2014, approximately 5% and 2%, respectively, of our revenues were earned outside the United States and collected in local currency. We are subject to risk for exchange rate fluctuations between such local currencies and the United States dollar and the subsequent translation of the Indian Rupee or Euro to United States dollars. We currently do not hedge currency risk. The translation adjustments for the three months ended March 31, 2015 and 2014, were not significant.

Interest Rate Risk

At March 31, 2015, we had interest rate risk primarily related to borrowings of $6 million on the line of credit with Wells Fargo Bank ("Wells Fargo Line"). Borrowings under the Wells Fargo Line bore interest at the Daily One Month LIBOR rate plus 1.75% (1.93% at March 31, 2015). This debt was refinanced with Silicon Valley Bank on May 7, 2015 and interest of the Wall Street Journal prime plus 2% with a floor of 5.25% is required under the new note. If interest rates increased by 1.0%, interest expense in the remainder of 2015 on our current borrowings would increase by approximately $45,000.

Item 4.        Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We evaluated, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934 (“Exchange Act”), as amended, as of March 31, 2015, the end of the period covered by this report on Form 10-Q. Based on this evaluation, our President and Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal accounting and financial officer) have concluded that our disclosure controls and procedures were effective at the reasonable assurance level at March 31, 2015. 

Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Due to the inherent limitations of control systems, not all misstatements may be detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. Controls and procedures can only provide reasonable, not absolute, assurance that the above objectives have been met.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended March 31, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1.        Legal Proceedings

Not applicable.

Item 1A.    Risk Factors

There have been no material changes to the risk factors disclosed in Part 1, Item 1A, of our annual report on Form 10-K for the year ended December 31, 2014.

Item 2.        Unregistered Sales of Equity Securities and Use of Proceeds from Sales of Registered Securities

Not applicable.

Item 3.        Defaults Upon Senior Securities

Not applicable.

Item 4.        Mine Safety Disclosures

Not applicable.

Item 5.        Other Information

On May 7, 2015, the Company entered into a new debt financing facility with Silicon Valley Bank (the “New Credit Facility”) to refinance the Company's cash collateralized loan from Wells Fargo and to provide an additional working capital line of credit. The New Credit Facility provides for a $6 million term note (“Term Note”) and a revolving line of credit (“Line of Credit”) for an amount not to exceed the lesser of (i) $4 million or (ii) an amount equal to 80% of eligible accounts receivable. The Term Note requires interest only payments through April 30, 2016 and beginning May 1, 2016, monthly principal payments of approximately $167,000 will be required plus interest through maturity on April 1, 2019. The interest rate of the Term Note is the Wall Street Journal prime plus 2% with a floor of 5.25% and an additional deferred interest payment of $180,000 will be due upon maturity. Subject to a prepayment penalty, we may prepay the Term Note in whole or part at any time. The Line of Credit requires monthly interest-only payments of the Wall Street Journal prime plus 1.5% and matures on May 7, 2017. In addition, we will pay a $20,000 commitment fee, a $20,000 fee on the first anniversary of the Line of Credit and a fee of 0.25% per year on the average unused portion of the Line of Credit.

The new loan agreement requires us to comply with certain financial covenants and restricts us from, among other things, paying cash dividends, incurring debt and entering into certain transactions without the prior consent of the lenders. Repayments of amounts borrowed under the New Credit Facility may be accelerated if an event of default occurs, which includes, among other things, a violation of such financial covenants and negative covenants. Our obligations under the New Credit Facility are secured by a first security interest in substantially all the assets (other than our intellectual property) of the Company and its U.S. subsidiary. Pursuant to the new loan agreement, the Company will no longer be required to maintain restricted cash accounts.

The above description of the terms of the loan agreement is qualified in its entirety by the loan agreement, which is being filed as Exhibit 10.1 to this Quarterly Report on Form 10-Q and incorporated herein.

Upon the effectiveness of the New Credit Facility described above, we terminated our credit agreement dated April 1, 2014, as amended, with Wells Fargo Bank, N.A. (the “Credit Agreement”). We repaid outstanding indebtedness under the Credit Agreement in the aggregate principal amount of approximately $6.0 million with the proceeds from the New Credit Facility described above.

Item 6.        Exhibits

See the Index to Exhibits following the signature page hereto, which Index to Exhibits is incorporated herein by reference.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Cancer Genetics, Inc.
	(Registrant)
Date: May 11, 2015	/s/    Panna L. Sharma
	Panna L. Sharma
	President and Chief Executive Officer (Principal Executive Officer)
Date: May 11, 2015	/s/    Edward J. Sitar
	Edward J. Sitar
	Chief Financial Officer (Principal Financial and Accounting Officer)

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INDEX TO EXHIBITS

Exhibit No.	Description
10.1	Loan and Security Agreement, between Cancer Genetics, Inc. and Silicon Valley Bank, dated May 7, 2015.
31.1	Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under The Securities Exchange Act of 1934, as amended
31.2	Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under The Securities Exchange Act of 1934, as amended
32.1	Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 **
32.2	Certifications of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 **
101	The following materials from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheet at March 31, 2015 (unaudited) and December 31, 2014, (ii) Consolidated Statements of Operations for the three month periods ended March 31, 2015 and 2014, (iii) Consolidated Statements of Cash Flows for the three month periods ended March 31, 2015 and 2014 (unaudited) and (iv) Notes to Consolidated Financial Statements (unaudited)
**	Furnished herewith.

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EX-10.1

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of May 7, 2015 (the “Effective Date”) by and among (a) SILICON VALLEY BANK, a California corporation with a loan production office located at One Tower Bridge, 100 Front Street, Suite 1340, West Conshohocken, Pennsylvania 19428 (“Bank”), and (b) (i) CANCER GENETICS, INC., a Delaware corporation (“Parent”) and (ii) GENTRIS, LLC, A Delaware limited liability company (“Delaware Subsidiary”; and together with Parent, individually and collectively, jointly and severally, “Borrower”), provides the terms on which Bank shall lend to Borrower and Borrower shall repay Bank. The parties agree as follows:

1.ACCOUNTING AND OTHER TERMS

Accounting terms not defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP. Notwithstanding the foregoing, all financial covenant calculations shall be computed with respect to the Borrower only, and not on a consolidated basis. Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in Section 13. All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent such terms are defined therein.

2.LOAN AND TERMS OF PAYMENT

2.1Promise to Pay. Borrower hereby unconditionally promises to pay Bank the outstanding principal amount of all Credit Extensions and accrued and unpaid interest thereon as and when due in accordance with this Agreement.

2.1.1Revolving Advances.

(a)    Availability. Subject to the terms and conditions of this Agreement, Bank shall make Advances not exceeding the Availability Amount. Amounts borrowed under the Revolving Line may be repaid and, prior to the Revolving Line Maturity Date, reborrowed, subject to the applicable terms and conditions precedent herein.

(b)    Termination; Repayment. The Revolving Line terminates on the Revolving Line Maturity Date, when the principal amount of all Advances, the unpaid interest thereon, and all other Obligations relating to the Revolving Line shall be immediately due and payable.

2.1.2Term Loan.

(a)    Availability. Subject to the terms and conditions of this Agreement, Bank shall make one (1) advance (the “Term Loan Advance”) available to Borrower in an amount of Six Million Dollars ($6,000,000.00) on the Effective Date, provided that all or a portion of the proceeds of the Term Loan Advance shall be used to repay in full Borrower’s outstanding obligations to Wells Fargo Bank, N.A. After repayment, the Term Loan Advance may not be reborrowed.

(b)    Interest Payments. Commencing on the first Payment Date of the month following the month in which the Funding Date of the Term Loan Advance occurs, and continuing on each Payment Date thereafter, Borrower shall make monthly payments of interest on the principal amount of the Term Loan Advance at the rate set forth in Section 2.3(a)(ii).

(c)    Repayment. Commencing on May 1, 2016, and continuing on each Payment Date thereafter, Borrower shall repay the Term Loan Advance in (i) thirty-six (36) equal monthly installments of principal, plus (ii) monthly payments of accrued interest at the rate set forth in Section 2.3(a)(ii). All outstanding principal and accrued interest with respect to the Term Loan Advance, and all other outstanding Obligations with respect to the Term Loan Advance, are due and payable in full on the Term Loan Maturity Date.

(d)    Mandatory Prepayment Upon an Acceleration. If the Term Loan Advance is accelerated following the occurrence of an Event of Default, Borrower shall immediately pay to Bank an amount equal to the sum of: (i) all outstanding principal plus accrued and unpaid interest, (ii) the Prepayment Premium, (iii) the Final Payment, plus (iv) all other sums, if any, that shall have become due and payable, including interest at the Default Rate with respect to any past due amounts.

(e)    Permitted Prepayment of Term Loan Advance. Borrower shall have the option to prepay all, but not less than all, of the Term Loan Advance advanced by Bank under this Agreement, provided Borrower (i) provides written notice to Bank of its election to prepay the Term Loan Advance at least ten (10) days prior to such prepayment, and (ii) pays, on the date of such prepayment (A) all outstanding principal plus accrued and unpaid interest, (B) the Prepayment Premium, (C) the Final Payment, plus (D) all other sums, if any, that shall have become due and payable, including interest at the Default Rate with respect to any past due amounts.

2.2Overadvances. If, at any time, the outstanding principal amount of any Advances exceeds the lesser of either the Revolving Line or the Borrowing Base, Borrower shall immediately pay to Bank in cash the amount of such excess (such excess, the “Overadvance”). Without limiting Borrower’s obligation to repay Bank any Overadvance, Borrower agrees to pay Bank interest on the outstanding amount of any Overadvance, on demand, at the Default Rate.

2.3Payment of Interest on the Credit Extensions.

(a)    Interest Rate.

(i)    Advances. Subject to Section 2.3(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to one and one half of one percent (1.5%) above the Prime Rate, which interest shall be payable monthly in accordance with Section 2.3(d) below.

(ii)    Term Loan Advance. Subject to Section 2.3(b), the principal amount outstanding for the Term Loan Advance shall accrue interest at a floating per annum rate equal to two percent (2.0%) above the greater of (x) the Prime Rate or (y) three and one quarter of one percent (3.25%), which interest shall be payable monthly.

(b)    Default Rate. Immediately upon the occurrence and during the continuance of an Event of Default, Obligations shall bear interest at a rate per annum which is four percent (4.0%) above the rate that is otherwise applicable thereto (the “Default Rate”). Fees and expenses which are required to be paid by Borrower pursuant to the Loan Documents (including, without limitation, Bank Expenses) but are not paid when due shall bear interest until paid at a rate equal to the highest rate applicable to the Obligations. Payment or acceptance of the increased interest rate provided in this Section 2.3(b) is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Bank.

(c)    Adjustment to Interest Rate. Changes to the interest rate of any Credit Extension based on changes to the Prime Rate shall be effective on the effective date of any change to the Prime Rate and to the extent of any such change.

(d)    Payment; Interest Computation. Interest is payable monthly on the Payment Date and shall be computed on the basis of a 360-day year for the actual number of days elapsed. In computing interest, (i) all payments received after 12:00 p.m. Eastern time on any day shall be deemed received at the opening of business on the next Business Day, and (ii) the date of the making of any Credit Extension shall be included and the date of payment shall be excluded; provided, however, that if any Credit Extension is repaid on the same day on which it is made, such day shall be included in computing interest on such Credit Extension.

2.4Fees. Borrower shall pay to Bank:

(a)    Revolving Line Commitment Fee. A fully earned, non‑refundable commitment fee of Twenty Thousand Dollars ($20,000.00), on the Effective Date;

(b)    Anniversary Fee. A fully earned, non-refundable anniversary fee (the “First Anniversary Fee”) of Twenty Thousand Dollars ($20,000.00) on May 7, 2016 [Date which is the one (1) year anniversary of the Effective Date—to be completed at closing];

(c)    Unused Revolving Line Facility Fee. Payable quarterly in arrears on the first day of each calendar quarter occurring prior to the Revolving Line Maturity Date, and on the Revolving Line Maturity Date, a fee (the “Unused Revolving Line Facility Fee”) in an amount equal to one quarter of one percent (0.25%) per annum of the average unused portion of the Revolving Line, as determined by Bank.  The unused portion of the Revolving Line, for purposes of this calculation, shall be calculated on a calendar year basis and shall equal the difference between (i) the Revolving Line, and (ii) the average for the period of the daily closing balance of the Revolving Line outstanding;

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(d)    Prepayment Premium. The Prepayment Premium, when due hereunder;

(e)    Final Payment. The Final Payment, when due hereunder; and

(f)    Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees and expenses for documentation and negotiation of this Agreement) incurred through and after the Effective Date, when due (or, if no stated due date, upon demand by Bank).

(g)    Fees Fully Earned. Unless otherwise provided in this Agreement or in a separate writing by Bank, Borrower shall not be entitled to any credit, rebate, or repayment of any fees earned by Bank pursuant to this Agreement notwithstanding any termination of this Agreement or the suspension or termination of Bank’s obligation to make loans and advances hereunder. Bank may deduct amounts owing by Borrower under the clauses of this Section 2.4 pursuant to the terms of Section 2.5(c). Bank shall provide Borrower written notice of deductions made from the Designated Deposit Account pursuant to the terms of the clauses of this Section 2.4.

2.5Payments; Application of Payments; Debit of Accounts.

(a)    All payments to be made by Borrower under any Loan Document shall be made in immediately available funds in Dollars, without setoff or counterclaim, before 12:00 p.m. Eastern time on the date when due. Payments of principal and/or interest received after 12:00 p.m. Eastern time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment shall be due the next Business Day, and additional fees or interest, as applicable, shall continue to accrue until paid.

(b)    Bank has the exclusive right to determine the order and manner in which all payments with respect to the Obligations may be applied. Borrower shall have no right to specify the order or the accounts to which Bank shall allocate or apply any payments required to be made by Borrower to Bank or otherwise received by Bank under this Agreement when any such allocation or application is not specified elsewhere in this Agreement.

(c)    Bank may debit any of Borrower’s deposit accounts, including the Designated Deposit Account, for principal and interest payments or any other amounts Borrower owes Bank when due. These debits shall not constitute a set-off.

3.CONDITIONS OF LOANS

3.1Conditions Precedent to Initial Credit Extension. Bank’s obligation to make the initial Credit Extension is subject to the condition precedent that Bank shall have received, in form and substance satisfactory to Bank, such documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate, including, without limitation:

(f)    duly executed original signatures to the Loan Documents;

(g)    the Operating Documents and long-form good standing certificates of Borrower certified by the Secretary of State (or equivalent agency) of Borrower’s jurisdiction of organization or formation and each jurisdiction in which Borrower is qualified to conduct business, each as of a date no earlier than thirty (30) days prior to the Effective Date;

(h)    duly executed original signatures to the completed Borrowing Resolutions for Borrower;

(i)    duly executed original signature to a payoff letter from Wells Fargo Bank, N.A.;

(j)    evidence that (i) the Liens securing Indebtedness owed by Borrower to Wells Fargo Bank, N.A. will be terminated and (ii) the documents and/or filings evidencing the perfection of such Liens, including without limitation any financing statements and/or control agreements, have or will, concurrently with the initial Credit Extension, be terminated;

(k)    certified copies, dated as of a recent date, of financing statement searches, as Bank may request, accompanied by written evidence (including any UCC termination statements) that the Liens indicated in any such financing statements either constitute Permitted Liens or have been or, in connection with the initial Credit Extension, will be terminated or released;

(l)    the Perfection Certificate of Borrower, together with the duly executed original signature thereto;

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(m)    a bailee’s waiver in favor of Bank for each location where Borrower maintains property with a third party, by each such third party, together with the duly executed original signatures thereto;

(n)    a legal opinion of Borrower’s counsel dated as of the Effective Date together with the duly executed original signature thereto;

(o)    evidence satisfactory to Bank that the insurance policies and endorsements required by Section 6.5 hereof are in full force and effect, together with appropriate evidence showing lender loss payable and/or additional insured clauses or endorsements in favor of Bank; and

(p)    payment of the fees and Bank Expenses then due as specified in Section 2.4 hereof.

3.2Conditions Precedent to all Credit Extensions. Bank’s obligations to make each Credit Extension, including the initial Credit Extension, is subject to the following conditions precedent:

(e)    timely receipt of an executed Payment/Advance Form;

(f)    the representations and warranties in this Agreement shall be true, accurate, and complete in all material respects on the date of the Payment/Advance Form and on the Funding Date of each Credit Extension; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, and no Event of Default shall have occurred and be continuing or result from the Credit Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the representations and warranties in this Agreement remain true, accurate, and complete in all material respects; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date;

(g)    Bank determines to its reasonable satisfaction thatthere has not been any material impairment in the general affairs, management, results of operation, financial condition or the prospect of repayment of the Obligations, or any material adverse deviation by Borrower from the most recent business plan of Borrower presented to and accepted by Bank; and

(h)    with respect to Advances under the Revolving Line, the completion of the Initial Audit with results satisfactory to Bank in its sole and absolute discretion.

3.3Covenant to Deliver. Borrower agrees to deliver to Bank each item required to be delivered to Bank under this Agreement as a condition precedent to any Credit Extension. Borrower expressly agrees that a Credit Extension made prior to the receipt by Bank of any such item shall not constitute a waiver by Bank of Borrower’s obligation to deliver such item, and the making of any Credit Extension in the absence of a required item shall be in Bank’s sole discretion.

3.4Procedures for Borrowing. Subject to the prior satisfaction of all other applicable conditions to the making of a Credit Extension set forth in this Agreement, to obtain a Credit Extension, Borrower shall notify Bank (which notice shall be irrevocable) by electronic mail, facsimile, or telephone by 12:00 p.m. Eastern time at least two (2) Business Days prior to the proposed Funding Date of the Credit Extension. Together with any such electronic or facsimile notification, Borrower shall deliver to Bank by electronic mail or facsimile a completed Payment/Advance Form executed by a Responsible Officer or his or her designee. Bank may rely on any telephone notice given by a person whom Bank believes is a Responsible Officer or designee. Bank shall credit any Credit Extensions to the Designated Deposit Account. Bank may make Credit Extensions under this Agreement based on instructions from a Responsible Officer or his or her designee or without instructions if the Credit Extensions are necessary to meet Obligations which have become due.

4.CREATION OF SECURITY INTEREST

4.1Grant of Security Interest. Borrower hereby grants Bank, to secure the payment and performance in full of all of the Obligations, a continuing security interest in, and pledges to Bank, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof.

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Borrower acknowledges that it previously has entered, and/or may in the future enter, into Bank Services Agreements with Bank. Regardless of the terms of any Bank Services Agreement, Borrower agrees that any amounts Borrower owes Bank thereunder shall be deemed to be Obligations hereunder and that it is the intent of Borrower and Bank to have all such Obligations secured by the first priority perfected security interest in the Collateral granted herein (subject only to Permitted Liens that are permitted pursuant to the terms of this Agreement to have superior priority to Bank’s Lien in this Agreement).

If this Agreement is terminated, Bank’s Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity obligations) are repaid in full in cash. Upon payment in full in cash of the Obligations (other than inchoate indemnity obligations) and at such time as Bank’s obligation to make Credit Extensions has terminated, Bank shall, at the sole cost and expense of Borrower, release its Liens in the Collateral and all rights therein shall revert to Borrower. In the event (x) all Obligations (other than inchoate indemnity obligations), except for Bank Services, are satisfied in full, and (y) this Agreement is terminated, Bank shall terminate the security interest granted herein upon Borrower providing cash collateral acceptable to Bank in its good faith business judgment for Bank Services, if any. In the event such Bank Services consist of outstanding Letters of Credit, Borrower shall provide to Bank cash collateral in an amount equal to (x) if such Letters of Credit are denominated in Dollars, then at least one hundred five percent (105.0%); and (y) if such Letters of Credit are denominated in a Foreign Currency, then at least one hundred ten percent (110.0%), of the Dollar Equivalent of the face amount of all such Letters of Credit plus all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its business judgment), to secure all of the Obligations relating to such Letters of Credit.

4.2Priority of Security Interest. Borrower represents, warrants, and covenants that the security interest granted herein is and shall at all times continue to be a first priority perfected security interest in the Collateral (subject only to Permitted Liens that are permitted pursuant to the terms of this Agreement to have superior priority to Bank’s Lien under this Agreement). If Borrower shall acquire a commercial tort claim, Borrower shall promptly notify Bank in a writing signed by Borrower of the general details thereof and grant to Bank in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Bank.

4.3Authorization to File Financing Statements. Borrower hereby authorizes Bank to file financing statements, without notice to Borrower, with all appropriate jurisdictions to perfect or protect Bank’s interest or rights hereunder, including a notice that any disposition of the Collateral, by either Borrower or any other Person, shall be deemed to violate the rights of Bank under the Code. Such financing statements may indicate the Collateral as “all assets of the Debtor” or words of similar effect, or as being of an equal or lesser scope, or with greater detail, all in Bank’s discretion.

5.REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants as follows:

5.1Due Organization, Authorization; Power and Authority. Borrower is duly existing and in good standing as a Registered Organization in its jurisdiction of formation and is qualified and licensed to do business and is in good standing in any jurisdiction in which the conduct of its business or its ownership of property requires that it be qualified except where the failure to do so could not reasonably be expected to have a material adverse effect on Borrower’s business. In connection with this Agreement, Borrower has delivered to Bank a completed certificate signed by Borrower, entitled “Perfection Certificate”. Borrower represents and warrants to Bank that (a) Borrower’s exact legal name is that indicated on the Perfection Certificate and on the signature page hereof; (b) Borrower is an organization of the type and is organized in the jurisdiction set forth in the Perfection Certificate; (c) the Perfection Certificate accurately sets forth Borrower’s organizational identification number or accurately states that Borrower has none; (d) the Perfection Certificate accurately sets forth Borrower’s place of business, or, if more than one, its chief executive office as well as Borrower’s mailing address (if different than its chief executive office); (e) Borrower (and each of its predecessors) has not, in the past five (5) years, changed its jurisdiction of formation, organizational structure or type, or any organizational number assigned by its jurisdiction; and (f) all other information set forth on the Perfection Certificate pertaining to Borrower and each of its Subsidiaries is accurate and complete (it being understood and agreed that Borrower may from time to time update certain information in the Perfection Certificate after the Effective Date to the extent permitted by one or more specific provisions in this Agreement). If Borrower is not now a Registered

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Organization but later becomes one, Borrower shall promptly notify Bank of such occurrence and provide Bank with Borrower’s organizational identification number.

The execution, delivery and performance by Borrower of the Loan Documents to which it is a party have been duly authorized, and do not (i) conflict with any of Borrower’s organizational documents, (ii) contravene, conflict with, constitute a default under or violate any material Requirement of Law, (iii) contravene, conflict or violate any applicable order, writ, judgment, injunction, decree, determination or award of any Governmental Authority by which Borrower or any of its Subsidiaries or any of their property or assets may be bound or affected, (iv) require any action by, filing, registration, or qualification with, or Governmental Approval from, any Governmental Authority (except such Governmental Approvals which have already been obtained and are in full force and effect or (v) conflict with, contravene, constitute a default or breach under, or result in or permit the termination or acceleration of, any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which it is a party or by which it is bound in which the default could reasonably be expected to have a material adverse effect on Borrower’s business.

5.2Collateral. Borrower has good title to, rights in, and the power to transfer each item of the Collateral upon which it purports to grant a Lien hereunder, free and clear of any and all Liens except Permitted Liens. Borrower has no Collateral Accounts at or with any bank or financial institution other than Bank or Bank’s Affiliates except for the Collateral Accounts described in the Perfection Certificate delivered to Bank in connection herewith and which Borrower has taken such actions as are necessary to give Bank a perfected security interest therein, pursuant to the terms of Section 6.6(b). The Accounts are bona fide, existing obligations of the Account Debtors.

The Collateral is not in the possession of any third party bailee (such as a warehouse) except as otherwise provided in the Perfection Certificate. None of the components of the Collateral shall be maintained at locations other than as provided in the Perfection Certificate or as permitted pursuant to Section 7.2.

All Inventory is in all material respects of good and marketable quality, free from material defects.

Borrower is the sole owner of the Intellectual Property which it owns or purports to own except for (a) non-exclusive licenses granted to its customers in the ordinary course of business, (b) over-the-counter software that is commercially available to the public, and (c) material Intellectual Property licensed to Borrower and noted on the Perfection Certificate. Each Patent which it owns or purports to own and which is material to Borrower’s business is valid and enforceable, and no part of the Intellectual Property which Borrower owns or purports to own and which is material to Borrower’s business has been judged invalid or unenforceable, in whole or in part. To the best of Borrower’s knowledge, no claim has been made that any part of the Intellectual Property violates the rights of any third party except to the extent such claim would not reasonably be expected to have a material adverse effect on Borrower’s business.

Except as noted on the Perfection Certificate, Borrower is not a party to, nor is it bound by, any Restricted License.

5.3Accounts Receivable.

(a)    For any Eligible Account in any Borrowing Base Certificate, all statements made and all unpaid balances appearing in all invoices, instruments and other documents evidencing such Eligible Accounts are and shall be true and correct and all such invoices, instruments and other documents, and all of Borrower's Books are genuine and in all respects what they purport to be. Whether or not an Event of Default has occurred and is continuing, Bank may notify any Account Debtor owing Borrower money of Bank’s security interest in such funds and verify the amount of such Eligible Account.

(b)    All sales and other transactions underlying or giving rise to each Eligible Account shall comply in all material respects with all applicable laws and governmental rules and regulations. Borrower has no knowledge of any actual or imminent Insolvency Proceeding of any Account Debtor whose accounts are Eligible Accounts in any Borrowing Base Certificate. To the best of Borrower’s knowledge, all signatures and endorsements on all documents, instruments, and agreements relating to all Eligible Accounts are genuine, and all such documents, instruments and agreements are legally enforceable in accordance with their terms.

5.4Litigation. There are no actions or proceedings pending or, to the knowledge of any Responsible Officer, threatened in writing by or against Borrower or any of its Subsidiaries involving more than, individually or in the aggregate, Fifty Thousand Dollars ($50,000.00).

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5.5Financial Statements; Financial Condition. All consolidated financial statements for Borrower and any of its Subsidiaries delivered to Bank fairly present in all material respects Borrower’s consolidated financial condition and Borrower’s consolidated results of operations. There has not been any material deterioration in Borrower’s consolidated financial condition since the date of the most recent financial statements submitted to Bank.

5.6Solvency. The fair salable value of Borrower’s consolidated assets (including goodwill minus disposition costs) exceeds the fair value of Borrower’s liabilities; Borrower is not left with unreasonably small capital after the transactions in this Agreement; and Borrower is able to pay its debts (including trade debts) as they mature.

5.7Regulatory Compliance. Borrower is not an “investment company” or a company “controlled” by an “investment company” under the Investment Company Act of 1940, as amended. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of Governors). Borrower (a) has complied in all material respects with all Requirements of Law, and (b) has not violated any Requirements of Law the violation of which could reasonably be expected to have a material adverse effect on its business. None of Borrower’s or any of its Subsidiaries’ properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally. Borrower and each of its Subsidiaries have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all Government Authorities that are necessary to continue their respective businesses as currently conducted.

5.8Subsidiaries; Investments. Borrower does not own any stock, partnership, or other ownership interest or other equity securities except for Permitted Investments.

5.9Tax Returns and Payments; Pension Contributions. Borrower has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except (a) to the extent such taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor, or (b) if such taxes, assessments, deposits and contributions do not, individually or in the aggregate, exceed Five Thousand Dollars ($5,000.00).

To the extent Borrower defers payment of any contested taxes, Borrower shall (i) notify Bank in writing of the commencement of, and any material development in, the proceedings, and (ii) post bonds or take any other steps required to prevent the governmental authority levying such contested taxes from obtaining a Lien upon any of the Collateral that is other than a Permitted Lien. Borrower is unaware of any claims or adjustments proposed for any of Borrower's prior tax years which could result in additional taxes becoming due and payable by Borrower. Borrower has paid all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms, and Borrower has not withdrawn from participation in, and has not permitted partial or complete termination of, or permitted the occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.

5.10Use of Proceeds. Borrower shall use the proceeds of the Credit Extensions to repay Borrower’s outstanding obligations to Wells Fargo Bank, N.A., as working capital, and to fund its general business requirements and not for personal, family, household or agricultural purposes.

5.11Full Disclosure. No written representation, warranty or other statement of Borrower in any certificate or written statement given to Bank, as of the date such representation, warranty, or other statement was made, taken together with all such written certificates and written statements given to Bank, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading (it being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results).

5.12Definition of “Knowledge.” For purposes of the Loan Documents, whenever a representation or warranty is made to Borrower’s knowledge or awareness, to the “best of” Borrower’s knowledge, or with a similar qualification, knowledge or awareness means the actual knowledge, after reasonable investigation, of any Responsible Officer.

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6.AFFIRMATIVE COVENANTS

Borrower shall do all of the following:

6.1Government Compliance.

(d)    Maintain its and all its Subsidiaries’ legal existence and good standing in their respective jurisdictions of formation and maintain qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to have a material adverse effect on Borrower’s business or operations. Borrower shall comply, and have each Subsidiary comply, in all material respects, with all laws, ordinances and regulations to which it is subject.

(e)    Obtain all of the Governmental Approvals necessary for the performance by Borrower of its obligations under the Loan Documents to which it is a party and the grant of a security interest to Bank in all of its property. Borrower shall promptly provide copies of any such obtained Governmental Approvals to Bank.

6.2Financial Statements, Reports, Certificates. Provide Bank with the following:

(c)    Borrowing Base Reports. Within thirty (30) days after the last day of each month, (i) aged listings of accounts receivable and accounts payable (by invoice date), (ii) Deferred Revenue reports and (iii) current backlog reports in form and substance satisfactory to Bank (the “Borrowing Base Reports”);

(d)    Borrowing Base Certificate. Within thirty (30) days after the last day of each month and together with the Borrowing Base Reports, a duly completed Borrowing Base Certificate signed by a Responsible Officer;

(e)    Monthly Financial Statements. As soon as available, but no later than thirty (30) days after the last day of each month, a company prepared consolidated and consolidating balance sheet and income statement covering Borrower’s consolidated operations and Borrower’s and each of its Subsidiary’s operations for such month certified by a Responsible Officer and in a form acceptable to Bank (the “Monthly Financial Statements”);

(f)    Monthly Compliance Certificate. Within thirty (30) days after the last day of each month and together with the Monthly Financial Statements, a duly completed Compliance Certificate signed by a Responsible Officer, certifying that as of the end of such month, Borrower was in full compliance with all of the terms and conditions of this Agreement, and setting forth calculations showing compliance with the financial covenants set forth in this Agreement and such other information as Bank may reasonably request;

(g)    Board-Approved Projections. Within sixty (60) days after the last day of Borrower’s fiscal year, and within thirty (30) days after any updates or changes thereto, annual Board-approved projections, in a form acceptable to Bank;

(h)    Annual Audited Financial Statements. As soon as available, but no later than one hundred fifty (150) days after the last day of Borrower’s fiscal year, audited consolidated financial statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm reasonably acceptable to Bank;

(i)    Other Statements. Within five (5) Business Days of delivery, copies of all statements, reports and notices made available to Borrower’s security holders or to any holders of Subordinated Debt;

(j)    SEC Filings. Within five (5) Business Days of filing, copies of all periodic and other reports, proxy statements and other materials filed by Borrower with the SEC, any Governmental Authority succeeding to any or all of the functions of the SEC or with any national securities exchange, or distributed to its shareholders, as the case may be. Documents required to be delivered pursuant to the terms hereof (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which Borrower posts such documents, or provides a link thereto, on Borrower’s website on the Internet at Borrower’s website address; provided, however, Borrower shall promptly notify Bank in writing (which may be by electronic mail) of the posting of any such documents;

(k)    Legal Action Notice. A prompt report of any legal actions pending or threatened in writing against Borrower or any of its Subsidiaries that would reasonably be expected to result in damages or costs to Borrower or any of its Subsidiaries of, individually or in the aggregate, One Hundred Thousand Dollars ($100,000.00) or more; and

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(l)    Other Financial Information. Other financial information reasonably requested by Bank.

6.3Inventory; Returns. Keep all Inventory in good and marketable condition, free from material defects. Returns and allowances between Borrower and its Account Debtors shall follow Borrower’s customary practices as they exist at the Effective Date. Borrower must promptly notify Bank of all returns, recoveries, disputes and claims that involve more than One Hundred Thousand Dollars ($100,000.00).

6.4Taxes; Pensions. Timely file, and require each of its Subsidiaries to timely file, all required tax returns and reports and timely pay, and require each of its Subsidiaries to timely pay, all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower and each of its Subsidiaries, except for deferred payment of any taxes contested pursuant to the terms of Section 5.9 hereof, and shall deliver to Bank, on demand, appropriate certificates attesting to such payments, and pay all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms.

6.5Insurance.

(a)    Keep its business and the Collateral insured for risks and in amounts standard for companies in Borrower’s industry and location and as Bank may reasonably request. Insurance policies shall be in a form, with financially sound and reputable insurance companies that are not Affiliates of Borrower, and in amounts that are satisfactory to Bank. All property policies shall have a lender’s loss payable endorsement showing Bank as lender loss payee. All liability policies shall show, or have endorsements showing, Bank as an additional insured. Bank shall be named as lender loss payee and/or additional insured with respect to any such insurance providing coverage in respect of any Collateral.

(b)    Ensure thatproceeds payable under any property policy are, at Bank’s option, payable to Bank on account of the Obligations.

(c)    At Bank’s request, Borrower shall deliver certified copies of insurance policies and evidence of all premium payments. Each provider of any such insurance required under this Section 6.5 shall agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to Bank, that it will give Bank thirty (30) days prior written notice before any such policy or policies shall be materially altered or canceled. If Borrower fails to obtain insurance as required under this Section 6.5 or to pay any amount or furnish any required proof of payment to third persons and Bank, Bank may make all or part of such payment or obtain such insurance policies required in this Section 6.5, and take any action under the policies Bank deems prudent.

6.6Operating Accounts.

(a)    Maintain all and all of its Subsidiaries’ operating, depository and securities accounts with Bank and Bank’s Affiliates.Notwithstanding the foregoing, Borrower shall be permitted to maintain certificates of deposit with JP Morgan Chase Bank to secure Borrower’s existing letter of credit with JP Morgan Chase Bank provided that (x) the maximum balance maintained in such certificates of deposit do not at any time exceed Three Hundred Six Thousand Dollars ($306,000.00) plus accrued interest in the aggregate (the “CD Accounts”), and (y) upon maturity of such CD Accounts, Borrower shall immediately transfer all funds in the CD Accounts into an account of Borrower with Bank.

(b)    Provide Bank five (5) Business Days prior written notice before establishing any Collateral Account at or with any bank or financial institution other than Bank or Bank’s Affiliates. For each Collateral Account that Borrower at any time maintains, Borrower shall cause the applicable bank or financial institution (other than Bank) at or with which any Collateral Account is maintained to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account to perfect Bank’s Lien in such Collateral Account in accordance with the terms hereunder which Control Agreement may not be terminated without the prior written consent of Bank. The provisions of the previous sentence shall not apply to (i) the CD Accounts or (ii) deposit accounts exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of Borrower’s employees and identified to Bank by Borrower as such.

6.7Financial Covenants. Maintain at all times, subject to periodic reporting as of the last day of each month, unless otherwise noted, computed with respect to the Borrower only, and not on a consolidated basis, either of the following:

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(a)    Adjusted Quick Ratio. Commencing with the month ending February 28, 2015 and as of the last day of each month thereafter, a ratio of Quick Assets to Current Liabilities minus the current portion of Deferred Revenue of at least 1.5 to 1.0; or

(b)    Fixed Charge Coverage Ratio. Commencing with the month ending May 31, 2016 and as of the last day of each month thereafter, measured on a trailing three (3) month basis, a Fixed Charge Coverage Ratio of at least 1.25 to 1.0.

6.8Protection of Intellectual Property Rights.

(a)    (i) Protect, defend and maintain the validity and enforceability of any Intellectual Property material to Borrower’s business; (ii) promptly advise Bank in writing of material infringements or any other event that could reasonably be expected to materially and adversely affect the value of its Intellectual Property; and (iii) not allow any Intellectual Property material to Borrower’s business to be abandoned, forfeited or dedicated to the public without Bank’s written consent.

(b)    Provide written notice to Bank within ten (10) days of entering or becoming bound by any Restricted License (other than over-the-counter software that is commercially available to the public). Borrower shall take such steps as Bank requests to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for (i) any Restricted License to be deemed “Collateral” and for Bank to have a security interest in it that might otherwise be restricted or prohibited by law or by the terms of any such Restricted License, whether now existing or entered into in the future, and (ii) Bank to have the ability in the event of a liquidation of any Collateral to dispose of such Collateral in accordance with Bank’s rights and remedies under this Agreement and the other Loan Documents.

6.9Litigation Cooperation. From the date hereof and continuing through the termination of this Agreement, make available to Bank, without expense to Bank, Borrower and its officers, employees and agents and Borrower's books and records, to the extent that Bank may deem them reasonably necessary to prosecute or defend any third-party suit or proceeding instituted by or against Bank with respect to any Collateral or relating to Borrower.

6.10 Access to Collateral; Books and Records. Allow Bank, or its agents, at reasonable times, on three (3) Business Days’ notice (provided no notice is required if an Event of Default has occurred and is continuing), to inspect the Collateral and audit and copy Borrower’s Books. Such inspections or audits shall be conducted no more often than once every twelve (12) months unless an Event of Default has occurred and is continuing, in which case such inspections and audits shall occur as often as Bank shall determine is necessary. The foregoing inspections and audits shall be at Borrower’s expense, and the charge therefor shall be Eight Hundred Fifty Dollars ($850.00) per person per day (or such higher amount as shall represent Bank’s then-current standard charge for the same), plus reasonable out-of-pocket expenses. In the event Borrower and Bank schedule an audit more than ten (10) days in advance, and Borrower cancels or seeks to reschedule the audit with less than ten (10) days written notice to Bank, then (without limiting any of Bank’s rights or remedies), Borrower shall pay Bank a fee of One Thousand Dollars ($1,000.00) plus any out-of-pocket expenses incurred by Bank to compensate Bank for the anticipated costs and expenses of the cancellation or rescheduling. The Initial Audit shall be completed within ninety (90) days after the Effective Date.

6.11Lockbox.Within sixty (60) days after the Effective Date and at all times thereafter, Borrower shall direct each Account Debtor (and each depository institution where proceeds of Accounts are on deposit) to remit payments with respect to the Accounts to a lockbox account established with Bank or to wire transfer payments to a cash collateral account that Bank controls (collectively, the “Lockbox”). Funds held in the Lockbox shall be (i) provided no Event of Default has occurred and is continuing, transferred to an operating account of Borrower maintained with Bank, and (ii) after the occurrence and during the continuance of an Event of Default, applied to reduce the Obligations pursuant to Section 9.4 hereof. It will be considered an immediate Event of Default if the Lockbox is not established and operational within sixty (60) days after the Effective Date and at all times thereafter.

6.12Further Assurances. Execute any further instruments and take further action as Bank reasonably requests to perfect or continue Bank’s Lien in the Collateral or to effect the purposes of this Agreement. Deliver to Bank,within five (5) Business Days after the same are sent or received, copies of all correspondence, reports, documents and other filings with any Governmental Authority regarding compliance with or maintenance of Governmental Approvals or Requirements of Law that could reasonably be expected to have a material effect on any of the Governmental Approvals or otherwise on the operations of Borrower or any of its Subsidiaries.

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7.NEGATIVE COVENANTS

Borrower shall not do any of the following without Bank’s prior written consent:

7.1Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of (collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, except for Transfers (a) of Inventory in the ordinary course of business; (b) of worn-out or obsolete Equipment that is, in the reasonable judgment of Borrower, no longer economically practicable to maintain or useful in the ordinary course of business of Borrower; (c) consisting of Permitted Liens and Permitted Investments; (d) consisting of the sale or issuance of any stock of Borrower permitted under Section 7.2 of this Agreement; (e) consisting of Borrower’s use or transfer of money or Cash Equivalents in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents; and (f) of non-exclusive licenses, joint ventures, and corporate collaborations for the use of the property of Borrower or its Subsidiaries in the ordinary course of business.

7.2Changes in Business, Management, Ownership or Business Locations. (a) Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b) liquidate or dissolve; or (c) (i) fail to provide notice to Bank of any Key Person departing from or ceasing to be employed by Borrower within five (5) Business Days after his or her departure from Borrower; or (ii) enter into any transaction or series of related transactions in which the stockholders of Borrower who were not stockholders immediately prior to the first such transaction own more than forty percent (40.0%) of the voting stock of Borrower immediately after giving effect to such transaction or related series of such transactions (other than by the sale of Borrower’s equity securities in a public offering or to venture capital or private equity investors so long as Borrower identifies to Bank the venture capital or private equity investors at least seven (7) Business Days prior to the closing of the transaction and provides to Bank a description of the material terms of the transaction).

Borrower shall not, without at least thirty (30) days prior written notice to Bank: (1) add any new offices or business locations, including warehouses (unless such new offices or business locations contain less than Ten Thousand Dollars ($10,000.00) in Borrower’s assets or property) or deliver any portion of the Collateral valued, individually or in the aggregate, in excess of Twenty-Five Thousand Dollars ($25,000.00) to a bailee at a location other than to a bailee and at a location already disclosed in the Perfection Certificate, (2) change its jurisdiction of organization, (3) change its organizational structure or type, (4) change its legal name, or (5) change any organizational number (if any) assigned by its jurisdiction of organization. If Borrower intends to deliver any portion of the Collateral valued, individually or in the aggregate, in excess of Twenty-Five Thousand Dollars ($25,000.00) to a bailee, and Bank and such bailee are not already parties to a bailee agreement governing both the Collateral and the location to which Borrower intends to deliver the Collateral, then Borrower will first receive the written consent of Bank, and if requested by Bank, such bailee shall execute and deliver a bailee agreement in form and substance reasonably satisfactory to Bank.

7.3Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person (including, without limitation, by the formation of any Subsidiary). A Subsidiary may merge or consolidate into another Subsidiary or into Borrower.

7.4Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness.

7.5Encumbrance. Create, incur, allow, or suffer any Lien on any of its property, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, permit any Collateral not to be subject to the first priority security interest granted herein, or enter into any agreement, document, instrument or other arrangement (except with or in favor of Bank) with any Person which directly or indirectly prohibits or has the effect of prohibiting Borrower or any Subsidiary from assigning, mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrower’s or any Subsidiary’s Intellectual Property, except as is otherwise permitted in Section 7.1 hereof and the definition of Permitted Liens herein.

7.6Maintenance of Collateral Accounts. Maintain any Collateral Account except pursuant to the terms of Section 6.6(b) hereof.

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7.7Distributions; Investments. (a) Pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock; or (b) directly or indirectly make any Investment (including, without limitation, by the formation of any Subsidiary) other than Permitted Investments, or permit any of its Subsidiaries to do so.

7.8Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower, except for transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person.

7.9Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt, except under the terms of the subordination, intercreditor, or other similar agreement to which such Subordinated Debt is subject, or (b) amend any provision in any document relating to the Subordinated Debt which would increase the amount thereof, provide for earlier or greater principal, interest, or other payments thereon, or adversely affect the subordination thereof to Obligations owed to Bank.

7.10Compliance. Become an “investment company” or a company controlled by an “investment company”, under the Investment Company Act of 1940, as amended, or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System), or use the proceeds of any Credit Extension for that purpose; fail to (a) meet the minimum funding requirements of ERISA, (b) prevent a Reportable Event or Prohibited Transaction, as defined in ERISA, from occurring, or (c) comply with the Federal Fair Labor Standards Act, the failure of any of the conditions described in clauses (a) through (c) which could reasonably be expected to have a material adverse effect on Borrower’s business; or violate any other law or regulation, if the violation could reasonably be expected to have a material adverse effect on Borrower’s business, or permit any of its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in, permit partial or complete termination of, or permit the occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.

8.EVENTS OF DEFAULT

Any one of the following shall constitute an event of default (an “Event of Default”) under this Agreement:

8.1Payment Default. Borrower fails to (a) make any payment of principal or interest on any Credit Extension when due, or (b) pay any other Obligations within three (3) Business Days after such Obligations are due and payable (which three (3) Business Day cure period shall not apply to payments due on the Maturity Date). During the cure period, the failure to make or pay any payment specified under clause (b) hereunder is not an Event of Default (but no Credit Extension will be made during the cure period);

8.2Covenant Default.

(a)    Borrower fails or neglects to perform any obligation in Sections 6.2, 6.4, 6.5, 6.6, 6.7, 6.8(b), 6.10, or 6.11, or violates any covenant in Section 7; or

(b)    Borrower fails or neglects to perform, keep, or observe any other term, provision, condition, covenant or agreement contained in this Agreement or any Loan Documents, and as to any default (other than those specified in this Section 8) under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure the default within ten (10) days after the occurrence thereof; provided, however, that if the default cannot by its nature be cured within the ten (10) day period or cannot after diligent attempts by Borrower be cured within such ten (10) day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional period (which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure to cure the default shall not be deemed an Event of Default (but no Credit Extensions shall be made during such cure period). Cure periods provided under this section shall not apply, among other things, to financial covenants or any other covenants set forth in clause (a) above;

8.3Material Adverse Change. A Material Adverse Change occurs;

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8.4Attachment; Levy; Restraint on Business.

(c)     (i) The service of process seeking to attach, by trustee or similar process, any funds of Borrower or of any entity under the control of Borrower (including a Subsidiary) in excess of Twenty-Five Thousand Dollars ($25,000.00), or (ii) a notice of lien or levy is filed against any of Borrower’s assets with a fair market value of Twenty-Five Thousand Dollars ($25,000.00) or more, individually or in the aggregate, by any Governmental Authority, and the same under subclauses (i) and (ii) hereof are not, within ten (10) days after the occurrence thereof, discharged or stayed (whether through the posting of a bond or otherwise); provided, however, no Credit Extensions shall be made during any ten (10) day cure period; or

(d)     (i) any material portion of Borrower’s assets is attached, seized, levied on, or comes into possession of a trustee or receiver, or (ii) any court order enjoins, restrains, or prevents Borrower from conducting all or any material part of its business;

8.5Insolvency. (a) Borrower Subsidiaries is unable to pay its debts (including trade debts) as they become due or otherwise becomes insolvent; (b) Borrower begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower and is not dismissed or stayed within thirty (30) days (but no Credit Extensions shall be made while any of the conditions described in clause (a) exist and/or until any Insolvency Proceeding is dismissed);

8.6Other Agreements. There is, under any agreement to which Borrower is a party with a third party or parties, (a) any default resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount individually or in the aggregate in excess of Fifty Thousand Dollars ($50,000.00); or (b) any breach or default by Borrower, the result of which could have a material adverse effect on Borrower’s business;

8.7Judgments; Penalties. One or more fines, penalties or final judgments, orders or decrees for the payment of money in an amount, individually or in the aggregate, of at least One Hundred Thousand Dollars ($100,000.00) (not covered by independent third-party insurance as to which liability has been accepted by such insurance carrier) shall be rendered against Borrower by any Governmental Authority, and the same are not, within ten (10) days after the entry, assessment or issuance thereof, discharged, satisfied, or paid, or after execution thereof, stayed or bonded pending appeal, or such judgments are not discharged prior to the expiration of any such stay (provided that no Credit Extensions will be made prior to the satisfaction, payment, discharge, stay, or bonding of such fine, penalty, judgment, order or decree);

8.8Misrepresentations. Borrower or any Person acting for Borrower makes any representation, warranty, or other statement now or later in this Agreement, any Loan Document or in any writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document, and such representation, warranty, or other statement is incorrect in any material respect when made;

8.9Subordinated Debt. Any document, instrument, or agreement evidencing any Subordinated Debt shall for any reason be revoked or invalidated or otherwise cease to be in full force and effect, any Person shall be in breach thereof or contest in any manner the validity or enforceability thereof or deny that it has any further liability or obligation thereunder, or the Obligations shall for any reason be subordinated or shall not have the priority contemplated by this Agreement; or

8.10Governmental Approvals. Any Governmental Approval shall have been (a) revoked, rescinded, suspended, modified in an adverse manner or not renewed in the ordinary course for a full term or (b) subject to any decision by a Governmental Authority that designates a hearing with respect to any applications for renewal of any of such Governmental Approval or that could result in the Governmental Authority taking any of the actions described in clause (a) above, and such decision or such revocation, rescission, suspension, modification or non-renewal (i) cause, or could reasonably be expected to cause, a Material Adverse Change, or (ii) adversely affects the legal qualifications of Borrower or any of its Subsidiaries to hold such Governmental Approval in any applicable jurisdiction and such revocation, rescission, suspension, modification or non-renewal could reasonably be expected to affect the status of or legal qualifications of Borrower or any of its Subsidiaries to hold any Governmental Approval in any other jurisdiction.

9.BANK’S RIGHTS AND REMEDIES

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9.1Rights and Remedies. Upon the occurrence and during the continuance of an Event of Default, Bank may, without notice or demand, do any or all of the following:

(c)    declare all Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs all Obligations are immediately due and payable without any action by Bank);

(d)    stop advancing money or extending credit for Borrower’s benefit under this Agreement or under any other agreement between Borrower and Bank;

(e)    demand that Borrower (i) deposit cash with Bank in an amount equal to at least (A) one hundred five percent (105.0%) of the Dollar Equivalent of the aggregate face amount of all Letters of Credit denominated in Dollars remaining undrawn, and (B) one hundred ten percent (110.0%) of the Dollar Equivalent of the aggregate face amount of all Letters of Credit denominated in a Foreign Currency remaining undrawn, (plus, in each case, all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment)), to secure all of the Obligations relating to such Letters of Credit, as collateral security for the repayment of any future drawings under such Letters of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in advance all letter of credit fees scheduled to be paid or payable over the remaining term of any Letters of Credit;

(f)    terminate any FX Contracts;

(g)    verify the amount of, demand payment of and performance under, and collect any Accounts and General Intangibles, settle or adjust disputes and claims directly with Account Debtors for amounts on terms and in any order that Bank considers advisable, and notify any Person owing Borrower money of Bank’s security interest in such funds;

(h)    make any payments and do any acts it considers necessary or reasonable to protect the Collateral and/or its security interest in the Collateral. Borrower shall assemble the Collateral if Bank requests and make it available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of its premises, without charge, to exercise any of Bank’s rights or remedies;

(i)    apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) amount held by Bank owing to or for the credit or the account of Borrower;

(j)    ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is hereby granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower’s labels, Patents, Copyrights, mask works, rights of use of any name, trade secrets, trade names, Trademarks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank’s exercise of its rights under this Section, Borrower’s rights under all licenses and all franchise agreements inure to Bank’s benefit;

(k)    place a “hold” on any account maintained with Bank and/or deliver a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any Control Agreement or similar agreements providing control of any Collateral;

(l)    demand and receive possession of Borrower’s Books; and

(m)    exercise all rights and remedies available to Bank under the Loan Documents or at law or equity, including all remedies provided under the Code (including disposal of the Collateral pursuant to the terms thereof).

9.2Power of Attorney. Borrower hereby irrevocably appoints Bank as its lawful attorney-in-fact, exercisable upon the occurrence and during the continuance of an Event of Default, to: (a) endorse Borrower’s name on any checks or other forms of payment or security; (b) sign Borrower’s name on any invoice or bill of lading for any Account or drafts against Account Debtors; (c) settle and adjust disputes and claims about the Accounts directly with Account Debtors, for amounts and on terms Bank determines reasonable; (d) make, settle, and adjust all claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge, encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the

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same; and (f) transfer the Collateral into the name of Bank or a third party as the Code permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to sign Borrower’s name on any documents necessary to perfect or continue the perfection of Bank’s security interest in the Collateral regardless of whether an Event of Default has occurred until all Obligations have been satisfied in full and Bank is under no further obligation to make Credit Extensions hereunder. Bank’s foregoing appointment as Borrower’s attorney in fact, and all of Bank’s rights and powers, coupled with an interest, are irrevocable until all Obligations have been fully repaid and performed and Bank’s obligation to provide Credit Extensions terminates.

9.3Protective Payments. If Borrower fails to obtain the insurance called for by Section 6.5 or fails to pay any premium thereon or fails to pay any other amount which Borrower is obligated to pay under this Agreement or any other Loan Document or which may be required to preserve the Collateral, Bank may obtain such insurance or make such payment, and all amounts so paid by Bank are Bank Expenses and immediately due and payable, bearing interest at the then highest rate applicable to the Obligations, and secured by the Collateral. Bank will make reasonable efforts to provide Borrower with notice of Bank obtaining such insurance at the time it is obtained or within a reasonable time thereafter. No payments by Bank are deemed an agreement to make similar payments in the future or Bank’s waiver of any Event of Default.

9.4Application of Payments and Proceeds Upon Default. If an Event of Default has occurred and is continuing, Bank shall have the right to apply in any order any funds in its possession, whether from Borrower account balances, payments, proceeds realized as the result of any collection of Accounts or other disposition of the Collateral, or otherwise, to the Obligations. Bank shall pay any surplus to Borrower by credit to the Designated Deposit Account or to other Persons legally entitled thereto; Borrower shall remain liable to Bank for any deficiency. If Bank, directly or indirectly, enters into a deferred payment or other credit transaction with any purchaser at any sale of Collateral, Bank shall have the option, exercisable at any time, of either reducing the Obligations by the principal amount of the purchase price or deferring the reduction of the Obligations until the actual receipt by Bank of cash therefor.

9.5Bank’s Liability for Collateral. So long as Bank complies with reasonable banking practices regarding the safekeeping of the Collateral in the possession or under the control of Bank, Bank shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss, damage or destruction of the Collateral.

9.6No Waiver; Remedies Cumulative. Bank’s failure, at any time or times, to require strict performance by Borrower of any provision of this Agreement or any other Loan Document shall not waive, affect, or diminish any right of Bank thereafter to demand strict performance and compliance herewith or therewith. No waiver hereunder shall be effective unless signed by the party granting the waiver and then is only effective for the specific instance and purpose for which it is given. Bank’s rights and remedies under this Agreement and the other Loan Documents are cumulative. Bank has all rights and remedies provided under the Code, by law, or in equity. Bank’s exercise of one right or remedy is not an election and shall not preclude Bank from exercising any other remedy under this Agreement or other remedy available at law or in equity, and Bank’s waiver of any Event of Default is not a continuing waiver. Bank’s delay in exercising any remedy is not a waiver, election, or acquiescence.

9.7Demand Waiver. Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Bank on which Borrower is liable.

9.8Borrower Liability. Either Borrower may, acting singly, request Credit Extensions hereunder.  Each Borrower hereby appoints the other as agent for the other for all purposes hereunder, including with respect to requesting Advances hereunder. Each Borrower hereunder shall be jointly and severally obligated to repay all Advances made hereunder, regardless of which Borrower actually receives said Advance, as if each Borrower hereunder directly received all Advances.  Each Borrower waives (a) any suretyship defenses available to it under the Code or any other applicable law, and (b) any right to require Bank to: (i) proceed against any Borrower or any other person; (ii) proceed against or exhaust any security; or (iii) pursue any other remedy.  Bank may exercise or not exercise any right or remedy it has against any Borrower or any security it holds (including the right to foreclose by judicial or non-judicial sale) without affecting any Borrower’s liability.  Notwithstanding any other provision of this Agreement or other related document, each Borrower irrevocably waives all rights that it may have at law or in equity (including, without limitation, any law subrogating Borrower to the rights of Bank under this Agreement) to seek contribution, indemnification or any other

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form of reimbursement from any other Borrower, or any other Person now or hereafter primarily or secondarily liable for any of the Obligations, for any payment made by Borrower with respect to the Obligations in connection with this Agreement or otherwise and all rights that it might have to benefit from, or to participate in, any security for the Obligations as a result of any payment made by Borrower with respect to the Obligations in connection with this Agreement or otherwise.  Any agreement providing for indemnification, reimbursement or any other arrangement prohibited under this Section shall be null and void.  If any payment is made to a Borrower in contravention of this Section, such Borrower shall hold such payment in trust for Bank and such payment shall be promptly delivered to Bank for application to the Obligations, whether matured or unmatured.

10.NOTICES

All notices, consents, requests, approvals, demands, or other communication by any party to this Agreement or any other Loan Document must be in writing and shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the U.S. mail, first class, registered or certified mail return receipt requested, with proper postage prepaid; (b) upon transmission, when sent by electronic mail or facsimile transmission; (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address, facsimile number, or email address indicated below. Bank or Borrower may change its mailing or electronic mail address or facsimile number by giving the other party written notice thereof in accordance with the terms of this Section 10.

If to Borrower:    Cancer Genetics, Inc.     

    201 Route 17 North, 2^nd Floor    

    Rutherford, New Jersey 07070    

    Attn: Edward J. Sitar

Title: Chief Financial Officer    

    Fax: (201) 528-9201    

    Email:      ed.sitar@cgix.com

Gentris, LLC     

    133 Southcenter Court, Suite 400    

    Morrisville, North Carolina 27560    

    Attn: Edward J. Sitar

Title: Chief Financial Officer    

    Fax: (201) 528-9201    

    Email:      ed.sitar@cgix.com

If to Bank:    Silicon Valley Bank     

    One Tower Bridge    

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    100 Front Street, Suite 1340    

West Conshohocken, Pennsylvania 19428    

    Attn:     Scott McCarty    

    Email:      smccarty@svb.com

with a copy to:    Riemer & Braunstein LLP    Three Center Plaza    Boston, Massachusetts 02108    Attn:    David A. Ephraim, Esquire    Fax:    (617) 692-3456    Email:    DEphraim@riemerlaw.com

11.CHOICE OF LAW, VENUE, AND JURY TRIAL WAIVER

Except as otherwise expressly provided in any of the Loan Documents, New York law governs the Loan Documents without regard to principles of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in New York, New York; provided, however, that nothing in this Agreement shall be deemed to operate to preclude Bank from bringing suit or taking other legal action in any other jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce a judgment or other court order in favor of Bank. Borrower expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and Borrower hereby waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court. Borrower hereby waives personal service of the summons, complaints, and other process issued in such action or suit and agrees that service of such summons, complaints, and other process may be made by registered or certified mail addressed to Borrower at the address set forth in, or subsequently provided by Borrower in accordance with, Section 10 of this Agreement and that service so made shall be deemed completed upon the earlier to occur of Borrower’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid.

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

This Section 11 shall survive the termination of this Agreement.

12.GENERAL PROVISIONS

12.1Termination Prior to Maturity Date; Survival. All covenants, representations and warranties made in this Agreement continue in full force until this Agreement has terminated pursuant to its terms and all Obligations have been satisfied. So long as Borrower has satisfied the Obligations (other than inchoate indemnity obligations, and any other obligations which, by their terms, are to survive the termination of this Agreement, and any Obligations under Bank Services Agreements that are cash collateralized in accordance with Section 4.1 of this Agreement), this Agreement may be terminated prior to the Maturity Date by Borrower, effective three (3) Business Days after written notice of termination is given to Bank. Those obligations that are expressly specified in this Agreement as surviving this Agreement’s termination shall continue to survive notwithstanding this Agreement’s termination.

12.2Successors and Assigns. This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower may not assign this Agreement or any rights or obligations under it without Bank’s prior written consent (which may be granted or withheld in Bank’s discretion). Bank has the right, without the consent

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of or notice to Borrower, to sell, transfer, assign, negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations, rights, and benefits under this Agreement and the other Loan Documents.

12.3Indemnification. Borrower agrees to indemnify, defend and hold Bank and its directors, officers, employees, agents, attorneys, or any other Person affiliated with or representing Bank (each, an “Indemnified Person”) harmless against: (i) all obligations, demands, claims, and liabilities (collectively, “Claims”) claimed or asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (ii) all losses or expenses (including Bank Expenses) in any way suffered, incurred, or paid by such Indemnified Person as a result of, following from, consequential to, or arising from transactions between Bank and Borrower (including reasonable attorneys’ fees and expenses), except for Claims and/or losses directly caused by such Indemnified Person’s gross negligence or willful misconduct.

This Section 12.3 shall survive until all statutes of limitation with respect to the Claims, losses, and expenses for which indemnity is given shall have run.

12.4Time of Essence. Time is of the essence for the performance of all Obligations in this Agreement.

12.5Severability of Provisions. Each provision of this Agreement is severable from every other provision in determining the enforceability of any provision.

12.6Correction of Loan Documents. Bank may correct patent errors and fill in any blanks in the Loan Documents consistent with the agreement of the parties.

12.7Amendments in Writing; Waiver; Integration. No purported amendment or modification of any Loan Document, or waiver, discharge or termination of any obligation under any Loan Document, shall be enforceable or admissible unless, and only to the extent, expressly set forth in a writing signed by the party against which enforcement or admission is sought. Without limiting the generality of the foregoing, no oral promise or statement, nor any action, inaction, delay, failure to require performance or course of conduct shall operate as, or evidence, an amendment, supplement or waiver or have any other effect on any Loan Document. Any waiver granted shall be limited to the specific circumstance expressly described in it, and shall not apply to any subsequent or other circumstance, whether similar or dissimilar, or give rise to, or evidence, any obligation or commitment to grant any further waiver. The Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of the Loan Documents merge into the Loan Documents.

12.8Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, is an original, and all taken together, constitute one Agreement.

12.9Confidentiality. In handling any confidential information, Bank shall exercise the same degree of care that it exercises for its own proprietary information, but disclosure of information may be made: (a) to Bank’s Subsidiaries or Affiliates (such Subsidiaries and Affiliates, together with Bank, collectively, “Bank Entities”); (b) to prospective transferees or purchasers of any interest in the Credit Extensions (provided, however, Bank shall use its best efforts to obtain any prospective transferee’s or purchaser’s agreement to the terms of this provision); (c) as required by law, regulation, subpoena, or other order; (d) to Bank’s regulators or as otherwise required in connection with Bank’s examination or audit; (e) as Bank considers appropriate in exercising remedies under the Loan Documents; and (f) to third-party service providers of Bank so long as such service providers have executed a confidentiality agreement with Bank with terms no less restrictive than those contained herein. Confidential information does not include information that is either: (i) in the public domain or in Bank’s possession when disclosed to Bank, or becomes part of the public domain (other than as a result of its disclosure by Bank in violation of this Agreement) after disclosure to Bank; or (ii) disclosed to Bank by a third party, if Bank does not know that the third party is prohibited from disclosing the information.

Bank Entities may use anonymous forms of confidential information for aggregate datasets, for analyses or reporting , and for any other uses not expressly prohibited in writing by Borrower.  The provisions of the immediately preceding sentence shall survive termination of this Agreement.

12.10Right of Set Off. Borrower hereby grants to Bank, a lien, security interest and right of set off as security for all Obligations to Bank, whether now existing or hereafter arising upon and against all deposits, credits,

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collateral and property, now or hereafter in the possession, custody, safekeeping or control of Bank or any entity under the control of Bank (including a Bank subsidiary) or in transit to any of them. At any time after the occurrence and during the continuance of an Event of Default, without demand or notice, Bank may set off the same or any part thereof and apply the same to any liability or obligation of Borrower even though unmatured and regardless of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

12.11Electronic Execution of Documents. The words “execution,” “signed,” “signature” and words of like import in any Loan Document shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity and enforceability as a manually executed signature or the use of a paper-based recordkeeping systems, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act.

12.12Captions. The headings used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.

12.13Construction of Agreement. The parties mutually acknowledge that they and their attorneys have participated in the preparation and negotiation of this Agreement. In cases of uncertainty this Agreement shall be construed without regard to which of the parties caused the uncertainty to exist.

12.14Relationship. The relationship of the parties to this Agreement is determined solely by the provisions of this Agreement. The parties do not intend to create any agency, partnership, joint venture, trust, fiduciary or other relationship with duties or incidents different from those of parties to an arm’s-length contract.

12.15Third Parties. Nothing in this Agreement, whether express or implied, is intended to: (a) confer any benefits, rights or remedies under or by reason of this Agreement on any persons other than the express parties to it and their respective permitted successors and assigns; (b) relieve or discharge the obligation or liability of any person not an express party to this Agreement; or (c) give any person not an express party to this Agreement any right of subrogation or action against any party to this Agreement.

13.DEFINITIONS

13.1Definitions. As used in the Loan Documents, the word “shall” is mandatory, the word “may” is permissive, the word “or” is not exclusive, the words “includes” and “including” are not limiting, the singular includes the plural. As used in this Agreement, the following capitalized terms have the following meanings:

“Account” is any “account” as defined in the Code with such additions to such term as may hereafter be made, and includes, without limitation, all accounts receivable and other sums owing to Borrower.

“Account Debtor” is any “account debtor” as defined in the Code with such additions to such term as may hereafter be made.

“Adjusted EBITDA” is Borrower’s EBITDA, plus other one-time or non-cash expenses as approved by Bank in writing on a case-by-case basis in its sole and absolute discretion.

“Advance” or “Advances” means a revolving credit loan (or revolving credit loans) under the Revolving Line.

“Affiliate” is, with respect to any Person, each other Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person’s senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person’s managers and members.

“Agreement” is defined in the preamble hereof.

“Availability Amount” is (a) the lesser of (i) the Revolving Line or (ii) the amount available under the Borrowing Base minus (b) the outstanding principal balance of any Advances.

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“Bank” is defined in the preamble hereof.

“Bank Entities” is defined in Section 12.9.

“Bank Expenses” are all audit fees and expenses, costs, and expenses (including reasonable attorneys’ fees and expenses) for preparing, amending, negotiating, administering, defending and enforcing the Loan Documents (including, without limitation, those incurred in connection with appeals or Insolvency Proceedings) or otherwise incurred with respect to Borrower.

“Bank Services”  are any products, credit services, and/or financial accommodations previously, now, or hereafter provided to Borrower or any of its Subsidiaries by Bank or any Bank Affiliate, including, without limitation, any letters of credit, cash management services (including, without limitation, merchant services, direct deposit of payroll, business credit cards, and check cashing services), interest rate swap arrangements, and foreign exchange services as any such products or services may be identified in Bank’s various agreements related thereto (each, a “Bank Services Agreement”).

“Bank Services Agreement” is defined in the definition of Bank Services.

“BioServe India” means BioServe Biotechnologies (India) Pvt. Ltd., a company organized under the laws of India and a Subsidiary of CGI India.

“Board” means Borrower’s board of directors.

“Borrower” is defined in the preamble hereof.

“Borrower’s Books” are all Borrower’s books and records including ledgers, federal and state tax returns, records regarding Borrower’s assets or liabilities, the Collateral, business operations or financial condition, and all computer programs or storage or any equipment containing such information.

“Borrowing Base” is eighty percent (80.0%) of Eligible Accounts, as determined by Bank from Borrower’s most recent Borrowing Base Certificate; provided, however, that Bank has the right, after consultation with Borrower, to decrease the foregoing percentage in its good faith business judgment to mitigate the impact of events, conditions, contingencies, or risks which may adversely affect the Collateral or its value.

“Borrowing Base Certificate” is that certain certificate in the form attached hereto as Exhibit B.

“Borrowing Base Report” is defined in Section 6.2(a).

“Borrowing Resolutions” are, with respect to any Person, those resolutions adopted by such Person’s board of directors (and, if required under the terms of such Person’s Operating Documents, stockholders) and delivered by such Person to Bank approving the Loan Documents to which such Person is a party and the transactions contemplated thereby, together with a certificate executed by its secretary on behalf of such Person certifying (a) such Person has the authority to execute, deliver, and perform its obligations under each of the Loan Documents to which it is a party, (b) that set forth as a part of or attached as an exhibit to such certificate is a true, correct, and complete copy of the resolutions then in full force and effect authorizing and ratifying the execution, delivery, and performance by such Person of the Loan Documents to which it is a party, (c) the name(s) of the Person(s) authorized to execute the Loan Documents, including any Credit Extension request, on behalf of such Person, together with a sample of the true signature(s) of such Person(s), and (d) that Bank may conclusively rely on such certificate unless and until such Person shall have delivered to Bank a further certificate canceling or amending such prior certificate.

“Business Day” is any day that is not a Saturday, Sunday or a day on which Bank is closed.

“Cash Equivalents” means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any State thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more than one (1) year after its creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc.; and (c) Bank’s certificates of deposit issued maturing no more than one (1) year after issue.

“CD Accounts” is defined in Section 6.6(a).

“CGI China” means, individually and collectively, Gentris Hong Kong Limited and Gentris Shanghai Pharma Science & Technology Co. Ltd.

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“CGI India” means Cancer Genetics (India) Pvt. Ltd., a company organized under the laws of India and a Subsidiary of Parent.

“CGI Italia” means Cancer Genetics Italia S.r.l., a company organized under the laws of Italy and a Subsidiary of Parent.

“Claims” is defined in Section 12.3.

“Code” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the State of New York; provided, that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the State of New York, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions.

“Collateral” is any and all properties, rights and assets of Borrower described on Exhibit A.

“Collateral Account” is any Deposit Account, Securities Account, or Commodity Account.

“Commodity Account” is any “commodity account” as defined in the Code with such additions to such term as may hereafter be made.

“Compliance Certificate” is that certain certificate in the form attached hereto as Exhibit C.

“Contingent Obligation” is, for any Person, any direct or indirect liability, contingent or not, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation, in each case, directly or indirectly guaranteed, endorsed, co‑made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable; (b) any obligations for undrawn letters of credit for the account of that Person; and (c) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent Obligation” does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under any guarantee or other support arrangement.

“Control Agreement” is any control agreement entered into among the depository institution at which Borrower maintains a Deposit Account or the securities intermediary or commodity intermediary at which Borrower maintains a Securities Account or a Commodity Account, Borrower, and Bank pursuant to which Bank obtains control (within the meaning of the Code) over such Deposit Account, Securities Account, or Commodity Account.

“Copyrights” are any and all copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret.

“Credit Extension” is the Term Loan Advance, any Advance, any Overadvance or any other extension of credit by Bank for Borrower’s benefit.

“Currency” is coined money and such other banknotes or other paper money as are authorized by law and circulate as a medium of exchange.

“Current Liabilities” are all obligations and liabilities of Borrower to Bank, plus, without duplication, the aggregate amount of Borrower’s Total Liabilities that mature within one (1) year.

“Default Rate” is defined in Section 2.3(b).

“Deferred Revenue” is all amounts received or invoiced in advance of performance under contracts and not yet recognized as revenue.

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“Delaware Borrower” is defined in the preamble hereof.

“Deposit Account” is any “deposit account” as defined in the Code with such additions to such term as may hereafter be made.

“Designated Deposit Account” is the multicurrency account denominated in Dollars, account number _____________, maintained by Borrower with Bank.

“Dollars,”“dollars” or use of the sign “$” means only lawful money of the United States and not any other currency, regardless of whether that currency uses the “$” sign to denote its currency or may be readily converted into lawful money of the United States.

“Dollar Equivalent” is, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in a Foreign Currency, the equivalent amount therefor in Dollars as determined by Bank at such time on the basis of the then-prevailing rate of exchange in San Francisco, California, for sales of the Foreign Currency for transfer to the country issuing such Foreign Currency.

“EBITDA” shall mean (a) Net Income, plus (b) Interest Expense, plus (c) to the extent deducted in the calculation of Net Income, depreciation expense and amortization expense, plus (d) income tax expense.

“Effective Date” is defined in the preamble hereof.

“Eligible Accounts” means Accounts which arise in the ordinary course of Borrower’s business that meet all Borrower’s representations and warranties in Section 5.3. Bank reserves the right at any time after the Effective Date to adjust any of the criteria set forth below and to establish new criteria in its good faith business judgment. Unless Bank otherwise agrees in writing, Eligible Accounts shall not include:

(c)    Accounts for which the Account Debtor is Borrower’s Affiliate, officer, employee, or agent;

(d)    Accounts that the Account Debtor has not paid within one hundred twenty (120) days of invoice date regardless of invoice payment period terms;

(e)    Accounts with credit balances over one hundred twenty (120) days from invoice date;

(f)    Accounts owing from an Account Debtor if fifty percent (50%) or more of the Accounts owing from such Account Debtor have not been paid within one hundred twenty (120) days of invoice date;

(g)    Accounts owing from an Account Debtor which does not have its principal place of business in the United States, the United Kingdom, or Canada (except for Eligible Foreign Accounts);

(h)    Accounts billed from and/or payable to Borrower outside of the United States (sometimes called foreign invoiced accounts);

(i)    Accounts owing from an Account Debtor to the extent that Borrower is indebted or obligated in any manner to the Account Debtor (as creditor, lessor, supplier or otherwise - sometimes called “contra” accounts, accounts payable, customer deposits or credit accounts);

(j)    Accounts owing from an Account Debtor which is a United States government entity or any department, agency, or instrumentality thereof unless Borrower has assigned its payment rights to Bank and the assignment has been acknowledged under the Federal Assignment of Claims Act of 1940, as amended;

(k)    Accounts for demonstration or promotional equipment, or in which goods are consigned, or sold on a “sale guaranteed”, “sale or return”, “sale on approval”, or other terms if Account Debtor’s payment may be conditional;

(l)    Accounts owing from an Account Debtor where goods or services have not yet been rendered to the Account Debtor (sometimes called memo billings or pre-billings);

(m)    Accounts subject to contractual arrangements between Borrower and an Account Debtor where payments shall be scheduled or due according to completion or fulfillment requirements where the Account Debtor has a right of offset for damages suffered as a result of Borrower’s failure to perform in accordance with the contract (sometimes called contracts accounts receivable, progress billings, milestone billings, or fulfillment contracts);

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(n)    Accounts owing from an Account Debtor the amount of which may be subject to withholding based on the Account Debtor’s satisfaction of Borrower’s complete performance (but only to the extent of the amount withheld; sometimes called retainage billings);

(o)    Accounts subject to trust provisions, subrogation rights of a bonding company, or a statutory trust;

(p)    Accounts owing from an Account Debtor that has been invoiced for goods that have not been shipped to the Account Debtor unless Bank, Borrower, and the Account Debtor have entered into an agreement acceptable to Bank wherein the Account Debtor acknowledges that (i) it has title to and has ownership of the goods wherever located, (ii) a bona fide sale of the goods has occurred, and (iii) it owes payment for such goods in accordance with invoices from Borrower (sometimes called “bill and hold” accounts);

(q)    Accounts for which the Account Debtor has not been invoiced;

(r)    Accounts that represent non-trade receivables or that are derived by means other than in the ordinary course of Borrower’s business;

(s)    Accounts for which Borrower has permitted Account Debtor’s payment to extend beyond one hundred twenty (120) days;

(t)    Accounts arising from chargebacks, debit memos or other payment deductions taken by an Account Debtor;

(u)    Accounts arising from product returns and/or exchanges (sometimes called “warranty” or “RMA” accounts);

(v)    Accounts in which the Account Debtor disputes liability or makes any claim (but only up to the disputed or claimed amount), or if the Account Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out of business;

(w)    Accounts owing from an Account Debtor, whose total obligations to Borrower exceed twenty-five percent (25.0%) of all Accounts, except for Merck & Co. Inc. and Gilead Sciences, Inc., for which such percentage is thirty-five percent (35%), for the amounts that exceed that percentage, unless Bank approves in writing;

(x)    Accounts billed through third party billing services (including, without limitation, Accounts billed through XIFIN, Inc.); and

(y)    Accounts for which Bank in its good faith business judgment determines collection to be doubtful, including, without limitation, accounts represented by “refreshed” or “recycled” invoices.

“Eligible Foreign Accounts” means Accounts which are billed from and/or payable to Borrower in the United States, but are owing from an Account Debtor which does not have its principal place of business in the United States, the United Kingdom, or Canada, and are otherwise Eligible Accounts; provided, however, at no time shall the portion of Advances based upon the Eligible Foreign Accounts exceed twenty-five percent (25%) of the Borrowing Base. For the avoidance of doubt, Eligible Foreign Accounts shall include Novartis AG, Reckitt Benckiser Group Plc., and Alkermes Plc.

“Equipment” is all “equipment” as defined in the Code with such additions to such term as may hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing.

“ERISA” is the Employee Retirement Income Security Act of 1974, and its regulations.

“Event of Default” is defined in Section 8.

“Exchange Act” is the Securities Exchange Act of 1934, as amended.

“Final Payment” is a payment (in addition to and not a substitution for the regular monthly payments of principal plus accrued interest) equal to the original principal amount of the Term Loan Advance extended by Bank to Borrower multiplied by the Final Payment Percentage, due on the earliest to occur of (a) the Term Loan Maturity Date,

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(b) the acceleration of the Term Loan Advance, (c) the prepayment of the Term Loan Advance pursuant to Section 2.1.2(d) or 2.1.2(e), or (d) the termination of this Agreement.

“Final Payment Percentage” is three percent (3.0%).

“First Anniversary Fee” is defined in Section 2.4(b).

“Fixed Charge Coverage Ratio” is, for the subject testing period, a ratio of (a) Borrower’s (i) Adjusted EBITDA, minus (ii) unfunded capital expenditures, minus (iii) increases in capitalized development costs (if any), minus (iv) cash taxes, minus (v) cash dividends, to (b) Borrower’s Fixed Charges.

“Fixed Charges” are, for the subject testing period, the sum of (a) scheduled principal payments on all outstanding Indebtedness of Borrower for the following three (3) months, plus (b) actual interest payments on all outstanding Indebtedness of Borrower for the three (3) months then-ended.

“Foreign Currency” means lawful money of a country other than the United States.

“Foreign Subsidiary” means each of CGI India and CGI Italia.

“Funding Date” is any date on which a Credit Extension is made to or for the account of Borrower which shall be a Business Day.

“FX Contract” is any foreign exchange contract by and between Borrower and Bank under which Borrower commits to purchase from or sell to Bank a specific amount of Foreign Currency on a specified date.

“GAAP” is generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other Person as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination.

“General Intangibles” is all “general intangibles” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation, all Intellectual Property, claims, income and other tax refunds, security and other deposits, payment intangibles, contract rights, options to purchase or sell real or personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation key man, property damage, and business interruption insurance), payments of insurance and rights to payment of any kind.

“Governmental Approval” is any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration, filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority.

“Governmental Authority” is any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization.

“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations, and (d) Contingent Obligations.

“Indemnified Person” is defined in Section 12.3.

“Initial Audit” is Bank’s inspection of Borrower’s Accounts, the Collateral, and Borrower’s Books with results satisfactory to Bank in its sole and absolute discretion.

“Insolvency Proceeding” is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.

“Intellectual Property” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following:

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(a)    its Copyrights, Trademarks and Patents;

(b)    any and all trade secrets and trade secret rights, including, without limitation, any rights to unpatented inventions, know-how, operating manuals;

(c)    any and all source code;

(d)    any and all design rights which may be available to such Person;

(e)    any and all claims for damages by way of past, present and future infringement of any of the foregoing, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of the Intellectual Property rights identified above; and

(f)    all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents.

“Interest Expense” means for any fiscal period, interest expense (whether cash or non-cash) determined in accordance with GAAP for the relevant period ending on such date, including, in any event, interest expense with respect to any Credit Extension and other Indebtedness of Borrower, including, without limitation or duplication, all commissions, discounts, or related amortization and other fees and charges with respect to letters of credit and bankers’ acceptance financing and the net costs associated with interest rate swap, cap, and similar arrangements, and the interest portion of any deferred payment obligation (including leases of all types).

“Inventory” is all “inventory” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, including without limitation such inventory as is temporarily out of Borrower’s custody or possession or in transit and including any returned goods and any documents of title representing any of the above.

“Investment” is any beneficial ownership interest in any Person (including stock, partnership interest or other securities), and any loan, advance or capital contribution to any Person.

“Key Person” is each of Borrower’s (a) Chief Executive Officer, who is Panna Sharma as of the Effective Date, and (b) Chief Financial Officer, who is Edward Sitar as of the Effective Date.

“Letter of Credit” is a standby or commercial letter of credit issued by Bank upon request of Borrower based upon an application, guarantee, indemnity, or similar agreement.

“Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security interest or other encumbrance of any kind, whether voluntarily incurred or arising by operation of law or otherwise against any property.

“Loan Documents” are, collectively, this Agreement and any schedules, exhibits, certificates, notices, and any other documents related to this Agreement, the Perfection Certificate, any Bank Services Agreement, any subordination agreement, any note, or notes or guaranties executed by Borrower, and any other present or future agreement by Borrower with or for the benefit of Bank in connection with this Agreement or Bank Services, all as amended, restated, or otherwise modified.

“Lockbox” is defined in Section 6.11.

“Material Adverse Change” is (a) a material impairment in the perfection or priority of Bank’s Lien in the Collateral or in the value of such Collateral; (b) a material adverse change in the business, operations, or condition (financial or otherwise) of Borrower; (c) a material impairment of the prospect of repayment of any portion of the Obligations; or (d) Bank determines, based upon information available to it and in its reasonable judgment, that there is a substantial likelihood that Borrower shall fail to comply with one or more of the financial covenants in Section 6 during the next succeeding financial reporting period.

“Maturity Date” means the Revolving Line Maturity Date and/or the Term Loan Maturity Date.

“Monthly Financial Statements” is defined in Section 6.2(c).

“Net Income” means, as calculated with respect to Borrower only and not on a consolidated basis, for any period as at any date of determination, the net profit (or loss), after provision for taxes, of Borrower for such period taken as a single accounting period.

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“Obligations” are Borrower’s obligations to pay when due any debts, principal, interest, fees, Bank Expenses, the First Anniversary Fee, the Prepayment Premium, the Final Payment, and other amounts Borrower owes Bank now or later, whether under this Agreement, the other Loan Documents, or otherwise, including, without limitation, any interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and to perform Borrower’s duties under the Loan Documents.

“Operating Documents” are, for any Person, such Person’s formation documents, as certified by the Secretary of State (or equivalent agency) of such Person’s jurisdiction of organization on a date that is no earlier than thirty (30) days prior to the Effective Date, and, (a) if such Person is a corporation, its bylaws in current form, (b) if such Person is a limited liability company, its limited liability company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership agreement (or similar agreement), each of the foregoing with all current amendments or modifications thereto.

“Overadvance” is defined in Section 2.2.

“Parent” is defined in the preamble hereof.

“Patents” means all patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.

“Payment/Advance Form” is that certain form attached hereto as Exhibit D

“Payment Date” means the first (1^st) calendar day of each month.

“Perfection Certificate” is defined in Section 5.1.

“Permitted Indebtedness” is:

(a)    Borrower’s Indebtedness to Bank under this Agreement and the other Loan Documents;

(b)    Indebtedness existing on the Effective Date and shown on the Perfection Certificate;

(c)    Subordinated Debt;

(d)    unsecured Indebtedness to trade creditors incurred in the ordinary course of business;

(e)    Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of business;

(f)    Indebtedness secured by Liens permitted under clauses (a) and (c) of the definition of “Permitted Liens” hereunder;

(g)    reimbursement obligations in connection with letters of credit issued by JP Morgan Chase Bank secured by CD Accounts, up to a maximum principal amount incurred not to exceed Three Hundred Six Thousand Dollars ($306,000.00) plus accrued interest; and

(h)    extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (g) above, provided that the principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be.

“Permitted Investments” are:

(a)    Investments (including, without limitation, Subsidiaries) existing on the Effective Date and shown on the Perfection Certificate;

(b)    Investments consisting of Cash Equivalents; and

(c)    Investments by Borrower in BioServe India, CGI India, CGI Italia and CGI China not to exceed One Million Dollars ($1,000,000.00) in the aggregate for any rolling four (4) quarter period, provided no Event of Default exists and no Event of Default would result from such Investment.

“Permitted Liens” are:

(a)    Liens existing on the Effective Date and shown on the Perfection Certificate or arising under this Agreement and the other Loan Documents;

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(b)    Liens for taxes, fees, assessments or other government charges or levies, either (i) not due and payable or (ii) being contested in good faith and for which Borrower maintains adequate reserves on its Books, provided that no notice of any such Lien has been filed or recorded under the Internal Revenue Code of 1986, as amended, and the Treasury Regulations adopted thereunder;

(c)    purchase money Liens or capital leases (i) on Equipment acquired or held by Borrower incurred for financing the acquisition of the Equipment securing no more than Five Hundred Thousand Dollars ($500,000.00) in the aggregate amount outstanding, or (ii) existing on Equipment when acquired, if the Lien is confined to the property and improvements and the proceeds of the Equipment;

(d)    Liens on the CD Accounts in favor of JP Morgan Chase Bank securing the Indebtedness described in subsection (g) of the definition of Permitted Indebtedness; and

(e)    Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (d), but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness may not increase.

“Person” is any individual, sole proprietorship, partnership, limited liability company, joint venture, company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.

“Prepayment Premium” shall be an additional fee payable to Bank in amount equal to:

(a)     for a prepayment made on or prior to the first (1^st) anniversary of the Funding Date of the Term Loan Advance, three percent (3.0%) of the original principal amount of the Term Loan Advance extended by Bank to Borrower;

(b)     for a prepayment made after the first (1^st) anniversary of the Funding Date of the Term Loan Advance, but on or prior to the second (2^nd) anniversary of the Funding Date of the Term Loan Advance, two percent (2.0%) of the original principal amount of the Term Loan Advance extended by Bank to Borrower; and

(c)    for a prepayment made after the second (2^nd) anniversary of the Funding Date of the Term Loan Advance, but prior to the Term Loan Maturity Date, one percent (1.0%) of the original principal amount of the Term Loan Advance extended by Bank to Borrower.

“Prime Rate” is the rate of interest per annum from time to time published in the money rates section of The Wall Street Journal or any successor publication thereto as the “prime rate” then in effect; provided that if such rate of interest, as set forth from time to time in the money rates section of The Wall Street Journal, becomes unavailable for any reason as determined by Bank, the “Prime Rate” shall mean the rate of interest per annum announced by Bank as its prime rate in effect at its principal office in the State of California (such Bank announced Prime Rate not being intended to be the lowest rate of interest charged by Bank in connection with extensions of credit to debtors).

“Quick Assets” is, on any date, Borrower’s unrestricted cash and Cash Equivalents maintained with Bank plus net billed accounts receivable, determined according to GAAP.

“Registered Organization” is any “registered organization” as defined in the Code with such additions to such term as may hereafter be made.

“Requirement of Law” is as to any Person, the organizational or governing documents of such Person, and any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

“Responsible Officer” is any of the Chief Executive Officer, President, Chief Financial Officer and Controller of Borrower.

“Restricted License” is any material license or other agreement with respect to which Borrower is the licensee (a) that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or any other property, or (b) for which a default under or termination of could interfere with the Bank’s right to sell any Collateral.

“Revolving Line” is an aggregate principal amount equal to Four Million Dollars ($4,000,000.00).

-27-

“Revolving Line Maturity Date” is May 7, 2017. [Date which is two (2) years after the Effective Date—to be completed at closing]

“SEC” shall mean the Securities and Exchange Commission, any successor thereto, and any analogous Governmental Authority.

“Securities Account” is any “securities account” as defined in the Code with such additions to such term as may hereafter be made.

“Subordinated Debt” is indebtedness incurred by Borrower subordinated to all of Borrower’s now or hereafter indebtedness to Bank (pursuant to a subordination, intercreditor, or other similar agreement in form and substance satisfactory to Bank entered into between Bank and the other creditor), on terms acceptable to Bank.

“Subsidiary” is, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless the context otherwise requires, each reference to a Subsidiary herein shall be a reference to a Subsidiary of Borrower.

“Term LoanAdvance” is defined in Section 2.1.2(a).

“Term Loan Maturity Date” is April 1, 2019.

“Total Liabilities” is on any day, obligations that should, under GAAP, be classified as liabilities on Borrower’s balance sheet, including all Indebtedness.

“Trademarks” means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.

“Transfer” is defined in Section 7.1.

“Unused Revolving Line Facility Fee” is defined in Section 2.4(c).

[Signature page follows.]

-28-

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the Effective Date.

BORROWER:

CANCER GENETICS, INC.

By /s/ Edward J. Sitar    

Name: Edward J. Sitar    

Title: Chief Financial Officer    

GENTRIS, LLC

By /s/ Edward J. Sitar    

Name: Edward J. Sitar    

Title: Chief Financial Officer    

BANK:

SILICON VALLEY BANK

By /s/ Sheena Discher    

Name: Sheena Discher    

Title: Vice President    

EXHIBIT A – COLLATERAL DESCRIPTION

The Collateral consists of all of Borrower’s right, title and interest in and to the following personal property:

All goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license agreements, franchise agreements, General Intangibles (except as provided below), commercial tort claims, documents, instruments (including any promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts, certificates of deposit, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and all other investment property, supporting obligations, and financial assets, whether now owned or hereafter acquired, wherever located; and

all Borrower’s Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing.

Notwithstanding the foregoing, the Collateral does not include (a) more than sixty-five percent (65%) of the presently existing and hereafter arising issued and outstanding shares of capital stock owned by Borrower of any Foreign Subsidiary which shares entitle the holder thereof to vote for directors or any other matter, or (b) any Intellectual Property; provided, however, the Collateral shall include all Accountsand all proceeds of Intellectual Property.

Pursuant to the terms of a certain negative pledge arrangement with Bank, Borrower has agreed not to encumber any of its Intellectual Property without Bank’s prior written consent.

Signature Page to Loan and Security Agreement

EXHIBIT B - BORROWING BASE CERTIFICATE

Borrower: Cancer Genetics, Inc. and Gentris, LLC
Lender:    Silicon Valley Bank
Commitment Amount: $4,000,000.00

ACCOUNTS RECEIVABLE
1Accounts Receivable (invoiced) Book Value as of ____________________	$_______________
2Additions (Please explain on next page)	$_______________
3Less: Intercompany / Employee / Non-Trade Accounts	$_______________
4NET TRADE ACCOUNTS RECEIVABLE	$_______________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
5120 Days Past Invoice Date	$_______________
6Credit Balances over 120 Days	$_______________
7Balance of 50% over 120 Day Accounts (Cross-Age or Current Affected)	$_______________
8Foreign Account Debtor Accounts (other than Eligible Foreign Accounts)	$_______________
9Foreign Invoiced and/or Collected Accounts	$_______________
10Contra / Customer Deposit Accounts	$_______________
11U.S. Government Accounts	$_______________
12Promotion or Demo Accounts; Guaranteed Sale or Consignment Sale Accounts	$_______________
13Accounts with Memo or Pre-Billings	$_______________
14Contract Accounts; Accounts with Progress / Milestone Billings	$_______________
15Accounts for Retainage Billings	$_______________
16Trust / Bonded Accounts	$_______________
17Bill and Hold Accounts	$_______________
18Unbilled Accounts	$_______________
19Non-Trade Accounts (If not already deducted above)	$_______________
20Accounts with Extended Term Invoices (Net 120 +)	$_______________
21Chargebacks Accounts / Debit Memos	$_______________
22Product Returns / Exchanges	$_______________
23Disputed Accounts; Insolvent Account Debtor Accounts	$_______________
24Other (Please explain on next page)	$_______________
25Concentration Limits	$_______________
26Accounts billed through third party billing services	$_______________
27TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS	$_______________
28Eligible Accounts (#4 minus #27)	$_______________
29ELIGIBLE AMOUNT OF ACCOUNTS (80% of #28)	$_______________
BALANCES
30Maximum Loan Amount	$4,000,000.00
31Total Funds Available (Lesser of #30 or #29)	$_______________
32Present balance owing on Line of Credit	$_______________
33RESERVE POSITION (#31 minus #32)	$_______________

1

[Continued on following page.]

2

Explanatory comments from previous page:

_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________                

The undersigned represents and warrants that this is true, complete and correct, and that the information in this Borrowing Base Certificate complies with the representations and warranties in the Loan and Security Agreement between the undersigned and Silicon Valley Bank.

COMMENTS: By: ___________________________ Authorized Signer Date: BANK USE ONLY Received by: _____________________ AUTHORIZED SIGNER Date: __________________________ Verified: ________________________ AUTHORIZED SIGNER Date: ___________________________ Compliance Status: Yes No

3

EXHIBIT C

COMPLIANCE CERTIFICATE

TO:    Silicon Valley Bank                        Date:

FROM: Cancer Genetics, Inc. and Gentris, LLC

The undersigned authorized officer of Cancer Genetics, Inc. and Gentris, LLC (“Borrower”) certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”):

(1) Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted below; (2) there are no Events of Default; (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement; and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank.

Attached are the required documents supporting the certification. The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.

Please indicate compliance status by circling Yes/No under “Complies” column.
Reporting Covenants	Required	Complies
Monthly financial statements (consolidated and consolidating) with Compliance Certificate	Monthly within 30 days	Yes No
Annual financial statement (CPA Audited)	FYE within 150 days	Yes No
10‑Q, 10‑K and 8-K	Within 5 days after filing with SEC	Yes No
Borrowing Base Certificate A/R & A/P Agings	Monthly within 30 days	Yes No
Deferred Revenue and Backlog reports	Monthly within 30 days	Yes No
Board-approved projections	FYE within 60 days	Yes No

Financial Covenants	Required	Actual	Complies
Maintain, on a Monthly Basis, either of the following:
Adjusted Quick Ratio	1.50:1.0	_____:1.0	Yes No
Fixed Charge Coverage Ratio	1.25:1.0	_____:1.0	Yes No

The following financial covenant analyses and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.

Other Matters

1

Have there been any amendments of or other changes to the capitalization table of Borrower and to the Operating Documents of Borrower or any of its Subsidiaries? If yes, provide copies of any such amendments or changes with this Compliance Certificate. Yes No

The following are the exceptions with respect to the certification above: (If no exceptions exist, state “No exceptions to note.”)

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

CANCER GENETICS, INC. By: Name: Title: GENTRIS, LLC By: Name: Title: BANK USE ONLY Received by: _____________________ AUTHORIZED SIGNER Date: _________________________ Verified: ________________________ AUTHORIZED SIGNER Date: _________________________ Compliance Status: Yes No

Schedule 1 to Compliance Certificate

Financial Covenants of Borrower

In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall govern.

Dated:    ____________________

Maintain at all times, subject to periodic reporting as of the last day of each month, unless otherwise noted, computed with respect to the Borrower only, and not on a consolidated basis, either of the following milestones:

I.    AdjustedQuick Ratio (Section 6.7(a)

Required:    1.50:1.00

Actual:        _________

A.	Aggregate value of the unrestricted cash and Cash Equivalents of Borrower maintained with Bank	$
B.	Aggregate value of the net billed accounts receivable of Borrower	$
C.	Quick Assets (the sum of lines A and B)	$
D.	Aggregate value of obligations and liabilities of Borrower to Bank	$
E.	Aggregate value of obligations that should, under GAAP, be classified as liabilities on Borrower’s balance sheet, including all Indebtedness and not otherwise reflected in line D above, that mature within one (1) year	$
F.	Current Liabilities (the sum of lines D and E)	$
G	Aggregate value of amounts received or invoiced in advance of performance under contracts and not yet recognized as revenue.	$
H.	Adjusted Quick Ratio (line D divided by (line F minus line G))	_______

Is line H equal to or greater than 1.50:1:00?

  No, not in compliance    

  Yes, in compliance     

  N/A (in compliance with Fixed Charge Coverage Ratio)

II.    Fixed Charge Coverage Ratio (Section 6.7(b))

Required:    1.25:1.00

Actual:        ___________

A.	Net Income of Borrower	$
B.	Interest Expense of Borrower	$
C.	To the extent included in the determination of Net Income:	$
	1. depreciation expense of Borrower	$
	2. amortization expense of Borrower	$
	3. income tax expense of Borrower	$
	4. The sum of lines 1 through 3	$
D.	EBITDA (line A plus line B plus line C(4))	$
E.	unfunded capital expenditures of Borrower	$
F.	increases in capitalized development costs of Borrower (if any)	$
G.	cash taxes of Borrower	$
H.	cash dividends of Borrower	$
I.	Adjusted EBITDA (line D minus lines E through H)	$
J.	Borrower’s Fixed Charges:
	1. scheduled principal payments on all outstanding Indebtedness of Borrower for the following three (3) months	$
	2. actual interest payments on all outstanding Indebtedness of Borrower for the three (3) months then-ended	$
	3. Sum of lines J(1) and J(2)	$
K	Fixed Charge Coverage Ratio (line I divided by line J(3))	________

Is line K equal to or greater than 1.25:1:00?

  No, not in compliance    

  Yes, in compliance     

  N/A (in compliance with Adjusted Quick Ratio)

2

EXHIBIT D– LOAN PAYMENT/ADVANCE REQUEST FORM

DEADLINE FOR SAME DAY PROCESSING IS NOON EASTERN TIME

Fax To:     Date: _____________________

LOAN PAYMENT:            Cancer Genetics, Inc. and Gentris, LLC

From Account #________________________________    To Account #__________________________________________________

(Deposit Account #)                        (Loan Account #)

Principal $____________________________________    and/or Interest $________________________________________________

Authorized Signature:    Phone Number:

Print Name/Title:

LOAN ADVANCE:

Complete Outgoing Wire Request section below if all or a portion of the funds from this loan advance are for an outgoing wire.

From Account #________________________________    To Account #__________________________________________________

(Loan Account #)                        (Deposit Account #)

Amount of Advance $___________________________

All Borrower’s representations and warranties in the Loan and Security Agreement are true, correct and complete in all material respects on the date of the request for an advance; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date:

Authorized Signature:    Phone Number:

Print Name/Title:

OUTGOING WIRE REQUEST:

Complete only if all or a portion of funds from the loan advance above is to be wired.

Deadline for same day processing is noon, Eastern Time

Beneficiary Name: _____________________________    Amount of Wire: $

Beneficiary Bank: ______________________________    Account Number:

City and State:

Beneficiary Bank Transit (ABA) #:     Beneficiary Bank Code (Swift, Sort, Chip, etc.):

(For International Wire Only)

Intermediary Bank:     Transit (ABA) #:

For Further Credit to:

Special Instruction:

By signing below, I (we) acknowledge and agree that my (our) funds transfer request shall be processed in accordance with and subject to the terms and conditions set forth in the agreements(s) covering funds transfer service(s), which agreements(s) were previously received and executed by me (us).

Authorized Signature: ___________________________    2^nd Signature (if required): _______________________________________

Print Name/Title: ______________________________    Print Name/Title: ______________________________________________

Telephone #:     Telephone #:

1

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Panna L. Sharma, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cancer Genetics, Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: May 11, 2015	/s/ Panna L. Sharma
	Panna L. Sharma
	President and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Edward J. Sitar, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cancer Genetics, Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: May 11, 2015	/s/ Edward J. Sitar
	Edward J. Sitar
	Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Cancer Genetics, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Panna L. Sharma, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 11, 2015

/s/ Panna L. Sharma

Panna L. Sharma

President and Chief Executive Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Cancer Genetics, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Edward J. Sitar, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 11, 2015

/s/ Edward J. Sitar

Edward J. Sitar

Chief Financial Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

XML

Equity Incentive Plans - Effects of Stock-Based Compensation Related to Stock Option Awards (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Total stock-based compensation	$ 696,353	$ 530,122
Cost of Revenues [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Total stock-based compensation	49,186	20,412
Research and Development [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Total stock-based compensation	95,073	14,102
General and Administrative [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Total stock-based compensation	520,737	468,855
Sales and Marketing [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Total stock-based compensation	$ 31,357	$ 26,753

XML

Related Party Transactions - Additional Information (Detail) (USD $)	0 Months Ended	3 Months Ended		0 Months Ended		1 Months Ended
	Sep. 15, 2010	Mar. 31, 2015	Mar. 31, 2014 extension	Jan. 06, 2014	Apr. 01, 2014	Aug. 31, 2010	Dec. 31, 2014	Oct. 31, 2013
Related Party Transaction [Line Items]
Number of revolving line of credit extensions facility			8
Warrants exercised (in shares)		0
Convertible shares issued to common stock		9,831,169					9,821,169	10,000
Shares granted		97,000
Consulting agreement period	3 years
Financial Guarantee [Member]
Related Party Transaction [Line Items]
Common stock purchased			284,000
Warrants exercised (in shares)		440,113
John Pappajohn [Member]
Related Party Transaction [Line Items]
Common stock purchased		202,630
Warrants adjusted in conjunction with IPO		436,079
Warrants outstanding per share		15
Additional amount of loan received		6,750,000
John Pappajohn [Member] | Financial Guarantee [Member]
Related Party Transaction [Line Items]
Common stock purchased			1,051,506
Warrants adjusted in conjunction with IPO		352,312
Warrants outstanding per share		15
John Pappajohn [Member] | IPO [Member]
Related Party Transaction [Line Items]
Convertible shares issued to common stock		675,000
Conversion price of notes		10
Chairman of the Board [Member]
Related Party Transaction [Line Items]
Compensation for serving as chairman of the board				100,000
Chairman of the Board [Member] | 2011 Equity Plan [Member]
Related Party Transaction [Line Items]
Shares granted				100,000
Equity Dynamics, Inc. [Member]
Related Party Transaction [Line Items]
Agreement with related party, fee					10,000	10,000
Due to related party		0
Agreement with related party, consulting fee		30,000
Dr. Chaganti [Member]
Related Party Transaction [Line Items]
Consulting and advisory services fee		5,000
Agreement with related party, consulting fee		15,000	15,000
Agreement with related party, one-time payment required	50,000
Agreement with related party, percentage of net revenues required to be paid	1.00%
Patents expense paid		150,000
Number of patents were issued		3
Dr. Chaganti [Member] | 2011 Equity Plan [Member]
Related Party Transaction [Line Items]
Shares granted		200,000
Common stock, shares purchased price per share		15.89
Award vesting period		4 years
Compensation for Serving as Chairman of Board [Member] | Chairman of the Board [Member]
Related Party Transaction [Line Items]
Options granted period				10 years
Number of installments				2
Consulting and Advisory Agreement [Member]
Related Party Transaction [Line Items]
Non-cash stock-based compensation expense		62,500	0
Restricted Stock [Member]
Related Party Transaction [Line Items]
Granted		10,000
Restricted Stock [Member] | Chairman of the Board [Member]
Related Party Transaction [Line Items]
Granted				25,000

XML

Fair Value Measurements Fair Value Measurements - Summary of Fair Value of Notes Payable (Details) (Contingent Consideration Liability [Member], Fair Value, Inputs, Level 3 [Member], Fair value measurements, recurring [Member], USD $)	3 Months Ended
	Mar. 31, 2015
BioServe [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Beginning balance	$ 534,828
Change in fair value	90,473
Ending balance	625,301
Gentris [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Beginning balance	293,400
Change in fair value	(162,000)
Ending balance	$ 131,400

XML

Earnings Per Share - Summary of Potentially Dilutive Adjustments to Weighted Average Number of Common Shares Excluded from Calculation (Detail)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from calculation (in shares)	3,146,120	2,634,291
Common Stock Purchase Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from calculation (in shares)	1,136,078	1,781,199
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from calculation (in shares)	1,888,375	848,092
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from calculation (in shares)	121,667	5,000

XML

Organization, Description of Business, Basis of Presentation and Acquistion - Additional Information (Detail) (USD $)	3 Months Ended	0 Months Ended
	Mar. 31, 2015	Jul. 16, 2014	Aug. 18, 2014
Acquisition [Abstract]
Pro forma revenue of acquirees since acquisition date	$ 2,166,665
Pro forma earnings (loss) of acquirees since acquisition date	(185,502)
Gentris [Member]
Business Acquisition [Line Items]
Consideration transferred		4,800,000
BioServe [Member]
Business Acquisition [Line Items]
Consideration transferred			1,100,000
Goodwill impairment loss	0
Adjustment to goodwill	193,000
Adjustment to fixed assets	(136,000)
Adjustment to other assets	(38,000)
Adjustment to other current assets	$ (19,000)

XML

Fair Value of Warrants - Assumptions Used in Computing Fair Value of Derivative Warrants (Detail) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Series B Preferred Stock [Member]
Class of Warrant or Right [Line Items]
Exercise Price	$ 10.00	$ 10.00	$ 10.00
Expected life (years)	7 months 17 days	1 year 8 months 19 days	10 months 17 days
Expected volatility	49.12%	46.60%	49.95%
Risk-free interest rate	0.14%	0.33%	0.25%
Expected dividend yield	0.00%	0.00%	0.00%
Debt Guarantee [Member]
Class of Warrant or Right [Line Items]
Exercise Price		$ 10.00
Expected life (years)		7 months 6 days
Expected volatility		49.01%
Risk-free interest rate		0.08%
Expected dividend yield		0.00%
Consulting [Member]
Class of Warrant or Right [Line Items]
Exercise Price	$ 10.00		$ 10.00
Expected life (years)	10 months 24 days		1 year 1 month 21 days
Expected volatility	46.92%		49.25%
Risk-free interest rate	0.26%		0.25%
Expected dividend yield	0.00%		0.00%
Financing [Member]
Class of Warrant or Right [Line Items]
Exercise Price	$ 10.00		$ 10.00
Expected life (years)	11 months 23 days		1 year 2 months 23 days
Expected volatility	46.69%		50.23%
Risk-free interest rate	0.26%		0.25%
Expected dividend yield	0.00%		0.00%

XML

Equity Incentive Plans - Weighted-Average Assumptions Used to Estimate Fair Value of Options Granted (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Non-Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Volatility	70.50%	72.66%
Risk free interest rate	1.88%	2.73%
Dividend yield	0.00%	0.00%
Term (years)	9 years 1 month 2 days	9 years 6 months 11 days
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Volatility	68.98%
Risk free interest rate	1.70%
Dividend yield	0.00%
Term (years)	6 years 3 months 22 days
Weighted-average fair value of options granted during the period	5.83

XML

Joint Venture Agreement - Additional Information (Detail) (USD $)	1 Months Ended	3 Months Ended
	Oct. 31, 2013	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2015	Dec. 31, 2014
Schedule of Equity Method Investments [Line Items]
Common stock, shares issued (in shares)	10,000	9,831,169				9,821,169
Additional expense related to shares issued	$ 175,000			$ 231,000
Joint venture net loss		207,458	11,755
Joint Venture Agreement [Member]
Schedule of Equity Method Investments [Line Items]
Percentage of outstanding membership interests in joint venture		50.00%
Investment in JV	1,000,000	1,000,000
Fair value of capital contribution in joint venture		6,000,000
Joint Venture Agreement [Member] | Maximum [Member]
Schedule of Equity Method Investments [Line Items]
Investment in JV		4,000,000
Joint Venture Agreement [Member] | Scenario, Forecast [Member]
Schedule of Equity Method Investments [Line Items]
Investment in JV					1,000,000
Research and Development [Member]
Schedule of Equity Method Investments [Line Items]
Joint venture net loss		207,000	12,000
Equity Method Investee [Member]
Schedule of Equity Method Investments [Line Items]
Due from Related Parties, Current		$ 0				10,000

XML

Sale of Net Operating Loss

3 Months Ended

Mar. 31, 2015

Income Tax Disclosure [Abstract]

Sale of Net Operating Losses

Sale of Net Operating Losses

In January 2014, we executed a sale of $22,301,643 of gross state NOL carryforwards resulting in the receipt of $1,813,941. The Company transferred the NOL carryforwards through the Technology Business Tax Certificate Transfer Program sponsored by the New Jersey Economic Development Authority.

XML

Fair Value of Warrants - Summary of Derivative Warrant Activity (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Class of Warrants Outstanding [Roll Forward]
Fair value of warrants outstanding as of December 31, 2014	$ 52,000
Change in fair value of warrant liability	15,000	44,000
Fair value of warrants outstanding as of March 31, 2015	67,000
Financing [Member]
Class of Warrants Outstanding [Roll Forward]
Fair value of warrants outstanding as of December 31, 2014	44,000
Change in fair value of warrant liability	12,000
Fair value of warrants outstanding as of March 31, 2015	56,000
Series B Preferred Stock [Member]
Class of Warrants Outstanding [Roll Forward]
Fair value of warrants outstanding as of December 31, 2014	8,000
Change in fair value of warrant liability	3,000
Fair value of warrants outstanding as of March 31, 2015	$ 11,000

XML

Revenue and Accounts Receivable - Schedule of Accounts Receivable by Service Type (Detail) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for doubtful accounts	$ (472,571)	$ (251,176)
Accounts receivable, net	4,824,394	5,028,620
Biopharma Services [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable, gross	3,389,388	3,203,335
Clinical Services [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable, gross	1,763,461	1,925,176
Discovery Services [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable, gross	$ 144,116	$ 151,285

XML

Revenue and Accounts Receivable - Schedule of Revenue by Service Type (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Revenue	$ 4,370,327	$ 1,430,375
Biopharma Services [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Revenue	3,331,090	491,250
Clinical Services [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Revenue	873,041	939,125
Discovery Services [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Revenue	$ 166,196	$ 0

XML

Fair Value Measurements - Summary of Financial Liabilities Measured at Fair Value on Recurring Basis (Detail) (Fair value measurements, recurring [Member], USD $)	Mar. 31, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Line of credit	$ 67,000	$ 52,000
Total liabilities fair value	823,701	880,228
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Line of credit	0	0
Total liabilities fair value	0	0
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Line of credit	0	0
Total liabilities fair value	0	0
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Line of credit	67,000	52,000
Total liabilities fair value	823,701	880,228
Gentris [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	131,400	293,400
Gentris [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	0	0
Gentris [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	0	0
Gentris [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	131,400	293,400
BioServe [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Note payable to VenturEast	625,301	534,828
BioServe [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Note payable to VenturEast	0	0
BioServe [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Note payable to VenturEast	0	0
BioServe [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Note payable to VenturEast	$ 625,301	$ 534,828

XML

Revenue and Accounts Receivable - Allowance for Doubtful Accounts (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Allowance for Doubtful Accounts Receivable [Roll Forward]
Balance, December 31, 2014	$ 251,176
Bad debt expense	221,395	0
Balance, March 31, 2015	$ 472,571

XML

Revenue and Accounts Receivable - Schedule of Product Information (Details) (Payor [Member], Sales Revenue, Net [Member])	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Product Information [Line Items]
Percentage of revenue	20.00%	66.00%
Medicare [Member]
Product Information [Line Items]
Percentage of revenue	6.00%	18.00%
Other insurers [Member]
Product Information [Line Items]
Percentage of revenue	7.00%	20.00%
Other healthcare facilities [Member]
Product Information [Line Items]
Percentage of revenue	7.00%	28.00%

XML

Earnings Per Share

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Earnings Per Share

Earnings Per Share

For purposes of this calculation, stock warrants, outstanding stock options and unvested restricted shares are considered common stock equivalents using the treasury stock method, and are the only such equivalents outstanding. For all periods presented, all equivalent units outstanding were anti-dilutive.

The following table summarizes equivalent units outstanding that were excluded from the earnings per share calculation because their effects were anti-dilutive:

	Three Months Ended March 31,
	2015	2014
Common stock purchase warrants	1,136,078	1,781,199
Stock options	1,888,375	848,092
Restricted shares of common stock	121,667	5,000
	3,146,120	2,634,291

XML

Revenue and Accounts Receivable - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2015 site	Mar. 31, 2014 site
Accounts, Notes, Loans and Financing Receivable [Line Items]
Sites accounted for approximately 10% or more of our revenue	2	1
Payor [Member] | Testing Volume [Member] | Clinical Testing [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of benchmark	72.00%	63.00%
Payor [Member] | Testing Volume [Member] | Community Hospitals [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of benchmark	24.00%	32.00%
Payor [Member] | Sales [Member] | 10% or More Clinical Revenue [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of benchmark	51.00%	33.00%
Payor [Member] | Sales [Member] | Customer One [Member] | Biopharma Services [Member] | 10% or More Clinical Revenue [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of benchmark	29.00%
Payor [Member] | Sales [Member] | Customer Two [Member] | Biopharma Services [Member] | 10% or More Clinical Revenue [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of benchmark	22.00%

XML

Warrants - Summary of Warrant Activity (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015
Class of Warrant or Right [Line Items]
Warrants, Exercise Price (usd per share)	$ 13.47
Class of Warrants Outstanding [Roll Forward]
Warrants outstanding, beginning balance (in shares)	1,136,078
Warrants exercised (in shares)	0
Warrants outstanding, ending balance (in shares)	1,136,078
Warrant Issued With [Member] | Warrants Other Warrants [Member]
Class of Warrant or Right [Line Items]
Warrants, Exercise Price (usd per share)	$ 13.72
Class of Warrants Outstanding [Roll Forward]
Warrants outstanding, beginning balance (in shares)	1,060,863
Warrants exercised (in shares)	0
Warrants outstanding, ending balance (in shares)	1,060,863
Warrant Issued For [Member] | Warrant Derivative [Member]
Class of Warrant or Right [Line Items]
Warrants, Exercise Price (usd per share)	$ 10.00
Class of Warrants Outstanding [Roll Forward]
Warrants outstanding, beginning balance (in shares)	75,215
Warrants exercised (in shares)	0
Warrants outstanding, ending balance (in shares)	75,215
Debt Guarantee [Member] | Warrant Issued With [Member] | Warrants Other Warrants [Member]
Class of Warrant or Right [Line Items]
Warrants, Exercise Price (usd per share)	$ 15.00
Class of Warrants Outstanding [Roll Forward]
Warrants outstanding, beginning balance (in shares)	352,312
Warrants exercised (in shares)	0
Warrants outstanding, ending balance (in shares)	352,312
Series B Preferred Stock [Member] | Warrant Issued For [Member] | Warrant Derivative [Member]
Class of Warrant or Right [Line Items]
Warrants, Exercise Price (usd per share)	$ 10.00
Class of Warrants Outstanding [Roll Forward]
Warrants outstanding, beginning balance (in shares)	15,015
Warrants exercised (in shares)	0
Warrants outstanding, ending balance (in shares)	15,015
Financing [Member] | Warrant Issued With [Member] | Warrants Other Warrants [Member]
Class of Warrant or Right [Line Items]
Warrants, Exercise Price (usd per share)	$ 10.00
Class of Warrants Outstanding [Roll Forward]
Warrants outstanding, beginning balance (in shares)	243,334
Warrants exercised (in shares)	0
Warrants outstanding, ending balance (in shares)	243,334
Financing [Member] | Warrant Issued With [Member] | Warrants Other Warrants [Member]
Class of Warrant or Right [Line Items]
Warrants, Exercise Price (usd per share)	$ 15.00
Class of Warrants Outstanding [Roll Forward]
Warrants outstanding, beginning balance (in shares)	436,079
Warrants exercised (in shares)	0
Warrants outstanding, ending balance (in shares)	436,079
Consulting [Member] | Warrant Issued With [Member] | Warrants Other Warrants [Member]
Class of Warrant or Right [Line Items]
Warrants, Exercise Price (usd per share)	$ 10.00
Class of Warrants Outstanding [Roll Forward]
Warrants outstanding, beginning balance (in shares)	29,138
Warrants exercised (in shares)	0
Warrants outstanding, ending balance (in shares)	29,138
Financing [Member] | Warrant Issued For [Member] | Warrant Derivative [Member]
Class of Warrant or Right [Line Items]
Warrants, Exercise Price (usd per share)	$ 10.00
Class of Warrants Outstanding [Roll Forward]
Warrants outstanding, beginning balance (in shares)	60,000
Warrants exercised (in shares)	0
Warrants outstanding, ending balance (in shares)	60,000
Consulting [Member] | Warrant Issued For [Member] | Warrant Derivative [Member]
Class of Warrant or Right [Line Items]
Warrants, Exercise Price (usd per share)	$ 10.00
Class of Warrants Outstanding [Roll Forward]
Warrants outstanding, beginning balance (in shares)	200
Warrants exercised (in shares)	0
Warrants outstanding, ending balance (in shares)	200

XML

Consolidated Balance Sheets (Unaudited) (USD $)	Mar. 31, 2015	Dec. 31, 2014
ASSETS
Cash and cash equivalents	$ 22,311,730	$ 25,554,064
Accounts receivable, net of allowance for doubtful accounts	4,824,394	5,028,620
Other current assets	1,149,428	1,172,750
Total current assets	28,285,552	31,755,434
FIXED ASSETS, net of accumulated depreciation	4,045,565	4,310,126
OTHER ASSETS
Restricted cash	6,300,000	6,300,000
Patents	534,101	502,767
Investment in joint venture	840,286	1,047,744
Goodwill	3,187,495	3,187,495
Security deposits	1,564	1,564
Total other assets	10,863,446	11,039,570
Total Assets	43,194,563	47,105,130
CURRENT LIABILITIES
Accounts payable and accrued expenses	3,753,224	3,762,567
Obligations under capital leases, current portion	59,652	58,950
Deferred revenue	267,396	544,446
Total current liabilities	4,080,272	4,365,963
Obligations under capital leases	285,188	300,385
Deferred rent payable	330,125	347,840
Line of credit	6,000,000	6,000,000
Warrant liability	67,000	52,000
Acquisition note payable	634,394	560,341
Deferred revenue, long-term	825,787	924,850
Total liabilities	12,222,766	12,551,379
Total liabilities
Preferred stock, authorized 9,764,000 shares, $0.0001 par value, none issued	0	0
Common stock, authorized 100,000,000 shares, $0.0001 par value, 9,831,169 and 9,821,169 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively	982	982
Additional paid-in capital	113,216,621	112,520,268
Accumulated (deficit)	(82,245,806)	(77,967,499)
Total Stockholders’ Equity	30,971,797	34,553,751
Total Liabilities and Stockholders’ Equity	$ 43,194,563	$ 47,105,130

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Fair Value Measurements Fair Value Measurements - Additional Information (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Change in fair value of acquisition note payable	$ (89,914)	$ 0
Gentris [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Change in fair value of acquisition note payable	162,000	0
BioServe [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Change in fair value of acquisition note payable	(89,914)	0
VenturEast [Member] | BioServe [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Change in fair value of acquisition note payable	$ (90,000)
Number of shares associated with notes payable	84,278

XML

Organization, Description of Business, Basis of Presentation and Acquistion

3 Months Ended

Mar. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Description of Business, Basis of Presentation and Acquisition

Organization, Description of Business, Basis of Presentation and Acquisitions

We are an oncology diagnostics company focused on developing, commercializing and providing DNA-based tests and services to improve the personalization of cancer treatment and to better inform biopharmaceutical companies of genomic factors influencing subject responses to therapeutics. Our vision is to become the oncology diagnostics partner for companies and clinicians by participating in the entire care continuum from bench to bedside. We believe the diagnostic industry is undergoing a metamorphosis in its approach to oncology testing, embracing individualized medicine as a means to drive higher standards of patient treatment and disease management. Similarly, biopharma companies are increasingly engaging companies such as ours to provide information on clinical trial participants’ DNA profiles in order to identify genomic variations that may be responsible for differing responses to pharmaceuticals, and particularly to oncology drugs, thereby increasing the efficiency of trials while lowering related costs. We believe tailored therapeutics can revolutionize oncology medicine through DNA-based testing services, enabling physicians and researchers to target the factors that make each patient and disease unique. We have created a unique position in the industry by providing targeted somatic analysis of tumor sample cells alongside germline analysis of an individuals' non-cancerous cells' DNA as we attempt to reach the next milestone in personalized medicine. Individuals are born with germline mutations and somatic mutations arise in tissues over the course of a lifetime.

We were incorporated in the State of Delaware on April 8, 1999 and have offices and state-of-the-art laboratories located in New Jersey, North Carolina, Shanghai (China), and Hyderabad, India. Our laboratories comply with the highest regulatory standards as appropriate for the services they deliver including CLIA, CAP, NY State and NABL (India).We have two advisory boards to counsel our scientific and clinical direction. Our Scientific Advisory Board is comprised of preeminent scientists and physicians from the fields of cancer biology, cancer pathology, cancer medicine and molecular genetics. Our Clinical Advisory Board is comprised of clinicians and scientists focused on clinical implementation of our proprietary tests and services and mapping those tests and services to patient needs.  Our services are built on a foundation of world-class scientific knowledge and intellectual property in solid and blood-borne cancers, as well as strong academic relationships with major cancer centers such as Memorial Sloan-Kettering, Mayo Clinic, and the National Cancer Institute.

Basis of Presentation

The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for interim reporting as prescribed by the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2014, filed with the Securities and Exchange Commission on March 16, 2015. The consolidated balance sheet as of December 31, 2014, included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by GAAP. Interim financial results are not necessarily indicative of the results that may be expected for any future interim period or for the year ending December 31, 2015.

2014 Acquisitions

On July 16, 2014, we purchased substantially all of the assets of Gentris Corporation, (“Gentris”), with its principal place of business in North Carolina, for approximately $4.8 million. There were no changes in the preliminary purchase price allocation or goodwill impairment for Gentris during the three months ended March 31, 2015.

On August 18, 2014, we acquired BioServe Biotechnologies (India) Private Limited, an Indian corporation (“BioServe”) for an aggregate purchase price of approximately $1.1 million. During the three months ended March 31, 2015, there was no goodwill impairment for BioServe, and the preliminary allocation of the purchase price was retrospectively adjusted for a measurement period adjustment to increase goodwill by approximately $193,000, reduce fixed assets by approximately $136,000, reduce other assets by approximately $38,000 and reduce other current assets by approximately $19,000. The fair value of the assets acquired and liabilities assumed as of August 18, 2014 are now as follows:

	Amount
Accounts receivable	$	151,002
Other current assets	102,064
Fixed assets	488,481
Other assets	378,440
Goodwill	734,925
Current liabilities	(758,614		)
Other liabilities	(22,049		)
Total Purchase Price	$	1,074,249

The results of operations for the three months ended March 31, 2015 include the operations of Gentris and BioServe and include combined revenues of $2,166,665 and a combined net loss of $185,502. The following table provides certain pro forma financial information for the Company as if the acquisitions discussed above occurred on January 1, 2014:

	Three Months Ended
	March 31, 2014
Revenue	$	2,272,584
Net loss	(2,720,296		)
Basic and diluted net loss per share	$	(0.29	)

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Equity Incentive Plans - Additional Information (Detail) (USD $)	3 Months Ended		12 Months Ended	1 Months Ended
	Mar. 31, 2015 stock_plan	Mar. 31, 2014	Dec. 31, 2014	May 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of equity incentive plans	2
Options granted maximum exercisable period	10 years
Stock appreciation rights	0
Restricted stock awarded	237,500
Fair value of common stock	$ 7.81		$ 6.68
Proceeds from option exercises	$ 0	$ 2,020	$ 79,018
Plan exercise price (usd per share)			$ 10.00
Intrinsic value			120,510
Option Holder [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercises in period	0		12,000
Forfeitures in period			11,429
Net shares issued			571
Non-Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost related to non-vested stock options granted	700,164
Unrecognized compensation cost related to non-vested stock options granted expect to recognize, period (in years)	2 years 9 months 4 days
Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost related to non-vested stock options granted	5,899,360
Unrecognized compensation cost related to non-vested stock options granted expect to recognize, period (in years)	3 years 7 months 17 days
Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of shares under stock options issued				200,000
Exercise price of options exchanged				$ 15.89
2011 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for future awards	323,267
Number of shares authorized	650,000
2008 Stock Option Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for future awards	92,911
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost related to non-vested stock options granted expect to recognize, period (in years)	2 years 10 months 17 days
Unrecognized compensation cost	831,472
Restricted Stock [Member] | Non-Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost related to non-vested stock options granted expect to recognize, period (in years)	6 months 10 days
Unrecognized compensation cost	$ 10,324

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Warrants (Tables)

3 Months Ended

Mar. 31, 2015

Equity [Abstract]

Summary of Warrant Activity

The following table summarizes the warrant activity for the three months ended March 31, 2015:

Issued With / For	Exercise Price			Warrants Outstanding January 1, 2015	2015 Warrants Exercised	Warrants Outstanding March 31, 2015
Non-Derivative Warrants:
Financing	$	10.00		243,334	—	243,334
Financing	15.00			436,079	—	436,079
Debt Guarantee	15.00			352,312	—	352,312
Consulting	10.00			29,138	—	29,138
Total Non-Derivative Warrants	$	13.72	B	1,060,863	—	1,060,863
Derivative Warrants:
Financing	$	10.00	A	60,000	—	60,000
Series B Pref. Stock	10.00		A	15,015	—	15,015
Consulting	10.00		A	200	—	200
Total Derivative Warrants	10.00		B	75,215	—	75,215
Total	$	13.47	B	1,136,078	—	1,136,078

A These warrants are subject to fair value accounting and contain an exercise price adjustment feature. See Note 7.

B Weighted-average exercise prices are as of March 31, 2015.

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Equity Incentive Plans - Summary of Employee and Nonemployee Stock Option Activity (Detail) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Options Outstanding, Number of Shares Outstanding
Outstanding, beginning balance	1,839,458
Granted	97,000
Cancelled or expired	(48,083)
Outstanding, ending balance	1,888,375	1,839,458
Exercisable	739,928
Options Outstanding, Weighted-Average Exercise Price
Outstanding, beginning balance	$ 10.58
Granted	$ 9.18
Cancelled or expired	$ 10.74
Outstanding, ending balance	$ 10.50	$ 10.58
Exercisable	$ 9.57
Weighted-Average Remaining Contractual Term (in years)
Outstanding	8 years 3 months 18 days	8 years 5 months 27 days
Exercisable	6 years 9 months 15 days
Aggregate Intrinsic Value
Outstanding, beginning balance	$ 618,250
Outstanding, ending balance	1,325,605	618,250
Exercisable	$ 806,090

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Summary of Financial Liabilities Measured at Fair Value on Recurring Basis

The following table summarizes the financial liabilities measured at fair value on a recurring basis segregated by the level of valuation inputs within the fair value hierarchy utilized to measure fair value:

	March 31, 2015
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Warrant liability	$	67,000	$	—	$	—	$	67,000
Gentris contingent consideration	131,400		—		—		131,400
Note payable to VenturEast	625,301		—		—		625,301
	$	823,701	$	—	$	—	$	823,701
	December 31, 2014
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Warrant liability	$	52,000	$	—	$	—	$	52,000
Gentris contingent consideration	293,400		—		—		293,400
Note payable to VenturEast	534,828		—		—		534,828
	$	880,228	$	—	$	—	$	880,228

Schedule of Fair Value Notes Payable and Contingent Consideration of Business Acquisitions

The following table summarizes the activity of the notes payable to VenturEast and Gentris consideration which were measured at fair value using Level 3 inputs:

	Note Payable		Gentris Contingent
	to VenturEast		Consideration
Fair value at December 31, 2014	$	534,828	$	293,400
Change in fair value	90,473		(162,000		)
Fair value at March 31, 2015	$	625,301	$	131,400

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Revenue and Accounts Receivable

3 Months Ended

Mar. 31, 2015

Receivables [Abstract]

Revenue and Accounts Receivable

Revenue and Accounts Receivable

Revenue by service type for the three months ended March 31, 2015 and 2014 is comprised of the following:

	Three Months Ended March 31,
	2015		2014
Biopharma Services	$	3,331,090	$	491,250
Clinical Services	873,041		939,125
Discovery Services	166,196		—
	$	4,370,327	$	1,430,375

Accounts receivable by service type at March 31, 2015 and December 31, 2014 consists of the following:

	March 31, 2015			December 31, 2014
Biopharma Services	$	3,389,388		$	3,203,335
Clinical Services	1,763,461			1,925,176
Discovery Services	144,116			151,285
Allowance for doubtful accounts	(472,571		)	(251,176		)
	$	4,824,394		$	5,028,620

Allowance for Doubtful Accounts
Balance, December 31, 2014	$	251,176
Bad debt expense	221,395
Balance, March 31, 2015	$	472,571

Biopharma Services are customized solutions provided to biopharmaceutical companies for patient stratification and treatment selection through an extensive suite of DNA-based testing services. Clinical Services are tests performed to provide information on diagnosis, prognosis and theranosis of cancers to guide patient management. These tests can be billed to Medicare, another third party insurer or the referring community hospital or other healthcare facility. Discovery Services are services that provide the tools and testing methods for companies and researchers seeking to identify new DNA-based biomarkers for disease.

We have historically derived a significant portion of our revenue from a limited number of test ordering sites. Test ordering sites account for all of our Clinical Services revenue along with a portion of our Biopharma Services revenue. Our test ordering sites are hospitals, cancer centers, reference laboratories, physician offices and biopharmaceutical companies. The top five test ordering sites during the three months ended March 31, 2015 and 2014 accounted for 72% and 63% respectively, of our testing volumes, with 24% and 32%, respectively, of the volume coming from community hospitals. During the three months ended March 31, 2015, there were two biopharmaceutical companies which accounted for approximately 51% of our total revenue. These two biopharmaceutical companies accounted for approximately 29% and 22% of total revenue, respectively. During the three months ended March 31, 2014, there was one biopharmaceutical company which accounted for approximately 33% of our total revenue. While we have agreements with our Biopharma clients, volumes from these clients are subject to the progression and continuation of the trials which can impact testing volume. We generally do not have formal written agreements with other testing sites and, as a result, we may lose these significant test ordering sites at any time.

The breakdown of our Clinical Services revenue (as a percent of total revenue) is as follows:

	Three Months Ended March 31,
	2015	2014
Medicare	6%	18%
Other insurers	7%	20%
Other healthcare facilities	7%	28%
	20%	66%

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Consolidated Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Preferred stock, shares authorized (in shares)	9,764,000	9,764,000
Preferred stock, par value (usd per share)	$ 0.0001	$ 0.0001
Preferred Stock, shares issued (in shares)	0	0
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, par value (usd per share)	$ 0.0001	$ 0.0001
Common stock, shares issued (in shares)	9,831,169	9,821,169
Common stock, shares outstanding (in shares)	9,831,169	9,821,169

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Subsequent Event

3 Months Ended

Mar. 31, 2015

Subsequent Events [Abstract]

Subsequent Events

Subsequent Event

On May 7, 2015, the Company entered into a new debt financing facility with Silicon Valley Bank to refinance the Company’s cash collateralized loan from Wells Fargo and to provide an additional working capital line of credit. The Silicon Valley Bank loan provides for a $6 million term note (“Term Note”) and a line of credit (“Line of Credit”) of up to $4 million. The Term Note requires interest-only payments through April 30, 2016 and beginning May 1, 2016, monthly principal payments of approximately $167,000 will be required plus interest through maturity on April 1, 2019. The interest rate of the Term Note is the Wall Street Journal prime plus 2%, with a floor of 5.25% and an additional deferred interest payment of $180,000 will be due upon maturity. The Line of Credit requires monthly interest-only payments of the Wall Street Journal prime plus 1.5% and matures on May 7, 2017. The new loan agreement requires us to maintain certain financial ratios and has a first security interest in substantially all Company assets (other than our intellectual property). Pursuant to the new loan agreement, the Company will no longer be required to maintain restricted cash accounts.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2015	May 01, 2015
Document And Entity Information [Abstract]
Entity Registrant Name	CANCER GENETICS, INC
Trading Symbol	CGIX
Entity Central Index Key	0001349929
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Document Type	10-Q
Document Period End Date	Mar. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		9,827,169

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Organization, Description of Business, Basis of Presentation and Acquistion (Tables)

3 Months Ended

Mar. 31, 2015

Business Acquisition [Line Items]

Business acquisition, pro forma information

The following table provides certain pro forma financial information for the Company as if the acquisitions discussed above occurred on January 1, 2014:

	Three Months Ended
	March 31, 2014
Revenue	$	2,272,584
Net loss	(2,720,296		)
Basic and diluted net loss per share	$	(0.29	)

BioServe [Member]

Business Acquisition [Line Items]

Schedule of recognized identified assets acquired and liabilities assumed

The fair value of the assets acquired and liabilities assumed as of August 18, 2014 are now as follows:

	Amount
Accounts receivable	$	151,002
Other current assets	102,064
Fixed assets	488,481
Other assets	378,440
Goodwill	734,925
Current liabilities	(758,614		)
Other liabilities	(22,049		)
Total Purchase Price	$	1,074,249

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Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Income Statement [Abstract]
Revenue	$ 4,370,327	$ 1,430,375
Cost of revenues	3,141,735	1,290,062
Gross profit	1,228,592	140,313
Operating expenses:
Research and development	1,277,926	596,771
General and administrative	2,986,897	2,731,404
Sales and marketing	1,115,813	748,979
Total operating expenses	5,380,636	4,077,154
Loss from operations	(4,152,044)	(3,936,841)
Other income (expense):
Interest expense	(33,967)	(341,177)
Interest income	12,618	22,184
Change in fair value of acquisition note payable	(89,914)	0
Change in fair value of warrant liability	(15,000)	(44,000)
Total other (expense)	(126,263)	(362,993)
Loss before income taxes	(4,278,307)	(4,299,834)
Income tax provision (benefit)	0	(1,813,941)
Net (loss)	$ (4,278,307)	$ (2,485,893)
Basic net income (loss) per share (usd per share)	$ (0.44)	$ (0.27)
Diluted net loss per share (usd per share)	$ (0.44)	$ (0.27)
Basic Weighted Average Shares Outstanding (in shares)	9,703,576	9,276,643
Diluted Weighted Average Shares Outstanding (in shares)	9,703,576	9,276,643

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Fair Value of Warrants

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value of Warrants

Fair Value of Warrants

The following table summarizes the derivative warrant activity subject to fair value accounting for the three months ended March 31, 2015:

Issued with/for	Fair value of warrants outstanding as of December 31, 2014		Change in fair value of warrants		Fair value of warrants outstanding as of March 31, 2015
Series B Preferred Stock	$	8,000	$	3,000	$	11,000
Financing	44,000		12,000		56,000
	$	52,000	$	15,000	$	67,000

The following tables summarize the assumptions used in computing the fair value of derivative warrants subject to fair value accounting at the date of issue or exercise during the three months ended March 31, 2015 and 2014, and at March 31, 2015 and December 31, 2014.

Issued with Debt Guarantee	Exercised During the Three Months Ended March 31, 2014
Exercise Price	$	10.00
Expected life (years)	0.60
Expected volatility	49.01		%
Risk-free interest rate	0.08		%
Expected dividend yield	—		%

Issued with Series B Preferred Shares	As of March 31, 2015			As of December 31, 2014			Exercised During the Three Months Ended March 31, 2014
Exercise Price	$	10.00		$	10.00		$	10.00
Expected life (years)	0.63			0.88			1.72
Expected volatility	49.12		%	49.95		%	46.60		%
Risk-free interest rate	0.14		%	0.25		%	0.33		%
Expected dividend yield	—		%	—		%	—		%

Issued for Consulting	As of March 31, 2015			As of December 31, 2014
Exercise Price	$	10.00		$	10.00
Expected life (years)	0.90			1.14
Expected volatility	46.92		%	49.25		%
Risk-free interest rate	0.26		%	0.25		%
Expected dividend yield	—		%	—		%

Issued with Financing	As of March 31, 2015			As of December 31, 2014
Exercise Price	$	10.00		$	10.00
Expected life (years)	0.98			1.23
Expected volatility	46.69		%	50.23		%
Risk-free interest rate	0.26		%	0.25		%
Expected dividend yield	—		%	—		%

The assumed Company stock price used in computing the fair value of warrants exercised during the three months ended March 31, 2014 was $15.20 – $19.86. In determining the fair value of warrants issued at each reporting date, the Company stock price was $7.81 at March 31, 2015 and $6.68 at December 31, 2014 based on the closing price on the NASDAQ Capital Market.

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Warrants

3 Months Ended

Mar. 31, 2015

Equity [Abstract]

Warrants

Warrants

We have issued certain warrants which contain an exercise price adjustment feature in the event we issue additional equity instruments at a price lower than the exercise price of the warrant. The warrants are described herein as derivative warrants. For all derivative warrants, in the event equity instruments are issued at a price lower than the exercise price of the warrant, the exercise price is adjusted to the price of the new equity instruments issued (price adjustment feature). For certain of these warrants, the number of shares underlying the warrant is also adjusted to an amount computed by dividing the proceeds of the warrant under its original terms by the revised exercise price (share adjustment feature). These warrants are initially recorded as a warrant liability at fair value with a corresponding entry to the loan guarantee fee asset, debt discount, additional paid-in capital or expense dependent upon the service provided in exchange for the warrant grant. As of March 31, 2015 all warrants with a share adjustment feature have either expired or have been exercised.

The following table summarizes the warrant activity for the three months ended March 31, 2015:

Issued With / For	Exercise Price			Warrants Outstanding January 1, 2015	2015 Warrants Exercised	Warrants Outstanding March 31, 2015
Non-Derivative Warrants:
Financing	$	10.00		243,334	—	243,334
Financing	15.00			436,079	—	436,079
Debt Guarantee	15.00			352,312	—	352,312
Consulting	10.00			29,138	—	29,138
Total Non-Derivative Warrants	$	13.72	B	1,060,863	—	1,060,863
Derivative Warrants:
Financing	$	10.00	A	60,000	—	60,000
Series B Pref. Stock	10.00		A	15,015	—	15,015
Consulting	10.00		A	200	—	200
Total Derivative Warrants	10.00		B	75,215	—	75,215
Total	$	13.47	B	1,136,078	—	1,136,078

A These warrants are subject to fair value accounting and contain an exercise price adjustment feature. See Note 7.

B Weighted-average exercise prices are as of March 31, 2015.

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Fair Value of Warrants (Tables)

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Summary of Derivative Warrant Activity

The following table summarizes the derivative warrant activity subject to fair value accounting for the three months ended March 31, 2015:

Issued with/for	Fair value of warrants outstanding as of December 31, 2014		Change in fair value of warrants		Fair value of warrants outstanding as of March 31, 2015
Series B Preferred Stock	$	8,000	$	3,000	$	11,000
Financing	44,000		12,000		56,000
	$	52,000	$	15,000	$	67,000

Assumptions Used in Computing Fair Value of Derivative Warrants

The following tables summarize the assumptions used in computing the fair value of derivative warrants subject to fair value accounting at the date of issue or exercise during the three months ended March 31, 2015 and 2014, and at March 31, 2015 and December 31, 2014.

Issued with Debt Guarantee	Exercised During the Three Months Ended March 31, 2014
Exercise Price	$	10.00
Expected life (years)	0.60
Expected volatility	49.01		%
Risk-free interest rate	0.08		%
Expected dividend yield	—		%

Issued with Series B Preferred Shares	As of March 31, 2015			As of December 31, 2014			Exercised During the Three Months Ended March 31, 2014
Exercise Price	$	10.00		$	10.00		$	10.00
Expected life (years)	0.63			0.88			1.72
Expected volatility	49.12		%	49.95		%	46.60		%
Risk-free interest rate	0.14		%	0.25		%	0.33		%
Expected dividend yield	—		%	—		%	—		%

Issued for Consulting	As of March 31, 2015			As of December 31, 2014
Exercise Price	$	10.00		$	10.00
Expected life (years)	0.90			1.14
Expected volatility	46.92		%	49.25		%
Risk-free interest rate	0.26		%	0.25		%
Expected dividend yield	—		%	—		%

Issued with Financing	As of March 31, 2015			As of December 31, 2014
Exercise Price	$	10.00		$	10.00
Expected life (years)	0.98			1.23
Expected volatility	46.69		%	50.23		%
Risk-free interest rate	0.26		%	0.25		%
Expected dividend yield	—		%	—		%

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Revenue and Accounts Receivable (Tables)

3 Months Ended

Mar. 31, 2015

Receivables [Abstract]

Schedule of Revenue by Payor Type

Revenue by service type for the three months ended March 31, 2015 and 2014 is comprised of the following:

	Three Months Ended March 31,
	2015		2014
Biopharma Services	$	3,331,090	$	491,250
Clinical Services	873,041		939,125
Discovery Services	166,196		—
	$	4,370,327	$	1,430,375

Schedule of Accounts Receivable by Payor Type

Accounts receivable by service type at March 31, 2015 and December 31, 2014 consists of the following:

	March 31, 2015			December 31, 2014
Biopharma Services	$	3,389,388		$	3,203,335
Clinical Services	1,763,461			1,925,176
Discovery Services	144,116			151,285
Allowance for doubtful accounts	(472,571		)	(251,176		)
	$	4,824,394		$	5,028,620

Allowance for Doubtful Accounts
Balance, December 31, 2014	$	251,176
Bad debt expense	221,395
Balance, March 31, 2015	$	472,571

Schedule of Clinical Services Revenue (as a percent of total revenue)

The breakdown of our Clinical Services revenue (as a percent of total revenue) is as follows:

	Three Months Ended March 31,
	2015	2014
Medicare	6%	18%
Other insurers	7%	20%
Other healthcare facilities	7%	28%
	20%	66%

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Related Party Transactions

3 Months Ended

Mar. 31, 2015

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

John Pappajohn, a member of the Board of Directors and stockholder, had personally guaranteed our revolving line of credit with Wells Fargo Bank through March 31, 2014. As consideration for his guarantee, as well as each of the eight extensions of this facility through March 31, 2014, Mr. Pappajohn received warrants to purchase an aggregate of 1,051,506 shares of common stock of which Mr. Pappajohn assigned warrants to purchase 284,000 shares of common stock to certain third parties. Warrants to purchase 440,113 shares of common stock have been exercised by Mr. Pappajohn through March 31, 2015. After adjustment pursuant to the terms of the warrants in conjunction with our IPO, the number of these warrants outstanding retained by Mr. Pappajohn was 352,312 at $15.00 per share.

In addition, John Pappajohn also had loaned us an aggregate of $6,750,000 (all of which was converted into 675,000 shares of common stock at the IPO price of $10.00 per share). In connection with these loans, Mr. Pappajohn received warrants to purchase an aggregate of 202,630 shares of common stock. After adjustment pursuant to the terms of the warrants in conjunction with our IPO, the number of warrants outstanding was 436,079 at $15.00 per share at March 31, 2015.

Effective January 6, 2014, the Board of Directors appointed John Pappajohn to serve as the Chairman of the Board. As compensation for serving as the Chairman of the Board, the Company will pay Mr. Pappajohn $100,000 per year and granted to Mr. Pappajohn 25,000 restricted shares of the Company's common stock, and options to purchase an aggregate of 100,000 shares of the Company's common stock. The options have a term of ten years from the date on which they were granted. The restricted stock and the options each vest in two equal installments on the one-year anniversary and the two-year anniversary of the date on which Mr. Pappajohn became the Chairman of the Board.

In August 2010, we entered into a consulting agreement with Equity Dynamics, Inc. (“EDI”), an entity controlled by John Pappajohn, pursuant to which EDI received a monthly fee of $10,000. The consulting agreement was terminated effective March 31, 2014. Subsequently, the Company entered into a new consulting agreement with EDI effective April 1, 2014 pursuant to which it will receive a monthly fee of $10,000. Total expenses for the three months ended March 31, 2015 and 2014 were $30,000. As of March 31, 2015, we owed EDI $0.

On September 15, 2010, we entered into a three-year consulting agreement with Dr. Chaganti which was subsequently renewed through December 31, 2016 pursuant to which Dr. Chaganti receives $5,000 per month for providing consulting and technical support services. Total expenses for each of the quarterly periods ended March 31, 2015 and 2014 were $15,000. Pursuant to the terms of the renewed consulting agreement, Dr. Chaganti received an option to purchase 200,000 shares of our common stock at a purchase price of $15.89 per share vesting over a period of four years. Total non-cash stock-based compensation recognized under the consulting agreement for each of the three months ended March 31, 2015 and 2014 were $62,500 and $0, respectively. Also pursuant to the consulting agreement, Dr. Chaganti assigned to us all rights to any inventions which he may invent during the course of rendering consulting services to us. In exchange for this assignment, if the USPTO issues a patent for an invention on which Dr. Chaganti is listed as an inventor, we are required to pay Dr. Chaganti (i) a one-time payment of $50,000 and (ii) 1% of any net revenues we receive from any licensed sales of the invention. In 2015, we paid Dr. Chaganti $150,000 which was recognized as an expense in fiscal 2014 when three patents were issued.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards Codification requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect our own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, the Topic establishes a fair value hierarchy for valuation inputs that give the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that we have the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect our own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The following table summarizes the financial liabilities measured at fair value on a recurring basis segregated by the level of valuation inputs within the fair value hierarchy utilized to measure fair value:

	March 31, 2015
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Warrant liability	$	67,000	$	—	$	—	$	67,000
Gentris contingent consideration	131,400		—		—		131,400
Note payable to VenturEast	625,301		—		—		625,301
	$	823,701	$	—	$	—	$	823,701
	December 31, 2014
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Warrant liability	$	52,000	$	—	$	—	$	52,000
Gentris contingent consideration	293,400		—		—		293,400
Note payable to VenturEast	534,828		—		—		534,828
	$	880,228	$	—	$	—	$	880,228

The warrant liability consists of stock warrants we issued that contain an exercise price adjustment feature. In accordance with derivative accounting for warrants, we calculated the fair value of warrants and the assumptions used are described in Note 7, “Fair Value of Warrants”. Realized and unrealized gains and losses related to the change in fair value of the warrant liability are included in Other income (expense) on the Statement of Operations.

The value of the Gentris consideration was determined using a discounted cash flow of the expected payments required by the purchase agreement. During the three months ended March 31, 2015, we recognized a gain of $162,000 due to the decrease in probability of paying the contingent consideration.

The ultimate payment to VenturEast will be the value of 84,278 shares of common stock at the time of payment. The value of the note payable to VenturEast was determined using the fair value of our common stock less a discount for credit risk. During the three months ended March 31, 2015, we recognized a loss of approximately $90,000 due to the increase in value of the note.

Realized and unrealized gains and losses related to the change in fair value of the Gentris contingent consideration are included in general and administrative expense, while realized and unrealized gains and losses related to the VenturEast note are included in other income (expense) on the Consolidated Statement of Operations.

A table summarizing the activity for the derivative warranty liability which is measured at fair value using Level 3 inputs is presented in Note 7. The following table summarizes the activity of the notes payable to VenturEast and Gentris consideration which were measured at fair value using Level 3 inputs:

	Note Payable		Gentris Contingent
	to VenturEast		Consideration
Fair value at December 31, 2014	$	534,828	$	293,400
Change in fair value	90,473		(162,000		)
Fair value at March 31, 2015	$	625,301	$	131,400

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Joint Venture Agreement

3 Months Ended

Mar. 31, 2015

Equity Method Investments and Joint Ventures [Abstract]

Joint Venture Agreement

Joint Venture Agreement

In November 2011, we entered into an affiliation agreement with the Mayo Foundation for Medical Education and Research (“Mayo”), subsequently amended. Under the agreement, we formed a joint venture with Mayo in May 2013 to focus on developing oncology diagnostic services and tests utilizing next generation sequencing. The joint venture is a limited liability company, with each party initially holding fifty percent of the issued and outstanding membership interests of the new entity (the “JV”). In exchange for our membership interest in the JV, we made an initial capital contribution of $1.0 million in October 2013. In addition, we issued 10,000 shares of our common stock to Mayo pursuant to our affiliation agreement and recorded an expense of approximately $175,000. We also recorded additional expense of approximately $231,000 during the fourth quarter of 2013 related to shares issued to Mayo in November 2011 as the JV achieved certain performance milestones. In the third quarter of 2014, we made an additional $1.0 million capital contribution.

The agreement also requires aggregate total capital contributions by us of up to an additional $4.0 million. We currently anticipate that we will make capital contributions of $1.0 million in the third quarter of 2015. The timing of the remaining installments is subject to the JV’s achievement of certain operational milestones agreed upon by the board of governors of the JV. In exchange for its membership interest, Mayo’s capital contribution will take the form of cash, staff, services, hardware and software resources, laboratory space and instrumentation, the fair market value of which will be approximately equal to $6.0 million. Mayo’s continued contribution will also be conditioned upon the JV’s achievement of certain milestones.

Our share of the JV’s net loss was approximately $207,000 and $12,000 for the three months ended March 31, 2015 and 2014, respectively, and is included in research and development expense on the Consolidated Statement of Operations. We have a net receivable due from the JV of approximately $0 and $10,000 at March 31, 2015 and December 31, 2014, respectively, which is included in other current assets in the Consolidated Balance Sheets.

The joint venture is considered a variable interest entity under ASC 810-10, but we are not the primary beneficiary as we do not have the power to direct the activities of the JV that most significantly impact its performance. Our evaluation of ability to impact performance is based on our equal board membership and voting rights and day-to-day management functions which are performed by the Mayo personnel.

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Contingencies

3 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Contingencies

Contingencies

In the normal course of business, the Company may become involved in various claims and legal proceedings. In the opinion of management, the ultimate liability or disposition thereof is not expected to have a material adverse effect on our financial condition, results of operations, or liquidity.

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Sale of Net Operating Loss - Additional Information (Detail) (State and Local Jurisdiction [Member], USD $)	1 Months Ended
	Jan. 31, 2014
State and Local Jurisdiction [Member]
Tax Credit Carryforward [Line Items]
NOL carryforwards sold	$ 22,301,643
Proceeds from sale of NOL carryforwards	$ 1,813,941

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Equity Incentive Plans (Tables)

3 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Employee and Nonemployee Stock Option Activity

A summary of employee and non-employee stock option activity for the three months ended March 31, 2015 is as follows:

	Options Outstanding				Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
	Number of Shares		Weighted- Average Exercise Price
Outstanding January 1, 2015	1,839,458		$	10.58	8.49	$	618,250
Granted	97,000		9.18
Canceled or expired	(48,083	)	10.74
Outstanding March 31, 2015	1,888,375		$	10.50	8.30	$	1,325,605
Exercisable March 31, 2015	739,928		$	9.57	6.79	$	806,090

Weighted-Average Assumptions Used to Estimate Fair Value of Options Granted

The following table presents the weighted-average assumptions used to estimate the fair value of options reaching their measurement date for non-employees during the periods presented:

	Three Months Ended March 31,
	2015		2014
Volatility	70.50	%	72.66	%
Risk free interest rate	1.88	%	2.73	%
Dividend yield	0.00	%	0.00	%
Term (years)	9.09		9.53

The following table presents the weighted-average assumptions used to estimate the fair value of options granted to employees during the periods presented:

	Three Months Ended March 31,
	2015
Volatility	68.98%
Risk free interest rate	1.70%
Dividend yield	0.00%
Term (years)	6.31
Weighted-average fair value of options granted during the period	5.83

Nonvested Restricted Stock Shares Activity

The following table summarizes the activities for our non-vested restricted stock awards for the three months ended March 31, 2015:

	Non-vested Restricted Stock Awards
	Number of Shares		Weighted-Average Grant Date Fair Value
Non-vested at January 1, 2015	132,500		$	8.14
Granted	10,000		8.42
Vested	(20,833	)	10.40
Non-vested at March 31, 2015	121,667		$	7.80

Effects of Stock-Based Compensation Related to Stock Option Awards

The following table presents the effects of stock-based compensation related to stock option and restricted stock awards to employees and non-employees on our Statement of Operations during the periods presented:

	Three Months Ended March 31,
	2015		2014
Cost of revenues	$	49,186	$	20,412
Research and development	95,073		14,102
General and administrative	520,737		468,855
Sales and marketing	31,357		26,753
Total stock-based compensation	$	696,353	$	530,122

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Organization, Description of Business, Basis of Presentation and Acquistion- BioServe Asset & Liabilities Assumed (Details) (USD $)	Mar. 31, 2015	Dec. 31, 2014	Aug. 18, 2014
Business Acquisition [Line Items]
Goodwill	$ 3,187,495	$ 3,187,495
BioServe [Member]
Business Acquisition [Line Items]
Accounts receivable			151,002
Other current assets			102,064
Fixed assets			488,481
Other assets			378,440
Goodwill			734,925
Current liabilities			(758,614)
Other liabilities			(22,049)
Total Purchase Price			$ 1,074,249

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Subsequent Event - Additional Information (Detail) (Subsequent Event [Member], USD $)	0 Months Ended
	May 07, 2015
Subsequent Event [Line Items]
Periodic principal payment	$ 167,000
Line of Credit [Member]
Subsequent Event [Line Items]
Credit facility, maximum borrowing capacity	4,000,000
Line of Credit [Member] | Prime Rate [Member]
Subsequent Event [Line Items]
Basis spread on variable rate	1.50%
Secured Debt [Member]
Subsequent Event [Line Items]
Term note, face amount	6,000,000
Stated interest rate, minimum	5.25%
Deferred interest due upon maturity	$ 180,000
Secured Debt [Member] | Prime Rate [Member]
Subsequent Event [Line Items]
Basis spread on variable rate	2.00%

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Fair Value of Warrants - Additional Information (Detail) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Class of Warrant or Right [Line Items]
Fair value of warrants issue price (usd per share)	$ 7.81	$ 6.68
Minimum [Member]
Class of Warrant or Right [Line Items]
Fair value of stock prices in computing fair value for warrants exercised (usd per share)	$ 15.20
Maximum [Member]
Class of Warrant or Right [Line Items]
Fair value of stock prices in computing fair value for warrants exercised (usd per share)	$ 19.86

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Consolidated Statements of Cash Flows (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss)	$ (4,278,307)	$ (2,485,893)
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
Depreciation	347,710	96,800
Amortization	8,725	6,702
Provision for bad debts	221,395	0
Equity-based consulting and compensation expenses	696,353	530,122
Change in fair value of business acquisition	89,914	0
Change in fair value of warrant liability	15,000	44,000
Amortization of loan guarantee and financing fees	0	310,500
Deferred rent	(17,715)	(3,210)
Loss in equity method investment	207,458	11,755
Loss in equity method investment
Accounts receivable	(17,169)	(251,057)
Other current assets	23,322	(64,844)
Accounts payable, accrued expenses and deferred revenue	(239,317)	(131,799)
Net cash (used in) operating activities	(3,104,631)	(1,936,924)
Net cash (used in) operating activities
Purchase of fixed assets	(83,149)	(144,018)
Increase in restricted cash	0	(6,000,000)
Patent costs	(40,059)	(36,809)
Net cash (used in) investing activities	(123,208)	(6,180,827)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on capital lease obligations	(14,495)	(7,490)
Proceeds from warrant exercises	0	950
Proceeds from option exercises	0	2,020
Principal payments on notes payable	0	(22,298)
Net cash (used in) financing activities	(14,495)	(26,818)
Net (decrease) in cash and cash equivalents	(3,242,334)	(8,144,569)
CASH AND CASH EQUIVALENTS
Beginning	25,554,064	49,459,564
Ending	22,311,730	41,314,995
SUPPLEMENTAL CASH FLOW DISCLOSURE
Cash paid for interest	33,940	30,677
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Cashless exercise of derivative warrants	0	125,000
Gentris [Member]
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
Change in fair value of business acquisition	(162,000)	0
BioServe [Member]
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
Change in fair value of business acquisition	$ 89,914	$ 0

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Equity Incentive Plans

3 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Equity Incentive Plans

Equity Incentive Plans

We have two equity incentive plans: the 2008 Stock Option Plan (the “2008 Plan”) and the 2011 Equity Incentive Plan (the “2011 Plan”, and together with the 2008 Plan, the “Stock Option Plans”). The Stock Option Plans are meant to provide additional incentive to officers, employees and consultants to remain in our employment. Options granted are generally exercisable for up to 10 years.

At March 31, 2015, 323,267 shares remain available for future awards under the 2011 Plan and 92,911 shares remain available for future awards under the 2008 Plan. Our board of directors increased availability under the 2011 Plan by 650,000 shares, subject to approval by our stockholders at the May 2015 annual meeting. As of March 31, 2015, no stock appreciation rights and 237,500 shares of restricted stock have been awarded under the Stock Option Plans.

A summary of employee and non-employee stock option activity for the three months ended March 31, 2015 is as follows:

	Options Outstanding				Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
	Number of Shares		Weighted- Average Exercise Price
Outstanding January 1, 2015	1,839,458		$	10.58	8.49	$	618,250
Granted	97,000		9.18
Canceled or expired	(48,083	)	10.74
Outstanding March 31, 2015	1,888,375		$	10.50	8.30	$	1,325,605
Exercisable March 31, 2015	739,928		$	9.57	6.79	$	806,090

Aggregate intrinsic value represents the difference between the estimated fair value of our common stock and the exercise price of outstanding, in-the-money options. The fair value of our common stock was $7.81 at March 31, 2015 and $6.68 at December 31, 2014, based on the closing price on the NASDAQ Capital Market. During the year ended December 31, 2014, we received $79,018 from the exercise of options. Also during the year ended December 31, 2014, an option holder exercised options to purchase 12,000 shares of common stock with an exercise price of $10.00 per share using the net issue exercise method whereby the option holder surrendered 11,429 shares in payment in full of the exercise price resulting in net issuance of 571 shares of common stock. The options exercised in 2014 had a total intrinsic value of $120,510. No options were exercised in the three months ended March 31, 2015.

As of March 31, 2015, total unrecognized compensation cost related to non-vested stock options granted to employees was $5,899,360 which we expect to recognize over the next 3.63 years.

As of March 31, 2015, total unrecognized compensation cost related to non-vested stock options granted to non-employees was $700,164 which we expect to recognize over the next 2.76 years. The estimate of unrecognized non-employee compensation is based on the fair value of the non-vested options as of March 31, 2015.

The fair value of options granted to employees is estimated on the grant date using the Black-Scholes option valuation model. This valuation model requires us to make assumptions and judgments about the variables used in the calculation, including the expected term (the period of time that the options granted are expected to be outstanding), the volatility of our common stock, a risk-free interest rate, and expected dividends. To the extent actual forfeitures differ from the estimates, the difference will be recorded as a cumulative adjustment in the period estimates are revised. No compensation cost is recorded for options that do not vest. We use the simplified calculation of expected life described in the SEC’s Staff Accounting Bulletin No. 107, Share-Based Payment, and volatility is based on an average of the historical volatilities of the common stock of three entities with characteristics similar to those of the Company. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. We use an expected dividend yield of zero, as we do not anticipate paying any dividends in the foreseeable future. Expected forfeitures are assumed to be zero due to the small number of plan participants and the plan design which has monthly vesting after an initial cliff vesting period.

The following table presents the weighted-average assumptions used to estimate the fair value of options granted to employees during the periods presented:

	Three Months Ended March 31,
	2015
Volatility	68.98%
Risk free interest rate	1.70%
Dividend yield	0.00%
Term (years)	6.31
Weighted-average fair value of options granted during the period	5.83

In May 2014, we issued 200,000 options to our Director, Raju Chaganti, with an exercise price of $15.89. See Note 10 for additional information. The following table presents the weighted-average assumptions used to estimate the fair value of options reaching their measurement date for non-employees during the periods presented:

	Three Months Ended March 31,
	2015		2014
Volatility	70.50	%	72.66	%
Risk free interest rate	1.88	%	2.73	%
Dividend yield	0.00	%	0.00	%
Term (years)	9.09		9.53

Restricted stock awards have been granted to employees, directors and consultants as compensation for services. At March 31, 2015, there was $831,472 of unrecognized compensation cost related to non-vested restricted stock granted to employees; we expect to recognize the cost over 2.88 years. At March 31, 2015, there was $10,324 of unrecognized compensation cost related to non-vested restricted stock granted to non-employees; we expect to recognize the cost over 0.53 years.

The following table summarizes the activities for our non-vested restricted stock awards for the three months ended March 31, 2015:

	Non-vested Restricted Stock Awards
	Number of Shares		Weighted-Average Grant Date Fair Value
Non-vested at January 1, 2015	132,500		$	8.14
Granted	10,000		8.42
Vested	(20,833	)	10.40
Non-vested at March 31, 2015	121,667		$	7.80

The following table presents the effects of stock-based compensation related to stock option and restricted stock awards to employees and non-employees on our Statement of Operations during the periods presented:

	Three Months Ended March 31,
	2015		2014
Cost of revenues	$	49,186	$	20,412
Research and development	95,073		14,102
General and administrative	520,737		468,855
Sales and marketing	31,357		26,753
Total stock-based compensation	$	696,353	$	530,122

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Organization, Description of Business, Basis of Presentation and Acquistion- Pro Forma (Details) (USD $)	3 Months Ended
	Mar. 31, 2014
Pro Forma Financial Information
Revenue	$ 2,272,584
Net loss	$ (2,720,296)
Basic and diluted net loss per share (usd per share)	$ (0.29)

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Equity Incentive Plans Equity Incentive Plans - Restricted Stock Award Activity (Details) (Restricted Stock [Member], USD $)	3 Months Ended
	Mar. 31, 2015
Restricted Stock [Member]
Number of Shares (in shares):
Non-vested at January 1, 2015	132,500
Granted	10,000
Vested	(20,833)
Non-vested at March 31, 2015	121,667
Weighted-Average Grant Date Fair Value (in dollars per share):
Non-vested at January 1, 2015 (in dollars per share)	$ 8.14
Granted (in dollars per share)	$ 8.42
Vested (in dollars per share)	$ 10.40
Non-vested at March 31, 2015 (in dollars per share)	$ 7.80

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Summary of Potentially Dilutive Adjustments to Weighted Average Number of Common Shares Excluded from Calculation

The following table summarizes equivalent units outstanding that were excluded from the earnings per share calculation because their effects were anti-dilutive:

	Three Months Ended March 31,
	2015	2014
Common stock purchase warrants	1,136,078	1,781,199
Stock options	1,888,375	848,092
Restricted shares of common stock	121,667	5,000
	3,146,120	2,634,291