Debt

Long-term debt consisted of the following (in thousands):



	September 30, 2015			December 31, 2014
SRS Note	$	1,785		$	1,785
Main Street Term Loan	9,000			9,000
Main Street Revolver	21			400
	10,806			11,185
Less current maturities	(21		)	(400		)
Long-term debt, net of current portion	$	10,785		$	10,785

As discussed in Note 2, the Main Street Loan Agreement provides for an $11,000,000 senior secured term loan facility and a $2,000,000 senior secured revolving loan facility. As of September 30, 2015, the Company had outstanding borrowings of $9,000,000 under the Main Street Term Loan and $21,000 on the Main Street Revolver.

Borrowings under the Main Street Term Loan and Main Street Revolver mature on October 17, 2018 and October 17, 2016, respectively, unless sooner terminated as provided in the Main Street Loan Agreement. On July 31, 2015, the maturity date of the Main Street Revolver was extended from October 17, 2015 to October 17, 2016. The Main Street Loan Agreement provides that the Main Street Term Loan borrowings bear interest at 12% per annum and the Main Street Revolver borrowings bear interest at 8% per annum. Interest payments on the outstanding borrowings under both the Main Street Term Loan and Main Street Revolver are due monthly. The Company is required to make quarterly principal payments on the Main Street Term Loan through the maturity date in an amount equal to 50% of Excess Cash Flow generated by the Company during the trailing fiscal quarter. For this purpose, "Excess Cash Flow" is defined in the Main Street Loan Agreement and is effectively equal to the cash flow from operations less capital expenditures less principal payments on capital leases. In the event there are outstanding borrowings on the Main Street Revolver, any quarterly principal payments are first applied to the Main Street Revolver and then to the Main Street Term Loan. During the three and nine months ended September 30, 2015, the Company was required to make $79,000 and $215,000 of principal payments, respectively, based on Excess Cash Flow and such payments were applied to the Main Street Revolver. In addition, the Company made net principal payments of $0 and $164,000 on the Main Street Revolver during the three and nine months ended September 30, 2015, respectively.

The Company may prepay borrowings under the Main Street Loan Agreement at any time without premium or penalty, subject to certain notice and minimum prepayment requirements. The obligations of the Company under the Main Street Loan Agreement are secured by substantially all of the assets of the Company, including all intellectual property, equity interests in subsidiaries, equipment and other personal property. The Main Street Loan Agreement contains standard representations, warranties and covenants for a transaction of its nature, including, among other things, covenants relating to (i) financial reporting and notification, (ii) payment of obligations, (iii) compliance with applicable laws and (iv) notification of certain events and covenants and restrictive provisions which may, among other things, limit the Company's ability to sell assets, incur additional indebtedness, make investments or loans and create liens. The Main Street Loan Agreement also contains financial covenants, including a fixed charge coverage ratio covenant and a debt to Adjusted EBITDA (“AEBITDA”) ratio covenant as defined in the Main Street Loan Agreement. The Main Street Loan Agreement contains events of default customary for similar financings with corresponding grace periods, including failure to pay any principal or interest when due, failure to perform or observe covenants, breaches of representations and warranties, certain cross defaults, certain bankruptcy related events, monetary judgments defaults and a change in control. Upon the occurrence of an event of default, the outstanding obligations under the Main Street Loan Agreement may be accelerated and become immediately due and payable. As of September 30, 2015, the Company was in compliance with all required covenants.

Deferred financing costs related to our debt agreements of $73,000 and $84,000 are included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets as of September 30, 2015 and December 31, 2014, respectively. Deferred financing costs related to our debt agreements of $143,000 and $192,000 are included in other assets in the accompanying condensed consolidated balance sheets as of September 30, 2015 and December 31, 2014, respectively. The financing costs are amortized using the effective interest method over the term of each loan through each maturity date. During the nine months ended September 30, 2015 and 2014, amortization of deferred financing costs was $68,000 and $67,000, respectively.

In connection with the October 2012 acquisition of Affinity VideoNet, Inc. ("Affinity"), the Company issued a promissory note (the “SRS Note”) to Shareholder Representative Services LLC ("SRS"), on behalf of the prior stockholders of Affinity. As of September 30, 2015 and December 31, 2014, the principal balance on the SRS Note was $1,785,000. On February 27, 2015, the Company amended and restated the SRS Note. The amended SRS Note, (i) extended the maturity date from January 4, 2016 to July 6, 2017, (ii) increased the interest rate from 10% to 15% per annum effective March 1, 2015 and (iii) revised the payment of interest from quarterly in arrears to payment on July 6, 2017 of all interest earned after March 1, 2015, unless certain trailing AEBITDA targets are met as defined in the agreement. The Company is required to make monthly principal payments in the amount of $50,000 in the event the Company's trailing three month AEBITDA exceeds $1,500,000. The Company is required to make additional payments on the principal amount over the remaining term of the SRS Note in an amount equal to 40% of the Company’s trailing six month Adjusted EBITDA less $3,000,000. The Company analyzed the amendment and determined that the future cash flows did not change by more than 10% and thus accounted for the amendment as a debt modification. During the nine months ended September 30, 2015, the Company was not required to make any principal payments on the SRS Note.

As of September 30, 2015, the current portion of long-term debt recorded on the Company's balance sheet was $21,000, which reflects principal payments the Company expects to pay in the twelve months ended September 30, 2016 on the Main Street Revolver. The Company expects that any principal payments under the Main Street Loan Agreement, which are based on a percentage of Excess Cash Flow as discussed above, will be applied to outstanding borrowings on the Main Street Revolver during the twelve months ending September 30, 2016. Therefore, the Company expects that no principal payments will be applied against the Main Street Term Loan during the twelve months ended September 30, 2016; and thus all outstanding borrowings on the Main Street Term Loan are classified as long term debt as of September 30, 2015. The principal payments related to these debt agreements are estimates and actual payments may vary.