Debt

Debt consisted of the following (in thousands):



	December 31,
	2016			2015
Main Street Term Loan, net of unamortized debt discount based on imputed interest rate of 12%; $123 at December 31, 2016 and $192 at December 31, 2015.	$	8,877		$	8,808
SRS Note, net of unamortized debt discount based on imputed interest rate of 15%; $2 at December 31, 2016 and $5 at December 31, 2015.	1,783			1,780
Main Street Revolver	—			400
Total	10,660			10,988
Less current maturities	(10,660		)	(400		)
Long-term debt, net of current portion	$	—		$	10,588

The Main Street Loan Agreement provides for an $11,000,000 senior secured term loan facility (“Main Street Term Loan”), and provided for a $2,000,000 senior secured revolving loan facility (the “Main Street Revolver”). On October 17, 2016, the $2,000,000 Main Street Revolver matured and therefore the Company no longer has access to this revolving loan facility. As of December 31, 2016, the Company had outstanding borrowings of $9,000,000 under the Main Street Term Loan. While an event of default exists under the Main Street Loan Agreement (see below), we are not able to access the $2,000,000 of remaining availability under the Main Street Term Loan. Borrowings under the Main Street Term Loan mature on October 17, 2018 unless sooner terminated as provided in the Main Street Loan Agreement. The Main Street Loan Agreement provides that the Main Street Term Loan borrowings bear interest at 12% per annum. Interest payments on the outstanding borrowings under the Main Street Term Loan 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 (Excess Cash Flow is defined in the Main Street Loan Agreement and is effectively equal to cash flow from operations less capital expenditures less principal payments on capital leases). In the event there were outstanding borrowings on the Main Street Revolver, any quarterly principal payments were first applied to the Main Street Revolver and then to the Main Street Term Loan.

During 2016 and 2015, the Company made no principal payments the Main Street Term Loan. During 2016, the Company received no advances on the Main Street Revolver and made principal payments of $400,000, of which $244,000 related to required payments based on Excess Cash Flow for the first quarter of 2016. During 2015, the Company received advances of $613,000 and made principal payments in the same amount on the Main Street Revolver.

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 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.

The Main Street Loan Agreement contains financial covenants that are measured on a quarterly basis, 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 Company breached its debt to AEBITDA ratio covenant as of June 30, 2016, September 30, 2016 and December 31, 2016 and breached the fixed charge coverage ratio covenant as of September 30, 2016 and December 31, 2016, each of which constitutes an event of default under the Main Street Loan Agreement. Main Street has not provided a waiver of any of the existing defaults, and thus Main Street may seek a variety of remedies under the loan documents including, without limitation, acceleration of the indebtedness owing under the Main Street Loan Agreement. Based on the Company’s current financial projections, we believe that it is likely that the Company will breach both of the financial covenants in the Main Street Loan Agreement throughout 2017 and 2018. Accordingly, we are exploring various alternatives to renegotiate our financial covenants and address our liquidity issues, including, without limitation, a potential restructuring of the Main Street and SRS indebtedness, which may involve a conversion of a portion or all of our debt to equity or a debt refinancing, coupled with a capital raise. Although the maturity date of the Main Street Term Loan is October 17, 2018, the Company has classified this debt as current as of December 31, 2016 given the existing defaults and potential acceleration of such indebtedness.

As of December 31, 2016, the Company had outstanding borrowings of $1,785,000 on a promissory note (the “SRS Note”) to Shareholder Representative Services LLC (“SRS”) the Company issued in connection with the 2012 acquisition of Affinity Videonet, Inc. (“Affinity”). The maturity date of the SRS Note is July 6, 2017. Effective March 1, 2015, the interest rate on the SRS Note is 15% per annum. Payment of all interest earned after March 1, 2015 is due on July 6, 2017, unless certain trailing AEBITDA targets are met as defined in the amended SRS Note. The SRS Note is subordinate to borrowings under the Main Street Loan Agreement, and is only permitted to be repaid if permitted by the terms of the Main Street Loan Agreement. In addition, under the terms of the Subordination Agreement among the Company, SRS and Main Street, repayment of the principal and accrued interest on the SRS Note is permitted to occur only if the Company’s cash balance is 200% greater than the balance of the SRS Note. 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 sum of the Company’s trailing six month AEBITDA less $3,000,000. During the years ended December 31, 2016 and 2015, the Company was not required to make any principal payments on the SRS Note. Accrued interest on the SRS Note is expected to increase from $565,000 as of December 31, 2016 to $752,000 as of June 30, 2017.

Future maturities of debt are estimated as follows (in thousands):



	Main Street Term Loan		SRS Note		Total
2017	$	—	$	1,785	$	1,785
2018	9,000		—		9,000
	$	9,000	$	1,785	$	10,785

Deferred financing costs related to our debt agreements of $125,000 and $197,000 are included as a direct reduction of the carrying amount of our debt as of December 31, 2016 and 2015, respectively. The financing costs are amortized to interest expense using the effective interest method over the term of each loan through each maturity date. Amortization of deferred financing costs for the years ended December 31, 2016, and 2015, was $72,000 and $87,000, respectively, which is recorded in “Interest and Other Expense, Net” on our Consolidated Statements of Operations.