Commitments and Contingencies

3 Months Ended

Mar. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Operating Leases

We lease several facilities under operating leases expiring through 2018. Certain leases require us to pay increases in real estate taxes, operating costs and repairs over certain base year amounts. Lease payments for the three months ended March 31, 2014 and 2013 were $165,000 and $191,000, respectively.

During the three months ended March 31, 2014, the Company vacated its Pennsylvania office space in an effort to lower future rent expense. The Company currently leases this office space through August 30, 2017 and is marketing this office space for sublease. During the three months ended March 31, 2014, the Company recorded an impairment charge of $225,000, representing the estimated net present value of the Company’s contractual obligation over the remaining lease term, adjusted for estimated sublease payments and other associated costs. This impairment charge is recorded in General and Administrative expenses on the Company’s condensed consolidated statements of operations for the three months ended March 31, 2014. As of March 31, 2014, the Company has $203,000 recorded in accrued expenses relating to this impairment charge.

Future minimum rental commitments under all non-cancelable operating leases as of March 31, 2014, are as follows (in thousands):

Year Ending December 31,
Remaining 2014	$	434
2015	349
2016	358
2017	317
2018	223
	$	1,681

The future minimum lease commitments above do not include amounts for our California location, which the Company began to lease on a month to month basis starting in April 2014. The Company entered into short term leases totaling $115,000 for the New Jersey location in April 2014, which extended the term through August 31, 2014. The future minimum lease commitments include the $115,000 in 2014 for our New Jersey location. The future minimum lease commitments do not include any future lease commitments for the New Jersey location beyond August 31, 2014. We plan to lease office space in different locations in both California and New Jersey.

Commercial Commitments

We have entered into a number of agreements with telecommunications companies to purchase communications services. Some of the agreements require a minimum amount of services to be purchased over the life of the agreement, or during a specified period of time.

Glowpoint believes that it will meet its commercial commitments. Historically, in certain instances where Glowpoint did not meet the minimum commitments, no penalties for minimum commitments have been assessed and the Company has entered into new agreements. It has been our experience that the prices and terms of successor agreements are similar to those offered by other carriers.

Glowpoint does not believe that any loss contingency related to a potential shortfall should be recorded in the condensed consolidated financial statements because it is not probable, from the information available and from prior experience, that Glowpoint has incurred a liability.

Letters of Credit

As of March 31, 2014, the Company had an outstanding irrevocable standby letter of credit with Comerica Bank for $185,000 to serve as our security deposit for our lease of office space in Colorado.