Commitments and Contingencies

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Note 20 - Commitments and Contingencies

Operating Leases

We lease several facilities under operating leases expiring through 2014.  Certain leases require us to pay increases in real estate taxes, operating costs and repairs over certain base year amounts.  Lease payments for the year ended December 31, 2011 were $500,000.  Lease payments for the year ended December 31, 2010 were $412,000.

Future minimum rental commitments under all non-cancelable operating leases are as follows (in thousands):

Year Ending December 31,
2012	$	441
2013		366
2014		31
	$	838

Capital Lease Obligation

The Company entered into two non-cancelable lease agreements for $512,000 and $40,000 with interest rates of 6% and 0%, respectively. These leases are accounted for as capital leases.  Depreciation expense on the equipment under the capital leases as of December 31, 2011 and 2010 was $51,000 and $0, respectively.  Future minimum commitments under all non-cancelable capital leases are as follows (in thousands):

	Total		Interest		Principal
2012	$	199	$	22	$	177
2013		200		13		187
2014		150		3		147
	$	549	$	38	$	511

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.  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 consolidated financial statements because it is not probable, from the information available and from prior experience, that Glowpoint has incurred a liability.

Letter of Credit

In November 2010, the Company entered into an irrevocable standby letter of credit (the “LOC”) for $115,000 to secure our security deposit for the sublease of our corporate headquarters.  The LOC was obtained from Silicon Valley Bank (“SVB”) and will be renewed yearly until January 2014, the expiration date of our sublease.