Quarterly report pursuant to Section 13 or 15(d)

Leases

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Leases
9 Months Ended
Sep. 30, 2015
Debt and Capital Lease Obligations [Abstract]  
Financing Obligations
Financing Obligations
During the nine months ended September 30, 2015, the Company acquired $838,000 in computer and network equipment and furniture through the issuance of capital leases. Balances for assets acquired under capital lease obligations were as follows (in thousands):
 
September 30,
2015
 
December 31,
2014
Computer and network equipment
$
551

 
$

Furniture
287

 

Assets acquired under capital lease obligations
838

 

Accumulated depreciation
(78
)
 

Assets acquired under capital lease obligations, net
$
760

 
$


As of September 30, 2015, the future minimum payments under capital leases and other financing obligations with initial terms of one year or more are as follows (in thousands):
Periods ending December 31,
 
2015
$
84

2016
334

2017
334

2018
134

Total minimum lease payments
886

Less amount representing interest
(88
)
Present value of net minimum lease payments
798

Less current portion
(279
)
Balance, non-current portion, end of period
$
519


Operating Lease Activity
On March 5, 2015, the Company entered into an office facility lease agreement for space that will serve as its corporate headquarters. The eighty-nine month lease commenced on September 1, 2015, provides the Company approximately 17,216 square feet in Minneapolis, Minnesota, with the initial term expiring January 31, 2023. Base annual rent during the lease term ranges from $20,249 to $23,132 per month. Total base rent payable over the lease period is $1,822,000. The Company has one option to extend the term of the lease for an additional five year period with respect to the leased premises. The lease agreement allowed the Company to construct leasehold improvements to the new space prior to the effective date of the lease. As the leasehold improvements are the property of the Company, the associated costs, amounting to approximately $713,000, were capitalized in property and equipment as of September 30, 2015 and will be depreciated over the term of the lease. As an incentive to enter into the lease agreement, the lessor provided the Company a one-time tenant improvement allowance of $689,000 to apply against the cost of the leasehold improvements. The one-time tenant improvement allowance is included in trade accounts payable and other accrued liabilities and non-current lease incentives and will be amortized as a reduction of rent expense over the term of the lease.
During the third quarter 2015, the Company recognized an equipment operating lease loss of $1 million relating to equipment the Company no longer plans to utilize as part of it managed services offerings. Under this obligation, there are six remaining quarterly lease payments of $71,000 payable through the first quarter of 2017.