12. Commitments and Contingencies

Operating Leases

As of September 30, 2016 and December 31, 2015, the Company has several non-cancelable operating leases (as lessor and as lessee), primarily associated with sale/leaseback transactions that are partially secured by restricted cash (see also Note 1) as summarized below. These leases expire over the next six years. Minimum rent payments under operating leases are recognized on a straight‑line basis over the term of the lease. Leases where the Company is the lessor contain termination clauses with associated penalties, the amount of which cause the likelihood of cancelation to be remote.

Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) as of September 30, 2016 are (in thousands):


	As Lessor		As Lessee
Remainder of 2016	$	4,186	$	3,077
2017		16,743		12,350
2018		16,743		12,125
2019		16,743		10,936
2020		15,587		9,802
Thereafter		14,153		6,105
Total future minimum lease payments	$	84,155	$	54,395

Rental expense for all operating leases was $3.7 million and $1.6 million for the three months ended September 30, 2016 and 2015, respectively. Rental expense for all operating leases was $10.1 million and $3.8 million for the nine months ended September 30, 2016 and 2015, respectively.

At September 30, 2016 and December 31, 2015, prepaid rent and security deposits associated with sale/leaseback transactions were $11.9 million and $12.1 million, respectively, and are included in other current and noncurrent assets on the consolidated balance sheets.

Finance Obligations

During the nine months ended September 30, 2016, the Company entered into sale/leaseback transactions, which were accounted for as capital leases and reported as part of finance obligations on the Company’s consolidated balance sheet. These transactions represented project financing as referenced in Note 7. The outstanding balance of these finance obligations at September 30, 2016 was $30.0 million. The fair value of the finance obligation approximates the carrying value as of September 30, 2016.

Future minimum lease payments under non-cancelable capital leases (with initial or remaining lease terms in excess of one year) as of September 30, 2016 are (in thousands):


	Total		Imputed		Net Present
	Payments		Interest		Value
Remainder of 2016	$	1,765	$	1,198	$	567
2017		16,313		4,201		12,112
2018		10,665		2,060		8,605
2019		3,436		1,431		2,005
2020		3,436		1,080		2,356
Thereafter		5,125		819		4,306
Total future minimum lease payments	$	40,740	$	10,789	$	29,951

During the year ended December 31, 2015, the Company received cash for future services to be performed associated with certain sale/leaseback transactions and recorded the balance as a finance obligation. The outstanding balance of this obligation at September 30, 2016 and December 31, 2015 is $13.4 million and $15.1 million, respectively. The amount is amortized using the effective interest method. The fair value of this finance obligation approximates the carrying value as of September 30, 2016.

The Company has a capital lease associated with its property in Latham, New York. Liabilities relating to this agreement of $2.4 million and $2.5 million have been recorded as a finance obligation, in the accompanying unaudited interim consolidated balance sheets as of September 30, 2016 and December 31, 2015, respectively. The fair value of this finance obligation approximates the carrying value as of September 30, 2016.

Restricted Cash

The Company has entered into sale/leaseback agreements associated with its products and services. To secure the Company’s obligations under these agreements, at September 30, 2016, cash of $44.9 million was restricted and pledged as security and will be released over the lease term. Included in the $44.9 million are security deposits backing letters of credit, which in turn support certain sale/leaseback agreements, as disclosed in the Operating Leases section above. Subsequent to September 30, 2016, the Company elected to pledge additional cash collateral of approximately $12.0 million to eliminate the minimum cash requirement.

The Company also has letters of credit in the aggregate amount of $1.0 million associated with an agreement to provide hydrogen infrastructure and hydrogen to a customer at its distribution center and with a finance obligation from the sale/leaseback of its building. Cash collateralizing these letters of credit is also considered restricted cash.

Litigation

Legal matters are defended and handled in the ordinary course of business. The Company has established accruals for matters for which management considers a loss to be probable and reasonably estimable. It is the opinion of management that facts known at the present time do not indicate that such litigation, after taking into account insurance coverage and the aforementioned accruals, will have a material adverse impact on our results of operations, financial position, or cash flows.

Concentrations of credit risk

Concentrations of credit risk with respect to receivables exist due to the limited number of select customers with whom the Company has initial commercial sales arrangements. To mitigate credit risk, the Company performs appropriate evaluation of a prospective customer’s financial condition.

At September 30, 2016, two customers comprise approximately 50.6% of the total accounts receivable balance, with each customer individually representing 29.0% and 21.6% of total accounts receivable, respectively. At December 31, 2015, two customers comprise approximately 50.9% of the total accounts receivable balance, with each customer individually representing 38.5% and 12.4% of total accounts receivable, respectively.

For the nine months ended September 30, 2016, 41.7% of total consolidated revenues were associated primarily with Walmart. For the nine months ended September 30, 2015, 56.7% of total consolidated revenues were associated primarily with Walmart.