11. Commitments and Contingencies

Operating Leases

As of March 31, 2017 and December 31, 2016, 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 March 31, 2017 are (in thousands):


	As Lessor		As Lessee
Remainder of 2017	$	13,882	$	9,256
2018		18,510		12,125
2019		18,313		10,936
2020		17,157		9,802
2021		12,922		5,535
2022 and thereafter		4,193		759
Total future minimum lease payments	$	84,977	$	48,413

Rental expense for all operating leases was $3.3 million for the three months ended March 31, 2017 and 2016.

At March 31, 2017 and December 31, 2016, prepaid rent and security deposits associated with sale/leaseback transactions were $11.7 million and $11.8 million, respectively. At March 31, 2017, $1.9 million of the amount is included in prepaid expenses and other current assets and $9.8 million was included in other assets on the unaudited interim consolidated balance sheet. At December 31, 2016, $1.9 million of this amount was included in prepaid expenses and other current assets and $9.9 million was included in other assets on the consolidated balance sheet.

Finance Obligations

During the three months ended March 31, 2017, the Company entered into a sale/leaseback transaction, which was accounted for as a capital lease and reported as part of finance obligations on the Company’s unaudited interim consolidated balance sheet. The outstanding balance of these finance obligations at March 31, 2017 was $32.2 million. The fair value of the finance obligation approximates the carrying value as of March 31, 2017.

Future minimum lease payments under non-cancelable capital leases (with initial or remaining lease terms in excess of one year) as of March 31, 2017 are (in thousands):


	Total		Imputed		Net Present
	Payments		Interest		Value
Remainder of 2017	$	16,631	$	3,236	$	13,395
2018		11,817		2,162		9,655
2019		3,600		1,499		2,101
2020		3,600		1,135		2,465
2021		3,600		711		2,889
2022 and thereafter		1,908		175		1,733
Total future minimum lease payments	$	41,156	$	8,918	$	32,238

In prior years, 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 March 31, 2017 and December 31, 2016 is $12.3 million and $12.8 million, respectively. The amount is amortized using the effective interest method. The fair value of this finance obligation approximates the carrying value as of March 31, 2017.

The Company has a capital lease associated with its property in Latham, New York. Liabilities relating to this agreement of $2.3 million and $2.4 million have been recorded as a finance obligation, in the accompanying unaudited interim consolidated balance sheets as of March 31, 2017 and December 31, 2016, respectively. The fair value of this finance obligation approximates the carrying value as of March 31, 2017.

Restricted Cash

The Company has entered into sale/leaseback agreements associated with its products and services. In connection with these agreements, cash of $52.9 million is required to be restricted as security and will be released over the lease term. The Company has additional letters of credit backed by security deposits as disclosed in the Operating Leases section above.

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 March 31, 2017, one customer comprises approximately 35.6% of the total accounts receivable balance. At December 31, 2016, two customers comprise approximately 59.9% of the total accounts receivable balance, with each customer individually representing 40.0% and 19.9% of total accounts receivable, respectively.

For the three months ended March 31, 2017, 53.4% of total consolidated revenues were associated primarily with Walmart. For the three months ended March 31, 2016, 47.7% of total consolidated revenues were associated primarily with Walmart.