Commitments and Contingencies

6 Months Ended

Jun. 30, 2011

Commitments and Contingencies and Litigation [Abstract]

Commitments and Contingencies

15. Commitments and Contingencies

Restricted Cash — The Company has restricted cash of $705,000 consisting of $250,000 held in an interest bearing account in our name with the lender financing our power generation facility, $400,000 held by the lender of our customer as collateral for such loan, $35,000 held by our bank as collateral for our merchant account transactions and $20,000 as collateral for a credit card issued to the Company.

Operating leases — The Company leases premises under various operating leases. Rental expense under operating leases included in the consolidated statements of operations was $148,000 and $168,000 for the three months ended June 30, 2011 and 2010, respectively, and $272,000 and $365,000 for the six months ended June 30, 2011 and 2010, respectively.

In June, 2011, the Company entered into an office lease agreement for approximately 11,275 rentable square feet of office space in Roseville, California. The Company plans to use the office space for its corporate headquarters. The initial term of the lease will commence for a term of six (6) years on August 1, 2011. No rent will be due during the first twelve (12) months of the lease. Following the first twelve (12) months, the monthly rent shall be $19,731.25 or $1.75 per square foot with rent increasing approximately $.05 per square foot each year thereafter for the duration of the lease. In addition, the Company has the option to extend the Lease for an additional five-year term, with rent to be determined according to the then-prevailing market rates.

Guarantee — On December 22, 2009, in connection with an equity funding of STP related to the Aerojet 1 (see Notes 3 and 8) project, the Company along with STP’s other investors entered into a Guaranty (“Guaranty”) to provide the equity investor, Greystone Renewable Energy Equity Fund (“Greystone”), with certain guarantees, in part, to secure investment funds necessary to facilitate STP’s payment to the Company under the Engineering, Procurement and Construction Agreement (“EPC”). Specific guarantees made by the Company include the following in the event of the other investors’ failure to perform under the operating agreement:

• Operating Deficit Loans — The Company would be required to loan Master Tenant 2008-c, LLC (“Master Tenant”) or STP monies necessary to fund operations to the extent costs could not be covered by Master Tenant’s or STP1’s cash inflows. The loan would be subordinated to other liabilities of the entity and earn no interest; and

• Exercise of Put Options — At the option of Greystone, the Company may be required to fund the purchase by the managing member of Greystone’s interest in Master Tenant under an option exercisable for nine months following a 63-month period commencing with operations of the Facility. The purchase price would be equal to the greater of the fair value of Greystone’s equity interest in Master Tenant or $952,000.

The Company has recorded on its consolidated balance sheet the fair value of the guarantees, at their estimated fair value of $142,000. This amount, less related amortization, is included in Accrued Liabilities.