12.

Commitments and Contingencies

Legal Matters

. From time to time, the Company has been and

may

again become involved in legal proceedings arising in the ordinary course of its business. The Company is

not

presently a party to any litigation that it believes to be material and is

not

aware of any pending or threatened litigation against the Company that it believes could have a material adverse effect on its business, operating results, financial condition or cash flows.

Leases

. During the year ended

December

31,

2012,

the Company entered into a

six

-year software license agreement. The Company concluded that the software license agreement qualified as a capital lease. Accordingly, at

June 30, 2018

and

December

31,

2017,

there were

capital lease obligations outstanding.

The Company has an operating lease for its office, research, and production facility in Englewood, Colorado with a term expiring in

July 2021.

The Company also maintains a corporate apartment in Colorado, which has a lease term expiring during the next

months. The Company has an operating lease for the rail cars used by Agri-Energy in Luverne, Minnesota.

Rent expense for the

three

months ended

June 30, 2018

and

2017,

respectively, was

$0.4

and

$0.4,

and for the

six

months ended

June 30, 2018

and

2017

was

$0.9

million and

$0.8

million, respectively.

The table below shows the future minimum payments under non-cancelable operating leases and at

June 30, 2018

(

in thousands):

	Operating Leases
2018 (remaining)	$	731
2019		943
2020		430
2021		218
2022 and thereafter		-
Total	$	2,322

July 27, 2018,

the Company entered into an Equipment Operating Lease and Services Agreement with Shockwave, LLC ("Shockwave") for

one

DGS Drying Machine (the "Dryer Agreement"). Pursuant to the terms of the Dryer Agreement, the Company is obligated to pay Shockwave

$1.0

million in

forty-eight

equal payments following the installation of the DGS Drying Machine. Also on

July 27, 2018,

the Company entered into an Equipment Operating Lease and Services Agreement with Shockwave for

one

Corn Fractionation Machine ("the Corn Fractionation Agreement"). Pursuant to the terms of the Corn Fractionation Agreement, the Company is obligated to pay Shockwave

$2.5

million in

forty-eight

equal payments following the Operation Date, as such term is defined in the Corn Fractionation Agreement.

Indemnifications

. In the ordinary course of its business, the Company makes certain indemnities under which it

may

be required to make payments in relation to certain transactions. As of

June 30, 2018

and

December 31, 2017,

the Company did

not

have any liabilities associated with indemnities.

Certain of the Company’s financial instruments consist of cash and cash equivalents, accounts receivable, and accounts payable, for which the carrying value on the Company’s balance sheet approximates their fair values due to the short maturities.

In addition, the Company, as permitted under Delaware law and in accordance with its amended and restated certificate of incorporation and amended and restated bylaws, indemnifies its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director is or was serving at the Company’s request in such capacity. The duration of these indemnifications, commitments, and guarantees varies and, in certain cases, is indefinite. The maximum amount of potential future indemnification is unlimited; however, the Company has a director and officer insurance policy that

may

enable it to recover a portion of any future amounts paid. The Company accrues for losses for any known contingent liability, including those that

may

arise from indemnification provisions, when future payment is probable.

such losses have been recorded to date.

Environmental Liabilities

. The Company’s operations are subject to environmental laws and regulations adopted by various governmental authorities in the jurisdictions in which it operates. These laws require the Company to investigate and remediate the effects of the release or disposal of materials at its locations. Accordingly, the Company has adopted policies, practices and procedures in the areas of pollution control, occupational health and the production, handling, storage and use of hazardous materials to prevent material environmental or other damage, and to limit the financial liability which could result from such events. Environmental liabilities are recorded when the Company’s liability is probable and the costs can be reasonably estimated.

environmental liabilities have been recorded as of

June 30, 2018

December 31, 2017.