Note 7 Leases

The Company’s principal facility and its corporate headquarters are located at the Natural Energy Laboratory of Hawaii Authority (“NELHA”) at Keahole Point in Kailua-Kona, Hawaii. The property is leased from the State of Hawaii under a 40-year commercial lease expiring in 2035. Under the terms of the existing NELHA lease, the Company could be required to remove improvements at the end of the lease term. Under generally accepted accounting principles in the United States, an entity should recognize the fair value of a liability for an asset retirement obligation in the period in which the retirement obligation is incurred, if a reasonable estimate of fair value can be made. If such an estimate cannot be made in the period the asset retirement obligation is incurred, the liability should be recognized when the fair value can be reasonably estimated. Based on communications with NELHA, we do not believe the projected cost for such removal to be material to the consolidated financial statements, or likely, given historical practices. However, conditions could change in the future. It is not possible to predict such changes or estimate any impact thereof.

The Company leases facilities, equipment and land under operating leases expiring through 2035. The land lease provides for contingent rentals in excess of minimum rental commitments based on a percentage of the Company’s sales. Contingent rental for the years ended March 31, 2013, 2012 and 2011 was $75,000, $188,000 and $96,000, respectively.

Future minimum lease payments under non-cancelable operating leases at March 31, 2013 are as follows:

Year ending March 31	(in thousands)
2014	$	468
2015	480
2016	409
2017	309
2018	299
Thereafter	5,311
Total minimum lease payments	$	7,276

Rent expense, including contingent rent, under operating leases amounted to $602,000, $509,000 and $370,000 for the years ended March 31, 2013, 2012 and 2011, respectively.