15. Commitments and Contingencies

Operating Leases

As of June 30, 2018 and December 31, 2017, 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 June 30, 2018 are (in thousands):


	As Lessor		As Lessee
Remainder of 2018	$	11,875	$	7,016
2019		23,619		12,914
2020		21,928		11,612
2021		17,336		7,032
2022		9,085		1,554
2023 and thereafter		8,621		2,290
Total future minimum lease payments	$	92,464	$	42,418

Rental expense for all operating leases was $3.6 million and $3.4 million for the three months ended June 30, 2018 and 2017, respectively. Rental expense for all operating leases was $7.0 million and $6.9 million for the six months ended June 30, 2018 and 2017, respectively.

At June 30, 2018 and December 31, 2017, prepaid rent and security deposits associated with sale/leaseback transactions were $11.1 million and $11.3 million, respectively. At June 30, 2018, $1.8 million of the amount is included in prepaid expenses and other current assets and $9.3 million was included in other assets on the unaudited interim consolidated balance sheet. At December 31, 2017, $1.8 million of this amount was included in prepaid expenses and other current assets and $9.5 million was included in other assets on the consolidated balance sheet.

Finance Obligations

During the three and six months ended June 30, 2018, 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 unaudited interim consolidated balance sheet. In June 2018, the timing and amount of the lease payments from certain previous sale/leaseback transactions were modified to extend the due date. The outstanding balance of finance obligations related to sale/leaseback transactions at June 30, 2018 was $64.6 million. The fair value of the finance obligation approximates the carrying value as of June 30, 2018.

Future minimum lease payments under non-cancelable capital leases related to sale/leaseback transactions (with initial or remaining lease terms in excess of one year) as of June 30, 2018 are (in thousands):


	Total		Imputed		Net Present
	Payments		Interest		Value
2018	$	25,528	$	3,322	$	22,206
2019		19,930		2,403		17,527
2020		6,042		1,800		4,242
2021		6,043		1,316		4,727
2022		4,296		705		3,591
2023 and thereafter		11,510		1,021		10,489
Total future minimum lease payments	$	73,349	$	10,567	$	62,782

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 June 30, 2018 and December 31, 2017 is $9.2 million and $10.4 million, respectively. The amount is amortized using the effective interest method. The fair value of this finance obligation approximates the carrying value as of June 30, 2018.

The Company has a capital lease associated with its property in Latham, New York. Liabilities relating to this agreement of $2.2 million and $2.3 million have been recorded as a finance obligation, in the accompanying consolidated balance sheets as of June 30, 2018 and December 31, 2017, respectively. The fair value of this finance obligation approximates the carrying value as of June 30, 2018.

Restricted Cash

The Company has entered into sale/leaseback agreements associated with its products and services. In connection with these agreements, cash of $39.4 million at June 30, 2018 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 at June 30, 2018 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 June 30, 2018, three customers comprise approximately 81.5% of the total accounts receivable balance. At December 31, 2017, three customers comprised approximately 59.0% of the total accounts receivable balance.

For the six months ended June 30, 2018, 66.2% of total consolidated revenues were associated primarily with two customers, respectively. For the three six months ended June 30, 2017, 71.3% of total consolidated revenues were associated primarily with two customers.