8. Commitments and Contingencies

 

Litigation

 

Legal matters are defended and handled in the ordinary course of business.  We have 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, 2015, two customers comprise approximately 42.6% of the total accounts receivable balance, with each customer individually representing 23.4% and 19.2% of total accounts receivable, respectively.  At December 31, 2014, four customers comprise approximately 69.9% of the total accounts receivable balance, with each customer individually representing 30.2%, 16.0%, 13.4% and 10.3% of total accounts receivable, respectively.

 

For the six months ended June 30, 2015, 95.1% of total consolidated revenues were associated with three customers, with each representing 68.8%, 16.1%, and 10.2% of total consolidated revenues, respectively.  For the six months ended June 30, 2014, 35.9% of total consolidated revenues were associated with two customers, with each representing 20.7% and 15.2% of total consolidated revenues, respectively.

 

Restricted Cash

 

The Company has entered into sales/leaseback agreements associated with its products and services.  In connection with these agreements, cash of $10.6 million is required to be held in escrow, which will be released over the lease term.

 

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 considered restricted cash.