On January 1, 2020, the Company adopted ASU 2016-02, Leases (“ASC 842”) using the modified retrospective method. The Company elected the package of practical expedients upon transition which will retain the lease classification for leases and any unamortized initial direct costs that existed prior to the adoption of this standard.

The adoption of the standard resulted in the recognition of operating lease right-of-use (“ROU”) assets and operating lease liabilities on the consolidated balance sheet as of January 1, 2020. ROU assets represent less than 1% of the Company’s total assets and lease liabilities represent less than 5% of the Company’s total liabilities as of December 31, 2020 and were not considered material to the Company. The Company did not recognize a material cumulative adjustment to the consolidated statement of shareholders’ equity and did not have any material changes in the timing of expense recognition or the Company’s accounting policies. The standard had no impact on the Company’s debt covenant compliance under existing agreements.

This ASU requires the Company to identify its contractual arrangements that contain leases at the inception of such arrangements. Specifically, the Company considered whether it can control the underlying asset and have the right to obtain substantially all of the economic benefits or outputs from the asset. The Company’s leases are long-term operating leases with fixed payment terms and will terminate at various dates through April 2027. The Company’s ROU assets represent its right to use an underlying asset for the lease term, and its operating lease liabilities represent its obligation to make lease payments. ROU operating assets and operating lease liabilities are included in the accompanying consolidated balance sheet as of December 31, 2020.

ROU assets are recognized at commencement date and consist of the present value of the remaining lease payments over the lease term, initial direct costs, prepaid lease payments less any lease incentives. Operating lease liabilities are recognized at commencement date based on the present value of the remaining lease payments over the lease term. The Company uses the implicit rate, when readily determinable, or its incremental borrowing rate based on the information available at the commencement date to determine the present value of lease payments. Since the Company’s leases do not provide an implicit rate that can readily be determined, the Company used a discount rate based on its incremental borrowing rate, which is determined by the information available in our Credit Facility. The incremental borrowing rate reflects the estimated rate of interest the Company would pay to borrow, on a collateralized basis over a similar term, an amount equal to the least payments in a similar economic environment.

Our lease obligations are primarily comprised of the main office spaces used for operations and are recorded as General, administrative, and other expenses in the Consolidated Statement of Operations. As of December 31, 2020, our lease obligations were classified as operating leases. The Company’s rental costs associated with these office spaces was $0.6 million for the year ended December 31, 2020.

The lease terms may include periods covered by options to extend the lease when it is reasonably certain that the Company will exercise that option and periods covered by options to terminate the lease when it is not reasonably certain that the Company will exercise that option. Lease cost for lease obligations is recognized on a straight-line basis over the lease term. In the event that the Company’s assumptions and expectations change, it may have to revise its ROU assets and operating lease liabilities. As of December 31, 2020, the weighted average remaining lease term is 3.4 years, and the weighted average discount rate is 4.21%.

As of December 31, 2020, the Company had ROU assets of $1.1 million recorded as Other Assets, $0.6 million of corresponding obligations recorded as Other Current Liabilities and $0.8 million of corresponding obligations recorded as Other Liabilities on the Company’s consolidated balance sheet.

Under ASC 840, rent expense recorded for the years ended December 31, 2019 and 2018 was $0.3 million, and less than $0.1 million, respectively.

As of December 31, 2020, the undiscounted cash flows for operating lease liabilities are as follows (in thousands):

	Payments Due by Period
	Total		2021		2022		2023		2024		2025		Thereafter
Lease obligations	$	1,329	$	609	$	228	$	196	$	199	$	58	$	39
Total	$	1,329	$	609	$	228	$	196	$	199	$	58	$	39

Under ASC 842, as of December 31, 2020, the Company has operating lease obligations expiring at various dates. There is an immaterial difference between undiscounted cash flows for operating leases and our $1.3 million of lease obligations due to the impact of the applicable discount rate.