Leases

The Company follows the accounting for leases under Accounting Standards Codification (“ASC”) 842 Lease Accounting and determines if an arrangement is a lease or contains a lease at inception. Operating leases result in operating lease right-of-use (“ROU”) assets and operating lease liabilities (short term and long term) being recorded on the Company’s balance sheets.

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company uses the incremental borrowing rate based on the estimated rate of interest for collateralized borrowings over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.