6. Operating Lease

The Company leases office space under an operating lease. In December 2021, the Company entered into a lease agreement for 2,367 square feet of office space commencing December 1, 2021. The initial lease term was for two years, and there was an option to extend the lease for an additional year. On March 3, 2023, the Company expanded its leased space through a lease amendment by an additional 2,456 square feet commencing March 15, 2023. The term of the amended lease is for three years with an option to extend the lease for three additional years.

The lease amendment represents a modification of the original lease, and the Company evaluated the new agreement under ASC 842, Leases. The Company classified the lease as an operating lease and, on March 15, 2023, determined that the present value of the lease was approximately $1.0 million using an estimated incremental borrowing rate of 10%. During the years ended December 31, 2022 and 2023, the Company reflected amortization of right-of-use asset of approximately $154,000 and $275,000, respectively, resulting in a right of use asset balance of approximately $0.8 million at December 31, 2023.

During the year ended December 31, 2023, the Company made cash payments on the lease of approximately $331,000 towards the lease liabilities. As of December 31, 2023, the total lease liability was $0.8 million. Rent expense for the lease for the years ended December 31, 2022 and 2023 was approximately $173,000 and $354,000, respectively.

Maturities of the Company’s lease liabilities are as follows (in thousands):