Note 11. Right-of-use Assets and Operating Lease Liabilities

The Company leases certain office, laboratory, research and development space for its use. Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheet. Operating lease cost for the operating lease is recognized on a straight-line basis over the lease term and is included in operating expenses on the condensed consolidated statements of operations and comprehensive loss. The lease agreements do not contain any material residual value guarantees or restrictive covenants. As most of the leases do not provide an implicit rate, the Company used its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

On November 21, 2022, Vivani entered into a triple net lease agreement for a single building with 43,645 square feet of space in Alameda, California. The stated term of the lease commenced on June 1, 2023 and terminates on September 30, 2033, ten years and four months. The lease term is based on the non-cancellable period in the lease agreement. There are two options to extend the lease, each for a term of five years; however, the extension options were not included in the measurement of the right-of-use asset and lease liability because it is not reasonably certain that the Company will exercise such extension options. Payments increase annually from $2,676,311 to $3,596,784, or 124 monthly payments less the first four which are abated, totaling approximately $31.0 million. Vivani is responsible for insurance, property taxes and common area maintenance charges. Vivani deposited $1.3 million to guarantee a letter of credit to secure the lease and this amount is recorded as restricted cash, long-term on the condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025. 

On February 1, 2023, the Company entered into a lease agreement, effective March 1, 2023, to sublease office space to replace Cortigent’s existing headquarters. Rental payments amount to $22,158 per month plus operating expenses, to lease 14,823 square feet of office space in Valencia, California. The sublease had a term of two years and two months. The sublease expired on April 30, 2025. The Company also entered into a lease for storage space on January 25, 2023, in the same building at a cost of $6,775 per month for a term of two years and one month. The lease expired on March 31, 2025. The Company did not renew the current office lease. However, the Company entered into another lease in the same building for a smaller space at a cost of $10,000 per month for six months. The Company has renewed the lease of the storage unit three times, and the current agreement will expire on September, 30, 2026.

On July 3, 2024, the Company entered into a short-term sublease agreement to lease a manufacturing facility which terminated on June 30, 2025.  

On October 1, 2025, the Company entered into a long-term sublease agreement for access to a manufacturing facility that will support, among other activities, Good Manufacturing Practices with the Company's clinical study test article. The stated term of the sublease commenced on October 1, 2025 and terminates on April 30, 2028. The Company's rental payment amounts to $35,000 per month plus operating expenses. 

Operating lease cost was $0.8 million and $0.8 million during the three months ended March 31, 2026 and 2025, respectively.

Variable lease cost, comprising primarily of common area maintenance charges and taxes, for the operating lease was $0.1 million and $0.2 million during the three months ended March 31, 2026 and 2025, respectively.