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 sheets. 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. 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. During the period ended June 30, 2026, $0.4 million of previously restricted cash was released upon a reduction in the collateral requirements under the letter of credit. Restricted cash was $0.9 million and $1.3 million on the condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025, respectively.  

The Company also maintains short-term leases for offices and storage space that are not material, individually or in the aggregate, and are not recorded on the condensed consolidated balance sheets.

On October 1, 2025, the Company entered into a long-term sublease agreement to lease 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 June 30, 2026 and 2025, respectively, and $1.6 million and $1.6 million during the six months ended June 30, 2026 and 2025, respectively.

Variable lease cost, comprising primarily of common area maintenance charges and taxes, for the operating lease was $0.2 million and $0.2 million during the three months ended June 30, 2026 and 2025, respectively, and $0.3 million and $0.4 million during the six months ended June 30, 2026 and 2025, respectively.