In July 2020, the Board of Directors approved the LENSAR Inc. 2020 Incentive Award Plan (the “2020 Plan”). The 2020 Plan provides for the grant of stock options, restricted stock, restricted stock unit awards and other stock-based awards to recipients. The amount and terms of grants are determined by the Company’s Board of Directors or a duly authorized committee thereof. Participants must pay the Company, or make provisions to pay, any required withholding taxes by the date of the event creating the tax liability. Participants may satisfy the tax liability in cash or in stock. A total of 3,333 shares of common stock were initially reserved for issuance pursuant to the 2020 Plan. The number of shares available for issuance under the 2020 Plan includes an annual increase on the first day of each fiscal year beginning fiscal 2021, equal to the lesser of (i) 5% of the aggregate number of shares outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares as determined by the Board of Directors. As of March 31, 2024, the Company has reserved a total of 5,550 shares of common stock for issuance under the 2020 Plan.

In February 2024, the Board adopted the 2024 Employment Inducement Incentive Award Plan (the “Inducement Plan”). The Inducement Plan provides for the grant of non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock or cash based awards (collectively, the “Inducement Awards”). The Inducement Plan was recommended for approval by the Compensation Committee of the Board and subsequently approved and adopted by the Board without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules. A maximum of 100 shares of common stock were reserved for issuance pursuant to the Inducement Plan. In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, Inducement Awards under the 2024 Plan may only be made to an employee who has not previously been an employee or member of the Board, or following a bona fide period of non-employment by the Company, if he or she is granted such Inducement Awards in connection with his or her commencement of employment with the Company and such grant is an inducement material to his or her entering into employment with the Company.

A summary of the shares available for issuance under the 2020 Plan and Inducement Plan (collectively, the “Incentive Plans”) is as follows:


	2020 Plan	Inducement Plan
Balance at December 31, 2023	294	—
Authorized	566	100
Granted/Awarded	(31)	(4)
Cancelled/Forfeited	140	—
Balance at March 31, 2024	969	96

The exercise price of incentive stock options (“ISOs”) and nonqualified stock options (“NSOs”) shall not be less than 100% of the fair market value on the grant date of the option and the term may not exceed 10 years. The exercise price of ISOs granted to a 10% stockholder shall not be less than 110% of the estimated fair market value on the grant date of the option and the term may not exceed five years. To date, options have a term of 10 years and generally vest over one to four years from the grant date.

Option award activity under the Incentive Plans is set forth below:


	Options Outstanding
	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2023		1,974		$	5.31		8.0	$	429
Options granted		34		$	4.12
Options exercised		(2	)	$	2.65
Options cancelled/forfeited		(108	)	$	6.45
Outstanding at March 31, 2024		1,898		$	5.23		8.1	$	332

Vested and expected to vest at March 31, 2024		1,898		$	5.23		8.1	$	332
Vested and exercisable at March 31, 2024		1,088		$	5.94		7.7	$	107

The weighted average grant date fair value of options granted during the three months ended March 31, 2024 was $2.38. The total fair value of options vested during the three months ended March 31, 2024 was approximately $540. Total unrecognized compensation expense of $2,006 related to stock options will be recognized over a weighted average period of 2.0 years.

The following table summarizes information about stock options outstanding and vested as of March 31, 2024:


	Options Outstanding						Options Vested
Exercise Price	Options Outstanding		Weighted Average Remaining Contractual Term (in Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$2.15 - $3.10		355		8.8	$	2.66		102	$	2.66
$3.23		422		9.2	$	3.23		193	$	3.23
$3.27 - $5.95		54		8.3	$	4.63		12	$	5.78
$6.04		413		7.7	$	6.04		225	$	6.04
$6.07 - $8.62		654		7.1	$	7.44		556	$	7.45
		1,898		8.1	$	5.23		1,088	$	5.94

The Company estimated the fair value of stock-options using the Black-Scholes option pricing model. The fair value of stock options is being amortized on a straight-line basis over the requisite service period of the awards. The fair value of stock options was estimated using the following assumptions for the three months ended March 31, 2024 and 2023:

Expected term: The expected term for the Company’s stock-based compensation awards was based on an index of the expected terms of a group of comparable publicly-traded medical device and other peer companies, which the Company believed was representative of the expected term of its awards.

Risk-free interest rate: The risk-free interest rate was based on the rates paid on securities issued by the U.S. Treasury with a term approximating the expected term.

Expected volatility: The expected volatility for the Company’s stock-based compensation awards was based on an index of the historical volatilities of a group of comparable publicly-traded medical device and other peer companies, which the Company believed was representative of the volatility of its common stock.

Expected dividend yield: The Company does not intend to pay dividends for the foreseeable future. Accordingly, the Company used a dividend yield of zero in the assumptions.

Restricted stock units granted to employees and non-employees generally vest over one to four years in annual equal increments. The fair value of restricted stock units is based on the Company’s closing stock price on the date of grant.

Restricted stock unit activity under the Incentive Plans is set forth below:


	Restricted Stock Units Outstanding
	Number of Units			Weighted Average Grant Date Fair Value Per Share
Non-vested at December 31, 2023		483		$	3.04
Restricted stock units granted		2		$	3.55
Restricted stock units vested		(84	)	$	3.26
Restricted stock units cancelled		(14	)	$	2.65
Non-vested at March 31, 2024		387		$	3.01

The total fair value of restricted stock units vested during the three months ended March 31, 2024 was approximately $274. At March 31, 2024 there was approximately $656 of total unrecognized compensation expense related to restricted stock units, which is expected to be recognized over a weighted-average period of 0.9 years.

In September 2020, the Board of Directors approved the LENSAR, Inc. 2020 Employee Stock Purchase Plan (the “2020 ESPP”), under which eligible employees are permitted to purchase common stock at a discount through payroll deductions. A total of 340 shares of common stock were initially reserved for issuance. The number of shares available for issuance under the 2020 ESPP includes an increase on the first day of each fiscal year, beginning in 2022, by an amount equal to the lesser of (i) 1.0% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year; or (ii) a lesser amount as determined by the Board of Directors. As of March 31, 2024, the Company has reserved 564 shares of common stock for issuance under the 2020 ESPP. The price of the common stock purchased will be the lower of 85% of the fair market value of the common stock at the beginning of an offering period or at the end of a purchase period. The 2020 ESPP is intended to qualify as an "employee stock purchase plan" within the meaning of Section 423 of the Code.

As of March 31, 2024, 304 shares of common stock have been issued to employees participating in the 2020 ESPP and 260 shares were available for future issuance under the 2020 ESPP. The grant date fair value of the shares to be issued under the Company’s 2020 ESPP was estimated using the Black-Scholes valuation model.

The following table sets forth the total stock-based compensation expense recognized under the Incentive Plans and the 2020 ESPP in the Company's condensed statements of operations:


	Three Months Ended March 31,
	2024		2023
Revenue – product	$	2	$	—
Cost of revenue – product		51		83
Cost of revenue – service		29		46
Selling, general and administrative expenses		484		1,426
Research and development expenses		86		171
Total	$	652	$	1,726

Total unrecognized stock-based compensation expense is expected to be amortized as follows:


Fiscal Year	Amount
Remainder of 2024	$	1,414
2025		1,000
2026		222
2027		26
2028		—
Total unrecognized stock-based compensation expense	$	2,662

The amounts included in this table are based on restricted stock units and stock options outstanding at March 31, 2024 and assumes the requisite service period is fulfilled for all awards outstanding. Actual stock-based compensation expense in future periods may vary from those reflected in the table.