On July 9, 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 June 30, 2021 the Company has reserved 3,880 shares of common stock for issuance under the 2020 Plan.

A summary of the shares available for issuance under the 2020 Plan is as follows:

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.

	Options Outstanding
	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2020		—		$	—		—	$	—
Options granted		634		$	7.53
Options exercised		—		$	—
Options cancelled		(5	)	$	8.27
Outstanding at June 30, 2021		629		$	7.53		9.5	$	713

Vested and expected to vest at June 30, 2021		629		$	7.53		9.5	$	713
Vested and exercisable at June 30, 2021		20		$	7.86		9.8	$	16

The weighted average grant date fair value of options granted during the three and six months ended June 30, 2021 was $4.59 and $4.81, respectively. The total fair value of options vested during the three and six months ended June 30, 2021 was approximately $59 and $99, respectively. Total unrecognized compensation expense of $2,721 related to stock options will be recognized over a weighted average period of 2.9 years.

The Company estimated the fair value of stock-options using the Black-Scholes option pricing model. The fair value of employee and non-employee stock options is being amortized on a straight-line basis over the requisite service period of the awards. The fair value of employee and non-employee stock options was estimated using the following assumptions for the three and six months ended June 30, 2021:

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 has the same rights as other issued and outstanding shares of the Company’s common stock. The compensation expense related to these awards is determined using the fair market value of the Company’s common stock on the date of the grant. Under the Company’s restricted stock plans, restricted stock awards typically vest over three years and compensation expense associated with these awards is recognized on a straight-line basis over the vesting period.

	Restricted Stock Awards Outstanding
	Number of Units			Weighted Average Grant Date Fair Value Per Share
Non-vested at December 31, 2020		2,050		$	10.30
Restricted stock awards granted		—		$	—
Restricted stock awards vested		(477	)	$	10.37
Restricted stock awards cancelled		—		$	—
Non-vested at June 30, 2021		1,573		$	10.28

The total fair value of restricted stock awards vested during the three and six months ended June 30, 2021 was approximately $1,372 and $4,947, respectively. At June 30, 2021 there was approximately $9,850 of total unrecognized compensation expense related to restricted stock awards, which is expected to be recognized over a weighted-average period of 1.3 years. The number of restricted stock awards that are expected to vest are as follows: 121 in the quarter ending September 30, 2021; 120 in the quarter ending December 31, 2021; 338 in the quarter ending March 31, 2022; 140 in the quarter ending June 30, 2022; 113 in the quarter ending September 30, 2022; 113 in the quarter ending December 31, 2022; 237 in the quarter ending March 31, 2023; 136 in the quarter ending June 30, 2023; 180 in the quarter ending September 30, 2023; and 75 in the quarter ending December 31, 2023. These are based on restricted stock awards outstanding at June 30, 2021 and assumes the requisite service period is fulfilled for all awards outstanding. Actual vesting in future periods may vary from those reflected above.

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 are reserved for issuance and will be increased 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. 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 IRC.

As of June 30, 2021, 24 shares of common stock have been issued to employees participating in the 2020 ESPP and 316 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.

LENSAR had a phantom stock plan under which it granted phantom stock units to LENSAR directors and employees. In connection with the Company’s issuance of stock awards under the 2020 Plan, all remaining outstanding awards under the Phantom Stock Plan were cancelled, and no further awards are outstanding under such plan.

The following table sets forth the total stock-based compensation expense recognized under the 2020 Plan, the 2020 ESPP and the Phantom Stock Plan in the Company’s condensed statements of operations:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Cost of revenue – product	$	47	$	—	$	122	$	—
Cost of revenue – service		27		—		68		—
Selling, general and administrative expenses		1,223		41		3,207		88
Research and development expenses		133		—		353		—
Total	$	1,430	$	41	$	3,750	$	88

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

Fiscal Year	Amount
Remainder of 2021	$	2,989
2022		5,586
2023		3,475
2024		445
2025		76
Thereafter		—
Total unrecognized stock-based compensation expense	$	12,571

The amounts included in this table are based on restricted stock awards and stock options outstanding at June 30, 2021 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.

PDL had equity incentive plans under which it granted equity awards, including stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance share and performance unit awards, deferred compensation awards and other stock-based or cash-based awards. PDL granted awards to one LENSAR employee, which consisted of restricted stock awards. There were no other grants to LENSAR employees of any other award types under PDL’s equity incentive plan.

Stock-based compensation expense related to the PDL awards for the three months ended June 30, 2021 and 2020 was approximately $0 and for the six months ended June 30, 2021 and 2020 was approximately $0 and $38, respectively, recorded in selling, general, and administrative expenses.

The total fair value of restricted stock awards vested during the six months ended June 30, 2021 and 2020 was approximately $0 and $65, respectively.