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, 2022 the Company has reserved 4,429 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, 2021		653		$	7.57		9.3	$	—
Options granted		476		$	6.04
Options exercised		—		$	—
Options cancelled		(27	)	$	6.88
Outstanding at March 31, 2022		1,102		$	6.92		9.3	$	752

Vested and expected to vest at March 31, 2022		1,102		$	6.92		9.3	$	752
Vested and exercisable at March 31, 2022		203		$	7.71		9.0	$	11

The weighted average grant date fair value of options granted during the three months ended March 31, 2022 was $3.79. The total fair value of options vested during the three months ended March 31, 2022 was approximately $534. Total unrecognized compensation expense of $3,471 related to stock options will be recognized over a weighted average period of 3.2 years.

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, 2022 and 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, 2021		1,332		$	10.29
Restricted stock awards granted		—		$	—
Restricted stock awards vested		(338	)	$	10.38
Restricted stock awards cancelled		(5	)	$	10.81
Non-vested at March 31, 2022		989		$	10.26

The total fair value of restricted stock awards vested during the three months ended March 31, 2022 was approximately $3,512. At March 31, 2022 there was approximately $6,294 of total unrecognized compensation expense related to restricted stock awards, which is expected to be recognized over a weighted-average period of 1.4 years. The number of restricted stock awards that are expected to vest are as follows: 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; 175 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 March 31, 2022 and assumes the requisite service period is fulfilled for all awards outstanding. Actual vesting in future periods may vary from those reflected above.

Restricted stock units granted to employees generally vest over 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 Units Outstanding
	Number of Units		Weighted Average Grant Date Fair Value Per Share
Non-vested at December 31, 2021		—	$	—
Restricted stock units granted		60	$	6.04
Restricted stock units vested		—	$	—
Restricted stock units cancelled		—	$	—
Non-vested at March 31, 2022		60	$	6.04

At March 31, 2022 there was approximately $343 of total unrecognized compensation expense related to restricted stock units, which is expected to be recognized over a weighted-average period of 3.8 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 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 March 31, 2022, 57 shares of common stock have been issued to employees participating in the 2020 ESPP and 283 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 2020 Plan and the 2020 ESPP in the Company’s condensed statements of operations:

	Three Months Ended March 31,
	2022		2021
Cost of revenue – product	$	52	$	75
Cost of revenue – service		30		41
Selling, general and administrative expenses		1,377		1,984
Research and development expenses		148		220
Total	$	1,607	$	2,320

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

Fiscal Year	Amount
2022		4,498
2023		3,988
2024		984
2025		625
2026		13
Thereafter		—
Total unrecognized stock-based compensation expense	$	10,108

The amounts included in this table are based on restricted stock awards, restricted stock units, and stock options outstanding at March 31, 2022 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.