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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2025

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number: 001-39473

LENSAR, INC.

(Exact name of registrant as specified in its charter)


Delaware	32-0125724
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2800 Discovery Drive

Orlando, Florida 32826

(Address of principal executive offices and Zip Code)

(888) 536-7271

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	LNSR	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated Filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

As of April 28, 2025, there were 11,792,156 shares of the registrant’s Common Stock outstanding.

Table of Contents


		Page
	Forward-Looking Statements	iii
	Risk Factor Summary	v
PART I – FINANCIAL INFORMATION		1
Item 1.	Financial Statements	1
	Condensed Statements of Operations and Comprehensive Loss (Unaudited)	1
	Condensed Balance Sheets (Unaudited)	2
	Condensed Statements of Cash Flows (Unaudited)	3
	Condensed Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) (Unaudited)	5
	Notes to the Condensed Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29
PART II – OTHER INFORMATION		30
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	71
Item 3.	Defaults Upon Senior Securities	71
Item 4.	Mine Safety Disclosures	71
Item 5.	Other Information	71
Item 6.	Exhibits	73
Signatures		74

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report, including without limitation statements regarding our pending Merger (as defined below), business model and strategic plans for our products, technologies and business, including our implementation thereof; the impact on our business, financial condition and results of operation from macroeconomic conditions; the timing of and our ability to obtain and maintain regulatory approvals and certifications; our expectations about our ability to successfully commercialize and further develop our next generation system, the ALLY Robotic Cataract Laser Treatment System™ (“ALLY System”), and the timing thereof; the ALLY System's performance and market impact; the sufficiency of our cash and cash equivalents; industry trends and conditions impacting various markets in which we operate; and the plans and objectives of management for future operations and capital expenditures are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

Without limiting the foregoing, in some cases, you can identify forward-looking statements by terms such as “aim”, “may,” “will,” “should,” “expect,” “exploring,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” “seeks,” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. No forward-looking statement is a guarantee of future results, performance, or achievements, and one should avoid placing undue reliance on such statements.

Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to us. Such beliefs and assumptions may or may not prove to be correct. Additionally, such forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to, those identified in Part I. Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II. Item 1A. “Risk Factors” in this Quarterly Report. These risks and uncertainties include, but are not limited to:

•

risks associated with our entrance into an Agreement and Plan of Merger (the “Merger Agreement”) with Alcon Research, LLC, a Delaware limited liability company (“Alcon”), and VMI Option Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Alcon (“Merger Sub”) (the “Merger”);

•

the structure, timing and ability to consummate the Merger;

•

any anticipated effects of the Merger’s announcement, pendency or completion on the value of our common stock;

•

our or Alcon’s ability to obtain any required regulatory approvals in connection with the Merger;

•

any potential future costs or benefits of the Merger, including relating to expenses, restrictions on the conduct of our business, diversion of our management’s attention, ability to retain or hire employees, maintenance of relationships with collaborators, vendors and other business partners and payment of termination fees;

•

the outcome of any legal proceedings that may be instituted against us and others relating to the Merger;

•

our history of operating losses and ability to achieve or sustain profitability;

•

our ability to develop, receive and maintain regulatory clearance or certification of and successfully commercialize the ALLY System and to maintain our LENSAR Laser System (“LLS”) (collectively the “Systems”);

•

the impact to our business, financial condition, results of operations and our suppliers and distributors as a result of global macroeconomic conditions;

•

the willingness of patients to pay the price difference for our products compared to a standard cataract procedure covered by Medicare or other insurance;

•

our ability to grow our U.S. sales and marketing organization or maintain or grow an effective network of international distributors;

•

our future capital needs and our ability to raise additional funds on acceptable terms, or at all;

•

the impact to our business, financial condition and results of operations as a result of a material disruption to the supply or manufacture of our Systems or necessary component parts for such Systems or material inflationary pressures affecting pricing of component parts;

iii

•

our ability to compete against competitors that have longer operating histories, more established products and greater resources than we do;

•

our ability to address the numerous risks associated with marketing, selling and leasing our products in markets outside the United States;

•

the impact to our business, financial condition and results of operations as a result of exposure to the credit risk of our customers;

•

our ability to accurately forecast customer demand and our inventory levels;

•

the impact to our business, financial condition and results of operations if we are unable to secure adequate coverage or reimbursement by government or other third-party payors for procedures using our ALLY System or our other products, or changes in such coverage or reimbursement;

•

the impact to our business, financial condition and results of operations of product liability suits brought against us;

•

risks related to government regulation applicable to our products and operations; and

•

risks related to our intellectual property and other intellectual property matters.

Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties.

You should read this Quarterly Report and the documents that we reference in this Quarterly Report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we have no obligation to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

Unless otherwise stated or the context requires otherwise, references to “LENSAR,” the “Company,” “we,” “us,” and “our,” refer to LENSAR, Inc.

We own or have registered rights to certain trademarks, trade names, copyrights and other intellectual property used in our business, including LENSAR, the LENSAR logo, Streamline, IntelliAxis, IntelliAxis Refractive Capsulorhexis, ALLY, Intelligent Incisions, Augmented Reality, ALLY Robotic Cataract Laser System, and the ALLY Robotic Cataract Laser System logo, Robotic Laser Cataract Surgery, and the Robotic Laser Cataract Surgery logo, each of which is considered a trademark. All other company names, product names, trade names and trademarks included in this Quarterly Report are trademarks, registered trademarks or trade names of their respective owners.

RISK FACTOR SUMMARY

Our business is subject to numerous risks and uncertainties, including those described in Part II, Item 1A. “Risk Factors” in this Quarterly Report. You should carefully consider these risks and uncertainties when investing in our common stock. The principal risks and uncertainties affecting our business include the following:

•

The conditions under the Merger Agreement to our and Alcon’s consummation of the Merger may not be satisfied at all or in the anticipated timeframe.

•

The announcement of, or a failure to consummate, the Merger could negatively impact our business, financial condition, results of operations or our stock price.

•

The Merger Agreement contains provisions that could make it difficult for a third-party to acquire us prior to the completing of the Merger.

•

While the Merger Agreement is in effect, we are subject to restrictions on our business activities.

•

Securities class action and derivative lawsuits in connection with the Merger could result in substantial costs and prevent or delay the consummation of the Merger.

•

Our results have been in the past, and could be in the future, adversely affected by economic uncertainty or deteriorations in economic conditions.

•

We have experienced and expect to incur operating losses for the near-term future and we cannot assure you that we will be able to generate sufficient revenue to achieve or sustain profitability.

•

We have historically derived our revenue from the sale or lease of our Systems as well as the associated procedure licenses and sale of consumables used in each procedure involving our Systems. The commercial success of our ALLY System will depend upon receipt of additional regulatory clearances or certifications and our ability to maintain and grow significant market acceptance for it.

•

Our growth depends on our ability to gain regulatory clearances and certifications, as well as our ability to meet production goals for our ALLY System.

•

Patients may not be willing to pay for the price difference between a standard cataract procedure and an advanced cataract procedure in which a laser system such as ours is used, an increment which is typically not covered by Medicare, private insurance or other third-party payors.

•

If we are not able to effectively grow our U.S. sales and marketing organization or maintain or grow an effective network of international distributors, our business prospects, results of operations and financial condition could be adversely affected.

•

Our future capital needs are uncertain and we may need to raise additional funds in the future, and such funds may not be available on acceptable terms or at all.

•

If the supply or manufacture of our Systems or other products associated with the Systems is materially disrupted, including by supply chain shortages and price increases, it may adversely affect our ability to manufacture products and could negatively affect our operating results.

•

We currently compete, and expect to compete in the future against other companies, some of which have longer operating histories, more established products or greater resources than we do.

•

To successfully market, sell and lease our products in markets outside of the United States, we must address many international business risks with which we have limited experience.

•

Our products and operations are subject to extensive government regulation and oversight both in the United States and abroad, and our failure to comply with applicable requirements could harm our business.

•

We may not receive, or may be delayed in receiving, the necessary clearances, certifications or approvals for our future products, or modifications to our current products, and failure to timely obtain additional clearances, certifications or approvals

for our ALLY System and future products or modifications to our current products would adversely affect our ability to grow our business.

•

Our success will depend on our ability to obtain, maintain and protect our intellectual property rights.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

LENSAR, Inc.

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended March 31,
	2025			2024
Revenue
Product	$	10,918		$	7,433
Lease		1,884			1,947
Service		1,357			1,208
Total revenue		14,159			10,588
Cost of revenue (exclusive of amortization)
Product		4,466			2,590
Lease		830			603
Service		1,738			1,731
Total cost of revenue		7,034			4,924
Operating expenses
Selling, general and administrative expenses		11,149			6,796
Research and development expenses		1,534			1,444
Amortization of intangible assets		232			274
Total operating expenses		12,915			8,514
Operating loss		(5,790	)		(2,850	)
Other (expense) income
Change in fair value of warrant liabilities		(21,714	)		495
Other income, net		159			198
Net loss		(27,345	)		(2,157	)
Other comprehensive loss
Change in unrealized loss on investments		(3	)		(5	)
Net loss and comprehensive loss	$	(27,348	)	$	(2,162	)
Net loss per common share:
Basic and diluted	$	(2.32	)	$	(0.19	)
Weighted-average number of common shares used in calculation of net loss per share:
Basic and diluted		11,774			11,387

The accompanying notes are an integral part of these condensed financial statements

LENSAR, Inc.

CONDENSED BALANCE SHEETS

(Unaudited)

(In thousands, except per share amounts)


	March 31, 2025			December 31, 2024
Assets
Current assets:
Cash and cash equivalents	$	19,547		$	16,263
Short-term investments		5,700			6,192
Accounts receivable, net of allowance of $85 and $105, respectively		6,885			6,085
Notes receivable, net of allowance of $7 and $8, respectively		357			395
Inventories		15,324			11,428
Prepaid and other current assets		1,373			1,616
Total current assets		49,186			41,979
Property and equipment, net		577			664
Equipment under lease, net		13,902			13,767
Notes and other receivables, long-term, net of allowance of $19 and $23, respectively		937			1,160
Intangible assets, net		5,880			6,112
Other assets		2,477			2,615
Total assets	$	72,959		$	66,297
Liabilities, redeemable convertible preferred stock, and stockholders’ (deficit) equity
Current liabilities:
Accounts payable	$	7,754		$	5,995
Accrued liabilities		6,910			6,807
Deferred revenue		1,993			1,677
Operating lease liabilities		517			524
Acquisition-related deposit		10,000			—
Total current liabilities		27,174			15,003
Long-term operating lease liabilities		1,956			2,090
Warrant liabilities		51,570			29,856
Other long-term liabilities		616			702
Total liabilities		81,316			47,651
Commitments and contingencies (Note 10)
Series A Redeemable Convertible Preferred Stock, par value $0.01 per share, 20 shares authorized at March 31, 2025 and December 31, 2024; 20 shares issued and outstanding at March 31, 2025 and December 31, 2024; aggregate liquidation preference of $20,000 at March 31, 2025 and December 31, 2024		13,784			13,784
Stockholders’ (deficit) equity:
Preferred stock, par value $0.01 per share, 9,980 shares authorized at March 31, 2025 and December 31, 2024; no shares issued and outstanding at March 31, 2025 and December 31, 2024		—			—
Common stock, par value $0.01 per share, 150,000 shares authorized at March 31, 2025 and December 31, 2024; 11,790 and 11,654 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively		118			116
Additional paid-in capital		148,378			148,035
Accumulated other comprehensive income		3			6
Accumulated deficit		(170,640	)		(143,295	)
Total stockholders’ (deficit) equity		(22,141	)		4,862
Total liabilities, redeemable convertible preferred stock, and stockholders’ (deficit) equity	$	72,959		$	66,297

The accompanying notes are an integral part of these condensed financial statements

LENSAR, Inc.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Three Months Ended
	March 31,
	2025			2024
Cash flows from operating activities
Net loss	$	(27,345	)	$	(2,157	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		844			647
Amortization of intangible assets		232			274
Non-cash operating lease cost		138			134
Provision for expected credit losses		(25	)		4
Write-down of inventory		—			144
Loss on disposal of property and equipment		58			—
Stock-based compensation expense		654			652
Change in fair value of warrant liabilities		21,714			(495	)
Amortization on investments, net		(47	)		(51	)
Changes in operating assets and liabilities:
Accounts receivable		(743	)		(13	)
Notes receivable		226			86
Prepaid and other current assets		243			9
Inventories		(4,839	)		(3,129	)
Accounts payable		1,759			6
Accrued liabilities		103			(1,491	)
Deferred revenue		229			205
Operating lease liabilities		(141	)		(138	)
Other		2			6
Net cash used in operating activities		(6,938	)		(5,307	)
Cash flows from investing activities
Purchase of property and equipment		(6	)		(20	)
Purchase of investments		(2,963	)		(2,206	)
Investment maturities		3,500			1,000
Net cash provided by (used in) investing activities		531			(1,226	)
Cash flows from financing activities
Proceeds from acquisition-related deposit		10,000			—
Proceeds from issuance of common stock through option exercises		21			5
Net settlement of stock-based compensation awards		(330	)		(83	)
Payment of accrued offering costs allocable to preferred stock		—			(52	)
Net cash provided by (used in) financing activities		9,691			(130	)
Net increase (decrease) in cash and cash equivalents		3,284			(6,663	)
Cash and cash equivalents at beginning of the period		16,263			20,621
Cash and cash equivalents at end of the period	$	19,547		$	13,958

The accompanying notes are an integral part of these condensed financial statements

LENSAR, Inc.

CONDENSED STATEMENTS OF CASH FLOWS, continued

(Unaudited)

(In thousands)


	Three Months Ended March 31,
	2025		2024
Supplemental cash flow information
Cash paid for interest	$	1	$	13


Supplemental schedule of non-cash investing and financing activities
Transfer from Inventories to Equipment under lease, net	$	944	$	858
Accounts payable for purchases of Property and equipment, net	$	—	$	(106	)

The accompanying notes are an integral part of these condensed financial statements

LENSAR, Inc.

CONDENSED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

(In thousands)


															Accumulated
	Series A														Other			Total
	Redeemable Convertible								Additional						Comprehensive			Stockholders’
	Preferred Stock				Common Stock				Paid-in			Accumulated			Income			Equity
	Shares		Amount		Shares		Amount		Capital			Deficit			(Loss)			(Deficit)
Balance as of December 31, 2024		20	$	13,784		11,654	$	116	$	148,035		$	(143,295	)	$	6		$	4,862
Exercise of stock options under the Incentive Plans		—		—		5		—		21			—			—			21
Issuance of common stock under the Incentive Plans, net of forfeitures		—		—		131		2		(332	)		—			—			(330	)
Stock-based compensation under the Incentive Plans		—		—		—		—		654			—			—			654
Net loss		—		—		—		—		—			(27,345	)		—			(27,345	)
Change in unrealized loss on investments		—		—		—		—		—			—			(3	)		(3	)
Balance as of March 31, 2025		20	$	13,784		11,790	$	118	$	148,378		$	(170,640	)	$	3		$	(22,141	)


															Accumulated
	Series A														Other
	Redeemable Convertible								Additional						Comprehensive			Total
	Preferred Stock				Common Stock				Paid-in			Accumulated			Income			Stockholders’
	Shares		Amount		Shares		Amount		Capital			Deficit			(Loss)			Equity
Balance as of December 31, 2023		20	$	13,747		11,327	$	113	$	145,203		$	(111,891	)	$	4		$	33,429
Exercise of stock options under the Incentive Plans		—		—		2		—		5			—			—			5
Issuance of common stock under the Incentive Plans, net of forfeitures		—		—		66		1		(90	)		—			—			(89	)
Stock-based compensation under the Incentive Plans		—		—		—		—		652			—			—			652
Net loss		—		—		—		—		—			(2,157	)		—			(2,157	)
Change in unrealized loss on investments		—		—		—		—		—			—			(5	)		(5	)
Balance at March 31, 2024		20	$	13,747		11,395	$	114	$	145,770		$	(114,048	)	$	(1	)	$	31,835

The accompanying notes are an integral part of these condensed financial statements

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS

(Unaudited)

(In thousands, except per share amounts)

Note 1. Overview and Basis of Presentation

Overview and Organization

LENSAR, Inc. (“LENSAR” or the “Company”) is a global medical device business focused on the design, development and commercialization of advanced technology for the treatment of cataracts and management of astigmatism to achieve improved visual outcomes for patients. The Company is a public company whose stock is listed and trading under the symbol “LNSR” on The Nasdaq Stock Market LLC (“Nasdaq”). The Company’s revenue is derived from the sale and lease of the Company’s LENSAR Laser System (“LLS”) and ALLY Robotic Cataract Laser System™ (“ALLY System”) (collectively the “Systems”), which may include equipment, a consumable referred to as the Patient Interface Device (“PID”), procedure licenses, training, installation, limited warranty and maintenance agreements through extended warranty. The Company has developed its ALLY System as a compact, highly ergonomic system utilizing an extremely fast dual-modality laser and integrating artificial intelligence (“AI”) into proprietary imaging and software. The ALLY System is designed to transform premium cataract surgery by utilizing LENSAR’s advanced robotic technologies with the ability to perform the entire procedure in a sterile operating room or in-office surgical suite, delivering operational efficiencies and reducing overhead. The ALLY System is available to U.S. and European Union cataract surgeons and has also received regulatory clearance in India, Taiwan, South Korea, and certain other countries. In addition, the Company is pursuing an additional marketing or certification application through its distributor in China.

On March 23, 2025, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), with Alcon Research, LLC (“Alcon”) and VMI Option Merger Sub, Inc. (“Merger Sub”). The Merger Agreement provides that, subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger”), with the Company continuing as the surviving corporation of the Merger and as a wholly-owned subsidiary of Alcon. Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of the Company’s common stock outstanding immediately prior to the Effective Time (subject to certain customary exceptions specified in the Merger Agreement) will be cancelled and converted automatically into the right to receive (i) $14.00 in cash, without interest, and subject to applicable taxes, plus (ii) one contingent value right per share, representing the right to receive one contingent payment of $2.75 in cash, without interest, upon achievement of 614,000 cumulative procedures with the Company’s products between January 1, 2026 and December 31, 2027. The Merger Agreement contains customary covenants and agreements, including with respect to the operations of the business of the Company between signing and closing. The Merger is expected to close in mid-to-late 2025, subject to customary closing conditions, including approval by the Company’s stockholders and regulatory approvals. The Merger Agreement includes customary termination rights for the Company and Alcon. Upon termination of the Merger Agreement in certain circumstances, the Company will be required to pay Alcon a termination fee of $8,500.

The Company received a $10,000 cash deposit towards the aggregate cash consideration, which is classified as a current liability on the condensed balance sheet at March 31, 2025. The deposit is considered the property of Alcon in accordance with the terms of the Merger Agreement. In connection with a termination of the Merger Agreement under certain specified circumstances, including if Alcon breaches its obligations such that the Company is entitled to terminate the Merger Agreement or the Merger has not been successfully completed by April 23, 2026, subject to an extension under certain circumstances solely at the election of Alcon to July 23, 2026, a governmental authority of competent jurisdiction has issued a final non-appealable governmental order prohibiting the Merger, and, at the time of such termination, the only remaining conditions to closing relate to certain regulatory approvals, the Company will be permitted to keep the deposit. If the Merger Agreement is terminated for any other reason, the Company shall refund the deposit to Alcon.

Other than the foregoing-described deposit and acquisition-related costs as described under “Acquisition-Related Costs” in Note 2, Summary of Significant Accounting Policies, the terms of the Merger Agreement did not impact the Company’s condensed financial statements for the three months ended March 31, 2025.

The Company has incurred recurring losses and operating cash outflows since its inception and, as of March 31, 2025, had an accumulated deficit of $170,640. The Company expects to continue to incur losses and cash outflows from operating activities for the near-term future. Pricing increases in component parts for the ALLY System resulting from inflationary pressures and related macroeconomic conditions may necessitate an increase in overall cost to customers, which in turn may have an adverse impact on customer demand.

Management believes the Company’s cash, cash equivalents, and investments on hand, together with cash generated from the future sale and lease of products, will provide sufficient funds for its operating, investing, and financing cash flows for a period of at least twelve months from the date of issuance of these financial statements. The Company expects annual revenue and selling, general and administrative expenses to increase from current levels associated with the increase in ALLY System placements. The U.S. government

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS

(Unaudited)

(In thousands, except per share amounts)

has recently implemented significant changes in U.S. trade policy and taken certain actions that may impact the Company’s business, including imposing tariffs on certain goods imported into the United States. Some of these changes have triggered retaliatory actions by affected countries that could negatively impact demand for the Company’s products in these regions, as well as negatively impact the Company’s gross profit margin. In addition, the Company’s growth depends in part on the Company’s ability to produce the ALLY System in sufficient quantities, within requested timelines and at an acceptable price to satisfy customer demand. The Company’s liquidity needs will be largely determined by the Company’s ability to continue to successfully commercialize its products and the progression, additional regulatory clearances or certifications and launch of the ALLY System in additional jurisdictions in the future. In the future, the Company may need to raise additional capital through equity or debt financings, borrowings under credit facilities or from other sources in the future. The Company may issue securities, including common stock, preferred stock, warrants, and/or debt securities through private placement transactions or registered public offerings in the future. The Company’s ability to raise additional funds will depend, among other factors, on financial, economic and market conditions, many of which are outside of the Company’s control, and the Company may be unable to raise financing when needed, or on terms favorable to the Company. If the necessary funds are not available from these sources, the Company may have to delay, reduce or suspend the scope of its sales and marketing efforts, research and development activities, or other components of its operations.

Basis of Presentation

These condensed financial statements are unaudited and have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to the regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information and, therefore, omit or condense certain footnotes and other information normally included. The condensed financial statements include all adjustments (consisting only of normal recurring adjustments) that management of the Company believes are necessary for a fair statement of the periods presented. These interim financial results are not necessarily indicative of results expected for the full fiscal year. The December 31, 2024 condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP.

The accompanying unaudited condensed financial statements and related financial information should be read in conjunction with the Company’s annual audited financial statements and the related notes thereto for the fiscal year ended December 31, 2024, included in the Annual Report on Form 10-K (the “Annual Report”) as filed with the SEC on February 27, 2025.

Note 2. Summary of Significant Accounting Policies

Other than policies noted below, there have been no significant changes to the significant accounting policies disclosed in Note 2, Summary of Significant Accounting Policies, of the annual audited financial statements included in the Annual Report.

Accounting Estimates

The preparation of condensed financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed financial statements and accompanying notes to the condensed financial statements. The accounting estimates that require management’s most significant, difficult and subjective judgments include, but are not limited to, revenue recognition and allowance for expected credit losses, the valuation of notes receivable and inventory, the assessment of recoverability of intangible assets and their estimated useful lives, the valuation and recognition of stock-based compensation, operating lease right-of-use assets and liabilities, the recognition and measurement of current and deferred income tax assets and liabilities, and the valuation of warrant liabilities. Management evaluates its estimates on an ongoing basis as there are changes in circumstances, facts, and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from these estimates.

As of the date of issuance of these unaudited condensed interim financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update estimates, judgments or revise the carrying value of any assets or liabilities.

Derivative Financial Instruments

The Company evaluates financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, Derivatives and Hedging (“ASC 815”). For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed statements of operations. Warrants issued by the Company that do not

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS

(Unaudited)

(In thousands, except per share amounts)

meet the criteria for equity treatment are recorded as liabilities. We do not use financial instruments or derivatives for any trading purposes.

Fair Value Measurement

The fair value of the Company’s financial instruments are estimates of the amounts that would be received if the Company were to sell an asset or the Company paid to transfer a liability in an orderly transaction between market participants at the measurement date or exit price. The assets and liabilities are categorized and disclosed in one of the following three categories:

•

Level 1—based on quoted market prices in active markets for identical assets and liabilities.

•

Level 2—based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•

Level 3—based on unobservable inputs using management’s best estimate and assumptions when inputs are unavailable.

Fair value measurements are classified in their entirety based on the lowest level of input that is significant to their fair value measurement.

Acquisition-Related Costs

Acquisition-related costs of $4,225, which consists of advisory, legal, accounting, valuation and other professional or consulting fees related to and incurred in association with the Merger Agreement with Alcon, are expensed as incurred and included within selling, general and administrative expenses in the condensed statements of operations and comprehensive loss for the three months ended March 31, 2025. The Company expects to incur additional acquisition-related costs in 2025 while the merger process is ongoing.

Related Parties

The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.

In May 2023, the Company completed the Private Placement (as defined in Note 11, Redeemable Convertible Preferred Stock) with NR-GRI Partners, LP (“NR-GRI”), an affiliate of North Run Capital, LP (“North Run”). Pursuant to the terms of the Private Placement, Thomas B. Ellis and Todd B. Hammer, co-managing partners of North Run, joined the Company’s Board of Directors following the Company’s 2023 Annual Meeting of Stockholders. Refer to Note 9, Warrant Liabilities, and Note 11, Redeemable Convertible Preferred Stock, for more details related to the Private Placement.

In June 2023, the Company entered into an international distribution agreement in India with a company owned by an employee at that time. The Company established the distributor relationship to gain regulatory and operational efficiencies, as well as to establish consistent operations with all other international markets where it conducts business. During the year ended December 31, 2023, the Company began transitioning transactions with customers in India to the distributor. The Company recognized $290 in product revenue, $301 in cost of product sales, and $119 in selling, general and administrative expenses for the three months ended March 31, 2024 associated with its Indian operations. There were no amounts due from, or due to, the distributor at March 31, 2024. The related party relationship ended on April 1, 2024.

Income Taxes

Income tax expense/(benefit) from continuing operations for the three months ended March 31, 2025 and 2024 was $0 in each period, which resulted from maintaining a full valuation allowance against the Company’s net deferred tax assets.

Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), an aggregate change in stock ownership of one or more stockholders or groups of stockholders owning at least 5% of the Company’s stock that exceeds 50 percentage points (by value) over a rolling three-year period (a “Section 382 ownership change”) may result in a limitation on the amount of net operating loss and tax credit carryforwards that may be used in future years. The Company completed a Section 382 ownership change analysis through its taxable year ended December 31, 2023 and determined that, during the second quarter of 2023, the Company experienced a Section 382 ownership change in connection with the Private Placement of Series A Redeemable Convertible Preferred Stock (the “Private Placement”), triggering the application of Section 382 of the Code. Refer to Note 11, Redeemable Convertible Preferred Stock,

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS

(Unaudited)

(In thousands, except per share amounts)

for more details related to the Private Placement. The Company has not completed an analysis to determine whether any subsequent Section 382 ownership changes have occurred and thus whether additional limitations have been triggered under Sections 382 and 383 of the Code since December 31, 2023. The Company computed and applied limitations of tax deductions in the income tax provision computation for the years ended December 31, 2023 and December 31, 2024; however, these limitations do not have a material impact on the financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures, which requires (1) disclosure of specific categories in the rate reconciliation and (2) additional information for reconciling items that meet a quantitative threshold. Additionally, the amendment requires disclosure of certain disaggregated information about income taxes paid, income from continuing operations before income tax expense (benefit) and income tax expense (benefit). The standard is effective for the Company’s annual financial statements for the year ending December 31, 2025. The Company does not believe that the adoption of the standard will result in material changes to the financial statement disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), ASU 2024-03 requires disclosure in the notes to the financial statements of specified information about certain costs and expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027. ASU 2024-03 should be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of ASU 2024-03 to the financial statement disclosures.

Note 3. Revenue from Contracts with Customers

Disaggregation of Revenue

The following table summarizes the Company’s product and service revenue disaggregated by geographic region, which is determined based on customer location, for the three months ended March 31, 2025 and 2024:


	Three Months Ended March 31,
	2025		2024
United States	$	6,699	$	6,010
Asia (excluding South Korea)		3,075		884
Europe		2,246		1,415
South Korea		188		278
Other		67		54
Total1	$	12,275	$	8,641

1 The table above does not include lease revenue of $1,884 and $1,947 for the three months ended March 31, 2025 and 2024, respectively. Substantially all lease revenue originates from the United States. Refer to Note 6, Leases.

Contract Balances

The following table provides information about receivables and contract liabilities from contracts with customers:


	Classification	As of March 31, 2025		As of December 31, 2024
Accounts receivable, current	Accounts receivable, net	$	6,885	$	6,085
Accounts receivable, long-term	Notes and other receivables, long-term, net	$	—	$	38
Notes receivable, current	Notes receivable, net	$	357	$	395
Notes receivable, long-term	Notes and other receivables, long-term, net	$	937	$	1,122
Contract asset, current	Prepaid and other current assets	$	144	$	236
Deferred revenue, current	Deferred revenue	$	1,993	$	1,677
Deferred revenue, non-current	Other long-term liabilities	$	609	$	696

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS

(Unaudited)

(In thousands, except per share amounts)

Accounts Receivables, Net – Accounts receivables, net, include amounts billed and due from customers. The amounts due are stated at their net estimated realizable value and are classified as current or noncurrent based on the timing of when the Company expects to receive payment. Most customers are on pre-paid or 30-day payment terms, depending on the product purchased. The Company maintains an allowance for expected credit losses to provide for the estimated amount of receivables that will not be collected. The allowance is based upon an assessment of customer credit worthiness, historical payment experience, the age of outstanding receivables, collateral to the extent applicable and reflects the possible impact of current conditions and reasonable forecasts not already reflected in historical loss information.

The following table summarizes the activity in the allowance for credit losses:


	Amount
Accounts receivable, allowance for credit losses as of December 31, 2024	$	105
Change in provision for credit losses		(20	)
Write-offs		—
Accounts receivable, allowance for credit losses as of March 31, 2025	$	85

Accounts receivable, allowance for credit losses as of December 31, 2023	$	62
Change in provision for credit losses		(18	)
Write-offs		—
Accounts receivable, allowance for credit losses as of March 31, 2024	$	44

Notes Receivables, Net – Notes receivable, net includes amounts billed and due from customers under extended payment terms with a significant financing component. Interest rates on notes receivable range from 7.0% to 8.0%. The Company recorded interest income on notes receivable during the three months ended March 31, 2025 and 2024 of $26 and $29, respectively, in other income, net in the statement of operations.

The following table summarizes the activity in the allowance for notes receivable:


	Amount
Notes receivable, allowance for credit losses as of December 31, 2024	$	31
Change in provision for credit losses		(5	)
Write-offs		—
Notes receivable, allowance for credit losses as of March 31, 2025	$	26

Notes receivable, allowance for credit losses as of December 31, 2023	$	33
Change in provision for credit losses		(2	)
Write-offs		—
Notes receivable, allowance for credit losses as of March 31, 2024	$	31

Contract Assets – The Company's contract assets represent revenue recognized for performance obligations completed before an unconditional right to payment exists, and therefore invoicing has not yet occurred. The Company classifies contract assets in prepaid and other current assets in the Company's condensed balance sheets.

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS

(Unaudited)

(In thousands, except per share amounts)

The following table provides information about contract assets from contracts with customers:


	Amount
Contract assets as of December 31, 2024	$	236
Contract assets recognized		189
Payments received		(197	)
Write-off due to contract modification		(84	)
Contract assets as of March 31, 2025	$	144

Contract assets as of December 31, 2023	$	982
Contract assets recognized		488
Payments received		(635	)
Write-off due to contract modification		(50	)
Contract assets as of March 31, 2024	$	785

Deferred Revenue and Contract Liabilities – The Company’s deferred revenue and contract liabilities represent services and products sold to customers for which the performance obligation has not been completed by the Company. The Company classifies deferred revenue and contract liabilities as current or noncurrent based on the timing of when it expects to recognize revenue. The noncurrent portion of deferred revenue and contract liabilities is included in other long-term liabilities in the Company’s condensed balance sheets.

The following table provides information about deferred revenue and contract liabilities from contracts with customers:


	Amount
Deferred revenue and contract liabilities as of December 31, 2024	$	2,373
Billings not yet recognized as revenue		998
Beginning deferred revenue and contract liabilities recognized as revenue		(769	)
Deferred revenue and contract liabilities as of March 31, 2025	$	2,602

Deferred revenue and contract liabilities as of December 31, 2023	$	1,919
Billings not yet recognized as revenue		776
Beginning deferred revenue and contract liabilities recognized as revenue		(578	)
Deferred revenue and contract liabilities as of March 31, 2024	$	2,117

Transaction Price Allocated to Future Performance Obligations

At March 31, 2025, the revenue expected to be recognized in future periods related to performance obligations that are unsatisfied for executed contracts with an original duration of one year or more was approximately $39,815. The Company expects to satisfy its remaining performance obligations by December 31, 2029, with $10,912 to be satisfied by December 31, 2025, $10,806 to be satisfied by December 31, 2026, $9,502 to be satisfied by December 31, 2027, $5,761 to be satisfied by December 31, 2028, and $2,834 to be satisfied by December 31, 2029. The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with original expected lengths of one year or less or (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for the products delivered or services performed.

Note 4. Fair Value of Financial Instruments

The carrying value of the Company’s cash, cash equivalents, accounts receivable, accounts payable, accrued liabilities, and other current liabilities approximate fair value based on the short-term maturities of these instruments. The carrying value of the Company’s notes receivable also approximates fair value based on the associated credit risk.

The Company classifies money market funds, U.S. treasury bills and government securities, and certificates of deposit as Level 1 within the fair value hierarchy as the fair value is based on quoted prices. The Company classifies its warrant derivative liabilities as Level 3 within the fair value hierarchy as the Company estimates the fair value of the warrant liabilities using recently quoted market prices of the Company's common stock and the Black-Scholes option pricing model, refer to Note 9, Warrant Liabilities.

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS

(Unaudited)

(In thousands, except per share amounts)

The following table sets forth by level, within the fair value hierarchy, the Company's assets and liabilities at fair value as of March 31, 2025 and December 31, 2024:


	March 31, 2025
	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	5,259	$	—	$	—	$	5,259
U.S. treasury bills		3,460	—		—			3,460
U.S. government securities		1,993	—		—			1,993
Certificates of deposit		247	—		—			247
Total assets	$	10,959	$	—	$	—	$	10,959

Liabilities
Warrant derivative liabilities	$	—	$	—	$	51,570	$	51,570
Total liabilities	$	—	$	—	$	51,570	$	51,570

	December 31, 2024
	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	6,631	$	—	$	—	$	6,631
U.S. treasury bills		3,451	—		—			3,451
U.S. government securities		2,494	—		—			2,494
Certificates of deposit		247	—		—			247
Total assets	$	12,823	$	—	$	—	$	12,823

Liabilities
Warrant derivative liabilities	$	—	$	—	$	29,856	$	29,856
Total liabilities	$	—	$	—	$	29,856	$	29,856

There were no transfers between fair value hierarchy levels during three months ended March 31, 2025 and 2024.

The fair value of the Company’s financial assets that are measured at fair value on a recurring basis are as follows:


	March 31, 2025
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Cash equivalents
Money market funds	$	5,259	$	—	$	—	$	5,259
Short-term investments
U.S. treasury bills		3,460		—		—		3,460
U.S. government securities		1,992		1		—		1,993
Certificates of deposit		245		2		—		247
Total	$	10,956	$	3	$	—	$	10,959

	December 31, 2024
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Cash equivalents
Money market funds	$	6,631	$	—	$	—	$	6,631
Short-term investments
U.S. treasury bills		3,449		2		—		3,451
U.S. government securities		2,492		2		—		2,494
Certificates of deposit		245		2		—		247
Total	$	12,817	$	6	$	—	$	12,823

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS

(Unaudited)

(In thousands, except per share amounts)

The change in fair value of warrant liabilities measured on a recurring basis using unobservable Level 3 inputs for the period ended March 31, 2025 is set forth below:


	Fair Value at December 31, 2024		Change in Fair Value		Fair Value at March 31, 2025
Series A Warrant	$	15,351	$	10,944	$	26,295
Series B Warrant		14,505		10,770		25,275
Total warrant liabilities	$	29,856	$	21,714	$	51,570

Note 5. Inventories

Inventory balances were as follows:


	As of March 31, 2025		As of December 31, 2024
Finished Goods	$	4,327	$	2,936
Work-in-process		3,319		1,292
Raw Materials		7,678		7,200
Total	$	15,324	$	11,428

Note 6. Leases

Lessor Arrangements

The Company has operating leases for Systems. The Company’s leases have remaining lease terms of less than one year to five years. Lease revenue for the three months ended March 31, 2025 and 2024 was as follows:


	Three Months Ended March 31,
	2025		2024
Lease revenue	$	1,884	$	1,947

Note 7. Intangible Assets

The components of intangible assets were as follows:


	As of March 31, 2025							As of December 31, 2024
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Impairment			Net Carrying Amount
Finite-lived intangible assets:
Customer relationships 1,2	$	4,292	$	(2,756	)	$	1,536	$	4,292	$	(2,678	)	$	—		$	1,614
Acquired technology 1,3,4,5		9,200		(4,856	)		4,344		13,900		(5,459	)		(3,943	)		4,498
Acquired trademarks 1		570		(570	)		—		570		(570	)		—			—
	$	14,062	$	(8,182	)	$	5,880	$	18,762	$	(8,707	)	$	(3,943	)	$	6,112

Certain intangible assets were established upon PDL BioPharma, Inc.’s acquisition of LENSAR in May 2017. They are being amortized on a straight-line basis over a period of 15 years. The intangible assets for customer relationships are amortized on a straight-line basis or a double declining basis over their estimated useful lives up to 20 years based on the method that better represents the economic benefits to be obtained.

The Company acquired certain intangible assets for customer relationships from a domestic distributor in an asset acquisition, which are being amortized on a straight-line basis over a period of 10 years.

The Company acquired certain intangible assets from a medical technology company in an asset acquisition, which were being amortized on a straight-line basis over a period of 15 years.

In 2019, the Company acquired certain intellectual property from a third party. Pursuant to the Company's agreement with the third party, the Company made milestone payments of $2,400 during the year ended December 31, 2022.

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS

(Unaudited)

(In thousands, except per share amounts)

In April 2024, the Company notified its third-party supplier of the phacoemulsification component in the ALLY System the Company would no longer pursue integration with the supplier’s phacoemulsification unit. This resulted in a triggering event impacting certain acquired technology intangible assets and contract liabilities associated with the phacoemulsification component. The Company determined that the carrying value of the intangible assets in items 3 and 4 above exceeded the estimated recoverable amount of $0 and recorded an impairment of intangible assets of $3,943. The impairment charge was offset with the write-off of contract liabilities associated with the intangible assets of $214.

Amortization expense for three months ended March 31, 2025 and 2024 was $232 and $274, respectively.

Based on the intangible assets recorded at March 31, 2025, and assuming no subsequent additions to or impairment of the underlying assets, the remaining amortization expense is expected to be as follows:


Fiscal Year	Amount
Remainder of 2025	$	689
2026		911
2027		902
2028		695
2029		690
2030		690
Thereafter		1,303
Total remaining estimated amortization expense	$	5,880

Note 8. Accrued Liabilities

Accrued liabilities consist of the following:


	As of March 31, 2025		As of December 31, 2024
Compensation	$	2,722	$	5,002
Acquisition-related costs		2,630		—
Professional Services		462		776
Warranty		347		432
Other		749		597
Total	$	6,910	$	6,807

Note 9. Warrant Liabilities

In May 2023, the Company completed the Private Placement (as defined below), which included the issuance of warrants (the “Warrants”) to purchase an aggregate of 4,367 shares of common stock (the “Warrant Shares”). Fifty percent of the Warrants have an exercise price equal to $2.45 per share (the “Series A Warrant”), and 50% of the Warrants have an exercise price equal to $3.0625 per share (the “Series B Warrant”), subject in each instance to adjustments as provided under the terms of the Warrants. Refer to Note 11, Redeemable Convertible Preferred Stock, for more details related to the Private Placement.

Upon the occurrence of certain transactions (“Fundamental Transactions,” as defined below), the Warrants provide that they are redeemable by the holder thereof for a value determined using a Black Scholes option pricing model with inputs calculated as described in the applicable Warrant, which includes a 100% floor on the volatility input to be utilized. The Company has determined that this provision introduces leverage to the holders of the Warrants that could result in a value that would be greater than the settlement amount of a fixed-for-fixed option on the Company’s own equity shares. Accordingly, pursuant to ASC 815, the Company classified the fair value of the Warrants as a liability to be re-measured at the end of every reporting period with the change in value reported in the statements of operations. Of the $20,000 gross proceeds for the Private Placement, $5,605 was allocated to the Warrants and the remaining $14,395 was allocated to the Series A Redeemable Convertible Preferred Stock.

The Company estimated the fair value of the warrant liabilities using recently quoted market prices of the Company's common stock and the Black-Scholes option pricing model. The fair value of the warrant liabilities was estimated using the following assumptions as of March 31, 2025 and December 31, 2024:

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS

(Unaudited)

(In thousands, except per share amounts)


	March 31, 2025	December 31, 2024
Risk-free interest rate	3.9%		4.3	%
Expected term (years)	3.1		3.4
Expected volatility	61%	61%
Dividends	0.0%	0.0%

Expected term: The expected term for the warrant liabilities was based on the remaining contractual term of the Warrants.

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 warrant liabilities 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.

Note 10. Commitments and Contingencies

Purchase Obligation

The Company is a party to various supply agreements for the manufacture and supply of certain components. The supply agreements commit the Company to a minimum purchase obligation of approximately $9,877 over the next 12 months. The Company expects to meet these requirements.

Employee Retention Credit

In March 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The CARES Act provides for an Employee Retention Credit (“ERC”), which is a refundable tax credit against certain employment taxes paid in 2020 and 2021. As of March 31, 2025, the Company received substantially all of the $1,368 ERC.

Legal Matters

The medical device market in which the Company participates is largely technology driven. As a result, intellectual property rights, particularly patents and trade secrets, play a significant role in product development and differentiation. The Company makes provisions for liabilities when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

From time to time, we may become involved in various legal proceedings relating to matters incidental to the ordinary course of our business, including intellectual property, commercial, product liability, employment, class action, whistleblower and other litigation and claims, and governmental and other regulatory investigations and proceedings. We make provisions for liabilities when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

Note 11. Redeemable Convertible Preferred Stock

Series A Redeemable Convertible Preferred Stock

In May 2023, the Company entered into a Securities Purchase Agreement (the “SPA”) with NR-GRI Partners, LP (“NR-GRI”), whereby it sold to NR-GRI, for an aggregate purchase price of $20,000, 20 shares of Series A Redeemable Convertible Preferred Stock and the Warrants (the “Private Placement”). Refer to Note 9, Warrant Liabilities, for more details related to the Warrants. The Series A Redeemable Convertible Preferred Stock is convertible into 7,940 shares of common stock at the election of NR-GRI.

On August 1, 2023, the Company’s stockholders voted to approve the issuance of shares of the Company’s common stock issuable upon conversion of the shares of Series A Redeemable Convertible Preferred Stock and exercise of the Warrants. As a result of the stockholders’ approval of the Private Placement, applicable ownership limitations under Nasdaq rules were lifted, and NR-GRI became entitled to convert shares of Series A Redeemable Convertible Preferred Stock or exercise Warrants up to the full amount purchased in the Private Placement.

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS

(Unaudited)

(In thousands, except per share amounts)

Holders of Series A Redeemable Convertible Preferred Stock are entitled to vote on an as-converted basis with holders of common stock. The Series A Redeemable Convertible Preferred Stock ranks senior to the common stock as to distributions and payments upon the liquidation, dissolution and winding up of the Company, and holders of Series A Redeemable Convertible Preferred Stock participate with the holders of the common stock on an as-converted basis to the extent any dividends are declared on common stock. The shares of Series A Redeemable Convertible Preferred Stock will automatically be redeemed in connection with certain transactions (“Fundamental Transactions”), including a merger, sale of all or substantially all the assets of the Company, recapitalization, or the sale by the Company of shares resulting in more than 50% ownership by a person or group. In such event, the redemption price would be equal to the greater of the stated value of the shares of Series A Redeemable Convertible Preferred Stock or the consideration per share of common stock in the Fundamental Transaction (or in the absence of such consideration, the volume-weighted average price of the Company’s common stock immediately preceding the closing of the Fundamental Transaction).

The Series A Redeemable Convertible Preferred Stock is classified as temporary equity in the condensed balance sheet because redemption automatically occurs upon a Fundamental Transaction. However, redemption is not considered probable; therefore, the Series A Redeemable Convertible Preferred Stock is not accreted to face value. The proceeds of the transaction were allocated first to the fair value of warrants due to the classification of the warrants as a liability on the condensed balance sheet and the remainder of the proceeds were allocated to the Series A Redeemable Convertible Preferred Stock. Offering costs of $901 were allocated ratably based on the allocation of proceeds; $253 was allocated to the general and administrative expenses and $648 was allocated to Series A Redeemable Convertible Preferred Stock. Series A Redeemable Convertible Preferred Stock is presented net of offering costs on the condensed balance sheet.

In connection with the parties’ entry into the SPA, the Company and NR-GRI entered into a Registration Rights Agreement, pursuant to which the Company filed a resale registration statement on Form S-3 (No. 333-272930) with respect to the resale of the shares of the Company’s common stock issuable upon conversion of the shares of Series A Redeemable Convertible Preferred Stock and exercise of the Warrants.

Note 12. Stockholders’ Equity

Common Stock

The Company has a single class of common stock in which stockholders are entitled to one vote for each share of common stock. No cash dividend was declared on common stock during the three months ended March 31, 2025 and 2024.

Note 13. Stock-Based Compensation

Stock-Based Incentive Plans

The 2020 Plan

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, performance 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, 2025, the Company has reserved a total of 6,133 shares of common stock for issuance under the 2020 Plan.

The Inducement 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

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS

(Unaudited)

(In thousands, except per share amounts)

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, 2024	477	84
Authorized	583	—
Granted/Awarded	(397)	(4)
Cancelled/Forfeited	50	1
Balance at March 31, 2025	713	81

Stock Options

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, 2024		1,845		$	5.22		7.3	$	6,859
Options granted		4		$	10.96
Options exercised		(5	)	$	4.54
Options cancelled/forfeited		(7	)	$	6.50
Outstanding at March 31, 2025		1,837		$	5.23		7.1	$	16,329

Vested and expected to vest at March 31, 2025		1,837		$	5.23		7.1	$	16,329
Vested and exercisable at March 31, 2025		1,473		$	5.55		7.0	$	12,619

The weighted average grant date fair value of options granted during the three months ended March 31, 2025 was $2.88. The total fair value of options vested during the three months ended March 31, 2025 was approximately $284. Total unrecognized compensation expense of $851 related to stock options will be recognized over a weighted average period of 1.5 years.

The following table summarizes information about stock options outstanding and vested as of March 31, 2025:


	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		330		7.8	$	2.66		174	$	2.66
$3.23		422		8.2	$	3.23		348	$	3.23
$3.27 - $5.95

LENSAR, Inc. 10-Q