LENSAR, Inc. Income Taxes Disclosure

Note 15. Income Taxes

The Company has elected to prospectively adopt ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures (“ASU 2023-09”) during the year ended December 31, 2025. A reconciliation of the income tax

Deferred tax assets and liabilities are determined based on the differences between financial reporting and income tax bases of assets and liabilities, as well as net operating loss carryforwards, and are measured using the enacted tax rates

and laws in effect when the differences are expected to reverse. The significant components of the Company’s net deferred tax assets and liabilities are as follows:

Income taxes paid, net of refunds received were not material for the year ended December 31, 2025.

The deferred tax assets associated with net operating losses included in the table above for the years ended December 31, 2025 and 2024 reflect the net operating losses the Company generated in previous years’ federal and state income tax returns in addition to losses the Company expects to generate on its federal and state income tax returns.

As of December 31, 2025 and 2024, the Company maintained U.S. federal net operating loss carryforwards of $52,559 and $37,673, respectively. As of December 31, 2025 and 2024, the Company also maintained state net operating loss carryforwards of $36,052 and $26,204, respectively. The U.S. federal net operating losses generated during years ended December 31, 2025 and 2024 (and not Code Section 382 limited; see below) may only be utilized to offset 80% of taxable income annually and may be carried forward indefinitely. Certain of the state net operating loss carryforwards generated will begin expiring in the year 2028, if not utilized.

Certain of our U.S. federal and state tax attributes are subject to change of ownership limitations provided by the Code and similar state provisions. In general, if the aggregate change in stock ownership of one or more stockholders or groups of stockholders owning at least 5% of a corporation’s stock exceeds 50 percentage points (by value) over a rolling three-year period (a “Section 382 ownership change”), utilization of such corporation’s pre-change NOL and credit carryforwards are subject to an annual limitation. The Company completed a Code Section 382 study through December 31, 2023 and determined that a Section 382 ownership change occurred on May 18, 2023 in connection with the Private Placement. At the time, the Company was in a net unrealized built-in loss position (“NUBIL”). The amount of pre-change NOL carryforwards which are subject to this limitation are $25,741.

As of December 31, 2025, the Company determined that it continued to be more likely than not that certain deferred tax assets would not be realized in the near future and maintained a $26,142 valuation allowance against deferred tax assets. The net change in total valuation allowance between the years ended December 31, 2025 and 2024 was an increase of $5,867 and the net change between the years ended December 31, 2024 and 2023 was an increase of $2,404. The Company’s determination was based on its review and analysis of all the available evidence as of the balance sheet date, both positive and negative.

The uncertainty provisions of ASC 740 also require the Company to recognize the impact of a tax position in its financial statements only if the technical merits of that position indicate that the position is more likely than not of being sustained upon audit. During the years ended December 31, 2025 and 2024, the Company did not record a reserve for uncertain tax positions.

The Company’s income tax returns for periods separate from the consolidation with PDL are subject to examination by U.S. federal, state and local tax authorities for tax years 2021 forward. The Company's separate state and local tax returns are generally not subject to examination by authorities for tax years prior to 2017; however, as we utilize our net operating loss carryforwards, prior years can be subject to examination from 2012 forward. The Company is not currently under examination in any significant tax jurisdictions. Interest and penalties associated with unrecognized tax benefits accrued on the balance sheet were $0 as of December 31, 2025 and 2024.

The 2017 Tax Cuts and Jobs Act required taxpayers to capitalize research and experimental (“R&E”) expenditures effective for taxable years beginning after December 31, 2021. R&E expenditures attributable to U.S.-based research were required to be amortized over a period of 5 years and R&E expenditures attributable to research conducted outside of the U.S. were required to be amortized over a period of 15 years. On July 4, 2025, new U.S. tax legislation was signed into law (known as the “One Big Beautiful Bill Act”) which generally allows taxpayers to (i) immediately deduct R&E expenditures attributable to U.S.-based research paid or incurred in taxable years beginning after December 31, 2024 and (ii) elect to accelerate, over a period of one or two years, any unamortized R&E expenditures attributable to U.S.-based research incurred in taxable years beginning after December 31, 2021 and before January 1, 2025. These tax law changes have not had a material impact on the financial statements.