On May 15, 2018, the Company’s Board of Directors authorized and approved the adoption of the 2018 Omnibus Incentive Plan, (as amended, the “2018 Plan”), which was effective upon approval by the stockholders of the Company on June 28, 2018 and under which an aggregate of 153,031 shares of common stock could be issued. This share reserve was the sum of 85,714 new shares, plus the 67,317 shares that remained available for issuance at the time of approval under the Company’s 2016 Omnibus Incentive Plan (the “2016 Plan”), the predecessor incentive plan at the time of the adoption of the 2018 Plan. On April 20, 2021, the Company’s Board of Directors authorized and approved an amendment, which was effective upon approval by the stockholders of the Company on May 25, 2021, authorizing an additional 565,000 shares of common stock to be issued under the 2018 Plan. Pursuant to the terms of the 2018 Plan, the Company is authorized to grant stock options, as well as awards of stock appreciation rights, restricted stock, unrestricted shares, restricted stock units (“RSUs”), stock equivalent units and performance-based cash awards. These awards may be granted to directors, officers, employees and eligible consultants. Vesting and the term of an option is determined at the discretion of the Company’s Board of Directors. Subsequent to the adoption of the 2018 Plan, the Company ceased granting awards under the 2016 Plan, the predecessor incentive plan. However, outstanding stock options granted prior to the effective date of the 2018 Plan are still governed by the 2016 Plan or the Company’s 2014 Stock Incentive Plan, which preceded the 2016 Plan.

As of September 30, 2021, there was an aggregate of 139,139 shares of common stock remaining available for grant under the 2018 Plan.

On July 2, 2021, the Company adopted the Helius Medical Technologies, Inc. 2021 Inducement Plan (the “Inducement Plan”), pursuant to which the Company reserved 100,000 shares of its common stock to be used exclusively for grants of awards to individuals who were not previously employees or directors of the Company, as an inducement material to the individuals’ entry into employment with the Company within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules. The Inducement Plan was approved by the Company’s Board of Directors without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules.

The Inducement Plan permits the grant of non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock and cash awards, and other share‑based awards.

As of September 30, 2021, there was an aggregate of 80,000 shares of common stock remaining available for grant under the Company’s Inducement Plan.

For the nine months ended September 30, 2021, the Company issued 554,615 stock options to employees and directors of which 13,200 were forfeited. The Company issued no stock options to consultants during the nine months ended September 30, 2021.

The following is a summary of the Company’s stock option activity during the nine months ended September 30, 2021:

				Weighted Average				Aggregate
				Remaining		Weighted		Intrinsic
	Number of			Contractual		Average		Value
	Stock Options			Life (in years)		Exercise Price		(in thousands)
Outstanding as of December 31, 2020		113,558		7.75		$	159.33	$	—
Granted		554,615					15.05		—
Forfeited/Cancelled		(26,807	)				64.55		—
Exercised		(214	)				10.50		1
Outstanding as of September 30, 2021		641,152			9.24	$	38.54	$	—
Exercisable as of September 30, 2021		271,433			8.72	$	66.81	$	—

Employee and Director Stock Options As of September 30, 2021, the unrecognized compensation cost related to non-vested time-based stock options outstanding for employees and directors, was $3.0 million which will be recognized over a weighted-average remaining vesting period of approximately 3.4 years. As of September 30, 2021, the unrecognized compensation cost related to performance-based stock options for employees was $1.2 million. Recognition of compensation expense for performance-based stock options will commence at the time it is determined to be probable that the performance conditions will be met. Compensation cost is not adjusted for estimated forfeitures, but instead is adjusted upon an actual forfeiture of a stock option.

The weighted average grant date fair value of employee and director stock options granted for the nine months ended September 30, 2021 was $10.67 per option and the grant date fair values of these stock options were estimated using the Black-Scholes option pricing model using the following weighted average assumptions:

	Nine Months Ended September 30, 2021
Stock price	$	15.14
Exercise price	$	15.05
Expected term	7.04 years
Expected volatility		78.27	%
Risk-free interest rate		1.18	%
Dividend rate		0.00	%

As of September 30, 2021, the unrecognized compensation cost related to non-vested stock options outstanding for non-employees was $3 thousand which will be recognized over a weighted-average remaining vesting period of approximately 0.1 years. Compensation cost is not adjusted for estimated forfeitures, but instead is adjusted upon an actual forfeiture of a stock option.

Beginning in the fourth quarter of 2019, certain members of the Company’s executive management team elected to receive RSUs in lieu of cash compensation under the 2018 Plan that vest upon issuance. The fair value of the RSUs was based on the closing price of the Company’s common stock on the day of the grant. Subsequent to the March 31, 2021 pay period, no members of the Company’s executive management team continued to elect to receive RSUs in lieu of cash compensation.

During the second quarter of 2021, the Company granted 2,668 RSUs to an officer of the Company under the 2018 Plan that were scheduled to vest on October 2, 2021. The fair value of the RSUs was based on the closing price of the Company’s common stock on the day of the grant. These RSUs were forfeited during the third quarter of 2021.

During the nine months ended September 30, 2021, the Company granted 6,343 RSUs to the Company’s Board of Directors pursuant to the Non-Employee Director Compensation Policy which will vest in twelve monthly installments on the last day of each month. The fair value of the RSUs is based on the closing price of the Company’s common stock on the day of the grant.

The following is a summary of the Company’s RSU award activity for the nine months ended September 30, 2021:

	Number of RSUs			Weighted Average Grant Date Fair Value per Unit
Outstanding as of December 31, 2020		168		$	13.20
Granted		9,871			15.41
Forfeited		(2,668	)		14.50
Settled		(3,428	)		15.56
Outstanding as of September 30, 2021		3,943		$	15.81

On April 1, 2021, the Company granted 5,337 shares of unrestricted Class A Common Stock to an officer of the Company under the 2018 Plan.

Stock-based compensation expense is classified in the Company’s condensed consolidated statements of operations and comprehensive loss as follows (amounts in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Research and development	$	156	$	245	$	540	$	727
Cost of sales		2		—		5		(1	)
Selling, general and administrative		582		205		3,351		1,295
Total	$	740	$	450	$	3,896	$	2,021

Stock-based compensation expense for the three and nine months ended September 30, 2020 was reduced by $0.1 million related to the forfeiture of stock options as a result of the departure of our former chief executive officer. Stock-based compensation expense for the three and nine months ended September 30, 2021 included $0.5 million in expense related to the accelerated vesting of stock options as a result of the departure of our former chief operating officer in July 2021.