The Company's 2021 Equity Incentive Plan (the “Hyperfine Plan”) is administered by the Company's board of directors. The board of directors may grant restricted stock units (“RSUs”) and options to purchase shares either as incentive stock options or non-qualified stock options, and other stock-based awards. The option grants are subject to certain terms and conditions, option periods and conditions, exercise rights and privileges as set forth in the Hyperfine Plan.

The following table summarizes the changes in the Company’s outstanding stock options for the three and nine months ended September 30, 2022:


	Number of Options
Outstanding at January 1, 2022		7,522,136
Granted		4,231,693
Exercised		—
Forfeited		(271,368	)
Outstanding at March 31, 2022		11,482,461
Granted		699,170
Exercised		(16,375	)
Forfeited		(383,090	)
Outstanding at June 30, 2022		11,782,166
Granted		122,800
Exercised		—
Forfeited (1)		(3,360,486	)
Outstanding at September 30, 2022		8,544,480

_________________________

(1) Includes 3,124,252 options forfeited by former CEO.

In general, each award will vest based on continued service which is generally over 4 years. The grant date fair value of the award will be recognized as stock-based compensation expense over the requisite service period. The grant date fair value was determined using similar methods and assumptions as those previously disclosed by the Company.

The following table summarizes the changes in the Company’s outstanding restricted stock units for the three and nine months ended September 30, 2022:


	Number of RSUs
Outstanding at January 1, 2022		117,516
Granted		1,660,535
Vested		—
Forfeited		—
Outstanding at March 31, 2022		1,778,051
Granted		742,900
Vested		(19,220	)
Forfeited		(115,084	)
Outstanding at June 30, 2022		2,386,647
Granted		61,400
Vested		(202,876	)
Forfeited (1)		(207,654	)
Outstanding at September 30, 2022		2,037,517

_________________________

(1) Includes 150,000 RSUs forfeited by former CEO.

Included in the table above are service-based restricted stock units. During the three and nine months ended September 30, 2022, the Company granted 0.1 million and 2.5 million service-based awards, respectively, of which 649,350 RSU awards were granted to the Company’s former CEO, Dave Scott on April 26, 2022. Each award will vest based on continued service, which is generally over 3-4 years except for the former CEO RSUs awarded on April 26, 2022, which were fully vested upon grant and therefore all of the stock-based compensation expense for these fully vested awards were recognized immediately upon grant. The grant date fair value of the award will be recognized as stock-based compensation expense over the requisite service period. The fair value of restricted stock units was estimated on the date of grant based on the fair value of the Company’s Class A common stock.

On June 27, 2022, Mr. Scott delivered his resignation as the Company’s President, Chief Executive Officer and member of the Board of Directors, effective as July 29, 2022. Pursuant to the terms of the Restricted Stock Unit Award Grant Notice and Agreement dated April 26, 2022 with Mr. Scott under the Hyperfine Plan, the 649,350 RSUs awarded on April 26, 2022 will continue to remain outstanding until paid in accordance with the schedule set forth in the grant notice. In addition, 150,000 unvested RSUs and 3,124,252 unvested options held by Mr. Scott ceased to vest as of the resignation date of July 29, 2022 and were immediately forfeited. The previously recognized stock-based compensation expense of $4,501 related to these awards was recaptured in accordance with ASC 718, Compensation – Stock Compensation (“ASC 718”) as a credit to general and administrative expense.

On September 26, 2022, stockholders controlled by Jonathan M. Rothberg, Ph.D., Vice Chairperson of the Company, representing a majority in voting power with respect to the Company’s Class A common stock and the Company’s Class B common stock, approved a one-time stock option repricing (the “Option Repricing”). The Board of Directors of the Company previously approved the Option Repricing on August 24, 2022, contingent upon stockholder approval of the Option Repricing. Stock options held by Dr. Rothberg will not be repriced in the Option Repricing. The Option Repricing was effected on October 31, 2022. The repricing is treated as a modification of the original awards and the incremental compensation cost will be measured as the excess of the fair value of the modified award immediately following the option repricing over the fair value of the original award immediately prior to the option repricing on the modification date. Expense related to vested shares is expensed on the repricing date and expense related to unvested shares is being amortized over the remaining vesting period of such stock options.

The following table presents details of stock-based compensation expenses by functional line item noted within the Company's operating expenses:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2022			2021		2022		2021
Cost of sales	$	34		$	24	$	85	$	24
Research and development		339			207		1,851		829
Sales and marketing		79			15		291		52
General and administrative		(2,806	)		1,129		6,632		2,226
	$	(2,354	)	$	1,375	$	8,859	$	3,131