F) Stock-Based Compensation. The following table presents stock-based employee compensation expenses included in our unaudited consolidated statements of comprehensive income (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018

Cost of services	$	6	$	7	$	14	$	15
Research and development		38		34		76		71
Selling and marketing		4		4		8		9
General and administrative		142		141		282		299
Stock-based compensation expense	$	190	$	186	$	380	$	394

Stock Option Grants. We may grant stock options under our 2001 Nonqualified Stock Plan. When we grant stock options, we estimate their fair value using the Black-Scholes valuation model. This valuation model takes into account the exercise price of the award, as well as a variety of significant assumptions. The assumptions used to estimate the fair value of stock options include the expected term, the expected volatility of our stock over the expected term, the risk-free interest rate over the expected term, and our expected annual dividend yield. We believe that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of our stock options. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by persons who receive equity awards.

We granted stock options for 260,000 shares in the three and nine months ended September 30, 2019 and no shares in the three and nine months ended September 30, 2018.

Unrestricted Stock Grants. We also grant unrestricted shares of stock under our 2001 Nonqualified Stock Plan. Stock-based compensation expense for stock grants is determined based on the fair market value of our stock on the date of grant, provided the number of shares in the grant is fixed on the grant date.

We granted shares of unrestricted stock in 2019 and 2018 that affected financial results for the three and nine month periods ended September 30, 2019 and 2018. These grants are described below.

September 2019 Grants. On September 19, 2019, we granted 15,000 shares of unrestricted stock to an officer. The shares will be issued in one installment shortly after December 31, 2019, provided the grantee is serving as a director, officer or employee on that date. The total stock-based compensation expense related to this grant is $41,000, of which $5,000 was charged to expense in the three and nine months ended September 30, 2019 and we anticipate the remaining $36,000 will be expensed in the fourth quarter of 2019. On September 19, 2019, we granted 80,000 shares of unrestricted stock to an officer. The shares will be issued in four equal installments shortly after September 19, 2020, September 19, 2021, September 19, 2022 and September 19, 2023, provided the grantee is serving as a director, officer or employee on those dates. The total stock-based compensation expense related to this grant is $220,000, of which $2,000 was charged to expense in the three and nine months ended September 30, 2019 and we anticipate the remaining $218,000 will be charged to expense ratably over the next sixteen quarters.

2019 Grant. On March 25, 2019, we granted 143,000 shares of unrestricted stock to directors, officers and employees. Half of those shares were issued on July 1, 2019 and the remaining 71,500 will be issued shortly after December 31, 2019, provided each grantee is serving as a director, officer or employee on those dates. The total stock-based compensation expense related to this grant is $547,000, of which $179,000 and $369,000 was charged to expense in the three and nine months ended September 30, 2019 and we anticipate the remaining $178,000 will be charged to expense in the fourth quarter of 2019.

The shares we issued on July 1, 2019 for the first installment of the 2019 grant included 58,548 net shares of common stock after employees surrendered 12,952 shares for which we paid $45,000 of withholding taxes on their behalf.

2018 Grant. In March 2018, we granted 138,000 shares of unrestricted stock to directors, officers and employees. The shares were issued in two equal installments shortly after June 30, 2018 and December 31, 2018. We expensed the entire $580,000 stock-based compensation expense related to this grant in 2018. We issued shares of common stock related to this grant as follows: i) 57,592 net shares of common stock were issued in early July 2018 after employees surrendered 11,408 shares for which we paid $51,000 of withholding taxes on their behalf; and ii) 55,278 net shares of common stock were issued in early January 2019 after employees surrendered 13,722 shares for which we paid $49,000 of withholding taxes on their behalf.

Performance Share Award. On September 19, 2019, we granted 20,000 shares of stock to an officer as a performance share award under our 2001 Nonqualified Stock Plan. The shares were issued on September 19, 2019 and will be forfeitable if grantee is not serving as a director, officer or employee on March 19, 2020. Stock-based compensation expense for this stock grant was determined based on the fair market value of our stock on the date of grant, as the number of shares in the grant was fixed on the grant date. The total stock-based compensation expense related to this grant is $55,000, of which $4,000 was charged to expense in the three and nine months ended September 30, 2019 and we anticipate the remaining $51,000 will be charged to expense ratably over the next two quarters.