Note 5 – 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				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019

Cost of services	$	4	$	7	$	5	$	8
Research and development		52		36		56		38
Selling and marketing		48		4		73		4
General and administrative		126		130		179		140
Stock-based compensation expense	$	230	$	177	$	313	$	190

Stock Options. We granted stock options for 50,000 shares in the three and six months ended June 30, 2020 and no shares in the three and six months ended June 30, 2019.

Unrestricted Stock Grants. We 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 2020 and 2019 that affected financial results for the three and six month periods ended June 30, 2020 and 2019. These grants are described below.

For the three and six months ended June 30, 2020 we granted 33,000 and 243,000 shares of unrestricted stock to directors, officers, and employees, respectively. The shares will be issued in two equal installments shortly after June 30, 2020 and December 31, 2020, provided each grantee is serving as a director, officer or employee on those dates. The total stock-based compensation expense related to these grants is $0.7 million, of which $0.2 million was charged to expense in the six months ended June 30, 2020. We anticipate the remaining $0.5 million will be charged to expense ratably over the remaining two quarters of 2020.

In 2019 we granted 285,500 shares of unrestricted stock to directors, officers, and employees. We granted 120,000 shares which will be issued in four equal installments on their anniversary in September and October of 2020, 2021, 2022, and 2023, provided the grantee is serving as a director, officer, or employee on those dates. We also granted 165,500 shares throughout March, September, and October of 2019. We issued 71,500 and 94,000 shares shortly after June 30 2019 and December 31, 2019, respectively. The total stock-based compensation expense related to the 285,500 shares granted in 2019 is $947,000, of which $633,000 was charged to expense in the 2019 and $42,000 was charged to expense in six months ended June 30, 2020. We anticipate the remaining $272,000 will be charged to expense ratably through 2023.

We issued shares of common stock related to the March 2019 grant as follows: i) 58,548 net shares of common stock were issued in early July 2019 after employees surrendered 12,952 shares for which we paid $43,000 of withholding taxes on their behalf; and ii) 56,605 net shares of common stock were issued in early January 2020 after employees surrendered 14,895 shares for which we paid $50,000 of withholding taxes on their behalf.

Performance Share Award. In September 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 in September 2019 and were forfeitable if the grantee was 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 was $55,000, of which $31,000 was charged to expense in 2019 and $24,000 was charged to expense in the six months ended June 30, 2020.

In October 2019, we granted 10,000 shares of stock to an officer as a performance share award under our 2001 Nonqualified Stock Plan. The shares were issued in October 2019 and were forfeitable if the grantee was not serving as a director, officer or employee on April 1, 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 was $29,000, of which $15,000 was charged to expense in 2019 and $14,000 was charged to expense in the six months ended June 30, 2020.