Stock-based compensation expense

9 Months Ended

Sep. 30, 2017

Stock incentive plan

Stock-based compensation expense and assumptions

5. Stock-based compensation expense

Stock-based compensation expense is measured at the grant date based on fair value, and recognized as an expense over the requisite service period, net of an estimated forfeiture rate.

During the second quarter of 2017, 34,000 stock options were granted to certain employees of the Company, with a grant fair value of $53,000. The actual number of shares that will be issued upon exercise of the options is subject to the achievement of service-based vesting conditions.  Stock-based compensation expense is recorded on a straight line basis from the date of the grant over the requisite service period of 36 months.

During the second quarter of 2017, 5,000 restricted stock awards with a grant fair value of $21,000 were granted to an employee of the Company.  The final number of vested shares is subject to service-based vesting conditions.  Stock-based compensation expense is recorded on a straight line basis from the date of the grant over the applicable service period of 36 months.

During the second quarter of 2017, 0.1 million restricted stock awards with a grant fair value of $0.2 million were granted to certain members of the Company’s Board of Directors.  The final number of vested shares is subject to service-based vesting conditions.  Stock-based compensation expense is recorded on a straight line basis from the date of the grant over the requisite service period of 12 months.

The following summarizes stock-based compensation expense recognized by income statement classification:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Processing and service costs	$	16,760	$	35,051	$	86,340	$	134,112
Selling, general and administrative expenses		176,595		282,408		681,534		1,364,246
Total stock-based compensation expense	$	193,355	$	317,459	$	767,874	$	1,498,358

The following summarizes stock-based compensation expense recognized by type:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Stock options	$	120,772	$	217,537	$	503,995	$	766,766
Restricted stock awards		72,583		99,922		263,879		731,592
Total stock-based compensation expense	$	193,355	$	317,459	$	767,874	$	1,498,358