14. STOCK-BASED COMPENSATION

In April 2014, the Company adopted the Medical Transcription Billing, Corp. 2014 Equity Incentive Plan (the “2014 Plan”), reserving a total of 1,351,000 shares of common stock for grants to employees, officers, directors and consultants. During April 2017, the 2014 Plan was amended whereby an additional 1,500,000 shares of common stock and 100,000 shares of Preferred Stock were added to the plan for future issuance. The name of the 2014 Plan was changed to the Amended and Restated Equity Incentive Plan (the “Incentive Plan”). As of December 31, 2017, 1,211,234 shares of common stock and 27,200 shares of Preferred Stock are available for grant. Permissible awards include incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, RSUs, performance stock and cash-settled awards and other stock-based awards in the discretion of the Compensation Committee of the Board of Directors including unrestricted stock grants.

The equity based RSUs contain a provision in which the units shall immediately vest and become converted into common shares at the rate of one common share per RSU, immediately after a change in control, as defined in the award agreement.

Common stock

During November 2016, a total of 120,000 restricted shares were granted to the four outside members of the Board of Directors which vested on January 3, 2017.

During the third quarter of 2017, a total of 200,000 RSUs of common stock were granted equally to the four outside members of the Board of Directors and a total of 300,000 RSUs of common stock were granted equally to three executive officers. The RSUs vest over the next two years, at six month intervals.

The following table summarizes the RSU and restricted stock transactions related to the common stock under the Incentive Plan for the years ended December 31, 2017 and 2016:

As of December 31, 2017 and 2016, there was approximately $793,000 and $245,000 of total unrecognized compensation cost related to these RSUs.

Of the total outstanding and unvested at December 31, 2017, 575,834 RSUs are classified as equity and 30,135 RSUs are classified as a liability.

The following table summarizes the share activity during the years ended December 31, 2017 and 2016 and the amount of shares available for grant at December 31, 2017:

The liability for the cash-settled awards was approximately $41,000 and $31,000 at December 31, 2017 and 2016, respectively, and is included in accrued compensation in the consolidated balance sheets. During the years ended December 31, 2017 and 2016, approximately $54,000 and $58,000, respectively, was paid in connection with the cash-settled awards.

Preferred stock

In November 2016, the Compensation Committee granted cash bonuses to three executives for the successful MediGain acquisition to be paid upon the closing of additional funding, which did not occur. The expense for this bonus was recorded in 2016. In January 2017, the Board of Directors recommended that these bonuses be paid in shares of Preferred Stock, subject to shareholder approval. In April 2017, shareholder approval was obtained and 33,000 shares of Preferred Stock were issued.

In the fourth quarter of 2017, the Compensation Committee of the Board of Directors approved the issuance of a total of 33,000 restricted shares of Preferred Stock, contingent on meeting 2017 financial objectives, to three executive officers. Subsequent to year-end, the Compensation Committee determined that the financial objectives were attained and all of the shares were issued. Stock-based compensation expense recorded during 2017 for these awards was $845,000 based on the liquidation value of $25 per share which approximated the fair value on the date of the grant.

Stock-based compensation expense

The Company recognizes compensation expense on a straight-line basis over the total requisite service period for the entire award. For stock awards classified as equity, the market price of our common stock or Preferred Stock on the date of grant is used in recording the fair value of the award. For stock awards classified as a liability, the earned amount is marked to market based on the end of period common stock price. The weighted average grant date fair value of the common stock price in connection with the RSUs classified as equity was $1.73 and $1.00 for the years ended December 31, 2017 and 2016, respectively. The following table summarizes the components of share-based compensation expense for the years ended December 31, 2017 and 2016: