In April 2014, the Company adopted its Equity Incentive Plan, reserving 1,351,000 shares of common stock for grants to employees, officers, directors and consultants. During April 2017, this plan was amended and restated whereby an additional 1,500,000 shares of common stock and 100,000 shares of Series A Preferred Stock were added to the plan for future issuance. During June 2018, the Company’s shareholders approved the addition of 200,000 preferred shares to the Equity Incentive Plan for future grants. As of June 30, 2018, 985,700 shares of common stock and 227,200 shares of Series A Preferred Stock are available for grant under our equity incentive plan. 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 RSUs

During May 2018, a total of 150,000 RSUs of common stock were granted equally to two executive officers. The RSUs vest in one-third increments over the next 15 months from the grant date. 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 transactions related to the common stock under our equity incentive plan for the six months ended June 30, 2018:

Of the total outstanding and unvested at June 30, 2018, 591,251 RSUs are classified as equity and 89,770 RSUs are classified as a liability.

The liability for the cash-settled awards was approximately $45,000 and $41,000 at June 30, 2018 and December 31, 2017, respectively, and is included in accrued compensation in the condensed consolidated balance sheets.

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.

In 2017, the Compensation Committee of the Board of Directors approved executive bonuses to be paid in shares of Series A Preferred Stock, with the number of shares and the value based on specified criteria being achieved during the year. The Company accrued for this expense as based on the probable amount to be paid.

In 2018, the Compensation Committee has again approved executive bonuses to be paid in shares of Series A Preferred Stock, with the number of shares and the amount based on specified criteria being achieved during 2018. The achievement of these criteria will be determined after the year-end. Once the Company’s shareholders added additional shares of preferred stock to the Equity Incentive Plan, the Company begun accruing for 2018 bonuses based on the probability of achieving the results. During the quarter ended June 30, 2018, approximately $154,000 was accrued for the 2018 stock bonuses and is included in stock based compensation expense.

The following table summarizes the components of share-based compensation expense for the three and six months ended June 30, 2018 and 2017: