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STOCK-BASED COMPENSATION PLAN

As of

December 31, 2019,

we have unvested restricted stock awards and stock options outstanding which were granted under the inTEST Corporation

2007

Stock Plan (the

"2007

Stock Plan") and the inTEST Corporation Second Amended and Restated

2014

Stock Plan (the

"2014

Stock Plan"). The

2007

Stock Plan was approved at our annual meeting of stockholders held on

June 13, 2007

and permitted the granting of stock options or restricted stock for up to

500,000

shares of our common stock to officers, other key employees and consultants.

further grants

may

be made under the

2007

Stock Plan. The

2014

Stock Plan was originally approved at our annual meeting of stockholders held on

June 25, 2014

and permits the granting of stock options, restricted stock, stock appreciation rights or restricted stock units for up to

500,000

shares of our common stock to directors, officers, other key employees and consultants. On

June 27, 2018,

our stockholders approved the amendment and restatement of the

2014

Stock Plan to increase the number of shares of common stock that

may

be delivered pursuant to awards granted under the

2014

Stock Plan from

500,000

1,000,000

shares. On

June 19, 2019,

our stockholders approved the amendment and restatement of the

2014

Stock Plan to increase the number of shares of common stock that

may

be delivered pursuant to awards granted under the

2014

Stock Plan from

1,000,000

2,000,000

shares. As of

December 31, 2019,

there were

1,198,935

aggregate shares available to grant under the

2014

Plan.

Our unvested restricted stock awards and stock options are accounted for based on their grant date fair value. As of

December

31,

2019,

total compensation expense to be recognized in future periods is

$1,779.

The weighted average period over which this expense is expected to be recognized is

2.7

years.

The following table summarizes the compensation expense we recorded during

2019

and

2018,

related to unvested shares of restricted stock and stock options.

	Years Ended December 31,
	2019		2018
Cost of revenues	$	-	$	-
Selling expense		8		-
Engineering and product development expense		35		9
General and administrative expense		841		645
	$	884	$	654

There was

compensation expense capitalized in

2019

2018.

Stock Options

We record compensation expense for stock options based on the fair market value of the options as of the grant date.

option

may

be granted with an exercise period in excess of

ten

years from the date of grant. Generally, stock options will be granted with an exercise price equal to the fair market value of our stock on the date of grant and will vest over

four

years.

The fair value for stock options granted during

2019

and

2018

was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

	2019			2018
Risk-free interest rate		2.35	%		2.75	%
Dividend yield		0.00	%		0.00	%
Expected common stock market price volatility factor		.42			.39
Weighted average expected life of stock options (years)		6.25			6.25

The per share weighted average fair value of stock options issued during

2019

and

2018

was

$2.75

and

$3.50,

respectively.

The following table summarizes the activity related to stock options for the

two

years ended

December 31, 2019:

	Number of Shares			Weighted Average Exercise Price
Options outstanding, January 1, 2018		76,400		$	5.98
Granted		189,800			8.14
Exercised		-			-
Canceled		(1,800	)		4.37
Options outstanding, December 31, 2018 (21,800 exercisable)		264,400			7.54
Granted		249,460			6.25
Exercised		-			-
Canceled		(7,050	)		8.45
Options outstanding, December 31, 2019 (87,900 exercisable)		506,810			6.89

Restricted Stock Awards

We record compensation expense for restricted stock awards (unvested shares) based on the quoted market price of our stock at the grant date and amortize the expense over the vesting period. Restricted stock awards generally vest over

four

years, except for restricted stock awards granted to our directors, which vest over

one

year.

The following table summarizes the activity related to unvested shares for the

two

years ended

December 31, 2019:

	Number of Shares			Weighted Average Grant Date Fair Value
Unvested shares outstanding, January 1, 2018		75,225		$	5.29
Granted		95,600			8.24
Vested		(56,075	)		7.18
Forfeited		-			-
Unvested shares outstanding, December 31, 2018		114,750			6.92
Granted		132,580			6.31
Vested		(69,974	)		6.60
Forfeited		(12,325	)		7.14
Unvested shares outstanding, December 31, 2019		165,031			6.55

The total fair value of the shares that vested during the years ended

December 31, 2019

and

2018

was

$426

and

$423,

respectively, as of the vesting dates of these shares.