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STOCK-BASED COMPENSATION PLAN

As of

December 31, 2020,

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

2014

Stock Plan (the

"2014

Stock Plan"). The

2014

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

June 25, 2014

and permitted 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, 2020,

there were

1,067,979

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,

2020,

total compensation expense to be recognized in future periods is

$1,353.

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

2.6

years.

The following table summarizes the compensation expense we recorded during

2020

and

2019,

related to unvested shares of restricted stock and stock options:

	Years Ended December 31,
	2020		2019
Cost of revenues	$	-	$	-
Selling expense		12		8
Engineering and product development expense		42		35
General and administrative expense		617		841
	$	671	$	884

There was

compensation expense capitalized in

2020

2019.

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

2020

and

2019

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

	2020			2019
Risk-free interest rate		0.46	%		2.35	%
Dividend yield		0.00	%		0.00	%
Expected common stock market price volatility factor		.44			.42
Weighted average expected life of stock options (years)		6.25			6.25

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

2020

and

2019

was

$1.48

and

$2.75,

respectively.

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

two

years ended

December 31, 2020:

	Number of Shares			Weighted Average Exercise Price
Options outstanding, January 1, 2019		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
Granted		113,980			3.49
Exercised		-			-
Canceled		(182,590	)		6.31
Options outstanding, December 31, 2020 (204,630 exercisable)		438,200			6.25

Restricted Stock Awards

We record compensation expense for restricted stock awards 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 for employees and over

one

year for our independent directors (

25%

at each of

March 31,

June 30,

September 30,

and

December 31

of the year in which they were granted).

August 24, 2020,

our new President and CEO received

two

restricted stock awards totaling

141,610

shares valued at

$650

as of the date of grant, which was also his hire date. Of the total shares awarded,

66,448

shares vest over

years (

25%

at each anniversary) and

75,162

vest on the

third

anniversary of the grant date at a vesting percentage that could range from

150%

of the number of shares awarded on

August 24, 2020.

The final vesting percentage will be based on the achievement of certain performance metrics, including net revenue compound annual growth rate and diluted earnings per share excluding amortization of intangibles, for specified time periods as determined by the Compensation Committee of our Board of Directors. As of

December 31, 2020,

we have estimated that these shares will vest at

100%

of the original amount awarded and are recording expense based on this estimate on a straight-line basis over the

three

year vesting period. Our estimate of the final expected vesting percentage will be reassessed and adjusted, as needed, at the end of each reporting period.

The following table summarizes the activity related to unvested restricted stock awards for the

two

years ended

December 31, 2020:

	Number of Shares			Weighted Average Grant Date Fair Value
Unvested shares outstanding, January 1, 2019		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
Granted		229,110			4.24
Vested		(89,861	)		5.32
Forfeited		(67,125	)		6.03
Unvested shares outstanding, December 31, 2020		237,155			4.93

The total fair value of the restricted stock awards that vested during the years ended

December 31, 2020

and

2019

was

$357

and

$426,

respectively, as of the vesting dates of these awards.