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STOCK-BASED COMPENSATION

As of

March 31, 2021,

we had unvested restricted stock awards and stock options outstanding which were granted under stock-based compensation plans that are described more fully in Note

to the consolidated financial statements in our

2020

Form

-K.

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

March 31, 2021,

total compensation expense to be recognized in future periods is

$2,787.

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

2.8

years. The following table shows the allocation of the compensation expense we recorded during the

three

months ended

March 31, 2021

and

2020,

respectively, related to stock-based compensation:

	Three Months Ended March 31,
	2021		2020
Cost of revenues	$	-	$	-
Selling expense		3		3
Engineering and product development expense		10		10
General and administrative expense		256		174
	$	269	$	187

There was

stock-based compensation expense capitalized in the

three

months ended

March 31, 2021

2020.

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

March 31, 2021,

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 is reassessed and adjusted, as needed, at the end of each reporting period.

March 10, 2021

we issued restricted stock awards totaling

18,000

shares to members of the senior management within our operating segments. These shares will 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

March 10, 2021.

The final vesting percentage will be based on the achievement of certain performance metrics related to the operating results of the business units for which these members of management are responsible. As of

March 31, 2021,

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 is reassessed and adjusted, as needed, at the end of each reporting period.

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

three

months ended

March

31,

2021:

	Number of Shares			Weighted Average Grant Date Fair Value
Unvested shares outstanding, January 1, 2021		237,155		$	4.93
Granted		81,468			10.62
Vested		(22,200	)		8.56
Forfeited		-			-
Unvested shares outstanding, March 31, 2021		296,423			6.22

The total fair value of the shares that vested during the

three

months ended

March 31, 2021

and

2020

was

$244

and

$155,

respectively, as of the vesting dates of these shares.

Stock Options

We record compensation expense for stock options based on the fair 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 the

three

months ended

March 31, 2021

and

2020

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

	2021			2020
Risk-free interest rate		1.00	%		0.48	%
Dividend yield		0.00	%		0.00	%
Expected common stock market price volatility factor		.49			.43
Weighted average expected life of stock options (years)		6.25			6.25

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

three

months ended

March 31, 2021

and

2020

was

$5.09

and

$1.55,

respectively.

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

three

months ended

March 31, 2021:

	Number of Shares			Weighted Average Grant Date Fair Value
Options outstanding, January 1, 2021 (204,630 exercisable)		438,200		$	6.25
Granted		164,800			10.62
Exercised		(99,740	)		7.19
Forfeited		-			-
Options outstanding, March 31, 2021 (144,265 exercisable)		503,260			7.49