Note 11 - Stock Option Plan

12 Months Ended

Dec. 31, 2019

In 2014, stockholders approved the adoption of the Evans & Sutherland Computer Corporation 2014 Stock Incentive Plan (“2014 Plan”) which replaced the expired 2004 Stock Incentive Plan of Evans & Sutherland Computer Corporation (“2004 Plan”). The 2014 Plan is a stock incentive plan that provides for the grant of options and restricted stock awards to employees and for the grant of options to non-employee directors essentially the same as the 2004 Plan. Under the 2014 Plan, non-employee directors may continue to receive an annual option grant for no more than 10,000 shares. New non-employee directors may also continue to receive an option grant for no more than 10,000 shares upon their appointment or election. With the adoption of the 2014 Plan, no additional options can be issued under the 2004 Plan. Options granted under the 2004 Plan are still held by recipients and will continue to be subject to the terms and conditions of the 2004 plan which are essentially the same as the 2014 Plan. The 2014 Plan continues a minimum exercise price for options of 110% of fair market value on the date of grant. Restricted stock awards may be qualified as a performance-based award that conditions a participant’s award upon achievement by the Company or its subsidiaries of performance goals established by the Board of Directors’ Compensation Committee.

The number of shares, terms, and exercise periods of option grants are determined by the Board of Directors on an option-by-option basis. Options generally vest ratably over three years and expire ten years from the date of grant. As of December 31, 2019, options to purchase 876,981 shares of common stock were authorized and reserved for future grant.

A summary of activity follows (shares in thousands):

	2019		2018
		Weighted-		Weighted-
		Average		Average
	Number	Exercise	Number	Exercise
	of Shares	Price	of Shares	Price

Outstanding as of beginning of the year	1,597	$ 0.65	1,610	$ 0.66
Granted	166	0.80	150	1.12
Exercised	(130)	0.17	-	-
Forfeited or expired	(41)	0.66	(163)	1.21
Outstanding as of end of the year	1,592	0.71	1,597	0.65

Exercisable as of end of the year	1,523	0.61	1,131	0.48

The weighted average fair value of options granted during 2019 and 2018 was $0.40 and $0.77, respectively. As of December 31, 2019, options exercisable and options outstanding had a weighted average remaining contractual term of 4.7 and 5.8 years with aggregate intrinsic value of $276 and $276, respectively. As of December 31, 2018, options exercisable and options outstanding had a weighted average remaining contractual term of 4.7 and 5.7 years with aggregate intrinsic value of $385 and $385, respectively.

The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for the grants made in 2019 and 2018:

	2019	2018
Expected life (in years)	3.5	3.5
Risk free interest rate	2.6%	2.0%
Expected volatility	81.2%	125.0%
Dividend yield	-	-

Expected option lives and volatilities are based on historical data of the Company. The risk-free interest rate is calculated as the average US Treasury bill rate that corresponds with the option life. Historically, the Company has not declared dividends and there are no plans to do so.

As of December 31, 2019, there was approximately $76 of total unrecognized share-based compensation cost related to grants collectively under the 2004 Plan and 2014 Plan that will be recognized over a weighted-average period of 1.9 years. As of December 31, 2018, there was approximately $90 of total unrecognized share-based compensation cost related to grants collectively under the 2004 Plan and 2014 Plan that will be recognized over a weighted-average period of 1.9 years.

Share-based compensation expense, from awards collectively under the 2004 Plan and 2014 Plan for the years ended December 31, 2019 and 2018 amounted to $95 and $149, respectively, and was included in general and administrative expense on the statements of comprehensive income.

EVANS & SUTHERLAND COMPUTER CORP 10-K