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)

STOCK-BASED COMPENSATION PLAN

As of

December 31, 2017,

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

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 permits 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. The

2014

Stock Plan was 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. As of

December 31, 2017,

there were

345,200

aggregate shares available to grant under these plans.

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

December 31, 2017,

total compensation expense to be recognized in future periods was

$455.

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

2.9

years.

The following table summarizes the compensation expense we recorded during

2017

and

2016,

related to unvested shares of restricted stock and stock options.

	Years Ended December 31,
	2017		2016
Cost of revenues	$	6	$	10
Selling expense		-		6
Engineering and product development expense		5		11
General and administrative expense		333		242
	$	344	$	269

There was

compensation expense capitalized in

2017

2016.

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

2017

and

2016

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

	2017			2016
Risk-free interest rate		2.14	%		1.30	%
Dividend yield		0.00	%		0.00	%
Expected common stock market price volatility factor		.39			.40
Weighted average expected life of stock options (years)		6			4

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

2017

and

2016

was

$2.64

and

$1.43,

respectively.

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

two

years ended

December 31, 2017:

	Number of Shares			Weighted Average Exercise Price
Options outstanding, January 1, 2016		-		$	-
Granted		19,800			4.37
Exercised		-			-
Canceled		-			-
Options outstanding, December 31, 2016 (none exercisable)		19,800			4.37
Granted		96,000			6.35
Exercised		-			-
Canceled		(39,400	)		6.08
Options outstanding, December 31, 2017 (4,950 exercisable)		76,400			5.98

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.

The follow

ing table summarizes the activity related to unvested shares for the

two

years ended

December 31, 2017:

	Number of Shares			Weighted Average Grant Date Fair Value
Unvested shares outstanding, January 1, 2016		63,750			3.64
Granted		86,400			4.27
Vested		(53,125	)		3.94
Forfeited		-			-
Unvested shares outstanding, December 31, 2016		97,025			4.04
Granted		66,000			6.54
Vested		(69,100	)		4.65
Forfeited		(18,700	)		5.59
Unvested shares outstanding, December 31, 2017		75,225			5.29

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

December 31, 2017

and

2016

was

$493

and

$208,

respectively, as of the vesting dates of these shares.