10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

__________________________________________________

FORM 10-Q

(Mark One)

[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, 

For the quarterly period ended March 31, 2017

or

[   ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, 

For the transition period from _____ to _____

Commission file number 001-14677 

__________________________________________________

EVANS & SUTHERLAND COMPUTER CORP

(Exact Name of Registrant as Specified in Its Charter)

Utah (State or Other Jurisdiction of Incorporation or Organization)	87-0278175 (I.R.S. Employer Identification No.)
770 Komas Drive, Salt Lake City, Utah (Address of Principal Executive Offices)	84108 (Zip Code)
Registrant's Telephone Number, Including Area Code:  (801) 588-1000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   X   No ___

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).      Yes X No ___

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [  ]	Accelerated filer [  ]
Non-accelerated filer [  ]   (Do not check if a smaller reporting company)	Smaller reporting company [X]
Emerging growth company [  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ___ No X

The number of shares of the registrant’s Common Stock (par value $0.20 per share) outstanding on May 2, 2017 was 11,352,516.

FORM 10-Q

Evans & Sutherland Computer Corporation

Quarter Ended March 31, 2017

		Page No.
	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016 (Unaudited)	3
	Condensed Consolidated Statements of Operations for the Three            Months Ended March 31, 2017 and April 1, 2016 (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the        Three Months Ended March 31, 2017 and April 1, 2016        (Unaudited)	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial  Condition and Results of Operations	10
Item 4.	Controls and Procedures	13
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	14
Item 6.	Exhibits	14
SIGNATURE		15

2

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS 

EVANS & SUTHERLAND COMPUTER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited) (In thousands, except share and per share data)

	March 31,	December 31,
	2017	2016
ASSETS
Current assets:
Cash and cash equivalents	$6,208	$6,823
Restricted cash	823	603
Accounts receivable, net	3,356	3,271
Current portion of lease receivable	236	252
Costs and estimated earnings in excess of billings on uncompleted contracts	2,813	3,038
Inventories, net	3,762	3,751
Prepaid expenses and deposits	1,063	902
Total current assets	18,261	18,640
Long-term lease receivable, net of current portion	1,023	1,083
Property and equipment, net	4,629	4,638
Goodwill	635	635
Intangible assets, net	-	-
Other assets	1,336	1,222
Total assets	$25,884	$26,218
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$1,167	$1,158
Accrued liabilities	1,539	1,400
Billings in excess of costs and estimated earnings on uncompleted contracts	6,209	6,500
Customer deposits	2,038	2,238
Current portion of retirement obligations	507	507
Current portion of pension settlement obligation	382	382
Current portion of long-term debt	214	211
Total current liabilities	12,056	12,396
Pension and retirement obligations, net of current portion	4,287	4,344
Pension settlement obligation, net of current portion	4,886	4,886
Long-term debt, net of current portion	1,709	1,764
Deferred rent obligation	1,125	1,231
Total liabilities	24,063	24,621
Commitments and contingencies
Stockholders’ equity:
Preferred stock, no par value: 10,000,000 shares authorized; no shares outstanding	-	-
Common stock, $0.20 par value: 30,000,000 shares authorized; 11,616,866 and 11,616,866 shares issued, respectively	2,323	2,323
Additional paid-in-capital	53,680	53,641
Common stock in treasury, at cost, 264,350 shares	(3,532)	(3,532)
Accumulated deficit	(48,504)	(48,689)
Accumulated other comprehensive loss	(2,146)	(2,146)
Total stockholders’ equity	1,821	1,597
Total liabilities and stockholders’ equity	$25,884	$26,218

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

EVANS & SUTHERLAND COMPUTER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited) (In thousands, except per share data)

	Three Months Ended
	March 31,	April 1,
	2017	2016
Sales	$8,043	$7,900
Cost of sales	(5,369)	(5,197)
Gross profit	2,674	2,703
Operating expenses:
Selling, general and administrative	(1,606)	(1,671)
Research and development	(701)	(587)
Pension	(58)	(66)
Total operating expenses	(2,365)	(2,324)
Operating income	309	379
Other expense, net	(109)	(128)
Income before income tax provision	200	251
Income tax provision	(15)	(15)
Net income	$185	$236
Net income per common share – basic and diluted	$0.02	$0.02
Weighted average common shares outstanding – basic	11,353	11,177
Weighted average common shares outstanding – diluted	12,052	11,801

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

EVANS & SUTHERLAND COMPUTER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (In thousands)

	Three Months Ended
	March 31,	April 1,
	2017	2016
Cash flows from operating activities:
Net income	$185	$236
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	64	73
Provision for excess and obsolete inventory	51	60
Other	82	46
Changes in assets and liabilities:
Increase in restricted cash	(220)	-
Decrease (increase) in accounts receivable	(128)	1,641
Decrease in lease receivable	76	-
Decrease (increase) in inventories	(62)	346
Increase in costs and estimated earnings in excess of billings on uncompleted contracts, net	(66)	(53)
Decrease (increase) in prepaid expenses and other assets	(275)	62
Increase in accounts payable	9	158
Increase in accrued liabilities	139	291
Decrease in pension and retirement obligations	(57)	(38)
Decrease in customer deposits	(200)	(1,072)
Decrease in deferred rent obligation	(106)	(105)
Net cash provided by (used in) operating activities	(508)	1,645
Cash flows from investing activities:
Purchases of property and equipment	(55)	(22)
Cash flows from financing activities:
Principal payments on long-term debt	(52)	(65)
Net increase (decrease) in cash and cash equivalents	(615)	1,558
Cash and cash equivalents as of beginning of the period	6,823	3,734
Cash and cash equivalents as of end of the period	$6,208	$5,292
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$28	$42
Income taxes	30	11

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

EVANS & SUTHERLAND COMPUTER CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

All dollar amounts (except share and per share amounts) in thousands.

1. GENERAL 

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Evans & Sutherland Computer Corporation and subsidiaries (collectively, the “Company” or “E&S”) have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations, and cash flows, in conformity with U.S. generally accepted accounting principles (“US GAAP”).  This report on Form 10-Q should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2016.

The accompanying unaudited condensed consolidated balance sheets, statements of operations, and statements of cash flows reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the Company’s financial position, results of operations and cash flows.  The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the full year ending December 31, 2017.  The Company operates on a calendar year with the first three fiscal quarters ending on the last Friday of the thirteenth week in the quarter.  

Revenue Recognition

Sales include revenues from system hardware and the related integrated software, database products and service contracts.  The following methods are used to determine revenue recognition:

Percentage of Completion. In arrangements that are longer in term and require significant production, modification or customization, revenue is recognized using the percentage-of-completion method.  In applying this method, the Company utilizes cost-to-cost methodology whereby it estimates the percent complete by calculating the ratio of costs incurred (consisting of material, labor and subcontracting costs, as well as an allocation of indirect costs) for each contract to its total anticipated costs for that contract.   This ratio is then utilized to determine the amount of gross profit earned based on the Company’s estimate of total gross profit at completion for each contract.  The Company routinely reviews estimates related to percentage-of-completion contracts and adjusts for changes in the period the revisions are made.  Billings on uncompleted percentage-of-completion contracts may be greater than or less than incurred costs and estimated earnings and are recorded as an asset or liability in the accompanying condensed consolidated balance sheets.

In those arrangements where software is a significant component of the contract, the Company uses the percentage-of-completion method as described above.

Completed Contract. Contract arrangements which typically require a relatively short period of time to complete the production, modification, and customization of products are accounted for using the completed contract method.  Accordingly, revenue is recognized upon delivery of the completed product, provided persuasive evidence of an arrangement exists, title and risk of loss have transferred to the customer, the fee is fixed or determinable, and collection is reasonably assured.

Multiple Element Arrangements.  Some contracts include multiple elements.  Significant deliverables in such arrangements commonly include various hardware components of the Company’s visual display systems, domes, show content and various service and maintenance elements.  Revenue earned on elements such as products, services and maintenance contracts are allocated to each element based on the relative fair values of the elements.  Relative fair values of elements are generally determined based on actual and estimated selling price.  Delivery times of such contracts typically occur within a three to six-month time period.

Other.  Other revenue consists primarily of amounts earned under maintenance contracts that are generally sold as a single element.  Revenue from product maintenance contracts, including separately priced extended warranty contracts, is deferred and recognized over the period of performance under the contract.  

6

EVANS & SUTHERLAND COMPUTER CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Anticipated Losses.  For contracts with anticipated losses at completion, a provision is recorded when the loss is probable.  After an anticipated loss is recorded, subsequent revenues and cost of sales are recognized in equal and offsetting amounts as contract costs are incurred.

Stock-Based Compensation

Compensation cost for all stock-based awards is measured at fair value on the date of grant and is recognized over the service period for awards expected to vest.  Determining the fair value of share-based awards at the grant date requires judgment, including estimating the value of share-based awards that are expected to be forfeited. Actual results and future estimates may differ from the Company’s current estimates.

Net Income Per Common Share

Basic net income per common share is computed based on the weighted-average number of common shares outstanding during the period.  Diluted net income per common share is computed based on the weighted-average number of common shares and dilutive common stock equivalents outstanding during the period. Stock options are considered to be common stock equivalents. When the Company incurs a loss, potentially dilutive common stock equivalents are excluded as their effect would be anti-dilutive, thereby increasing the net income per common share. Stock options produced common stock equivalents of 699,134 and 623,958 used to compute diluted net income per share for the three months ended March 31, 2017 and April 1, 2016, respectively.    

Inventories, net

Inventories consisted of the following:

	March 31,	December 31,
	2017	2016
Raw materials	$5,862	$5,427
Work in process	840	1,120
Finished goods	233	326
Reserve for obsolete inventory	(3,173)	(3,122)
Inventories, net	$3,762	$3,751

2. STOCK OPTION PLAN  

As of March 31, 2017, options to purchase 989,381 shares of common stock under the Company’s stock option plan were authorized and reserved for future grant.  A summary of activity in the stock option plan for the three months ended March 31, 2017 follows (shares in thousands):

		Weighted-
		Average
	Number	Exercise
	of Shares	Price
Outstanding as of beginning of the period	1,625	$0.88
Granted	140	1.39
Exercised	-
Forfeited or expired	(156)	3.62
Outstanding as of end of the period	1,609	0.66
Exercisable as of end of the period	1,145	$0.51

7

EVANS & SUTHERLAND COMPUTER CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

As of March 31, 2017, options exercisable and options outstanding had a weighted average remaining contractual term of 5.14 and 6.50 years, respectively, and had an aggregate intrinsic value of $1,145 and 1,441, respectively.

The Black-Scholes option-pricing model is used to estimate the fair value of options under the Company’s stock option plan. The weighted average values of employee stock options granted under the stock option plan, as well as the weighted average assumptions used in calculating these values during the first three months of 2017, were based on estimates as of the date of grant as follows:

Risk-free interest rate	1.47%
Dividend yield	0.00%
Volatility	176%
Expected life	3.5 years

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

As of March 31, 2017, there was approximately $277 of total unrecognized share-based compensation cost related to grants under the stock option plan that will be recognized over a weighted-average period of 3.07 years.

Share-based compensation expense included in selling, general and administrative expense in the statements of operations for each of the three-month periods ended March 31, 2017 and April 1, 2016 was $39 and $25, respectively.

8

EVANS & SUTHERLAND COMPUTER CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

3. EMPLOYEE RETIREMENT BENEFIT PLANS  

Pension and Retirement Obligations

In 2015, the Company terminated a defined pension plan and settled the resulting liabilities in exchange for a fixed obligation secured by the Company’s assets which requires payment of ten annual installments of $750 to the Pension Benefit Guaranty Corporation due annually on October 31. The Pension Settlement Obligation is recorded net of imputed interest expense at 7%, as a liability on the balance sheet.

The Company’s only remaining pension obligation is the Supplemental Executive Retirement Plan (“SERP”).

Employer Contributions

The Company is not currently required to fund the SERP.  All benefit payments are made by the Company directly to those who receive benefits from the SERP.  As such, these payments are treated as both contributions and benefits paid for reporting purposes. The Company expects to contribute and pay SERP benefits of approximately $500 in the next 12 months.  

Components of Net Periodic Benefit Expense

	Supplemental Executive
	Retirement Plan
	March 31,	April 1,
For the three months ended:	2017	2016
Interest cost	$39	$48
Amortization of actuarial loss	19	21
Amortization of prior year service cost	-	(3)
Net periodic benefit expense	$58	$66

9

Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

The following discussion should be read in conjunction with the condensed consolidated financial statements and related notes of Evans & Sutherland Computer Corporation and subsidiaries (collectively, the “Company,”  “E&S,” “we,” “us” and “our”) included in Item 1 of Part I of this quarterly report on Form 10-Q.  In addition to the historical information contained herein, this quarterly report on Form 10-Q includes certain "forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can identify these forward-looking statements by the fact they use words such as “should,” “expect,” “anticipate,” “estimate,” “target,” “may,” “project,” “guidance,” “intend,” “plan,” “believe” and other words and terms of similar meaning and expression in connection with any discussion of future operating or financial performance. One can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes to differ materially from current expectations. These statements are likely to relate to, among other things, the Company’s goals, plans and projections regarding its financial position, results of operations, cash flows, market position, product development, sales efforts, expenses, performance or results of current and anticipated products and the outcome of contingencies such as legal proceedings and financial results, which are based on current expectations that involve inherent risks and uncertainties, including internal or external factors that could delay, divert or change any of them in the next several years.

Although the Company believes it has been prudent in its plans and assumptions, no assurance can be given that any goal or plan set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. The Company undertakes no obligation to release publicly any revisions to forward-looking statements as a result of new information, future events or otherwise.

All dollar amounts are in thousands.

EXECUTIVE SUMMARY

The first three months of 2017 produced profitable results comparable to the same period of 2016. Variations in the sales and costs discussed below are within the range normally expected from period to period. The high volume of new orders in the quarter increased the revenue backlog which combined with healthy sales prospects provides a positive outlook for the remainder of 2017 and into 2018. We continue to expect variable but reasonably consistent future sales and gross profits from our current product line at annual levels sufficient to cover or exceed operating expenses and meet our obligations.

CRITICAL ACCOUNTING POLICIES  

Certain accounting policies are considered by management to be critical to an understanding of our condensed consolidated financial statements.  Their application requires significant management judgment, with financial reporting results relying on estimates about the effect of matters that are inherently uncertain.  A summary of critical accounting policies can be found in our Form 10-K for the year ended December 31, 2016.  For all of these policies, management cautions that future results rarely develop exactly as forecasted, and the best estimates routinely require modification.  

RESULTS OF OPERATIONS

Sales and Backlog

The following table summarizes our sales:

10

	Three Months Ended
	March 31, 2017	April 1, 2016
Sales	$8,043	$7,900

Sales for the first quarter of 2017 were slightly higher than the same period in 2016. The higher 2017 sales were attributable to higher sales of larger planetarium systems which offset a decrease in sales of domes and smaller planetarium systems.  

Revenue backlog increased to $26,810 as of March 31, 2017, compared to $24,444 as of December 31, 2016.  The increase in the revenue backlog is attributed to a high volume of new orders booked in the first three months of 2017. Sales prospects support the outlook for an adequate volume of new orders through the remainder of 2017 to maintain sales at an annual level comparable to 2016.  

Gross Profit

The following table summarizes our gross profit and the gross profit as a percentage of total sales:

	Three Months Ended
	March 31, 2017	April 1, 2016
Gross profit	$2,674	$2,703
Gross profit percentage	33%	34%

The variability in the gross profit percentage was due to the mix of products delivered and the types of customer contracts that contributed to the revenue recognized for the periods presented.  

Operating Expenses

The following table summarizes our operating expenses:

	Three Months Ended
	March 31, 2017	April 1, 2016
Selling, general and
administrative	$1,606	$1,671
Research and development	701	587
Pension	58	66
Total operating expenses	$2,365	$2,324

Selling, general and administrative expenses were lower in 2017 compared to 2016. This was primarily due to reduced trade show activity and agent commissions.     

Research and development expenses were higher in 2017 compared to 2016. This was due primarily to an increase in the use of engineering resources for product improvement projects as opposed to customer delivery activities.

Pension expense declined slightly in 2017 compared to 2016 due to a decrease in the interest cost on the SERP.

11

Other Expense, net

The following table summarizes our other expense:

	Three Months Ended
	March 31, 2017	April 1, 2016
Total other expense, net	$109	$128

Other expense decreased in 2017 compared to 2016 mainly due to declining interest expense on the Pension Settlement Obligation and mortgage notes.  

LIQUIDITY AND CAPITAL RESOURCES

Outlook

As discussed above in the executive summary, we believe existing liquidity resources and funds generated from forecasted revenue will be sufficient to meet our current and long-term obligations. We continue to operate in a rapidly evolving and often unpredictable business environment that may change the timing or amount of expected future cash receipts and expenditures.

Cash Flows

In the first three months of 2017, $508 of cash used in operating activities was attributable to $382 of cash provided by the net income for the period, after the effect of $197 of non-cash items plus an unfavorable change to working capital of $890. The change to working capital was driven by increases in inventory and receivables attributable to the timing of billings and new customer orders, an increase in prepaid expenses and restricted cash for performance guarantees on several large contracts, and an increase in accrued liabilities attributable to payroll schedules.

In the first three months of 2016, $1,645 of cash provided by operating activities was attributable to $415 of cash provided by the net income for the period, after the effect of $179 of non-cash items plus a favorable change to working capital of $1,230. The change to working capital was driven by the timing of progress payments from customer contracts, a decrease in inventory attributable to customer deliveries, an increase in accounts payable attributable to the timing of purchases, and an increase in accrued expenses attributable to payroll schedules.

Cash used in investing activities was $55 for the three months ended March 31, 2017 compared to $22 for the same period of 2016.  Investing activities for both periods presented consisted entirely of property and equipment purchases.  

For the three months ended March 31, 2017, financing activities used $52 of cash compared to $65 in 2016 for principal payments on mortgage notes.

Line of Credit

The Company is a party to a line-of-credit agreement with a commercial bank which permits borrowings of up to $1,100 to fund the working capital requirements of Spitz. Under the line of credit agreement, interest is charged on amounts borrowed at the lender’s prime rate less 0.25%.  Any borrowings under the Credit Agreement are secured by Spitz real and personal property and all of the outstanding shares of Spitz common stock. The line-of-credit agreement and mortgage notes (with the same commercial bank) contain cross default provisions whereby a default on either agreement will result in a default on both agreements. There were no borrowings outstanding under the line-of-credit agreement as of March 31, 2017.

12

Letters of Credit

Under the terms of financing arrangements for letters of credit, the Company is required to maintain a balance in a specific cash account equal to or greater than the outstanding value of all letters of credit issued, plus other amounts necessary to adequately secure obligations with the financial institutions who issue the letters of credit.  As of March 31, 2017 there were outstanding letters of credit and bank guarantees of $820, which are scheduled to expire during the year ending December 31, 2017.  

Mortgage Notes

As of March 31, 2017, Spitz had obligations totaling $1,923 under its two mortgage notes payable.

Item 4. CONTROLS AND PROCEDURES 

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this report.  Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective at the reasonable assurance level such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls system cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company are detected.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting identified in connection with the evaluation of disclosure controls and procedures discussed above that occurred during the quarter ended March 31, 2017, or subsequent to that date, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Our process for evaluating controls and procedures is continuous and encompasses constant improvement of the design and effectiveness of established controls and procedures and the remediation of any deficiencies which may be identified during this process.

13

PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS  

In the normal course of business, we become involved in various legal proceedings.  Although the final outcome of such proceedings cannot be predicted with certainty, we believe the ultimate disposition of any such proceedings will not have a material adverse effect on our consolidated financial position, liquidity, or results of operations.

Item 6. EXHIBITS 

31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended, filed herewith.  

31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended, filed herewith. 

32.1 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith. 

101 The following materials from this Quarterly Report on Form 10-Q for the period ended March 31, 2017, formatted in XBRL (Extensible Business Reporting Language) and filed electronically herewith: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) Notes to Condensed Consolidated Financial Statements. 

14

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 EVANS & SUTHERLAND COMPUTER CORPORATION 

Date:	May 4, 2017	By:    /s/ Paul Dailey
		Paul Dailey, Chief Financial Officer
		and Corporate Secretary
		(Authorized Officer)
		(Principal Financial and Accounting Officer)

15

EX-31.1

Exhibit 31

EX-31.2

Exhibit 31

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. 1350,

as Adopted Pursuant Section 906 of the

Sarbanes-Oxley Act of 2002

I, Jonathan Shaw, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Form 10-Q of Evans & Sutherland Computer Corporation for the quarter ended March 31, 2017, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Evans & Sutherland Computer Corporation.

Date: May 4, 2017	By:  /s/ Jonathan Shaw
	Jonathan Shaw
	Chief Executive Officer

I, Paul L. Dailey, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Form 10-Q of Evans & Sutherland Computer Corporation for the quarter ended September 30, 2016, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Evans & Sutherland Computer Corporation.

Date: May 4, 2017	By:     /s/ Paul L. Dailey
	Paul L. Dailey
	Chief Financial Officer

The foregoing certifications are being furnished solely to accompany the Report pursuant to 18 U.S.C. §1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 02, 2017
Details
Registrant Name	EVANS & SUTHERLAND COMPUTER CORP
Registrant CIK	0000276283
SEC Form	10-Q
Period End date	Mar. 31, 2017
Fiscal Year End	--12-31
Trading Symbol	escc
Tax Identification Number (TIN)	870278175
Number of common stock shares outstanding		11,352,516
Filer Category	Smaller Reporting Company
Current with reporting	Yes
Voluntary filer	No
Well-known Seasoned Issuer	No
Amendment Flag	false
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Contained File Information, File Number	001-14677
Entity Incorporation, State Country Name	Utah
Entity Address, Address Line One	770 Komas Drive
Entity Address, City or Town	Salt Lake City
Entity Address, State or Province	Utah
Entity Address, Postal Zip Code	84108
City Area Code	801
Local Phone Number	588-1000

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 6,208	$ 6,823
Restricted cash	823	603
Accounts receivable, net	3,356	3,271
Current portion of lease receivable	236	252
Costs and estimated earnings in excess of billings on uncompleted contracts	2,813	3,038
Inventories, net	3,762	3,751
Prepaid expenses and deposits	1,063	902
Total current assets	18,261	18,640
Long-term lease receivable, net of current portion	1,023	1,083
Property and equipment, net	4,629	4,638
Goodwill	635	635
Intangible assets, net	0	0
Other assets	1,336	1,222
Total assets	25,884	26,218
Current liabilities:
Accounts payable	1,167	1,158
Accrued liabilities	1,539	1,400
Billings in excess of costs and estimated earnings on uncompleted contracts	6,209	6,500
Customer deposits	2,038	2,238
Current portion of retirement obligations	507	507
Current portion of pension settlement obligation	382	382
Current portion of long-term debt	214	211
Total current liabilities	12,056	12,396
Pension and retirement obligations, net of current portion	4,287	4,344
Pension settlement obligation, net of current portion	4,886	4,886
Long-term debt, net of current portion	1,709	1,764
Deferred rent obligation	1,125	1,231
Total liabilities	24,063	24,621
Stockholders' equity:
Preferred stock,	0	0
Common stock,	2,323	2,323
Additional paid-in-capital	53,680	53,641
Common stock in treasury, at cost,	(3,532)	(3,532)
Accumulated deficit	(48,504)	(48,689)
Accumulated other comprehensive loss	(2,146)	(2,146)
Total stockholders' equity	1,821	1,597
Total liabilities and stockholders' equity	$ 25,884	$ 26,218

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CONDENSED CONSOLIDATED BALANCE SHEETS - Parenthetical - $ / shares	Mar. 31, 2017	Dec. 31, 2016
Details
Preferred Stock, No Par Value	$ 0	$ 0
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Preferred Stock, Shares Outstanding	0	0
Common Stock, Par or Stated Value Per Share	$ 0.20	$ 0.20
Common Stock, Shares Authorized	30,000,000	30,000,000
Common Stock, Shares, Issued	11,616,866	11,616,866
Treasury Stock, Shares	264,350	264,350

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Apr. 01, 2016
Details
Sales	$ 8,043	$ 7,900
Cost of sales	(5,369)	(5,197)
Gross profit	2,674	2,703
Operating expenses:
Selling, general and administrative	(1,606)	(1,671)
Research and development	(701)	(587)
Pension	(58)	(66)
Total operating expenses	(2,365)	(2,324)
Operating income	309	379
Other expense, net	(109)	(128)
Income before income tax provision	200	251
Income tax provision	(15)	(15)
Net income	$ 185	$ 236
Net income per common share - basic and diluted	$ 20	$ 20
Weighted average common shares outstanding - basic	11,353	11,177
Weighted average common shares outstanding - diluted	12,052	11,801

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Apr. 01, 2016
Cash flows from operating activities:
Net income	$ 185	$ 236
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	64	73
Provision for excess and obsolete inventory	51	60
Other	82	46
Changes in assets and liabilities:
Increase in restricted cash	(220)	0
Decrease (increase) in accounts receivable	(128)	1,641
Decrease in lease receivable	76	0
Decrease (increase) in inventories	(62)	346
Increase in costs and estimated earnings in excess of billings on uncompleted contracts, net	(66)	(53)
Decrease (increase) in prepaid expenses and other assets	(275)	62
Increase in accounts payable	9	158
Increase in accrued liabilities	139	291
Decrease in pension and retirement obligations	(57)	(38)
Decrease in customer deposits	(200)	(1,072)
Decrease in deferred rent obligation	(106)	(105)
Net cash provided by (used in) operating activities	(508)	1,645
Cash flows from investing activities:
Purchases of property and equipment	(55)	(22)
Cash flows from financing activities:
Principal payments on long-term debt	(52)	(65)
Net increase (decrease) in cash and cash equivalents	(615)	1,558
Cash and cash equivalents as of beginning of the period	6,823	3,734
Cash and cash equivalents as of end of the period	6,208	5,292
Cash paid during the period for:
Interest	28	42
Income taxes	$ 30	$ 11

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1. General

3 Months Ended

Mar. 31, 2017

Notes

1. General

1.     GENERAL

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Evans & Sutherland Computer Corporation and subsidiaries (collectively, the “Company” or “E&S”) have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations, and cash flows, in conformity with U.S. generally accepted accounting principles (“US GAAP”).  This report on Form 10-Q should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2016.

The accompanying unaudited condensed consolidated balance sheets, statements of operations, and statements of cash flows reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the Company’s financial position, results of operations and cash flows.  The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the full year ending December 31, 2017.  The Company operates on a calendar year with the first three fiscal quarters ending on the last Friday of the thirteenth week in the quarter. 

Revenue Recognition

Sales include revenues from system hardware and the related integrated software, database products and service contracts.  The following methods are used to determine revenue recognition:

Percentage of Completion. In arrangements that are longer in term and require significant production, modification or customization, revenue is recognized using the percentage-of-completion method.  In applying this method,  the Company utilizes cost-to-cost methodology whereby it estimates the percent complete by calculating the ratio of costs incurred (consisting of material, labor and subcontracting costs, as well as an allocation of indirect costs) for each contract to its total anticipated costs for that contract.   This ratio is then utilized to determine the amount of gross profit earned based on the Company’s estimate of total gross profit at completion for each contract.  The Company routinely reviews estimates related to percentage-of-completion contracts and adjusts for changes in the period the revisions are made.  Billings on uncompleted percentage-of-completion contracts may be greater than or less than incurred costs and estimated earnings and are recorded as an asset or liability in the accompanying condensed consolidated balance sheets.

In those arrangements where software is a significant component of the contract, the Company uses the percentage-of-completion method as described above.

Completed Contract. Contract arrangements which typically require a relatively short period of time to complete the production, modification, and customization of products are accounted for using the completed contract method.  Accordingly, revenue is recognized upon delivery of the completed product, provided persuasive evidence of an arrangement exists, title and risk of loss have transferred to the customer, the fee is fixed or determinable, and collection is reasonably assured.

Multiple Element Arrangements.  Some contracts include multiple elements.  Significant deliverables in such arrangements commonly include various hardware components of the Company’s visual display systems, domes, show content and various service and maintenance elements.  Revenue earned on elements such as products, services and maintenance contracts are allocated to each element based on the relative fair values of the elements.  Relative fair values of elements are generally determined based on actual and estimated selling price.  Delivery times of such contracts typically occur within a three to six-month time period.

Other.  Other revenue consists primarily of amounts earned under maintenance contracts that are generally sold as a single element.  Revenue from product maintenance contracts, including separately priced extended warranty contracts, is deferred and recognized over the period of performance under the contract. 

Anticipated Losses.  For contracts with anticipated losses at completion, a provision is recorded when the loss is probable.  After an anticipated loss is recorded, subsequent revenues and cost of sales are recognized in equal and offsetting amounts as contract costs are incurred.

Stock-Based Compensation

Compensation cost for all stock-based awards is measured at fair value on the date of grant and is recognized over the service period for awards expected to vest.  Determining the fair value of share-based awards at the grant date requires judgment, including estimating the value of share-based awards that are expected to be forfeited. Actual results and future estimates may differ from the Company’s current estimates.

Net Income Per Common Share

Basic net income per common share is computed based on the weighted-average number of common shares outstanding during the period.  Diluted net income per common share is computed based on the weighted-average number of common shares and dilutive common stock equivalents outstanding during the period. Stock options are considered to be common stock equivalents. When the Company incurs a loss, potentially dilutive common stock equivalents are excluded as their effect would be anti-dilutive, thereby increasing the net income per common share.  Stock options produced common stock equivalents of 699,134 and 623,958 used to compute diluted net income per share for the three months ended March 31, 2017 and April 1, 2016, respectively.    

Inventories, net

Inventories consisted of the following:

	March 31,	December 31,
	2017	2016
Raw materials	$         5,862	$         5,427
Work in process	840	1,120
Finished goods	233	326
Reserve for obsolete inventory	(3,173)	(3,122)
Inventories, net	$         3,762	$         3,751

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2. Stock Option Plan

3 Months Ended

Mar. 31, 2017

Notes

2. Stock Option Plan

2.     STOCK OPTION PLAN

As of March 31, 2017, options to purchase 989,381 shares of common stock under the Company’s stock option plan were authorized and reserved for future grant.  A summary of activity in the stock option plan for the three months ended March 31, 2017 follows (shares in thousands):

		Weighted-
		Average
	Number	Exercise
	of Shares	Price
Outstanding as of beginning of the period	1,625	$            0.88
Granted	140	1.39
Exercised	-
Forfeited or expired	(156)	3.62
Outstanding as of end of the period	1,609	0.66
Exercisable as of end of the period	1,145	$            0.51

As of March 31, 2017, options exercisable and options outstanding had a weighted average remaining contractual term of 5.14 and 6.50 years, respectively, and had an aggregate intrinsic value of $1,145 and 1,441, respectively.

The Black-Scholes option-pricing model is used to estimate the fair value of options under the Company’s stock option plan. The weighted average values of employee stock options granted under the stock option plan, as well as the weighted average assumptions used in calculating these values during the first three months of 2017, were based on estimates as of the date of grant as follows:

Risk-free interest rate	1.47%
Dividend yield	0.00%
Volatility	176%
Expected life	3.5 years

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

As of March 31, 2017, there was approximately $277 of total unrecognized share-based compensation cost related to grants under the stock option plan that will be recognized over a weighted-average period of 3.07 years.

Share-based compensation expense included in selling, general and administrative expense in the statements of operations for each of the three-month periods ended March 31, 2017 and April 1, 2016 was $39 and $25, respectively.  

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3. Employee Retirement Benefit Plans

3 Months Ended

Mar. 31, 2017

Notes

3. Employee Retirement Benefit Plans

3.     EMPLOYEE RETIREMENT BENEFIT PLANS

 Pension and Retirement Obligations

In 2015, the Company terminated a defined pension plan and settled the resulting liabilities in exchange for a fixed obligation secured by the Company’s assets which requires payment of ten annual installments of $750 to the Pension Benefit Guaranty Corporation due annually on October 31. The Pension Settlement Obligation is recorded net of imputed interest expense at 7%, as a liability on the balance sheet.

The Company’s only remaining pension obligation is the Supplemental Executive Retirement Plan (“SERP”).

Employer Contributions

The Company is not currently required to fund the SERP.  All benefit payments are made by the Company directly to those who receive benefits from the SERP.  As such, these payments are treated as both contributions and benefits paid for reporting purposes. The Company expects to contribute and pay SERP benefits of approximately $500 in the next 12 months. 

Components of Net Periodic Benefit Expense

	Supplemental Executive
	Retirement Plan
	March 31,	April 1,
For the three months ended:	2017	2016
Interest cost	$                39	$               48
Amortization of actuarial loss	19	21
Amortization of prior year service cost	-	(3)
Net periodic benefit expense	$                58	$               66

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1. General (Policies)

3 Months Ended

Mar. 31, 2017

Policies

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Evans & Sutherland Computer Corporation and subsidiaries (collectively, the “Company” or “E&S”) have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations, and cash flows, in conformity with U.S. generally accepted accounting principles (“US GAAP”).  This report on Form 10-Q should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2016.

The accompanying unaudited condensed consolidated balance sheets, statements of operations, and statements of cash flows reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the Company’s financial position, results of operations and cash flows.  The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the full year ending December 31, 2017.  The Company operates on a calendar year with the first three fiscal quarters ending on the last Friday of the thirteenth week in the quarter. 

Revenue Recognition

Revenue Recognition

Sales include revenues from system hardware and the related integrated software, database products and service contracts.  The following methods are used to determine revenue recognition:

Percentage of Completion. In arrangements that are longer in term and require significant production, modification or customization, revenue is recognized using the percentage-of-completion method.  In applying this method,  the Company utilizes cost-to-cost methodology whereby it estimates the percent complete by calculating the ratio of costs incurred (consisting of material, labor and subcontracting costs, as well as an allocation of indirect costs) for each contract to its total anticipated costs for that contract.   This ratio is then utilized to determine the amount of gross profit earned based on the Company’s estimate of total gross profit at completion for each contract.  The Company routinely reviews estimates related to percentage-of-completion contracts and adjusts for changes in the period the revisions are made.  Billings on uncompleted percentage-of-completion contracts may be greater than or less than incurred costs and estimated earnings and are recorded as an asset or liability in the accompanying condensed consolidated balance sheets.

In those arrangements where software is a significant component of the contract, the Company uses the percentage-of-completion method as described above.

Completed Contract. Contract arrangements which typically require a relatively short period of time to complete the production, modification, and customization of products are accounted for using the completed contract method.  Accordingly, revenue is recognized upon delivery of the completed product, provided persuasive evidence of an arrangement exists, title and risk of loss have transferred to the customer, the fee is fixed or determinable, and collection is reasonably assured.

Multiple Element Arrangements.  Some contracts include multiple elements.  Significant deliverables in such arrangements commonly include various hardware components of the Company’s visual display systems, domes, show content and various service and maintenance elements.  Revenue earned on elements such as products, services and maintenance contracts are allocated to each element based on the relative fair values of the elements.  Relative fair values of elements are generally determined based on actual and estimated selling price.  Delivery times of such contracts typically occur within a three to six-month time period.

Other.  Other revenue consists primarily of amounts earned under maintenance contracts that are generally sold as a single element.  Revenue from product maintenance contracts, including separately priced extended warranty contracts, is deferred and recognized over the period of performance under the contract. 

Anticipated Losses.  For contracts with anticipated losses at completion, a provision is recorded when the loss is probable.  After an anticipated loss is recorded, subsequent revenues and cost of sales are recognized in equal and offsetting amounts as contract costs are incurred.

Stock-Based Compensation

Stock-Based Compensation

Compensation cost for all stock-based awards is measured at fair value on the date of grant and is recognized over the service period for awards expected to vest.  Determining the fair value of share-based awards at the grant date requires judgment, including estimating the value of share-based awards that are expected to be forfeited. Actual results and future estimates may differ from the Company’s current estimates.

Net Income Per Common Share

Net Income Per Common Share

Basic net income per common share is computed based on the weighted-average number of common shares outstanding during the period.  Diluted net income per common share is computed based on the weighted-average number of common shares and dilutive common stock equivalents outstanding during the period. Stock options are considered to be common stock equivalents. When the Company incurs a loss, potentially dilutive common stock equivalents are excluded as their effect would be anti-dilutive, thereby increasing the net income per common share.  Stock options produced common stock equivalents of 699,134 and 623,958 used to compute diluted net income per share for the three months ended March 31, 2017 and April 1, 2016, respectively.    

Inventories, net

Inventories, net

Inventories consisted of the following:

	March 31,	December 31,
	2017	2016
Raw materials	$         5,862	$         5,427
Work in process	840	1,120
Finished goods	233	326
Reserve for obsolete inventory	(3,173)	(3,122)
Inventories, net	$         3,762	$         3,751

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1. General (Tables)

3 Months Ended

Mar. 31, 2017

Tables/Schedules

Schedule of Inventory

Inventories consisted of the following:

	March 31,	December 31,
	2017	2016
Raw materials	$         5,862	$         5,427
Work in process	840	1,120
Finished goods	233	326
Reserve for obsolete inventory	(3,173)	(3,122)
Inventories, net	$         3,762	$         3,751

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2. Stock Option Plan (Tables)

3 Months Ended

Mar. 31, 2017

Tables/Schedules

Schedule of Stock Option Plan Activity

A summary of activity in the stock option plan for the three months ended March 31, 2017 follows (shares in thousands):

		Weighted-
		Average
	Number	Exercise
	of Shares	Price
Outstanding as of beginning of the period	1,625	$            0.88
Granted	140	1.39
Exercised	-
Forfeited or expired	(156)	3.62
Outstanding as of end of the period	1,609	0.66
Exercisable as of end of the period	1,145	$            0.51

Schedule of Stock Options Valuation Assumptions

The weighted average values of employee stock options granted under the stock option plan, as well as the weighted average assumptions used in calculating these values during the first three months of 2017, were based on estimates as of the date of grant as follows:

Risk-free interest rate	1.47%
Dividend yield	0.00%
Volatility	176%
Expected life	3.5 years

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3. Employee Retirement Benefit Plans (Tables)

3 Months Ended

Mar. 31, 2017

Tables/Schedules

Components of Net Periodic Benefit Expense

	Supplemental Executive
	Retirement Plan
	March 31,	April 1,
For the three months ended:	2017	2016
Interest cost	$                39	$               48
Amortization of actuarial loss	19	21
Amortization of prior year service cost	-	(3)
Net periodic benefit expense	$                58	$               66

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1. General: Net Income Per Common Share (Details) - shares	3 Months Ended
	Mar. 31, 2017	Apr. 01, 2016
Details
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	699,134	623,958

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1. General: Inventories, net: Schedule of Inventory (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Details
Raw materials	$ 5,862	$ 5,427
Work in process	840	1,120
Finished goods	233	326
Reserve for obsolete inventory	(3,173)	(3,122)
Inventories, net	$ 3,762	$ 3,751

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2. Stock Option Plan (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Apr. 01, 2016
Options exercisable, weighted average remaining contractual term	5 years 1 month 20 days
Options outstanding, weighted average remaining contractual term	6 years 6 months
Options, Exercisable, Aggregate Intrinsic Value	$ 1,145
Options, Outstanding, Aggregate Intrinsic Value	1,441
Total unrecognized share-based compensation cost	$ 277
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	3 years 25 days
Allocated Share-based Compensation Expense	$ 39	$ 25
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	989,381

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2. Stock Option Plan: Schedule of Stock Option Plan Activity (Details) shares in Thousands	3 Months Ended
	Mar. 31, 2017 $ / shares shares
Details
Outstanding as of the beginning of the period	1,625
Outstanding as of the beginning of the period, weighted average exercise price | $ / shares	$ 0.88
Granted	140
Granted, weighted average exercise price | $ / shares	$ 1.39
Exercised	0
Forfeited or expired	(156)
Forfeited or expired, weighted average exercise price | $ / shares	$ 3.62
Outstanding as of the end of the period	1,609
Outstanding as of the end of the period, weighted average exercise price | $ / shares	$ 0.66
Exercisable as of the end of the period	1,145
Exercisable as of the end of the period, weighted average exercise price | $ / shares	$ 0.51

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2. Stock Option Plan: Schedule of Stock Options Valuation Assumptions (Details)	3 Months Ended
	Mar. 31, 2017
Details
Risk-free interest rate	1.47%
Dividend yield	0.00%
Volatility	176.00%
Expected life	3 years 6 months

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3. Employee Retirement Benefit Plans (Details) - USD ($) $ in Thousands	1 Months Ended
	Apr. 30, 2015	Mar. 31, 2017	Apr. 21, 2015
Pension Plan Settlement Agreement, Payment Schedule	payment of ten annual installments of $750 to the Pension Benefit Guaranty Corporation due annually on October 31
Pension Settlement Obligation, Interest Rate			7.00%
Supplemental Executive Retirement Plan
Expected Future Benefit Payments, Next Twelve Months		$ 500

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3. Employee Retirement Benefit Plans: Components of Net Periodic Benefit Expense (Details) - Supplemental Executive Retirement Plan - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Apr. 01, 2016
Interest cost	$ 39	$ 48
Amortization of actuarial loss	19	21
Amortization of prior year service cost	0	(3)
Net periodic benefit expense	$ 58	$ 66