10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the year ended December 31, 2018

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 0-8771

EVANS & SUTHERLAND COMPUTER CORPORATION

(Exact name of registrant as specified in its charter)

Utah87-0278175 

(State or other jurisdiction of(I.R.S. Employer 

incorporation or organization)Identification No.) 

770 Komas Drive, Salt Lake City, Utah84108 

(Address of principal executive offices)(Zip Code) 

Registrant’s telephone number, including area code: 801-588-1000

Securities registered pursuant to Section 12(b) of the Act:

NONE

Securities registered pursuant to Section 12(g) of the Act:

Title of Each Class

Common Stock, $0.20 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [  ] Yes  [x ] No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.  [ ] Yes  [x] No

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.       [ x ] Yes       [  ] No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). [ x ] Yes  [  ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   [ ]

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 definition 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 [x]    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 by Rule 12b-2 of the Act).  [  ] Yes    [x ] No

The aggregate market value of the voting and non-voting common stock of the registrant held by non-affiliates of the registrant as of June 29, 2018 the last business day of the registrant’s most recently completed second fiscal quarter was $4,907,717 based on the closing sale price of $1.02 as reported by the Over-the-Counter Market. Shares of common stock held by each executive officer and director and by each person who owns 5% or more of the outstanding common stock, based on Schedule 13D and 13G filings, have been excluded since such persons may be deemed affiliates. This determination of affiliate status is not necessarily a conclusive determination of affiliate status for other purposes.

The number of shares of the registrant’s Common Stock outstanding as of March 4, 2019 was 11,482,516.

DOCUMENTS INCORPORATED BY REFERENCE:

Certain information from the Registrant’s definitive proxy statement for the 2019 Annual Meeting of Stockholders is incorporated by reference into Part III hereof.

EVANS & SUTHERLAND COMPUTER CORPORATION

FORM 10-K

FOR THE YEAR ENDED DECEMBER 31, 2018

	PART I
ITEM 1.	BUSINESS	3
ITEM 2.	PROPERTIES	6
ITEM 3.	LEGAL PROCEEDINGS	6
ITEM 4.	MINE SAFETY DISCLOSURES	6
	PART II
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	7
ITEM 6.	CONSOLIDATED FINANCIAL DATA	7
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	7
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	16
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	41
ITEM 9A.	CONTROLS AND PROCEDURES	41
ITEM 9B.	OTHER INFORMATION	42
	PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	42
ITEM 11.	EXECUTIVE COMPENSATION	43
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	43
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	43
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	43
	PART IV
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	44
SIGNATURES		48

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PART I

ITEM 1.BUSINESS 

Throughout this document Evans & Sutherland Computer Corporation may be referred to as “Evans & Sutherland,” “E&S,” “we,” “us,” “our” or the “Company.”  All dollar amounts are in thousands unless otherwise indicated.

Evans & Sutherland was incorporated in the state of Utah on May 10, 1968.  Our principal offices are located at 770 Komas Drive, Salt Lake City, Utah 84108, and our telephone number is (801) 588-1000.  Through a link on our website, www.es.com, we make available, free of charge, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (“Exchange Act”) as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (the “SEC”).  We make our website content available for informational purposes only.  The information provided on our website is not incorporated by reference into this Form 10-K and our website address is not intended to be a hyperlink.  The above reports and other information are also available, free of charge, at www.sec.gov.  

General

Evans & Sutherland focuses on the production of high-quality advanced visual display systems used primarily in full-dome video projection applications, dome projection screens, dome architectural treatments, and unique content for planetariums, schools, science centers, other educational institutions, and entertainment venues.  With a 50-year history in computer graphics, we are widely regarded as both a pioneer and a leader in providing the world’s most compelling full-dome digital theater and planetarium systems as well as original full-dome shows. With our subsidiary, Spitz, Inc. (“Spitz”), and its over 70-year history as a leading supplier of planetarium systems, dome projection screens and other dome displays, E&S supplies premier total system solutions for its digital theater markets as well as customized domes and other unique geometric structures in the architectural market.

We continue to maintain a significant share of the overall planetarium market.  We estimate that the annual market for our planetarium products ranges from $65 million to $100 million and varies each year depending on the timing of customer projects.  We estimate our share of the planetarium market has ranged from 30% to 50% each year.  Additionally we sell related products into tangential markets that are less defined which make up the balance of our revenue.

Description of Products

E&S offers a range of products and services primarily for dome and planetarium theaters in educational institutions, training, and entertainment venues.  These products include state of the art planetarium and dome theater systems consisting of proprietary hardware and software, and other unique visual display systems primarily used to project digital video on large curved surfaces.  We also produce unique show content both for our own library which we license to customers and for specific customer requirements for planetarium and dome theaters. Additionally, we manufacture and install metal domes with customized optical coatings and acoustical properties that are used for planetarium and dome theaters as well as many other unique custom applications. Our dome engineering and manufacturing resources also design and supply geometrically complex structures for customized architectural treatments, often involving curved metal shapes with unique optical and acoustical properties.

Description of Markets

We are an industry leader in providing full-dome hardware and software to an international customer base in the digital theater, planetarium, entertainment, training and educational markets.  In each of these markets, we face highly competitive conditions where we compete on features, performance, and responsiveness to customer needs as well as on price.  E&S is unique among its competitors by virtue of its capability as a single source that can directly supply and integrate all of the equipment in the planetarium theater, including the projection system, sound, lighting, computer control system and domed projection screen.  We believe our range of visual systems and services at various price and performance levels, our research and development investments and capabilities, our responsiveness to customers, and our ability to design and manufacture value-added visual systems enable us to compete effectively. Our competitive strengths with visual systems and services aid the sale of our dome projection

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screens as customers often require a new dome projection screen with their visual system. We also believe our capabilities to design and manufacture domes and certain other architectural structures are very unique and enable us to compete effectively in all of the markets where these products are sold.   

Digital Theater

In the digital theater market our products compete with traditional optical-mechanical products and digital display systems offered by GOTO Optical Mfg. Co., Konica-Minolta Planetarium Co. Ltd., Carl Zeiss Inc., and Sky-Skan, Inc. The Company’s digital display systems are configured with standard commercial projectors similar to systems sold by our competitors.  Our proprietary Digistar full-dome digital system, along with other customized software tools differentiate our digital theater systems and compete favorably with competitive digital display systems. Our SciDome planetarium system, which uses a dome theater version of a retail desktop astronomy product with curriculum tools for teachers, creates a unique competitive advantage when targeting smaller classroom planetarium theaters.  

Advanced Displays

Our capabilities and products sometimes are used for special advance display applications primarily for wide audiences in specialty theaters and other visitor attractions. This includes the integration of the most advanced video projectors with customized lenses, software and unique application techniques to serve customers who are in search of extraordinary display of visual content. Our competition in these markets includes various specialty audio visual systems integrators and alternative solutions using other technologies.   

Giant Screen Cinema

E&S supplies digital display systems for educational and entertaining giant screen cinema experiences, focused on the market commonly defined by established competitors like IMAX. We bring unique capabilities and strengths to this market, including ultra-high resolution projection systems.

Domed Structures

Our Spitz subsidiary is the world's leading producer of domed projection screens. At Spitz we design, manufacture, and install domed projection screens used in planetarium theaters and a variety of other applications such as ride simulators, special or large format film theaters, simulation training systems and architectural treatments. We have developed proprietary dome products such as our NanoSeam dome which we believe provides the smoothest, most uniform projection surface available. Our experience with dome projection screens enables us to advise on the architectural integration of domed projection screens and solve complex optical problems involving reflectivity and image distortion on compound curved surfaces. We believe that these skills are important to buyers of domed projection screens. The principal customers of our dome business are entities in the entertainment, educational and commercial and military simulation markets. Customers include major theme parks, casinos, world expositions, museums, schools, and military defense contractors. There is currently one known domestic competitor that manufactures domed projection screens. In addition, construction or metal fabrication contractors occasionally supply domed projection screens, particularly in foreign markets. The structures we design and supply for architectural treatments are sold as complements to our dome screen products or into the architectural market for a wide variety of interesting venues. Competition for our architectural treatment products usually comes from construction or metal fabrication contractors often with an alternative design idea.

Intellectual Property

We own a significant number of patents and trademarks and we are a licensee under several others.  Our portfolio of patents and trademarks, as a whole, contributes to our business.  However, no one piece of intellectual property is critical to our business, thus no individual piece of our intellectual property is separately discussed.  In the U.S. and internationally, we hold active patents that cover many aspects of our visualization technology.  Several patent applications are presently pending and routinely other patent applications are in preparation. We actively pursue patents on our new technology and we intend to vigorously protect our patent rights.  We often trademark key product names and brand names to protect our equity in the marketplace. We routinely copyright software and documentation and institute copyright registration when appropriate.  Currently we retain a total of 18 active U.S. patents.

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Research and Development

We consider the timely development and improvement of our technology to be essential to maintain our competitive position and to capitalize on market opportunities.  We continue to fund essentially all research and development (“R&D”) efforts internally. 

R&D efforts continue to improve Digistar, our popular full-dome digital system and a key component to our planetarium and dome theater products.  We also explore the possibility of other commercial applications for Digistar technology as opportunities arise. We conduct ongoing R&D to improve the functionality of SciDome to keep pace with updated versions of the desktop software it emulates and to take advantage of the latest digital display and theater technology. Some noteworthy specific R&D activities for our advance display and planetarium products include the development of unique techniques to display three dimensional digital video and the expansion of educational curriculum tools to cover new subject matter in addition to astronomy such as chemistry and earth sciences.  We continue to develop improvements to our dome products including optical coatings and ways to make the projection surface more uniform.  There are also R&D efforts ongoing to enhance components of the systems we sell, such as improvements to theater lighting.  

We continually work with the new digital projection technologies to develop advanced visual display systems primarily to be used by wide audiences in specialty theaters and other visitor attractions. This includes the integration of the most advanced video projectors with customized lenses, software and unique application techniques to serve customers who are in search of extraordinary display of visual content.  

Dependence on Suppliers

Most of our current parts and assemblies are readily available through multiple sources in the open market; however, a limited number are available only from a single source.  In these cases, we either stock adequate inventory to cover future product demands, obtain the agreement of the vendor to maintain adequate stock for future demands, or develop alternative components or sources where appropriate.

Employees

As of December 31, 2018, Evans & Sutherland and its subsidiaries employed a total of 96 persons of which 95 were employed full time. 

Environmental Standards

We believe our facilities and operations are within standards fully acceptable to the Environmental Protection Agency and that all facilities and procedures are operated in accordance with environmental rules and regulations, and international, federal, state and local laws.

Strategic Relationships

In the normal course of business, we develop and maintain various types of relationships with key customers and technology partners.  The teaming agreements are with industry partners and are intended to improve our overall competitive position.  The product development agreements enhance our products by the cooperative development of new features and capabilities necessary to maintain our industry leading position.  

Forward-Looking Statements and Associated Risks

This annual report, including all documents incorporated herein by reference, includes certain “forward-looking statements” within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, among others, those statements preceded by, followed by or including the words “estimates,” “believes,” “expects,” “anticipates,” “plans,” “projects,” “intends,” “predicts,” “may,” “will,” “could,” “would,” “potential” and similar expressions or the negative of such terms.  See Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II of this annual report on Form 10-K for a list of some of the forward-looking statements included in this Form 10-K.  

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EXECUTIVE OFFICERS OF THE REGISTRANT

The following sets forth certain information regarding the executive officers of E&S as of December 31, 2018.

NameAgePosition 

Jonathan A. Shaw62Chief Executive Officer and Director 

Paul L. Dailey62Chief Financial Officer and Corporate Secretary 

Kirk D. Johnson57Chief Operating Officer and President  

Jonathan A. Shaw was appointed Chief Executive Officer and Director in September 2016.  He previously served as President and Chief Executive Officer of Spitz since November 2001. Prior to his appointment as President and Chief Executive Officer of Spitz, Mr. Shaw held various management positions since 1985. 

Paul L. Dailey was appointed Executive Vice President in December 2016. He was appointed Chief Financial Officer and Corporate Secretary in February 2007.  He became an executive officer of E&S in August 2006 when he was appointed Acting Chief Financial Officer and Corporate Secretary.  Prior to his appointments at E&S, Mr. Dailey served as Executive Vice President, Chief Financial Officer and Corporate Secretary of Spitz, where he started as Controller in 1983. Mr. Dailey is a Certified Public Accountant (inactive).

Kirk D. Johnson was appointed Chief Operating Officer and President in September 2016.  He previously served as Vice President and General Manager of Digital Theater since January 2002.  He joined E&S in April 1990 and has held various engineering and management positions throughout his service at E&S. 

ITEM 2. PROPERTIES

Our principal executive, engineering, manufacturing and operations facilities are located in the University of Utah Research Park in Salt Lake City, Utah, where we lease two buildings totaling approximately 68,000 square feet.

Spitz owns and occupies an approximately 47,000 square-foot building on approximately 15.2 acres in Chadds Ford, Pennsylvania. The property serves as collateral under Spitz’s debt agreements through a mortgage granted to First Keystone Bank which is now The Bryn Mawr Trust Company, a commercial bank.

ITEM 3. LEGAL PROCEEDINGS

In the normal course of business, we may have various legal claims and other contingent matters.  We know of no legal claims outstanding that would have a material adverse effect on our consolidated financial position, liquidity or results of operations.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock trades on the Over-the-Counter Markets under the symbol “ESCC.”  On March 1, 2019, there were approximately 420 holders of record of our common stock.  Because brokers and other institutions hold many of our shares on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.  

We have never paid a cash dividend on our common stock and have used funds generated internally to operate our business.  For the foreseeable future, we intend to follow our policy of retaining any future earnings to finance the development and growth of our business.   

Additional information required by this item is incorporated by reference to the table captioned Securities Authorized for Issuance Under Equity Compensation Plans as of December 31, 2018 in Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” of Part III of this annual report on Form 10-K.

ITEM 6. CONSOLIDATED FINANCIAL DATA

Not applicable

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition.  The discussion should be read in conjunction with our consolidated financial statements and notes included in Item 8, “Financial Statements and Supplementary Data,” of this annual report on Form 10-K.  Information set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes forward-looking statements that involve risks and uncertainties.  Many factors could cause actual results to differ materially from those contained in the forward-looking statements.  See “Forward-Looking Statements” below for additional information concerning these items.

(All dollar amounts are in thousands unless otherwise indicated.)

Executive Summary

Sales for 2018 were $37,193 which is 22% higher than the $30,508 of sales reported in 2017. This produced net income of $3,747 in 2018 compared to net income of $1,481 in 2017. The profitable results advance the recovery of our stockholders’ equity to $8,004 from a large deficit prior to the settlement of our pension obligations in 2015. The 2018 sales and net income exceeded expectations and are high compared to the Company’s recent history. The high 2018 sales are attributable to an unusually large volume of work performed on customer planetarium projects in the second half of 2018 in order to meet customer schedules. The results of 2018 demonstrate the profit potential of the business as well as the degree of variability in sales that can occur from the timing of customer orders and deliveries.

The high volume of sales from work on prior customer orders combined with a decrease in new orders for dome products in 2018 decreased the sales backlog to $17,366 as of December 31, 2018. This compares to a sales backlog of $27,360 as of December 31, 2017. New orders to replenish the sales backlog will be critical to produce sales at sufficient levels for profitable results in 2019. We remain encouraged that the Company’s sales prospects will produce sufficient orders to sustain sales at profitable levels over the long term; however, we anticipate that the low backlog as of December 31, 2018 may result in lower sales that could challenge profitability for early reporting periods of 2019.  The Company plans to use this as an opportunity to redirect staff and resources, which would otherwise be working on customer projects, toward research and development activities to expand our products for future sales growth.

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Beyond 2019, we expect variable but reasonably consistent future sales and gross profit from our current product line at annual levels sufficient to cover or exceed operating expenses and meet our obligations. As our recovery progresses from a large stockholders’ deficit eliminated mainly by the 2015 Pension Settlement, we expect to continue to improve our products and explore new opportunities to increase our sales and profits in an effort to grow shareholder value. We believe that our improving financial position could present more opportunities in this effort.

As described in the notes to the consolidated financial statements, the Company adopted Topic 606, Revenue from Contracts with Customers, with a date of the initial application of January 1, 2018. The Company applied Topic 606 using the cumulative effect method and accordingly recognized the cumulative effect of initially applying Topic 606 as an adjustment to the opening balance of stockholders’ equity at January 1, 2018. As a result, the Company used different methods for recognizing revenue in each of the years presented as detailed below.

The adoption of Topic 606 changed the method of recognizing revenue for certain customer contracts. More specifically, for some contracts, revenue previously was not recognized until the product was accepted by the customer. Under Topic 606, revenue for these contracts will be recognized over time using the percentage completion method, which is the method used for most of our customer contracts. The immediate effect of the change was to accelerate earnings on the revenue backlog for the effected contracts. This acceleration was recorded in a cumulative transition adjustment, whereby $683 of gross profit on $1,606 of sales was recorded directly to stockholders’ equity.  Although the benefit of the earnings from the transition adjustment is reflected in the financial position of the Company on the balance sheet, it will not be reported in the statement of operations. Going forward, we believe Topic 606 will create a smoother revenue stream by spreading more revenue over the period of performance as opposed to previously when some contract revenue was recorded in a lump sum in the period of acceptance by the customer.  

We are currently pursuing new opportunities for our business while we continue to develop and improve the products that serve our traditional markets. We consider the advancement of innovative products such as Digistar essential to maintaining our leading share of the planetarium market. We will continue to develop and improve our planetarium products more narrowly focused on education markets such as our SciDome product. We intend to also continue development and improvement of our dome products used by planetarium theaters and many other varied applications.  We intend to continue the production of quality show content for planetarium theaters.  We believe that the ability to include the wide range of complementary products in the systems we sell, along with access to the legacy customer base of E&S and our subsidiary, Spitz, provides a unique competitive advantage.

Results of Operations

Consolidated Sales and Backlog

The following table summarizes our consolidated sales for the years ended December 31:

	2018	2017
Sales	$ 37,193	$ 30,508

Sales increased 22% from 2017 to 2018. Sales of all Company products were higher in 2018 with the most significant contribution to the increased sales coming from planetarium products.

The volume of new orders in 2018 was less than the sales recorded resulting in a decrease in our sales backlog from $27,360 as of December 31, 2017 to $17,366 as of December 31, 2018. Approximately $1,200 of the decrease in the backlog was due to the adoption of Topic 606, Revenue from Contracts with Customers. Otherwise the decrease was attributable to high 2018 planetarium sales and lower bookings of dome products in 2018.  We anticipate that approximately 90% of the 2018 backlog will be converted to sales in 2019.  

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Gross Profit

The following table summarizes our gross profit and the percentage to total sales for the years ended December 31:

	2018	2017
Gross profit	$ 13,724	$ 10,951
Gross profit percentage	37 %	36 %

Our gross profit percentage was slightly higher in 2018 when compared to 2017. There were variations in gross margins among customer projects within the usual range which, when combined, resulted in comparable margins for all of the Company’s products in 2017 and 2018.

Operating Expenses

The following table summarizes our operating expenses during the years ended December 31:

	2018	2017
Selling, general and administrative	$ 6,561	$ 6,045
Research and development	2,851	2,908
Pension	217	231
Total operating expense	$ 9,629	$ 9,184

Selling, general and administrative expenses were higher in 2018 compared to 2017. This was attributable to higher 2018 selling expense mostly due to a bi-annual trade show and an increase in sales commissions. Also, 2017 general administrative expenses were low due to a large credit of $143 for bad debt recoveries.      

Research and development expenses were slightly lower in 2018 compared to 2017.  This was primarily due to redirecting resources from research and development activities to work on customer projects. Research and development activities consisted of exploration of new applications for our products, improvements to the software in our planetarium products, testing hardware to project high definition video on large dome screens, development of various utilities for planetarium theaters, testing of optical coatings for projection surfaces and developing techniques to make dome projection surfaces more uniform.  

Pension expense attributable to our Supplemental Executive Retirement Plan (“SERP”) was lower in 2018 compared to 2017 due to changes in the actuarial data affecting the measurement of the pension expense.  

Other Expense, net

The following table summarizes our other expense during the years ended December 31:

	2018	2017
Interest expense	$ (433)	$ (473)
Other income, net	106	76

Interest expense in 2018 and 2017 consisted mostly of imputed interest on the Pension Settlement Obligation. Interest expense also included interest paid on real estate debt in both years presented. Interest expense decreased in 2018 due to the reduction of debt and is expected to continue to decrease at a comparable rate in future years.

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Other income, net increased from $76 in 2017 to $106 in 2018 due primarily to rental income from a sublease for a small portion of our facilities.  

Income Taxes

The income tax benefit (expense) consisted of federal and state income taxes as follows for the years ended December 31:

	2018	2017
Income tax benefit (expense)	$ (21)	$ 111

The 2017 tax benefit resulted primarily from state film tax credit for the production of a planetarium show which was recorded at the estimated value realizable through assignment.  The 2018 income tax expense was for state income taxes resulting from Spitz’ normal business activity in various jurisdictions.

Other Comprehensive Income

The following table summarizes other comprehensive income for the years ended December 31:

	2018	2017
Decrease (increase) to minimum pension liability	$ 200	$ (30)
Other comprehensive income	$ 200	$ (30)

Other comprehensive income consists of accounting for potential changes in the actuarial valuation of the SERP liabilities.

Liquidity and Capital Resources

Outlook

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

The following table summarizes our cash flows for the years ended December 31:

	2018	2017
Net cash and cash equivalents provided by (used in):
Operating activities	$ 3,729	$ (1,098)
Investing activities	(101)	(148)
Financing activities	(631)	(592)
Increase (decrease) in cash and cash equivalents	$ 2,997	$ (1,838)

The fluctuation in the annual increase and decrease in cash and cash equivalents is mainly due to cash provided by or used in operating activities.

Operating Activities

The net cash provided by operating activities in 2018 was attributable to $4,804 of cash provided by the $3,747 net income after the effect of $1,057 of non-cash charges which was partially offset by a decrease in working capital

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of $1,075.  The non-cash charges consisted primarily of $263 of depreciation and $427 in the provision for excess and obsolete inventory.  The changes in working capital which used cash were largely attributable to an increase in inventory and the reduction of liabilities. This was partially offset by a decrease in customer accounts receivable. These changes are attributable to the timing of performance on customer projects.

The net cash used in operating activities in 2017 was attributable to an increase in working capital of $2,947 less $1,849 of cash provided by the $1,481 net income after the effect of $368 of non-cash charges.  The non-cash charges consisted primarily of $259 of depreciation and $105 in the provision for excess and obsolete inventory.  The changes in working capital which used cash were largely attributable to the timing of progress payments on customer projects.

Investing Activities

Investing activities used $101 of cash during 2018 consisting of purchases of property and equipment of $136, less proceeds from the sale of property and equipment of $35.

Investing activities used $148 of cash during 2017 consisting entirely of purchases of property and equipment.

Financing Activities

Financing activities used $631 of cash during 2018 consisting of $224 for principal payments on debt obligations and $407 for principal payments on the Pension Settlement Obligation.

Financing activities used $592 of cash during 2017 consisting of $211 for principal payments on debt obligations and $381 for principal payments on the Pension Settlement Obligation.

Credit Facilities

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 Spitz working capital requirements. 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 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 December 31, 2018.

The ability to issue letters of credit and bank guarantees is an important tool to mitigate credit risk in our business. International sales are increasingly important to our business and, in many countries, letters of credit and bank guarantees serve as performance guarantees for customer contracts. Also, domestic sales sometimes require performance guarantees in the form of surety bonds.  We have relationships with licensed surety companies to provide performance bonds subject to certain limitations and collateral which we must provide for security. Letters of credit and bank guarantees are issued to serve as collateral and to ensure our performance for these purposes. Cash deposits or deferral of customer payments for performance guarantees can often be used as an alternative to 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 December 31, 2018, there were outstanding letters of credit and bank guarantees of $220, which are scheduled to expire during the year ending December 31, 2019.  

Mortgage Notes

Debt obligations include a first mortgage note payable to a commercial bank which represents the balance on a $3,200 note (“First Mortgage Note”) issued on January 14, 2004 by Spitz. The First Mortgage Note requires repayment in monthly installments of principal and interest over 20 years. On January 14, 2006 and each third anniversary thereof, the interest rate on the First Mortgage Note is adjusted to the greater of 5.75% or 3% over the Three-Year Constant Maturity Treasury Rate published by the United States Federal Reserve (“3YCMT”).   The monthly installment is recalculated in the first month following a change in the interest rate. The recalculated monthly installment is equal to the monthly installment sufficient to repay the principal balance, as of the date of the

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change in the interest rate, over the remaining portion of the original 20-year term. On January 14, 2018, the 3YCMT was 2.09% and the interest rate on the First Mortgage Note remained at 5.75% per annum. As a result, the monthly installment amount remained unchanged at $23.  

Debt obligations also include a second mortgage note payable to a commercial bank which represents the balance on a $500 note (“Second Mortgage Note”) issued on September 11, 2008 by Spitz. The Second Mortgage Note requires repayment in monthly installments of principal and interest over 20 years.  On October 1, 2013 and each fifth anniversary thereof, the interest rate on the Second Mortgage Note is adjusted to the greater of 5.75% or 3% over  the Five-Year Constant Maturity Treasury Rate published by the United States Federal Reserve (“5YCMT”).  The monthly installment is recalculated on the first month following a change in the interest rate. The recalculated monthly installment is equal to the monthly installment sufficient to repay the principal balance, as of the date of the change in the interest rate, over the remaining portion of the original 20-year term. On October 1, 2018, the tenth anniversary of the Second Mortgage Note, the 5YCMT was 2.99%. As a result, interest was adjusted to 5.99%. The monthly installment remains at $4.

The Mortgage Notes are secured by the real property occupied by Spitz pursuant to a Mortgage and Security Agreement.  The real property had a carrying value of $3,973 as of December 31, 2018. The Mortgage Notes are guaranteed by E&S.

Land and building lease

In November 2014, the Company agreed to an extension of its lease for its corporate office buildings and its interest in the lease for the land occupied by the buildings for a term of 5 years. Base annual rent for the extended 5-year term is $549.

The lease obligation is recorded as an operating lease for a term of five years commencing November 1, 2014.  The accounting for lease extension resulted in $620 gain on the disposition of leased assets under the prior lease which was deferred and is being amortized over the five-year term of the new operating lease. There was also a $1,526 gain from the extinguishment of a deferred rent credit related to the underlying land lease which is being amortized over the five-year term of the new operating lease. The amortization of the deferred gain and deferred rent credit reduces the rent expense attributable to the cash rent payments.

Other

In 2019, we expect capital expenditures similar to 2018.  There were no material capital expenditure commitments as of December 31, 2018, nor do we anticipate any over the next several years.

Our Board of Directors has authorized the repurchase of 1,600,000 shares of our common stock.  As of March 8, 2019, 463,500 shares remained available for repurchase under the plans approved by the Board of Directors.  No shares were repurchased during 2018 or 2017.  Stock may be acquired on the open market or through negotiated transactions depending on market conditions, share price and other factors.

We also maintain trade credit arrangements with certain suppliers.  The unavailability of a significant portion of, or the loss of, these trade credit arrangements from suppliers would have a material adverse effect on our financial condition and operations.

As of December 31, 2018, our total indebtedness was $1,540 on the mortgage notes.  Our cash and restricted cash, subject to various restrictions set forth in this annual report on Form 10-K, are available for working capital needs, capital expenditures, strategic investments, mergers and acquisitions, stock repurchases and other potential cash needs as they may arise.

Effects of Inflation

The effects of inflation were not considered material for the years 2018 and 2017 and are not expected to be material for the year 2019.

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Application of Critical Accounting Estimates

The application of the accounting estimates discussed below is considered by management to be critical to an understanding of our consolidated financial statements.  Their application places significant demands on management’s judgment, with financial reporting results relying on estimates about the effect of matters that are inherently uncertain.  Specific risks for these critical accounting estimates are described in the following paragraphs.  A summary of significant accounting policies can be found in Note 1, “Nature of Operations and Summary of Significant Accounting Policies,” of Item 8, “Financial Statements and Supplementary Data,” in this annual report on Form 10-K.  For all of these policies, management cautions that future results rarely develop exactly as forecast, and the best estimates routinely require adjustment.  

Revenue Recognition

Revenue from contracts is recorded over time using the percentage-of-completion method.  This method uses the ratio of costs incurred to management’s estimate of total anticipated costs.  Our estimates of total costs include assumptions, such as man-hours to complete, estimated materials cost, and estimates of other direct and indirect costs.  Actual results may vary significantly from our estimates.  If the actual costs are higher than management’s anticipated total costs, then an adjustment is required to reduce the previously recognized revenue as the ratio of costs incurred to management’s estimate was overstated.  If actual costs are lower than management’s anticipated total costs, then an adjustment is required to increase the previously recognized revenue as the ratio of costs incurred to management’s estimate is understated.  Adjustments for revisions of previous estimates are made in the period they become known.

Contract Revenue in Excess of Billings on and Billings in Excess Contract Revenue

Billings on uncompleted long-term contracts may be greater than or less than revenue recognized.  As a result, these differences are recorded as an asset or liability on the balance sheet.  Since revenue recognized on these long-term contracts includes management’s estimates of total anticipated costs, the amounts in revenue in excess of billings and billings in excess of revenue also include these estimates.

Inventories

Inventories include materials at standard costs, which approximate actual costs, and inventoried costs on programs, including material, labor, subcontracting costs, as well as an allocation of indirect costs.  We periodically review inventories for excess supply, obsolescence, and valuations above estimated realizable amounts, and then provide a reserve we consider sufficient to reduce inventories to net realizable values.  Reserve adequacy is based on estimates of future sales, product pricing, and requirements to complete projects.  Revisions of these estimates would result in adjustments to our operating results.  

Allowance for Doubtful Accounts Receivable

We specifically analyze accounts receivable and consider historical experience, customer creditworthiness, facts and circumstances specific to outstanding balances, current economic trends, and changes in payment terms when evaluating the adequacy of the allowance for doubtful accounts receivable.  Changes in these factors could result in material adjustments to the expense recognized for bad debts.

Income Taxes

As part of the process of preparing our consolidated financial statements, we are required to estimate our actual income taxes in each of the jurisdictions in which we operate.  This involves estimating our actual current tax exposure together with assessing temporary differences resulting from differing treatments of items, such as accrued liabilities, for tax and accounting purposes.  These differences result in deferred income tax assets and liabilities, which are included in our consolidated balance sheets.  We must then assess the likelihood that our deferred income tax assets will be recovered from future taxable income and, to the extent we believe that recovery is not likely, we must establish a valuation allowance.  To the extent we establish a valuation allowance or increase or decrease this allowance in a period, we must include a corresponding adjustment within the income tax provision in the statement of comprehensive income.  Significant judgment by management is required to determine our provision for income taxes, our deferred income tax assets and liabilities and any valuation allowance recorded against our net deferred income tax assets.

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Impairment of Long- Lived Assets

Long-lived assets are reviewed for impairment when events or changes in circumstances indicate the carrying values of the assets may not be fully recoverable. When this occurs, we review the value assigned to long-lived assets by analyzing the anticipated, undiscounted cash flows they generate.  When the expected future undiscounted cash flows from these assets do not exceed their carrying values, the Company determines the estimated fair value of such assets. Impairment is recognized to the extent the carrying values of the assets exceed their estimated fair values.  Assets held for sale are reported at the lower of their carrying values or fair values less costs to sell.

Straight-Line Rent and Contingent Obligation

We recognize scheduled rent increases on a straight-line basis over the lease term, which may include optional lease renewal terms, and deferred rent income and expense is recognized to reflect the difference between the rent paid or received in the current period and the calculated straight-line amount.

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASU 2016-02”).  ASU 2016-02 changes the accounting for leases.  In particular, lessees will recognize lease assets and lease liabilities for operating leases.  ASU 2016-02 is effective in the first quarter of fiscal year ending 2019. The Company is currently assessing the impact on its financial reporting of implementing this guidance.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230) Restricted Cash (“ASU 2016-18”).  ASU 2016-18 changes the cash flow presentation and disclosures of restricted cash.  The Company implemented this update in the presented financial statements.

Forward-Looking Statements

The foregoing contains “forward-looking statements” within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including among others, those statements preceded by, followed by or including the words “estimates,” “believes,” “expects,” “plans,” “projects,” and similar expressions.

These forward-looking statements include, but are not limited to, the following statements:

·Our belief that our range of products and services at various price and performance levels, our research and development investments and capabilities, and our ability to design and manufacture products will enable us to compete effectively. 

·Our belief that our facilities and operations are within standards fully acceptable to the Environmental Protection Agency and that all facilities and procedures are operated in accordance with environmental rules and regulations, and international, federal, state and local laws. 

·Our belief that our existing sources of liquidity will provide sufficient liquidity to meet our obligations through 2019 and beyond. 

·Our belief that our ability to include the wide range of complementary products offered by E&S and Spitz in the systems we sell, along with access to the legacy customer base of E&S and Spitz, provides a unique competitive advantage.  

·Our expectations for variable future sales and gross profits from our current product line at annual levels sufficient to cover or exceed operating expenses.   

·Our belief that an improved financial position may present business growth opportunities.  

·Our belief that the business cost structure creates the potential for long-term profitability. 

·Our belief that capital expenditures during 2019 will be similar to the capital expenditures incurred during 2018. 

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·Our belief that the effects of inflation will not be material for 2019. 

·Our belief that approximately 90% of our backlog will be converted to sales in 2019.  

·Our belief that we will receive sufficient new orders to produce total sales in 2019 at sufficient levels to sustain profitable results. 

Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified.  Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements.  Our actual results could differ materially from these forward-looking statements.  Important factors to consider in evaluating such forward-looking statements include risks of product demand, market acceptance, economic conditions, competitive products and pricing, difficulties in product development, and product delays.  In light of these risks and uncertainties, there can be no assurance that the events contemplated by the forward-looking statements contained in this annual report will, in fact, occur.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders
Evans & Sutherland Computer Corporation

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Evans & Sutherland Computer Corporation (the Company) as of December 31, 2018 and 2017, and the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2018, and the related notes (collectively referred to as the “financial statements”).    In our opinion, the financial statements referred to above present fairly, in all material aspects, the consolidated financial position of Evans & Sutherland Computer Corporation as of December 31, 2018 and 2017, and the results of its consolidated operations and its cash flows for each of the years then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.  We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities law and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.  

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, due to error or fraud, and performing procedures that respond to those risks.  Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since October 9, 2006.    

/s/ Tanner LLC

Salt Lake City, Utah

March 8, 2019

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CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	December 31,
	2018	2017
ASSETS
Current assets:
Cash and cash equivalents	$ 8,365	$ 5,276
Restricted cash	220	312
Accounts receivable, net	3,250	3,794
Current portion of lease receivable	262	247
Contract revenue in excess of billings	3,484	2,763
Inventories, net	3,072	3,973
Prepaid expenses and deposits	655	712
Total current assets	19,308	17,077
Long-term lease receivable, net of current portion	574	836
Property and equipment, net	4,395	4,527
Goodwill	635	635
Other assets	2,249	1,955
Total assets	$ 27,161	$ 25,030
LIABILITIESANDSTOCKHOLDERS’EQUITY
Current liabilities:
Accounts payable	$ 1,527	$ 1,667
Accrued liabilities	1,059	912
Billings in excess of contract revenue	5,959	7,117
Current portion of retirement obligations	621	500
Current portion of pension settlement obligation	438	409
Current portion of long-term debt	237	224
Total current liabilities	9,841	10,829
Retirement obligations, net of current portion	3,601	4,150
Pension settlement obligation, net of current portion	4,042	4,478
Long-term debt, net of current portion	1,303	1,540
Deferred rent obligation	370	808
Total liabilities	19,157	21,805
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 shares issued	2,323	2,323
Additional paid-in-capital	53,967	53,818
Common stock in treasury, at cost, 264,350 shares	(3,532)	(3,532)
Accumulated deficit	(42,778)	(47,208)
Accumulated other comprehensive loss	(1,976)	(2,176)
Total stockholders’ equity	8,004	3,225
Total liabilities and stockholders’ equity	$ 27,161	$ 25,030

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data)

	Years Ended December 31,
	2018	2017
Sales	$ 37,193	$ 30,508
Cost of sales	(23,469)	(19,557)
Gross profit	13,724	10,951
Operating expenses:
Selling, general and administrative	(6,561)	(6,045)
Research and development	(2,851)	(2,908)
Pension	(217)	(231)
Total operating expenses	(9,629)	(9,184)
Operating income	4,095	1,767
Interest expense	(433)	(473)
Other income, net	106	76
Income before income tax benefit (expense)	3,768	1,370
Income tax benefit (expense)	(21)	111
Net income	$ 3,747	$ 1,481
Net income per common share – basic	$ 0.33	$ 0.13
Net income per common share – diluted	$ 0.31	$ 0.12
Weighted average common shares outstanding – basic	11,353	11,353
Weighted average common shares outstanding – diluted	11,978	12,014
Comprehensive income, net of tax:
Net income	$ 3,747	$ 1,481
Decrease (increase) in minimum pension liability	200	(30)
Total comprehensive income	$ 3,947	$ 1,451

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

(In thousands)

						Accumulated
			Additional			Other
	Common Stock		Paid-in	Treasury	Accumulated	Comprehensive
	Shares	Amount	Capital	Stock	Deficit	Loss	Total
Balance, December 31, 2016	11,617	$ 2,323	$ 53,641	$ (3,532)	$ (48,689)	$ (2,146)	$ 1,597
Net income	-	-	-	-	1,481	-	1,481
Other comprehensive loss	-	-	-	-	-	(30)	(30)
Stock-based compensation	-	-	177	-	-	-	177
Balance, December 31, 2017	11,617	$ 2,323	$ 53,818	$ (3,532)	$ (47,208)	$ (2,176)	$ 3,225
Balance at January 1, 2018, as previously reported	11,617	2,323	53,818	(3,532)	(47,208)	(2,176)	3,225
Impact of change in accounting policy	-	-	-	-	683	-	683
Adjusted balance at January 1, 2018	11,617	2,323	53,818	(3,532)	(46,525)	(2,176)	3,908
Net income	-	-	-	-	3,747	-	3,747
Other comprehensive loss	-	-	-	-	-	200	200
Stock-based compensation	-	-	149	-	-	-	149
Balance, December 31, 2018	11,617	$ 2,323	$ 53,967	$ (3,532)	$ (42,778)	$ (1,976)	$ 8,004

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Years Ended December 31,
	2018	2017
Cash flows from operating activities:
Net income	$ 3,747	$ 1,481
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization	263	259
Deferred pension costs	200	(30)
Provision for excess and obsolete inventory	427	105
Other	167	34
Changes in operating assets and liabilities:
Accounts receivable	496	(380)
Lease receivable	247	252
Inventories	(449)	(327)
Contract revenue in excess of billings	33	(1,651)
Prepaid expenses and other assets	(237)	(543)
Accounts payable	(140)	509
Accrued liabilities	147	(488)
Accrued pension and retirement liabilities	(428)	(201)
Billings in excess of contract revenue	(306)	305
Deferred rent obligation	(438)	(423)
Net cash provided by (used in) operating activities	3,729	(1,098)
Cash flows from investing activities:
Purchases of property and equipment	(136)	(148)
Proceeds from sale of property and equipment	35	-
Net cash used in investing activities	(101)	(148)
Cash flows from financing activities:
Principal payments on long-term debt	(224)	(211)
Principal payments on pension settlement obligation	(407)	(381)
Net cash used in financing activities	(631)	(592)
Net increase (decrease) in cash, cash equivalents, and restricted cash	2,997	(1,838)
Cash, cash equivalents, and restricted cash as of beginning of the year	5,588	7,426
Cash, cash equivalents, and restricted cash as of end of the year	$ 8,585	$ 5,588
Supplemental disclosures of non-cash investing and financing activities
ASC 606 transition adjustment	$    683	$         -
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest	$    439	$    478
Income taxes	133	141

See notes to consolidated financial statements.

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All dollar amounts are in thousands except share and per share information or unless otherwise indicated.

Note 1 - Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Evans & Sutherland Computer Corporation, referred to in these notes as “Evans & Sutherland,” “E&S,” or the “Company,” produces high-quality advanced visual display systems used primarily in full-dome video projection applications, dome projection screens and dome architectural treatments. E&S also produces unique content for planetariums, schools, science centers and other educational institutions and entertainment venues.  The Company’s products include state of the art planetarium and dome theater systems consisting of proprietary hardware and software, and other unique visual display systems primarily used to project digital video on large curved surfaces.  Additionally, E&S manufactures and installs metal domes with customized optical coatings and acoustical properties that are used for planetarium and dome theaters as well as many other unique custom applications.  The Company operates in one business segment, which is the visual simulation market.

Basis of Presentation

The consolidated financial statements include the accounts of Evans & Sutherland and its wholly owned subsidiaries.  All inter-company accounts and transactions have been eliminated in consolidation.  Certain prior year amounts have been reclassified to conform to the current year presentation.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.  The accounting estimates that require management’s most difficult and subjective judgments include revenue recognition based on the percentage-of-completion method, inventory reserves, allowance for doubtful accounts receivable, allowance for deferred income tax assets, impairment of long-lived assets, pension and retirement obligations and useful lives of depreciable assets.  Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three or fewer months to be cash equivalents.  The Company maintains cash balances in bank accounts that, at times, exceed federally insured limits.  The Company has not experienced any losses in these accounts and believes it is not exposed to any significant risk with respect to cash.  As of December 31, 2018, cash deposits as reported by the banks, including restricted cash, exceeded the federally insured limits by approximately $8,095.

Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statements of cash flows.

	2018	2017
Cash and cash equivalents	$ 8,365	$ 5,276
Restricted cash	220	312
Total cash, cash equivalents, and restricted cash
shown in the statements of cash flows	$ 8,585	$ 5,588

Amounts included in restricted cash represent those required to be set aside by a contractual agreement.  Restricted cash that guarantees letters of credit that mature or expire within one year is reported as a current asset.  Restricted cash that guarantees letters of credit that mature or expire after more than one year is reported as a long-term asset.

Trade Accounts Receivable

In the normal course of business, E&S provides unsecured credit terms to its customers.  Accordingly, the Company maintains an allowance for doubtful accounts for possible losses on uncollectible accounts receivable.  The

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Company routinely analyzes accounts receivable and costs and estimated earnings in excess of billings, and considers history, customer creditworthiness, facts and circumstances specific to outstanding balances, current economic trends, and changes in payment terms when evaluating the adequacy of the allowance for doubtful accounts receivable.  Changes in these factors could result in material differences to bad debt expense.  Past due balances are determined based on contractual terms and are reviewed individually for collectability. Uncollectible accounts receivable are charged against the allowance for doubtful accounts when management determines the probability of collection is remote.  

The table below represents changes in E&S’s allowance for doubtful accounts receivable for the years ended December 31:

	2018	2017
Beginning balance	$ 109	$ 259
Write-off of accounts receivable	-	(7)
Increase (decrease) in estimated losses on accounts receivable	48	(143)
Ending balance	$ 157	$ 109

Inventories

Inventories include materials at standard costs, which approximate actual costs, as well as inventoried costs on programs and long-term contracts.  Inventoried costs include material, direct engineering and production costs, and applicable overhead, not in excess of estimated market value.  Spare parts and general stock materials are stated at cost not in excess of market value.  E&S periodically reviews inventories for excess supply, obsolescence, and valuations above estimated realizable amounts, and provides a reserve sufficient to reduce inventories to net realizable values.  Revisions of these estimates could impact net loss.

During the years ended December 31, 2018 and 2017, E&S recognized impairment losses on inventory of $427 and $105, respectively.  

Inventories as of December 31, were as follows:

	2018	2017
Raw materials	$ 5,979	$ 5,458
Work in process	116	1,011
Finished goods	323	423
Reserve for obsolete inventory	(3,346)	(2,919)
Inventories, net	$ 3,072	$ 3,973

Property and Equipment

Property and equipment are stated at cost.  Depreciation and amortization are computed using the straight-line method based on the estimated useful lives of the related assets.  Expenditures that materially increase values or capacities or extend useful lives of property and equipment are capitalized.  Leasehold improvements are assigned useful lives based on the shorter of their useful lives or the term of the related leases, including renewal options likely to be exercised.  Routine maintenance, repairs and renewal costs are expensed as incurred.  When property is retired or otherwise disposed of, the carrying values are removed from the property and equipment and related accumulated depreciation and amortization accounts.  Depreciation and amortization are included in cost of sales, research and development or selling, general and administrative expenses depending on the nature of the asset.  

Depreciation expense was $263 and $259 for the years ended December 31, 2018 and 2017, respectively.  The cost and estimated useful lives of property and equipment and the total accumulated depreciation were as follows as of December 31:

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	Estimated
	Useful Lives	2018	2017
Land	n/a	$ 2,250	$ 2,250
Buildings and improvements	5 - 40 years	3,065	3,065
Manufacturing machinery and equipment	3 - 8 years	4,554	5,582
Office furniture and equipment	3 - 8 years	630	779
Total		10,499	11,676
Less accumulated depreciation		(6,104)	(7,149)
Net property and equipment		$ 4,395	$ 4,527

Goodwill

The Company tests its recorded goodwill for impairment on an annual basis during the fourth quarter, or more often if indicators of potential impairment exist, by determining if the carrying value of each reporting unit exceeds its estimated fair value. Factors that could trigger impairment include, but are not limited to, underperformance relative to historical or projected future operating results, significant changes in the manner of use of the acquired assets or the Company’s overall business and significant negative industry or economic trends. Future impairment reviews may require write-downs in the Company’s goodwill and could have a material adverse impact on the Company’s operating results for the periods in which such write-downs occur.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment when events or changes in circumstances indicate the carrying values of the assets may not be fully recoverable. When this occurs, the Company reviews the values assigned to long-lived assets by analyzing the anticipated, undiscounted cash flows they generate.  When the expected future undiscounted cash flows from these assets do not exceed their carrying values, the Company estimates the fair values of such assets. Impairment is recognized to the extent the carrying values of the assets exceed their estimated fair values.  Assets held for sale are reported at the lower of their carrying values or fair values less costs to sell.

Warranty Reserve

E&S provides a warranty reserve for estimated future costs of servicing products under warranty agreements extending for periods from 90 days to one year.  Anticipated costs for product warranties are based upon estimates derived from experience factors and are recorded at the time of sale or over the period revenues are recognized for long-term contracts.  Warranty reserves are classified as accrued liabilities in the accompanying consolidated balance sheets.

The table below represents changes in E&S’s warranty reserve for the years ended December 31:

	2018	2017
Beginning balance	$ 139	$ 123
Additions to warranty reserve	166	249
Warranty costs	(134)	(233)
Ending balance	$ 171	$ 139

Stock-Based Compensation

The Company records compensation expense in the financial statements for stock-based awards based on the grant date fair value of those awards that are ultimately expected to vest. As such, the value of the award is reduced for the estimated forfeitures at the date of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company determines the grant date fair value of the options using the Black-Scholes option-pricing model.  Stock-based compensation expense is recognized over the requisite service periods of the

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awards on a ratable basis, which recognizes expense for each vesting tranche of each grant starting on the grant date and finishing on the vest date for that tranche.

Net Income per Common Share

Basic net income per common share represents income available to common shareholders divided by the weighted-average number of common shares outstanding during the period. Diluted net income per common share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares include shares that may be issued by the Company for outstanding stock options determined using the treasury stock method. In periods resulting in a net loss, potential common shares are anti-dilutive and therefore are not included. Net income per common share has been computed based on the following:

	2018	2017
Numerator
Net Income	$ 3,747	$ 1,481
Denominator
Weighted-average number of common shares outstanding - basic	11,353	11,353
Incremental shares assumed for stock options	625	661
Weighted-average number of common shares outstanding - dilutive	11,978	12,014
Basic net income per common share	$ 0.33	$ 0.13
Diluted net income per common share	$ 0.31	$ 0.12

Income Taxes

The Company uses the asset and liability method of accounting for income taxes.  Under the asset and liability method, deferred income tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases and operating loss and income tax credit carry-forwards.  Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in income tax rates is recognized in the period that includes the enactment date.

Other Comprehensive Income

On a net basis for 2018 and 2017, there were deferred income tax assets resulting from items reflected in comprehensive income.  However, E&S has determined that it is more likely than not that it will not realize such net deferred income tax assets and has therefore established a valuation allowance against the full amount of the net deferred income tax assets.  Accordingly, the net income tax effect of the items included in other comprehensive income is zero.  Therefore, the Company has included no income tax expense or benefit in relation to items reflected in other comprehensive income.  The accumulated other comprehensive loss at the end of 2017 and 2018 consists of minimum pension liability attributable to the Supplemental Executive Retirement Plan (“SERP”) (see Note 7).

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Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 changes the accounting for leases. In particular, lessees will recognize lease assets and lease liabilities for operating leases. This update will have a minimal effect on lessor accounting. ASU 2016-02 is effective in the first quarter of the fiscal year ending 2019. The Company is currently assessing the impact on its financial reporting of implementing this guidance.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230) Restricted Cash

(“ASU 2016-18”). ASU 2016-18 changes the cash flow presentation and disclosures of restricted cash. The

Company implemented this update in the presented financial statements.

Note 2 – Revenue

The Company adopted Topic 606, Revenue from Contracts with Customers, with a date of the initial application of January 1, 2018. The Company applied Topic 606 using the cumulative effect method, and accordingly recognized the cumulative effect of initially applying Topic 606 as an adjustment to the opening balance of stockholders’ equity at January 1, 2018. As a result, the Company used different methods for recognizing revenue in each of the periods presented as detailed below.

Products and services

The Company generates its revenue through manufacturing, integrating, distributing, and servicing its various products consisting of: Audio-Visual Systems, Domes, Show Content, and Maintenance and Service contracts. All of the Company’s products are sold worldwide.

Audio-Visual Systems consist of standard and customized hardware components integrated with proprietary software. The Audio-Visual Systems are most often used as the primary equipment for planetarium theaters operated by educational institutions. Occasionally, Audio-Visual Systems are sold for other special purposes at various visitor attractions. Audio-Visual System sales include upgrades of existing systems and sub-systems. Sales of typical Audio-Visual Systems range from $200 to $2,000.  

Domes are hemispheric or curved metal structures fabricated from mostly aluminum metal tubing and sheets at the Company’s factory. Some Dome components have a special optical coating applied by a partner vendor. The Dome components are shipped to a customer site and are assembled and installed in or on the customer’s building by Company employees or subcontractors. Domes are often sold with an Audio-Visual System to serve as projection screens but can also be sold separately. Most often a Dome sold separately is used as a projection screen but occasionally they are used as architectural treatments. Dome projection screens sold separately can be used for existing planetarium theaters or other special visitor attractions such as theme park rides. A typical Dome is a hemispheric structure ranging from 40 to 70 feet in diameter but Domes are also produced in various curved shapes and sizes to accommodate a special purpose. Dome sales typically range from $200 to $1,000 but occasionally exceed this range for sales of multiple complex structures priced at several million dollars.

Show Content is sold under a license agreement. Show Content can also be sold with or without an Audio-Visual System. Most Show Content is sold to planetarium theaters which historically have been used as astronomical simulators; however, digital technologies have expanded capabilities to display a wider variety of content. The Company’s Show Content products include a variety of mostly educational topics including but not limited to astronomy, earth sciences, history, and biology. The Company sells Show Content it produces as well as content produced by other entities under distribution arrangements. Show Content sales typically range from $2 to $80.

Maintenance and Service is sold in the form of spare parts or service agreements that sometimes include an extended warranty feature. Maintenance and Service is sold predominantly for Audio-Visual Systems. Dome products require less maintenance but can benefit from an occasional cleaning. Part sales typically range from $1 to $100. Maintenance and Service contract sales typically range from $3 to $200.  

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The Company sells and markets its products through its employee sales team. For many foreign sales, the employee team is assisted by commissioned agents based in the locale of the customer. The Company markets its products through a network of industry associations and by messaging to the designers of planetarium theaters and visitor attractions. For Dome sales other than for planetarium projects, the Company relies on relationships developed with many satisfied customers in the architectural, visitor attraction, and theme park community. Customer decisions are based on price, product features and the experience of the supplier.

Most of the Company’s revenue comes from sales of Audio-Visual Systems and Domes for planetarium theaters or other visitor attractions. Sales can be to existing theaters interested in upgrading or to a new theater. Service Support and Show Content provide a reasonably steady stream of repeat revenue from existing customers which supplements the revenue from Audio-Visual Systems and Domes. As such, the Company relies on Audio-Visual Systems and Domes sales to new projects to generate the volume of revenue necessary sustain the business. Customer sales sometimes can take years to consummate from the initial planning stage to the award of the contract. Often there is a competitive bid process with multiple suppliers involved.

Customer contracts generally provide for progress payments which in many cases provides advance funding for the cost of performance. In some cases, customers hold a small portion of the contract payment for performance security through the warranty. The Company may also be required to provide performance security in the form of a surety bond or international standby letter of credit. Most customers are large public institutions, government or quasi-government entities, and large theme park entities, which carry little credit risk.  

Multiple Performance Obligations  

Some contracts include multiple performance obligations. Significant performance obligations commonly include the supply of Audio-Visual Systems, Domes, Show Content and various Service deliverables.  Revenue earned on performance obligations are allocated to each deliverable based on the relative fair values.  Relative fair values of performance obligations are generally determined based on actual and estimated selling price. Completion times of such contract obligations vary but typically occur within a three to twelve-month time period.

Revenue Recognition Methods for 2017

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 revenue recognized and are recorded as an asset or liability in the accompanying condensed consolidated balance sheets.

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.

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.  

Revenue Recognition Methods for 2018

In 2018, upon adoption of Topic 606, the Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. The following describes the methods used to recognize revenue under the application of Topic 606.

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Audio-Visual Systems. The Company’s Audio-Visual Systems are sold for a fixed price under non-cancelable contracts. Because systems are often designed with unique features and constantly changing technology components, there is no practical alternative use for a system after it is sold. Under Topic 606, if an entity’s performance does not create an asset with an alternative use to the entity, and the entity has an enforceable right to payment for the performance completed to date, then its performance obligation is satisfied and control of the product transfers over time. If control transfers over time, an entity selects a method to measure progress that is consistent with the objective of depicting its performance and recognizes revenue accordingly. The Company has determined the percentage-of-completion method utilizing cost-to-cost methodology best depicts the measure of progress because it tracks the utilization of total resources to fulfill the obligation. This same method has been used prior to the adoption of Topic 606 for recognizing revenue on certain Audio-Visual System sales and most Dome sales. With the adoption of Topic 606, essentially all Audio-Visual Systems and subsystem sales will use the percentage-of-completion method for revenue recognition.  

Domes. The Company’s Domes are sold for a fixed price under non-cancelable contracts. Because Domes have custom design and interface features, there is no practical alternative use for a Dome after it is sold. As discussed above under Audio-Visual Systems, when there is no alternative use for the product and there is an enforceable right to payment, Topic 606 requires revenue to be recognized over the time of performance. Accordingly, the Company continues to use the percentage-of-completion method utilizing cost-to-cost methodology for the recognition of revenue for the sale of Domes, as it has prior to the adoption of Topic 606.  

Show Content.  Show Content is sold under various license agreements, most often for a fixed price, but occasionally for a variable share of the customer’s theater revenue. Sales of Show Content require no future obligations by the Company after delivery.  The Company recognizes the revenue for fixed price Show Content licenses upon the execution of the license agreement and delivery of media since that is the time control and benefit of the Show Content is transferred. Under Topic 606, an entity does not recognize revenue for the variable amounts related to a royalty until a customer’s subsequent sales or usage occurs. Accordingly, revenue from the variable share of the customer’s theater revenue is recognized when realized. The method used by the Company for recognizing Show Content revenue has not changed with the adoption of Topic 606.

Maintenance and Service. Maintenance and Service revenue consists of parts sales and service contracts. Parts sales are recognized upon shipment which is when the control and benefit transfers to the customer. Service contracts are sold for a fixed price and provide the customer with various levels of preventive service, support and limited warranty protection. Under Topic 606, the revenue for service contracts is recognized ratably over the term of the contract or upon delivery of a service specified in the contract. The method used by the Company for recognizing Maintenance and Service revenue has not changed with the adoption of Topic 606.

Contract Acquisition Costs

Contract acquisition costs consist of expenditures of Company employee and other resources and, in some cases, the payment of sales commissions to non-employee agents. Expenditures of Company employee and other resources are costs that would be incurred regardless of whether the contract is obtained, are not recoverable, and therefore are expensed as they are incurred under Topic 606. Sales commissions paid to agents are incurred only if the contract is obtained and therefore are incremental costs of acquiring the contract. Rather than capitalize the cost of sales commissions, the Company has elected to expense sales commissions as incurred under the practical expedient permitted by Topic 606, whereby expensing is permitted when the amortization period of the asset that the entity otherwise would have recognized is one year or less.

Disaggregation of Revenue

In the following table, revenue reported for the year ended December 31, 2018 under Topic 606 is disaggregated by primary geographical market, major product line, timing of revenue recognition and product application.

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Product Application	Planetarium Theaters	Other Visitor Attractions	Architectural Treatments	Total
Primary Geographic Area:
North America	$  23,443	$ 1,452	$ 1,022	$ 25,917
Europe	2,607	1,175	-	3,782
Asia	4,077	1,911	-	5,988
Other	1,506	-	-	1,506
	$ 31,633	$ 4,538	$ 1,022	$ 37,193
Products:
Audio-Visual Systems	$ 21,315	$ 1,646	$         -	$ 22,961
Domes	5,686	2,892	1,022	9,600
Show Content	2,225	-	-	2,225
Maintenance and Service	2,407	-	-	2,407
	$ 31,633	$ 4,538	$ 1,022	$ 37,193
Timing of revenue recognition:
Goods transferred at point in time	$   2,935	$         -	$         -	$   2,935
Goods and services transferred over time	28,698	4,538	1,022	34,258
	$ 31,633	$ 4,538	$ 1,022	$ 37,193

Contract Balances

The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers as of December 31, 2018 and January 1, 2018:

	December 31, 2018	January 1, 2018
Receivables reported as accounts receivable, net	$ 3,250	$ 3,794
Contract revenue in excess of billings	3,484	3,517
Billings in excess of contract revenue	5,959	6,265

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Significant changes in the contract assets and the contract liabilities balances during the year are as follows:

	Contract Assets	Contract Liabilities
Revenue recognized that was included in the contract liability balance at the beginning of the year		$ (4,697)
Increases due to amounts billed to customers, excluding amounts recognized as revenue during the year		$  4,391
Transferred to receivables from contract assets recognized at the beginning of the year	$ (3,404)
Increases as a result of revenue recognized, excluding amounts transferred to receivables during the year	$  3,371

Contract revenue in excess of billings are contract assets that arise when revenue recognized on a contract exceeds the cumulative progress billings. Contracts generally provide for an enforceable right to payment for performance completed to date but do not necessarily have a present right to consideration payment for performance completed until the event that triggers the progress billing. The contract assets are transferred to receivables when the rights to payment occur and amounts are billed. Billings in excess of contract revenue are contract liabilities that arise when progress billings on a contract exceed the revenue recognized. Contract liabilities are relieved as the performance obligation is completed and revenue is recognized. Progress billings vary among contracts and can be triggered by chronological milestones, performance events or other various measurements of performance.

Backlog of Remaining Customer Performance Obligations

The following table includes estimated revenue expected to be recognized and recorded as sales in the future from the backlog of performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period.

	2019	2020	2021	2022	2023
Sales	$15,881	$678	$546	$170	$91

Note 3 – Changes in Accounting Policies

Except for the changes disclosed in Note 1 under revenue recognition, the Company has consistently applied the accounting policies to both periods presented in these condensed consolidated financial statements. The Company adopted Topic 606, Revenue from Contracts with Customers, with a date of initial application of January 1, 2018. As a result, the Company has changed its accounting policy for revenue recognition as detailed below. The Company applied Topic 606 using the cumulative effect method and accordingly recognized the cumulative effect of initially applying Topic 606 as an adjustment to the opening balance of equity at January 1, 2018. Therefore, the comparative information has not been adjusted and continues to be reported under prior accounting rules.

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The following tables summarize the impacts of adopting Topic 606 on the Company’s consolidated financial statements for year ended December 31, 2018:

CONDENSED CONSOLIDATED BALANCE SHEETS
Impact of changes in accounting policies
			Balances
			without
			adoption of
December 31, 2018	As reported	Adjustments	Topic 606
Cash and cash equivalents	$   8,365	$            -	$ 8,365
Restricted cash	220	-	220
Contract revenue in excess of billings	3,484	(1,130)	2,354
Inventories, net	3,072	712	3,784
Others	12,020	-	12,020
Total assets	27,161	(418)	26,743
Billings in excess of contract revenue	5,959	44	6,003
Others	13,198	-	13,198
Total liabilities	19,157	44	19,201
Accumulated deficit	(42,778)	(462)	(43,240)
Others	50,782		50,782
Total stockholders’ equity	8,004	(462)	7,542
Total liabilities and stockholders’ equity	$ 27,161	$     (418)	$ 26,743

			Balances
			without
			adoption of
For the year ended December 31, 2018	As reported	Adjustments	Topic 606
Sales	$ 37,193	$     432	$ 37,625
Cost of sales	(23,469)	(211)	(23,680)
Selling, general and administrative	(6,561)	-	(6,561)
Income tax expense	(21)	-	(21)
Others	(3,395)	-	(3,395)
Net income	$  3,747	$     221	$ 3,968

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Impact of changes in accounting policies
			Balances
			without
			adoption of
For the year ended December 31, 2018	As reported	Adjustments	Topic 606
Net income	$ 3,747	$ 221	$ 3,968
Adjustments to reconcile net income to
net cash used in operating activities:
Other	1,057	-	1,057
Changes in:
Inventories	(449)	211	(238)
Contract revenue in excess of billings	33	1,130	1,163
Billings in excess of contract revenue	(306)	(1,562)	(1,868)
Other	(353)	-	(353)
Net cash from operating activities	3,729	-	3,729
Net cash from investing activities	(101)	-	(101)
Net cash from financing activities	$ (631)	$ -	$ (631)

Note 4 – Goodwill

Goodwill of $635 resulted from the acquisition of the Company’s wholly owned subsidiary, Spitz, and was measured as the excess of the $2,884 purchase consideration paid over the fair value of the net assets acquired. The Company has made its annual assessment of impairment of goodwill and has concluded that goodwill is not impaired as of December 31, 2018.

Note 5 – Lease Receivable

In 2016, the Company entered into a lease agreement with a customer whereby the Company will be the Lessor and the customer will be the lessee of a Planetarium System produced, delivered and installed by the Company. The lease term is 5 years and requires the customer to make rent payments to the Company over the lease term in accordance with the fixed schedule in the agreement.  The equipment will be returned to the Company at the end of the lease term at which time the Company estimates that the system will have no residual value.  The customer obtained control of the leased assets upon delivery and acceptance of the system on December 7, 2016.  The lease is accounted for as a sales-type lease since the lease term is for substantially all of the economic life of the system, the present value of the lease payments amounts to substantially all of the fair value of the underlying assets, and the customer will retain the control with substantially all of the risks and awards of ownership of the system.  The discounted present value of the payments to be made under the lease agreement, using an annual rate of 6%, amounts to $1,754. This amount represents the fair value of the equipment of $1,678 and the maintenance services E&S is to provide over the terms of the lease valued at $76.  In 2016, the Company recorded the sale of the system of $1,678 and $76 of deferred revenue representing the value of the maintenance services.  In 2017, the Company collected $307 in lease payments of which $55 was recorded as interest income and $252 as principal reduction of the lease receivable. In 2018, the Company collected $307 in lease payments of which $60 was recorded as interest income and $247 as principal reduction of the lease receivable.

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The balance of lease receivable as of December 31, 2018 and 2017 is recorded as follows:

	2018	2017
Lease receivable	$   262	$    247
Lease receivable long term	574	836
Total	$   836	$ 1,083

Note 6– Leases and deferred gain on disposal of building assets

The Company occupies real property and uses certain equipment under lease arrangements that are accounted for as operating leases.  The Company’s real property leases contain escalation clauses.  Rental expense for all operating leases for 2018 and 2017 was $151 and $148, respectively.

In November 2014, the Company agreed to an extension of its lease for its corporate office buildings and its interest in the lease for the land occupied by the buildings for a term of 5 years. Base annual rent was $549 until April 1, 2018 when the base annual rent increased to $570. The annual rent expense on a straight-line basis is $555. The new lease obligation is recorded as an operating lease for a term of five years which commenced November 1, 2014.  The accounting for the lease extension resulted in a $620 gain on the disposition of leased assets under the prior lease which was deferred and is being amortized over the five-year term of the new operating lease. There was also a $1,526 gain from the extinguishment of a deferred rent credit related to the underlying land lease which is being amortized over the five-year term of the new operating lease. The amortization of the deferred gain and deferred rent credit reduces the rent expense attributable to the cash rent payments.

Future minimum rent expense payments under the new operating lease and the remaining deferred gain from the disposal of the building assets and deferred rent credit to be recognized are as follows:

Years Ending	Minimum Lease	Gain on	Deferred	Net Rent
December 31,	Payments	Building	Rent Credit	Expense
2019	475	(106)	(264)	105
Total	$ 475	$ (106)	$ (264)	$ 105

There are no other lease obligations that have initial or remaining non-cancelable lease terms in excess of one year.

Note 7 - Employee Retirement Benefit Plans

Settlement of Pension Plan Liabilities

On April 21, 2015, the Company, as the administrator of its qualified defined benefit pension plan (“Pension Plan”), and the Pension Benefit Guaranty Corporation (“PBGC”) entered into an Agreement for Appointment of Trustee and Termination of Plan (the “Termination Agreement”) (a) terminating the Pension Plan, (b) establishing March 9, 2013 as the Plan’s termination date and (c) appointing the PBGC as statutory trustee of the Pension Plan.

In connection with the Termination Agreement, on April 21, 2015, the Company entered into the Pension Settlement Agreement with the PBGC to settle all liabilities of the Pension Plan including any termination premium resulting from the Pension Plan termination (the “Settled ERISA Liabilities”). Pursuant to the Pension Settlement Agreement, the Company agreed to (a) pay to the PBGC a total of $10,500, with $1,500 due within ten days following the effective date of the Pension Settlement Agreement and the remainder paid in twelve annual installments of $750 beginning on October 31, 2015 (the “Pension Settlement Obligation”) and (b) issue within ten days following the effective date of the Pension Settlement Agreement 88,117 shares of the Company’s treasury stock in the name of the PBGC. The Pension Settlement Agreement further provides that the PBGC will be deemed to have released the Company from all Settled ERISA Liabilities upon payment of the Pension Settlement Obligation. In the event of a

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default by the Company of its obligations under the Pension Settlement Agreement or the underlying agreements which secure the Pension Settlement Obligation, the PBGC may enforce payment of the Settled ERISA Liabilities, which would accrue interest at various rates until payment is made and be reduced by any payments made by the Company pursuant to the Pension Settlement Agreement.  The estimated total Settled ERISA Liabilities as of the settlement date is $46,000.

To secure the Company’s obligations under the Pension Settlement Agreement, on April 21, 2015, the Company also entered into a Security Agreement with the PBGC (the “Security Agreement”), and executed an Open-End Mortgage in favor of the PBGC (the “Mortgage”) on certain real property owned by the Company’s subsidiary, Spitz, Inc. (“Spitz”). The Security Agreement and Mortgage grant to the PBGC a security interest on all of the Company’s presently owned and after-acquired property and proceeds thereof, free and clear of all liens and other encumbrances, except those described therein (the “Senior Liens”). The PBGC’s security interest in the Company’s property is subordinate to the Company’s two senior lenders pursuant to the Security Agreement and agreements between the PBGC and the lenders (the “Intercreditor Agreements”). The Intercreditor Agreements provide for the lenders to extend credit to the Company, secured by the Senior Liens, up to specified limits. The Intercreditor Agreement between the lender of the mortgage notes and line of credit (see Note 8) and the PBGC provides for total aggregate loans of up to $6,500 secured by Senior Liens on Spitz assets. The second Intercreditor Agreement between another lender and the PBGC provides for up to $3,000 of letter of credit indebtedness secured by Senior Liens on cash deposits.

The balance of the Pension Settlement Obligation is recorded on the balance sheet as of December 31, 2018 and 2017 as follows:  

	2018	2017
Current portion of pension settlement obligation	$    438	$    409
Pension settlement obligation, net of current portion	4,042	4,478
Total Pension Settlement Obligation	$ 4,480	$ 4,887

Supplemental Executive Retirement Plan (SERP)

The SERP provides eligible former executives, employed by the Company prior to 2002, defined pension benefits based on average salary, years of service and age at retirement.  The SERP was amended in 2002 to discontinue further SERP gains from future salary increases and close the SERP to new participants.

Obligations and Funded Status for SERP

E&S uses a December 31 measurement date for the SERP.

Information concerning the obligations, plan assets and funded status of employee retirement defined benefit plans are provided below:

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Changes in benefit obligation	2018	2017
Projected benefit obligation - beginning of year	$   4,650	$  4,851
Interest cost	136	156
Actuarial loss (gain)	(119)	103
Benefits paid	(445)	(460)
Projected benefit obligation - end of year	$   4,222	$  4,650
Changes in plan assets	2018	2017
Contributions	$      445	$     460
Benefits paid	(445)	(460)
Fair value of plan assets - end of year	$          -	$          -
Net amount recognized	2018	2017
Unfunded status	$ (4,222)	$ (4,650)
Unrecognized net actuarial loss	1,976	2,176
Net amount recognized	$ (2,246)	$ (2,474)

Amounts recognized in the consolidated balance sheets consisted of:

	2018	2017
Accrued liability	$ (4,222)	$ (4,650)
Accumulated other comprehensive loss	1,976	2,176
Net amount recognized	$ (2,246)	$ (2,474)

Components of net periodic benefit cost:

	2018	2017
Interest cost	$      136	$     156
Amortization of actuarial loss	81	75
Amortization of prior year service cost	-	-
Net periodic benefit expense	$      217	$     231

Additional information

Pension expense was $217 and $231 for the years ended December 31, 2018 and 2017, respectively, which consisted of net periodic benefit expense for the SERP.  

The SERP minimum liability recorded in other comprehensive loss decreased $200 in 2018 compared to an increase of $30 in 2017.  The decrease in 2018 was primarily due to an increase in the discount rate and change to the mortality table offset by an increase due to the change to payout assumption. The increase in 2017 was caused by a decrease in the discount rate, partly offset by a change to the mortality table.

Assumptions

The weighted average assumptions used to remeasure benefit obligations as of December 31, 2018 and 2017 included a discount rate of 3.8% and 3.1%, respectively, for the SERP.  The weighted average assumptions used to

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determine net periodic cost for the years ended December 31, 2018 and 2017 included a discount rate of 3.8% and 3.1%, respectively, in each year for the SERP.

In prior years, for persons who have not yet commenced benefits, it was assumed that installment payments would commence on the valuation date and continue for 10 years.  That assumption was changed such that if an individual has not yet commenced benefit payments, the first payment would be a one-time lump sum equal to installments in arrears plus future installments commencing on the valuation date and continuing through the original end date assuming payments had commenced on the expected start date.

Cash Flows

Employer contributions

The Company is not currently required to fund the SERP.  All benefit payments are made by E&S 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 benefits of approximately $621 related to the SERP in 2019.  

Estimated future benefit payments

As of December 31, 2018, the following benefits are expected to be paid based on actuarial estimates and prior experience:

Years Ending December 31,	SERP
2019	$    621
2020	$    426
2021	$    414
2022	$    407
2023	$    392
2024-2028	$ 1,527

401(k) Deferred Savings Plan

The Company has a deferred savings plan that qualifies under Section 401(k) of the Internal Revenue Code.  The 401(k) plan covers all employees of the Company who have at least one year of service and who are age 18 or older.  Matching contributions of 50% are made on the first 6% of employee contributions after the employee has achieved one year of service.  Extra matching contributions can be made based on profitability and other financial and operational considerations.  Effective January 1, 2017, the Company started making a 3% contribution in addition to the matching contribution.  Contributions to the 401(k) plan for 2018 and 2017 were $444 and $451, respectively.

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Note 8 –Debt

Long-term debt consisted of the following as of December 31, 2018 and 2017:

	2018	2017
First mortgage note payable due in monthly installments of $23 (interest  at 5.75%) through January 1, 2024; payment and rate subject to  adjustment every 3 years, next adjustment January 14, 2021	$ 1,221	$ 1,422
Second mortgage note payable due in monthly installments of $4 (interest  at 5.99%) through October 1, 2028; payment and rate subject to  adjustment every 5 years, next adjustment October 1, 2023	319	342
Total debt	1,540	1,764
Current portion of long-term debt	(237)	(224)
Long-term debt, net of current portion	$ 1,303	$ 1,540

Principal maturities on total debt are as follows:

Years Ending December 31,
2019	$    237
2020	251
2021	267
2022	283
2023	299
Thereafter	203
Total debt	$ 1,540

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Mortgage Notes

The first mortgage note payable represents the balance on a $3,200 note (“First Mortgage Note”) issued on January 14, 2004 by Spitz. The First Mortgage Note requires repayment in monthly installments of principal and interest over 20 years.  On January 14, 2006 and each third anniversary thereof, the interest rate on the First Mortgage Note is adjusted to the greater of 5.75% or 3% over the Three-Year Constant Maturity Treasury Rate published by the United States Federal Reserve (“3YCMT”).  The monthly installment is recalculated on the first month following a change in the interest rate. The recalculated monthly installment is equal to the monthly installment sufficient to repay the principal balance, as of the date of the change in the interest rate, over the remaining portion of the original 20-year term.  On January 14, 2018, the 3YCMT was 2.09% and the interest rate on the First Mortgage Note remained at 5.75% per annum. As a result, the monthly installment amount remained at $23.

The second mortgage note payable represents the balance on a $500 note (“Second Mortgage Note”) issued on September 11, 2008 by Spitz. The Second Mortgage Note requires repayment in monthly installments of principal and interest over 20 years. On October 1, 2013 and each fifth anniversary thereof, the interest rate on the Second Mortgage Note is adjusted to the greater of 5.75% or 3% over the Five-Year Constant Maturity Treasury Rate published by the United States Federal Reserve (“5YCMT”).  The monthly installment is recalculated on the first month following a change in the interest rate. The recalculated monthly installment is equal to the monthly installment sufficient to repay the principal balance, as of the date of the change in the interest rate, over the remaining portion of the original 20-year term.  On October 1, 2018, the fifth anniversary of the Second Mortgage Note, the 5YCMT was 2.99%. As a result, interest was adjusted to 5.99%. The monthly installment remains at $4.

The Mortgage Notes are secured by the real property occupied by Spitz pursuant to a Mortgage and Security Agreement.  The real property had a carrying value of $3,973 as of December 31, 2018. The Mortgage Notes are guaranteed by E&S.

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 Spitz working capital requirements. 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 December 31, 2018.

Note 9 - Income Taxes

Income tax for 2018 and 2017 consisted of an expense of $21 and a benefit of $(111), respectively, of federal and state income taxes. The actual expense differs from the expected tax expense (benefit) as computed by applying the U.S. federal statutory income tax rate of 21 and 34 percent for 2018 and 2017, respectively, as follows:

	2018	2017
Income tax provision at U.S. federal statutory rate	$      791	$      466
State tax  provision, net of federal income tax	116	48
Change in valuation allowance attributable to operations	(3,114)	(25,093)
Change in effective tax rate	111	22,311
Stock compensation	30	570
True-up adjustments and expiration of tax carryforwards and credits	2,105	1,568
Other, net	(18)	19
Income tax expense (benefit)	$      21	$    (111)

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The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and liabilities as of December 31, 2018 and 2017 are as follows:

	2018	2017
Property and equipment, principally due to differences in depreciation	$          68	$         71
Inventory reserves and other inventory-related temporary basis differences	437	361
Warranty, vacation, deferred rent and other liabilities	251	371
Retirement liabilities	543	645
Net operating loss carryforwards	35,532	38,536
Credit carryforwards	28	27
Other	181	143
Total deferred income tax	37,040	40,154
Less valuation allowance	(37,040)	(40,154)
Net deferred income tax	$            -	$           -

Worldwide income before income taxes consisted of the following:

	2018	2017
United States	$    3,768	$    1,370
International	-	-
Total	$    3,768	$    1,370

Income tax expense (benefit) consisted of the following:

	2018	2017
Current
U.S. federal	$        (1)	$         (8)
State	22	(103)
Total current expense (benefit)	$        21	$     (111)
Deferred
U.S. federal	$  1,477	$ 23,012
State	1,637	2,081
Total	3,114	25,093
Valuation allowance increase	(3,114)	(25,093)
Total deferred expense (benefit)	-	-
Total income tax expense (benefit)	$       21	$    (111)

The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.  

E&S has total federal net operating loss carryforwards of approximately $161,541 which expire from 2020 through 2036. The Company has federal minimum tax credit carryforwards of approximately $28 which do not expire. The Company has $3,400 of federal research credits that begin to expire in 2019 and $1,100 of state research credits that begin to expire in 2019. The Company has not recorded a benefit for these research credits in the financial statements because it does not meet the more-likely-than-not position recognition threshold. E&S also has state net operating loss carryforwards of approximately $34,500 that expire at various dates depending on the rules of the states to which the loss or credit is allocated.

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The Company evaluates its deferred tax assets for realizability based on all of the available positive and negative evidence. Due to cumulative losses and the significance of the carryforwards, the Company determined that it is more likely than not that the deferred tax assets will not be realized. Accordingly, a valuation allowance has been established to offset the net deferred tax assets. During the years ended December 31, 2018 and 2017, the valuation allowance on deferred tax assets decreased by $3,114 and $25,093, respectively.

The Company is subject to audit by the IRS and various states for tax years dating back to 2015.  No federal or state tax returns are currently under audit. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

Note 10 - Commitments and Contingencies

Letters of Credit

Under the terms of financing arrangements for letters of credit, E&S is required to maintain a balance in a specific cash account equal to or greater than the outstanding value of all letters of credit or bank guarantees issued, plus other amounts necessary to adequately secure obligations with the financial institution.  As of December 31, 2017, there were outstanding letters of credit and bank guarantees of $312 which expired in 2018.  As of December 31, 2018, there were outstanding letters of credit and bank guarantees of $220 which are scheduled to expire in 2019.  

Note 11 - Stock Option Plan

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, 2018, options to purchase 1,001,781 shares of common stock were authorized and reserved for future grant.  

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A summary of activity follows (shares in thousands):

	2018		2017
		Weighted-		Weighted-
		Average		Average
	Number	Exercise	Number	Exercise
	of Shares	Price	of Shares	Price
Outstanding as of beginning of the year	1,610	$ 0.66	1,625	$ 0.88
Granted	150	1.12	141	1.39
Exercised	-	-	-	-
Forfeited or expired	(163)	1.21	(156)	3.61
Outstanding as of end of the year	1,597	0.65	1,610	0.66
Exercisable as of end of the year	1,131	0.48	1,089	0.51

The weighted average fair value of options granted during 2018 and 2017 was $0.77 and $1.14, 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. As of December 31, 2017, options exercisable and options outstanding had a weighted average remaining contractual term of 4.4 and 5.8 years with aggregate intrinsic value of $566 and $637, 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 2018 and 2017:

	2018	2017
Expected life (in years)	3.5	3.5
Risk free interest rate	2.04%	1.47%
Expected volatility	125%	175%

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, 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.  As of December 31, 2017, there was approximately $140 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 2.4 years.    

Share-based compensation expense, from awards collectively under the 2004 Plan and 2014 Plan for the years ended December 31, 2018 and 2017 amounted to $149 and $177, respectively, and was included in general and administrative expense on the statements of comprehensive income.

Note 12 - Preferred Stock

Class A Preferred Stock

The Company has 5,000,000 authorized shares of Class A Preferred stock.  As of December 31, 2018 and 2017, there were no Class A Preferred shares outstanding.     

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Class B Preferred Stock

The Company has 5,000,000 authorized shares of Class B Preferred stock.  As of December 31, 2018 and 2017, there were no Class B Preferred shares outstanding.

Note 13 - Significant Customers

As of December 31, 2018, Customer D represented 24% of accounts receivable, and Customer E represented 10% of contract revenue in excess of billings.

As of December 31, 2017, Customers A and B each represented 10% of accounts receivable, and Customer C represented 30% of contract revenue in excess of billings.

For the year ended December 31, 2018, no customers represented 10% or more of total sales.  For the year ended December 31, 2017, Customer C represented 11% of total sales.    

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. 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 recognized that any control system cannot provide absolute assurance, however, that the objectives of the control 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 have been detected.

Management’s Annual Report on Internal Control over Financial Reporting.  

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes of U.S. generally accepted accounting principles.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Further, because of changes in conditions, the effectiveness of internal control may vary over time.

Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s internal control over financial reporting as of December 31, 2018.  In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (1992).  Based on this evaluation, our

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management, with the participation of the Chief Executive Officer and Chief Financial Officer, concluded that, as of December 31, 2018, our internal control over financial reporting was effective based on those criteria.

This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

Changes in Internal Control Over Financial Reporting.

       On January 1, 2018, the Company’s subsidiary began processing inventory transactions on the integrated accounting software system it uses for all other transactions. Prior to 2018 the subsidiary’s inventory and product bills of material were accounted for using a legacy system. This change was made to improve the efficiency of the accounting function through improved integration of all transactions. Also, transitioning off the legacy system provides better security and assurance of system support. The Company has made changes to its internal control over financial reporting in connection with this transition from the legacy system.

      Other than the improvements noted above, there have been no changes in our internal control over financial reporting identified in connection with the evaluation of disclosure controls and procedures discussed above that occurred during the year ended December 31, 2018, 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.

ITEM 9B. OTHER INFORMATION

None

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND cORPORATE gOVERNANCE

Certain information required by Item 401 of Regulation S-K will be included under the caption “Election of Directors” in the Proxy Statement for our 2019 Annual Meeting of Stockholders and that information is incorporated herein by reference.  Information required by Item 405 of Regulation S-K will be included under the caption “Compliance with Section 16(a) of the Securities Exchange Act of 1934” in the Proxy Statement for our 2019 Annual Meeting of Stockholders and that information is incorporated herein by reference.  Certain information required by Item 401 of Regulation S-K is included in Part I of this Form 10-K under the caption “Executive Officers of the Registrant.” The information required by Item 407(c)(3), 407(d)(4) and 407(d)(5) of Regulation S-K will be included under the caption “Election of Directors” in the Proxy Statement for our 2019 Annual Meeting of Stockholders and that information is herein incorporated by reference.

Code of Ethics

Evans & Sutherland maintains a Code of Ethics and Business Conduct which is applicable to all employees, including all officers, and including our independent non-employee directors with regard to Evans & Sutherland related activities.  The Code of Ethics and Business Conduct incorporates our guidelines designed to deter wrongdoing and to promote honest and ethical conduct and compliance with applicable laws and regulations. It also incorporates our expectations of our employees that enable us to provide accurate and timely disclosure in our filings with the Securities and Exchange Commission and other public communications.  In addition, they incorporate our expectations of our employees concerning prompt internal reporting of violations of our Code of Ethics and Business Conduct.  

The full text of the Evans & Sutherland Code of Ethics and Business Conduct is published on our Investors Relations website at www.es.com.  We intend to disclose future amendments to certain provisions of our Code of Ethics and Business Conduct or waivers of such provisions granted to executive officers and directors on this website within four business days following the date of such amendment or waiver.

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ITEM 11. EXECUTIVE COMPENSATION

The information required by this item will be included under the captions, “Executive Compensation,” and, “Election of Directors,” in the Proxy Statement for our 2019 Annual Meeting of Stockholders and that information is herein incorporated by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by Item 403 of Regulation S-K will be included under the caption, “Security Ownership of Certain Beneficial Owners and Management,” in the Proxy Statement for our 2019 Annual Meeting of Stockholders and that information is herein incorporated by reference.

Securities Authorized for Issuance Under Equity Compensation Plans as of December 31, 2018:

			Number of securities
	Number of securities		remaining available for
	to be issued upon	Weighted average	future issuance
	exercise of	exercise price of	under equity compensation
	outstanding options,	outstanding options,	plans (excluding securities
	warrants and rights	warrants and rights	reflected in column (a))
	(a)	(b)	(c)
Equity compensation plans approved by
security holders	1,596,700	$ 0.65	1,001,781
Equity compensation plans not approved by
security holders	-	-	-
Total	1,596,700	$ 0.65	1,001,781

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by Item 404 of Regulation S-K will be included under the caption, “Certain Relationships and Related Party Transactions,” in the Proxy Statement for our 2019 Annual Meeting of Stockholders and that information is herein incorporated by reference. The information required by Item 407(a) of Regulation S-K will be included under the caption, “Election of Directors,” in the Proxy Statement for our 2019 Annual Meeting of Stockholders and that information is herein incorporated by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item will be included under the caption, “Report of the Audit Committee of the Board of Directors,” in the Proxy Statement for our 2019 Annual Meeting of Stockholders and that information is herein incorporated by reference.

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)List of documents filed as part of this report 

1.Financial Statements 

The following consolidated financial statements are included in Part II, Item 8 of this report on Form 10-K.

·Consolidated Balance Sheets as of December 31, 2018 and 2017 

·Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2018 and 2017 

·Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2018 and 2017 

·Consolidated Statements of Cash Flows for the Years Ended December 31, 2018 and 2017 

·Notes to Consolidated Financial Statements  

2.Financial Statement Schedules 

There are no schedules filed because of the absence of conditions under which they are required or because the required information is presented in the consolidated financial statements or the notes thereto.

3.Exhibits 

Articles of Incorporation and Bylaws

3.1.1Articles of Incorporation, as amended, filed as Exhibit 3.1 to Evans & Sutherland Computer Corporation’s Annual Report on Form 10-K, SEC File No. 000-08771, for the fiscal year ended December 25, 1987, and incorporated herein by reference. 

3.1.2Amendments to Articles of Incorporation filed as Exhibit 3.1.1 to Evans & Sutherland Computer Corporation’s Annual Report on Form 10-K, SEC File No. 000-08771, for the fiscal year ended December 30, 1988, and incorporated herein by reference. 

3.1.3Certificate of Designation, Preferences and Other Rights of the Class B-1 Preferred Stock of Evans & Sutherland Computer Corporation, filed as Exhibit 3.1 to Evans & Sutherland Computer Corporation’s Form 10-Q, SEC File No. 000-08771, for the quarter ended September 25, 1998, and incorporated herein by reference. 

3.2.1Amended and Restated Bylaws of Evans & Sutherland Computer Corporation, filed as Exhibit 3.2 to Evans & Sutherland Computer Corporation’s Form 10-K for the year ended December 31, 2000, and incorporated herein by reference. 

3.2.2Amendment No. 1 to the Amended and Restated Bylaws of Evans & Sutherland Computer Corporation, filed as Exhibit 3.3 to Evans & Sutherland Computer Corporation’s Form 10-K for the year ended December 31, 2000, and incorporated herein by reference. 

3.2.3Amendment No. 2 to the Amended and Restated Bylaws of Evans & Sutherland Computer Corporation, filed as Exhibit 3.1 to Evans & Sutherland Computer Corporation’s Form 8-K filed with the Commission on November 31, 2015, and incorporated herein by reference. 

Material contracts

Management contracts and compensatory plans

10.1Amended and Restated Evans & Sutherland Computer Corporation’s Supplemental Executive Retirement Plan (SERP), dated May 16, 2002, filed as Exhibit 10.38 to Evans & Sutherland Computer Corporation’s Form 10-K for the year ended December 31, 2002, and incorporated herein by reference. 

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10.2Evans & Sutherland Computer Corporation 2014 Stock Incentive Plan, filed as Exhibit 10.1 to Evans & Sutherland Computer Corporation’s Form 8-K filed with the Commission on May 16, 2014, and incorporated herein by reference. 

10.3Form of Incentive Stock Option Award Agreement under the Evans & Sutherland Computer Corporation 2014 Stock Incentive Plan, filed as Exhibit 10.2 to Evans & Sutherland Computer Corporation’s Form 8-K filed with the Commission on May 16, 2014, and incorporated herein by reference. 

10.4Form of Non-Qualified Stock Option Award Agreement under the Evans & Sutherland Computer Corporation 2014 Stock Incentive Plan, filed as Exhibit 10.3 to Evans & Sutherland Computer Corporation’s Form 8-K filed with the Commission on May 16, 2014, and incorporated herein by reference. 

10.5Form of Indemnification Agreement, filed as Exhibit 10.1 to Evans & Sutherland Computer Corporation’s Form 8-K filed with the Commission on September 2, 2016, and incorporated herein by reference. 

10.6Employment Agreement by and between Evans & Sutherland Computer Corporation and Jonathan Shaw, dated September 2, 2016, filed as Exhibit 10.3 to Evans & Sutherland Computer Corporation’s Form 8-K filed with the Commission on September 2, 2016, and incorporated herein by reference. 

10.7Employment Agreement by and between Evans & Sutherland Computer Corporation and Kirk Johnson, dated September 2, 2016, filed as Exhibit 10.4 to Evans & Sutherland Computer Corporation’s Form 8-K filed with the Commission on September 2, 2016, and incorporated herein by reference. 

10.8Employment Agreement, by and between Evans & Sutherland Computer Corporation and Paul Dailey, dated December 15, 2016, filed as Exhibit 10.9 to Evans & Sutherland Computer Corporation’s Form 10-K for the year ended December 31, 2016, and incorporated herein by reference. 

10.9First Amendment to Employment Agreement, by and between Evans & Sutherland Computer Corporation and Jonathan Shaw, dated January 9, 2017 filed as Exhibit 10.10 to Evans & Sutherland Computer Corporation’s Form 10-K for the year ended December 31, 2016, and incorporated herein by reference. 

10.10First Amendment to Employment Agreement, by and between Evans & Sutherland Computer Corporation and Kirk Johnson, dated January 9, 2017, filed as Exhibit 10.11 to Evans & Sutherland Computer Corporation’s Form 10-K for the year ended December 31, 2016, and incorporated herein by reference. 

Other material contracts

10.11Guaranty, dated April 28, 2006, by Evans and Sutherland Computer Corporation, filed as Exhibit 10.7 to Evans & Sutherland Computer Corporation’s Form 10-Q for the quarter ended June 30, 2006, and incorporated herein by reference. 

10.12Pledge Agreement, dated April 28, 2006, by and between Evans & Sutherland Computer Corporation, Spitz, Inc. and First Keystone Bank, filed as Exhibit 10.8 to Evans & Sutherland Computer Corporation’s Form 10-Q for the quarter ended June 30, 2006, and incorporated herein by reference. 

10.13Security Agreement, dated April 28, 2006, by and between Spitz, Inc. and First Keystone Bank, filed as Exhibit 10.9 to Evans & Sutherland Computer Corporation’s Form 10-Q for the quarter ended June 30, 2006, and incorporated herein by reference. 

10.14Open-end Mortgage and Security Agreement, dated April 28, 2006, by and between Spitz, Inc. and First Keystone Bank, filed as Exhibit 10.10 to Evans & Sutherland Computer Corporation’s Form 10-Q for the quarter ended June 30, 2006, and incorporated herein by reference. 

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10.15Mortgage Note dated January 14, 2004, of Transnational Industries, Inc. and Spitz, Inc. to First Keystone Bank filed as Exhibit 10.25 to Evans & Sutherland Computer Corporation’s Form 10-K for the year ended December 31, 2006, and incorporated herein by reference. 

10.16Open-End Mortgage and Security Agreement dated January 14, 2004, between Spitz, Inc. and First Keystone Bank filed as Exhibit 10.26 to Evans & Sutherland Computer Corporation’s Form 10-K for the year ended December 31, 2006, and incorporated herein by reference. 

10.17Loan Agreement dated as January 14, 2004, between First Keystone Bank, Transnational Industries, Inc. and Spitz, Inc filed as Exhibit 10.27 to Evans & Sutherland Computer Corporation’s Form 10-K for the year ended December 31, 2006, and incorporated herein by reference. 

10.18First Modification Agreement to Mortgage Loan Agreements, dated March 30 2007, by and between Evans & Sutherland Computer Corporation, Spitz, Inc. and First Keystone Bank, filed as Exhibit 10.28 to Evans & Sutherland Computer Corporation’s Form 10-K for the year ended December 31, 2006, and incorporated herein by reference. 

10.19Guaranty, dated March 30, 2007 by Evans and Sutherland Computer Corporation, filed as Exhibit 10.30 to Evans & Sutherland Computer Corporation’s Form 10-K for the year ended December 31, 2006, and incorporated herein by reference. 

10.20First Amendment to Sublease Agreement dated November 4, 2014, by and between Evans & Sutherland Computer Corporation and Wasatch Research Park I, LLC, filed as Exhibit 10.1 to Evans & Sutherland Computer Corporation’s Form 10-Q for the quarter ended September 26, 2014 and incorporated herein by reference. 

10.21   Line of Credit Agreement between Spitz, Inc. and Bryn Mawr Trust Company dated March 15, 2012 filed as Exhibit 10.2 to Evans & Sutherland Computer Corporation’s Form 10-Q for the quarter ended September 26, 2014 and incorporated herein by reference. 

10.22Settlement Agreement, dated April 21, 2015, between Pension Benefit Guaranty Corporation, Evans & Sutherland Computer Corporation and Spitz, Inc., filed as Exhibit 10.1 to Evans & Sutherland Computer Corporation’s Form 8-K filed with the Commission on April 24, 2015, and incorporated herein by reference. 

10.23Agreement for Appointment of Trustee and Termination of Plan, dated April 21, 2015, between Pension Benefit Guaranty Corporation and Evans & Sutherland Computer Corporation, filed as Exhibit 10.1 to Evans & Sutherland Computer Corporation’s Form 8-K filed with the Commission on April 24, 2015, and incorporated herein by reference. 

10.24Security Agreement, dated April 21, 2015, between Pension Benefit Guaranty Corporation, Evans & Sutherland Computer Corporation and Spitz, Inc., filed as Exhibit 10.1 to Evans & Sutherland Computer Corporation’s Form 8-K filed with the Commission on April 24, 2015, and incorporated herein by reference. 

10.25Open-End Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing, dated April 21, 2015, executed by Spitz, Inc. in favor of Pension Benefit Guaranty Corporation, filed as Exhibit 10.1 to Evans & Sutherland Computer Corporation’s Form 8-K filed with the Commission on April 24, 2015, and incorporated herein by reference. 

Subsidiaries of the registrant

21.1Subsidiaries of Registrant, filed as Exhibit 21.1 to Evans & Sutherland Computer Corporation’s Form 10-K for the year ended December 31, 2016, and incorporated herein by reference. 

Consent of experts and counsel

23.1Consent of Independent Registered Public Accounting Firm, filed herein. 

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Rule 13a-14(a)/15d-14(a) Certifications

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

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

Section 1350 Certifications

32.1Certification 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 herein. 

TRADEMARKS USED IN THIS FORM 10-K

E&S, Digistar, SciDome and NanoSeam are trademarks or registered trademarks of Evans & Sutherland Computer Corporation or Spitz.  All other product, service, or trade names or marks are the properties of their respective owners.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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

By  /s/ JONATHAN SHAW

Jonathan Shaw

Chief Executive Officer and Director

March 8, 2019

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Jonathan Shaw	Chief Executive Officer	March 8, 2019
Jonathan Shaw	and Director
	(Principal Executive Officer)
/s/ Paul L. Dailey	Chief Financial Officer	March 8, 2019
Paul L. Dailey	(Principal Financial Officer and Principal Accounting Officer)
/s/ L. Tim Pierce	Director	March 8, 2019
L. Tim Pierce
/s/ William Schneider, Jr.	Director	March 8, 2019
William Schneider, Jr.
/s/ James P. McCarthy	Director	March 8, 2019
James P. McCarthy
/s/ E. Michael Campbell	Director	March 8, 2019
E. Michael Campbell
/s/ William E. Stringham	Director	March 8, 2019
William E. Stringham

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EX-23.1

 

EX-31.1

Exhibit 31.1

Rule 13a-14 Certification

CERTIFICATIONS*

I, Jonathan Shaw, certify that:

1.I have reviewed this annual report on Form 10-K of Evans & Sutherland Computer Corporation;  

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;  

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;  

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:  

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;  

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; 

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and  

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and  

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):  

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and  

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.  

Date: March 8, 2019

/s/ Jonathan Shaw
Jonathan Shaw
Chief Executive Officer
(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Rule 13a-14 Certification

CERTIFICATIONS*

I, Paul L. Dailey, certify that:

1.I have reviewed this annual report on Form 10-K of Evans & Sutherland Computer Corporation;  

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;  

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;  

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:  

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;  

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; 

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and  

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and  

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):  

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and  

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.  

Date: March 8, 2019

/s/ Paul L. Dailey
Paul L. Dailey
Chief Financial Officer
(Principal Financial Officer)

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-K of Evans & Sutherland Computer Corporation for the fiscal year ended December 31, 2018, 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-K fairly presents, in all material respects, the financial condition and results of operations of Evans & Sutherland Computer Corporation.

Date: March 8, 2019By:          /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-K of Evans & Sutherland Computer Corporation for the fiscal year ended December 31, 2018, 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-K fairly presents, in all material respects, the financial condition and results of operations of Evans & Sutherland Computer Corporation.

Date: March 8, 2019By:        /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 - USD ($)	12 Months Ended
	Dec. 31, 2018	Mar. 04, 2019	Jun. 29, 2018
Text Block [Abstract]
Registrant Name	EVANS & SUTHERLAND COMPUTER CORPORATION
Registrant CIK	0000276283
SEC Form	10-K
Period End date	Dec. 31, 2018
Fiscal Year End	--12-31
Trading Symbol	escc
Tax Identification Number (TIN)	870278175
Number of common stock shares outstanding		11,482,516
Public Float			$ 4,907,717
Filer Category	Non-accelerated Filer
Current with reporting	Yes
Voluntary filer	No
Well-known Seasoned Issuer	No
Entity Small Business	true
Emerging Growth Company	false
Ex Transition Period	false
Entity Shell Company	false
Amendment Flag	false
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Contained File Information, File Number	0-8771
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

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 8,365	$ 5,276
Restricted cash	220	312
Accounts receivable, net	3,250	3,794
Current portion of lease receivable	262	247
Contract revenue in excess of billings	3,484	2,763
Inventories, net	3,072	3,973
Prepaid expenses and deposits	655	712
Total current assets	19,308	17,077
Long-term lease receivable, net of current portion	574	836
Property and equipment, net	4,395	4,527
Goodwill	635	635
Other assets	2,249	1,955
Total assets	27,161	25,030
Current liabilities:
Accounts payable	1,527	1,667
Accrued liabilities	1,059	912
Billings in excess of contract revenue	5,959	7,117
Current portion of retirement obligations	621	500
Current portion of pension settlement obligation	438	409
Current portion of long-term debt	237	224
Total current liabilities	9,841	10,829
Retirement obligations, net of current portion	3,601	4,150
Pension settlement obligation, net of current portion	4,042	4,478
Long-term debt, net of current portion	1,303	1,540
Deferred rent obligation	370	808
Total liabilities	19,157	21,805
Stockholders' equity:
Preferred stock, no par value: 10,000,000 shares authorized; no shares outstanding	0	0
Common stock, $0.20 par value: 30,000,000 shares authorized; 11,616,866 shares issued	2,323	2,323
Additional paid-in-capital	53,967	53,818
Common stock in treasury, at cost, 264,350 shares	(3,532)	(3,532)
Accumulated deficit	(42,778)	(47,208)
Accumulated other comprehensive loss	(1,976)	(2,176)
Total stockholders' equity	8,004	3,225
Total liabilities and stockholders' equity	$ 27,161	$ 25,030

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2018	Dec. 31, 2017
Text Block [Abstract]
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

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Text Block [Abstract]
Sales	$ 37,193	$ 30,508
Cost of sales	(23,469)	(19,557)
Gross profit	13,724	10,951
Operating expenses:
Selling, general and administrative	(6,561)	(6,045)
Research and development	(2,851)	(2,908)
Pension	(217)	(231)
Total operating expenses	(9,629)	(9,184)
Operating income	4,095	1,767
Interest expense	(433)	(473)
Other income, net	106	76
Income before income tax benefit (expense)	3,768	1,370
Income tax benefit (expense)	(21)	111
Net income	$ 3,747	$ 1,481
Net income per common share - basic	$ 0.33	$ 0.13
Net income per common share - diluted	$ 0.31	$ 0.12
Weighted average common shares outstanding - basic	11,353	11,353
Weighted average common shares outstanding - diluted	11,978	12,014
Comprehensive income, net of tax:
Net income	$ 3,747	$ 1,481
Decrease (increase) in minimum pension liability	200	(30)
Total comprehensive income	$ 3,947	$ 1,451

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) shares in Thousands, $ in Thousands	Common Stock	Additional Paid-in Capital	Treasury Stock	Retained Earnings	AOCI Attributable to Parent	Total
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Beginning Balance at Dec. 31, 2016	$ 2,323	$ 53,641	$ (3,532)	$ (48,689)	$ (2,146)	$ 1,597
Shares, Outstanding, Beginning Balance at Dec. 31, 2016	11,617
Net income				1,481		1,481
Other comprehensive income					(30)	(30)
Stock-based compensation		177				177
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Dec. 31, 2017	$ 2,323	53,818	(3,532)	(47,208)	(2,176)	3,225
Shares, Outstanding, Ending Balance at Dec. 31, 2017	11,617
Impact of change in accounting policy				683		683
Stockholders' Equity Adjusted balance	$ 2,323	53,818	(3,532)	(46,525)	(2,176)	3,908
Shares Outstanding, Adjusted balance	11,617
Net income				3,747		3,747
Other comprehensive income					200	200
Stock-based compensation		149				149
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Dec. 31, 2018	$ 2,323	$ 53,967	$ (3,532)	$ (42,778)	$ (1,976)	$ 8,004
Shares, Outstanding, Ending Balance at Dec. 31, 2018	11,617

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities:
Net income	$ 3,747	$ 1,481
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	263	259
Deferred pension costs	200	(30)
Provision for excess and obsolete inventory	427	105
Other	167	34
Changes in operating assets and liabilities:
Accounts receivable	496	(380)
Lease receivable	247	252
Inventories	(449)	(327)
Contract revenue in excess of billings	33	(1,651)
Prepaid expenses and other assets	(237)	(543)
Accounts payable	(140)	509
Accrued liabilities	147	(488)
Accrued pension and retirement liabilities	(428)	(201)
Billings in excess of contract revenue	(306)	305
Deferred rent obligation	(438)	(423)
Net cash provided by (used in) operating activities	3,729	(1,098)
Cash flows from investing activities:
Purchases of property and equipment	(136)	(148)
Proceeds from sale of property and equipment	35	0
Net cash used in investing activities	(101)	(148)
Cash flows from financing activities:
Principal payments on long-term debt	(224)	(211)
Principal payments on pension settlement obligation	(407)	(381)
Net cash used in financing activities	(631)	(592)
Net increase (decrease) in cash, cash equivalents, and restricted cash	2,997	(1,838)
Cash, cash equivalents, and restricted cash as of beginning of the year	5,588	7,426
Cash, cash equivalents, and restricted cash as of end of the year	8,585	5,588
Supplemental disclosures of non-cash investing and financing activities
ASC 606 transition adjustment	683	0
Cash paid during the year for:
Interest	439	478
Income taxes	$ 133	$ 141

XML

Note 1 - Nature of Operations and Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2018

Disclosure Text Block [Abstract]

Note 1. Nature of Operations and Summary of Significant Accounting Policies

Note 1 - Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Evans & Sutherland Computer Corporation, referred to in these notes as “Evans & Sutherland,” “E&S,” or the “Company,” produces high-quality advanced visual display systems used primarily in full-dome video projection applications, dome projection screens and dome architectural treatments. E&S also produces unique content for planetariums, schools, science centers and other educational institutions and entertainment venues.  The Company’s products include state of the art planetarium and dome theater systems consisting of proprietary hardware and software, and other unique visual display systems primarily used to project digital video on large curved surfaces.  Additionally, E&S manufactures and installs metal domes with customized optical coatings and acoustical properties that are used for planetarium and dome theaters as well as many other unique custom applications.  The Company operates in one business segment, which is the visual simulation market.

Basis of Presentation

The consolidated financial statements include the accounts of Evans & Sutherland and its wholly owned subsidiaries.  All inter-company accounts and transactions have been eliminated in consolidation.  Certain prior year amounts have been reclassified to conform to the current year presentation.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.  The accounting estimates that require management’s most difficult and subjective judgments include revenue recognition based on the percentage-of-completion method, inventory reserves, allowance for doubtful accounts receivable, allowance for deferred income tax assets, impairment of long-lived assets, pension and retirement obligations and useful lives of depreciable assets.  Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three or fewer months to be cash equivalents.  The Company maintains cash balances in bank accounts that, at times, exceed federally insured limits.  The Company has not experienced any losses in these accounts and believes it is not exposed to any significant risk with respect to cash.  As of December 31, 2018, cash deposits as reported by the banks, including restricted cash, exceeded the federally insured limits by approximately $8,095.

Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statements of cash flows.

	2018	2017
Cash and cash equivalents	$ 8,365	$ 5,276
Restricted cash	220	312
Total cash, cash equivalents, and restricted cash
shown in the statements of cash flows	$ 8,585	$ 5,588

Amounts included in restricted cash represent those required to be set aside by a contractual agreement.  Restricted cash that guarantees letters of credit that mature or expire within one year is reported as a current asset.  Restricted cash that guarantees letters of credit that mature or expire after more than one year is reported as a long-term asset.

Trade Accounts Receivable

In the normal course of business, E&S provides unsecured credit terms to its customers.  Accordingly, the Company maintains an allowance for doubtful accounts for possible losses on uncollectible accounts receivable.  The Company routinely analyzes accounts receivable and costs and estimated earnings in excess of billings, and considers history, customer creditworthiness, facts and circumstances specific to outstanding balances, current economic trends, and changes in payment terms when evaluating the adequacy of the allowance for doubtful accounts receivable.  Changes in these factors could result in material differences to bad debt expense.  Past due balances are determined based on contractual terms and are reviewed individually for collectability. Uncollectible accounts receivable are charged against the allowance for doubtful accounts when management determines the probability of collection is remote.  

The table below represents changes in E&S’s allowance for doubtful accounts receivable for the years ended December 31:

	2018	2017
Beginning balance	$ 109	$ 259
Write-off of accounts receivable	-	(7)
Increase (decrease) in estimated losses on accounts receivable	48	(143)
Ending balance	$ 157	$ 109

Inventories

Inventories include materials at standard costs, which approximate actual costs, as well as inventoried costs on programs and long-term contracts.  Inventoried costs include material, direct engineering and production costs, and applicable overhead, not in excess of estimated market value.  Spare parts and general stock materials are stated at cost not in excess of market value.  E&S periodically reviews inventories for excess supply, obsolescence, and valuations above estimated realizable amounts, and provides a reserve sufficient to reduce inventories to net realizable values.  Revisions of these estimates could impact net loss.

During the years ended December 31, 2018 and 2017, E&S recognized impairment losses on inventory of $427 and $105, respectively.  

Inventories as of December 31, were as follows:

	2018	2017
Raw materials	$ 5,979	$ 5,458
Work in process	116	1,011
Finished goods	323	423
Reserve for obsolete inventory	(3,346)	(2,919)
Inventories, net	$ 3,072	$ 3,973

Property and Equipment

Property and equipment are stated at cost.  Depreciation and amortization are computed using the straight-line method based on the estimated useful lives of the related assets.  Expenditures that materially increase values or capacities or extend useful lives of property and equipment are capitalized.  Leasehold improvements are assigned useful lives based on the shorter of their useful lives or the term of the related leases, including renewal options likely to be exercised.  Routine maintenance, repairs and renewal costs are expensed as incurred.  When property is retired or otherwise disposed of, the carrying values are removed from the property and equipment and related accumulated depreciation and amortization accounts.  Depreciation and amortization are included in cost of sales, research and development or selling, general and administrative expenses depending on the nature of the asset.  

Depreciation expense was $263 and $259 for the years ended December 31, 2018 and 2017, respectively.  The cost and estimated useful lives of property and equipment and the total accumulated depreciation were as follows as of December 31: 

	Estimated
	Useful Lives	2018	2017
Land	n/a	$ 2,250	$ 2,250
Buildings and improvements	5 - 40 years	3,065	3,065
Manufacturing machinery and equipment	3 - 8 years	4,554	5,582
Office furniture and equipment	3 - 8 years	630	779
Total		10,499	11,676
Less accumulated depreciation		(6,104)	(7,149)
Net property and equipment		$ 4,395	$ 4,527

Goodwill

The Company tests its recorded goodwill for impairment on an annual basis during the fourth quarter, or more often if indicators of potential impairment exist, by determining if the carrying value of each reporting unit exceeds its estimated fair value. Factors that could trigger impairment include, but are not limited to, underperformance relative to historical or projected future operating results, significant changes in the manner of use of the acquired assets or the Company’s overall business and significant negative industry or economic trends. Future impairment reviews may require write-downs in the Company’s goodwill and could have a material adverse impact on the Company’s operating results for the periods in which such write-downs occur.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment when events or changes in circumstances indicate the carrying values of the assets may not be fully recoverable. When this occurs, the Company reviews the values assigned to long-lived assets by analyzing the anticipated, undiscounted cash flows they generate.  When the expected future undiscounted cash flows from these assets do not exceed their carrying values, the Company estimates the fair values of such assets. Impairment is recognized to the extent the carrying values of the assets exceed their estimated fair values.  Assets held for sale are reported at the lower of their carrying values or fair values less costs to sell.

Warranty Reserve

E&S provides a warranty reserve for estimated future costs of servicing products under warranty agreements extending for periods from 90 days to one year.  Anticipated costs for product warranties are based upon estimates derived from experience factors and are recorded at the time of sale or over the period revenues are recognized for long-term contracts.  Warranty reserves are classified as accrued liabilities in the accompanying consolidated balance sheets.

The table below represents changes in E&S’s warranty reserve for the years ended December 31:

	2018	2017
Beginning balance	$ 139	$ 123
Additions to warranty reserve	166	249
Warranty costs	(134)	(233)
Ending balance	$ 171	$ 139

Stock-Based Compensation

The Company records compensation expense in the financial statements for stock-based awards based on the grant date fair value of those awards that are ultimately expected to vest. As such, the value of the award is reduced for the estimated forfeitures at the date of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company determines the grant date fair value of the options using the Black-Scholes option-pricing model.  Stock-based compensation expense is recognized over the requisite service periods of the awards on a ratable basis, which recognizes expense for each vesting tranche of each grant starting on the grant date and finishing on the vest date for that tranche.

Net Income per Common Share

Basic net income per common share represents income available to common shareholders divided by the weighted-average number of common shares outstanding during the period. Diluted net income per common share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares include shares that may be issued by the Company for outstanding stock options determined using the treasury stock method. In periods resulting in a net loss, potential common shares are anti-dilutive and therefore are not included. Net income per common share has been computed based on the following:

	2018	2017
Numerator
Net Income	$ 3,747	$ 1,481
Denominator
Weighted-average number of common shares outstanding - basic	11,353	11,353
Incremental shares assumed for stock options	625	661
Weighted-average number of common shares outstanding - dilutive	11,978	12,014
Basic net income per common share	$ 0.33	$ 0.13
Diluted net income per common share	$ 0.31	$ 0.12

Income Taxes

The Company uses the asset and liability method of accounting for income taxes.  Under the asset and liability method, deferred income tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases and operating loss and income tax credit carry-forwards.  Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in income tax rates is recognized in the period that includes the enactment date.

Other Comprehensive Income

On a net basis for 2018 and 2017, there were deferred income tax assets resulting from items reflected in comprehensive income.  However, E&S has determined that it is more likely than not that it will not realize such net deferred income tax assets and has therefore established a valuation allowance against the full amount of the net deferred income tax assets.  Accordingly, the net income tax effect of the items included in other comprehensive income is zero.  Therefore, the Company has included no income tax expense or benefit in relation to items reflected in other comprehensive income.  The accumulated other comprehensive loss at the end of 2017 and 2018 consists of minimum pension liability attributable to the Supplemental Executive Retirement Plan (“SERP”) (see Note 7). 

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 changes the accounting for leases. In particular, lessees will recognize lease assets and lease liabilities for operating leases. This update will have a minimal effect on lessor accounting. ASU 2016-02 is effective in the first quarter of the fiscal year ending 2019. The Company is currently assessing the impact on its financial reporting of implementing this guidance.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230) Restricted Cash (“ASU 2016-18”). ASU 2016-18 changes the cash flow presentation and disclosures of restricted cash. The Company implemented this update in the presented financial statements.

XML

Note 2. Revenue

12 Months Ended

Dec. 31, 2018

Disclosure Text Block [Abstract]

2. Revenue

Note 2 – Revenue

The Company adopted Topic 606, Revenue from Contracts with Customers, with a date of the initial application of January 1, 2018. The Company applied Topic 606 using the cumulative effect method, and accordingly recognized the cumulative effect of initially applying Topic 606 as an adjustment to the opening balance of stockholders’ equity at January 1, 2018. As a result, the Company used different methods for recognizing revenue in each of the periods presented as detailed below.

Products and services

The Company generates its revenue through manufacturing, integrating, distributing, and servicing its various products consisting of: Audio-Visual Systems, Domes, Show Content, and Maintenance and Service contracts. All of the Company’s products are sold worldwide.

Audio-Visual Systems consist of standard and customized hardware components integrated with proprietary software. The Audio-Visual Systems are most often used as the primary equipment for planetarium theaters operated by educational institutions. Occasionally, Audio-Visual Systems are sold for other special purposes at various visitor attractions. Audio-Visual System sales include upgrades of existing systems and sub-systems. Sales of typical Audio-Visual Systems range from $200 to $2,000.  

Domes are hemispheric or curved metal structures fabricated from mostly aluminum metal tubing and sheets at the Company’s factory. Some Dome components have a special optical coating applied by a partner vendor. The Dome components are shipped to a customer site and are assembled and installed in or on the customer’s building by Company employees or subcontractors. Domes are often sold with an Audio-Visual System to serve as projection screens but can also be sold separately. Most often a Dome sold separately is used as a projection screen but occasionally they are used as architectural treatments. Dome projection screens sold separately can be used for existing planetarium theaters or other special visitor attractions such as theme park rides. A typical Dome is a hemispheric structure ranging from 40 to 70 feet in diameter but Domes are also produced in various curved shapes and sizes to accommodate a special purpose. Dome sales typically range from $200 to $1,000 but occasionally exceed this range for sales of multiple complex structures priced at several million dollars.

Show Content is sold under a license agreement. Show Content can also be sold with or without an Audio-Visual System. Most Show Content is sold to planetarium theaters which historically have been used as astronomical simulators; however, digital technologies have expanded capabilities to display a wider variety of content. The Company’s Show Content products include a variety of mostly educational topics including but not limited to astronomy, earth sciences, history, and biology. The Company sells Show Content it produces as well as content produced by other entities under distribution arrangements. Show Content sales typically range from $2 to $80.

Maintenance and Service is sold in the form of spare parts or service agreements that sometimes include an extended warranty feature. Maintenance and Service is sold predominantly for Audio-Visual Systems. Dome products require less maintenance but can benefit from an occasional cleaning. Part sales typically range from $1 to $100. Maintenance and Service contract sales typically range from $3 to $200.  

 The Company sells and markets its products through its employee sales team. For many foreign sales, the employee team is assisted by commissioned agents based in the locale of the customer. The Company markets its products through a network of industry associations and by messaging to the designers of planetarium theaters and visitor attractions. For Dome sales other than for planetarium projects, the Company relies on relationships developed with many satisfied customers in the architectural, visitor attraction, and theme park community. Customer decisions are based on price, product features and the experience of the supplier.

Most of the Company’s revenue comes from sales of Audio-Visual Systems and Domes for planetarium theaters or other visitor attractions. Sales can be to existing theaters interested in upgrading or to a new theater. Service Support and Show Content provide a reasonably steady stream of repeat revenue from existing customers which supplements the revenue from Audio-Visual Systems and Domes. As such, the Company relies on Audio-Visual Systems and Domes sales to new projects to generate the volume of revenue necessary sustain the business. Customer sales sometimes can take years to consummate from the initial planning stage to the award of the contract. Often there is a competitive bid process with multiple suppliers involved.

Customer contracts generally provide for progress payments which in many cases provides advance funding for the cost of performance. In some cases, customers hold a small portion of the contract payment for performance security through the warranty. The Company may also be required to provide performance security in the form of a surety bond or international standby letter of credit. Most customers are large public institutions, government or quasi-government entities, and large theme park entities, which carry little credit risk.  

Multiple Performance Obligations  

Some contracts include multiple performance obligations. Significant performance obligations commonly include the supply of Audio-Visual Systems, Domes, Show Content and various Service deliverables.  Revenue earned on performance obligations are allocated to each deliverable based on the relative fair values.  Relative fair values of performance obligations are generally determined based on actual and estimated selling price. Completion times of such contract obligations vary but typically occur within a three to twelve-month time period.

Revenue Recognition Methods for 2017

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 revenue recognized and are recorded as an asset or liability in the accompanying condensed consolidated balance sheets.

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.

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.  

Revenue Recognition Methods for 2018

In 2018, upon adoption of Topic 606, the Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. The following describes the methods used to recognize revenue under the application of Topic 606. 

Audio-Visual Systems. The Company’s Audio-Visual Systems are sold for a fixed price under non-cancelable contracts. Because systems are often designed with unique features and constantly changing technology components, there is no practical alternative use for a system after it is sold. Under Topic 606, if an entity’s performance does not create an asset with an alternative use to the entity, and the entity has an enforceable right to payment for the performance completed to date, then its performance obligation is satisfied and control of the product transfers over time. If control transfers over time, an entity selects a method to measure progress that is consistent with the objective of depicting its performance and recognizes revenue accordingly. The Company has determined the percentage-of-completion method utilizing cost-to-cost methodology best depicts the measure of progress because it tracks the utilization of total resources to fulfill the obligation. This same method has been used prior to the adoption of Topic 606 for recognizing revenue on certain Audio-Visual System sales and most Dome sales. With the adoption of Topic 606, essentially all Audio-Visual Systems and subsystem sales will use the percentage-of-completion method for revenue recognition.  

Domes. The Company’s Domes are sold for a fixed price under non-cancelable contracts. Because Domes have custom design and interface features, there is no practical alternative use for a Dome after it is sold. As discussed above under Audio-Visual Systems, when there is no alternative use for the product and there is an enforceable right to payment, Topic 606 requires revenue to be recognized over the time of performance. Accordingly, the Company continues to use the percentage-of-completion method utilizing cost-to-cost methodology for the recognition of revenue for the sale of Domes, as it has prior to the adoption of Topic 606.  

Show Content.  Show Content is sold under various license agreements, most often for a fixed price, but occasionally for a variable share of the customer’s theater revenue. Sales of Show Content require no future obligations by the Company after delivery.  The Company recognizes the revenue for fixed price Show Content licenses upon the execution of the license agreement and delivery of media since that is the time control and benefit of the Show Content is transferred. Under Topic 606, an entity does not recognize revenue for the variable amounts related to a royalty until a customer’s subsequent sales or usage occurs. Accordingly, revenue from the variable share of the customer’s theater revenue is recognized when realized. The method used by the Company for recognizing Show Content revenue has not changed with the adoption of Topic 606.

Maintenance and Service. Maintenance and Service revenue consists of parts sales and service contracts. Parts sales are recognized upon shipment which is when the control and benefit transfers to the customer. Service contracts are sold for a fixed price and provide the customer with various levels of preventive service, support and limited warranty protection. Under Topic 606, the revenue for service contracts is recognized ratably over the term of the contract or upon delivery of a service specified in the contract. The method used by the Company for recognizing Maintenance and Service revenue has not changed with the adoption of Topic 606.

Contract Acquisition Costs

Contract acquisition costs consist of expenditures of Company employee and other resources and, in some cases, the payment of sales commissions to non-employee agents. Expenditures of Company employee and other resources are costs that would be incurred regardless of whether the contract is obtained, are not recoverable, and therefore are expensed as they are incurred under Topic 606. Sales commissions paid to agents are incurred only if the contract is obtained and therefore are incremental costs of acquiring the contract. Rather than capitalize the cost of sales commissions, the Company has elected to expense sales commissions as incurred under the practical expedient permitted by Topic 606, whereby expensing is permitted when the amortization period of the asset that the entity otherwise would have recognized is one year or less.

Disaggregation of Revenue

In the following table, revenue reported for the year ended December 31, 2018 under Topic 606 is disaggregated by primary geographical market, major product line, timing of revenue recognition and product application.

Product Application	Planetarium Theaters	Other Visitor Attractions	Architectural Treatments	Total
Primary Geographic Area:
North America	$  23,443	$ 1,452	$ 1,022	$ 25,917
Europe	2,607	1,175	-	3,782
Asia	4,077	1,911	-	5,988
Other	1,506	-	-	1,506
	$ 31,633	$ 4,538	$ 1,022	$ 37,193
Products:
Audio-Visual Systems	$ 21,315	$ 1,646	$         -	$ 22,961
Domes	5,686	2,892	1,022	9,600
Show Content	2,225	-	-	2,225
Maintenance and Service	2,407	-	-	2,407
	$ 31,633	$ 4,538	$ 1,022	$ 37,193
Timing of revenue recognition:
Goods transferred at point in time	$   2,935	$         -	$         -	$   2,935
Goods and services transferred over time	28,698	4,538	1,022	34,258
	$ 31,633	$ 4,538	$ 1,022	$ 37,193

Contract Balances

The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers as of December 31, 2018 and January 1, 2018:

	December 31, 2018	January 1, 2018
Receivables reported as accounts receivable, net	$ 3,250	$ 3,794
Contract revenue in excess of billings	3,484	3,517
Billings in excess of contract revenue	5,959	6,265

Significant changes in the contract assets and the contract liabilities balances during the year are as follows:

	Contract Assets	Contract Liabilities
Revenue recognized that was included in the contract liability balance at the beginning of the year		$ (4,697)
Increases due to amounts billed to customers, excluding amounts recognized as revenue during the year		$  4,391
Transferred to receivables from contract assets recognized at the beginning of the year	$ (3,404)
Increases as a result of revenue recognized, excluding amounts transferred to receivables during the year	$  3,371

Contract revenue in excess of billings are contract assets that arise when revenue recognized on a contract exceeds the cumulative progress billings. Contracts generally provide for an enforceable right to payment for performance completed to date but do not necessarily have a present right to consideration payment for performance completed until the event that triggers the progress billing. The contract assets are transferred to receivables when the rights to payment occur and amounts are billed. Billings in excess of contract revenue are contract liabilities that arise when progress billings on a contract exceed the revenue recognized. Contract liabilities are relieved as the performance obligation is completed and revenue is recognized. Progress billings vary among contracts and can be triggered by chronological milestones, performance events or other various measurements of performance.

Backlog of Remaining Customer Performance Obligations

The following table includes estimated revenue expected to be recognized and recorded as sales in the future from the backlog of performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period.

	2019	2020	2021	2022	2023
Sales	$15,881	$678	$546	$170	$91

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Note 3. Changes in Accounting Policies

12 Months Ended

Dec. 31, 2018

Disclosure Text Block [Abstract]

3. Changes in Accounting Policies

Note 3 – Changes in Accounting Policies

Except for the changes disclosed in Note 1 under revenue recognition, the Company has consistently applied the accounting policies to both periods presented in these condensed consolidated financial statements. The Company adopted Topic 606, Revenue from Contracts with Customers, with a date of initial application of January 1, 2018. As a result, the Company has changed its accounting policy for revenue recognition as detailed below. The Company applied Topic 606 using the cumulative effect method and accordingly recognized the cumulative effect of initially applying Topic 606 as an adjustment to the opening balance of equity at January 1, 2018. Therefore, the comparative information has not been adjusted and continues to be reported under prior accounting rules. 

The following tables summarize the impacts of adopting Topic 606 on the Company’s consolidated financial statements for year ended December 31, 2018:

CONDENSED CONSOLIDATED BALANCE SHEETS
Impact of changes in accounting policies
			Balances
			without
			adoption of
December 31, 2018	As reported	Adjustments	Topic 606
Cash and cash equivalents	$   8,365	$            -	$ 8,365
Restricted cash	220	-	220
Contract revenue in excess of billings	3,484	(1,130)	2,354
Inventories, net	3,072	712	3,784
Others	12,020	-	12,020
Total assets	27,161	(418)	26,743
Billings in excess of contract revenue	5,959	44	6,003
Others	13,198	-	13,198
Total liabilities	19,157	44	19,201
Accumulated deficit	(42,778)	(462)	(43,240)
Others	50,782		50,782
Total stockholders’ equity	8,004	(462)	7,542
Total liabilities and stockholders’ equity	$ 27,161	$     (418)	$ 26,743

			Balances
			without
			adoption of
For the year ended December 31, 2018	As reported	Adjustments	Topic 606
Sales	$ 37,193	$     432	$ 37,625
Cost of sales	(23,469)	(211)	(23,680)
Selling, general and administrative	(6,561)	-	(6,561)
Income tax expense	(21)	-	(21)
Others	(3,395)	-	(3,395)
Net income	$  3,747	$     221	$ 3,968

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Impact of changes in accounting policies
			Balances
			without
			adoption of
For the year ended December 31, 2018	As reported	Adjustments	Topic 606
Net income	$ 3,747	$ 221	$ 3,968
Adjustments to reconcile net income to
net cash used in operating activities:
Other	1,057	-	1,057
Changes in:
Inventories	(449)	211	(238)
Contract revenue in excess of billings	33	1,130	1,163
Billings in excess of contract revenue	(306)	(1,562)	(1,868)
Other	(353)	-	(353)
Net cash from operating activities	3,729	-	3,729
Net cash from investing activities	(101)	-	(101)
Net cash from financing activities	$ (631)	$ -	$ (631)

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Note 4 - Goodwill

12 Months Ended

Dec. 31, 2018

Disclosure Text Block [Abstract]

Note 4 - Goodwill

Note 4 – Goodwill

Goodwill of $635 resulted from the acquisition of the Company’s wholly owned subsidiary, Spitz, and was measured as the excess of the $2,884 purchase consideration paid over the fair value of the net assets acquired. The Company has made its annual assessment of impairment of goodwill and has concluded that goodwill is not impaired as of December 31, 2018.

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Note 5 - Lease Receivable

12 Months Ended

Dec. 31, 2018

Disclosure Text Block [Abstract]

Note 5 - Lease Receivable

Note 5 – Lease Receivable

In 2016, the Company entered into a lease agreement with a customer whereby the Company will be the Lessor and the customer will be the lessee of a Planetarium System produced, delivered and installed by the Company. The lease term is 5 years and requires the customer to make rent payments to the Company over the lease term in accordance with the fixed schedule in the agreement.  The equipment will be returned to the Company at the end of the lease term at which time the Company estimates that the system will have no residual value.  The customer obtained control of the leased assets upon delivery and acceptance of the system on December 7, 2016.  The lease is accounted for as a sales-type lease since the lease term is for substantially all of the economic life of the system, the present value of the lease payments amounts to substantially all of the fair value of the underlying assets, and the customer will retain the control with substantially all of the risks and awards of ownership of the system.  The discounted present value of the payments to be made under the lease agreement, using an annual rate of 6%, amounts to $1,754. This amount represents the fair value of the equipment of $1,678 and the maintenance services E&S is to provide over the terms of the lease valued at $76.  In 2016, the Company recorded the sale of the system of $1,678 and $76 of deferred revenue representing the value of the maintenance services.  In 2017, the Company collected $307 in lease payments of which $55 was recorded as interest income and $252 as principal reduction of the lease receivable. In 2018, the Company collected $307 in lease payments of which $60 was recorded as interest income and $247 as principal reduction of the lease receivable.

The balance of lease receivable as of December 31, 2018 and 2017 is recorded as follows:

	2018	2017
Lease receivable	$   262	$    247
Lease receivable long term	574	836
Total	$   836	$ 1,083

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Note 6 - Leases and deferred gain on disposal of building assets

12 Months Ended

Dec. 31, 2018

Disclosure Text Block [Abstract]

Note 6 - Leases and deferred gain on disposal of building assets

Note 6– Leases and deferred gain on disposal of building assets

The Company occupies real property and uses certain equipment under lease arrangements that are accounted for as operating leases.  The Company’s real property leases contain escalation clauses.  Rental expense for all operating leases for 2018 and 2017 was $151 and $148, respectively.

In November 2014, the Company agreed to an extension of its lease for its corporate office buildings and its interest in the lease for the land occupied by the buildings for a term of 5 years. Base annual rent was $549 until April 1, 2018 when the base annual rent increased to $570. The annual rent expense on a straight-line basis is $555. The new lease obligation is recorded as an operating lease for a term of five years which commenced November 1, 2014.  The accounting for the lease extension resulted in a $620 gain on the disposition of leased assets under the prior lease which was deferred and is being amortized over the five-year term of the new operating lease. There was also a $1,526 gain from the extinguishment of a deferred rent credit related to the underlying land lease which is being amortized over the five-year term of the new operating lease. The amortization of the deferred gain and deferred rent credit reduces the rent expense attributable to the cash rent payments.

Future minimum rent expense payments under the new operating lease and the remaining deferred gain from the disposal of the building assets and deferred rent credit to be recognized are as follows:

Years Ending	Minimum Lease	Gain on	Deferred	Net Rent
December 31,	Payments	Building	Rent Credit	Expense
2019	475	(106)	(264)	105
Total	$ 475	$ (106)	$ (264)	$ 105

There are no other lease obligations that have initial or remaining non-cancelable lease terms in excess of one year.

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Note 7 - Employee Retirement Benefit Plans

12 Months Ended

Dec. 31, 2018

Disclosure Text Block [Abstract]

Note 7 - Employee Retirement Benefit Plans

Note 7 - Employee Retirement Benefit Plans

Settlement of Pension Plan Liabilities

On April 21, 2015, the Company, as the administrator of its qualified defined benefit pension plan (“Pension Plan”), and the Pension Benefit Guaranty Corporation (“PBGC”) entered into an Agreement for Appointment of Trustee and Termination of Plan (the “Termination Agreement”) (a) terminating the Pension Plan, (b) establishing March 9, 2013 as the Plan’s termination date and (c) appointing the PBGC as statutory trustee of the Pension Plan.

In connection with the Termination Agreement, on April 21, 2015, the Company entered into the Pension Settlement Agreement with the PBGC to settle all liabilities of the Pension Plan including any termination premium resulting from the Pension Plan termination (the “Settled ERISA Liabilities”). Pursuant to the Pension Settlement Agreement, the Company agreed to (a) pay to the PBGC a total of $10,500, with $1,500 due within ten days following the effective date of the Pension Settlement Agreement and the remainder paid in twelve annual installments of $750 beginning on October 31, 2015 (the “Pension Settlement Obligation”) and (b) issue within ten days following the effective date of the Pension Settlement Agreement 88,117 shares of the Company’s treasury stock in the name of the PBGC. The Pension Settlement Agreement further provides that the PBGC will be deemed to have released the Company from all Settled ERISA Liabilities upon payment of the Pension Settlement Obligation. In the event of a default by the Company of its obligations under the Pension Settlement Agreement or the underlying agreements which secure the Pension Settlement Obligation, the PBGC may enforce payment of the Settled ERISA Liabilities, which would accrue interest at various rates until payment is made and be reduced by any payments made by the Company pursuant to the Pension Settlement Agreement.  The estimated total Settled ERISA Liabilities as of the settlement date is $46,000.

To secure the Company’s obligations under the Pension Settlement Agreement, on April 21, 2015, the Company also entered into a Security Agreement with the PBGC (the “Security Agreement”), and executed an Open-End Mortgage in favor of the PBGC (the “Mortgage”) on certain real property owned by the Company’s subsidiary, Spitz, Inc. (“Spitz”). The Security Agreement and Mortgage grant to the PBGC a security interest on all of the Company’s presently owned and after-acquired property and proceeds thereof, free and clear of all liens and other encumbrances, except those described therein (the “Senior Liens”). The PBGC’s security interest in the Company’s property is subordinate to the Company’s two senior lenders pursuant to the Security Agreement and agreements between the PBGC and the lenders (the “Intercreditor Agreements”). The Intercreditor Agreements provide for the lenders to extend credit to the Company, secured by the Senior Liens, up to specified limits. The Intercreditor Agreement between the lender of the mortgage notes and line of credit (see Note 8) and the PBGC provides for total aggregate loans of up to $6,500 secured by Senior Liens on Spitz assets. The second Intercreditor Agreement between another lender and the PBGC provides for up to $3,000 of letter of credit indebtedness secured by Senior Liens on cash deposits.

The balance of the Pension Settlement Obligation is recorded on the balance sheet as of December 31, 2018 and 2017 as follows:  

	2018	2017
Current portion of pension settlement obligation	$    438	$    409
Pension settlement obligation, net of current portion	4,042	4,478
Total Pension Settlement Obligation	$ 4,480	$ 4,887

Supplemental Executive Retirement Plan (SERP)

The SERP provides eligible former executives, employed by the Company prior to 2002, defined pension benefits based on average salary, years of service and age at retirement.  The SERP was amended in 2002 to discontinue further SERP gains from future salary increases and close the SERP to new participants.

Obligations and Funded Status for SERP

E&S uses a December 31 measurement date for the SERP.

Information concerning the obligations, plan assets and funded status of employee retirement defined benefit plans are provided below: 

Changes in benefit obligation	2018	2017
Projected benefit obligation - beginning of year	$   4,650	$  4,851
Interest cost	136	156
Actuarial loss (gain)	(119)	103
Benefits paid	(445)	(460)
Projected benefit obligation - end of year	$   4,222	$  4,650
Changes in plan assets	2018	2017
Contributions	$      445	$     460
Benefits paid	(445)	(460)
Fair value of plan assets - end of year	$          -	$          -
Net amount recognized	2018	2017
Unfunded status	$ (4,222)	$ (4,650)
Unrecognized net actuarial loss	1,976	2,176
Net amount recognized	$ (2,246)	$ (2,474)

Amounts recognized in the consolidated balance sheets consisted of:

	2018	2017
Accrued liability	$ (4,222)	$ (4,650)
Accumulated other comprehensive loss	1,976	2,176
Net amount recognized	$ (2,246)	$ (2,474)

Components of net periodic benefit cost:

	2018	2017
Interest cost	$      136	$     156
Amortization of actuarial loss	81	75
Amortization of prior year service cost	-	-
Net periodic benefit expense	$      217	$     231

Additional information

Pension expense was $217 and $231 for the years ended December 31, 2018 and 2017, respectively, which consisted of net periodic benefit expense for the SERP.  

The SERP minimum liability recorded in other comprehensive loss decreased $200 in 2018 compared to an increase of $30 in 2017.  The decrease in 2018 was primarily due to an increase in the discount rate and change to the mortality table offset by an increase due to the change to payout assumption. The increase in 2017 was caused by a decrease in the discount rate, partly offset by a change to the mortality table.

Assumptions

The weighted average assumptions used to remeasure benefit obligations as of December 31, 2018 and 2017 included a discount rate of 3.8% and 3.1%, respectively, for the SERP.  The weighted average assumptions used to determine net periodic cost for the years ended December 31, 2018 and 2017 included a discount rate of 3.8% and 3.1%, respectively, in each year for the SERP.

In prior years, for persons who have not yet commenced benefits, it was assumed that installment payments would commence on the valuation date and continue for 10 years.  That assumption was changed such that if an individual has not yet commenced benefit payments, the first payment would be a one-time lump sum equal to installments in arrears plus future installments commencing on the valuation date and continuing through the original end date assuming payments had commenced on the expected start date.

Cash Flows

Employer contributions

The Company is not currently required to fund the SERP.  All benefit payments are made by E&S 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 benefits of approximately $621 related to the SERP in 2019.  

Estimated future benefit payments

As of December 31, 2018, the following benefits are expected to be paid based on actuarial estimates and prior experience:

Years Ending December 31,	SERP
2019	$    621
2020	$    426
2021	$    414
2022	$    407
2023	$    392
2024-2028	$ 1,527

401(k) Deferred Savings Plan

The Company has a deferred savings plan that qualifies under Section 401(k) of the Internal Revenue Code.  The 401(k) plan covers all employees of the Company who have at least one year of service and who are age 18 or older.  Matching contributions of 50% are made on the first 6% of employee contributions after the employee has achieved one year of service.  Extra matching contributions can be made based on profitability and other financial and operational considerations.  Effective January 1, 2017, the Company started making a 3% contribution in addition to the matching contribution.  Contributions to the 401(k) plan for 2018 and 2017 were $444 and $451, respectively.

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Note 8 - Debt

12 Months Ended

Dec. 31, 2018

Disclosure Text Block [Abstract]

Note 8 -Debt

Note 8 –Debt

Long-term debt consisted of the following as of December 31, 2018 and 2017:

	2018	2017
First mortgage note payable due in monthly installments of $23 (interest  at 5.75%) through January 1, 2024; payment and rate subject to  adjustment every 3 years, next adjustment January 14, 2021	$ 1,221	$ 1,422
Second mortgage note payable due in monthly installments of $4 (interest  at 5.99%) through October 1, 2028; payment and rate subject to  adjustment every 5 years, next adjustment October 1, 2023	319	342
Total debt	1,540	1,764
Current portion of long-term debt	(237)	(224)
Long-term debt, net of current portion	$ 1,303	$ 1,540

Principal maturities on total debt are as follows:

Years Ending December 31,
2019	$    237
2020	251
2021	267
2022	283
2023	299
Thereafter	203
Total debt	$ 1,540

Mortgage Notes

The first mortgage note payable represents the balance on a $3,200 note (“First Mortgage Note”) issued on January 14, 2004 by Spitz. The First Mortgage Note requires repayment in monthly installments of principal and interest over 20 years.  On January 14, 2006 and each third anniversary thereof, the interest rate on the First Mortgage Note is adjusted to the greater of 5.75% or 3% over the Three-Year Constant Maturity Treasury Rate published by the United States Federal Reserve (“3YCMT”).  The monthly installment is recalculated on the first month following a change in the interest rate. The recalculated monthly installment is equal to the monthly installment sufficient to repay the principal balance, as of the date of the change in the interest rate, over the remaining portion of the original 20-year term.  On January 14, 2018, the 3YCMT was 2.09% and the interest rate on the First Mortgage Note remained at 5.75% per annum. As a result, the monthly installment amount remained at $23.

The second mortgage note payable represents the balance on a $500 note (“Second Mortgage Note”) issued on September 11, 2008 by Spitz. The Second Mortgage Note requires repayment in monthly installments of principal and interest over 20 years. On October 1, 2013 and each fifth anniversary thereof, the interest rate on the Second Mortgage Note is adjusted to the greater of 5.75% or 3% over the Five-Year Constant Maturity Treasury Rate published by the United States Federal Reserve (“5YCMT”).  The monthly installment is recalculated on the first month following a change in the interest rate. The recalculated monthly installment is equal to the monthly installment sufficient to repay the principal balance, as of the date of the change in the interest rate, over the remaining portion of the original 20-year term.  On October 1, 2018, the fifth anniversary of the Second Mortgage Note, the 5YCMT was 2.99%. As a result, interest was adjusted to 5.99%. The monthly installment remains at $4.

The Mortgage Notes are secured by the real property occupied by Spitz pursuant to a Mortgage and Security Agreement.  The real property had a carrying value of $3,973 as of December 31, 2018. The Mortgage Notes are guaranteed by E&S.

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 Spitz working capital requirements. 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 December 31, 2018.

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Note 9 - Income Taxes

12 Months Ended

Dec. 31, 2018

Disclosure Text Block [Abstract]

Note 9 - Income Taxes

Note 9 - Income Taxes

Income tax for 2018 and 2017 consisted of an expense of $21 and a benefit of $(111), respectively, of federal and state income taxes. The actual expense differs from the expected tax expense (benefit) as computed by applying the U.S. federal statutory income tax rate of 21 and 34 percent for 2018 and 2017, respectively, as follows:

	2018	2017
Income tax provision at U.S. federal statutory rate	$      791	$      466
State tax  provision, net of federal income tax	116	48
Change in valuation allowance attributable to operations	(3,114)	(25,093)
Change in effective tax rate	111	22,311
Stock compensation	30	570
True-up adjustments and expiration of tax carryforwards and credits	2,105	1,568
Other, net	(18)	19
Income tax expense (benefit)	$      21	$    (111)

The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and liabilities as of December 31, 2018 and 2017 are as follows:

	2018	2017
Property and equipment, principally due to differences in depreciation	$          68	$         71
Inventory reserves and other inventory-related temporary basis differences	437	361
Warranty, vacation, deferred rent and other liabilities	251	371
Retirement liabilities	543	645
Net operating loss carryforwards	35,532	38,536
Credit carryforwards	28	27
Other	181	143
Total deferred income tax	37,040	40,154
Less valuation allowance	(37,040)	(40,154)
Net deferred income tax	$            -	$           -

Worldwide income before income taxes consisted of the following:

	2018	2017
United States	$    3,768	$    1,370
International	-	-
Total	$    3,768	$    1,370

Income tax expense (benefit) consisted of the following:

	2018	2017
Current
U.S. federal	$        (1)	$         (8)
State	22	(103)
Total current expense (benefit)	$        21	$     (111)
Deferred
U.S. federal	$  1,477	$ 23,012
State	1,637	2,081
Total	3,114	25,093
Valuation allowance increase	(3,114)	(25,093)
Total deferred expense (benefit)	-	-
Total income tax expense (benefit)	$       21	$    (111)

The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.  

E&S has total federal net operating loss carryforwards of approximately $161,541 which expire from 2020 through 2036. The Company has federal minimum tax credit carryforwards of approximately $28 which do not expire. The Company has $3,400 of federal research credits that begin to expire in 2019 and $1,100 of state research credits that begin to expire in 2019. The Company has not recorded a benefit for these research credits in the financial statements because it does not meet the more-likely-than-not position recognition threshold. E&S also has state net operating loss carryforwards of approximately $34,500 that expire at various dates depending on the rules of the states to which the loss or credit is allocated.

The Company evaluates its deferred tax assets for realizability based on all of the available positive and negative evidence. Due to cumulative losses and the significance of the carryforwards, the Company determined that it is more likely than not that the deferred tax assets will not be realized. Accordingly, a valuation allowance has been established to offset the net deferred tax assets. During the years ended December 31, 2018 and 2017, the valuation allowance on deferred tax assets decreased by $3,114 and $25,093, respectively.

The Company is subject to audit by the IRS and various states for tax years dating back to 2015.  No federal or state tax returns are currently under audit. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

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Note 10 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

Disclosure Text Block [Abstract]

Note 10 - Commitments and Contingencies

Note 10 - Commitments and Contingencies

Letters of Credit

Under the terms of financing arrangements for letters of credit, E&S is required to maintain a balance in a specific cash account equal to or greater than the outstanding value of all letters of credit or bank guarantees issued, plus other amounts necessary to adequately secure obligations with the financial institution.  As of December 31, 2017, there were outstanding letters of credit and bank guarantees of $312 which expired in 2018.  As of December 31, 2018, there were outstanding letters of credit and bank guarantees of $220 which are scheduled to expire in 2019.  

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Note 11 - Stock Option Plan

12 Months Ended

Dec. 31, 2018

Disclosure Text Block [Abstract]

Note 11 - Stock Option Plan

Note 11 - Stock Option Plan

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, 2018, options to purchase 1,001,781 shares of common stock were authorized and reserved for future grant.  

 A summary of activity follows (shares in thousands):

	2018		2017
		Weighted-		Weighted-
		Average		Average
	Number	Exercise	Number	Exercise
	of Shares	Price	of Shares	Price
Outstanding as of beginning of the year	1,610	$ 0.66	1,625	$ 0.88
Granted	150	1.12	141	1.39
Exercised	-	-	-	-
Forfeited or expired	(163)	1.21	(156)	3.61
Outstanding as of end of the year	1,597	0.65	1,610	0.66
Exercisable as of end of the year	1,131	0.48	1,089	0.51

The weighted average fair value of options granted during 2018 and 2017 was $0.77 and $1.14, 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. As of December 31, 2017, options exercisable and options outstanding had a weighted average remaining contractual term of 4.4 and 5.8 years with aggregate intrinsic value of $566 and $637, 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 2018 and 2017:

	2018	2017
Expected life (in years)	3.5	3.5
Risk free interest rate	2.04%	1.47%
Expected volatility	125%	175%

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, 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.  As of December 31, 2017, there was approximately $140 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 2.4 years.    

Share-based compensation expense, from awards collectively under the 2004 Plan and 2014 Plan for the years ended December 31, 2018 and 2017 amounted to $149 and $177, respectively, and was included in general and administrative expense on the statements of comprehensive income.

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Note 12 - Preferred Stock

12 Months Ended

Dec. 31, 2018

Disclosure Text Block [Abstract]

Note 12 - Preferred Stock

Note 12 - Preferred Stock

Class A Preferred Stock

The Company has 5,000,000 authorized shares of Class A Preferred stock.  As of December 31, 2018 and 2017, there were no Class A Preferred shares outstanding.

Class B Preferred Stock

The Company has 5,000,000 authorized shares of Class B Preferred stock.  As of December 31, 2018 and 2017, there were no Class B Preferred shares outstanding.

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Note 13 - Significant Customers

12 Months Ended

Dec. 31, 2018

Disclosure Text Block [Abstract]

Note 13 - Significant Customers

Note 13 - Significant Customers

As of December 31, 2018, Customer D represented 24% of accounts receivable, and Customer E represented 10% of contract revenue in excess of billings.

As of December 31, 2017, Customers A and B each represented 10% of accounts receivable, and Customer C represented 30% of contract revenue in excess of billings.

For the year ended December 31, 2018, no customers represented 10% or more of total sales.  For the year ended December 31, 2017, Customer C represented 11% of total sales.    

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Note 1. Nature of Operations and Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2018

Policy Text Block [Abstract]

Nature of Operations

Nature of Operations

Evans & Sutherland Computer Corporation, referred to in these notes as “Evans & Sutherland,” “E&S,” or the “Company,” produces high-quality advanced visual display systems used primarily in full-dome video projection applications, dome projection screens and dome architectural treatments. E&S also produces unique content for planetariums, schools, science centers and other educational institutions and entertainment venues.  The Company’s products include state of the art planetarium and dome theater systems consisting of proprietary hardware and software, and other unique visual display systems primarily used to project digital video on large curved surfaces.  Additionally, E&S manufactures and installs metal domes with customized optical coatings and acoustical properties that are used for planetarium and dome theaters as well as many other unique custom applications.  The Company operates in one business segment, which is the visual simulation market.

Basis of Presentation

Basis of Presentation

The consolidated financial statements include the accounts of Evans & Sutherland and its wholly owned subsidiaries.  All inter-company accounts and transactions have been eliminated in consolidation.  Certain prior year amounts have been reclassified to conform to the current year presentation.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.  The accounting estimates that require management’s most difficult and subjective judgments include revenue recognition based on the percentage-of-completion method, inventory reserves, allowance for doubtful accounts receivable, allowance for deferred income tax assets, impairment of long-lived assets, pension and retirement obligations and useful lives of depreciable assets.  Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three or fewer months to be cash equivalents.  The Company maintains cash balances in bank accounts that, at times, exceed federally insured limits.  The Company has not experienced any losses in these accounts and believes it is not exposed to any significant risk with respect to cash.  As of December 31, 2018, cash deposits as reported by the banks, including restricted cash, exceeded the federally insured limits by approximately $8,095.

Restricted Cash

Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statements of cash flows.

	2018	2017
Cash and cash equivalents	$ 8,365	$ 5,276
Restricted cash	220	312
Total cash, cash equivalents, and restricted cash
shown in the statements of cash flows	$ 8,585	$ 5,588

Amounts included in restricted cash represent those required to be set aside by a contractual agreement.  Restricted cash that guarantees letters of credit that mature or expire within one year is reported as a current asset.  Restricted cash that guarantees letters of credit that mature or expire after more than one year is reported as a long-term asset.

Trade Accounts Receivable

Trade Accounts Receivable

In the normal course of business, E&S provides unsecured credit terms to its customers.  Accordingly, the Company maintains an allowance for doubtful accounts for possible losses on uncollectible accounts receivable.  The Company routinely analyzes accounts receivable and costs and estimated earnings in excess of billings, and considers history, customer creditworthiness, facts and circumstances specific to outstanding balances, current economic trends, and changes in payment terms when evaluating the adequacy of the allowance for doubtful accounts receivable.  Changes in these factors could result in material differences to bad debt expense.  Past due balances are determined based on contractual terms and are reviewed individually for collectability. Uncollectible accounts receivable are charged against the allowance for doubtful accounts when management determines the probability of collection is remote.  

The table below represents changes in E&S’s allowance for doubtful accounts receivable for the years ended December 31:

	2018	2017
Beginning balance	$ 109	$ 259
Write-off of accounts receivable	-	(7)
Increase (decrease) in estimated losses on accounts receivable	48	(143)
Ending balance	$ 157	$ 109

Inventories

Inventories

Inventories include materials at standard costs, which approximate actual costs, as well as inventoried costs on programs and long-term contracts.  Inventoried costs include material, direct engineering and production costs, and applicable overhead, not in excess of estimated market value.  Spare parts and general stock materials are stated at cost not in excess of market value.  E&S periodically reviews inventories for excess supply, obsolescence, and valuations above estimated realizable amounts, and provides a reserve sufficient to reduce inventories to net realizable values.  Revisions of these estimates could impact net loss.

During the years ended December 31, 2018 and 2017, E&S recognized impairment losses on inventory of $427 and $105, respectively.  

Inventories as of December 31, were as follows:

	2018	2017
Raw materials	$ 5,979	$ 5,458
Work in process	116	1,011
Finished goods	323	423
Reserve for obsolete inventory	(3,346)	(2,919)
Inventories, net	$ 3,072	$ 3,973

Property and Equipment

Property and Equipment

Property and equipment are stated at cost.  Depreciation and amortization are computed using the straight-line method based on the estimated useful lives of the related assets.  Expenditures that materially increase values or capacities or extend useful lives of property and equipment are capitalized.  Leasehold improvements are assigned useful lives based on the shorter of their useful lives or the term of the related leases, including renewal options likely to be exercised.  Routine maintenance, repairs and renewal costs are expensed as incurred.  When property is retired or otherwise disposed of, the carrying values are removed from the property and equipment and related accumulated depreciation and amortization accounts.  Depreciation and amortization are included in cost of sales, research and development or selling, general and administrative expenses depending on the nature of the asset.  

Depreciation expense was $263 and $259 for the years ended December 31, 2018 and 2017, respectively.  The cost and estimated useful lives of property and equipment and the total accumulated depreciation were as follows as of December 31: 

	Estimated
	Useful Lives	2018	2017
Land	n/a	$ 2,250	$ 2,250
Buildings and improvements	5 - 40 years	3,065	3,065
Manufacturing machinery and equipment	3 - 8 years	4,554	5,582
Office furniture and equipment	3 - 8 years	630	779
Total		10,499	11,676
Less accumulated depreciation		(6,104)	(7,149)
Net property and equipment		$ 4,395	$ 4,527

Goodwill

Goodwill

The Company tests its recorded goodwill for impairment on an annual basis during the fourth quarter, or more often if indicators of potential impairment exist, by determining if the carrying value of each reporting unit exceeds its estimated fair value. Factors that could trigger impairment include, but are not limited to, underperformance relative to historical or projected future operating results, significant changes in the manner of use of the acquired assets or the Company’s overall business and significant negative industry or economic trends. Future impairment reviews may require write-downs in the Company’s goodwill and could have a material adverse impact on the Company’s operating results for the periods in which such write-downs occur.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment when events or changes in circumstances indicate the carrying values of the assets may not be fully recoverable. When this occurs, the Company reviews the values assigned to long-lived assets by analyzing the anticipated, undiscounted cash flows they generate.  When the expected future undiscounted cash flows from these assets do not exceed their carrying values, the Company estimates the fair values of such assets. Impairment is recognized to the extent the carrying values of the assets exceed their estimated fair values.  Assets held for sale are reported at the lower of their carrying values or fair values less costs to sell.

Warranty Reserve

Warranty Reserve

E&S provides a warranty reserve for estimated future costs of servicing products under warranty agreements extending for periods from 90 days to one year.  Anticipated costs for product warranties are based upon estimates derived from experience factors and are recorded at the time of sale or over the period revenues are recognized for long-term contracts.  Warranty reserves are classified as accrued liabilities in the accompanying consolidated balance sheets.

The table below represents changes in E&S’s warranty reserve for the years ended December 31:

	2018	2017
Beginning balance	$ 139	$ 123
Additions to warranty reserve	166	249
Warranty costs	(134)	(233)
Ending balance	$ 171	$ 139

Stock-Based Compensation

Stock-Based Compensation

The Company records compensation expense in the financial statements for stock-based awards based on the grant date fair value of those awards that are ultimately expected to vest. As such, the value of the award is reduced for the estimated forfeitures at the date of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company determines the grant date fair value of the options using the Black-Scholes option-pricing model.  Stock-based compensation expense is recognized over the requisite service periods of the awards on a ratable basis, which recognizes expense for each vesting tranche of each grant starting on the grant date and finishing on the vest date for that tranche.

Net Income Per Common Share

Net Income per Common Share

Basic net income per common share represents income available to common shareholders divided by the weighted-average number of common shares outstanding during the period. Diluted net income per common share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares include shares that may be issued by the Company for outstanding stock options determined using the treasury stock method. In periods resulting in a net loss, potential common shares are anti-dilutive and therefore are not included. Net income per common share has been computed based on the following:

	2018	2017
Numerator
Net Income	$ 3,747	$ 1,481
Denominator
Weighted-average number of common shares outstanding - basic	11,353	11,353
Incremental shares assumed for stock options	625	661
Weighted-average number of common shares outstanding - dilutive	11,978	12,014
Basic net income per common share	$ 0.33	$ 0.13
Diluted net income per common share	$ 0.31	$ 0.12

Income Taxes

Income Taxes

The Company uses the asset and liability method of accounting for income taxes.  Under the asset and liability method, deferred income tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases and operating loss and income tax credit carry-forwards.  Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in income tax rates is recognized in the period that includes the enactment date.

Other Comprehensive Income

Other Comprehensive Income

On a net basis for 2018 and 2017, there were deferred income tax assets resulting from items reflected in comprehensive income.  However, E&S has determined that it is more likely than not that it will not realize such net deferred income tax assets and has therefore established a valuation allowance against the full amount of the net deferred income tax assets.  Accordingly, the net income tax effect of the items included in other comprehensive income is zero.  Therefore, the Company has included no income tax expense or benefit in relation to items reflected in other comprehensive income.  The accumulated other comprehensive loss at the end of 2017 and 2018 consists of minimum pension liability attributable to the Supplemental Executive Retirement Plan (“SERP”) (see Note 7).

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 changes the accounting for leases. In particular, lessees will recognize lease assets and lease liabilities for operating leases. This update will have a minimal effect on lessor accounting. ASU 2016-02 is effective in the first quarter of the fiscal year ending 2019. The Company is currently assessing the impact on its financial reporting of implementing this guidance.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230) Restricted Cash

(“ASU 2016-18”). ASU 2016-18 changes the cash flow presentation and disclosures of restricted cash. The

Company implemented this update in the presented financial statements.

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Note 1. Nature of Operations and Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2018

Table Text Block Supplement [Abstract]

Schedule of Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statements of cash flows.

	2018	2017
Cash and cash equivalents	$ 8,365	$ 5,276
Restricted cash	220	312
Total cash, cash equivalents, and restricted cash
shown in the statements of cash flows	$ 8,585	$ 5,588

Schedule of Doubtful Accounts

The table below represents changes in E&S’s allowance for doubtful accounts receivable for the years ended December 31:

	2018	2017
Beginning balance	$ 109	$ 259
Write-off of accounts receivable	-	(7)
Increase (decrease) in estimated losses on accounts receivable	48	(143)
Ending balance	$ 157	$ 109

Schedule of Inventory

Inventories as of December 31, were as follows:

	2018	2017
Raw materials	$ 5,979	$ 5,458
Work in process	116	1,011
Finished goods	323	423
Reserve for obsolete inventory	(3,346)	(2,919)
Inventories, net	$ 3,072	$ 3,973

Schedule of Depreciation

The cost and estimated useful lives of property and equipment and the total accumulated depreciation were as follows as of December 31: 

	Estimated
	Useful Lives	2018	2017
Land	n/a	$ 2,250	$ 2,250
Buildings and improvements	5 - 40 years	3,065	3,065
Manufacturing machinery and equipment	3 - 8 years	4,554	5,582
Office furniture and equipment	3 - 8 years	630	779
Total		10,499	11,676
Less accumulated depreciation		(6,104)	(7,149)
Net property and equipment		$ 4,395	$ 4,527

Schedule of Product Warranty Reserve

The table below represents changes in E&S’s warranty reserve for the years ended December 31:

	2018	2017
Beginning balance	$ 139	$ 123
Additions to warranty reserve	166	249
Warranty costs	(134)	(233)
Ending balance	$ 171	$ 139

Schedule of Net Income Per Common Share

Net income per common share has been computed based on the following:

	2018	2017
Numerator
Net Income	$ 3,747	$ 1,481
Denominator
Weighted-average number of common shares outstanding - basic	11,353	11,353
Incremental shares assumed for stock options	625	661
Weighted-average number of common shares outstanding - dilutive	11,978	12,014
Basic net income per common share	$ 0.33	$ 0.13
Diluted net income per common share	$ 0.31	$ 0.12

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Note 2. Revenue (Tables)

12 Months Ended

Dec. 31, 2018

Table Text Block Supplement [Abstract]

Schedule of geographical revenues

In the following table, revenue reported for the year ended December 31, 2018 under Topic 606 is disaggregated by primary geographical market, major product line, timing of revenue recognition and product application.

Product Application	Planetarium Theaters	Other Visitor Attractions	Architectural Treatments	Total
Primary Geographic Area:
North America	$  23,443	$ 1,452	$ 1,022	$ 25,917
Europe	2,607	1,175	-	3,782
Asia	4,077	1,911	-	5,988
Other	1,506	-	-	1,506
	$ 31,633	$ 4,538	$ 1,022	$ 37,193
Products:
Audio-Visual Systems	$ 21,315	$ 1,646	$         -	$ 22,961
Domes	5,686	2,892	1,022	9,600
Show Content	2,225	-	-	2,225
Maintenance and Service	2,407	-	-	2,407
	$ 31,633	$ 4,538	$ 1,022	$ 37,193
Timing of revenue recognition:
Goods transferred at point in time	$   2,935	$         -	$         -	$   2,935
Goods and services transferred over time	28,698	4,538	1,022	34,258
	$ 31,633	$ 4,538	$ 1,022	$ 37,193

Schedule of contract balances

The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers as of December 31, 2018 and January 1, 2018:

	December 31, 2018	January 1, 2018
Receivables reported as accounts receivable, net	$ 3,250	$ 3,794
Contract revenue in excess of billings	3,484	3,517
Billings in excess of contract revenue	5,959	6,265

Schedule of changes in the contract assets and the contract liabilities

Significant changes in the contract assets and the contract liabilities balances during the year are as follows:

	Contract Assets	Contract Liabilities
Revenue recognized that was included in the contract liability balance at the beginning of the year		$ (4,697)
Increases due to amounts billed to customers, excluding amounts recognized as revenue during the year		$  4,391
Transferred to receivables from contract assets recognized at the beginning of the year	$ (3,404)
Increases as a result of revenue recognized, excluding amounts transferred to receivables during the year	$  3,371

Schedule of backlog of performance obligations

The following table includes estimated revenue expected to be recognized and recorded as sales in the future from the backlog of performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period.

	2019	2020	2021	2022	2023
Sales	$15,881	$678	$546	$170	$91

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Note 3. Changes in Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2018

Disclosure Text Block [Abstract]

Schedule of impacts of accounting changes

The following tables summarize the impacts of adopting Topic 606 on the Company’s consolidated financial statements for year ended December 31, 2018:

CONDENSED CONSOLIDATED BALANCE SHEETS
Impact of changes in accounting policies
			Balances
			without
			adoption of
December 31, 2018	As reported	Adjustments	Topic 606
Cash and cash equivalents	$   8,365	$            -	$ 8,365
Restricted cash	220	-	220
Contract revenue in excess of billings	3,484	(1,130)	2,354
Inventories, net	3,072	712	3,784
Others	12,020	-	12,020
Total assets	27,161	(418)	26,743
Billings in excess of contract revenue	5,959	44	6,003
Others	13,198	-	13,198
Total liabilities	19,157	44	19,201
Accumulated deficit	(42,778)	(462)	(43,240)
Others	50,782		50,782
Total stockholders’ equity	8,004	(462)	7,542
Total liabilities and stockholders’ equity	$ 27,161	$     (418)	$ 26,743

			Balances
			without
			adoption of
For the year ended December 31, 2018	As reported	Adjustments	Topic 606
Sales	$ 37,193	$     432	$ 37,625
Cost of sales	(23,469)	(211)	(23,680)
Selling, general and administrative	(6,561)	-	(6,561)
Income tax expense	(21)	-	(21)
Others	(3,395)	-	(3,395)
Net income	$  3,747	$     221	$ 3,968

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Impact of changes in accounting policies
			Balances
			without
			adoption of
For the year ended December 31, 2018	As reported	Adjustments	Topic 606
Net income	$ 3,747	$ 221	$ 3,968
Adjustments to reconcile net income to
net cash used in operating activities:
Other	1,057	-	1,057
Changes in:
Inventories	(449)	211	(238)
Contract revenue in excess of billings	33	1,130	1,163
Billings in excess of contract revenue	(306)	(1,562)	(1,868)
Other	(353)	-	(353)
Net cash from operating activities	3,729	-	3,729
Net cash from investing activities	(101)	-	(101)
Net cash from financing activities	$ (631)	$ -	$ (631)

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Note 5. Lease Receivable (Tables)

12 Months Ended

Dec. 31, 2018

Table Text Block Supplement [Abstract]

Schedule of Lease Receivable

The balance of lease receivable as of December 31, 2018 and 2017 is recorded as follows:

	2018	2017
Lease receivable	$   262	$    247
Lease receivable long term	574	836
Total	$   836	$ 1,083

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Note 6. Leases and deferred gain on disposal of building assets (Tables)

12 Months Ended

Dec. 31, 2018

Table Text Block Supplement [Abstract]

Schedule of Future Minimum Payments for Operating Leases

Future minimum rent expense payments under the new operating lease and the remaining deferred gain from the disposal of the building assets and deferred rent credit to be recognized are as follows:

Years Ending	Minimum Lease	Gain on	Deferred	Net Rent
December 31,	Payments	Building	Rent Credit	Expense
2019	475	(106)	(264)	105
Total	$ 475	$ (106)	$ (264)	$ 105

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Note 7. Employee Retirement Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2018

Table Text Block Supplement [Abstract]

Schedule of Settlement of Pension Plan Liabilities

The balance of the Pension Settlement Obligation is recorded on the balance sheet as of December 31, 2018 and 2017 as follows:  

	2018	2017
Current portion of pension settlement obligation	$    438	$    409
Pension settlement obligation, net of current portion	4,042	4,478
Total Pension Settlement Obligation	$ 4,480	$ 4,887

Schedule of Costs of Retirement Plans, changes in benefit obligation

Information concerning the obligations, plan assets and funded status of employee retirement defined benefit plans are provided below: 

Changes in benefit obligation	2018	2017
Projected benefit obligation - beginning of year	$   4,650	$  4,851
Interest cost	136	156
Actuarial loss (gain)	(119)	103
Benefits paid	(445)	(460)
Projected benefit obligation - end of year	$   4,222	$  4,650
Changes in plan assets	2018	2017
Contributions	$      445	$     460
Benefits paid	(445)	(460)
Fair value of plan assets - end of year	$          -	$          -

Schedule of Amounts Recognized in Other Comprehensive Income (Loss)

Net amount recognized	2018	2017
Unfunded status	$ (4,222)	$ (4,650)
Unrecognized net actuarial loss	1,976	2,176
Net amount recognized	$ (2,246)	$ (2,474)

Schedule of Amounts Recognized in Balance Sheet

Amounts recognized in the consolidated balance sheets consisted of:

	2018	2017
Accrued liability	$ (4,222)	$ (4,650)
Accumulated other comprehensive loss	1,976	2,176
Net amount recognized	$ (2,246)	$ (2,474)

Schedule of Net Periodic Benefit Cost

Components of net periodic benefit cost:

	2018	2017
Interest cost	$      136	$     156
Amortization of actuarial loss	81	75
Amortization of prior year service cost	-	-
Net periodic benefit expense	$      217	$     231

Schedule of Expected Benefit Payments

As of December 31, 2018, the following benefits are expected to be paid based on actuarial estimates and prior experience:

Years Ending December 31,	SERP
2019	$    621
2020	$    426
2021	$    414
2022	$    407
2023	$    392
2024-2028	$ 1,527

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Note 8. Debt (Tables)

12 Months Ended

Dec. 31, 2018

Table Text Block Supplement [Abstract]

Schedule of Long-term Debt

Long-term debt consisted of the following as of December 31, 2018 and 2017:

	2018	2017
First mortgage note payable due in monthly installments of $23 (interest  at 5.75%) through January 1, 2024; payment and rate subject to  adjustment every 3 years, next adjustment January 14, 2021	$ 1,221	$ 1,422
Second mortgage note payable due in monthly installments of $4 (interest  at 5.99%) through October 1, 2028; payment and rate subject to  adjustment every 5 years, next adjustment October 1, 2023	319	342
Total debt	1,540	1,764
Current portion of long-term debt	(237)	(224)
Long-term debt, net of current portion	$ 1,303	$ 1,540

Schedule of Principal maturities

Principal maturities on total debt are as follows:

Years Ending December 31,
2019	$    237
2020	251
2021	267
2022	283
2023	299
Thereafter	203
Total debt	$ 1,540

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Note 9. Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Table Text Block Supplement [Abstract]

Schedule of Effective Income Tax Rate Reconciliation

The actual expense differs from the expected tax expense (benefit) as computed by applying the U.S. federal statutory income tax rate of 21 and 34 percent for 2018 and 2017, respectively, as follows:

	2018	2017
Income tax provision at U.S. federal statutory rate	$      791	$      466
State tax  provision, net of federal income tax	116	48
Change in valuation allowance attributable to operations	(3,114)	(25,093)
Change in effective tax rate	111	22,311
Stock compensation	30	570
True-up adjustments and expiration of tax carryforwards and credits	2,105	1,568
Other, net	(18)	19
Income tax expense (benefit)	$      21	$    (111)

Schedule of Deferred Income Tax Assets and Liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and liabilities as of December 31, 2018 and 2017 are as follows:

	2018	2017
Property and equipment, principally due to differences in depreciation	$          68	$         71
Inventory reserves and other inventory-related temporary basis differences	437	361
Warranty, vacation, deferred rent and other liabilities	251	371
Retirement liabilities	543	645
Net operating loss carryforwards	35,532	38,536
Credit carryforwards	28	27
Other	181	143
Total deferred income tax	37,040	40,154
Less valuation allowance	(37,040)	(40,154)
Net deferred income tax	$            -	$           -

Schedule of Worldwide Income Before Income Taxes

Worldwide income before income taxes consisted of the following:

	2018	2017
United States	$    3,768	$    1,370
International	-	-
Total	$    3,768	$    1,370

Schedule of Components of Income Tax Expense (Benefit)

Income tax expense (benefit) consisted of the following:

	2018	2017
Current
U.S. federal	$        (1)	$         (8)
State	22	(103)
Total current expense (benefit)	$        21	$     (111)
Deferred
U.S. federal	$  1,477	$ 23,012
State	1,637	2,081
Total	3,114	25,093
Valuation allowance increase	(3,114)	(25,093)
Total deferred expense (benefit)	-	-
Total income tax expense (benefit)	$       21	$    (111)

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Note 11. Stock Option Plan (Tables)

12 Months Ended

Dec. 31, 2018

Table Text Block Supplement [Abstract]

Schedule of Stock Option Plan Activity

A summary of activity follows (shares in thousands):

	2018		2017
		Weighted-		Weighted-
		Average		Average
	Number	Exercise	Number	Exercise
	of Shares	Price	of Shares	Price
Outstanding as of beginning of the year	1,610	$ 0.66	1,625	$ 0.88
Granted	150	1.12	141	1.39
Exercised	-	-	-	-
Forfeited or expired	(163)	1.21	(156)	3.61
Outstanding as of end of the year	1,597	0.65	1,610	0.66
Exercisable as of end of the year	1,131	0.48	1,089	0.51

Schedule of Stock Options Valuation Assumptions

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 2018 and 2017:

	2018	2017
Expected life (in years)	3.5	3.5
Risk free interest rate	2.04%	1.47%
Expected volatility	125%	175%

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Note 1 - Nature of Operations and Summary of Significant Accounting Policies: Cash and Cash Equivalents (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Text Block [Abstract]
Cash, Uninsured Amount	$ 8,095

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Note 1 - Nature of Operations and Summary of Significant Accounting Policies: Restricted Cash: Schedule of Restricted Cash (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Text Block [Abstract]
Cash and cash equivalents	$ 8,365	$ 5,276
Restricted cash	220	312
Total cash, cash equivalents, and restricted cash shown in the statements of cash flows	$ 8,585	$ 5,588	$ 7,426

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Note 1 - Nature of Operations and Summary of Significant Accounting Policies: Trade Accounts Receivable: Schedule of Doubtful Accounts (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Text Block [Abstract]
Allowance for Doubtful Accounts Receivable, Beginning Balance	$ 109	$ 259
Write-off of accounts receivable	0	(7)
Increase (reduction) in estimated losses on accounts receivable	48	(143)
Allowance for Doubtful Accounts Receivable, Ending Balance	$ 157	$ 109

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Note 1 - Nature of Operations and Summary of Significant Accounting Policies: Inventories (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Text Block [Abstract]
Provision for excess and obsolete inventory	$ 427	$ 105

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Note 1 - Nature of Operations and Summary of Significant Accounting Policies: Inventories: Schedule of Inventory (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Text Block [Abstract]
Raw Materials	$ 5,979	$ 5,458
Work-in-process	116	1,011
Finished goods	323	423
Reserve for obsolete inventory	(3,346)	(2,919)
Inventories, net	$ 3,072	$ 3,973

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Note 1 - Nature of Operations and Summary of Significant Accounting Policies: Property and Equipment: Schedule of Depreciation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Depreciation	$ 263	$ 259
Property, Plant and Equipment, Gross	10,499	11,676
Less accumulated depreciation and amortization	(6,104)	(7,149)
Property and equipment, net	4,395	4,527
Building and Building Improvements
Property, Plant and Equipment, Gross	$ 3,065	3,065
Building and Building Improvements | Minimum
Property, Plant and Equipment, Useful Life	5 years
Building and Building Improvements | Maximum
Property, Plant and Equipment, Useful Life	40 years
Machinery and Equipment
Property, Plant and Equipment, Gross	$ 4,554	5,582
Machinery and Equipment | Minimum
Property, Plant and Equipment, Useful Life	3 years
Machinery and Equipment | Maximum
Property, Plant and Equipment, Useful Life	8 years
Office Equipment
Property, Plant and Equipment, Gross	$ 630	779
Office Equipment | Minimum
Property, Plant and Equipment, Useful Life	3 years
Office Equipment | Maximum
Property, Plant and Equipment, Useful Life	8 years
Land {1}
Property, Plant and Equipment, Gross	$ 2,250	$ 2,250

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Note 1 - Nature of Operations and Summary of Significant Accounting Policies: Warranty Reserve: Schedule of Product Warranty Reserve (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Text Block [Abstract]
Ending balance	$ 139	$ 123
Additions to warranty reserve	166	249
Warranty costs	(134)	(233)
Ending balance	$ 171	$ 139

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Note 1 - Nature of Operations and Summary of Significant Accounting Policies: Net Income Per Common Share: Schedule of Net Income Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Numerator
Net Income (Loss) Attributable to Parent	$ 3,747	$ 1,481
Denominator
Weighted average common shares outstanding - basic	11,353	11,353
Stock Issued During Period, Shares, Period Increase (Decrease)	625	661
Pro Forma Weighted Average Shares Outstanding, Diluted	11,978	12,014
Net income per common share - basic	$ 0.33	$ 0.13
Net income per common share - diluted	$ 0.31	$ 0.12

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Note 2 - Revenue (Details)	12 Months Ended
	Dec. 31, 2018
Maintenance and Service
Products and services segment	Part sales typically range from $1 to $100. Maintenance and Service contract sales typically range from $3 to $200.
Audio-Visual Systems
Products and services segment	Sales of typical Audio-Visual Systems range from $200 to $2,000.

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Note 2 - Revenue: Schedule of geographical revenues (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($)
Application total
Product Application	$ 37,193
Transferred at Point in Time
Product Application	2,935
Transferred over Time
Product Application	34,258
Audio-Visual Systems
Product Application	22,961
Domes
Product Application	9,600
Show Content
Product Application	2,225
Maintenance and Service
Product Application	2,407
Planetarium Theaters | Application total
Product Application	31,633
Planetarium Theaters | Transferred at Point in Time
Product Application	2,935
Planetarium Theaters | Transferred over Time
Product Application	28,698
Planetarium Theaters | Audio-Visual Systems
Product Application	21,315
Planetarium Theaters | Domes
Product Application	5,686
Planetarium Theaters | Show Content
Product Application	2,225
Planetarium Theaters | Maintenance and Service
Product Application	2,407
Other Visitor Attractions | Application total
Product Application	4,538
Other Visitor Attractions | Transferred at Point in Time
Product Application	0
Other Visitor Attractions | Transferred over Time
Product Application	4,538
Other Visitor Attractions | Audio-Visual Systems
Product Application	1,646
Other Visitor Attractions | Domes
Product Application	2,892
Other Visitor Attractions | Show Content
Product Application	0
Other Visitor Attractions | Maintenance and Service
Product Application	0
Architectural Treatments | Application total
Product Application	1,022
Architectural Treatments | Transferred at Point in Time
Product Application	0
Architectural Treatments | Transferred over Time
Product Application	1,022
Architectural Treatments | Audio-Visual Systems
Product Application	0
Architectural Treatments | Domes
Product Application	1,022
Architectural Treatments | Show Content
Product Application	0
Architectural Treatments | Maintenance and Service
Product Application	0
North America
Product Application	25,917
North America | Planetarium Theaters
Product Application	23,443
North America | Other Visitor Attractions
Product Application	1,452
North America | Architectural Treatments
Product Application	1,022
Europe
Product Application	3,782
Europe | Planetarium Theaters
Product Application	2,607
Europe | Other Visitor Attractions
Product Application	1,175
Europe | Architectural Treatments
Product Application	0
Asia
Product Application	5,988
Asia | Planetarium Theaters
Product Application	4,077
Asia | Other Visitor Attractions
Product Application	1,911
Asia | Architectural Treatments
Product Application	0
Other {1}
Product Application	1,506
Other {1} | Planetarium Theaters
Product Application	1,506
Other {1} | Other Visitor Attractions
Product Application	0
Other {1} | Architectural Treatments
Product Application	$ 0

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Note 2 - Revenue: Schedule of contract balances (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Text Block [Abstract]
Accounts receivable, net	$ 3,250	$ 3,794
Contract revenue in excess of billings	3,484	3,517
Other Liabilities, Current	$ 5,959	$ 6,265

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Note 2 - Revenue: Schedule of changes in the contract assets and the contract liabilities (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($)
Contract revenue recognized
Increase (Decrease) in Contract with Customer, Liability	$ (4,697)
Increase (Decrease) in Contract with Customer, Asset	3,371
Contract receivables recorded
Increase (Decrease) in Contract with Customer, Asset	3,404
Contract amount billed
Increase (Decrease) in Contract with Customer, Liability	$ 4,391

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Note 2 - Revenue: Schedule of backlog of performance obligations (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Sales	$ 37,193	$ 30,508
Backlog in sales | 2019
Sales	15,881
Backlog in sales | 2020
Sales	678
Backlog in sales | 2021
Sales	546
Backlog in sales | 2022
Sales	170
Backlog in sales | 2023
Sales	$ 91

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Note 3 - Changes in Accounting Policies: Schedule of impacts of accounting changes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Cash and cash equivalents	$ 8,365	$ 5,276
Restricted cash	220	312
Contract revenue in excess of billings	3,484	2,763
Inventories, net	3,072	3,973
Total assets	27,161	25,030
Billings in excess of contract revenue	5,959	7,117
Total liabilities	19,157	21,805
Accumulated deficit	(42,778)	(47,208)
Total stockholders' equity	8,004	3,225
Total liabilities and stockholders' equity	27,161	25,030
Sales	37,193	30,508
Selling, general and administrative	(6,561)	(6,045)
Income tax provision	(21)	111
Net income	3,747	1,481
Changes in operating assets and liabilities:
Decrease in inventories	449	327
Increase in contract revenue in excess of billings	(33)	1,651
Increase in billings in excess of contract revenue	(306)	305
Net cash provided by operating activities	3,729	(1,098)
Net cash used in investing activities	(101)	(148)
Net cash used in financing activities	(631)	$ (592)
As reported
Cash and cash equivalents	8,365
Restricted cash	220
Contract revenue in excess of billings	3,484
Inventories, net	3,072
Others	12,020
Total assets	27,161
Billings in excess of contract revenue	5,959
Others	13,198
Total liabilities	19,157
Accumulated deficit	(42,778)
Others	50,782
Total stockholders' equity	8,004
Total liabilities and stockholders' equity	27,161
Sales	37,193
Cost of sales	(23,469)
Selling, general and administrative	(6,561)
Income tax provision	(21)
Others	(3,395)
Net income	3,747
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Other	1,057
Changes in operating assets and liabilities:
Decrease in inventories	449
Increase in contract revenue in excess of billings	(33)
Increase in billings in excess of contract revenue	(306)
Increase in contract liabilities	(353)
Net cash provided by operating activities	3,729
Net cash used in investing activities	(101)
Net cash used in financing activities	(631)
Scenario, Adjustment
Cash and cash equivalents	0
Restricted cash	0
Contract revenue in excess of billings	(1,130)
Inventories, net	712
Others	0
Total assets	(418)
Billings in excess of contract revenue	44
Others	0
Total liabilities	44
Accumulated deficit	(462)
Total stockholders' equity	(462)
Total liabilities and stockholders' equity	(418)
Sales	432
Cost of sales	(211)
Selling, general and administrative	0
Income tax provision	0
Others	0
Net income	221
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Other	0
Changes in operating assets and liabilities:
Decrease in inventories	(211)
Increase in contract revenue in excess of billings	(1,130)
Increase in billings in excess of contract revenue	(1,562)
Increase in contract liabilities	0
Net cash provided by operating activities	0
Net cash used in investing activities	0
Net cash used in financing activities	0
Balances without adoption of Topic 606
Cash and cash equivalents	8,365
Restricted cash	220
Contract revenue in excess of billings	2,354
Inventories, net	3,784
Others	12,020
Total assets	26,743
Billings in excess of contract revenue	6,003
Others	13,198
Total liabilities	19,201
Accumulated deficit	(43,240)
Others	50,782
Total stockholders' equity	7,542
Total liabilities and stockholders' equity	26,743
Sales	37,625
Cost of sales	(23,680)
Selling, general and administrative	(6,561)
Income tax provision	(21)
Others	(3,395)
Net income	3,968
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Other	1,057
Changes in operating assets and liabilities:
Decrease in inventories	238
Increase in contract revenue in excess of billings	(1,163)
Increase in billings in excess of contract revenue	(1,868)
Increase in contract liabilities	(353)
Net cash provided by operating activities	3,729
Net cash used in investing activities	(101)
Net cash used in financing activities	$ (631)

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Note 4 - Goodwill (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2007	Dec. 31, 2018	Dec. 31, 2017
Text Block [Abstract]
Goodwill		$ 635	$ 635
Payments to Acquire Businesses, Gross	$ 2,884

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Note 5 - Lease Receivable (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Lease term			5 years
Fair Value Inputs, Discount Rate			6.00%
Present value of future lease payments			$ 1,754
Fair value of lease equipment			1,678
Present value of future maintenance exenses			76
Sales	$ 37,193	$ 30,508
Increase (Decrease) in Leasing Receivables	247	252
Property, Plant and Equipment
Sales			1,678
Deferred Revenue			$ 76
Proceeds from Lease Payments	307	307
Interest Income, Other	60	55
Increase (Decrease) in Leasing Receivables	$ 247	$ 252

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Note 5 - Lease Receivable: Schedule of Lease Receivable (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Text Block [Abstract]
Lease receivable	$ 262	$ 247
Lease receivable long term	574	836
Total	$ 836	$ 1,083

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Note 6 - Leases and deferred gain on disposal of building assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2015
Text Block [Abstract]
Operating Leases, Rent Expense	$ 151	$ 148
Base Rent After Lease Extension	$ 549
Gain from Building disposal and Lease extinguishment, to be recognized			$ 620
Gain from extinguishment of deferred rent credit, to be recognized			$ 1,526

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Note 6 - Leases and deferred gain on disposal of building assets: Schedule of Future Minimum Payments (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($)
Gain On Building
Gain on Leased Assets	$ (106)
Gain On Building | First Year
Gain on Leased Assets	(106)
Gain on Land
Gain on Leased Assets	(264)
Gain on Land | First Year
Gain on Leased Assets	(264)
Rent Expense
2019	105
Total	105
Minimum Lease Payments
2019	475
Total	$ 475

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Note 7 - Employee Retirement Benefit Plans (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Apr. 21, 2015
Pension Plan Settlement Agreement, Amount Payable			$ 10,500
Pension Plan Settlement Agreement, Payment Schedule	with $1,500 due within ten days following the effective date of the Pension Settlement Agreement and the remainder paid in twelve annual installments of $750 beginning on October 31, 2015
Pension Plan Settlement Agreement, Stock Payable			88,117
Settled ERISA Liabilities			$ 46,000
Line of Credit Facility, Maximum Borrowing Capacity	$ 1,100
Pension Cost (Reversal of Cost)	217	$ 231
Decrease (increase) in minimum pension liability	$ 200	$ (30)
Assumptions Used Calculating Benefit Obligation, Discount Rate	3.80%	3.10%
Assumptions Used Calculating Net Periodic Benefit Cost, Discount Rate	3.80%	3.10%
Second Intercreditor Agreement
Line of Credit Facility, Maximum Borrowing Capacity	$ 3,000
Intercreditor Agreement
Line of Credit Facility, Maximum Borrowing Capacity	6,500
401K Deferred Savings Plan
Contribution by Employer	$ 444	$ 451

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Note 7 - Employee Retirement Benefit Plans: Schedule of Settlement of Pension Plan Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Text Block [Abstract]
Current portion of pension settlement obligation	$ 438	$ 409
Pension settlement obligation, net of current portion	4,042	4,478
Pension Settlement Obligation	$ 4,480	$ 4,887

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Note 7 - Employee Retirement Benefit Plans: Schedule of Costs of Retirement Plans, changes in benefit obligation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Text Block [Abstract]
Projected benefit obligation as of beginning of the year	$ 4,650	$ 4,851
Interest cost	136	156
Actuarial loss (gain)	(119)	103
Benefits paid	(445)	(460)
Projected benefit obligation as of beginning of the year	4,222	4,650
Contributions	445	460
Fair value of plan assets - end of year	$ 0	$ 0

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Note 7 - Employee Retirement Benefit Plans: Schedule of Amounts Recognized in Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Text Block [Abstract]
Unfunded status	$ 4,222	$ 4,650
Unrecognized net actuarial loss	1,976	2,176
Net amount recognized	$ (2,246)	$ (2,474)

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Note 7 - Employee Retirement Benefit Plans: Schedule of Amounts Recognized in Balance Sheet (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Text Block [Abstract]
Accrued liability	$ (4,222)	$ (4,650)
Accumulated other comprehensive loss	1,976	2,176
Net amount recognized	$ (2,246)	$ (2,474)

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Note 7 - Employee Retirement Benefit Plans: Schedule of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Text Block [Abstract]
Interest cost	$ 136	$ 156
Amortization of actuarial loss	81	75
Amortization of prior year service cost	0	0
Net periodic benefit cost	$ 217	$ 231

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Note 7 - Employee Retirement Benefit Plans: Schedule of Expected Benefit Payments (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Text Block [Abstract]
2019	$ 621
2020	426
2021	414
2022	407
2023	392
2024-2028	$ 1,527

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Note 8 -Debt (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Jan. 14, 2004
Line of Credit Facility, Maximum Borrowing Capacity	$ 1,100
First Mortgage Note Payable
Debt Instrument, Face Amount		$ 3,200
Long-term Debt, Maturities, Repayment Terms	The First Mortgage Note requires repayment in monthly installments of principal and interest over 20 years. On January 14, 2006 and each third anniversary thereof, the interest rate on the First Mortgage Note is adjusted to the greater of 5.75% or 3% over the Three-Year Constant Maturity Treasury Rate published by the United States Federal Reserve (“3YCMT”).
Debt Instrument, Interest Rate, Basis for Effective Rate	On January 14, 2018, the 3YCMT was 2.09% and the interest rate on the First Mortgage Note remained at 5.75% per annum. As a result, the monthly installment amount remained at $23.
Second Mortgage Note Payable
Debt Instrument, Interest Rate, Basis for Effective Rate	On October 1, 2018, the fifth anniversary of the Second Mortgage Note, the 5YCMT was 2.99%. As a result, interest was adjusted to 5.99%. The monthly installment remains at $4.
Property Carrying Value	$ 3,973
Line Of Credit 1
Debt Instrument, Interest Rate Terms	Under the line of credit agreement, interest is charged on amounts borrowed at the lender’s prime rate less 0.25%.

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Note 8 -Debt: Schedule of Long-term Debt (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Long-term Debt	$ 1,540	$ 1,764
Current portion of long-term debt	(237)	(224)
Long-term debt, net of current portion	1,303	1,540
First Mortgage Note Payable
Debt Instrument, Periodic Payment	$ 23
Debt Instrument, Interest Rate, Effective Percentage	5.75%
Long-term Debt	$ 1,221	1,422
Second Mortgage Note Payable
Debt Instrument, Periodic Payment	$ 4
Debt Instrument, Interest Rate, Effective Percentage	5.99%
Long-term Debt	$ 319	$ 342

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Note 8 -Debt: Schedule of Principal maturities (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Text Block [Abstract]
2019	$ 237
2020	251
2021	267
2022	283
2023	299
Thereafter	203
Long-term Debt	$ 1,540	$ 1,764

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Note 9 - Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	21.00%	34.00%
Federal research credits	$ 3,400
Change in valuation allowance attributable to operations	(3,114)	$ (25,093)
Internal Revenue Service (IRS)
Operating Loss Carryforwards	161,541
Internal Revenue Service (IRS) | No Expire
Operating Loss Carryforwards	28
State and Local Jurisdiction
State research credits	1,100
State and Local Jurisdiction | Expire On Various Dates
Operating Loss Carryforwards	$ 34,500

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Note 9 - Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Text Block [Abstract]
Income tax benefit at U.S. federal statutory rate	$ 791	$ 466
State tax benefit (provision) (net of federal income tax benefit)	116	48
Change in valuation allowance attributable to operations	(3,114)	(25,093)
Change in effective tax rate	111	22,311
Stock compensation	30	570
True-up adjustments and expiration of tax carryforwards and credits	2,105	1,568
Other, net	(18)	19
Income tax provision (benefit)	$ 21	$ (111)

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Note 9 - Income Taxes: Schedule of Deferred Income Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Text Block [Abstract]
Property and equipment, principally due to differences in depreciation	$ 68	$ 71
Inventory reserves and other inventory-related temporary basis differences	437	361
Warranty, vacation, deferred rent and other liabilities	251	371
Retirement liabilities	543	645
Net operating loss carryforwards	35,532	38,536
Credit carryforwards	28	27
Other	181	143
Total deferred income tax assets	37,040	40,154
Less valuation allowance	(37,040)	(40,154)
Net deferred income tax assets	$ 0	$ 0

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Note 9 - Income Taxes: Schedule of Worldwide Income Before Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Text Block [Abstract]
United States	$ 3,768	$ 1,370
International	0	0
Total	$ 3,768	$ 1,370

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Note 9 - Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Current
U.S. federal	$ (1)	$ (8)
State	(22)	103
Current Income Tax Expense (Benefit)	21	(111)
Deferred
U.S. federal	1,477	23,012
State	1,637	2,081
Deferred Federal, State and Local, Tax Expense (Benefit)	3,114	25,093
Valuation allowance increase	(3,114)	(25,093)
Total deferred expense (benefit)	0	0
Total income tax expense (benefit)	$ 21	$ (111)

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Note 10 - Commitments and Contingencies (Details) $ in Thousands	Dec. 31, 2017 USD ($)
Text Block [Abstract]
Letters of Credit Outstanding, Amount	$ 312

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Note 11 - Stock Option Plan (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Options, Granted, Weighted Average Grant Date Fair Value	$ 0.77	$ 1.14
Options exercisable, weighted average remaining contractual term	4 years 8 months 12 days	4 years 4 months 24 days
Options outstanding, weighted average remaining contractual term	5 years 8 months 12 days	5 years 9 months 18 days
Options, Exercisable, Aggregate Intrinsic Value	$ 385	$ 566
Options, Outstanding, Aggregate Intrinsic Value	385	637
Total unrecognized share-based compensation cost	$ 90	$ 140
Total unrecognized share-based compensation, compensation cost not yet recognized, weighted-average period	1 year 10 months 25 days	2 years 4 months 24 days
Allocated Share-based Compensation Expense	$ 149	$ 177
2004 Stock Incentive Plan Of Evans Sutherland Computer Corporation
Minimum exercise price for options	The 2014 Plan continues a minimum exercise price for options of 110% of fair market value on the date of grant.
Number of Shares Authorized	1,001,781
2004 Stock Incentive Plan Of Evans Sutherland Computer Corporation | Directors
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	10,000

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Note 11 - Stock Option Plan: Schedule of Stock Option Plan Activity (Details) - $ / shares shares in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Text Block [Abstract]
Outstanding at beginning of year	1,610	1,625
Outstanding at beginning of year, weighted average exercise price	$ 0.66	$ 0.88
Granted	150	141
Granted, weighted average exercise price	$ 1.12	$ 1.39
Exercised	0	0
Exercised, weighted average exercise price	$ 0.00	$ 0.00
Forfeited or expired	(1,630)	(156)
Forfeited or expired, weighted average exercise price	$ 1.21	$ 3.61
Outstanding at beginning of year	1,597	1,610
Outstanding at beginning of year, weighted average exercise price	$ 0.65	$ 0.66
Exercisable as of end of the period	1,131	1,089
Exercisable as of end of the period, weighted average exercise price	$ 0.48	$ 0.51

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Note 11 - Stock Option Plan: Schedule of Stock Options Valuation Assumptions (Details)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Text Block [Abstract]
Expected life (in years)	3 years 6 months	3 years 6 months
Risk-free interest rate	2.04%	1.47%
Expected Volatility	125.00%	175.00%

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Note 12 - Preferred Stock (Details) - shares	Dec. 31, 2018	Dec. 31, 2017
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Preferred Stock, Shares Outstanding	0	0
Preferred Class A
Preferred Stock, Shares Authorized	5,000,000
Preferred Stock, Shares Outstanding	0	0
Preferred Class B
Preferred Stock, Shares Authorized	5,000,000
Preferred Stock, Shares Outstanding	0	0

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Note 13 - Significant Customers (Details)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Accounts Receivable | Customer D
Concentration Risk, Percentage	24.00%
Accounts Receivable | Customer A
Concentration Risk, Percentage		10.00%
Contract Revenue In Excess Of Billings | Customer E
Concentration Risk, Percentage	10.00%
Contract Revenue In Excess Of Billings | Customer B
Concentration Risk, Percentage		10.00%
Contract Revenue In Excess Of Billings | Customer C
Concentration Risk, Percentage		30.00%
Sales Revenue, Net | Customer C
Concentration Risk, Percentage		11.00%