Non-Cash Share-Based Employee Compensation

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements

NOTE 9 - Non-Cash Share-Based Employee Compensation

The Company has employee and non-employee director stock option programs.  Related to these programs, and in accordance with ASC Topic 718, “Compensation-Stock Compensation”, the Company recorded non-cash share-based employee compensation expense of $15 and $3, respectively, for the three and six months ended June 30, 2012, compared with $41 and $91 for the same periods last year.  The Company considers its non-cash share-based employee compensation expenses as a component of cost of products ($0 and $0 for the three and six months ended June 30, 2012, respectively, compared with $4 and $8 for the same periods last year) and selling, general and administrative expenses ($15 and $3 for the three and six months ended June 30, 2012, respectively, compared with $37 and $83 for the same periods last year).  There was no non-cash share–based employee compensation expense capitalized as part of capital expenditures or inventory for the periods presented.

The Company uses the Black-Scholes-Merton option valuation model to calculate the fair value of a stock option grant.  The non-cash share-based employee compensation expense recorded in the three and six months ended June 30, 2012 was calculated using certain assumptions.  For a description of such assumptions, reference is made to Note 10 (Share-Based Employee Compensation) of the Company’s Consolidated Financial Statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

A summary of stock option activity under the Company’s stock option plans as of June 30, 2012, and changes during the three months ended June 30, 2012 are presented below:

As of April 1, 2012	Stock Options		Wgt. Avg. Exercise Price ($) Per Share		Wgt. Avg. Remaining Contractual Life (Years)		Wgt. Avg. Grant Date Fair Value($) Per Share		Aggregate Intrinsic Value ($)
Outstanding		503,444		3.53		-		2.30		-
Vested		473,444		3.63		-		2.40		-
Nonvested		30,000		2.00		-		0.61		-
Period activity
Issued		25,000		2.03		-		0.68		-
Exercised		2,500		0.88		-		0.62		-
Forfeited		-		-		-		-		-
Expired		60,000		5.52		-		2.28		-
As of June 30, 2012
Outstanding		495,944		3.43		4.60		2.24		3,500
Vested		470,944		3.51		4.58		2.33		3,500
Nonvested		25,000		2.03		4.90		0.68		-