8. Non-Cash Share-Based Employee Compensation

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

NOTE 8 - 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 $5 and $23, respectively, for the three and nine months ended September 30, 2012, compared with $40 and $131 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 nine months ended September 30, 2012, respectively, compared with $4 and $11 for the same periods last year) and selling, general and administrative expenses ($5 and $23 for the three and nine months ended September 30, 2012, respectively, compared with $36 and $120 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 nine months ended September 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 September 30, 2012, and changes during the three months ended September 30, 2012 are presented below:

As of July 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		495,944		3.43		-		2.24		-
Vested		470,944		3.51		-		2.33		-
Nonvested		25,000		2.03		-		0.68		-
Period activity
Issued		-		-		-		-		-
Exercised		-		-		-		-		-
Forfeited		-		-		-		-		-
Expired		35,000		2.91		-		1.67		-
As of September 30, 2012
Outstanding		460,944		3.47		4.34		2.29		9,750
Vested		435,944		3.55		4.33		2.38		9,750
Nonvested		25,000		2.03		4.64		0.68		-