8. Non-Cash Share-Based Employee Compensation

6 Months Ended

Jun. 30, 2013

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 $2 and $33,  respectively, for the three and six months ended June 30, 2013, compared with $15 and $18 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, 2013, respectively, compared with $0 and $0 for the same periods last year) and selling, general and administrative expenses ($2 and $33 for the three and six months ended June 30, 2013, respectively, compared with $15 and $18 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, 2013 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, 2012.

A summary of stock option activity under the Company’s stock option plans as of June 30, 2013, and changes during the six months ended June 30, 2013 are presented below:

As of January 1, 2013	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		460,944		3.47		-		2.29		-
Vested		435,944		3.55		-		2.38		-
Nonvested		25,000		2.03		-		0.68		-
Period activity
Issued		80,000		2.61		-		0.98		-
Exercised		55,000		1.90		-		1.15		-
Forfeited		-		-		-		-		-
Expired		5,000		4.50		-		2.68		-
As of June 30, 2013
Outstanding		480,944		3.50		4.71		2.20		248,310
Vested		419,275		3.61		4.26		2.39		220,075
Nonvested		61,669		2.72		7.75		0.85		28,235