8. Non-Cash Share-Based Employee Compensation

6 Months Ended

Jun. 30, 2014

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 $13 and $25, respectively, for the three and six months ended June 30, 2014, compared with $2 and $33 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, 2014, respectively, compared with $0 and $0 for the same periods last year) and selling, general and administrative expenses ($13 and $25 for the three and six months ended June 30, 2014, respectively, compared with $2 and $33 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, 2014 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, 2013.

A summary of stock option activity under the Company’s stock option plans as of June 30, 2014, and changes during the six months ended June 30, 2014 are presented below:

As of January 1, 2014	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		482,611		3.50		-		2.18		-
Vested		410,942		3.64		-		2.41		-
Nonvested		71,669		2.68		-		0.87		-
Period activity
Issued		35,000		3.40		-		0.08		-
Exercised		75,833		2.18		-		1.03		-
Forfeited		-		-		-		-		-
Expired		5,000		3.45		-		0.03		-
As of June 30, 2014
Outstanding		436,778		3.72		4.13		2.24		368,459
Vested		373,443		3.86		3.83		2.52		307,773
Nonvested		63,335		2.90		5.87		0.61		60,686