8. Non-Cash Share-Based Employee Compensation

9 Months Ended

Sep. 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 $11 and $36, respectively, for the three and nine months ended September 30, 2014, compared with $3 and $36 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, 2014, respectively, compared with $0 and $0 for the same periods last year) and selling, general and administrative expenses ($11 and $36 for the three and nine months ended September 30, 2014, respectively, compared with $3 and $36 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, 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 September 30, 2014, and changes during the nine months ended September 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		87,833		2.09		-		1.04		-
Forfeited		-		-		-		-		-
Expired		5,000		3.45		-		0.03		-
As of September 30, 2014
Outstanding		424,778		3.78		3.88		2.27		791,549
Vested		371,443		3.89		3.59		2.52		676,127
Nonvested		53,335		3.00		5.94		0.54		115,422