10. Share-Based Employee Compensation

12 Months Ended

Dec. 31, 2015

Notes to Financial Statements

10. Share-Based Employee Compensation

The Company has employee and non-employee director stock option programs.  Related to these programs, the Company recorded $57 and $46 of share-based employee compensation expense during the years ended December 31, 2015 and 2014, respectively, which is included as a component of cost of products and selling, general and administrative expenses in the accompanying consolidated statements of operations.  No amount of share–based employee compensation expense was capitalized as part of capital expenditures or inventory for the years presented.

The Company uses the Black-Scholes-Merton option valuation model to calculate the fair value of a stock option grant.  The share-based employee compensation expense recorded in the years ended December 31, 2015 and 2014 was calculated using the assumptions noted in the following table.  Expected volatilities are based on the historical volatility of the Company’s common stock over the period of time commensurate with the expected life of the stock options.  While the Company paid a one-time special cash dividend in 2007, it has never paid a cash dividend previously, nor is a cash dividend planned for the future.  Accordingly, the assumed dividend yield is zero.  The Company has estimated its future stock option exercises.  The expected term of option grants is based upon the observed and expected time to the date of post vesting exercises and forfeitures of options by the Company’s employees.  The risk-free interest rate is derived from the average U.S. Treasury rate for the period, which approximates the rate at the time of the stock option grant.

	FY 2015			FY 2014
Expected Volatility		52.7	%		59.6	%
Expected Dividends		0.00			0.00
Expected Term (in years)		3.0			3.0
Risk-Free Rate		0.98	%		0.80	%
Estimated forfeitures		0.0	%		0.0	%

A summary of stock option activity under the Company’s stock option plans as of December 31, 2015, and changes during the year ended December 31, 2015, are presented below:

As of January 1, 2015	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		414,778		3.79		—		2.29		—
Vested		361,443		3.91		—		2.55		—
Nonvested		53,335		3.00		—		0.54		—
Period activity
Issued		30,000		5.53		—		1.99		—
Exercised		112,002		3.12		—		1.11		—
Forfeited		—		—		—		—		—
Expired		40,840		4.94		—		2.45		—
As of December 31, 2015
Outstanding		291,936		4.07		3.35		2.68		242,940
Vested		276,936		4.00		3.29		2.72		242,940
Nonvested		15,000		5.35		4.43		1.93		—

Outstanding:

Range of Exercise Prices ($) Per Share			Stock Options Outstanding		Wgt. Avg. Exercise Price ($) Per Share		Wgt. Avg. Remaining Contractual Life (Years)
	1.50	1.89		64,000		1.70		2.42
	2.00	2.23		50,000		2.14		4.68
	3.44	11.40		177,936		5.46		3.31
				291,936		4.07		3.35

Exercisable:

Range of Exercise Prices ($) Per Share			Stock Options Exercisable		Wgt. Avg. Exercise Price ($)
	1.50	1.89		64,000		1.70
	2.00	2.23		50,000		2.14
	3.44	11.40		162,936		5.47
				276,936		4.00

The weighted-average grant-date fair value per option granted during the years ended December 31, 2015 and 2014 was $5.53 and $0.08, respectively.  The aggregate intrinsic value of stock options exercised during the years ended December 31, 2015 and 2014 was approximately $105 and $238, respectively.