5. Share-based Compensation

3 Months Ended

Jun. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

5. Share-based Compensation

5.  Share-based Compensation

Share-based compensation expense has been recorded as follows:

	Three months ended June 30,		Six months ended June 30,
	2012	2011	2012	2011
Cost of goods sold	$                -	$                -	$               1	$                -
Sales and marketing	17	6	30	10
Research and product development	10	4	17	8
General and administrative	33	34	63	65
	$            60	$            44	$          111	$            83

As of June 30, 2012, the total remaining unrecognized compensation cost related to non-vested stock options, net of forfeitures, was approximately $594 which will be recognized over a weighted average period of 2.79 years.

During the three and six months ended June 30, 2012, we granted 65,000 and 95,000 stock options, respectively. During the three and six months ended June 30, 2011, we granted 5,000 stock options. We use judgment in determining the fair value of the share-based payments on the date of grant using an option-pricing model with assumptions regarding a number of highly complex and subjective variables.  These variables include the risk-free interest rate of the awards, the expected life of the awards, the expected volatility over the term of the awards, the expected dividends of the awards, and an estimate of the amount of awards that are expected to be forfeited.  We use the Black-Scholes option pricing model to determine the fair value of share-based payments granted under ASC Topic 718.

In applying the Black-Scholes methodology to the options granted, the Company used the following assumptions:

	Three months ended June 30,		Six months ended June 30,
	2012	2011	2012	2011
Risk-free interest rate, average	1.2%	2.5%	1.5%	2.5%
Expected option life, average	7.02 years	6.9 years	7.11 years	6.9 years
Expected price volatility, average	51.7%	52.5%	51.6%	52.5%
Expected dividend yield	0.0%	0.0%	0.0%	0.0%