Share-based Compensation Expense

6 Months Ended

Jun. 30, 2013

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

Share-Based Compensation Expense

Share-based Compensation Expense

Share-based compensation expense has been recorded as follows:

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
Cost of goods sold	$	2	$	2	$	4	$	1
Sales and marketing	19		16		34		30
Research and product development	13		10		24		17
General and administrative	33		32		64		63
	$	67	$	60	$	126	$	111

As of June 30, 2013, the total remaining unrecognized compensation cost related to non-vested stock options, net of forfeitures, was approximately $681, which will be recognized over a weighted average period of 2.90 years.

During the three and six months ended June 30, 2013, we granted 57,500 and 57,500 stock options, respectively. During the three and six months ended June 30, 2012, we granted 65,000 and 95,000 stock options, respectively. 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,
	2013	2012	2013	2012
Risk-free interest rate, average	1.2%	1.2%	1.2%	1.5%
Expected option life, average	6.8 years	7.0 years	6.8 years	7.1 years
Expected price volatility, average	50.1%	51.7%	50.1%	51.6%
Weighted average per share fair value	$4.49	$2.07	$4.49	$2.23