NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2012

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Intangible assets consist of the following (in thousands):

	December 31, 2012				December 31, 2011
	Gross carrying value		Accumulated amortization		Gross carrying value		Accumulated amortization
Amortizable intangible assets - Patents	$	2,624	$	2,624	$	2,624	$	2,262

We believe our estimates related to gross-to-net sales adjustments for MuGard do not have a high degree of estimation complexity or uncertainty as the related amounts are settled within a short period of time.

Below is a table showing gross sales and net sales by quarter for the years ended December 31, 2012 and 2011.

(in thousands)	Three months ended March 31, 2012			Three months ended June 30, 2012			Three months ended Sept 30, 2012			Three months ended Dec 31, 2012			Twelve months ended Dec 31, 2012
Gross sales		$	577		$	712		$	877		$	1,048		$	3,214
Cash discounts	5			13			7			9			34
Contract discounts			18			84			89			124			315
Net Sales		$	554		$	615		$	781		$	915		$	2,865

	Three months ended March 31, 2011			Three months ended June 30, 2011			Three months ended Sept 30, 2011			Three months ended Dec 31, 2011			Twelve months ended Dec 31, 2011
Gross sales		$	13		$	43		$	82		$	410		$	548
Cash discounts	-			1			-			1			2
Contract discounts			-			-			-			7			7
Net Sales		$	13		$	42		$	82		$	402		$	539

Stock options assumptions

During 2012 and 2011, 1,235,000 stock options and 580,000 stock options, respectively, were granted under the 2005 Equity Incentive Plan. Assumptions for 2012 and 2011 are:

	2012	2011
Expected volatility assumption was based upon a combination of historical stock price volatility measured on a weekly basis and is considered a reasonable indicator of expected volatility.	98%	117%
Risk-free interest rate assumption is based upon U.S. Treasury bond interest rates appropriate for the term of the our employee stock options.	0.45%	1.42%
Dividend yield assumption is based on our history and expectation of dividend payments.	None	None
Estimated expected term (average of number years) is based on the simplified method as prescribed by SAB 107/110 as we do not have sufficient information to calculate an expected term.	5.5 years	5.6 years

Stock-based compensation allocation

The following table summarizes stock-based compensation for the years ended December 31, 2012 and 2011 which was allocated as follows (in thousands):

	Year ended December 31, 2012		Year ended December 31, 2011
Research and development	$	93	$	377
General and administrative		297		689
Stock-based compensation expense included in		390		1,066
operating expense

Total stock-based compensation expense		390		1,066
Tax benefit		-		-
Stock-based compensation expense, net of tax	$	390	$	1,066

- Definition

Tabular disclosure of the allocation of equity-based compensation costs to a given line item on the balance sheet and income statement for the period. This may include the reporting line for the costs and the amount capitalized and expensed.

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