NOTE 14. STOCK OPTIONS

On October 30, 2007, our stockholders approved and the Board of Directors adopted an amendment to the 2003 Executive and Employee Stock Option Plan (the “Plan”) to increase the maximum aggregate number of shares of common stock reserved for issuance under the Plan from 1.2 million shares (already reserved against outstanding options) to 1.7 million shares. Except for the increase in the number of shares covered by the Plan, the Plan remained otherwise unchanged. In 2001, the Board of Directors adopted the 2001 Executive and Employee Stock Option Plan which reserved for issuance 1,200,000 stock options. Stock options typically have a ten-year life and currently vest over a seven year period.

As of December 31, 2011, there was approximately $450,000 of total unrecognized compensation costs related to outstanding stock options, which is expected to be recognized over a period of 5 years.

The status of our stock options and stock awards are summarized as follows:

	Number Of Options			Weighted Average Exercise Price

Outstanding at December 31, 2009		1,741,525		$	3.61

Granted		264,160		$	4.67
Exercised		(46,000	)	$	0.89
Cancelled		(11,425	)	$	7.33
Outstanding at December 31, 2010		1,948,260		$	3.61

Granted		25,000		$	2.81
Exercised		(69,000	)	$	0.57
Cancelled		(371,414	)	$	3.52
Outstanding at December 31, 2011		1,532,846

Exercisable at December 31, 2011		1,195,112		$	3.53

The following table summarizes information about our options outstanding at December 31, 2011:

Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Life	Options Exercisable

$	0.70		35,000	2 years		35,000
$	0.75		21,500	1 – 2 years		21,500
$	1.30		25,000	2 years		25,000
$	2.13		125,000	3 years		125,000
$	2.25		322,500	4 years		322,500
$	2.41		40,000	3 years		40,000
$	2.93		35,000	4 years		35,000
$	2.95		2,500	3 years		2,500
$	3.25		331,700	2 years		331,700
$	6.93		20,000	5 years		20,000
$	7.10		12,125	7 years		9,982
$	7.18		50,000	8 years		50,000
$	7.33		136,075	8 years		59,406
$	7.68		7,500	7 years		4,286
$	8.66		97,857	7 years		57,143
$	6.60		500	8 years		500
$	8.32		68,214	8 years		20,000
$	7.85		7,500	8 years		2,143
$	6.00		30,000	9 years		-
$	7.45		14,286	9 years		14,286
$	3.08		10,000	9 years		1,429
$	2.46		65,589	9 years		10,594
$	1.89		50,000	9 years		7,143
$	2.80		10,000	10 years		-
$	2.81		15,000	10 years		-
			1,532,846			1,195,112

The number and weighted average grant-date fair values of options non-vested at the beginning and end of 2011, as well as options granted, vested and forfeited during the year was as follows:

	Number Of Options			Weighted Average Grant Date Fair Value
Nonvested at January 1, 2011		503,990		$	2.51
Granted in 2011		25,000		$	1.32
Vested in 2011		(90,542	)	$	2.74
Forfeited in 2011		(100,714	)	$	3.33

Nonvested at December 31, 2011		337,734		$	2.12

Common shares required to be issued upon the exercise of stock options and warrants would be issued from our authorized and unissued shares.

The grant date fair value of options granted in 2011 was estimated on the grant date using a binomial lattice option-pricing model and the following assumptions: expected volatility of 41-42%, expected term of 7 years, risk-free interest rate of 1.8-2.6%, and expected dividend yield of 0%.

The grant date fair value of options granted in 2010 was estimated on the grant date using a binomial lattice option-pricing model and the following assumptions: expected volatility of 42% - 43%, expected term of 7 years, risk-free interest rate of 1.1% - 2.27%, and expected dividend yield of 0%.

The grant date fair value of options granted in 2009 was estimated on the grant date using a binomial lattice option-pricing model and the following assumptions: expected volatility of 40% - 45%, expected term of 7 years, risk-free interest rate of 0% - 2.74%, and expected dividend yield of 0%.

Expected volatility is based on a weighted average of the historical volatility of the Company's stock and peer company volatility. The weighting percentages relative to our stock and the peer group was adjusted in 2010 to a 50%/50% weighting as management determined that sufficient price history reflecting the true volatility existed for our stock. Previous to 2010 we used a weighting of 75% to 25% in favor of the peer group as our price history contained large erratic price swings that were not indicative of our true volatility. Our peer group has remained the same throughout our calculations year over year. The average expected life was calculated using the simplified method as we believe we do not have sufficient history. The risk-free rate is based on the rate of U.S. Treasury zero-coupon issues with a remaining term equal to the expected life of the options. The Company uses historical data to estimate pre-vesting forfeiture rates.

As of December 31, 2011, the aggregate intrinsic value of all stock options outstanding and expected to vest was approximately $111,000 and the aggregate intrinsic value of currently exercisable stock options was approximately $101,000. The intrinsic value of each option share is the difference between the fair market value of BVX common stock and the exercise price of such option share to the extent it is “in-the-money”. Aggregate intrinsic value represents the value that would have been received by the holders of in-the-money options had they exercised their options on the last trading day of the year and sold the underlying shares at the closing stock price on such day. The intrinsic value calculation is based on the $2.12 closing stock price of BVX Common Stock on December 31, 2011, the last trading day of 2011. The total number of in-the-money options outstanding and exercisable as of December 31, 2011 was approximately 89,000.

The total intrinsic value of options exercised during the years ended December 31, 2011, 2010 and 2009 was approximately $157,000, $198,000 and $1,097,000, respectively. Intrinsic value of exercised shares is the total value of such shares on the date of exercise less the cash received from the option holder to exercise the options. The total cash proceeds received from the exercise of stock options was approximately zero, $9,000 and $79,000 for the years ended December 31, 2011, 2010 and 2009, respectively.

The total fair value of options granted during the years ended December 31, 2011, 2010 and 2009 was approximately $33,000, $496,000 and $299,000, respectively. The total fair value of option shares vested during the years ended December 31, 2011, 2010, and 2009 was approximately $248,000, $121,000 and $177,000, respectively.

During the year ended December 31, 2011, we issued 54,744 common shares in exchange for 69,000 employee and non-employee stock options and 14,256 common shares (via a stock swap). Net proceeds from the issuance of common shares along with the shares received in the stock swap exercises were zero for the year ended December 31, 2011.

Stock compensation cost recognized for the years ended December 31, 2011, 2010 and 2009 was approximately $132,000, $163,000 and $136,000, respectively. As of December 31, 2011, there was approximately $450,000 of total unrecognized stock-based compensation cost, related to unvested stock options granted under the Amended Plan. This cost is expected to be recognized over a weighted-average period of approximately 4 years.

Allocation of stock based compensation expense for the fiscal years ended December 31, 2011, 2010 and 2009 was as follows (in thousands):

	2011		2010		2009

Cost of sales	$	16	$	16	$	30
Research and development		11		33		32
Salaries and related costs		105		114		74

Total	$	132	$	163	$	136