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STOCK-BASED COMPENSATION
9 Months Ended
Sep. 30, 2011
STOCK-BASED COMPENSATION [Abstract] 
STOCK-BASED COMPENSATION
NOTE 9.  STOCK-BASED COMPENSATION

Under our stock option plan, our board of directors may grant options to purchase common shares to our key employees, officers, directors and consultants.  We account for stock options in accordance with FASB ASC Topic 718, Compensation – Stock Compensation, with option expense amortized over the vesting period based on the binomial lattice option-pricing model fair value on the grant date, which includes a number of estimates that affect the amount of our expense. During the nine months ended September 30, 2011, we expensed $104,988 in stock-based compensation.
 
Activity in our stock options during the period ended September 30, 2011 was as follows:
 
 
 
Number Of
Options
(in thousands)
  
Weighted
Average
 Exercise
 Price
 
 
 
 
  
 
 
Outstanding at December 31, 2010
  1,948  $3.79 
 
        
Granted
  25  $2.81 
Exercised
  ( 56 ) $0.54 
Cancelled
  (197 ) $2.16 
 
        
Outstanding at September 30, 2011
  1,720  $4.07 
 
The grant date fair value of options granted in 2011 were estimated on the grant date using a binomial lattice option-pricing model and the following assumptions: expected volatility range between 41- 42%, expected term of 7 years, risk-free interest rate range between 1.8 - 2.6%, and expected dividend yield of 0%.
 
Expected volatility is based on a weighted average of the historical volatility of our stock price and peer company stock price volatilities. The average expected life was calculated using the simplified method under SAB 107. 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. We use historical data to estimate pre-vesting forfeiture rates.