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STOCK-BASED COMPENSATION
 3 Months Ended
Mar. 31, 2012
STOCK-BASED COMPENSATION [Abstract]  
STOCK-BASED COMPENSATION
NOTE 8. 
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 three months ended March 31, 2012, we expensed $31,552 in stock-based compensation.
 
Activity in our stock options during the period ended March 31, 2012 was as follows:
 
 
 
Number Of
Options
(in thousands)
 
 
Weighted
Average
 Exercise
 Price
 
 
 
 
 
 
 
 
Outstanding at December 31, 2011
 
 
1,533
 
 
$
3.99
 
 
 
 
 
 
 
 
 
 
Granted
 
 
--
 
 
$
--
 
Exercised
 
 
(10
)
 
$
0.70
 
Cancelled
 
 
--
 
 
$
--
 
 
 
 
 
 
 
 
 
 
Outstanding at March 31, 2012
 
 
1,523
 
 
$
4.01
 
 
There were no stock options granted during the first three months of 2012, however the grant date fair value of options previously granted were estimated on the grant date using a binomial lattice option-pricing model and the following assumptions: expected volatility range between 40-45%, expected term of between 5-7 years, risk-free interest rate range between 0-2.7%, 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 relatively the same throughout our calculations year over year, and a peer is only replaced with a similar peer company if it is removed from the public stock exchanges. 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.