Note 13 - Stock-Based Compensation

12 Months Ended

Dec. 31, 2012

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

Note 13—Stock-Based Compensation

The fair values of share-based payments are estimated on the date of grant using the Black-Scholes option pricing model, based on weighted average assumptions. Expected volatility is based on historical volatility of our common stock. The risk-free rate is based on the U.S. Treasury yield curve in effect over the expected term at the time of grant. Compensation expense is recognized on a straight-line basis over the requisite service period of the award.  During 2012, 2011 and 2010, we continued to use the simplified method to determine the expected option term since our stock option exercise experience does not provide a reasonable basis upon which to estimate the expected option term.

The assumptions used in calculating the fair value of stock-based awards represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future.

Stock based compensation expense includes incremental stock-based compensation expense as follows:

	For the Years Ended December 31,
	2012		2011		2010
Sales and marketing	$	347,555	$	567,380	$	412,183
Product development and content		1,856,624		953,742		918,844
General and administrative		1,677,717		2,096,258		4,533,942
Total stock-based compensation for continuing operations		3,881,896		3,617,380		5,864,969
Total stock-based compensation for discontinued operations		151,506		730,758		-
Total stock-based compensation for vesting of options	$	4,033,402	$	4,348,138	$	5,864,969

As of December 31, 2012, there was approximately $6.3 million of total unrecognized compensation cost, which is expected to be recognized over a period of approximately two years.

Stock Option Plans

2012 Omnibus Incentive Plan

On June 1, 2012, the stockholders approved the 2012 Omnibus Incentive Plan (the “2012 Plan”), providing for the issuance of up to 5,700,000 shares of common stock, including approximately 2,100,000 shares previously approved by the Company’s stockholders under our Amended and Restated 2006 Stock Incentive Plan (the “2006 Stock Plan”, less one share of common stock for every one share of common stock that was subject an option or other award granted after December 31, 2011 under the 2006 Stock Plan, plus an additional number of shares of common stock equal to the number of shares previously granted under the 2006 Stock Plan that either terminate, expire, or are forfeited after the December 31, 2011. As of December 31, 2012, there were approximately 7,494,000 shares of common stock available for grant.  A summary of stock option activity under the 2012 Plan during the year ended December 31, 2012 is as follows:

Options	Number of Stock Options			Weighted- Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
Outstanding at December 31, 2011		-		$	-
Granted		189,875		$	1.82
Exercised		-		$	-
Forfeited or expired		(2,500	)	$	1.84
Outstanding at December 31, 2012		187,375		$	1.84	9.5	$	$127,309
Exercisable at December 31, 2012		70,919		$	2.68	9.4	$	$42,983

The fair value of each stock option is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

	For the year ended December 31,
	2012
Risk-free interest rate:		0.64	%
Expected term (in years):		5.7
Expected dividend yield:		-
Expected volatility:		84	%

2006 Stock Incentive Plan

On June 27, 2007, the stockholders approved the 2006 Stock Plan, providing for the issuance of up to 3,700,000 shares of common stock plus an additional number of shares of common stock equal to the number of shares previously granted under the 1998 Stock Option Plan that either terminate, expire, or lapse after the date of the Board of Directors’ approval of the 2006 Plan.

In 2008, our Board of Directors and stockholders approved an amendment to the 2006 Plan to authorize the issuance of an additional 2,000,000 shares of common stock.  In November 2009, our Board of Directors approved an amendment to the 2006 Plan to authorize the issuance of an additional 2,000,000 shares of common stock.  On June 4, 2010, our stockholders ratified this amendment to the 2006 Plan.  In June 2011 and November 2011, our Board of Directors and stockholders approved amendments to the 2006 Plan to authorize the issuances of 4,000,000 additional shares of common stock.    Pursuant to the terms of the 2006 Plan, eligible individuals could be granted incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, or stock grant awards.  

A summary of stock option activity under the 2006 Stock Plans during the year ended December 31, 2012 is as follows:

Options	Number of  Stock Options			Weighted- Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding at December 31, 2011 (1)		9,168,893		$	2.70
Granted (2)		1,309,750		$	3.69
Exercised		(901,321	)	$	1.39
Forfeited or expired (3)		(1,124,982	)	$	5.93
Outstanding at December 31, 2012 (4)		8,452,340		$	2.56		6.8	$	10,845,396
Exercisable at December 31, 2012 (5)		5,819,245		$	1.92		5.9	$	10,760,862

(1) Includes 138,864 outstanding options to purchase common stock at a weighted average exercise price of $3.58 per share being held by consultants.

(2) Includes 10,000 outstanding options to purchase common stock at a weighted average exercise price of $4.20 per share being held by consultants.

(3) Includes 13,333 of forfeited options to purchase common stock at a weighted average exercise price of $3.60 per share formerly held by consultants

(4) Includes 135,531 options granted to purchase common stock at a weighted average exercise price of $3.62 per share being held by consultants.

(5) Includes 91,352 exercisable options to purchase common stock at a weighted average exercise price of $3.06 per share being held by consultants.

The total intrinsic values of options exercised during the year ended December 31, 2012, 2011 and 2010 were approximately $1.8 million, $4.9 million and $2.2 million, respectively. The fair value of each stock option is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

	For the Years Ended December 31,
	2012			2011			2010
Risk-free interest rate:		0.80	%		1.31	%		1.86	%
Expected term (in years):		6.0			6.0			5.8
Expected dividend yield:		-			-			-
Expected volatility:		82	%		83	%		89	%

Non-Plan Options

The Board of Directors has approved and our stockholders have ratified the issuance of stock options outside of our stock incentive plans.  A summary of Non-Plan option activity during the year ended December 31, 2012 is as follows:

Options	Number of Stock Options		Weighted- Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding at December 31, 2011		443,038	$	1.34
Granted		-	$	-
Exercised		-	$	-
Forfeited or expired		-	$	-
Outstanding at December 31, 2012		443,038	$	1.34		6.9	$	668,987
Exercisable at Decemberr 31, 2012		443,038	$	1.34		6.9	$	668,987

On July 8, 2009,  our Board of Directors authorized an option exchange of 5,751,937 existing stock options to a new exercise price of $1.00 per share in order to provide incentive for certain key employees.  Some of the exchanged options were granted to our named executive officers including: 2,268,466 to John Abbott, the Chief Executive Officer, 1,826,971 to Michael Matte, the Chief Financial Officer and 732,500 to Louis Bardov, the former Chief Technology Officer.  The financial impact of this transaction was an increase of $1,052,010 in stock based compensation to be amortized over the remaining life of the options and was recognized through year ended December 31, 2010.