Note 13 - Stock-Based Compensation

9 Months Ended

Sep. 30, 2013

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

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

Note 13—Stock-Based Compensation

The fair values of share-based payments related to stock options 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. Stock based compensation expense for stock options is recognized on a straight-line basis over the requisite service period of the award. During 2013 and 2012, the Company 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 Company began granting restricted stock awards (“RSAs”) to its employees in April 2013. The cost of the RSAs is determined using the fair value of the Company’s common stock on the date of grant. Stock-based compensation expense for RSAs is amortized on a straight-line basis over the requisite service period. RSAs generally vest over a three-year period with 33% vesting at the end of one year and the remaining vesting quarterly or annually thereafter.

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 the Company uses 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:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Sales and marketing	$	103,521	$	95,399	$	266,663	$	256,662
Product development and content		583,523		475,616		1,175,680		1,426,332
General and administrative		163,598		455,555		1,319,223		1,222,161
Total stock-based compensation for continuing operations		850,642		1,026,570		2,761,566		2,905,155
Total stock-based compensation for discontinued operations		-		-		-		151,506
Total stock-based compensation for vesting of options and awards	$	850,642	$	1,026,570	$	2,761,566	$	3,056,661

As of September 30, 2013, there was approximately $3.7 million of total unrecognized compensation expense related to stock options which will be recognized over a period of less than two years. As of September 30, 2013, the Company had approximately $2.1 million of unrecognized stock-based compensation expense related to RSAs, which will be recognized over the remaining weighted-average vesting period of approximately 3 years.

Stock-Based Plans

2012 Omnibus Incentive Plan

Stock Options

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 to 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 December 31, 2011. As of September 30, 2013, there were approximately 6.1 million shares of common stock available for grant.  A summary of stock option activity under the 2012 Plan during the nine months ended September 30, 2013 is as follows:

Options	Number of Stock Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding at December 31, 2012		187,375		$	2.86
Granted		914,000		$	1.89
Exercised		-		$	-
Forfeited or expired		(43,500	)	$	3.21
Outstanding at September 30, 2013		1,057,875		$	2.01		9.6	$	93,785
Exercisable at September 30, 2013		106,375		$	2.86		8.7	$	-

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:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Weighted-average volatility		86	%		83	%		86	%		84	%
Weighted-average risk-free interest rate		1.55	%		0.68	%		1.21	%		0.64	%
Weighted-average expected life in years		5.8			5.8			5.8			5.6
Dividend yield		-	%		-	%		-	%		-	%

Restricted Stock Awards

The Company granted 150,000 and zero RSAs during the three months ended September 30, 2013 and 2012, respectively. The Company granted 1,458,000 and zero RSAs during the nine months ended September 30, 2013 and 2012, respectively. The Company recorded stock-based compensation expense related to RSAs of approximately $198,000 and zero for the three months ended September 30, 2013 and 2012, respectively. A summary of RSA activity under the 2012 Plan during the nine months ended September 30, 2013 is as follows:

RSA's	Number of Stock Options			Weighted- Average Stock Price
Outstanding at December 31, 2012		-		$	-
Granted		1,458,000		$	1.79
Exercised		-		$	-
Forfeited or expired		(92,500	)	$	-
Outstanding at September 30, 2013		1,365,500		$	1.79
Unvested at September 30, 2013		1,365,500		$	1.79

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 nine months ended September 30, 2013 is as follows:

Options	Number of Stock Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding at December 31, 2012 (1)		8,452,340		$	2.56
Granted		-		$	-
Exercised (2)		(122,685	)	$	1.00
Forfeited or expired		(849,872	)	$	4.56
Outstanding at September 30, 2013 (3)		7,479,783		$	2.38		5.9	$	3,362,457
Exercisable at September 30, 2013 (4)		5,968,883		$	1.95		5.3	$	3,362,457

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

(2) Includes 20,000 outstanding options to purchase common stock at a weighted average exercise price of $1.00 per share being held by consultants.

(3) Includes 115,531 options granted to purchase common stock at a weighted average exercise price of $4.08 per share being held by consultants.

(4) Includes 71,352 exercisable options to purchase common stock at a weighted average exercise price of $3.64 per share being held by consultants.

The total intrinsic value of options exercised during the nine months ended September 30, 2013 and 2012 were approximately $116,000 and $412,000, respectively.

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 nine months ended September 30, 2013 is as follows:

Options	Number of Stock Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding at December 31, 2012		443,038	$	1.34
Granted		-	$	-
Exercised		-	$	-
Forfeited or expired		-	$	-
Outstanding at September 30, 2013		443,038	$	1.34		6.4	$	208,228
Exercisable at September 30, 2013		443,038	$	1.34		6.4	$	208,228