Note 3 - Stock-Based Compensation and Stock Option Activity

3 Months Ended

Mar. 31, 2013

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

3.   Stock-Based Compensation and Stock Option Activity

The impact on Onvia’s results of operations of recording stock-based compensation was as follows for the periods presented (in thousands):

	Three Months Ended March 31,
	2013		2012
Cost of sales	$	2	$	(1	)
Sales and marketing		10		(35	)
Technology and development		13		12
General and administrative		48		44
Total stock-based compensation	$	73	$	20

Stock-based compensation in the first quarter of 2012 includes the impact of options forfeited upon the departure of our Vice President of Sales and Vice President of Content, which resulted in the reversal of approximately $62,000 in previously recognized expenses on forfeited options.

Valuation Assumptions

Stock Options

Onvia calculated the fair value of each option award on the date of grant using the Black-Scholes valuation model. The following weighted average assumptions were used for options granted in each respective period:

	Three Months Ended March 31,
	2013			2012
Risk-free interest rate		1.00	%		1.07	%
Expected volatility		53	%		51	%
Expected dividends		0	%		0	%
Expected life (in years)		5.5			4.6

Employee Stock Purchase Plan (“ESPP”)

The fair value of each employee purchase under Onvia’s ESPP is estimated on the first day of each purchase period using the Black-Scholes valuation model. Purchase periods begin on May 1 and November 1 of each year.  No purchase periods commenced during the three months ended March 31, 2013 or 2012.

Stock Option Activity

The following table summarizes stock option activity under Onvia’s equity incentive plan for the three months ended March 31, 2013:

	Options Outstanding			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (1)
Total options outstanding at January 1, 2013		1,097,236		$	4.58
Options granted		80,000			3.56
Options exercised		(53,829	)		2.56
Options forfeited and cancelled		(29,925	)		3.54
Total options outstanding at March 31, 2013		1,093,482		$	4.63
Options exercisable at March 31, 2013		662,308		$	5.40		4.50	$	179,082
Options vested and expected to vest at March 31, 2013		1,057,176		$	4.68		6.02	$	406,317

 (1) Aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of Onvia’s common stock of $3.83 at March 31, 2013 for options that were in-the-money at March 31, 2013.  The number of in-the-money options outstanding and exercisable at March 31, 2013 was 564,298 and 205,315, respectively.

The weighted average grant date fair value of options granted during the period ended March 31, 2013 and 2012 was $1.68 and $1.31 per option, respectively.

As of March 31, 2013, there was approximately $346,000 of unrecognized compensation cost related to unvested stock options and estimated purchases under the ESPP.  That cost is expected to be recognized over a weighted average period of 1.68 years.

During the three months ended March 31, 2013, approximately $81,000 was received for exercises of stock options compared to $38,000 for the same period of 2012.

Restricted Stock Units

The following table summarizes changes in non-vested restricted stock units (“RSUs”) for the three months ended March 31, 2013:

	Number of shares		Weighted Average Grant Date Fair Value
Non-vested balance at January 1, 2013		13,954	$	4.12
Granted		-		-
Vested		-		-
Forfeited / Expired		-		-
Non-vested balance at December 31, 2013		13,954	$	4.12

RSUs granted during the first quarter of 2011 were valued on the grant date based upon the fair value of the underlying common stock on the grant date.  Prior to the first quarter of 2011 no RSUs had been granted.  The value of the RSUs granted is recognized as compensation expense over the applicable vesting period.  The RSUs granted during the first quarter of 2011 have a three year vesting period and were subject to accelerated vesting based upon achievement of 2011 financial targets.  The 2011 financial targets were not achieved and therefore these RSU’s will fully vest over three years on December 31, 2013.  As of March 31, 2013 there was $15,000 of total unrecognized compensation cost related to non-vested RSU’s and remaining unrecognized compensation cost associated with these RSUs is expected to be recognized over a weighted average period of 0.75 years.