Share-Based Payments

6 Months Ended

Jun. 30, 2012

Share-Based Payments [Abstract]

Share-Based Payments

15. Share-Based Payments

Stock Options

Through June 30, 2012, the Company has 1,583,648 options and 440,245 warrants outstanding to purchase shares of our common stock.

The following table provides the details of the approximate total share based payments expense during the three months and six months ended June 30, 2012 and 2011:

	3 Months Ended				6 Months Ended
	June 30,				June 30,
	2012		2011		2012		2011
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Stock option amortization	$	247,000	$	145,000	$	410,000	$	291,000	(a)
Stock issued for services		39,000		-		39,000		10,000	(b)
Stock warrants issued for service		14,000		12,000		26,000		12,000
Right to purchase shares		44,000		155,000		44,000		155,000	(see note 11)
	$	344,000	$	312,000	$	519,000	$	468,000

 

 

(a) The Company accounts for its stock option awards pursuant to the provisions of ASC 718, Stock Compensation. The fair value of each option award is estimated on the date of grant using the Black-Scholes Merton valuation model. The Company recognizes the fair value of each option as compensation expense ratably using the straight-line attribution method over the service period, which is generally the vesting period. The Black-Scholes Merton model incorporated the following assumptions for the options granted in 2012 and 2011: risk-free interest rate of 1.73% to 3.43%, expected volatility of 60% and 75%, expected life of 10.0 years and expected dividend yield of 0%.

(b) In the second quarter of 2012, the Company appointed two new "independent" (as defined under the NASDAQ listing requirements) members to the Board of Directors.  In connection with the appointment we granted each of our three "independent" directors 10,000 restricted shares to be vested quarterly over one year.  We recorded the common shares at the closing price on the issue date and expensed to consulting services the amount of $39,000 during the three and six months ended June 30, 2012.  During the three and six months ended June 30, 2011, we recorded $10,000 for other consulting services.    

Effective as of December 3, 2010, our Board of Directors approved the YOU On Demand Holdings, Inc. 2010 Stock Incentive Plan ("the Plan") pursuant to which options or other similar securities may be granted. The maximum aggregate number of shares of our common stock that may be issued under the Plan is 4,000,000 shares.

Stock option activity for the six months ended June 30, 2012 is summarized as follows:

	June 30, 2012
				Weighted		Aggregate
				Average		Intrinsic
	Shares			Exercise Price		Value
Options outstanding at beginning of year		1,383,567		$	3.32	$	2,600,000
Granted		200,900			4.58		93,058
Exercised		-			-		-
Cancelled/expired		(3,486	)		3.77		(4,295	)
Options outstanding at end of period		1,580,981		$	3.49	$	2,688,763
Options exercisable at end of period		902,620		$	3.30	$	1,729,103
Options available for issuance		2,416,352

As of June 30, 2012, there were 1,580,981 options outstanding with 902,620 options exercisable at a weighted average exercise price of $3.30 with a weighted average remaining contractual life of 8.43 years.

As of June 30, 2012 the Company had total unrecognized compensation expense related to options granted of approximately $1,828,619 which will be recognized over a remaining service period of 4.0 years.

Warrants

In connection with the Company's Share Exchange, capital raising efforts in 2007, the Company's January 2008 Financing of Convertible Notes and Class A Warrants, the April 2010 Convertible Note, the July 2010 and June 2011 financings, the WB Agreement and a service agreement, the Company issued warrants to investors and service providers to purchase common stock of the Company. As of June 30, 2012, the weighted average exercise price was $35.77 and the weighted average remaining life was 2.12 years. The following table outlines the warrants outstanding as of June 30, 2012 and December 31, 2011:

	June 30,		December 31,
	2012		2011
	(unaudited)
	Number of		Number of
	Warrants		Warrants		Exercise		Expiration
Warants Outstanding	Outstanding		Outstanding		Price		Date
Share Exchange Consulting Warrants ($45.00 exercise price)		59,664		59,664	$	45.00	1/11/2013
2007 Private Placement Broker Warrants ($45.00 exercise price)		8,533		8,533	$	45.00	1/11/2013
2007 Private Placement Investor Warrants ($150.00 exercise price)		53,333		53,333	$	150.00	1/11/2013
July 2010 Sinotop Acquisition Warrants ($45.00 exercise price)		17,049		17,049	$	45.00	1/11/2013
July 2010 Sinotop Acquisition Warrants ($150.00 exercise price)		13,333		13,333	$	150.00	1/11/2013
May 2011 Warner Brothers Warrants ($6.60 excercise price)		200,000		200,000	$	6.60	5/11/2016
June 2011 Fidelity Right to Purchase ($6.60 exercise price)		75,000		75,000	$	6.60	12/3/2012
2011 Service Agreement Warrants ($7.20 exercise price)		13,333		6,667	$	7.20	6/15/2016
		440,245		433,579