Share-Based Payments

9 Months Ended

Sep. 30, 2012

Share-Based Payments [Abstract]

Share-Based Payments

15. Share-Based Payments

 

Stock Options

Through September 30, 2012, the Company has 1,601,245 options and 1,420,642 warrants and stock purchase rights 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 nine months ended September 30, 2012 and 2011:

	3 Months Ended		9 Months Ended
	September 30,		September 30,
	2012	2011	2012	2011
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Stock option amortization	$   192,000	$   150,000	$   602,000	$   442,000	(a)
Stock issued for services	139,000	-	178,000	10,000	(b)
Stock warrants issued for services	10,000	-	36,000	12,000
Right to purchase shares	-	-	44,000	155,000	(see note 11)
	$   341,000	$   150,000	$   860,000	$   619,000

(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.  In the third quarter of 2012, the Company granted 101,542 shares to certain consultants for services.  As of September 30, 2012, there were 43,972 shares vested.  We recorded the common shares at the closing price on the issue date and expensed to consulting and marketing services $139,000 and $178,000 during the three and nine months ended September 30, 2012.  During the three and nine months ended September 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 nine months ended September 30, 2012 is summarized as follows:

	September 30, 2012
		Weighted	Aggregate
		Average	Intrinsic
	Shares	Exercise Price	Value
Options outstanding at beginning of year	1,383,567	$            3.32
Granted	227,567	4.48
Exercised	(1,347)	3.80
Cancelled/expired	(8,542)	4.20
Options outstanding at end of period	1,601,245	$            3.51	$ 1,016,634
Options exercisable at end of period	1,012,198	$            3.32	$    732,047
Options available for issuance	2,398,755

As of September 30, 2012, there were 1,601,245 options outstanding with 1,012,198 options exercisable at a weighted average exercise price of $3.32 with a weighted average remaining contractual life of 8.25 years.

As of September 30, 2012 the Company had total unrecognized compensation expense related to options granted of approximately $1,618,000 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, June 2011 and August 2012 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 September 30, 2012, the weighted average exercise price was $14.02 and the weighted average remaining life was 4.03 years. The following table outlines the warrants outstanding as of September 30, 2012 and December 31, 2011:

	September 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)	16,667	6,667	$              7.20	6/15/2016
2012 August Financing Warrants ($4.25 exercise price)	977,063	-	$              4.25	8/30/2017
	1,420,642	433,579