Share-Based Payments (Tables)

3 Months Ended

Mar. 31, 2013

Share-Based Payments [Abstract]

Share Based Payments Expense

The following table provides the details of the approximate total share based payments expense during the three months ended March 31, 2013 and 2012:

	2013		2012
	(unaudited)		(unaudited)
Stock option amortization	$	164,000	$	163,000	(a)
Stock issued for services		79,000		-	(b)
Stock warrants issued for services		108,000		12,000	(c)
	$	351,000	$	175,000

(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: risk-free interest rate of 1.73% to 1.98%, expected volatility of 75%, expected life of 10.0 years and expected dividend yield of 0%.  There have been no options granted in 2013.

(b) During 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. Also, during 2012, the Company granted 196,620 shares to certain consultants and Directors for services. As of March 31, there were 210,010 shares vested. We recorded the common shares at the closing price on the issue date and expensed to consulting and marketing services $193,000 during the three months ended March 31, 2013 (none in 2012).

(c) In 2013, we issued 166,677 consulting warrants and 3,333 warrants vested during the period. The fair value of the warrants was estimated on the date of grant using the Black-Scholes Merton valuation model.  We expensed to marketing $44,000 during the three months ended March 31, 2013 and recorded $64,000 to prepaid expense to be recognized for services provided in the remainder of 2013.  For the three months ended March 31, 2012, we recorded $12,000 for marketing 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

Stock option activity for the three months ended March 31, 2013 is summarized as follows:

	Options			Weighted Average
	Outstanding			Exercise Price
Approved plan		4,000,000
Outstanding at January 1, 2013		1,585,401		$	3.54
Granted		-			-
Exercised		-			-
Canceled		(900	)		45.00
Outstanding at March 31, 2013		1,584,501		$	3.55
Options exercisable at March 31, 2013 (vested)		1,131,160		$	3.30
Options available for issuance		2,415,499

Shares Authorized under Stock Option Plans, by Exercise Price Range

The following table summarizes information concerning outstanding and exercisable options as of March 31, 2013:

				Weighted Average
				Remaining
		Number		Contractual Life		Weighted Average		Number		Weighted Average
Range of Exercise Prices		Outstanding		(Years)		Exercise Price		Exerciseable		Exercise Price
$	3 - $4		1,338,000		7.92	$	3.04		1,050,028	$	3.04
$	4 - $8		243,168		8.70		6.43		77,799		6.60
$	8 - $33		0		0		0.00		0		0
$	33 - $74		2,000		0.21		33.75		2,000		33.75
$	74 - $75		1,333		4.95		75.00		1,333		75.00
			1,584,501		7.85	$	3.41		1,131,160	$	3.30

Non Vested Shares

The following table summarizes the status of options which contain vesting provisions:

				Weighted
				Average
				Grant Date
	Options			Fair Value
Non-vested at January 1, 2013		525,396		$	3.67
Granted		0			0.00
Vested		(64,656	)		3.45
Canceled		(900	)		45.00
Non-vested at March 31, 2013		459,840		$	3.62

Warrants Outstanding

 As of March 31, 2013, the weighted average exercise price was $4.37 and the weighted average remaining life was 4.26 years. The following table outlines the warrants outstanding as of March  31, 2013 and December 31, 2012:

	March 31,		December 31,
	2013		2012
	(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	$	45.00	1/11/2013
2007 Private Placement Broker Warrants ($45.00 exercise price)		-		8,533	$	45.00	1/11/2013
2007 Private Placement Investor Warrants ($150.00 exercise price)		-		53,333	$	150.00	1/11/2013
July 2010 Sinotop Acquisition Warrants ($45.00 exercise price)		-		17,049	$	45.00	1/11/2013
July 2010 Sinotop Acquisition Warrants ($150.00 exercise price)		-		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
2011 Service Agreement Warrants ($7.20 exercise price)		23,333		20,000	$	7.20	6/15/2016
2012 August Financing Warrants ($4.25 exercise price)		977,063		977,063	$	4.25	8/30/2017	(1)
2013 Service Agreement Warrants ($2.00 exercise price)		166,667		-	$	2.00	2/26/2018
		1,367,063		1,348,975

(1) After receiving shareholder approval in the second quarter of 2013 and ss a result of the negative clawback provisions included in our warrant agreements associated with our August 2012 private financings, the exercise price of $4.25 per share will be reset to $1.50 per share.