Note 7 - Stockholder's Equity

6 Months Ended

Jun. 30, 2015

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

 Note 7—Stockholder’s Equity

Preferred Stock

The Board of Directors may, without further action by the stockholders, issue a series of Preferred Stock and fix the rights and preferences of those shares, including the dividend rights, dividend rates, conversion rights, exchange rights, voting rights, terms of redemption, redemption price or prices, liquidation preferences, the number of shares constituting any series and the designation of such series.

In November 2011, the Company sold 1,000,000 shares of Series A-1 Preferred Stock (“Series A-1”) to Mexicans & Americans Trading Together, Inc. (“MATT Inc.”) for $5,000,000.  MATT Inc. was an existing stockholder of the Company.  The Series A-1 shares are convertible, at MATT Inc.’s option, into 1,479,949 shares of the Company’s common stock, at a purchase price per share of approximately $3.38, and have voting rights on a converted basis. The holders of the Series A-1 do not have any change in control or liquidation preferences.  

Common Stock

The total number of shares of common stock, $0.001 par value, that the Company is authorized to issue is 100,000,000.

The Company issued 38,834 shares of common stock in connection with the exercise of stock options during the year ended December 31, 2014. There were no stock options or warrants exercised in the six months ended June 30, 2015.

Stock-Based Compensation

The fair values of share-based payments 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 the Company’s 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. Compensation expense is recognized on a straight-line basis over the requisite service period of the award.  During 2015 and 2014, the Company continued to use the simplified method to determine the expected option term since the Company’s 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 annually thereafter.

The assumptions used in calculating the fair value of stock-based awards represent the Company’s 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, the Company’s stock-based compensation expense could be materially different in the future.

Stock-based compensation expense includes incremental stock-based compensation expense and is allocated on the condensed consolidated statement of operations and comprehensive income (loss) as follows:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Sales and marketing	$	79,418	$	125,180	$	146,244	$	242,170
Product development and content		335,443		593,115		656,278		1,107,860
General and administrative		318,190		319,806		545,794		629,358
Total stock-based compensation for vesting of options and awards	$	733,051	$	1,038,101	$	1,348,316	$	1,979,388

As of June 30, 2015, there was approximately $6.4 million of total unrecognized compensation cost relating to stock options and RSA’s, which is expected to be recognized over a period of approximately 2.3 years. As of June 30, 2015, the Company had approximately $3.6 million of unrecognized stock-based compensation expense related to RSAs, which will be recognized over the remaining weighted-average vesting period of approximately 2.3 years.

Stock Option Plans

2012 Omnibus Incentive Plan

On August 11, 2014, the stockholders approved the Amended and Restated 2012 Omnibus Incentive Plan (the “2012 Plan”), providing for the issuance of up to 8,700,000 shares of common stock, including approximately 2,100,000 shares previously approved by the Company’s stockholders under the Company’s 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 June 30, 2015, there were approximately 3.2 million shares of common stock available for grant.  A summary of stock option activity under the 2012 Plan during the six months ended June 30, 2015 is as follows:

Options	Number of Stock Options			Weighted- Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding at December 31, 2014		1,951,957		$	2.25
Granted		1,430,000		$	1.74
Exercised		-		$	-
Forfeited or expired		(57,332	)	$	2.00
Outstanding at June 30, 2015		3,324,625		$	2.04		9.0	$	37,011
Exercisable at June 30, 2015		1,217,060		$	2.17		8.3	$	23,102

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 for the six months ended June 30, 2015:

Risk-free interest rate:	1.35	%
Expected term (in years):	6.0
Expected dividend yield	-
Expected volatility:	88	%

The Company recorded stock-based compensation expense related to options of $339,469 and $684,298 for the three and six months ended June 30, 2015, respectively.

Restricted Stock Awards

The Company granted 1,277,350 RSAs during the six months ended June 30, 2015. Shares are forfeited if not vested within three years from the date of grant, and vest in three equal annual increments. The Company recorded stock-based compensation expense related to RSAs of $393,582 and $664,018 for the three and six months ended June 30, 2015, respectively.

A summary of RSA activity under the 2012 Plan during the six months ended June 30, 2015 is as follows:

RSA's	Number of Restricted Stock Awards			Weighted- Average Stock Price
Outstanding at December 31, 2014		1,418,227		$	2.07
Granted		1,277,350		$	1.69
Exercised		(552,603	)	$	2.02
Forfeited or expired		(36,383	)	$	1.82
Outstanding at June 30, 2015		2,106,591		$	1.86
Unvested at June 30, 2015		2,106,591		$	1.86

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 Stock Plan.

In 2008, the Company’s Board of Directors and stockholders approved an amendment to the 2006 Stock Plan to authorize the issuance of an additional 2,000,000 shares of common stock.  In November 2009, the Company’s Board of Directors approved an amendment to the 2006 Stock Plan to authorize the issuance of an additional 2,000,000 shares of common stock.  On June 4, 2010, the Company’s stockholders ratified this amendment to the 2006 Stock Plan.  In June 2011 and November 2011, the Company’s Board of Directors and stockholders approved amendments to the 2006 Stock Plan to authorize the issuances of 4,000,000 additional shares of common stock. Pursuant to the terms of the 2006 Stock 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 Plan during the six months ended June 30, 2015 is as follows:

Options	Number of Stock Options			Weighted- Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding at December 31, 2014		7,223,107		$	2.30
Granted		-			-
Exercised		-		$	-
Forfeited or expired		(182,304	)	$	4.07
Outstanding at June 30, 2015		7,040,803		$	2.26		4.0	$	2,895,456
Exercisable at June 30, 2015		6,996,622		$	2.25		4.0	$	2,895,456

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 six months ended June 30, 2015 is as follows:

Options	Number of Stock Options		Weighted- Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding at December 31, 2014		443,038	$	1.34
Granted		-		-
Exercised		-		-
Forfeited or expired		-		-
Outstanding at June 30, 2015		443,038	$	1.34		4.4	$	159,494
Exercisable at June 30, 2015		443,038	$	1.34		4.4	$	159,494