Share-Based Payments

12 Months Ended

Dec. 31, 2011

Share-Based Payments [Abstract]

Share-Based Payments

18.          Share-Based Payments

Stock Options

Through December 31, 2011, the Company has 1,386,233 options and 433,579 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 periods ended December 31, 2011 and 2010:

	2011		2010
Stock option amortization	$	599,000	$	503,000
Stock issued as payment for interest		-		133,000
Stock issued for services		10,000		255,000
Stock warrants issued for service		25,000		-
Stock issuance right of purchase		194,000		-
	$	828,000	$	891,000

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 2011 and 2010:  risk-free interest rate of 1.82% to 3.43%, expected volatility of 60% and 75%, expected life of 10.0 years and expected dividend yield of 0%.

Common shares were also issued to pay for consulting services and were recorded at the closing price of $3.75 per share on the issue date and expensed in an amount of $10,000 for the year ended December 31, 2011.

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 at December 31, 2011 and 2010 is summarized as follows:

	December 31, 2011								December 31, 2010
				Weighted		Aggregate					Weighted		Aggregate
				Average		Intrinsic					Average		Intrinsic
	Shares			Exercise Price		Value			Shares		Exercise Price		Value
Options outstanding at beginning of year		1,285,567		$	3.00	$	1,922,000			4,233	$	49.50		-
Granted		114,000			4.91		37,000			1,281,333		3.00		-
Exercised		-			-		-			-		-		-
Cancelled/expired		(13,333	)		3.00		(20,000	)		-		-		-
Options outstanding at end of period		1,386,234		$	3.32	$	1,939,000			1,285,567	$	3.00		-
Options exercisable at end of period		735,025		$	3.28	$	1,089,031			418,344	$	3.75		-
Options available for issuance		2,613,767								2,714,433

As of December 31, 2011, there were 1,386,233 options outstanding with 735,025 options exercisable at a weighted average exercise price of $3.28 with a weighted average remaining contractual life of 8.89 years.

As of December 31, 2011 the Company had total unrecognized compensation expense related to options granted of approximately $1,527,000 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 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 December 31, 2011, the weighted average exercise price was $36.21 and the weighted average remaining life was 2.49 years.  The following table outlines the warrants outstanding as of December 31, 2011 and December 31, 2010:

	2011		2010
	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		0	$	6.60	5/11/2016
June 2011 Fidelity Right to Purchase ($6.60 exercise price)		75,000		0	$	6.60	6/3/2012
2011 Service Warrants ($7.20 exercise price)		6,667		0	$	7.20	6/15/2016
		433,579		151,912

The Company accounts for its stock warrant issuances pursuant to the provisions of ASC 505-50, Equity-based Payments to Nonemployees.  The fair value of each warrant issued is estimated on the date of grant using the Black-Scholes Merton valuation model.  The Black-Scholes Merton model incorporated the following assumptions for the warrants issued in 2011:  risk-free interest rate of 0.11% to 1.89%, expected volatility of 60.0%, expected life of 6 months to 5.0 years and expected dividend yield of 0%.