Share-Based Payments

3 Months Ended

Mar. 31, 2012

Share-Based Payments [Abstract]

Share-Based Payments

15.           Share-Based Payments

Stock Options

Through March 31, 2012, the Company has 1,579,634 options and 436,912 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 ended March 31, 2012 and 2011:

	March 31,		March 31,
	2012		2011
	(unaudited)		(unaudited)
Stock option amortization	$	163,000	$	146,000
Stock issued for services		-		10,000
Stock warrants issued for service		12,000		-
	$	175,000	$	156,000

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 2012 and 2011: 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 during the three months ended March 31, 2011 (none in 2012).

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 three months ended March 31, 2012 is summarized as follows:

	March 31, 2012
			Weighted		Aggregate
			Average		Intrinsic
	Shares		Exercise Price		Value
Options outstanding at beginning of year		1,386,234	$	3.32	$	3,203,967
Granted		193,400		4.91		175,813
Exercised		-		-		-
Cancelled/expired		-		3.00		(32,667	)
Options outstanding at end of period		1,579,634	$	3.48	$	3,347,113
Options exercisable at end of period		805,386	$	3.27	$	1,946,492
Options available for issuance		2,420,366

As of March 31, 2012, there were 1,579,634 options outstanding with 805,386 options exercisable at a weighted average exercise price of $3.22 with a weighted average remaining contractual life of 8.63 years.

As of March 31, 2012 the Company had total unrecognized compensation expense related to options granted of approximately $2,058,427 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 March 31, 2012, the weighted average exercise price was $35.99 and the weighted average remaining life was 2.29 years. The following table outlines the warrants outstanding as of March 31, 2012 and December 31, 2011:

	March 31,		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	6/3/2012
2011 Service Agreement Warrants ($7.20 exercise price)		10,000		6,667	$	7.20	6/15/2016
		436,912		433,579

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 0.05% to 1.89%, expected volatility of 60.0% to 75%, expected life of 6 months to 5.0 years and expected dividend yield of 0%.