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Note 9 - Stock Option Plans

12 Months Ended

Dec. 31, 2013

Disclosure Text Block Supplement [Abstract]

Shareholders' Equity and Share-based Payments [Text Block]

9. Stock option plans:

The Company’s 1996 Stock Option Plan (the “1996 Plan”) was established for the benefit of the employees, officers, directors and certain consultants of the Company. The maximum number of common shares which may be set aside for issuance under the 1996 Plan was 2,787,500 shares, provided that the Board of Directors of the Company has the right, from time to time, to increase such number subject to the approval of the shareholders of the Company when required by law or regulatory authority. Generally, options issued under the 1996 Plan vest over a four-year period. The 1996 Plan expired on February 25, 2006; no options were issued from this plan after that date.

On November 22, 2006, the shareholders of the Company approved the Company’s 2006 Equity Compensation Plan (the “2006 Plan”), which was amended and restated effective July 29, 2010 and which serves as a successor to the 1996 Plan. The 2006 Plan has been established for the benefit of the employees, officers, directors and certain consultants of the Company. The maximum number of common shares which have been set aside for issuance under the 2006 Plan is 1.25 million shares. On October 8, 2010, the 2006 Plan was amended to increase the number of shares which have been set aside for issuance by an additional 0.475 million shares to 1.725 million shares. Generally, options issued under the 2006 Plan vest over a four-year period and have a term not exceeding seven years, except for automatic formula grants of non-qualified stock options, which are immediately exercisable and have a five year term.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. Because option-pricing models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. The assumptions presented in the table below represent the weighted average of the applicable assumption used to value stock options at their grant date. The Company calculates expected volatility based on historical volatility of the Company’s common shares. The expected term, which represents the period of time that options granted are expected to be outstanding, is estimated based on historical exercise experience. The Company evaluated historical exercise behavior when determining the expected term assumptions. The risk-free rate assumed in valuing the options is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the option. The Company determines the expected dividend yield percentage by dividing the expected annual dividend by the market price of Tucows Inc. common shares at the date of grant.

The fair value of stock options granted during the years ended December 31, 2013, 2012 and 2011 was estimated using the following weighted average assumptions:

	Year ended December 31,
	2013			2012			2011
Volatility		69.4	%		52.1	%		73.7	%
Risk-free interest rate		1.1	%		0.5	%		0.8	%
Expected life (in years)		4.0			4.0			4.0
Dividend yield		—	%		—	%		—	%
The weighted average grant date fair value for options issued, with the exercise price equal to market value on the date of grant	$	4.52		$	2.24		$	1.52

Details of stock option transactions are as follows:

	Year ended December 31, 2013					Year ended December 31, 2012					Year ended December 31, 2011
	Number of shares			Weighted average exercise price per share		Number of shares			Weighted average exercise price per share		Number of shares			Weighted average exercise price per share
Outstanding, beginning of year		2,148,170		$	2.56,		2,186,511		$	2.28		2,068,063		$	2.24
Granted		180,375			8.36		194,750			5.44		176,500			2.96
Exercised		(890,033	)		1.80		(191,585	)		2.20		(18,427	)		1.72
Forfeited		(29,684	)		4.88		(40,751	)		3.20		(24,625	)		2.76
Expired		(1,189	)		1.44		(755	)		1.76		(15,000	)		3.20
Outstanding, end of year		1,407,639		$	3.80		2,148,170		$	2.56		2,186,511		$	2.28
Options exercisable, end of year		1,045,475		$	3.14		1,772,723		$	2.28		1,760,604		$	2.16

The stock options expire at various dates through 2020.

As of December 31, 2013, the exercise prices, weighted average remaining contractual life of outstanding options and intrinsic values were as follows:

					Options outstanding								Options exercisable
Exercise price					Number outstanding		Weighted average exercise price per share		Weighted average remaining contractual life (years)		Aggregate intrinsic value		Number exercisable		Weighted average exercise price per share		Aggregate intrinsic value
$	1.52	-	$	2.40		335,029	$	2.32		0.9	$	3,911,669		335,029	$	2.32	$	3,911,669
$	2.48	-	$	2.80		379,135	$	2.75		3.0		4,264,512		302,472	$	2.74		3,405,886
$	2.92	-	$	3.76		339,041	$	3.21		2.0		3,658,099		288,867	$	3.26		3,102,171
$	4.20	-	$	10.16		354,434	$	6.86		5.5		2,530,230		119,107	$	6.13		937,590
						1,407,639	$	3.80			$	14,364,510		1,045,475	$	3.14	$	11,357,316

Total unrecognized compensation cost relating to unvested stock options at December 31, 2013, prior to the consideration of expected forfeitures, is approximately $0.9 million and is expected to be recognized over a weighted average period of 2.9 years.

The total intrinsic value of options exercised during the years ended December 31, 2013, 2012 and 2011 was $1.1 million, $296,000 and $25,000, respectively. Cash received from the exercise of stock options during the years ended December 31, 2013, 2012 and 2011 was $1.5 million, $0.4 million and $31,346 respectively.

The Company recorded stock-based compensation amounting to $0.4 million, $0.4 million and $0.3 million for the years ended December 31, 2013, 2012 and 2010 respectively.