Stock option plan

6 Months Ended

Jun. 30, 2011

Stock option plan

18.  Stock option plan

On April 23, 2008, the board of directors adopted the 2008 Equity Incentive Plan (the “Plan”).  The purposes of the Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to employees, directors and consultants, and to promote the success of the Company’s business.  The maximum aggregate number of shares that may be issued under the Plan is 5,000,000 shares.

Pursuant to the Plan, on January 6, 2009, the Company granted options to purchase 735,200 and 137,040 shares of common stock with an exercise price of $0.60 and $1.25 per share, respectively, to a director and several employees of the Company.  In accordance with the vesting provisions of the grants, 50% of the options were vested on the date of grant and 12.5% will vest thereafter on each of the following March 31, June 30, September 30 and December 31, until fully vested.  The options granted expire in ten years after the date of grant or are exercisable for 36 months after the optionee ceases to be a service provider to the Company.

Pursuant to the Plan, on January 20, 2009, the Company granted options to purchase 497,600 shares of common stock with an exercise price of $0.60 per share to a director and several employees of the Company.  In accordance with the vesting provisions of the grants, 50% of the options will vest on the first anniversary date of the date of grant and 12.5% will vest thereafter on each of the following March 31, June 30, September 30 and December 31, until fully vested.  The options granted expire in ten years after the date of grant or are exercisable for 36 months after the optionee ceases to be a service provider to the Company.

A summary of share option plan activity for the six months ended June 30, 2011 is presented below :-

			Average		Remaining	Aggregate
	Number of		exercise price		contractual	intrinsic
	shares		per share		term	value
Outstanding as of January 1, 2011		1,369,840	$	0.67
Granted		-		-
Exercised/Forfeited/Cancelled		-		-
Outstanding as of June 30, 2011		1,369,840	$	0.67	7.5 years	$	-
Exercisable as of June 30, 2011		1,369,840	$	0.67	7.5 years	$	-

Aggregate intrinsic value represents the value of the Company’s closing stock price on June 30, 2011 of $0.05 in excess of the exercise price multiplied by the number of options outstanding or exercisable.

The weighted average grant-date fair value of options granted on January 6, 2009 and January 20, 2009 was $0.27 and $0.32 per share respectively. The non-cash share-based compensation expenses were fully amortized in the fiscal year 2010.  The Company recorded non-cash share-based compensation expense of $43,420 for the six months ended June 30, 2010 in respect of the share options, which was allocated to general and administrative expenses.

The fair value of the above option awards granted on January 6, 2009 and January 20, 2009 was estimated on the date of grant using the Black-Scholes Option Valuation Model that uses the following assumptions.

Expected volatility		119.66	%
Expected dividends	Nil
Expected life	1.5 years - 2 years
Risk-free interest rate		1	%