NOTE 10 – OPTIONS AND NONVESTED SHARES

Options

A summary of stock options activity for six months ended June 30, 2013 is as follow:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term in Years		Aggregate Intrinsic Value
			USD				USD
Outstanding as of December 31, 2012		2,648,609		9.39		7.65		18,374,422
Granted		33,000		10.48
Exercised		(323,330)		8.25				4,267,299
Forfeited and expired		(150,680)		6.78
Outstanding as of June 30, 2013		2,207,599		9.75		7.45		29,679,283

Vested and expected to vest		2,207,599		9.75		7.45		29,679,283
Exercisable as of June 30, 2013		1,387,587		9.65		6.60		18,788,752

The 33,000 stock options granted during the six months ended June 30, 2013 had a weighted average fair value of $8.37 per share or an aggregate of $276,250 on the date of grant, determined based on the Black-Scholes option pricing model using the following weighted average assumptions:

	For six months ended
	June 30, 2013
Expected volatility		104	%
Expected dividends yield		0	%
Expected term		5 years
Risk-free interest rate (per annum)		0.72	%
Fair value of underlying ordinary shares (per share)	$	10.57

For the three months ended June 30, 2013 and 2012, the Company recorded stock compensation expense of $1,230,066 and $1,030,539, respectively, in general and administrative expenses. For the six months ended June 30, 2013 and 2012, the Company recorded stock compensation expense of $2,694,999 and $1,992,958, respectively, in general and administrative expenses.

As of June 30, 2013, approximately $4,733,962 of stock compensation expense with respect to the non-vested stock options is to be recognized over approximately 2. 71 years.

Nonvested shares

A summary of nonvested shares activity for the six months ended June 30, 2013 is as follows:

	Number of nonvested shares		Grant date weighted average fair value
			USD
Outstanding as of December 31, 2012		120,000		9.85
Granted		22,500		18.58
Vested		-		-
Forfeited		-		-
Outstanding as of June 30, 2013		142,500		11.23

For the three months ended June 30, 2013 and 2012, the Company recorded stock compensation expense of $183,161 and nil respectively in general and administrative expenses. For the six months ended June 30, 2013 and 2012, the Company recorded stock compensation expense of $352,963 and nil respectively in general and administrative expenses.

As of June 30, 2013, approximately $1,037,755 of stock compensation expense with respect to nonvested shares is to be recognized over approximately 2. 52 years.