Note 29 - Share-based Compensation Expenses

12 Months Ended

Dec. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

29. Share-based compensation expenses

The Company granted 50,000 shares and 40,000 shares of the Company’s restricted common stock to its investor relations services provider, in exchange for its services to the Company for the years ended December 31, 2015 and 2014, respectively. These shares were valued at US$1.20 per share and US$0.84 per share, the closing bid price of the Company’s common stock on the date of grant, respectively. Total compensation expense recognized for the services was US$60,000 and US$33,600 for the years ended December 31, 2015 and 2014, respectively.

The Company granted 300,000 shares of the Company’s restricted common stock to a technical service provider in exchange for its services to the Company for a 12-month period commencing on August 1, 2014. These shares were valued at US$0.67 per share, the closing bid price of the Company’s common stock on the date of grant. Total compensation expense amortized for the years ended December 31, 2015 and 2014 was approximately US$117,000 and US$84,000, respectively.

The Company granted 350,000 shares of the Company’s restricted common stock to a management consulting service provider in exchange for its services to the Company for a 24-month period commencing on May 1, 2015. These shares were valued at US$1.57 per share, the closing bid price of the Company’s common stock on the date of grant. Total compensation expense recognized for the year ended December 31, 2015 was approximately US$183,000.

The Company granted 60,000 shares of the Company’s restricted common stock to another management consulting service provider in exchange for its services to the Company. These shares were valued at US$0.90 per share, the closing bid price of the Company’s common stock on the date of grant. Total compensation expense recognized for the year ended December 31, 2015 was approximately US$54,000.

On September 14, 2015, under its 2015 Omnibus Securities and Incentive Plan, the Company granted its employees and directors in the aggregate of 665,592 shares of the Company’s restricted common stock, which will be vested on the third anniversary of the date of the grant. These shares were valued at $0.84 per share, the closing bid price of the Company’s common stock on the date of grant. The Company adopted a 5% forfeiture rate for recognition of the related compensation expenses of these unvested shares, total compensation cost recognized for the year ended December 31, 2015 was approximately US$53,000.

On December 30, 2014, the Company issued 4,200,000 shares of the Company’s restricted common stock to its executive officers, of which 1,533,333 restricted shares were vested upon issuance, 1,333,333 restricted shares were vested on December 30, 2015 and the remaining 1,333,334 restricted shares will be vested on December 30, 2016. The restricted stock was valued at $1.17 per share, the closing bid price of the Company’s common stock on the date of grant. Total compensation cost recognized for the years ended December 31, 2015 and 2014 was US$1,560,000 and US$1,794,000, respectively.

On December 30, 2014, the Company issued its management, employees and directors in the aggregate of 2,418,780 shares of the Company’s restricted common stock for the services they provided to the Company. The restricted stock is subject to a strict lock-up for an initial six-month period. Following the initial six-month period, the restricted stock will continue to be locked up until the earlier of (i) the date upon which the closing price of the Company's common stock equals or exceeds $2.50 for five consecutive trading days, and (ii) December 30, 2016. In addition, the restricted stock is subject to forfeiture upon an employee's cessation of employment at the discretion of the Company. The restricted stock was fully vested upon issuance and was valued at $1.17 per share, the closing bid price of the Company’s common stock on the date of grant. Total compensation cost recognized for the year ended December 31, 2014 was US$2,830,000.

On September 14, 2015, under its 2015 Omnibus Securities and Incentive Plan, the Company also granted 5-year common stock purchase options to its employees and directors, in the aggregate, to purchase up to 1,193,100 shares of the Company’s restricted common stock at an exercise price of US$0.84 per share, of which 397,700 options was vested upon the date of grant, 397,700 options will be vested on September 14, 2016 and the remaining 397,700 options will be vested on September 14, 2017. The Company adopted a 5% forfeiture rate for recognition of the related compensation expenses of the unvested part of options, total compensation expenses recognized for these options for the year ended December 31, 2015 was approximately US$229,000.

The Company estimated the fair value of these options using the Binomial option-pricing model based on the following assumptions:

Applicable stock price	$	0.84
Exercise multiple		2-2.5
Tenor (years)		5.00
Risk-free interest rate		1.563	%
Dividend yield		-
Expected volatility		98.63	%
Exercise price of the option	$	0.84
Value per option		$0.41-$0.56

On December 30, 2014, the Company granted 5-year options to each of its three independent directors, Mr. Douglas MacLellan, Mr. Mototaka Watanabe and Mr. Zhiqing Chen, to purchase in the aggregate 200,000 shares of the Company’s common stock at an exercise price of US$1.23 per share, in consideration of their services to the Company. These options were fully vested and exercisable upon issuance and subject to forfeiture upon the termination of the Optionee’s status as a director for any reason. Total compensation expenses recognized for these options for the year ended December 31, 2014 was US$99,000.

The Company estimated the fair value of these options granted on December 30, 2014 using the Binomial option-pricing model based on the following assumptions:

Applicable stock price	$	0.908
Exercise multiple		2.5
Tenor (years)		5.00
Risk-free interest rate		1.67	%
Dividend yield		-
Expected volatility		98.68	%
Exercise price of the option	$	1.23
Value per option	$	0.495

Applicable stock price is based on the closing bid price of the Company’s common stock on the respective grant date, after adjustment for the restricted shares granted/cancelled on the respective grant date. Exercise multiple is used as the estimated ratio of fair value of stock over the exercise price as at the time the option is exercised. Tenor is the contract life of the option. Yield-to-maturities in continuous compounding of the United States Government Bonds with the time-to-maturities same as the expected tenor of the options are adopted as the risk-free rate. Annualized historical stock price volatility of the Company from an appropriate index as at the respective grant date is deemed to be appropriate to serve as the expected volatility of the stock price of the Company and is assumed to be constant and prevailing. The dividend yield is calculated based on management’s estimate of dividends to be paid on the underlying stock. Exercise price of the option is the contractual exercise price of the option.

On December 30, 2014, the Company cancelled 155,190 shares of the Company’s restricted common stock and options to purchase up to 190,500 of the Company’s common stock, respectively, which were issued under the Company’s 2011 Omnibus Securities and Incentive Plan due to cessation of employment.

Options issued and outstanding at December 31, 2015 and their movements for the two years then ended are as follows:

	Option Outstanding							Option Exercisable
	Number of underlying shares			Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number of underlying shares			Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price
Balance, December 31, 2013		939,440			7.51	$	1.42		939,440			7.51	$	1.42
Granted/Vested		200,000			5	$	1.23		200,000			5	$	1.23
Cancelled		(190,500	)			$	1.20		(190,500	)			$	1.20
Expired		(54,000	)			$	5.00		(54,000	)			$	5.00
Balance, December 31, 2014		894,940			6.48	$	1.21		894,940			6.48	$	1.21
Granted/Vested		1,193,100			5	$	0.84		397.700			5	$	0.84
Forfeited		-							-
Exercised		-							-
Balance, December 31, 2015		2,088,040			5.04	$	1.00		1,292,640			5.24	$	1.09

The aggregate unrecognized share-based compensation expenses as of December 31, 2015 and 2014 is approximately US$2,741,000 and US$3,237,000, respectively.