SHARE-BASED COMPENSATION

9 Months Ended

Sep. 30, 2011

SHARE-BASED COMPENSATION

NOTE 15 SHARE-BASED COMPENSATION

Common Stock awarded to Employees by a Majority Shareholder

The Company recognized compensation expense of $190,688 and $63,563, related to the restricted shares granted by a principal stockholder to Mr. Yang “Roy” Yu, the Company’s then Chief Financial Officer, based on the grant-date fair value of the Company’s common stock of $2.26 per share, for the nine and three months ended September 30, 2011, respectively.

Options granted to Independent Directors and Employees

On January 14, 2011, the Company granted options to one of its independent directors, Mr. Kelvin Lau to purchase 15,000 shares of the Company’s common stock at a strike price of $10.64 per share, in consideration of his services to the Company. The option vests and becomes exercisable in equal installments on December 3, 2010, January 16, 2011, March 1, 2011 and April 14, 2011 and will expire 10 years from the date of grant.

On June 3, 2011, the Company granted options to each of its independent directors, Mr. Robert Bruce, Mr. Jonathan Serbin and Mr. Kelvin Lau to purchase 20,000 shares of the Company’s common stock at a strike price of $6.49 per share, in consideration of their services to the Company. The options vest and become exercisable in equal installments on July 14, 2011, October 14, 2011, January 14, 2012 and April 14, 2012 and will expire 10 years from the date of grant.

In accordance with the guidance provided in ASC Topic 718, Stock Compensation, the compensation costs associated with these options granted to directors and employees are recognized, based on the grant-date fair values of these options, over the requisite service period, or vesting period. Accordingly, the Company recognized compensation expense of $188,590 and $48,641 for the nine and three months ended September 30, 2011, respectively.

Options issued and outstanding at September 30, 2011 and their movements during the nine months then ended are as follows:

	Number of Underlying Shares		Weighted- Average Exercise Price Per Share		Aggregate Intrinsic Value (1)		Weighted- Average Contractual Life Remaining in Years
Outstanding at December 31, 2010		115,000	$	6.74	$	517,450		9
Granted		75,000		7.32		-		10
Exercised		-		-		-		-
Expired		-		-		-		-
Forfeited		-		-		-		-
Outstanding at September 30, 2011 (Unaudited)		190,000	$	6.97	$	64,500		8.61
Exercisable at September 30, 2011 (Unaudited)		145,000	$	7.12	$	64,500		8.27

(1) The intrinsic value of the stock option at September 30, 2011 is the amount by which the market value of the Company’s common stock of $4.35 as of September 30, 2011 exceeds the exercise price of the option.