SHARE-BASED COMPENSATION

6 Months Ended

Jun. 30, 2013

NOTE 14

SHARE-BASED COMPENSATION

Options granted to Independent Directors and Employees

The Company grants share-based awards, primarily stock options, to their independent directors and employees.

On May 30, 2013, 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 $5.60 per share, in consideration of their services to the Company. The options vest and become exercisable in equal installments on July 14, 2013, October 14, 2013, January 14, 2014 and April 14, 2014 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 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 $155,920 and $74,456 for the six and three months ended June 30, 2013, respectively. The Company recognized compensation expense of $214,475 and $101,600 for the six and three months ended June 30, 2012, respectively.

Options issued and outstanding at June 30, 2013 and their movements during the six 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 January 1, 2013		715,000	$	5.25	$	65,700		8.47
Granted		60,000		5.60				10.00
Exercised		-
Expired		-
Forfeited		-
Outstanding at June 30, 2013		775,000	$	5.28	$	222,450		8.17
Exercisable at June 30, 2013		445,000	$	5.71	$	138,750		7.84

(1)

The intrinsic value of the stock options at June 30, 2013 and January 1, 2013 is the amount by which the market value of the Company’s common stock of $4.81 and $4.39, as of June 30, 2013 and January 1, 2013, respectively, exceeds the exercise price of the option.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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