Note 8. Share-Based Compensation

The Company records share-based compensation expense in respect of options, multi-year performance based restricted share units (“MRSUs”) and restricted share units (“RSUs”) issued under its share incentive plans. Share-based compensation expense amounted to $1,187 and $1,083 in the quarters ended September 30, 2017 and September 30, 2016, respectively, and $2,472 and $1,981 in the six month periods ended September 30, 2017 and September 30, 2016, respectively.

Share option activity

The following table summarizes share option activity:

	Number of Share Options Outstanding			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Months)
Outstanding — March 31, 2017		1,948,917		$	8.04		90
Granted		309,525			7.55		120
Exercised		(33,520	)		3.21		—
Forfeited		(17,200	)		11.14		—
Outstanding — September 30, 2017		2,207,722		$	8.02		89
Exercisable —September 30, 2017		1,420,382		$	7.40		78

The closing price of the Company’s ordinary shares on The NASDAQ Global Market at September 30, 2017 was $4.93.

The following table summarizes the options granted in the current financial year with their exercise prices, the fair value of ordinary shares as of the applicable grant date, and the intrinsic value:

Grant Date

Number of

Options Granted

Exercise Price

Ordinary

Fair Value Per

Share at Grant

Date

Per Share

Intrinsic

Value of

Options

May 24, 2017

305,525

7.58

4.62

August 9, 2017

4,000

5.41

3.34

Determining the fair value of share incentive awards

The fair value of each share incentive grant was determined by the Company using the Black-Scholes options pricing model.

Assumptions used in the option pricing models are discussed below. Each of these inputs is subjective and generally requires significant judgment to determine.

Expected volatility. The expected volatility was based on the historical share volatilities of a number of the Company’s publicly listed peers over a period equal to the expected terms of the options as the Company did not have a sufficient trading history to use the volatility of its own ordinary shares.

Fair value of ordinary shares. The fair value of the ordinary shares is based upon the closing price of the Company’s shares on The NASDAQ Global Market on the last trading day prior to the date of grant.

Risk-Free Interest Rate. The risk-free interest rate is based on the US Treasury 10-year bond yield in effect at the time of grant.

Expected term. The expected term is determined after giving consideration to the contractual terms of the share-based awards, graded vesting schedules ranging from one to three years and expectations of future employee behavior as influenced by changes to the terms of its share-based awards.

Expected dividend. According to the terms of the awards, the exercise price of the options is adjusted to take into account any dividends paid. As a result dividends are not required as an input to the model, as these reductions in the share price are offset by a corresponding reduction in exercise price.

A summary of the assumptions applicable to the share options issued in the current financial year is as follows:

	May 24, 2017			August 9, 2017
Risk-free interest rate		2.28	%		2.25	%
Expected lives (years)		6			6
Volatility		66.10	%		67.17	%
Dividend yield		—			—
Grant date fair value (per share)	$	7.58		$	5.41
Number granted		305,525			4,000

A summary of the RSUs and MRSUs in issue at September 30, 2017 is as follows:

	Number of RSUs or MRSUs Outstanding		Weighted Average Remaining Vesting Period (Months)	Period in which the target must be achieved
RSUs subject to time based vesting		294,063	15	N/A
RSUs subject to MosaiQ milestone vesting		290,000	N/A	N/A
MRSUs with vesting based on $60 share price		114,500	N/A	Apr - Dec 2018
MRSUs with vesting based on $40 share price		127,000	N/A	Apr - Dec 2018
MRSUs with vesting based on $22 share price		166,000	N/A	Apr - Dec 2019

At September 30, 2017, 294,063 RSUs were subject to time based vesting and the weighted average remaining vesting period was 15 months. In addition, 290,000 RSUs were subject to vesting based on the achievement of various milestones relating to the development, approval and marketing of MosaiQ. 166,000 MRSUs were awarded on May 24, 2017, which will vest if the volume weighted average price of the Company’s ordinary shares exceeds $22 for a continuous twenty day period between April 1, 2019 and December 31, 2019. The Company determined the grant date fair value of these MRSUs using a barrier option pricing model with the same grant date fair value per share, risk free interest rate, volatility and dividend yield assumptions as the options awarded on the same date. This resulted in a grant date fair value of $3.20 per MRSU on May 24, 2017. The remainder of the MRSUs in issue at September 30, 2017 comprised 114,500 MRSUs, which will vest between April 1, 2018 and December 31, 2018 if the Company’s ordinary share price exceeds $60 for 20 consecutive days in this period, and 127,000 MRSUs, which will vest between April 1, 2018 and December 31, 2018 if the Company’s ordinary share price exceeds $40 for 20 consecutive days in this period.