Note 8 — Share based compensation

 

The following table shows the total share-based compensation expense (see below for types of share-based awards) included in the consolidated statements of operations (thousands):

 

 

There were 13,575,554 and 9,183,962 options granted in the three months ended March 31, 2016 and 2015, respectively. The weighted average fair value of stock options granted in the three months ended March 31, 2016 and March 31, 2015 was $0.89 and $0.83, respectively.

 

The total charge for the three months ended March 31, 2016 and 2015 relating to share based payment plans was $2,074,000 and $1,482,000, respectively, all of which related to equity-settled share based payment transactions and was recognized in the Statement of operations.

 

The fair value of the stock options granted during the period was calculated using the Black-Scholes option-pricing model using the following assumptions:

 

 

The expected term of the option is based on management judgment.

 

Estimates of pre-vesting option forfeitures are based on the Company’s experience. The Company adjusts its estimate of forfeitures over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures are recognized through a cumulative adjustment in the period of change and may impact the amount of compensation expense to be recognized in future periods. To date, our forfeitures have been minimal.

 

Due to the Company’s lack of sufficient history as a publicly traded company, management’s estimate of expected volatility is based on the average volatilities of seven public companies with similar attributes to the Company.

 

The risk free rate is based on the Bank of England’s estimates of gilt yield curve as of the respective grant dates.

 

At March 31, 2016, there were 3,074,600 share options granted to nonemployees outstanding.  These share options are measured at the current fair values at each reporting date until the share options have vested and recognized in the consolidated statement of operation over the requisite service period.  The total share based payment charge relating to these options was a credit of $108,000 in the three months ended March 31, 2016 and a debit of $528,000 in the three months ended March 31, 2015.