Earnings Per Share

6 Months Ended

Jun. 30, 2021

NOTE 11. EARNINGS PER SHARE

Basic net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted average common shares outstanding during the period. Basic and diluted net loss per share are the same because all outstanding common stock equivalents have been excluded, as they are anti-dilutive due to the Company’s losses.

The following potentially issuable common shares were not included in the computation of diluted net loss per share because they would have an anti-dilutive effect for each of the three and six months ended June 30, 2021 and 2020 (in thousands):


	Three Months Ended June 30,		Six Months Ended June 30,
	2021	2020	2021	2020
Shares issuable upon the release of restricted stock units	2,444	704	2,444	704
Shares issuable upon exercise of stock options	7,941	9,773	7,941	9,773
	10,385	10,477	10,385	10,477

Potentially dilutive common shares would also include common shares that would be outstanding if Notes convertible at the balance sheet date were converted. As discussed in Note 10, Convertible Notes, the Company issued $171.5 million of Notes due 2023. Upon conversion of the Notes, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock, or a combination of cash and shares of common stock, at the Company’s election. The initial conversion rate of the Notes is 32.3428 shares of common stock per $1,000 principal amount of the Notes. As of June 30, 2021, no Notes were convertible pursuant to their terms. The number of shares issuable upon conversion of the Notes is 5.5 million shares.

In connection with the Notes, the Company entered into a prepaid forward stock repurchase transaction. The aggregate number of shares of the Company’s common stock underlying the Prepaid Forward was approximately 1,858,500. The shares purchased under the Prepaid Forward are treated as treasury stock and not outstanding for purposes of the calculation of basic and diluted earnings per share, but will remain outstanding for corporate law purposes, including for purposes of any future stockholders’ votes, until the Forward Counterparty delivers the shares underlying the Prepaid Forward to the Company.

As discussed in Note 17, Stockholders’ Equity, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain Purchasers (as defined in Note 17, Stockholders’ Equity) for the issuance and sale by the Company of an aggregate of 4,166,663 shares of the Company’s common stock. The agreement contemplates that the closing of the purchase and sale of the shares will occur in three approximately equal tranches on the dates as specified in the agreement or such other dates as the parties may agree, with the first and second tranches having closed on February 19, 2021, and April 9, 2021, respectively. Shares from the third tranche were not included in the computation of diluted net loss per share because they would have an anti-dilutive effect due to net losses.