L.Net Loss per Share

We compute basic net loss per share by dividing net loss by the weighted average number of common shares outstanding during the relevant period.

In February 2014, in connection with the issuance of the Convertible Notes, we entered into convertible bond hedges. The convertible bond hedges are not included for purposes of calculating the number of diluted shares outstanding, as their effect would be anti-dilutive. The convertible bond hedges are generally expected, but not guaranteed, to reduce the potential dilution and/or offset the cash payments we are required to make upon conversion of the Convertible Notes. See Note P, “Debt,” for additional information. As we have a choice to settle the conversion obligation under the Convertible Notes in cash, shares or any combination of the two, we currently intend to settle the accreted principal value of the Convertible Notes in cash and the excess conversion premium in shares. While the dilutive effect of the conversion premium will be considered in the calculation of diluted net income per share using the treasury stock method, the accreted principal value of the Convertible Notes will not be included in the calculation of diluted income per share, as we intend to settle this in cash.

The components of basic and diluted net loss per share for the three and six months ended June 30, 2014 and 2013 were as follows (in thousands, except per share data):

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Net loss	$	(1,547	)	$	(1,908	)	$	(8,649	)	$	(5,803	)
Weighted average common shares outstanding	21,925			21,603			21,875			21,574
Net loss per share:
Basic and diluted	$	(0.07	)	$	(0.09	)	$	(0.40	)	$	(0.27	)

The following table sets forth the potential common shares issuable upon the exercise of outstanding options, the vesting of restricted stock units, or RSUs, and warrants (prior to consideration of the treasury stock method), which were excluded from our computation of diluted net loss per share because such instruments were anti-dilutive for the six months ended June 30, 2014 and 2013 since we were in a net loss position for both periods presented (in thousands):

	Six Months Ended June 30,
	2014	2013
Options to purchase shares of common stock	3,210	2,763
Shares of common stock issuable upon the vesting of restricted stock units	517	491
Warrants	7,382	—
Total	11,109	3,254

We have determined that we have the intent and ability to settle the debt component of the Convertible Notes in cash and the excess conversion spread in shares. Therefore, the effect of the Convertible Notes reflected in diluted earnings per share is limited to the conversion premium, which is reflected in the calculation of diluted earnings per share as if it were a freestanding written call option on our shares. During the six months ended June 30, 2014, the weighted average common stock price was below the conversion price of the Convertible Notes, and thus there would be no shares issuable under the conversion premium. As such, no shares have been presented in the table above.

The dilutive effect of the stock options, RSUs, and warrants is calculated using the treasury stock method. During the six months ended June 30, 2014, the weighted average common stock price was below the exercise price of the warrants.