Net Loss Per Share

9 Months Ended

Sep. 30, 2022

Basic income (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted income (loss) per common share is calculated by dividing the adjusted net income (loss) by the weighted average number of common shares outstanding combined with dilutive common share equivalents outstanding, if the effect is dilutive. Potentially dilutive common share equivalents consist of incremental shares of common stock issuable upon conversion of convertible notes payable, exercise of stock warrants and vesting and settlement of stock awards. The dilutive effect of non-vested stock issued under share‑based compensation plans, shares issuable under the Employee Stock Purchase Plan (ESPP), employee stock options outstanding, and the prefunded stock warrants are computed using the treasury stock method. The dilutive effect of the Convertible Notes is computed using the if‑converted method in accordance with ASU 2020-06, which was adopted by the Company on January 1, 2022 (see Note 2, “Summary of Significant Accounting Policies”).

The calculation of the basic and diluted income (loss) per share for the three and nine months ended September 30, 2022 is as follows (in thousands):


	Three months ended September 30,		Nine months ended September 30,
	2022			2022
Numerator:
Net income (loss) for basic earnings per share	$	(18,794)		$	(23,278)
Anti-dilutive Adjustment to Net Income available to shareholders excluded from Numerator for Diluted Earnings Computation
Paid-in-Kind interest expense on convertible notes payable, net of tax	2,043			3,861
Valuation (gain) loss on convertible notes carried at FV, net of tax	4,250			(9,016)
Total numerator adjustment excluded from diluted earnings computation	$	6,293		$	(5,155)

Denominator:
Basic and diluted weighted average shares outstanding	75,312			74,095
Anti-dilutive Incremental Shares Excluded from Denominator for Diluted Earnings Computation
Average number of diluted shares for convertible notes payable	74,395			47,354
Average number of diluted shares for stock warrants	8,897			3,324
Average number of diluted shares for options and restricted	418			571

Basic and diluted loss per share	(0.25)			(0.31)

For the three and nine months ended September 30, 2022 paid-in-kind interest expense, net of tax, on convertible notes payable and the change in fair value related to the contract consideration convertible notes payable, net of tax, were not included in the dilution calculation since including them would have an anti-dilutive effect on the loss per share due to the net loss incurred during the periods. For the three and nine months ended September 30, 2022 weighted average shares for convertible notes payable, weighted average shares for stock warrants and weighted average shares for employee stock awards were not included in the dilution calculation since including them would have an anti-dilutive effect on the loss per share due to the net loss incurred during the periods.

For the three months ended September 30, 2021, diluted earnings per common share included 851,702 common share equivalents. For the nine months ended September 30, 2021, weighted average shares for employee stock awards of 1,130,719, were not included in the calculation of diluted loss per share since including them would have an anti-dilutive effect on the loss per share due to the net loss incurred during the periods.