Note 9 – Loss Per Share

The following table presents the calculation of loss per share for the three and nine months ended September 30, 2018 and 2017:

	Three months ended September 30				Nine months ended September 30
In thousands, except per share data	2018		2017		2018		2017
Numerator:
Net loss, as reported	$	(3,080)	$	(123)	$	(4,048)	$	(2,632)
Change in dividends accumulated on preferred shares		(50)		(50)		(149)		(149)
Net loss attributable to common shares	$	(3,130)	$	(173)	$	(4,197)	$	(2,781)
Denominator:
Weighted average shares outstanding		2,289		1,711		2,232		1,711
Basic and diluted loss per share	$	(1.37)	$	(0.10)	$	(1.88)	$	(1.63)

Basic loss per common share is computed by dividing net loss attributable to common shares by the weighted average number of common shares outstanding for the period. Diluted loss per common share is computed by dividing net loss attributable to common shares, by the weighted average number of common shares outstanding, adjusted for shares that would be assumed outstanding after warrants and stock options vested under the treasury stock method.

At September 30, 2018 and 2017, the Company had accumulated unpaid dividends of $91,000 related to the Series B Convertible Preferred Stock (“Preferred Stock”).

On November 6, 2018, the Company declared a semi-annual dividend of $6.00 per share of Preferred Stock aggregating $99,000, which was paid on November 8, 2018. On April 26, 2018, the Company declared a semi-annual dividend of 7.6923 shares of Common Stock per share of Preferred Stock aggregating 127,013 shares of Common Stock, which was distributed to the holders of the Preferred Stock on May 4, 2018.

As of September 30, 2018 and 2017, the Company had warrants to purchase 302,000 shares and 52,000 shares, respectively, of Common Stock outstanding, none of which were used in the calculation of diluted loss per share because their inclusion would have been anti-dilutive. These warrants could be dilutive in the future if the Company records net income instead of net losses and if the average share price increases and is greater than the exercise price of these warrants.

In connection with the SMI Note, the Company issued SMI a three-year warrant to purchase 82,500 shares of the Company at an exercise price of $0.01 per share. The Company utilized the Black-Scholes method to calculate the fair value of this warrant at the time of issuance, which was $95,000, and is being treated as a debt discount amortized over the two-year term of the loan.

In connection with the SMII Note, the Company issued SMII a three-year warrant to purchase 167,500 shares of the Company at an exercise price of $0.01 per share. The Company utilized the Black-Scholes method to calculate the fair value of this warrant at the time of issuance, which was $192,000, and is being treated as a debt discount amortized over the two-year term of the loan.

As of September 30, 2018 and 2017, the Company had 16,512 shares of Preferred Stock outstanding, which is convertible into 330,240 shares of Common Stock, none of which were used in the calculation of diluted loss per share because their conversion price was greater than the average stock price for the period and their inclusion would have been anti-dilutive. These shares of Preferred Stock could be dilutive in the future if the average share price increases and is greater than the purchase price of these shares of Preferred Stock.