Note 16. Basic and diluted net loss per share

Net loss per share is calculated in accordance with ASC 260, Earnings per Share (“ASC 260”). Basic net loss per share is based upon the weighted-average number of common shares outstanding. The Series A and B warrants issued in the Securities Purchase Agreement are participating securities due to the warrant holder’s participation in dividends distributed by the Company on a one-for-one basis with common stockholders thus requiring the application of the two-class method in computing basic net income per share. For the year ended December 31, 2019, the Company was in a loss position and none of the loss was allocated to the participating securities as they do not participate in the losses of the Company.

Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase Common Stock at the average market price during the period. The Company uses the ‘if converted’ method for its senior secured convertible notes.

The diluted share base includes shares related to convertible debt, warrants to purchase Common Stock and employee awards and or stock options as follows:


Dilutive Securities	2019	2018
Convertible Notes	—	39,500
Warrants	38,111,211	3,789,482
Time Conditioned Share Awards	2,563,359	1,480,557
Employee Stock Options	6,924,436	3,663,812
	47,599,006	8,973,351

Weighted-average number of shares used to compute basic and diluted loss per share is the same since the effect of the dilutive securities is anti-dilutive due to the Company’s reported net loss for the years ended December 31, 2019 and 2018.