Net Loss Per Share

3 Months Ended

Mar. 31, 2023

Net Loss Per Share

Net Loss Per Share

9. Net Loss Per Share

Basic and diluted net loss per share for the three months ended March 31, 2023 and 2022 was calculated as follows (in thousands except share and per share amounts).

	Three Months Ended March 31,
	2023		2022
Numerator:
Net loss	$	(41,863)	$	(10,376)
Net loss attributable to common stockholders for basic and diluted loss per share	$	(41,863)	$	(10,376)
Denominator:
Weighted average number of common shares outstanding – basic and diluted		129,344,272		113,248,937
Net loss per share attributable to common stockholders – basic and diluted	$	(0.32)	$	(0.09)

Included within weighted average common shares outstanding for the three months ended March 31, 2023 and 2022 are 14,217,716 and 24,930,483, respectively, common shares issuable upon the exercise of the pre-funded warrants and penny warrants, as the warrants are exercisable at any time for nominal consideration, and as such, the shares are considered outstanding for the purpose of calculating basic and diluted net loss per share attributable to common stockholders.

All warrants and shares of Series X Preferred Stock issued participate on a one-for-one basis with common stock in the distribution of dividends, if and when declared by the board of directors, on the Company’s common stock. For purposes of computing EPS, these warrants are considered to participate with common stock in earnings of the Company. Therefore, the Company calculates basic and diluted EPS using the two-class method. Under the two-class method, net income for the period is allocated between common stockholders and participating securities according to dividends declared and participation rights in undistributed earnings. No income was allocated to the warrants and Series X Preferred Stock for the three months ended March 31, 2023 and 2022, as results of operations were a loss for the period.

The Company’s potentially dilutive securities include RSUs, stock options and warrants. These securities were excluded from the computations of diluted net loss per share for the three months ended March 31, 2023 and 2022, as the effect would be to reduce the net loss per share. The following table includes the potential shares of common stock, presented based on amounts outstanding at each period end, that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

	Three Months Ended March 31,
	2023	2022
Restricted stock units to purchase common stock	2,925,000	3,510,606
Options to purchase common stock	20,088,158	9,101,507
Warrants to purchase common stock	35,420,975	35,455,674
	58,434,133	48,067,787

Pursuant to the Merger, the Company issued 136,248 shares of Series X Preferred Stock to Flame Stockholders. As of March 31, 2023, the number of potentially dilutive shares of the Company’s common stock into which these Series X preferred shares can be converted into is 136,248,000, and is not included in diluted earnings per share since the shares are contingently convertible. Subject to and upon the requisite approval of the stockholders of Leap, each issued share of Series X Preferred Stock shall convert into 1,000 shares of common stock, subject to the terms of any reverse stock split approved by the stockholders and effected by the Board of Directors. In the event that stockholder approval is not obtained, the Company must also include a proposal to approve the conversion of the Series X Preferred Stock into common stock at a meeting of stockholders (“Special Meeting”), to be held no less than once in each subsequent six-month period beginning on the date of the Special Meeting until such approval is obtained. If stockholders have not approved the conversion of the Series X Preferred Stock into common stock by July 17, 2023 (six months from the Effective Date), then, holders of Series X Preferred Stock may thereafter require the Company to repurchase the Series X Preferred Stock at the then-current fair value of the underlying common stock.