EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2023

We compute basic and diluted earnings per share (“EPS”) by dividing net earnings by the weighted average number of shares of common stock outstanding during the period.

We are required, in periods in which we have net income, to calculate EPS using the two-class method. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders but does not require the presentation of basic and diluted EPS for securities other than common stock. The two-class method is required because our Series A preferred stock has the right to receive dividends or dividend equivalents should we declare dividends on our Common stock as if such holder of the Series A preferred stock had been converted to Common stock. Under the two-class method, earnings for the period are allocated to the common and preferred stockholders taking into consideration Series A preferred stockholders participation in dividends on an as converted basis. The weighted-average number of common and preferred shares outstanding during the period is then used to calculate basic EPS for each class of shares. Diluted EPS is computed in the same manner as basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if certain shares issuable upon exercise of common stock options or warrants were included unless those additional shares would have been anti-dilutive. For the diluted EPS computation, the treasury stock method is applied and compared to the two-class method and whichever method results in a more dilutive impact is utilized to calculate diluted EPS.

In periods in which we have a net loss, basic loss per share is calculated by dividing the loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. The two-class method is not used because the preferred stock does not participate in losses.

The following table summarizes net income attributable to common stockholders used in the calculation of basic and diluted income per common share:


	Three months ended March 31,
	2023		2022
(Dollars in thousands - except share and per share amounts)
Distributed earnings allocated to common stock	$	—	$	—
Net (loss) income attributable to common stock and participating securities used to calculate basic (loss) earnings per share	(1,460)		18,411
Net earnings allocated to Series A convertible preferred stock	—		8,689
Net (loss) earnings allocated to common stock and participating securities	$	(1,460)	$	27,100

Weighted average shares outstanding	11,688,542		12,497,743
Dilutive effect of pre-funded warrants	300,357		300,357
Weighted average shares outstanding - basic	11,988,899		12,798,100

Weighted average common shares outstanding	11,688,542		12,497,743
Weighted average pre-funded warrants	300,357		300,357
Weighted average warrants (equity)	—		1,244,495
Weighted average warrants (liabilities)	—		438,143
Weighted average options	—		6,080,398
Weighted average shares outstanding - diluted	11,988,899		20,561,136

Basic income per common share	$	(0.12)	$	1.44
Diluted income per common share	$	(0.17)	$	1.17

The following common stock equivalent shares were excluded from the computation of the diluted income per share since their inclusion would have been anti-dilutive:


	Three months ended March 31,
	2023	2022

Stock options	295,061	270,032
Restricted stock units	237,249	—
Shares issuable under the Employee Stock Purchase Plan	18,805	31,874
Share equivalents excluded from EPS	551,115	301,906