Loss Per Share

3 Months Ended

Mar. 31, 2022

NOTE 11. LOSS PER SHARE

Basic net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted average common shares outstanding during the period. Basic and diluted net loss per share are the same because all outstanding common stock equivalents have been excluded, as they are anti-dilutive due to the Company’s losses.

The following potentially issuable common shares were not included in the computation of diluted net loss per share because they would have an anti-dilutive effect for each of the three months ended March 31, 2022 and 2021 (in thousands):


	Three Months Ended March 31,
	2022	2021
Shares issuable upon the release of restricted stock units	3,610	2,457
Shares issuable upon exercise of stock options	6,818	7,567
	10,428	10,024

Potentially dilutive common shares would include common shares that would be outstanding if Notes convertible at the balance sheet date were converted. As discussed in Note 10, Convertible Notes, upon conversion of the Notes, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock, or a combination of cash and shares of common stock, at the Company’s election. The initial conversion rate of the Notes is 32.3428 shares of common stock per $1,000 principal amount of the Notes. As of March 31, 2022, no Notes were convertible pursuant to the original terms. After giving effect for the Exchanged Principal, the total principal amount of the Notes and New Notes outstanding as of March 31, 2022 was $118.8 million. The number of shares of common stock issuable upon conversion of the Notes and New Notes based on the initial conversion rate was approximately 3.8 million shares as of March 31, 2022.

Per the terms of the Exchange Agreement, the Exchange Transactions are expected to occur in eight tranches, subject to customary closing conditions, with the first closing on March 29, 2022 and the remaining seven tranches closing after the balance sheet date. The shares to be issued from the closing of the other seven tranches, following the three months ended March 31, 2022 were not included in the computation of diluted net loss per share because they would have an anti-dilutive effect due to net losses. The Company estimates the shares to be issued from the closing of the other seven tranches to be approximately 9.5 million shares.

In connection with the Notes, the Company entered into a prepaid forward stock repurchase transaction. The aggregate number of shares of the Company’s common stock underlying the Prepaid Forward was approximately 1,858,500. The shares purchased under the Prepaid Forward are treated as treasury stock and not outstanding for purposes of the calculation of basic and diluted earnings per share, but will remain outstanding for corporate law purposes, including for purposes of any future stockholders’ votes, until the Forward Counterparty delivers the shares underlying the Prepaid Forward to the Company.

Potentially dilutive common shares would also include common shares that would be outstanding if Series A Preferred Stock were converted into common stock. Each share of Series A Preferred Stock is convertible, at the option of the holder, at any time into one share of the Company’s common stock. Additionally, each share of Series A Preferred Stock will automatically be converted into one share of the Company’s common stock immediately upon a sale of all outstanding stock of the Company or a merger of the Company into another corporation where the pre-merger Company’s stockholders cease to be the controlling stockholders of the post-merger corporation. The number of shares of common stock issuable upon conversion of the Series A Preferred Stock is 3,954,546 as of March 31, 2022.

As discussed in Note 16, Stockholders' Equity, the Company entered into a securities purchase agreement with the Jack W. Schuler Living Trust for the issuance and sale by the Company of an aggregate of 2,439,024 shares of the Company’s common stock The closing of the transaction is expected to occur on June 30, 2022, subject to the satisfaction of customary closing conditions and is considered an equity forward agreement. The shares to be issued from this agreement were not included in the computation of diluted net loss per share because they would have an anti-dilutive effect due to net losses.