NOTE 10 — EARNINGS PER SHARE

Earnings per share are computed using weighted average common shares and dilutive common equivalent shares outstanding. Potentially dilutive shares consist of outstanding options, shares issuable upon the assumed conversion of Modified Convertible Notes, Series A Preferred Stock and unvested restricted stock units (“RSUs”). A reconciliation of the numerator and denominator of basic earnings per share and diluted earnings per share is as follows:


	Three months ended				Six months ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015

Basic (loss) earnings per share computation:
Numerator:
(Loss) income from continuing operations	$	(3,605)	$	(488)	$	(8,800)	$	69
Loss from discontinued operations		-		-		(1,286)		-
Net (loss) income		(3,605)		(488)		(10,086)		69

Denominator:
Weighted average common shares outstanding		12,380		8,825		11,852		8,825

(Loss) earnings per common share - basic
(Loss) income from continuing operations		(0.29)		(0.06)		(0.74)		0.01
(Loss) Income from discontinued operations		-		-		(0.11)		-
(Loss) earnings per common share - basic	$	(0.29)	$	(0.06)	$	(0.85)	$	0.01


Diluted (loss) earnings per share computation:
Numerator:
(Loss) income from continuing operations	$	(3,605)	$	(488)	$	(8,800)	$	69
(Loss) Income from discontinued operations		-		-		(1,286)		-
Net (loss) income		(3,605)		(488)		(10,086)		69

Denominator:
Weighted average common shares outstanding		12,380		8,825		11,852		8,825
Effect of dilutive securities:
RSU's, convertible securities and options		-		-		-		-
Dilutive potential common shares		12,380		8,825		11,852		8,825

(Loss) earnings per common share - diluted
(Loss) income from continuing operations		(0.29)		(0.06)		(0.74)		0.01
Loss from discontinued operations		-		-		(0.11)		-
(Loss) earnings per common share - diluted	$	(0.29)	$	(0.06)	$	(0.85)	$	0.01

For the three and six months ended June 30, 2016, currently exercisable options, the Modified Convertible Notes, Series A Preferred Stock and unvested RSUs in the aggregate of 6,377,781 have been excluded from the calculation of the diluted loss per share as their effect would have been anti-dilutive.

For the three and six months ended June 30, 2015, weighted average shares represent the number of shares issued to RG members in connection with the RG Merger.

Earnings (Loss) Per Share under Two− Class Method

Our Series A Preferred Stock has the non-forfeitable right to participate on an as converted basis at the conversion rate then in effect in any common stock dividends declared and as such, is considered a participating security. The Series A Preferred Stock is included in the computation of basic and diluted loss per share pursuant to the two-class method. Holders of the Series A Preferred Stock do not participate in undistributed net losses because they are not contractually obligated to do so.

The computation of diluted earnings per share attributable to common stockholders reflects the potential dilution that could occur if securities or other contracts to issue shares of common stock that are dilutive were exercised or converted into shares of common stock (or resulted in the issuance of shares of common stock) and would then share in our earnings. During the periods in which we record a loss from continuing operations attributable to common stockholders, securities would not be dilutive to net loss per share and conversion into shares of common stock is assumed not to occur.

The following table provides a reconciliation of net loss to preferred shareholders and common stockholders for purposes of computing net loss per share for the three and six months ended June 30, 2016 and 2015 (in thousands, except per share amounts):


	Three months ended				Six months ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015

Net (loss) income	$	(3,605)	$	(488)	$	(10,086)	$	69
Less: preferred dividends		863		-		1,268		-
Net (loss) income attributable to stockholders		(4,468)		(488)		(11,354)		69
Participating securities - Series A Preferred Stock		-		-		-		-
Net (loss) income attributable to common stockholders	$	(4,468)	$	(488)	$	(11,354)	$	69

Denominator:
Weighted average common shares outstanding		12,380		8,825		11,852		8,825

(Loss) earnings per common share - basic and diluted under two-class method	$	(0.36)	$	(0.06)	$	(0.96)	$	0.01

Shares Reserved for Future Issuance

As of June 30, 2016, shares reserved for future issuance include: (i) 444 shares of common stock issuable upon the exercise of stock options granted under the incentive plans; (ii) 700,431 shares of common stock issuable upon the vesting of RSUs; and (iii) 1,187,498 shares of common stock issuable pursuant to the Modified Convertible Notes.