15. (Loss) Earnings per Share

(Loss) earnings per share is computed using weighted average common shares and dilutive common equivalent shares outstanding. Potentially dilutive securities consist of outstanding stock options, unvested RSUs, unvested PSUs, warrants, convertible Series A Preferred Stock and shares issuable upon the assumed conversion of the Modified Convertible Notes and the SWIMS Convertible Note. A reconciliation of the numerator and denominator of basic and diluted (loss) earnings per share is as follows (in thousands, except per share data):


	Year ended December 31,
	2016		2015
Basic (loss) earnings per share computation
Numerator:
(Loss) income from continuing operations	$	(16,526)	$	760
Loss from discontinued operations		(1,286)		—
Net (loss) income	$	(17,812)	$	760

Denominator:
Weighted average common shares outstanding		12,428		8,825

(Loss) earnings per common share - basic
(Loss) income from continuing operations	$	(1.33)	$	0.09
Loss from discontinued operations		(0.10)		—
(Loss) earnings per common share - basic	$	(1.43)	$	0.09


Diluted (loss) earnings per share computation
Numerator:
(Loss) income from continuing operations	$	(16,526)	$	760
Loss from discontinued operations		(1,286)		—
Net (loss) income	$	(17,812)	$	760

Denominator:
Weighted average common shares outstanding		12,428		8,825
Effect of dilutive securities:
Options, RSUs, PSUs, warrants, Series A, convertible notes		—		—
Dilutive common shares		12,428		8,825

(Loss) earnings per common share - diluted
(Loss) income from continuing operations	$	(1.33)	$	0.09
Loss from discontinued operations		(0.10)		—
(Loss) earnings per common share - diluted	$	(1.43)	$	0.09

For the year ended December 31, 2015, weighted average shares represent the number of shares issued to RG members in connection with the RG Merger.

For the year ended December 31, 2016, the following potential common shares were excluded from diluted (loss) earnings per share as the company had a net loss for the year (in thousands): 150 for outstanding stock options, 801 for unvested RSUs, 514 for unvested PSU’s, 650 for outstanding warrants, 4,480 related to the convertible Series A Preferred Stock, 1,207 related to the Modified Convertible Notes, and 4,394 related to the SWIMS Convertible Note. There were no potential common shares excluded from diluted (loss) earnings per share for the year ended December 31, 2015.

(Loss) Earnings Per Share under Two − Class Method

The 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 (loss) 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) income to preferred shareholders and common stockholders for purposes of computing net (loss) income per share for the years ended December 31, 2016 and 2015 (in thousands, except per share data):


	Year ended December 31,
	2016		2015
Net (loss) income	$	(17,812)	$	760
Less: preferred dividends		4,694		-
Net (loss) income attributable to stockholders		(22,506)		760
Participating securities - Series A Preferred Stock (1)		-		-
Net (loss) income attributable to common stockholders	$	(22,506)	$	760

Denominator:
Weighted average common shares outstanding		12,428		8,825

(Loss) earnings per common share - basic and diluted under two-class method	$	(1.81)	$	0.09

(1)

As these shares are participating securities that participate in earnings, but do not participate in losses based on their contractual rights and obligations, this calculation demonstrates that there is no allocation of the loss to these securities.