Note 10 – Net Loss per Share of Common Stock

Basic net loss per share is computed by dividing net loss by the weighted average common stock outstanding. Diluted net loss per share is computed by dividing net loss by the weighted average common stock outstanding, which includes potentially dilutive effect of stock options, warrants and senior convertible notes. Since we experienced a loss for both periods presented, including any dilutive common stock outstanding would have an anti-dilutive impact on diluted net loss per share, and as shown below were excluded from the computation. The treasury-stock method is used to determine the dilutive effect of our stock options and warrants grants, and the if-converted method is used to determine the dilutive effect of the Senior Notes.

The computation of net loss per share for the year ended December 31, 2020 and 2019 was as follows:

We determined the sale of our common stock in our underwritten offering described in Note 9 and the sale of our 2019 Senior Notes in late 2019 described in Note 6, which are convertible into common stock at a conversion rate of $14.28 per share, both triggered the full ratchet anti-dilution provision in 2020 and 2019, respectively, of the common stock we sold in 2018 Private Placement Transactions. We issued 1,156,487 shares of our common stock in connection with triggering the full-ratchet anti-dilution provisions to shareholders who purchased these shares as a result of closing our underwritten offering in 2020. We valued these shares at $4,625,948, which is the closing price of the offering of $4.00 per share. We also issued 28,971 shares of common stock to these shareholders in June 2020 related to the deemed dividend we recorded at the end of 2019. We determined the value of these shares at $506,993 based on a price per share of $17.50 which represents the closing price per share on October 18, 2019, the last day investors had to rescind their investment.

For purposes of computing our basic and diluted EPS, we increased our net loss available for common shareholders by the fair value of the additional shares issued related to the anti-dilution provision since they did not affect all our common shareholders equally and there were no contingencies related to the issuance of these shares at December 31, 2020 and 2019. Triggering the full ratchet anti-dilution provision increased our basic and diluted EPS by $0.62 and $0.09 per share for the years ended December 31, 2020 and 2019, respectively. As described in Note 5, we issued 343,110 restricted stock awards during the year ended December 31, 2020. At December 31, 2020, 129,032 restricted stock awards were not vested. Although we consider these shares to be issued and outstanding in our consolidated statements of changes in stockholders’ equity, we have excluded them from the EPS calculation.

The outstanding shares of unvested restricted stock awards, stock options and warrants to purchase common stock and the shares issuable under the 2019 Senior Notes were excluded from the computation of diluted net loss per share as their effect would have been anti-dilutive for the periods presented below:

Basic net loss per share is computed by dividing net loss by the weighted average common shares outstanding. Diluted net loss per share is computed by dividing net loss by the weighted average common shares outstanding without the impact of potential dilutive common shares outstanding because they would have an anti-dilutive impact on diluted net loss per share. The treasury-stock method is used to determine the dilutive effect of our stock options and warrants grants, and the if-converted method is used to determine the dilutive effect of the 2019 Senior Notes.