Net Income (Loss) Per Share
Basic net income (loss) per share is determined by dividing net income (loss) by the weighted average shares of common stock outstanding during the period, without consideration of potentially dilutive securities, except for those shares that are issuable for little or no cash consideration. Diluted net income (loss) per share is determined by dividing net income (loss) by diluted weighted average shares outstanding. Diluted weighted average shares reflects the dilutive effect, if any, of potentially dilutive common shares, such as stock options, stock purchased pursuant to the Company’s employee stock purchase plan, convertible notes and warrants calculated using the treasury stock method. In periods with reported net operating losses, all common stock options and warrants are generally deemed anti-dilutive such that basic net loss per share and diluted net loss per share are equal.
At both December 31, 2025 and 2024, the Company had 1,341,375 pre-funded warrants outstanding. The following tables provides a reconciliation of the weighted average shares outstanding calculation for the year-ended December 31, 2025 and 2024.
| | | | | | | | | | | | | | | | | |
| Weighted average number of basic shares outstanding |
| | | Year ended December 31, |
| | | | | 2025 | | 2024 |
| Weighted average shares issued | | | | | 34,479,782 | | 27,571,541 |
| Weighted average pre-funded warrants | | | | | 1,341,375 | | 939,852 |
| Weighted average shares outstanding | | | | | 35,821,157 | | 28,511,393 |
| | | | | | | | | | | | | | | | | |
| Weighted average number of diluted shares outstanding |
| | | Year ended December 31, |
| | | | | 2025 | | 2024 |
| Weighted average shares outstanding (Basic) | | | | | 35,821,157 | | 28,511,393 |
| Additional dilutive shares | | | | | 4,098,400 | | — | |
| Weighted average shares outstanding (Diluted) | | | | | 39,919,557 | | 28,511,393 |
For the years ended December 31, 2025 and 2024 the following potentially dilutive securities were excluded from the computation of diluted earnings per share because their effects would be antidilutive:
| | | | | | | | | | | |
| | December 31, |
| | 2025 | | 2024 |
| Common stock warrants - equity | — | | | 1,851,900 |
| Assumed conversion of preferred stock | — | | | 1,782,842 |
| Stock options | 3,845,762 | | 5,766,927 |
| Assumed conversion of ESPP shares | 47,815 | | 35,513 |
| Total | 3,893,577 | | 9,437,182 |
About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.