FiEE, Inc. Earnings Per Share Disclosure

(11) EARNINGS (LOSS) PER SHARE

 

The Company's Series A Preferred Stock is considered a participating security because it has the right to participate in dividends with common shareholders on an as-converted basis. Accordingly, the Company applies the two-class method to compute basic and diluted earnings (loss) per share. Under the two-class method, net income is allocated between common shareholders and participating securities based on their respective rights to receive dividends as if all earnings for the period had been distributed. Net losses are not allocated to the Series A Preferred Stock, as holders do not have a contractual obligation to share in losses.

 

Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Potentially dilutive securities include convertible preferred stock, warrants, and restricted shares. Warrants and restricted shares are included in diluted EPS using the treasury stock method. For convertible preferred stock that is a participating security, diluted EPS is calculated using the more dilutive of the two-class method or the if-converted method in accordance with ASC 260. Under the two-class method, the numerator used in diluted EPS is consistent with that used in basic EPS. Potential common shares are included only to the extent they are dilutive, and anti-dilutive securities are excluded.

 

Earnings (loss) per share for the year ended December 31, 2025 and 2024, respectively, are as follows:

 

Schedule of net income (loss) per share
		Years ended December 31,
		2025				2024
Basic earnings per common share:
Net income (loss)		$	1,072,434			$	(4,224,278	)
Less: Preferred stock dividend declared			-				-
Income (loss) available for distribution			1,072,434			$	(4,224,278	)
Less: Income allocated to participating securities			(391,125	)			-
Net income (loss) available to common stockholders		$	681,309				(4,224,278	)
Weighted average basic shares outstanding			5,622,077				3,159,061
Basic earnings (loss) per common share		$	0.12			$	(1.34	)
Diluted earnings per common share:
Net income (loss) available to common stockholders		$	681,309			$	(4,224,278	)
Weighted average basic shares outstanding		$	5,622,077				3,159,061
Dilutive effect related to warrants			1,370,399				-
Dilutive effect related to restricted stocks with service conditions			88,157				-
Weighted average diluted shares outstanding		$	7,080,633				3,159,061
Diluted earnings (loss) per common share		$	0.10			$	(1.34	)

 

Diluted loss per common share for the year ended December 31, 2025 and 2024 excludes the effects of 3,227,500 and 5,536,126 common share equivalents respectively, since such inclusion would be anti-dilutive. The common share equivalents consist of shares of common stock issuable upon the exercise or conversion of outstanding Series A preferred stock, warrants, and restricted shares with a service condition.