Reborn Coffee, Inc. Earnings Per Share Disclosure
| 12. | EARNINGS PER SHARE |
The Company calculates earnings per share in accordance with FASB ASC 260, Earnings Per Share, which requires a dual presentation of basic and diluted earnings per share. Basic earnings per share are computed using the weighted average number of shares outstanding during the fiscal year. Potentially dilutive common shares consist of stock options outstanding (using the treasury method).
The following table sets forth the computation of basic and diluted net income per common share:
| Years Ended December 31, | 2024 | 2023 | ||||||
| Net Loss | $ | (4,805,948 | ) | $ | (4,725,123 | ) | ||
| Weighted Average Shares of Common Stock Outstanding | ||||||||
| Basic | 2,896,960 | 1,652,034 | ||||||
| Diluted | 2,896,960 | 1,652,034 | ||||||
| Earnings Per Share - Basic | ||||||||
| Basic | $ | (1.66 | ) | $ | (2.86 | ) | ||
| Diluted | $ | (1.66 | ) | $ | (2.86 | ) | ||
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.