SOLENO THERAPEUTICS INC Earnings Per Share Disclosure
Note 10. Net Income (Loss) per Share
Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of common stock outstanding during the period. Shares of common stock that are potentially issuable for little or no cash consideration at issuance, such as the Company's pre-funded warrants issued in March 2022 and October 2023 and in connection with the exercise of certain May 2023 Tranche A and Tranche B warrants, are considered outstanding common stock and are included in the calculation of basic and diluted net loss per share in connection with ASC 260 Earnings Per Shares. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of common stock outstanding and dilutive potential common stock that would be issued upon the exercise or vesting of common stock awards and exercise of common stock warrants that are not pre-funded using the treasury stock method which would result in the issuance of incremental shares of common stock. The Company applies the two-class method to calculate basic and diluted earnings per share as its warrants issued in March 2022 and May 2023 are
participating securities. However, the two-class method does not impact the net loss per share of common stock as the March 2022 and May 2023 common warrants issued do not participate in losses. For the years ended December 31, 2024 and 2023, the effect of issuing the respective potential common stock is anti-dilutive due to the net losses in those periods and therefore the number of shares used to compute basic and diluted net loss per share are the same in each of those periods.
The following securities are included in the weighted-average common shares outstanding used to calculate basic and diluted net income (loss) per common share:
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|
Years Ended December 31, |
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2025 |
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|
2024 |
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2023 |
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Numerator: |
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|
|
|
|
|
|
|
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|||
Net income (loss) |
|
$ |
20,890 |
|
|
$ |
(175,850 |
) |
|
$ |
(38,988 |
) |
Less: Earnings attributable to participating securities |
|
|
(415 |
) |
|
|
— |
|
|
|
— |
|
Net income (loss) attributable to common stockholders - basic and diluted |
|
$ |
20,475 |
|
|
$ |
(175,850 |
) |
|
$ |
(38,988 |
) |
|
|
|
|
|
|
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|
|
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|||
Denominator: |
|
|
|
|
|
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|
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Common stock |
|
|
50,567,586 |
|
|
|
37,689,804 |
|
|
|
15,040,036 |
|
March 2022 pre-funded warrants |
|
|
— |
|
|
|
— |
|
|
|
290,665 |
|
May 2023 Tranche A pre-funded warrants |
|
|
— |
|
|
|
1,685,181 |
|
|
|
778,904 |
|
May 2023 Tranche B pre-funded warrants |
|
|
— |
|
|
|
373,892 |
|
|
|
92,801 |
|
October 2023 pre-funded warrants |
|
|
250,000 |
|
|
|
427,049 |
|
|
|
289,726 |
|
Weighted-average shares - basic |
|
|
50,817,586 |
|
|
|
40,175,926 |
|
|
|
16,492,132 |
|
|
|
|
|
|
|
|
|
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|||
Effect of dilutive securities: |
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|
|
|
|
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|
|
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|||
Stock options |
|
|
1,228,032 |
|
|
|
— |
|
|
|
— |
|
Restricted stock units |
|
|
339,268 |
|
|
|
— |
|
|
|
— |
|
Weighted-average shares - diluted |
|
|
52,384,886 |
|
|
|
40,175,926 |
|
|
|
16,492,132 |
|
|
|
|
|
|
|
|
|
|
|
|||
Net income (loss) per share - basic |
|
$ |
0.40 |
|
|
$ |
(4.38 |
) |
|
$ |
(2.36 |
) |
Net income (loss) per share - diluted |
|
$ |
0.39 |
|
|
$ |
(4.38 |
) |
|
$ |
(2.36 |
) |
The following potentially dilutive securities outstanding have been excluded from the computation of diluted net income (loss) per share because their effect would have been anti-dilutive for the periods presented:
|
|
Years Ended December 31, |
|
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|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Warrants issued to 2010/2012 convertible note holders to purchase common stock |
|
|
- |
|
|
|
- |
|
|
|
6,804 |
|
Warrants issued to underwriter to purchase common stock |
|
|
- |
|
|
|
- |
|
|
|
1,100 |
|
March 2022 common warrants |
|
|
- |
|
|
|
1,255,346 |
|
|
|
1,929,066 |
|
May 2023 Tranche B warrants |
|
|
- |
|
|
|
2,065,305 |
|
|
|
6,750,000 |
|
Options to purchase common stock |
|
|
1,869,149 |
|
|
|
3,971,798 |
|
|
|
2,369,665 |
|
Outstanding restricted stock units |
|
|
8,307 |
|
|
|
939,865 |
|
|
|
15,534 |
|
Total |
|
|
1,877,456 |
|
|
|
8,232,314 |
|
|
|
11,072,169 |
|
|
|
|
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2017 | Apr 2, 2018 | |
| 2016 | Mar 15, 2017 | |
| 2015 | Mar 25, 2016 | |
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.