Note 7. Earnings Per Share

Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Except when the effect would be anti-dilutive, diluted earnings (loss) per share is calculated based on the weighted average number of shares of common stock outstanding plus the dilutive effect of share-based awards calculated under the treasury stock method.

On September 8, 2017, in connection with the 2017 Rights Offering and related 2017 Investment Agreement, the Company issued an aggregate of 66,666,667 shares of its common stock and recorded increases of $667 within Common Stock and $28,338 within Additional paid-in-capital on the condensed consolidated balance sheet, prior to adjustment for the Reverse Stock Split. See Note 11 “Related Party Transactions” for additional information.

At the close of business on October 23, 2017, the Company effected a 1-for-10 reverse stock split of its common stock. The calculation of basic and diluted net earnings (loss) per share, as presented in the condensed consolidated statements of operations, have been determined based on a retroactive adjustment of weighted average shares outstanding for all periods presented.

The following is a reconciliation of weighted average basic shares to weighted average diluted shares outstanding:

	Three Months Ended				Nine Months Ended
	October 28,		October 29,		October 28,		October 29,
	2017		2016		2017		2016
Weighted-average shares—basic		8,610,869		4,928,744		6,166,219		4,541,966
Effect of dilutive equity securities		439		19,246		—		—
Weighted-average shares—diluted		8,611,308		4,947,990		6,166,219		4,541,966

Because the Company incurred a net loss for the nine months ended October 28, 2017 and October 29, 2016, weighted-average basic shares and weighted-average diluted shares outstanding are equal for these periods.

For the three months ended October 28, 2017 and October 29, 2016, 183,566 and 76,443 options to purchase shares of the Company’s common stock, respectively, were excluded from the computation of weighted average shares for diluted earnings per share since the related exercise prices exceeded the average market price of the Company’s common stock and such inclusion would be anti-dilutive.

For the nine months ended October 28, 2017 and October 29, 2016, 189,060 and 72,362 options to purchase shares of the Company’s common stock, respectively, were excluded from the computation of weighted average shares for diluted earnings per share since the related exercise prices exceeded the average market price of the Company’s common stock and such inclusion would be anti-dilutive.