Fortress Biotech, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Net Loss Per Share

Net Loss Per Share

9 Months Ended

Sep. 30, 2011

2.	NET LOSS PER SHARE

The Company calculates earnings per share using the two-class method, which is an earnings allocation formula that determines earnings per share for Common Stock and non-forfeitable participating securities according to dividends declared and participation rights in undistributed earnings. Under this method, all earnings (distributed and undistributed) are allocated to common shares and participating securities based on their respective rights to receive dividends. Holders of Convertible Preferred Stock are entitled to a dividend equal (on an as-if-converted to Common Stock basis) to the amount paid or set aside for each share of Common Stock. Additionally, holders of restricted Common Stock are entitled to all cash dividends, when declared, and such dividends are non-forfeitable. The participating securities do not have a contractual obligation to share in any losses of the Company. As a result, net losses are not allocated to the participating securities for any of the periods presented.

Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for Common Stock equivalents. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares and common share equivalents outstanding for the period. For purposes of this calculation, Common Stock equivalents are only included in the calculation of diluted net loss per share when the effect is dilutive.

A calculation of basic and diluted net loss per share follows:


($ in thousands expcept share and per share amounts)	For the three months ended						For the nine months ended
	September 30,						September 30,
	2011			2010			2011			2010

Historical net loss per share:

Numerator:

Net loss	$	(3,365	)	$	(2,120	)	$	(29,641	)	$	(8,354	)

Common Stock dividend to Series A Convertible Preferred Stockholders		—			—			(5,861	)		—


Net loss attributed to Common Stock	$	(3,365	)	$	(2,120	)	$	(35,502	)	$	(8,354	)

Denominator:

Weighted average common shares outstanding—basic and diluted		7,028,060			4,791,102			5,897,462			4,349,345


Weighted-average common shares outstanding - Denominator for basic and diluted net loss per share	$	(0.48	)	$	(0.44	)	$	(6.02	)	$	(1.92	)

The Company's potential dilutive securities which include convertible debt, convertible preferred stock, unvested restricted stock, stock options, and warrants have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average Common Stock outstanding used to calculate both basic and diluted net loss per share are the same.

The following shares of potentially dilutive securities have been excluded from the computations of diluted weighted average shares outstanding as the securities would be antidilutive:


	For the three months ended				For the nine months ended
	September 30,				September 30,
	2011		2010		2011		2010

Series A Convertible Preferred Stock		4,357,885		3,974,654		4,357,855		2,030,652

Series B Convertible Preferred Stock		2,525,677		—		2,470,168		—

Series C Convertible Preferred Stock		4,612,624		—		1,869,061		—

Unvested restricted Common Stock		—		—		—		431,716

Warrants to purchase Common Stock		527,537		336,329		505,449		217,345

Warrants to purchase Series C Convertible Preferred Stock		461,263		—		186,906		—

Options to purchase Common Stock		1,528,798		—		1,355,640		—


		14,013,784		4,310,983		10,745,079		2,679,713