Note 16 - Earnings Per Share
|3 Months Ended|
Jan. 31, 2019
|Notes to Financial Statements|
|Earnings Per Share [Text Block]||
16.Earnings Per Share
The Company calculates earnings per share in accordance with ASC
Earnings Per Share. The
two-class method of computing earnings per share is required for entities that have participating securities. The
two-class method is an earnings allocation formula that determines earnings per share for participating securities according to dividends declared (or accumulated) and participation rights in undistributed earnings. The Company has
twoclasses of stock: (
1) Common Stock and (
2) Series A Preferred Stock.
Basic earnings (loss) per common share is calculated by dividing net income (loss) attributable to common shareholders by the weighted average number of outstanding shares of Common Stock during the period. Net income (loss) attributable to common shareholders is calculated by taking the net income (loss) for the period, less both the dividends declared in the period on preferred stock (whether or
notpaid) and the dividends accumulated for the period on cumulative preferred stock (whether or
notearned) for the period.
Diluted earnings (loss) per common share is computed using the weighted average number of outstanding shares of Common Stock and, when dilutive, potential outstanding shares of Common Stock during the period. Diluted earnings (loss) per common share reflects the potential dilution that could occur assuming common shares were issued upon the exercise of outstanding in the money warrants and the proceeds thereof were used to purchase common shares at the average market price during the period. Common stock equivalents are
notincluded in the diluted earnings (loss) per common share calculation when their effect is antidilutive. The Company uses the treasury stock method to calculate potentially dilutive shares, as if they were converted into common stock at the beginning of the period. At
January 31, 2019 (Successor), the Company had outstanding warrants to purchase
34,100,000shares of common stock,
2,783,479outstanding stock options and
2,450,980shares of Series A Preferred Stock, all of which could potentially be dilutive. For all periods presented, the weighted-average dilutive impact, if any, of these shares was excluded from the calculation of diluted earnings (loss) per common share because their inclusion would have been anti-dilutive. As a result, dilutive earnings (loss) per share is equal to basic earnings (loss) per share.
The table below shows our basic and diluted EPS calculations for the period from
December 6, 2018through
January 31, 2019 (Successor):
Under the terms and conditions of the Company’s Participating Preferred Stock Agreement, the holders of the preferred stock have the right to receive dividends or dividend equivalents should the Company declare dividends on its common stock on a
oneper-share basis. Under the
two-class method, undistributed earnings is calculated by the earnings for the period less the cumulative preferred stock dividends earned for the period. The undistributed earnings are then allocated on a pro-rata basis to the common and preferred stockholders on a
oneper-share basis. The weighted-average number of common and preferred shares outstanding during the period is then used to calculate basic EPS for each class of shares. As a result, the undistributed earnings available to common shareholders is calculated by earnings (loss) for the period less the cumulative preferred stock dividends earned for the period less undistributed earnings allocated to the holders of the preferred stock.
In periods in which the Company has a net loss or undistributed net loss, basic loss per share is calculated by dividing the loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. The
two-class method is
notused, because the holders of the preferred stock do
notparticipate in losses.
The table below shows our basic and diluted EPS calculations for the Predecessor periods from
November 1, 2018through
December 5, 2018and from
November 1, 2017through
January 31, 2018:
The entire disclosure for earnings per share.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef