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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2015

Notes to Financial Statements

NOTE 6. EARNINGS PER SHARE

We compute basic earnings per share ("basic EPS") by dividing the net income or loss by the weighted average number of common shares outstanding for the reporting period. Diluted earnings per share ("diluted EPS") gives effect to all dilutive potential shares outstanding. The following table provides the computation of basic and diluted earnings per share for the three and six month periods ending June 30, 2015 and 2014.

		Three Months Ended								Six Months Ended
(in thousands, except per share data)		June 30,								June 30,
		2015				2014				2015				2014
Numerator:
Net income (loss) available to common shareholders		$	(1,497	)		$	29			$	11,359			$	(9,782	)
Effect of dilutive securities
Derivative liability - warrants		$	-			$	(1,454	)		$	(1,534	)		$	-
Accretion on convertible preferred stock			-				-				222				-
Numerator for diluted income (loss) per common share		$	(1,497	)		$	(1,425	)		$	10,047			$	(9,782	)

Denominator:
Weighted average shares used to compute basic income (loss) per common share			24,435				17,717				21,555				17,667
Effect of dilutive securities:
Derivative liability - warrants			-				3,459				82				-
Convertible preferred stock			-				-				2,305				-
Stock options			-				-				309				-
Denominator for diluted income (loss) per common share			24,435				21,176				24,251				17,667

Basic income (loss) per common share		$	(0.06	)		$	0.00			$	0.53			$	(0.55	)
Diluted income (loss) per common share		$	(0.06	)		$	(0.07	)		$	0.41			$	(0.55	)

For the three months ended June 30, 2015, options and warrants to purchase approximately 277,000 shares of common stock and approximately $90,000 of the gain on the fair market valuation of the derivative liabilities were excluded in the computation of diluted earnings per share because their effects were anti-dilutive, while the conversion of Series B Preferred Stock into 3,951,278 shares of common stock was excluded from the computation of diluted earnings per share as the effect is anti-dilutive.

For the six months ended June 30, 2015, warrants to purchase approximately 82,000 shares of common stock and approximately $1,534,000 of the gain on the fair market valuation of the derivative liabilities were included in the computation of dilutive earnings per share and options to purchase approximately 309,000 shares of common stock were included in the computation of dilutive earnings per share because their effect was dilutive. The conversion of Series B Preferred Stock into 2,305,000 shares of common stock was included in the computation of diluted earnings per share as the effect is dilutive.

For the six months ended June 30, 2014 options and warrants to purchase shares of common stock and Series A Preferred Stock were excluded in the computation of diluted earnings per share because their effects were anti-dilutive.