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EARNINGS PER SHARE (in thousands, except EPS)

9 Months Ended

Sep. 30, 2015

Notes to Financial Statements

NOTE 6. EARNINGS PER SHARE (in thousands, except EPS)

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 nine month periods ending September 30, 2015 and 2014:

		Three Months Ended								Nine Months Ended
(in thousands, except per share data)		September 30,								September 30,
		2015				2014				2015				2014
Numerator:
Net income (loss) available to common shareholders		$	(1,587	)		$	(2,976	)		$	9,772			$	(12,760	)
Effect of dilutive securities
Derivative liability - warrants		$	-			$	-			$	(1,800	)		$	-
Accretion on convertible preferred stock			-				-				222				-
Numerator for diluted income (loss) per common share		$	(1,587	)		$	(2,976	)		$	8,194			$	(12,760	)

Denominator:
Weighted average shares used to compute basic income (loss) per common share			27,051				17,780				23,414				17,727
Effect of dilutive securities:
Derivative liability - warrants			-				-				54				-
Convertible preferred stock			-				-				2,862				-
Stock options			-				-				16				-
Denominator for diluted income (loss) per common share			27,051				17,780				26,346				17,727

Basic income (loss) per common share		$	(0.06	)		$	(0.17	)		$	0.42			$	(0.72	)
Diluted income (loss) per common share		$	(0.06	)		$	(0.17	)		$	0.31			$	(0.72	)

For the three months ended September 30, 2015, options and warrants to purchase approximately 8,000 shares of common stock and approximately $266,000 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 nine months ended September 30, 2015, warrants to purchase approximately 54,000 shares of common stock and approximately $1,800,000 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 16,000 shares of common stock were included in the computation of dilutive earnings per share because their effect was dilutive. Options to purchase approximately 2,692,678 shares of common stock were excluded because their effect was anti-dilutive. The conversion of Series B Preferred Stock into 2,861,771 shares of common stock was included in the computation of diluted earnings per share as the effect is dilutive.

For the nine months ended September 30, 2014 options and warrants to purchase approximately 2,945,591 shares of common stock were excluded in the computation of diluted earnings per share because their effects were anti-dilutive.