Quarterly report pursuant to Section 13 or 15(d)

Basic and Diluted Net Income (Loss) Per Common Share

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Basic and Diluted Net Income (Loss) Per Common Share
 6 Months Ended
Jun. 30, 2011
Basic and Diluted Net Income (Loss) Per Common Share  
Basic and Diluted Net Income (Loss) Per Common Share
(6)           Basic and Diluted Net Income (Loss) Per Common Share

Basic net income or loss per share is based upon the weighted average number of common shares outstanding during the period. Diluted net income or loss per share is based upon the weighted average number of common shares outstanding during the period, plus the effect of additional weighted average common equivalent shares outstanding during the period when the effect of adding such shares is dilutive. Common equivalent shares result from the assumed conversion of preferred stock and the exercise of outstanding stock options and warrants (the proceeds of which are then assumed to have been used to repurchase outstanding stock using the treasury stock method). In addition, the assumed proceeds under the treasury stock method include the average unrecognized compensation expense of stock options that are in-the-money. This results in the “assumed” buyback of additional shares, thereby reducing the dilutive impact of stock options and warrants. Common equivalent shares have not been included in the net loss per share calculations for three and six months ended June 30, 2011, because the effect of including them would have been anti-dilutive.
 
Basic and diluted net income (loss) per share were determined as follows:


(in thousands, except per share amounts)
  
Three months ended June 30,
    
Six months ended June 30,
  
   
2011
    
2010
    
2011
    
2010
  
                         
Net income (loss) allocable to
  common shareholders
   $ (1,706 )   $ 1,344     $ (4,043 )   $ 1,991  
Weighted average shares outstanding
     19,388       15,460       19,315       15,115  
Basic net income (loss) per common share
   $ (0.09 )   $ 0.09     $ (0.21 )   $ 0.13  
                                 
Net income (loss) allocable to
  common shareholders
   $ (1,706 )   $ 1,344     $ (4,043 )   $ 1,991  
Effect of dilutive securities
                                
     Preferred stock dividends
     -       446       -       888  
     Interest related to dividends
     -       37       -       77  
Diluted net income
   $ (1,706 )   $ 1,827     $ (4,043 )   $ 2,956  
Weighted average shares outstanding
     19,388       15,460       19,315       15,115  
Effect of dilutive options, warrants and
  preferred stock
     -       12,478       -       12,710  
Weighted average shares outstanding assuming
  dilution
     19,388       27,938       19,315       27,825  
Diluted net income (loss) per common share
   $ (0.09 )   $ 0.07     $ (0.21 )   $ 0.11  

We did not include the following securities in the table below in the computation of diluted net income (loss) per common share because the securities were anti-dilutive during the periods presented:

(in thousands, except per share amounts)
  
Three months ended June 30,
    
Six months ended June 30,
  
   
2011
    
2010
    
2011
    
2010
  
                         
Warrants
     11,989       6,175       11,989       6,150  
Stock options
     2,321       1,168       2,321       1,027  
Convertible note
     200       200       200       200  
Preferred stock
     11,601       -       11,601       -  
Total
     26,111       7,543       26,111       7,377