LOSS PER SHARE (EPS)

9 Months Ended

Sep. 30, 2011

NOTE 4. LOSS PER SHARE (EPS)

Basic EPS is computed by dividing net income (loss) attributable to NutraCea shareholders by the weighted average number of common shares outstanding during all periods presented. Options, warrants and shares issuable upon conversion of convertible notes payable are excluded from the basic EPS calculation and are considered in calculating the diluted EPS.

Diluted EPS is computed by dividing net income (loss) attributable to NutraCea shareholders by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been outstanding if the impact of assumed exercises and conversions is dilutive. The dilutive effect of outstanding options and warrants is calculated using the treasury stock method. The dilutive effect of outstanding convertible notes payable is calculated using the “if converted” method.

Below are reconciliations of the numerators and denominators in the EPS computations for the three months and nine months ended September 30, 2011.

	Three Months Ended						Nine Months Ended
	2011			2010			2011			2010
NUMERATOR (in thousands):
Basic and diluted - net loss attributable to NutraCea shareholders	$	(1,493	)	$	(3,090	)	$	(5,573	)	$	(10,888	)

DENOMINATOR:
Basic EPS - weighted average number of shares outstanding		199,380,838			193,027,680			197,650,794			193,015,812
Effect of dilutive securities outstanding		-			-			-			-
Diluted EPS - weighted average number of shares outstanding		199,380,838			193,027,680			197,650,794			193,015,812

Number of shares of common stock which could be purchased with weighted average outstanding securities not included in diluted EPS because effect would be antidilutive:
Stock options (average exercise price for the three and nine months ended September 30, 2011 of $0.29 and $0.29)		39,557,171			30,996,197			40,342,313			28,089,581
Warrants (average exercise price for the three and nine months ended September 30, 2011 of $1.10 and $1.17)		42,950,415			39,578,506			41,721,527			39,666,418
Convertible notes payable		6,286,935			-			3,230,007			-

The impact of potentially dilutive securities outstanding at September 30, 2011 and 2010, were not included in the calculation of diluted EPS in 2011 and 2010 because to do so would be antidilutive. Those securities which were antidilutive in 2011 and 2010, which remain outstanding, could potentially dilute EPS in the future.