EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2011

NOTE 13.

EARNINGS PER SHARE

Basic and Diluted Net Loss Per Share

In accordance with FASB Accounting Standards Codification (“ASC”) Topic 260, Earnings per Share, basic earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period, increased to include potential dilutive common shares. The effect of outstanding stock options, restricted vesting common stock, convertible debt, convertible preferred stock, and warrants, when dilutive, is reflected in diluted earnings (loss) per common share by application of the treasury stock method. We have excluded all outstanding stock options, restricted vesting common stock, convertible debt, convertible preferred stock, and warrants from the calculation of diluted net loss per common share because all such securities are antidilutive for all periods presented.

Shares used in calculating basic and diluted net loss per common share exclude these potential common shares as of September 30, 2011 and December 31, 2010:

	September 30, 2011		December 31, 2010
Warrants to purchase common stock		723,929		635,873
Stock options to purchase common stock		287,745		290,411
Unvested restricted common stock		1,096		6,336
Common stock issuable upon the assumed conversion of our convertible notes payable		219,908		---
Common stock issuable upon the assumed conversion of our convertible preferred stock		214,286		---
Total		1,446,964		932,620