EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2012

EARNINGS PER SHARE [Abstract]

EARNINGS PER SHARE

NOTE 15. 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 December 31:

	December 31, 2012		December 31, 2011
Warrants to purchase common stock (1)		2,041,165		612,594
Stock options to purchase common stock		158,409		287,745
Unvested restricted common stock		300		1,096
Common stock issuable upon the assumed conversion of our convertible note payable from June 2012 (2)		5,617,974		---
Common stock issuable upon the assumed conversion of our convertible notes payable from June 2011 and July 2011 (3)		368,637		232,408
Common stock issuable upon the assumed conversion of our Series A preferred stock (4)		1,002,634		357,143
Total		9,189,119		1,490,986

(1	)	As part of the June 2012 Note, Inter-Mountain received a total of seven warrants to purchase, if they all vest, an aggregate of 3,142,857 shares of common stock, which number of shares could increase based upon the terms and conditions of the warrants.  The warrants have an exercise price of $0.35 per share, subject to certain pricing adjustments, and are exercisable, subject to vesting provisions and ownership limitations, until June 27, 2017.  Warrants for 785,714 shares of common stock and 392,857 shares of common stock vested on June 27, 2012 and December 31, 2012, respectively, and only such shares of common stock have been included in this Table, based upon an exercise price of $0.35 per share of common stock.  Each of the other five warrants vest upon the payment by Inter-Mountain of a related Investor Note.
(2	)	The outstanding principal balance and the accrued and unpaid interest of the June 2012 Note may be converted, at the option of Inter-Mountain, into shares of common stock at a conversion price of $0.35 per share, subject to certain pricing adjustments and ownership limitations.  For the purposes of this Table, we have assumed a conversion price of $0.35 per share and no ownership limitations.
(3	)	The outstanding principal balance of the June 2011 Note and the July 2011 Note may be converted, at the option of Mr. Gray, into shares of common stock at a fixed conversion price of $1.20 per share and $1.08 per shares, respectively.  The accrued and unpaid interest for each convertible note payable may be converted, at the option of Mr. Gray, into shares of common stock at a conversion price based upon the average of the five trading days prior to the payment date, which for the purposes of this Table we have assumed to be December 31, 2012.
(4	)	The outstanding Series A preferred stock and the accrued and unpaid dividends thereon are convertible into shares of the Company's common stock at the Company's option at any time after six-months from the date of issuance of the Series A preferred stock.  The conversion price for the holder is fixed at $0.70 per share with no adjustment mechanisms, resets, ratchets, or anti- covenants other than the customary adjustments for stock splits.  For the purposes of this Table, we have assumed a conversion price of $0.70 per share.