NOTE 11. LOSS PER SHARE

Basic loss per share is computed on the basis of the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed on the basis of the weighted-average number of common shares and all dilutive potentially issuable common shares outstanding during the year. Common stock issuable upon conversion of debt and preferred stock, or exercise of stock options and stock warrants have not been included in the loss per share for the three month or nine month periods ended August 31, 2011 and 2010 as they are anti-dilutive.

The potential common shares as of August 31, 2011 are as follows:

Stock warrants			10,938,030
Stock options			18,358,947
Series B Convertible Preferred Stock			33,646,884
Series I Convertible Preferred Stock			2,293,600
LJCI Debenture			1,188,491,723

			1,253,729,184

The Company does not currently have sufficient authorized shares of common stock to meet the commitments entered into under the Debenture and the related LJCI Warrants. As further discussed in Note 4, upon the conversion of any portion of the remaining $66,056 principal amount of the Debenture, LJCI is required to simultaneously exercise and purchase that same percentage of the remaining 6,605,629 warrant shares equal to the percentage of the dollar amount of the Debenture being converted. The agreement limits LJCI’s investment to an aggregate common stock ownership that does not exceed 9.99% of the outstanding common shares of the Company. Furthermore, the Company has the right to redeem that portion of the Debenture that the holder may elect to convert and also has the right to redeem the outstanding principal amount of the Debenture not yet converted by the holder into common stock, plus accrued and unpaid interest thereon.