Basic and Diluted Net Loss Per Share

12 Months Ended

Dec. 31, 2011

Basic and Diluted Net Loss Per Share [Abstract]

BASIC AND DILUTED NET LOSS PER SHARE

NOTE 7—BASIC AND DILUTED NET LOSS PER SHARE

Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed giving effect to all dilutive potential common shares that were outstanding during the period. Diluted potential common shares consist of incremental shares issuable upon exercise of stock options and warrants and conversion of preferred stock. In computing diluted net loss per share for the years ended December 31, 2011 and 2010, no adjustment has been made to the weighted average outstanding common shares as the assumed exercise of outstanding options and warrants and conversion of preferred stock would be anti-dilutive.

Potential common shares not included in calculating diluted net loss per share are as follows:

	December 31, 2011		December 31, 2010
Stock options		1,628,167		1,334,667
Stock warrants		805,521		805,521
Series A Preferred Stock		0		0
Total		2,433,688		2,140,188

Under applicable SEC accounting guidance, the difference between (a) the fair value of the consideration transferred to the Preferred Investors upon conversion of the Series A Preferred Stock and (b) the carrying amount of the Series A Preferred Stock on the Company’s balance sheet is required to be added to the Company’s net loss to arrive at loss available to common stockholders in the calculation of loss per share. As discussed in Note 6 above, during the year ended December 31, 2010, the Preferred Investors received an aggregate dividend of $5.4 million, consisting of $0.4 million accumulated dividends and $5.0 million aggregate deemed dividends. This $5.4 million aggregate dividend was recorded as a $4.4 million increase in losses attributable to common stockholders on the Conversion Date, after giving effect to the $0.7 million beneficial conversion feature and $0.3 million cumulative dividends recorded as increases in losses attributable to common stockholders in prior periods.