Note 4 - Earnings (Loss) Per Common Share

3 Months Ended

Jun. 30, 2011

Earnings Per Share [Text Block]

4.         Earnings (Loss) Per Common Share

We compute earnings (loss) per share in accordance with ASC Topic 260, Earnings per Share (“ASC 260”), which requires the presentation of both basic and diluted earnings (loss) per common share. Basic earnings (loss) per common share is computed by dividing income or loss available to common stockholders by the weighted average number of shares of common stock outstanding. Our Series B junior participating convertible preferred stock (“Series B Preferred Stock”), which is convertible into shares of our common stock at the holder’s option (subject to a limitation based upon voting interest and a holding restriction through August 23, 2011), is classified as a convertible participating security in accordance with ASC 260, which requires that both net income and loss per share for each class of stock (common stock and participating preferred stock) be calculated for basic earnings per share purposes based on the contractual rights and obligations of this participating security. Net income (loss) allocated to the holders of our Series B Preferred Stock is calculated based on the preferred shareholder’s proportionate share of weighted average shares of common stock outstanding on an if-converted basis.

For purposes of determining diluted earnings (loss) per common share, basic earnings (loss) per common share is further adjusted to include the effect of potential dilutive common shares outstanding, including stock options and warrants using the treasury stock method and convertible debt using the if-converted method.  For the three and six months ended June 30, 2011, all dilutive securities were excluded from the calculation as they were anti-dilutive as a result of the net loss for these respective periods.  Shares outstanding under the share lending facility are not treated as outstanding for earnings per share purposes in accordance with ASC 260, because the share borrower must return to us all borrowed shares (or identical shares) on or about October 1, 2012, or earlier in certain circumstances.  The following table sets forth the components used in the computation of basic and diluted earnings (loss) per common share.

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
	(Dollars in thousands, except per share amounts)
Numerator:
Net income (loss)	$	(10,519	)	$	10,661		$	(25,316	)	$	5,590
Less: Net (income) loss allocated to preferred shareholder		4,554			(6,288	)		10,968			(3,303	)
Net income (loss) available to common shareholders	$	(5,965	)	$	4,373		$	(14,348	)	$	2,287
Denominator:
Weighted average basic common shares outstanding		193,577,324			102,796,195			193,369,182			102,318,953
Effect of dilutive securities:
Warrant		―			16,411,758			―			10,306,708
Stock options		―			4,732,900			―			4,228,828
Weighted average diluted common shares outstanding		193,577,324			123,940,853			193,369,182			116,854,489
Income (loss) per common share:
Basic	$	(0.03	)	$	0.04		$	(0.07	)	$	0.02
Diluted	$	(0.03	)	$	0.04		$	(0.07	)	$	0.02

As of June 30, 2011 and 2010, we had 450,829 shares of Series B Preferred Stock outstanding, which are convertible into 147.8 million shares of our common stock.  The following table sets forth the potential weighted average diluted common shares outstanding if our Series B Preferred Stock was converted to common stock.  Please see Note 16 “Stockholders’ Equity” for further discussion of the Series B Preferred Stock.

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Weighted average diluted common shares outstanding		193,577,324		123,940,853		193,369,182		116,854,489
Additional weighted average common shares outstanding if the Series B Preferred Stock converted to common shares		147,812,786		147,812,786		147,812,786		147,812,786
Total potential weighted average diluted common shares outstanding if the Series B Preferred Stock converted to common shares		341,390,110		271,753,639		341,181,968		264,667,275

In accordance with ASC 260, assuming that all of the outstanding Series B Preferred Stock was converted to common stock, all net income (loss) would be allocated to common stock in the computation of earnings (loss) per share.