ProPhase Labs, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Earnings (Loss) Per Share

Earnings (Loss) Per Share

9 Months Ended

Sep. 30, 2011

Note 7 – Earnings (Loss) Per Share

Basic earnings per share is computed by dividing net income or loss to common stockholders by the weighted-average number of shares of our Common Stock outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue Common Stock were exercised or converted into Common Stock or resulted in the issuance of Common Stock that shared in the earnings of the entity. Diluted earnings per share also utilizes the treasury stock method which prescribes a theoretical buy-back of shares from the theoretical proceeds of all options and warrants outstanding during the period. Options and warrants outstanding to acquire shares of our Common Stock at September 30, 2011 and 2010 were 1,281,250 and 453,250, respectively.

For the nine months ended September 30, 2011 and 2010 dilutive earnings per share is the same as basic earnings per share due to (i) the inclusion of Common Stock, in the form of stock options and warrants (“Common Stock Equivalents”), would have an anti-dilutive effect on the loss per share or (ii) there were no Common Stock Equivalents for the respective period. For the three months ended September 30, 2011 and 2010, there were zero and 155 Common Stock Equivalents, respectively, which were in the money, that were excluded from the earnings per share computation. For the nine months ended September 30, 2011 and 2010, there were 53,517 and 3,633 Common Stock Equivalents, respectively, which were in the money, that were excluded from the earnings per share computation.

A reconciliation of the applicable numerators and denominators of the income statement periods presented, as reflected in the results of continuing operations, is as follows (in thousands, except per share amounts):

	Three Months Ended						Three Months Ended						Nine Months Ended								Nine Months Ended
	September 30, 2011						September 30, 2010						September 30, 2011								September 30, 2010
	Income		Shares		EPS		Income		Shares		EPS		Loss			Shares		EPS			Loss			Shares		EPS
Basic earnings (loss) per share	$	1,110		15,113	$	0.07	$	947		14,659	$	0.06	$	(877	)		14,901	$	(0.06	)	$	(2,370	)		14,152	$	(0.17	)

Dilutives:
Options / Warrants		-		-		-		-		-		-		-			-		-			-			-		-

Diluted loss per share	$	1,110		15,113	$	0.07	$	947		14,659	$	0.06	$	(877	)		14,901	$	(0.06	)	$	(2,370	)		14,152	$	(0.17	)