XPO Logistics Announces Third Quarter 2011 Results

BUCHANAN, Mich.--(BUSINESS WIRE)--

XPO Logistics, Inc. (NYSE Amex: XPO), a leading provider of non-asset based, third-party logistics in the transportation industry, today announced financial results for the third quarter of 2011. Total revenue from continuing operations was $47.4 million, a 6.6% increase from the same period last year.

The company reported net income from continuing operations of $190,000 compared with net income from continuing operations of $1.7 million for the same period in 2010. Earnings per share for the third quarter of 2011 reflect a $44.6 million non-cash accounting charge related to the beneficial conversion features of the previously announced equity investment led by Jacobs Private Equity, LLC. This accounting charge resulted in a $5.38 loss per diluted share, compared with earnings of $0.21 per diluted share for the same period in 2010.

EBITDA was $775,000 for the third quarter, compared with $3.2 million for the same period in 2010. EBITDA was negatively impacted by $700,000 of indirect transaction costs related to the equity investment and $1.6 million of costs for executive recruitment and related fees. A reconciliation of EBITDA to net income is included below.

CEO Comments

Bradley Jacobs, chairman and chief executive officer, said, “While our overall operating results in the quarter were mixed, we're encouraged by the opportunities to enhance the earnings power of all three of our business units. We have an extensive plan in place to expand XPO through acquisitions, organic growth and the optimization of our operations. In addition, we've assembled a highly experienced management team with the specific expertise required for this strategy.”

Jacobs continued, “We began taking action immediately after we closed the equity investment in early September. For example, we're opening a new truck brokerage location in Phoenix this month to replicate the high-growth model of our Bounce Logistics operation. This is the first of what we intend to be an aggressive expansion of our truck brokerage footprint.”

Third Quarter 2011 Highlights by Business Unit

• Express-1 (expedited transportation solutions) generated revenue of $23.4 million, a 9.4% increase from the same period in 2010. Gross margin percentage was 21.4%, compared with 24.8% in 2010. Operating income was $2.5 million for the quarter, a 3% decrease from the same period last year. The year-over-year decrease in operating income for the quarter primarily reflects a higher percentage of third-party brokered loads in 2011, and the loss of one-time project work from 2010 that was not replaced this year.
• Concert Group Logistics (CGL) (freight forwarding) generated revenue of $16.9 million, a 9% decrease from the same period in 2010. The decrease was primarily the result of certain lost revenue from larger customers that more than offset an increase in the number of new customers. Operating income was $639,000 for the quarter, compared to $552,000 for the same period last year. Operating income benefited from an improvement in gross margin, reflecting a more favorable mix of higher-margin international business relative to lower-margin deferred shipments.
• Bounce Logistics (premium truck brokerage) generated revenue of $8.2 million, a 44.8% increase from the same period in 2010. Operating income was $499,000 for the quarter, a 78.2% increase over $280,000 for the same period last year. The improvements in revenue and operating income were primarily driven by increased volumes due to an improvement in sales productivity.
  
  

The XPO Growth Strategy

The company began implementing its growth strategy in September 2011 in three key areas:

Targeted acquisitions. The company intends to make selective acquisitions of non-asset based logistics truck brokerage businesses that would benefit from greater scale and potential access to capital, and may make similar acquisitions of freight forwarding, expedited and intermodal service businesses, among others. The company believes it is in a position to make the first phase of acquisitions by using existing cash and expanding its credit facilities.

Organic growth. The company is planning to add a significant number of new truck brokerage offices throughout North America, and is actively recruiting managers with a track record of building successful broker operations. The new brokerage offices are expected to generate revenue growth by developing customer and carrier relationships in new territories.

Optimized operations. The company intends to accelerate the earnings performance of its existing operations, acquired companies and greenfield locations by investing in an expanded sales and service workforce, implementing an advanced IT infrastructure, incorporating industry best practices, and leveraging scale to share capacity more efficiently and increase buying power.

Executive Team

In addition to Bradley Jacobs, chief executive officer, and Scott Malat, senior vice president–strategic planning, both announced previously, the following appointments are now effective:

J. Thomas Connolly, Senior Vice President–Acquisitions

J. Thomas Connolly is responsible for executing the company's growth strategy related to the acquisition of transportation logistics businesses. He most recently served as managing director of EVE Partners, LLC, a leading financial advisory firm whose practice is focused exclusively on the transportation logistics industry. He holds a master of business administration degree from the Goizueta Business School at Emory University.

Troy A. Cooper, Vice President–Finance

Troy Cooper is responsible for providing financial support to the company's business units to align performance with strategic objectives. Mr. Cooper was most recently with United Rentals, Inc., where he served as vice president–group controller responsible for field finance functions. Previously, he held controller positions with United Waste Systems, Inc. and OSI Specialties, Inc. (formerly a division of Union Carbide, Inc.). Mr. Cooper began his career in public accounting with Arthur Andersen and Co. and is a certified public accountant.

Gordon E. Devens, Senior Vice President and General Counsel

Beginning November 14, 2011, Gordon Devens will be responsible for all corporate legal matters, governance and compliance, as well as the company's legal interests relating to acquisitions and other growth initiatives. He was most recently vice president–corporate development with AutoNation, Inc., where he previously held positions as vice president–associate general counsel and senior counsel for its retail automotive group. Earlier, he was an associate at the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, where he specialized in mergers and acquisitions and securities law. He holds a doctorate of jurisprudence degree from the University of Michigan Law School.

M. Sean Fernandez, Chief Operating Officer

Sean Fernandez is responsible for the day-to-day operations and P&L performance of the company. Mr. Fernandez has more than 20 years of leadership experience with global companies in industries that include distribution, consumer goods manufacturing, trucking and transportation. He most recently served as senior vice president and general manager–consumables for NCR Corporation, and earlier held positions as vice president–new growth platforms with Avery Dennison Corporation; chief operating officer with SIRVA, Inc.; group president with Esselte Corporation; chief operating officer–Asia Pac operations and divisional president with Arrow Electronics, Inc.; and senior engagement manager with McKinsey & Company, Inc. He holds a master of business administration degree from Harvard Business School.

Mario A. Harik, Chief Information Officer

Beginning November 14, 2011, Mario Harik will be responsible for the design and implementation of the company's integrated technology infrastructure. Mr. Harik has consulted to Fortune 100 firms, and is experienced in building comprehensive IT organizations and proprietary platforms. His prior positions include chief information officer and senior vice president–research and development with Oakleaf Waste Management; chief technology officer with Tallan, Inc.; co-founder of G3 Analyst, where he served as chief architect of web and voice applications; and architect and consultant with Adea Solutions. Mr. Harik holds a master of engineering degree in information technology from Massachusetts Institute of Technology.

Richard M. Metzler, Senior Vice President–Acquisitions

Richard Metzler is responsible for acquisitions and business development. Mr. Metzler most recently served as chief commercial officer for Greatwide Logistics Services, LLC, with prior positions as executive vice president of marketing–Americas for DHL Express, Inc.; and senior vice president—marketing and customer service, Transport International Pool for GE Capital (now GE Trailer Fleet Services). Previously, he held numerous senior positions with Federal Express Corporation, including vice president and general manager, FedEx Logistics–Americas. Mr. Metzler is a member of the boards of directors of EcoSquid, Inc., Flash Global Logistics, Inc. and the Transportation Marketing and Sales Association.

Gregory W. Ritter, Senior Vice President–Brokerage Operations

Gregory Ritter is responsible for opening and developing new truck brokerage operations in North America, due diligence related to acquisitions, and recruitment of an expanded sales and carrier procurement workforce. Mr. Ritter has more than three decades of sales and management experience in multi-modal transportation logistics. He most recently served as the president of a brokerage subsidiary that he established for one of the top 10 transportation logistics providers in North America. Previously, Mr. Ritter spent 22 years with C.H. Robinson Worldwide.

Conference Call

The company will hold a conference call today, Monday, November 7, 2011, at 9:00 a.m. Eastern Time. Participants can call toll-free (from US/Canada) 1-877-407-8031; international callers dial +1-201-689-8031. A replay of the conference will be available until December 7, 2011, by calling toll-free (from US/Canada) 1-877-660-6853; international callers dial +1-201-612-7415. Use account code number 286 and conference ID number 380488. Additionally, the call will be archived on www.xpologistics.com.

Non-GAAP Financial Measures

Earnings before interest, taxes, depreciation and amortization (EBITDA), is a non-GAAP financial measure as defined under the rules and regulations of the SEC. “EBITDA” is defined as net income increased by the sum of interest expense, income taxes, depreciation and amortization. We believe EBITDA is a useful measure of operating performance because it allows management, investors and others to evaluate and compare our core operating results from period to period by removing the impact of our capital structure (interest expense from our outstanding debt), asset base (depreciation and amortization) and tax consequences. In addition to its use by management, we believe EBITDA is a measure widely used by securities analysts, investors and others to evaluate the financial performance of companies in our industry. Other companies may calculate EBITDA differently, and therefore our EBITDA may not be comparable to similarly titled measures of other companies. EBITDA is not a measure of financial performance or liquidity under United States generally accepted accounting principles, or GAAP, and should not be considered in isolation or as an alternative to net income, cash flows from operating activities and other measures determined in accordance with GAAP. Items excluded from EBITDA are significant and necessary components of the operations of our business, and, therefore, EBITDA should only be used as a supplemental measure of our operating performance.

About XPO Logistics, Inc.

Founded in 1989, XPO Logistics, Inc. is a non-asset based, third-party logistics provider of freight transportation services that uses a network of relationships with ground, sea and air carriers to find the best transportation solutions for its customers. The company offers its services through three distinct business units: Express-1, Inc. (expedited transportation solutions); Concert Group Logistics, Inc. (domestic and international freight forwarding); and Bounce Logistics, Inc. (premium truck brokerage). XPO Logistics serves more than 4,000 retail, commercial, manufacturing and industrial customers through six U.S. operations centers and 23 agent locations. www.xpologistics.com

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts, included in this press release, which address activities, events or developments that the company expects or anticipates will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), finding suitable merger or acquisition candidates, expansion and growth of the company's business and operations, and other such matters, are forward-looking statements. These statements are based on certain assumptions and analyses made by the company in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances. In some cases, readers can identify forward-looking statements by the use of forward-looking terms such as “may”, “will”, “should”, “expect”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue” or the negative of these terms or other comparable terms.

Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements. Factors that could adversely affect actual results and performance include, among others, potential fluctuations in quarterly operating results and expenses, government regulation, technology change, competition and the potential inability to identify and consummate acquisitions and arrange adequate financing. All of the forward-looking statements included in this press release speak only as of the date of this press release. All of the forward-looking statements included in this press release are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the company or its business or operations. The company assumes no obligation to update any such forward-looking statements.

XPO Logistics, Inc.
Condensed Consolidated Balance Sheets
		(Unaudited)
		September 30, 2011				December 31, 2010
ASSETS
Current assets:
Cash		$	71,473,000			$	561,000
Accounts receivable, net of allowances of $113,000 and $136,000, respectively			26,332,000				24,272,000
Prepaid expenses			607,000				257,000
Deferred tax asset, current			0				314,000
Income tax receivable			869,000				1,348,000
Other current assets			246,000				813,000
Total current assets			99,527,000				27,565,000
Property and equipment, net of $3,768,000 and $3,290,000 in accumulated depreciation, respectively			2,868,000				2,960,000
Goodwill			16,959,000				16,959,000
Identifiable intangible assets, net of $3,211,000 and $2,827,000 in accumulated amortization, respectively			8,162,000				8,546,000
Loans and advances			115,000				126,000
Other long-term assets			399,000				516,000
Total long-term assets			28,503,000				29,107,000
Total assets		$	128,030,000			$	56,672,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	7,130,000			$	8,756,000
Accrued salaries and wages			912,000				1,165,000
Accrued expenses, other			4,729,000				2,877,000
Deferred tax liability, current			94,000				0
Current maturities of long-term debt and capital leases			1,674,000				1,680,000
Other current liabilities			746,000				773,000
Total current liabilities			15,285,000				15,251,000
Line of credit			0				2,749,000
Long-term debt and capital leases, net of current maturities			873,000				2,083,000
Deferred tax liability, long-term			2,412,000				2,032,000
Other long-term liabilities			477,000				544,000
Total long-term liabilities			3,762,000				7,408,000
Stockholders' equity:
Preferred stock, $.001 par value; 10,000,000 shares; 75,000 shares and none issued and outstanding, respectively			42,794,000				0
Common stock, $.001 par value; 150,000,000 shares authorized; 8,297,891 and 8,171,881 shares issued,
respectively; and 8,252,891 and 8,126,881 shares outstanding, respectively			8,000				8,000
Additional paid-in capital			101,399,000				27,233,000
Treasury stock, at cost, 45,000 shares held			(107,000	)			(107,000	)
Accumulated (deficit) earnings			(35,111,000	)			6,879,000
Total stockholders' equity			108,983,000				34,013,000
Total liabilities and stockholders' equity		$	128,030,000			$	56,672,000

XPO Logistics, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
		Three Months Ended September 30,														Nine Months Ended September 30,
		2011				2010			Difference				%			2011				2010			Difference				%
Revenues
Operating revenue		$	47,389,000			$	44,448,000		$	2,941,000			6.6	%		$	132,991,000			$	116,430,000		$	16,561,000			14.2	%
Direct expense
Transportation services			35,539,000				32,992,000			2,547,000			7.7	%			99,568,000				86,131,000			13,437,000			15.6	%
Station commissions			2,798,000				2,785,000			13,000			0.5	%			8,387,000				7,798,000			589,000			7.6	%
Insurance			426,000				235,000			191,000			81.3	%			1,182,000				819,000			363,000			44.3	%
Other			406,000				297,000			109,000			36.7	%			1,247,000				705,000			542,000			76.9	%
Direct expense			39,169,000				36,309,000			2,860,000			7.9	%			110,384,000				95,453,000			14,931,000			15.6	%
Gross margin			8,220,000				8,139,000			81,000			1.0	%			22,607,000				20,977,000			1,630,000			7.8	%
SG&A expenses
Salaries & benefits			3,420,000				3,298,000			122,000			3.7	%			9,709,000				8,714,000			995,000			11.4	%
Purchased services			2,996,000				628,000			2,368,000			377.1	%			4,912,000				1,775,000			3,137,000			176.7	%
Depreciation & amortization			253,000				276,000			(23,000	)		-8.3	%			795,000				883,000			(88,000	)		-10.0	%
Other			1,081,000				1,017,000			64,000			6.3	%			3,078,000				2,520,000			558,000			22.1	%
Total SG&A expenses			7,750,000				5,219,000			2,531,000			48.5	%			18,494,000				13,892,000			4,602,000			33.1	%
Operating income			470,000				2,920,000			(2,450,000	)		-83.9	%			4,113,000				7,085,000			(2,972,000	)		-41.9	%
Other expense			-				48,000			(48,000	)		-100.0	%			62,000				102,000			(40,000	)		-39.2	%
Interest expense			49,000				32,000			17,000			53.1	%			145,000				140,000			5,000			3.6	%
Income before income tax			421,000				2,840,000			(2,419,000	)		-85.2	%			3,906,000				6,843,000			(2,937,000	)		-42.9	%
Income tax provision (benefit)			231,000				1,110,000			(879,000	)		-79.2	%			1,685,000				2,775,000			(1,090,000	)		-39.3	%
Net income			190,000				1,730,000			(1,540,000	)		-89	%			2,221,000				4,068,000			(1,847,000	)		-45	%
Preferred stock beneficial conversion charge
and dividends			(44,586,000	)			-			(44,586,000	)		-				(44,586,000	)			-			(44,586,000	)		-
Net (loss) income available to common shareholders		$	(44,396,000	)		$	1,730,000		$	(46,126,000	)		-2666.2	%		$	(42,365,000	)		$	4,068,000		$	(46,433,000	)		-1141.4	%
Basic (loss) earnings per common share			(5.38	)			0.21										(5.15	)			0.51
Diluted (loss) earnings per share			(5.38	)			0.21										(5.15	)			0.50
Basic weighted average common shares outstanding			8,252,891				8,095,376										8,227,375				8,038,723
Diluted weighted average common shares outstanding			8,252,891				8,252,186										8,227,375				8,185,456

Express-1, Inc.
Schedule of Operating Income
(Unaudited)
		Three Months Ended September 30,													Nine Months Ended September 30,
		2011			2010			Difference				%			2011			2010			Difference				%
Revenues
Operating revenue		$	23,419,000		$	21,407,000		$	2,012,000			9.4	%		$	67,221,000		$	58,176,000		$	9,045,000			15.5	%
Direct expense
Transportation services			17,634,000			15,590,000			2,044,000			13.1	%			50,888,000			42,929,000			7,959,000			18.5	%
Insurance			371,000			208,000			163,000			78.4	%			1,038,000			724,000			314,000			43.4	%
Other			406,000			298,000			108,000			36.2	%			1,247,000			705,000			542,000			76.9	%
Direct expense			18,411,000			16,096,000			2,315,000			14.4	%			53,173,000			44,358,000			8,815,000			19.9	%
Gross margin			5,008,000			5,311,000			(303,000	)		-5.7	%			14,048,000			13,818,000			230,000			1.7	%
SG&A expenses
Salaries & benefits			1,732,000			1,919,000			(187,000	)		-9.7	%			5,209,000			5,075,000			134,000			2.6	%
Purchased services			365,000			339,000			26,000			7.7	%			1,066,000			866,000			200,000			23.1	%
Depreciation & amortization			93,000			123,000			(30,000	)		-24.4	%			317,000			362,000			(45,000	)		-12.4	%
Other			365,000			398,000			(33,000	)		-8.3	%			1,088,000			852,000			236,000			27.7	%
Total SG&A expenses			2,555,000			2,779,000			(224,000	)		-8.1	%			7,680,000			7,155,000			525,000			7.3	%
Operating income		$	2,453,000		$	2,532,000		$	(79,000	)		-3.1	%		$	6,368,000		$	6,663,000		$	(295,000	)		-4.4	%
Total depreciation and amortization for the Express-1 operating segment, included in both direct expense and SG&A, was $144,000 and
$172,000 for the three-month periods ended September 30, 2011 and 2010, respectively, and $465,000 and $505,000 for the nine-month
periods ended September 30, 2011 and 2010, respectively.

Concert Group Logistics, Inc.
Schedule of Operating Income
(Unaudited)
		Three Months Ended September 30,													Nine Months Ended September 30,
		2011			2010			Difference				%			2011				2010			Difference				%
Revenues
Operating revenue		$	16,918,000		$	18,586,000		$	(1,668,000	)		-9.0	%		$	48,379,000			$	47,598,000		$	781,000			1.6	%
Direct expense
Transportation services			12,231,000			13,889,000			(1,658,000	)		-11.9	%			34,643,000				34,767,000			(124,000	)		-0.4	%
Station commissions			2,798,000			2,785,000			13,000			0.5	%			8,387,000				7,798,000			589,000			7.6	%
Insurance			35,000			25,000			10,000			40.0	%			99,000				87,000			12,000			13.8	%
Other			-			-			-							(1,000	)			1,000			(2,000	)		-200.0	%
Direct expense			15,064,000			16,699,000			(1,635,000	)		-9.8	%			43,128,000				42,653,000			475,000			1.1	%
Gross margin			1,854,000			1,887,000			(33,000	)		-1.7	%			5,251,000				4,945,000			306,000			6.2	%
SG&A expenses
Salaries & benefits			696,000			789,000			(93,000	)		-11.8	%			2,123,000				2,002,000			121,000			6.0	%
Purchased services			123,000			64,000			59,000			92.2	%			310,000				154,000			156,000			101.3	%
Depreciation & amortization			144,000			140,000			4,000			2.9	%			430,000				484,000			(54,000	)		-11.2	%
Other			252,000			342,000			(90,000	)		-26.3	%			878,000				942,000			(64,000	)		-6.8	%
Total SG&A expenses			1,215,000			1,335,000			(120,000	)		-9.0	%			3,741,000				3,582,000			159,000			4.4	%
Operating income		$	639,000		$	552,000		$	87,000			15.8	%		$	1,510,000			$	1,363,000		$	147,000			10.8	%

Bounce Logistics, Inc.
Schedule of Operating Income
(Unaudited)
		Three Months Ended September 30,														Nine Months Ended September 30,
		2011			2010				Difference				%			2011			2010				Difference			%
Revenues
Operating revenue		$	8,246,000		$	5,696,000			$	2,550,000			44.8	%		$	20,916,000		$	13,494,000			$	7,422,000		55.0	%
Direct expense
Transportation services			6,868,000			4,754,000				2,114,000			44.5	%			17,562,000			11,273,000				6,289,000		55.8	%
Insurance			20,000			2,000				18,000			900.0	%			45,000			8,000				37,000		462.5	%
Other			-			(1,000	)			1,000			-100.0	%			1,000			(1,000	)			2,000		-200.0	%
Direct expense			6,888,000			4,755,000				2,133,000			44.9	%			17,608,000			11,280,000				6,328,000		56.1	%
Gross margin			1,358,000			941,000				417,000			44.3	%			3,308,000			2,214,000				1,094,000		49.4	%
SG&A expenses
Salaries & benefits			681,000			472,000				209,000			44.3	%			1,779,000			1,216,000				563,000		46.3	%
Purchased services			38,000			34,000				4,000			11.8	%			113,000			60,000				53,000		88.3	%
Depreciation & amortization			11,000			8,000				3,000			37.5	%			32,000			23,000				9,000		39.1	%
Other			129,000			147,000				(18,000	)		-12.2	%			575,000			397,000				178,000		44.8	%
Total SG&A expenses			859,000			661,000				198,000			30.0	%			2,499,000			1,696,000				803,000		47.3	%
Operating income		$	499,000		$	280,000			$	219,000			78.2	%		$	809,000		$	518,000			$	291,000		56.2	%

XPO Corporate
Schedule of SG&A Expense
(Unaudited)
		Three Months Ended September 30,												Nine Months Ended September 30,
		2011			2010			Difference			%			2011			2010			Difference			%
SG&A expenses
Salaries & benefits		$	311,000		$	118,000		$	193,000		163.6	%		$	598,000		$	421,000		$	177,000		42.0	%
Purchased services			2,470,000			191,000			2,279,000		1193.2	%			3,423,000			695,000			2,728,000		392.5	%
Depreciation & amortization			5,000			5,000			-		0.0	%			16,000			14,000			2,000		14.3	%
Other			335,000			130,000			205,000		157.7	%			537,000			329,000			208,000		63.2	%
Total SG&A expenses		$	3,121,000		$	444,000		$	2,677,000		602.9	%		$	4,574,000		$	1,459,000		$	3,115,000		213.5	%

XPO Logistics, Inc. Consolidated Reconciliation of EBITDA to Net Income (Unaudited)
		Three Months Ended September 30,													Nine Months Ended September 30,
		2011			2010			Difference				%			2011			2010			Difference				%
Net Income		$	190,000		$	1,730,000		$	(1,540,000	)		-89	%		$	2,221,000		$	4,068,000		$	(1,847,000	)		-45	%
Interest			49,000			32,000			17,000			53.1	%			145,000			140,000			5,000			3.6	%
Tax provision			231,000			1,110,000			(879,000	)		-79.2	%			1,685,000			2,775,000			(1,090,000	)		-39.3	%
Depreciation & amortization			305,000			325,000			(20,000	)		-6.2	%			944,000			1,026,000			(82,000	)		-8.0	%
EBITDA		$	775,000		$	3,197,000		$	(2,422,000	)		-75.8	%		$	4,995,000		$	8,009,000		$	(3,014,000	)		-37.6	%

XPO Logistics, Inc.
Diluted Share Information
		Weighted average		Weighted average
		diluted shares for		diluted shares for
		the three months ended		the nine months ended
		September 30, 2011		September 30, 2011
Common stock outstanding		8,252,891		8,227,382
Full dilution of preferred stock		3,260,870		1,098,901
Full dilution of warrants		4,564,303		3,634,255
Full dilution of outstanding stock options		402,819		360,693
Full dilution of restricted stock units		559		186
Total		16,481,442		13,321,417
For dilution purposes, GAAP requires diluted shares to be reflected on a weighted average basis, which
takes into account the portion of the period in which the diluted shares were outstanding. The table above
reflects the weighted average diluted shares for the three- and nine-month periods ended September 30,
2011. The impact of this dilution was not reflected in the earnings per share calculations on the
Condensed Consolidated Statements of Operations because the impact was anti-dilutive.
For informational purposes, the following table represents fully diluted shares as of September 30, 2011,
calculated on a non-weighted basis without giving effect to the portion of any period in which the diluted
shares were outstanding. The dilutive effect of warrants and options in the table was calculated using the
average closing market price of common stock for the three-month period ended September 30, 2011.
		Diluted shares as of
		September 30, 2011
Common stock outstanding		8,252,891
Full dilution of preferred stock		10,714,286
Full dilution of warrants		4,564,303
Full dilution of outstanding stock options		402,819
Full dilution of restricted stock units		559
Total		23,934,858

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