1700000
P4Y
33604121
2325000
6.46
6.18
40571000
5489000
2200000
51931000
83000
7300000
2682000
64972000
4069000
100000000
6.88
33602000
225000
48380000
35671000
1545000
4802000
25000000
-49625000
113352000
6.58
363000
236000
1260000
2932000
41360000
0.00001
113352000
250000
29961000
33602000
7544000
48017000
40590000
5295000
0.00001
77366000
22700000
33300000
110335000
4262000
29231000
2
770000
6000000
33602000
-49625000
4262000
110335000
2751000
12857000
7808000
460000
3791000
24264000
5.69
12939000
4262000
2200000
51211000
93000
16800000
66658000
3325000
100000000
33500000
41005000
28696000
1270000
5414000
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-46626000
107663000
6.40
350000
246000
2054000
2613000
33319000
0.00001
107663000
225000
32152000
33500000
6545000
40655000
32558000
5209000
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71501000
21045000
33491000
109022000
4262000
30166000
761000
33500000
-46626000
4262000
109022000
2670000
12759000
7778000
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3387000
24157000
7.04
34800000
1200000
33600000
4900000
7.04
VITC
Vitacost.com, Inc.
false
Accelerated Filer
Q1
2013
10-Q
2013-03-31
0001401688
--12-31
-3006000
6975000
20000
775000
-2999000
775000
7.15
4.99
250000
2000
-0.09
102000
<div style="font: 10pt Times New Roman, Times, Serif">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<i><u>Concentration of credit risk</u></i>:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
The Company’s cash and cash equivalents were held by one
major financial institution and for certain accounts exceed
federally insured limits. These cash and cash equivalent balances
could be impacted if this financial institution fails or is
subjected to other adverse conditions in the financial
markets. To date, the Company has experienced no loss or lack
of access to its cash and cash equivalents.</p>
</div>
1655000
538000
-1012000
-1717000
<div style="FONT: 10pt Times New Roman, Times, Serif">
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
Property and equipment consists of the following as of March 31,
2013 and December 31, 2012:</p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<table style="WIDTH: 70%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0" align="center">
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">March 31,</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">December 31,</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; COLOR: black; FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; COLOR: black; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2013</td>
<td style="PADDING-BOTTOM: 1pt; COLOR: black; FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; COLOR: black; FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; COLOR: black; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td>
<td style="PADDING-BOTTOM: 1pt; COLOR: black; FONT-WEIGHT: bold" nowrap="nowrap"> </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">(In thousands)</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="TEXT-ALIGN: left; WIDTH: 64%">Buildings and building
improvements</td>
<td style="WIDTH: 1%; COLOR: black"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%; COLOR: black">$</td>
<td style="TEXT-ALIGN: right; WIDTH: 15%; COLOR: black">12,857</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%; COLOR: black"> </td>
<td style="WIDTH: 1%; COLOR: black"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%; COLOR: black">$</td>
<td style="TEXT-ALIGN: right; WIDTH: 15%; COLOR: black">12,759</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%; COLOR: black"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td style="TEXT-ALIGN: left">Furniture, fixtures and equipment</td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">24,264</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">24,157</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td>Computers</td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">3,791</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">3,387</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td>Software</td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">7,808</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">7,778</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="TEXT-ALIGN: left">Leasehold improvements</td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">2,751</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">2,670</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td style="PADDING-BOTTOM: 1pt">Land</td>
<td style="PADDING-BOTTOM: 1pt; COLOR: black"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; COLOR: black">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; COLOR: black">
460</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; COLOR: black">
 </td>
<td style="PADDING-BOTTOM: 1pt; COLOR: black"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; COLOR: black">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; COLOR: black">
460</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; COLOR: black">
 </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td> </td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">51,931</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">51,211</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Less accumulated
depreciation</td>
<td style="PADDING-BOTTOM: 1pt; COLOR: black"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; COLOR: black">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; COLOR: black">
(22,700</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; COLOR: black">
)</td>
<td style="PADDING-BOTTOM: 1pt; COLOR: black"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; COLOR: black">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; COLOR: black">
(21,045</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; COLOR: black">
)</td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td> </td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">29,231</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">30,166</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td style="PADDING-BOTTOM: 1pt">Construction-in-progress</td>
<td style="PADDING-BOTTOM: 1pt; COLOR: black"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; COLOR: black">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; COLOR: black">
4,069</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; COLOR: black">
 </td>
<td style="PADDING-BOTTOM: 1pt; COLOR: black"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; COLOR: black">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; COLOR: black">
3,325</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; COLOR: black">
 </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
$</td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
33,300</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
$</td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
33,491</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
</tr>
</table>
</div>
-612000
5.27
1469000
<div style="FONT: 10pt Times New Roman, Times, Serif">
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
Inventory consists of the following as of March 31, 2013 and
December 31, 2012:  </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<table style="WIDTH: 60%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0" align="center">
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">March 31,</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">December 31,</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2013</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">(In thousands)</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="TEXT-ALIGN: left; WIDTH: 64%">Bulk and other</td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%">$</td>
<td style="TEXT-ALIGN: right; WIDTH: 15%">770</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%">$</td>
<td style="TEXT-ALIGN: right; WIDTH: 15%">761</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Finished
goods</td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
40,590</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
32,558</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
$</td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
41,360</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
$</td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
33,319</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
</tr>
</table>
</div>
-2191000
8303000
-10000
P3Y7M6D
33519000
<div style="FONT: 10pt Times New Roman, Times, Serif">
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">A
summary of the Company’s stock option activity related to
common stock for the three months ended March 31, 2013 and 2012 is
as follows:</p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<table style="WIDTH: 80%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0" align="center">
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">2013</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">2012</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap">
 </td>
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Weighted-</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Weighted-</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap">
 </td>
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Average</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Average</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap">
 </td>
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Exercise</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Exercise</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Shares</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Price</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Shares</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Price</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="14" nowrap="nowrap">(In thousands except exercise price)</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="TEXT-INDENT: 0in; WIDTH: 40%">Outstanding at beginning
of period</td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: right; WIDTH: 12%">5,209</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%">$</td>
<td style="TEXT-ALIGN: right; WIDTH: 12%">6.40</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: right; WIDTH: 12%">4,262</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%">$</td>
<td style="TEXT-ALIGN: right; WIDTH: 12%">5.69</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td style="TEXT-INDENT: 0in">Granted</td>
<td> </td>
<td style="TEXT-ALIGN: left"> </td>
<td style="TEXT-ALIGN: right">510</td>
<td style="TEXT-ALIGN: left"> </td>
<td> </td>
<td style="TEXT-ALIGN: left"> </td>
<td style="TEXT-ALIGN: right">7.15</td>
<td style="TEXT-ALIGN: left"> </td>
<td> </td>
<td style="TEXT-ALIGN: left"> </td>
<td style="TEXT-ALIGN: right">1,653</td>
<td style="TEXT-ALIGN: left"> </td>
<td> </td>
<td style="TEXT-ALIGN: left"> </td>
<td style="TEXT-ALIGN: right">6.95</td>
<td style="TEXT-ALIGN: left"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="TEXT-INDENT: 0in">Exercised</td>
<td> </td>
<td style="TEXT-ALIGN: left"> </td>
<td style="TEXT-ALIGN: right">(102</td>
<td style="TEXT-ALIGN: left">)</td>
<td> </td>
<td style="TEXT-ALIGN: left"> </td>
<td style="TEXT-ALIGN: right">5.27</td>
<td style="TEXT-ALIGN: left"> </td>
<td> </td>
<td style="TEXT-ALIGN: left"> </td>
<td style="TEXT-ALIGN: right">(337</td>
<td style="TEXT-ALIGN: left">)</td>
<td> </td>
<td style="TEXT-ALIGN: left"> </td>
<td style="TEXT-ALIGN: right">3.69</td>
<td style="TEXT-ALIGN: left"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td style="TEXT-INDENT: 0in">Forfeited or expired</td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
(322</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
4.99</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
(89</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
6.87</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="TEXT-INDENT: 0in">Outstanding at period end</td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
5,295</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
$</td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
6.58</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
5,489</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
$</td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
6.18</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td style="TEXT-INDENT: 0in">Exercisable at period end</td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
2,682</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
$</td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
6.88</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
2,325</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
$</td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
6.46</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
</tr>
</table>
</div>
538000
97756000
319000
-2986000
8417000
538000
275000
<div style="FONT: 10pt Times New Roman, Times, Serif">
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
Securities that were not included in the calculation of diluted
earnings per share because to do so would have been antidilutive
for the periods presented, are as follows:</p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<table style="WIDTH: 70%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0" align="center">
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">Three Months Ended March 31,</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2013</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">(In thousands)</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="TEXT-ALIGN: left; WIDTH: 70%">Stock options</td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: right; WIDTH: 12%">2,682</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: right; WIDTH: 12%">2,325</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td style="PADDING-BOTTOM: 1pt">Warrants</td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
1,681</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
1,681</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; TEXT-INDENT: -0.125in; PADDING-LEFT: 0.125in">
Total antidilutive common stock equivalents excluded from diluted
earnings per share</td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
4,363</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
4,006</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
</tr>
</table>
</div>
<div style="FONT: 10pt Times New Roman, Times, Serif">
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"><b>4.
Property and Equipment</b></p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
Property and equipment consists of the following as of March 31,
2013 and December 31, 2012:</p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<table style="WIDTH: 70%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0" align="center">
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">March 31,</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">December 31,</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; COLOR: black; FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; COLOR: black; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2013</td>
<td style="PADDING-BOTTOM: 1pt; COLOR: black; FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; COLOR: black; FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; COLOR: black; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td>
<td style="PADDING-BOTTOM: 1pt; COLOR: black; FONT-WEIGHT: bold" nowrap="nowrap"> </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">(In thousands)</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="TEXT-ALIGN: left; WIDTH: 64%">Buildings and building
improvements</td>
<td style="WIDTH: 1%; COLOR: black"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%; COLOR: black">$</td>
<td style="TEXT-ALIGN: right; WIDTH: 15%; COLOR: black">12,857</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%; COLOR: black"> </td>
<td style="WIDTH: 1%; COLOR: black"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%; COLOR: black">$</td>
<td style="TEXT-ALIGN: right; WIDTH: 15%; COLOR: black">12,759</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%; COLOR: black"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td style="TEXT-ALIGN: left">Furniture, fixtures and equipment</td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">24,264</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">24,157</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td>Computers</td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">3,791</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">3,387</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td>Software</td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">7,808</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">7,778</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="TEXT-ALIGN: left">Leasehold improvements</td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">2,751</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">2,670</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td style="PADDING-BOTTOM: 1pt">Land</td>
<td style="PADDING-BOTTOM: 1pt; COLOR: black"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; COLOR: black">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; COLOR: black">
460</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; COLOR: black">
 </td>
<td style="PADDING-BOTTOM: 1pt; COLOR: black"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; COLOR: black">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; COLOR: black">
460</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; COLOR: black">
 </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td> </td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">51,931</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">51,211</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Less accumulated
depreciation</td>
<td style="PADDING-BOTTOM: 1pt; COLOR: black"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; COLOR: black">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; COLOR: black">
(22,700</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; COLOR: black">
)</td>
<td style="PADDING-BOTTOM: 1pt; COLOR: black"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; COLOR: black">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; COLOR: black">
(21,045</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; COLOR: black">
)</td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td> </td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">29,231</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="COLOR: black"> </td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
<td style="TEXT-ALIGN: right; COLOR: black">30,166</td>
<td style="TEXT-ALIGN: left; COLOR: black"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td style="PADDING-BOTTOM: 1pt">Construction-in-progress</td>
<td style="PADDING-BOTTOM: 1pt; COLOR: black"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; COLOR: black">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; COLOR: black">
4,069</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; COLOR: black">
 </td>
<td style="PADDING-BOTTOM: 1pt; COLOR: black"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; COLOR: black">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; COLOR: black">
3,325</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; COLOR: black">
 </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
$</td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
33,300</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
$</td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
33,491</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
</tr>
</table>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="TEXT-ALIGN: justify; TEXT-INDENT: 0px; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
Construction-in-progress was primarily related to the upgrade of
the Company’s Lexington, North Carolina distribution
facility.</p>
</div>
322000
25635000
<div style="FONT: 10pt Times New Roman, Times, Serif">
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">The
following table reconciles basic weighted-average shares
outstanding to diluted weighted-average shares outstanding for the
three months ended March 31, 2013 and 2012:</p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<table style="WIDTH: 70%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0" align="center">
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">Three Months Ended March 31,</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2013</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6">(In
thousands)</td>
<td style="FONT-WEIGHT: bold"> </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6">
 </td>
<td style="FONT-WEIGHT: bold"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="WIDTH: 70%">Weighted-average shares outstanding -
basic</td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: right; WIDTH: 12%">33,519</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: right; WIDTH: 12%">30,591</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Effect of
dilutive securities</td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
-</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
-</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="PADDING-BOTTOM: 2.5pt">Weighted-average shares
outstanding - diluted</td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
33,519</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
30,591</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
</tr>
</table>
</div>
33519000
<div style="FONT: 10pt Times New Roman, Times, Serif">
<p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
<b>7. Income Taxes</b></p>
<p style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">The
Company evaluates its deferred tax assets on a regular basis to
determine if valuation allowances are required. In its evaluation,
the Company considers taxable loss carryback availability,
expectations of sufficient future taxable income, trends in
earnings, existence of taxable income in recent years, the future
reversal of temporary differences and available tax planning
strategies that could be implemented, if
required.  Valuation allowances are established based on
the consideration of all available evidence using a more likely
than not standard.  Based on the Company’s
evaluation, a valuation allowance of $1.0 million was established
against its net deferred tax assets for the three months ended
March 31, 2013. This amount was in addition to the $16.8 million
valuation allowance that was recorded as of December 31, 2012.</p>
</div>
8041000
<div style="FONT: 10pt Times New Roman, Times, Serif">
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
<i><u>Restricted cash</u>:</i></p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
Restricted cash consists of cash pledged as collateral to secure
vendor obligations.</p>
</div>
<div style="font: 10pt Times New Roman, Times, Serif">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<i><u>Principles of consolidation</u>:</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
The consolidated financial statements include the accounts of
Vitacost and its wholly-owned subsidiary. All intercompany accounts
and transactions have been eliminated in consolidation.</p>
</div>
1000000
-10000
75127000
<div style="FONT: 10pt Times New Roman, Times, Serif">
<p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
<b>3. Inventory</b></p>
<p style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
Inventory consists of the following as of March 31, 2013 and
December 31, 2012:  </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<table style="WIDTH: 60%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0" align="center">
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">March 31,</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">December 31,</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2013</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">(In thousands)</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="TEXT-ALIGN: left; WIDTH: 64%">Bulk and other</td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%">$</td>
<td style="TEXT-ALIGN: right; WIDTH: 15%">770</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%">$</td>
<td style="TEXT-ALIGN: right; WIDTH: 15%">761</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Finished
goods</td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
40,590</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
32,558</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
$</td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
41,360</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
$</td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
33,319</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
</tr>
</table>
</div>
-3000
22629000
<div>
<p style="TEXT-ALIGN: justify; TEXT-TRANSFORM: none; TEXT-INDENT: 0px; MARGIN: 0pt 0px; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman', Times, serif; WHITE-SPACE: normal; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px">
<b>6.    Contingencies</b></p>
<p style="TEXT-ALIGN: justify; TEXT-TRANSFORM: none; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman', Times, serif; WHITE-SPACE: normal; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px">
 </p>
<p style="TEXT-TRANSFORM: none; TEXT-INDENT: 0px; MARGIN: 0pt 0px; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman', Times, serif; WHITE-SPACE: normal; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px">
<i><u>Securities Class Action</u>:</i></p>
<p style="TEXT-TRANSFORM: none; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman', Times, serif; WHITE-SPACE: normal; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px">
 </p>
<p style="TEXT-TRANSFORM: none; TEXT-INDENT: 0px; MARGIN: 0pt 0px; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman', Times, serif; WHITE-SPACE: normal; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px">
On May 24, 2010, a punitive class action complaint was filed in the
United States District Court for the Southern District of Florida
against the Company and certain current and former officers and
directors by a stockholder on behalf of herself and other
stockholders who purchased Vitacost common stock between September
24, 2009 and April 20, 2010, captioned Miyahira v. Vitacost.com,
Inc., Ira P. Kerker, Richard P. Smith, Stewart Gitler, Allen S.
Josephs, David N. Ilfeld, Lawrence A. Pabst, Eran Ezra, and Robert
G. Trapp, Case 9:10-cv-80644-KLR. After being appointed to
represent the purported class of shareholders, the lead plaintiffs
filed an amended complaint asserting claims under Sections 11,
12(a)(2), and 15 of the Securities Act of 1933 and Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, as amended, and
Rule 10b-5 promulgated thereunder against Vitacost, its current and
former officers and directors, and the underwriters of its initial
public offering (“IPO”). On December 12, 2011, the
Court granted defendants’ motion to dismiss the complaint,
and granted plaintiffs leave to amend.</p>
<p style="TEXT-TRANSFORM: none; TEXT-INDENT: 0px; MARGIN: 0pt 0px; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman', Times, serif; WHITE-SPACE: normal; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px">
 </p>
<p style="TEXT-TRANSFORM: none; TEXT-INDENT: 0px; MARGIN: 0pt 0px; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman', Times, serif; WHITE-SPACE: normal; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px">
On January 11, 2012, lead plaintiff filed its second amended
complaint asserting claims under Sections 11, 12(a)(2), and 15 of
the Securities Act of 1933 against Vitacost, its current and former
officers and directors, and its underwriters. Lead plaintiff
purports to bring its action on behalf of investors who purchased
stock in connection with or traceable to the Company’s IPO
between September 24, 2009 and April 20, 2010. The complaint
alleges that the defendants violated the federal securities laws
during the period by, among other things, disseminating false and
misleading statements and/or concealing material facts concerning
the Company’s current and prospective business and financial
results. The complaint also alleges that as a result of these
actions the Company’s stock price was artificially inflated
during the class period. The complaint seeks unspecified
compensatory damages, costs, and expenses.</p>
<p style="TEXT-TRANSFORM: none; TEXT-INDENT: 0px; MARGIN: 0pt 0px; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman', Times, serif; WHITE-SPACE: normal; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px">
 </p>
<p style="TEXT-TRANSFORM: none; TEXT-INDENT: 0px; MARGIN: 0pt 0px; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman', Times, serif; WHITE-SPACE: normal; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px">
</p>
<p style="TEXT-TRANSFORM: none; TEXT-INDENT: 0px; MARGIN: 0pt 0px; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman', Times, serif; WHITE-SPACE: normal; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px">
On June 25, 2012, the Southern District of Florida entered its
order granting defendants’ motion to dismiss in full and
dismissing the second amended complaint with prejudice. On July 23,
2012, lead plaintiff filed a notice of appeal to the Eleventh
Circuit of the order granting defendants’ motion to dismiss.
On May 5, 2013, the Eleventh Circuit issued its opinion affirming
the dismissal. The deadline for lead plaintiff to file a petition
for writ of certiorari in the U.S. Supreme Court is August 5,
2013.</p>
<p style="TEXT-TRANSFORM: none; TEXT-INDENT: 0px; MARGIN: 0pt 0px; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman', Times, serif; WHITE-SPACE: normal; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px">
 </p>
<p style="TEXT-TRANSFORM: none; TEXT-INDENT: 0px; MARGIN: 0pt 0px; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman', Times, serif; WHITE-SPACE: normal; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px">
The Company records provisions in its consolidated financial
statements for pending litigation when it determines that an
unfavorable outcome is probable and the amount of loss can be
reasonably estimated. As of March 31, 2013, the Company has
concluded that it is not probable that a loss has been incurred and
is unable to estimate the possible loss or range of loss that could
result from an unfavorable verdict. Therefore, the Company has not
provided any amounts in the consolidated financial statements for
an unfavorable outcome. The Company believes that it has
meritorious arguments for affirmation of the Southern District of
Florida’s order that it has raised in the appeal. It is
possible that the Company’s consolidated financial statements
could be materially adversely affected by an unfavorable
outcome.</p>
<p style="TEXT-TRANSFORM: none; TEXT-INDENT: 0px; MARGIN: 0pt 0px; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman', Times, serif; WHITE-SPACE: normal; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px">
<i> </i></p>
<p style="TEXT-TRANSFORM: none; TEXT-INDENT: 0px; MARGIN: 0pt 0px; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman', Times, serif; WHITE-SPACE: normal; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px">
<i><u>Sales or Other Taxes</u>:  </i></p>
<p style="TEXT-TRANSFORM: none; TEXT-INDENT: 0px; MARGIN: 0pt 0px; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman', Times, serif; WHITE-SPACE: normal; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px">
 </p>
<p style="TEXT-TRANSFORM: none; TEXT-INDENT: 0px; MARGIN: 0pt 0px; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman', Times, serif; WHITE-SPACE: normal; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px">
A number of states have sought to impose sales or other tax
collection obligations on online retailers. Certain states have
imposed such a sales tax obligation requirement on remote online
retailers that use residents of that state to directly or
indirectly refer potential customers, via a link on an internet
website or other means, to the online retailer for a
commission-based fee. There is still significant uncertainty as to
whether or how existing laws governing these matters apply to
Vitacost and how these laws will be interpreted for the Company and
other online retailers. As a result, it is currently not possible
to determine the ultimate outcome as to whether such potential
obligations apply to the Company under its specific facts and
circumstances. Because the Company does not believe that it is
probable such potential obligations are applicable to its specific
facts and circumstances, it has not accrued for such potential
obligations as of March 31, 2013. The Company is also currently
unable to estimate the amount of the loss, if any, should such
potential obligations apply. The eventual outcome of a successful
assertion by one or more states that the Company should collect
sales or other taxes may be materially different from any
provisions or disclosures the Company has previously made and could
have a material adverse effect on the Company’s financial
position, results of operations and cash flows.</p>
<p style="TEXT-TRANSFORM: none; TEXT-INDENT: 0px; MARGIN: 0pt 0px; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman', Times, serif; WHITE-SPACE: normal; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px">
<i> </i></p>
<p style="TEXT-TRANSFORM: none; TEXT-INDENT: 0px; MARGIN: 0pt 0px; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman', Times, serif; WHITE-SPACE: normal; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px">
<i><u>Other matters</u>:</i></p>
<p style="TEXT-TRANSFORM: none; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman', Times, serif; WHITE-SPACE: normal; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px">
 </p>
<p style="TEXT-TRANSFORM: none; TEXT-INDENT: 0px; MARGIN: 0pt 0px; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman', Times, serif; WHITE-SPACE: normal; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px">
In addition to the matter described above, the Company is involved
in litigation and administrative proceedings primarily arising in
the normal course of its business. In the opinion of the Company,
except as set forth above, its liability, if any, under any other
pending litigation or administrative proceedings would not
materially affect its financial condition, results of operations or
cash flows. Furthermore, the Company has not been the subject of
any product liability litigation.</p>
<p style="TEXT-ALIGN: justify; TEXT-TRANSFORM: none; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman', Times, serif; WHITE-SPACE: normal; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px">
<b> </b></p>
</div>
33519000
13000
4363000
-2999000
-794000
510000
13000
<div style="FONT: 10pt Times New Roman, Times, Serif">
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
<i><u>Earnings per share</u>:</i></p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">The
Company computed earnings per share by dividing net income by the
weighted-average number of common shares outstanding during the
period. Diluted earnings per share is computed by giving effect to
all potentially dilutive common shares, including stock options and
warrants. The following table reconciles basic weighted-average
shares outstanding to diluted weighted-average shares outstanding
for the three months ended March 31, 2013 and 2012:</p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<table style="WIDTH: 70%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0" align="center">
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">Three Months Ended March 31,</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2013</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6">(In
thousands)</td>
<td style="FONT-WEIGHT: bold"> </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6">
 </td>
<td style="FONT-WEIGHT: bold"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="WIDTH: 70%">Weighted-average shares outstanding -
basic</td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: right; WIDTH: 12%">33,519</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: right; WIDTH: 12%">30,591</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Effect of
dilutive securities</td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
-</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
-</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="PADDING-BOTTOM: 2.5pt">Weighted-average shares
outstanding - diluted</td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
33,519</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
30,591</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
</tr>
</table>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">For the
periods where the Company reported losses, all common stock
equivalents are excluded from the computation of diluted earnings
per share, since the result would be antidilutive. Securities that
were not included in the calculation of diluted earnings per share
because to do so would have been antidilutive for the periods
presented, are as follows:</p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<table style="WIDTH: 70%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0" align="center">
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">Three Months Ended March 31,</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2013</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">(In thousands)</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="TEXT-ALIGN: left; WIDTH: 70%">Stock options</td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: right; WIDTH: 12%">2,682</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: right; WIDTH: 12%">2,325</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td style="PADDING-BOTTOM: 1pt">Warrants</td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
1,681</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
1,681</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; TEXT-INDENT: -0.125in; PADDING-LEFT: 0.125in">
Total antidilutive common stock equivalents excluded from diluted
earnings per share</td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
4,363</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
4,006</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
</tr>
</table>
</div>
<div style="FONT: 10pt Times New Roman, Times, Serif">
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
<b>1.  Nature of Business, Significant Accounting
Policies and Recent Accounting Guidance</b></p>
<p style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
<b><i>Nature of Business  </i></b></p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
Vitacost.com, Inc.  (“Vitacost” or the
“Company”) is a leading online retailer of health and
wellness products, including dietary supplements such as vitamins,
minerals, herbs and other botanicals, as well as cosmetics, natural
personal care products, pet products, sports nutrition and health
foods. Vitacost was incorporated in 1994 and began its online
retail activity in 1999. Vitacost sells an internally
developed proprietary line of nutraceuticals as well as a wide
selection of other manufacturers’ brand-name health and
wellness products.  The Company ships products from two
distribution centers located in Lexington, North Carolina and Las
Vegas, Nevada.</p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
<b><i>Basis of presentation </i></b></p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">The
accompanying unaudited consolidated financial statements of
Vitacost as of March 31, 2013, and for the three months ended March
31, 2013 and 2012, have been prepared in accordance with accounting
principles generally accepted in the United States for interim
financial information along with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and notes required by generally accepted
accounting principles (“GAAP”) for annual financial
statements. In management’s opinion, Vitacost has made all
adjustments (consisting of normal, recurring and non-recurring
adjustments) during the quarter that were considered necessary for
the fair presentation of the financial position and operating
results of the Company. The preparation of financial statements in
conformity with GAAP requires management to make estimates and
assumptions that affect reported amounts in the financial
statements and accompanying notes. Actual results could differ from
those estimates. In addition, the results of operations for the
three months ended March 31, 2013 are not necessarily indicative of
the results for the entire fiscal year ending December 31, 2013, or
for any other period. These unaudited consolidated financial
statements should be read in conjunction with the consolidated
financial statements and related notes, together with
management’s discussion and analysis of financial position
and results of operations, contained in Vitacost’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2012
(the “Form 10-K”).</p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
<b><i>Significant Accounting Policies</i></b></p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
<i><u>Principles of consolidation</u>:</i></p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">The
consolidated financial statements include the accounts of Vitacost
and its wholly-owned subsidiary. All intercompany accounts and
transactions have been eliminated in consolidation.</p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
  <font style="COLOR: red"> </font></p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
<i><u>Earnings per share</u>:</i></p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">The
Company computed earnings per share by dividing net income by the
weighted-average number of common shares outstanding during the
period. Diluted earnings per share is computed by giving effect to
all potentially dilutive common shares, including stock options and
warrants. The following table reconciles basic weighted-average
shares outstanding to diluted weighted-average shares outstanding
for the three months ended March 31, 2013 and 2012:</p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<table style="WIDTH: 70%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0" align="center">
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">Three Months Ended March 31,</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2013</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6">(In
thousands)</td>
<td style="FONT-WEIGHT: bold"> </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6">
 </td>
<td style="FONT-WEIGHT: bold"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="WIDTH: 70%">Weighted-average shares outstanding -
basic</td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: right; WIDTH: 12%">33,519</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: right; WIDTH: 12%">30,591</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Effect of
dilutive securities</td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
-</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
-</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="PADDING-BOTTOM: 2.5pt">Weighted-average shares
outstanding - diluted</td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
33,519</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
30,591</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
</tr>
</table>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">For the
periods where the Company reported losses, all common stock
equivalents are excluded from the computation of diluted earnings
per share, since the result would be antidilutive. Securities that
were not included in the calculation of diluted earnings per share
because to do so would have been antidilutive for the periods
presented, are as follows:</p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<table style="WIDTH: 70%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0" align="center">
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">Three Months Ended March 31,</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2013</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">(In thousands)</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="TEXT-ALIGN: left; WIDTH: 70%">Stock options</td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: right; WIDTH: 12%">2,682</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: right; WIDTH: 12%">2,325</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td style="PADDING-BOTTOM: 1pt">Warrants</td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
1,681</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
1,681</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; TEXT-INDENT: -0.125in; PADDING-LEFT: 0.125in">
Total antidilutive common stock equivalents excluded from diluted
earnings per share</td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
4,363</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
4,006</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
</tr>
</table>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
<i><u>Restricted cash</u>:</i></p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
Restricted cash consists of cash pledged as collateral to secure
vendor obligations.</p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
<i><u>Fair value of financial instruments</u></i>:</p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
Existing accounting guidance defines fair value, establishes a
framework and gives guidance regarding the methods used for
measuring fair value, and requires disclosures about fair value
measurements. The guidance applies to all assets and liabilities
that are being measured and reported on a fair value basis. It
requires disclosure that establishes a framework for measuring fair
value in GAAP and about fair value measurements. This guidance
enables the reader of the financial statements to assess the inputs
used to develop those measurements by establishing a hierarchy for
ranking the quality and reliability of the information used to
determine fair values. Assets and liabilities carried at fair value
are classified and disclosed in one of the following three
categories:</p>
<p style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0">
<tr style="VERTICAL-ALIGN: top">
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: center; WIDTH: 12%"><font style="FONT: 10pt Times New Roman, Times, Serif"><i>Level
1</i>:</font></td>
<td style="WIDTH: 87%"><font style="FONT: 10pt Times New Roman, Times, Serif">Quoted market prices in
active markets for identical assets or liabilities.</font></td>
</tr>
</table>
<p style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0">
<tr style="VERTICAL-ALIGN: top">
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: center; WIDTH: 12%"><font style="FONT: 10pt Times New Roman, Times, Serif"><i>Level
2</i>:</font></td>
<td style="WIDTH: 87%"><font style="FONT: 10pt Times New Roman, Times, Serif">Observable market based
inputs or unobservable inputs that are corroborated by market
data.</font></td>
</tr>
</table>
<p style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0">
<tr style="VERTICAL-ALIGN: top">
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: center; WIDTH: 12%"><font style="FONT: 10pt Times New Roman, Times, Serif"><i>Level
3</i>:</font></td>
<td style="WIDTH: 87%"><font style="FONT: 10pt Times New Roman, Times, Serif">Unobservable inputs that
are not corroborated by market data.</font></td>
</tr>
</table>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">The
carrying amounts of other financial instruments, including cash,
cash equivalents, accounts receivable, other receivables and
accounts payable approximate fair value due to the short maturity
of these instruments. Cash and cash equivalents are a Level 1
instrument within the fair value hierarchy.</p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
<i><u>Concentration of credit risk</u></i>:</p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">The
Company’s cash and cash equivalents were held by one major
financial institution and for certain accounts exceed federally
insured limits. These cash and cash equivalent balances could be
impacted if this financial institution fails or is subjected to
other adverse conditions in the financial markets. To date,
the Company has experienced no loss or lack of access to its cash
and cash equivalents.</p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
<b><i>Recently Adopted and Recently Issued Accounting
Guidance</i></b></p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">The
Company did not adopt any accounting guidance nor was there any new
accounting guidance during the period that had or would have a
material impact on the Company’s consolidated financial
statements.</p>
</div>
<div style="FONT: 10pt Times New Roman, Times, Serif">
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
<b>5. Stock Option Plan</b></p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">In
September 2011, the Company obtained shareholder approval of the
2011 Incentive Compensation Plan (the “Plan”), which
replaced the 2007 Stock Award Plan (the “2007 Plan”).
The 2007 Plan, however, will continue to govern awards previously
granted under it. The Plan share reserve includes the sum of 6.0
million shares of the Company’s common stock, plus (i) any
shares of its common stock which have been reserved but not issued
pursuant to any awards granted under the 2007 Plan, and (ii) the
number of shares subject to outstanding awards under the 2007 Plan
that expire or otherwise terminate without having been exercised in
full, or are forfeited to or repurchased by the Company.</p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">A
summary of the Company’s stock option activity related to
common stock for the three months ended March 31, 2013 and 2012 is
as follows:</p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<table style="WIDTH: 80%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0" align="center">
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">2013</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">2012</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap">
 </td>
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Weighted-</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Weighted-</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap">
 </td>
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Average</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Average</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap">
 </td>
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Exercise</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Exercise</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Shares</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Price</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Shares</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Price</td>
<td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">
 </td>
</tr>
<tr style="VERTICAL-ALIGN: bottom">
<td nowrap="nowrap"> </td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
<td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="14" nowrap="nowrap">(In thousands except exercise price)</td>
<td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="TEXT-INDENT: 0in; WIDTH: 40%">Outstanding at beginning
of period</td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: right; WIDTH: 12%">5,209</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%">$</td>
<td style="TEXT-ALIGN: right; WIDTH: 12%">6.40</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: right; WIDTH: 12%">4,262</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
<td style="WIDTH: 1%"> </td>
<td style="TEXT-ALIGN: left; WIDTH: 1%">$</td>
<td style="TEXT-ALIGN: right; WIDTH: 12%">5.69</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td style="TEXT-INDENT: 0in">Granted</td>
<td> </td>
<td style="TEXT-ALIGN: left"> </td>
<td style="TEXT-ALIGN: right">510</td>
<td style="TEXT-ALIGN: left"> </td>
<td> </td>
<td style="TEXT-ALIGN: left"> </td>
<td style="TEXT-ALIGN: right">7.15</td>
<td style="TEXT-ALIGN: left"> </td>
<td> </td>
<td style="TEXT-ALIGN: left"> </td>
<td style="TEXT-ALIGN: right">1,653</td>
<td style="TEXT-ALIGN: left"> </td>
<td> </td>
<td style="TEXT-ALIGN: left"> </td>
<td style="TEXT-ALIGN: right">6.95</td>
<td style="TEXT-ALIGN: left"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="TEXT-INDENT: 0in">Exercised</td>
<td> </td>
<td style="TEXT-ALIGN: left"> </td>
<td style="TEXT-ALIGN: right">(102</td>
<td style="TEXT-ALIGN: left">)</td>
<td> </td>
<td style="TEXT-ALIGN: left"> </td>
<td style="TEXT-ALIGN: right">5.27</td>
<td style="TEXT-ALIGN: left"> </td>
<td> </td>
<td style="TEXT-ALIGN: left"> </td>
<td style="TEXT-ALIGN: right">(337</td>
<td style="TEXT-ALIGN: left">)</td>
<td> </td>
<td style="TEXT-ALIGN: left"> </td>
<td style="TEXT-ALIGN: right">3.69</td>
<td style="TEXT-ALIGN: left"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td style="TEXT-INDENT: 0in">Forfeited or expired</td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
(322</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
4.99</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
(89</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td>
<td style="PADDING-BOTTOM: 1pt"> </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right">
6.87</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td>
</tr>
<tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom">
<td style="TEXT-INDENT: 0in">Outstanding at period end</td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
5,295</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
$</td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
6.58</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
5,489</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
$</td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
6.18</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
</tr>
<tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom">
<td style="TEXT-INDENT: 0in">Exercisable at period end</td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
2,682</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
$</td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
6.88</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
 </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
2,325</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
<td style="PADDING-BOTTOM: 2.5pt"> </td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">
$</td>
<td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">
6.46</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td>
</tr>
</table>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">As of
March 31, 2013 there was $7.3 million of total unrecognized
compensation cost, net of estimated forfeitures, related to stock
options granted under the Company’s stock incentive plans,
which is expected to be recognized over a weighted average period
of 3.60 years.</p>
</div>
<div style="font: 10pt Times New Roman, Times, Serif">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<i><u>Fair value of financial instruments</u></i>:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
Existing accounting guidance defines fair value, establishes a
framework and gives guidance regarding the methods used for
measuring fair value, and requires disclosures about fair value
measurements. The guidance applies to all assets and liabilities
that are being measured and reported on a fair value basis. It
requires disclosure that establishes a framework for measuring fair
value in GAAP and about fair value measurements. This guidance
enables the reader of the financial statements to assess the inputs
used to develop those measurements by establishing a hierarchy for
ranking the quality and reliability of the information used to
determine fair values. Assets and liabilities carried at fair value
are classified and disclosed in one of the following three
categories:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">
 </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 1%"> </td>
<td style="width: 12%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><i>Level
1</i>:</font></td>
<td style="width: 87%"><font style="font: 10pt Times New Roman, Times, Serif">Quoted market prices in
active markets for identical assets or liabilities.</font></td>
</tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">
 </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 1%"> </td>
<td style="width: 12%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><i>Level
2</i>:</font></td>
<td style="width: 87%"><font style="font: 10pt Times New Roman, Times, Serif">Observable market based
inputs or unobservable inputs that are corroborated by market
data.</font></td>
</tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">
 </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 1%"> </td>
<td style="width: 12%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><i>Level
3</i>:</font></td>
<td style="width: 87%"><font style="font: 10pt Times New Roman, Times, Serif">Unobservable inputs that
are not corroborated by market data.</font></td>
</tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
The carrying amounts of other financial instruments, including
cash, cash equivalents, accounts receivable, other receivables and
accounts payable approximate fair value due to the short maturity
of these instruments. Cash and cash equivalents are a Level 1
instrument within the fair value hierarchy.</p>
</div>
999000
8915000
<div style="FONT: 10pt Times New Roman, Times, Serif">
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"><b>2.
Private Placement</b></p>
<p style="TEXT-INDENT: 26.9pt; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">On
February 16, 2012, the Company entered into a Purchase Agreement
(the “Purchase Agreement”) by and among Vitacost, JHH
Capital, LLC, an entity affiliated with Jeffrey Horowitz, our Chief
Executive Officer (“JHH”), Great Hill Equity Partners
III, L.P. (“Great Hill III”), Great Hill Equity
Partners IV, L.P. (“Great Hill IV”), Great Hill
Investors, LLC (“Great Hill Investors”), Freshford
Partners, LP (“Freshford Partners”), Freshford Master
Fund, Ltd (“Freshford Master Fund”) and Baron Small Cap
Fund (“Baron” and, together with JHH, Great Hill III,
Great Hill IV, Great Hill Investors, Freshford Partners, Freshford
Master Fund, collectively, the “Investors”) pursuant to
which the Investors purchased, and Vitacost sold, an aggregate of
4.9 million shares of the Company’s common stock at a
purchase price of $7.04 per share, and warrants to purchase an
aggregate of 1.7 million shares of the Company’s common stock
for an aggregate purchase price of $34.8 million. The warrants have
an exercise price of $7.04 per share and a term of four years. The
net proceeds of $33.6 million, after the deduction of fees of $1.2
million incurred in connection with the transaction, were allocated
between common stock and warrants based on their relative fair
values as of the purchase date.</p>
</div>
<div style="FONT: 10pt Times New Roman, Times, Serif">
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
<b><i>Recently Adopted and Recently Issued Accounting
Guidance</i></b></p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">The
Company did not adopt any accounting guidance nor was there any new
accounting guidance during the period that had or would have a
material impact on the Company’s consolidated financial
statements.</p>
</div>
1994
102000
-2999000
775000
538000
1681000
2682000
-6573000
445000
32000
-6554000
492000
6.95
6.87
55000
-0.21
337000
1554000
1244000
-4884000
-2367000
-700000
3.69
2422000
27632000
8174000
-4000
30591000
83592000
9000
-6541000
9133000
34883000
263000
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