1. UNAUDITED INTERIM FINANCIAL STATEMENTS

9 Months Ended

Sep. 30, 2018

Notes

1. UNAUDITED INTERIM FINANCIAL STATEMENTS

1.     UNAUDITED INTERIM FINANCIAL STATEMENTS

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (Topic 606) “Revenue from Contracts with Customers.”  Topic 606 supersedes the revenue recognition requirements in Accounting Standards Codification Topic 605, “Revenue Recognition”, and requires entities to recognize revenue when they transfer control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services.  We adopted Topic 606 as of January 1, 2018.  The adoption of Topic 606 did not have a material impact to our consolidated financial statements, including the presentation of revenues in our Consolidated Statements of Income because the revenue of the Company does not include contracts that extend over several periods.

The unaudited condensed consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.  Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The accompanying unaudited condensed consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements of the Company and notes thereto for the year ended December 31, 2017.

Certain reclassifications have been made to prior period balances to conform with the presentation for the current period.  These reclassifications did not impact the net income (loss).

The information furnished reflects, in the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of the interim periods presented. Operating results of the interim period are not necessarily indicative of the amounts that will be reported for the year ending December 31, 2018.  

Income (Loss) Per Share

Income (loss) per share – basic is calculated by dividing net income (loss) by the weighted average number of shares of stock outstanding during the year, including shares issuable without additional consideration. Income per share – assuming dilution is calculated by dividing net income by the weighted average number of shares outstanding during the year adjusted for the effect of dilutive potential shares calculated using the treasury stock method.

Schedule of Income (Loss) Per Share
	Three Months Ended		Nine Months Ended
	September 30, 2018	September 30, 2017	September 30, 2018	September 30, 2017
Net income (loss):
Income from continuing operations	$100,910	$3,587	$33,046	$50,267
Income (loss) from discontinued operations – See Note 8	(13,825)	(19,211)	166,462	(76,380)
Net income (loss)	$87,085	$(15,624)	$199,508	$(26,113)
Preferred stock dividends	(5,044)	(6,725)	(15,131)	(20,174)
Net income (loss) available to common shareholders	82,041	(22,349)	184,377	(46,287)
Basic income (loss) per share:
Weighted average common shares outstanding used in income (loss) per share	11,909,052	11,871,009	11,883,830	11,871,009
Basic income (loss) per share:
Continuing operations	0.01	0.00	0.00	0.00
Discontinued operations – See Note 8	(0.00)	(0.00)	0.01	(0.01)
Basic income (loss) per share	0.01	(0.00)	0.02	(0.00)
Diluted income (loss) per share:
Shares used in diluted income (loss) per share	14,851,830	14,887,069	14,815,054	14,833,073
Diluted income (loss) per share:
Continuing operations	0.01	0.00	0.00	0.00
Discontinued operations – See Note 8	(0.00)	(0.00)	0.01	(0.01)
Diluted income (loss) per share	0.01	(0.00)	0.01	(0.00)
Computation of shares used in income (loss) per share:
Weighted average shares and share equivalents outstanding – basic	11,909,052	11,871,009	11,883,830	11,871,009
Effect of preferred stock	987,102	987,102	987,102	987,102
Effect of dilutive stock options	1,727,251	1,796,778	1,716,322	1,745,847
Effect of dilutive warrants	228,425	232,180	227,800	229,115
Weighted average shares and share equivalents outstanding – diluted	14,851,830	14,887,069	14,815,054	14,833,073

Schedule of Anti-dilutive Securities Excluded
	Three Months Ended		Nine Months Ended
	September 30, 2018	September 30, 2017	September 30, 2018	September 30, 2017
Preferred stock	-	-	-	-
Stock options	266,000	-	266,000	-
Warrants	-	-	-	-
Convertible promissory notes	29,256	158,444	29,256	158,444
Total anti-dilutive securities excluded	295,256	158,444	295,256	158,444

Anti-dilutive securities consist of stock options and convertible promissory notes whose exercise price or conversion price, respectively, was greater than the average market price of the common stock.