3.	EARNINGS PER SHARE

The Company presents basic and diluted earnings (loss) per share using the two-class method which requires all outstanding Series A Preferred Stock and unvested restricted stock that contain rights to non-forfeitable dividends and therefore participate in undistributed earnings with common shareholders be included in computing earnings per share. Under the two-class method, net income is reduced by the amount of dividends declared in the period for each class of common stock and participating security. The remaining undistributed earnings are then allocated to common stock and participating securities, based on their respective rights to receive dividends. Series A Preferred Stock and unvested restricted stock contain non-forfeitable rights to dividends on an if-converted basis and on the same basis as common shares, respectively, and are considered participating securities. Basic earnings (loss) per share has been computed by dividing net income (loss) allocated to common shareholders by the weighted-average number of common shares outstanding.

The Series A Preferred Stock and unvested restricted stock are not included in the computation of basic earnings (loss) per share in periods in which we have a net loss, as the Series A Preferred Stock and unvested restricted stock are not contractually obligated to share in our net losses. The two-class method was not applicable for the years ended December 31, 2018 and 2017 and was calculated using the treasury stock method. Dilutive potential common shares include outstanding stock options, unvested restricted stock and Series A Preferred Stock. The Company uses the more dilutive method of calculating the diluted earnings per share by applying the more dilutive of either (a) the treasury stock method, if-converted method, or (b) the two-class method in its diluted EPS calculation. Potentially dilutive shares are determined by applying the treasury stock method to the assumed exercise of outstanding stock options and the assumed vesting of restricted stock. Potentially dilutive shares issuable upon conversion of the Series A Preferred Stock are calculated using the if-converted method.

For the year ended December 31, 2019, diluted earnings per share was calculated using the two-class method because these amounts are more dilutive than applying the treasury stock method and if-converted methods which yielded antidilutive shares of 692,942 and 88,848 for Series A Preferred Stock and restricted shares, respectively, for the year ended December 31, 2019.

For the years ended December 31, 2018, and 2017, options to acquire 50,422, and 570,306 shares, respectively, were excluded from the below table because the Company reported a net loss for the year and, therefore, their impact on reported loss per share would have been antidilutive. For the years ended December 31, 2019, 2018 and 2017, options to acquire 116,000, 139,000, and 167,667 shares, respectively, were excluded from the below table because they have an exercise price that is greater than the average market price of the Company’s common stock and, therefore, their impact on reported loss per share would have been antidilutive.

The following is a reconciliation of the numerator and denominator of the diluted net income (loss) per share computations for the periods presented below:

	Year Ended December 31,
(in thousands, except share data)	2019			2018			2017
Numerator:
Net income (loss)	$	2,015		$	(6,545	)	$	(11,484	)
Less: preferred stock dividend		-			-			-
Less: allocation to preferred stockholders		(54	)		-			-
Less: allocation to restricted stockholders		(38	)		-			-
Net income (loss) allocated to common stockholders	$	1,923		$	(6,545	)	$	(11,484	)

Basic earnings (loss) per share:
Denominator:
Weighted average common shares outstanding		24,554,033			24,423,479			23,906,395
Basic earnings (loss) per share	$	0.08		$	(0.27	)	$	(0.48	)

Diluted earnings (loss) per share:
Denominator:
Weighted average number of:
Common shares outstanding		24,554,033			24,423,479			23,906,395
Dilutive potential common shares outstanding:
Series A Preferred Stocck		-			-			-
Unvested restricted stock		-			-			-
Stock options		-			-			-
Dilutive shares outstanding		24,554,033			24,423,479			23,906,395
Diluted earnings (loss) per share	$	0.08		$	(0.27	)	$	(0.48	)