NET INCOME PER COMMON SHARE

12 Months Ended

Dec. 31, 2023

NET INCOME PER COMMON SHARE [Abstract]

3.	NET INCOME PER COMMON SHARE

Basic and diluted earnings per share (“EPS”) are determined in accordance with ASC Topic 260, “Earnings per Share”, which specifies the computation, presentation and disclosure requirements for EPS. Basic EPS excludes all dilutive Common Stock equivalents. It is based upon the weighted average number of common shares outstanding during the period. Diluted EPS, as calculated using the treasury stock method, reflects the potential dilution that would occur if our dilutive outstanding stock options and stock awards were issued.

During the year ended December 31, 2022, the Company presented its basic and diluted income per common share using the two-class method, which requires all outstanding Series A Preferred Stock (“Series A Preferred Stock”) and unvested shares of Restricted Stock that contain rights to non-forfeitable dividends and therefore participate in undistributed income with common shareholders to be included in computing income per common 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 income is then allocated to Common Stock and participating securities based on their respective rights to receive dividends. Series A Preferred Stock and shares of unvested Restricted Stock contain non-forfeitable rights to dividends on an if-converted basis and on the same basis as shares of the Company’s Common Stock, respectively, and are considered participating securities. The Series A Preferred Stock and unvested Restricted Stock are not included in the computation of basic income per common 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. However, the cumulative dividends on Series A Preferred Stock for the period decreases the income or increases the net loss allocated to common shareholders unless the dividend is paid in the period. Basic income per common share has been computed by dividing net income allocated to common shareholders by the weighted-average number of common shares outstanding.

On November 30, 2022, the Company exercised in full its right of mandatory conversion of the Company’s Series A Preferred Stock. In connection with the conversion, each share of Series A Preferred Stock was cancelled and converted into 423.729 shares of the Company’s Common Stock, no par value per share (the “Common Stock”). No shares of Series A Preferred Stock remain outstanding and all rights of the holders to receive future dividends have been terminated. As a result of the conversion, the aggregate 12,700 shares of Series A Preferred Stock outstanding were converted into 5,381,356 shares of Common Stock. As of December 31, 2023, the Company still maintains Restricted Stock, but these shares do not participate in the disbursement of dividends.

The following is a reconciliation of the numerator and denominator of the net income per share computations for the years ended December 31, 2023 and 2022:

	Year Ended December 31,
(in thousands, except share data)	2023		2022
Numerator:
Net income	$	25,997	$	12,634
Less: preferred stock dividend		-		(1,111	)
Less: allocation to preferred stockholders		-		(1,753	)
Less: allocation to restricted stockholders		-		(559	)
Net income allocated to common stockholders	$	25,997	$	9,211

Basic net income per share:
Denominator:
Weighted average common shares outstanding		30,105,194		25,879,483
Basic net income per share	$	0.86	$	0.36

Diluted net income per share:
Denominator:
Weighted average number of:
Common shares outstanding		30,540,628		25,879,483
Dilutive shares outstanding		30,540,628		25,879,483
Diluted net income per share	$	0.85	$	0.36

The following table summarizes the potential weighted average shares of Common Stock that were excluded from the determination of our diluted shares outstanding as they were anti-dilutive:

	Year Ended December 31,
	2023		2022
Unvested restricted stock		-		516,233
		-		516,233