Note 6. EARNINGS (LOSS) PER SHARE

12 Months Ended

Dec. 31, 2011

Earnings Per Share [Text Block]

Note 6.    EARNINGS (LOSS) PER SHARE

The consolidated financial statements include basic and diluted earnings (loss) per share. Diluted per share information is calculated by considering the impact of potential common stock on the weighted average shares outstanding. Potential common stock consists of (a) incremental shares that would be available for issuance upon the assumed exercise of stock options “in the money” based on the average stock price for the respective period and (b) convertible preferred shares accounted for using the “if converted” basis, which assumes their conversion to common stock at a ratio of 16.6:1, pursuant to the terms of the Recapitalization, as defined and described in Note 8. The basic and diluted earnings per share (“EPS”) calculations are as follows:

	For the Years Ended December 31,
	2011			2010
	(Amounts in Thousands, except per share amounts)
Loss from continuing operations	$	(9,135	)	$	(8,628	)
Discontinued operations		13,942			3,561
Net income (loss)	$	4,807		$	(5,067	)
Average common shares outstanding - Basic		7,951			7,951
Dilutive effect of stock options		-			-
Dilutive effect of convertible preferred stock		18,859			-
Average common shares outstanding - Diluted		26,810			7,951
Per share amount - Basic:
Loss from continuing operations	$	(1.15	)	$	(1.09	)
Discontinued operations		1.75			0.45
Net income (loss)	$	0.60		$	(0.64	)
Per share amount - Diluted:
Loss from continuing operations	$	(0.34	)	$	(1.09	)
Discontinued operations		0.52			0.45
Net income (loss)	$	0.18		$	(0.64	)

As of December 31, 2011, no options were in the money and 38,000 options were out of the money. As of December 31, 2010, 250,000 options were in-the-money and 1,112,000 options were out-of-the money.  At December 31, 2011 and 2010, 1,131,551 convertible preferred shares were outstanding, which are in total convertible into 18,859,183 shares of Katy common stock.  In-the-money options and convertible preferred shares were not included in the calculation of diluted earnings (loss) per share for the year ended December 31, 2010 because of their anti-dilutive impact as a result of the Company’s net loss position.