NOTE 4 – EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per common share is based only on the average number of shares of Common Stock outstanding for the periods. Diluted earnings (loss) per common share reflects the effect of shares of Common Stock issuable upon the exercise of options, unless the effect on earnings is antidilutive.

Diluted earnings (loss) per common share is computed using the treasury stock method. Under this method, the aggregate number of shares of Common Stock outstanding reflects the assumed use of proceeds from the hypothetical exercise of any outstanding options to purchase shares of Common Stock. The average market value for the period is used as the assumed purchase price.

The following table sets forth the elements of basic and diluted earnings (loss) per common share:

	Three months ended				Nine months ended
	September 30,				September 30,
	2017		2016		2017		2016
Numerator for basic and diluted earnings (loss) per common share:

Net income (loss) from continuing operations	$	5,000	$	(286,000)	$	(38,000)	$	(5,590,000)
Net income from discontinued operations		—		187,000		—		12,430,000
Net income (loss)	$	5,000	$	(99,000)	$	(38,000)	$	6,840,000

Denominator:
For basic earnings (loss) per share - weighted average common shares outstanding		3,617,000		3,598,000		3,609,000		3,598,000
Dilutive securities ⁽¹⁾		160,000		—		—		—
For diluted earnings (loss) per share - weighted average common shares outstanding		3,777,000		3,598,000		3,609,000		3,598,000

⁽¹⁾

Dilutive securities consist of “in the money” stock options.

At September 30, 2017 and 2016, there were outstanding stock options whose exercise prices were higher than the average market values of the underlying Common Stock for the period. For all periods presented, other than the three months ended September 30, 2017, these options are considered anti-dilutive and are excluded from the computation of diluted earnings (loss) per share. The weighted average of anti-dilutive stock options outstanding was as follows:

	Three months ended				Nine months ended
	September 30,				September 30,
	2017		2016		2017		2016
Weighted average antidilutive stock options outstanding		138,000		73,000		86,000		78,000