EARNINGS (LOSS) PER SHARE

9 Months Ended

Sep. 30, 2018

NOTE 3 – 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,
	2018		2017		2018		2017
Numerator for basic and diluted earnings (loss) per common share:
Net income (loss)	$	541,000	$	5,000	$	911,000	$	(38,000	)

Denominator:
Denominator for basic earnings (loss) per share - weighted average common shares outstanding		3,701,000		3,617,000		3,626,000		3,609,000
Dilutive securities (1)		83,000		160,000		112,000		—
Denominator for diluted earnings (loss) per share - weighted average common shares outstanding		3,784,000		3,777,000		3,738,000		3,609,000

(1)

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

At September 30, 2017, there were outstanding stock options whose exercise prices were higher than the average market values of the underlying Common Stock for the period.

The weighted average of anti-dilutive stock options outstanding was as follows:

	Three months ended				Nine months ended
	September 30,				September 30,
	2018		2017		2018		2017
Weighted average antidilutive stock options outstanding		—		138,000		16,000		86,000