Basic and Diluted Earnings (Loss) per Share

3 Months Ended

Mar. 31, 2017

Note 2—

Basic and Diluted Earnings (Loss) per Share

Basic earnings (loss) per common share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed using the weighted average number of common shares and potential dilutive common shares that were outstanding during the period. Potential dilutive common shares consist of outstanding stock options, outstanding stock warrants, and convertible preferred stock.

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

	Three months ended March 31
	2017		2016
Numerator:
Net income (loss)	$	523,793	$	(43,660)

Denominator:
Denominator for basic earnings (loss) per share—weighted average shares		1,845,000		1,846,000
Dilutive effect of employee stock options and other warrants		1,000		-

Denominator for diluted earnings (loss) per share—adjusted weighted average shares		1,846,000		1,846,000

Basic earnings (loss) per share	$	0.28	$	(0.02)
Diluted earnings (loss) per share	$	0.28	$	(0.02)

Options and warrants to purchase 142,013 and 267,226 shares of common stock for the three months ended March 31, 2017 and 2016, respectively, were not included in the denominator for diluted earnings (loss) per share because their effect would be antidilutive or because the shares were deemed contingently issuable.