(6) Net Income Per Common Share

The calculation of basic and diluted income per common and common equivalent share is as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Basic income per share
Net income	$	2,656,879		$	1,942,810		$	3,898,519		$	6,897,203
Less: Preferred stock dividends		(6,875	)		(7,500	)		(13,750	)		(15,000	)

Net income applicable to common stock	$	2,650,004		$	1,935,310		$	3,884,769		$	6,882,203

Basic weighted average number of common shares outstanding		87,413,773			87,305,184			87,372,558			87,300,585

Basic net income per share	$	0.03		$	0.02		$	0.04		$	0.08

Diluted income per share
Net income applicable to common stock	$	2,650,004		$	1,935,310		$	3,884,769		$	6,882,203
Add: Preferred stock dividends		6,875			7,500			13,750			15,000
Less: Fair value of stock warrants for dilutive warrants		—			(205,700	)		(50,026	)		(6,465,067	)

Net income applicable to dilutive common stock	$	2,656,879		$	1,737,110		$	3,848,493		$	432,136

Basic weighted average number of common shares outstanding		87,413,773			87,305,184			87,372,558			87,300,585
Effect of dilutive securities
Dilutive stock awards		60,968			38,825			88,208			—
Dilutive preferred share conversions		1,139,600			1,139,600			1,139,600			1,139,600

		1,200,568			1,178,425			1,227,808			1,139,600
Diluted weighted average number of common shares outstanding		88,614,341			88,483,609			88,600,366			88,440,185

Diluted net income per share	$	0.03		$	0.02		$	0.04		$	0.00

Basic income per share is computed by dividing net income less preferred stock dividends by the weighted-average number of shares of Columbia’s common stock (“Common Stock”) outstanding during the period. The diluted earnings per share calculation gives effect to dilutive options, warrants, convertible preferred stock, and other potential dilutive Common Stock, including selected restricted shares of Common Stock outstanding during the period. Diluted income per share is based on the treasury stock method and includes the effect from potential issuance of Common Stock, such as shares issuable pursuant to the exercise of stock options, assuming the exercise of all in-the-money stock options. Common share equivalents have been excluded where their inclusion would be anti-dilutive. The warrants related to the stock warrant liability were first evaluated on an “as if converted” basis; the change in the fair value of the stock warrants recognized in the periods presented was subtracted from earnings to calculate net income applicable to dilutive Common Stock. Then, the incremental shares for dilution were determined utilizing the treasury method. Since the average stock price for all periods presented was below the exercise price of the warrants, the calculation under the treasury method resulted in repurchasing more shares than would have been exercised and therefore, the inclusion of these shares were deemed to be anti-dilutive and excluded from the dilutive share calculation.

Shares to be issued upon the exercise of the outstanding options and warrants, convertible preferred stock and selected restricted shares of Common Stock excluded from the income per share calculation amounted to 13,190,982 and 16,968,748 for the three months ended June 30, 2013, and 2012, respectively but were not included in the computation of diluted earnings per share because the awards were anti-dilutive. Shares to be issued upon the exercise of the outstanding options and warrants, convertible preferred stock and selected restricted shares of Common Stock excluded from the income per share calculation amounted to 13,190,982 and 17,021,453 for the six months ended June 30, 2013 and 2012, respectively, but were not included in the computation of diluted earnings per share because the awards were anti-dilutive.