Earnings Per Share

3 Months Ended

Mar. 31, 2014

Earnings Per Share

Note  2. Earnings per Share.

We present basic and diluted earnings or loss per share in accordance with authoritative guidance which establishes standards for computing and presenting basic and diluted earnings per share. Per share data is determined by using the weighted average number of common shares outstanding. Common equivalent shares are considered only for diluted earnings per share, unless considered anti-dilutive. Common equivalent shares, determined using the treasury stock method, result from stock options with exercise prices that are below the average market price of the common stock.

The potentially dilutive securities are comprised of outstanding stock options to acquire 694,520 and 977,328 of our shares at March 31, 2014 and 2013, respectively, a decrease of 282,808 or 28.9%. This decrease is due primarily to stock options being exercised as well as stock options expiring. At March 31, 2014, options to acquire 644,519 of our shares had exercise prices that were lower than the average market price of our shares for the three months ended March 31, 2014. At March 31, 2013, all potentially dilutive securities were excluded from the computation of weighted average shares outstanding due to their anti-dilutive effect.

A reconciliation of the weighted average number of common shares outstanding for the three months ended March 31, 2014 and 2013 is as follows:

	2014		2013
Common shares outstanding, beginning of the year		11,446,800		10,937,000
Weighted average common shares issued		0		154,550
Weighted average number of common shares outstanding		11,446,800		11,091,550
Dilutive effect of common share equivalents		215,696		0
Diluted weighted average number of common shares outstanding		11,662,496		11,091,550

We have authorized 20,000,000 shares of preferred stock issuable in one or more series, none of which are issued or outstanding as of March 31, 2014.