Earnings Per Share

6 Months Ended

Jun. 30, 2011

Earnings Per Share

Earnings Per Share

3.       EARNINGS PER SHARE

The following table shows the shares (in thousands) used in computing diluted earnings per share ("EPS") in accordance with ASC topic No. 260 – Earnings per Share:

	Three Months Ended June 30,		Six Months Ended June 30,
	2011	2010	2011	2010
Diluted earnings per share:
Weighted average shares outstanding…….	12,815	12,861	12,838	12,734
Employee and director stock options	-	-	-	-
Weighted average shares assuming       dilution	12,815	12,861	12,838	12,734

Options outstanding to purchase 593,000 shares of the Company's common stock for the three and six months ended June 30, 2011 were not included in the computation of diluted EPS because their effect was anti-dilutive.  Options outstanding to purchase 1.1 million shares of the Company's common stock for the three and six months ended June 30, 2010 were not included in the computation of diluted EPS because their effect was anti-dilutive.  Included in the 1.1 million of outstanding options and warrants for the three and six months ended June 30, 2010 was a warrant to purchase 150,000 shares of Innotrac stock which expired on December 8, 2010.

On January 1, 2009 the Company adopted an update to ASC topic No. 260, which requires the inclusion of all unvested stock awards which contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, in the number of shares outstanding in our basic and diluted EPS calculations. 

 As a result, we have included 722,304 restricted shares in our calculation of basic and diluted EPS for the three and six months ended June 30, 2011.  For the three and six months ended June 30, 2010, we included 525,956 of restricted shares in our calculation of basic and diluted EPS.    These restricted shares were issued under the Innotrac Corporation 2000 Stock Option and Incentive Award Plan and the Innotrac Corporation 2010 Stock Award Plan.  Both plans provide for immediate voting rights, forfeiture of unvested shares if a grantee's employment or service with the Company ends for any reason (other than a change in control, as defined in the plan), and vesting of shares upon the earlier of a change in control as defined in the plan or 25% on each of the 7^th, 8^th, 9^th and 10^th anniversary of the issuance date.