EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2012

Earnings Per Share [Abstract]

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 September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Diluted earnings per share:
Weighted average shares outstanding		13,058		13,045		13,033		12,908
Employee and director stock options		-		-		-		-
Weighted average shares assuming dilution		13,058		13,045		13,033		12,908

Options outstanding to purchase 351,000 shares of the Company’s common stock for the three and nine months ended September 30, 2012 and 575,000 shares for the three and nine months ended September 30, 2011 were not included in the computation of diluted EPS because their effect was anti-dilutive.  The Company has included 820,637 of restricted shares in our calculation of basic and diluted EPS for the three and nine months ended September 30, 2012 and 700,637 for the three and nine months ended September 30, 2011. These restricted shares include 265,956 restricted shares issued on April 16, 2007 under the Innotrac Corporation 2000 Stock Option and Incentive Award Plan and 715,000 restricted shares issued under the Innotrac Corporation 2010 Stock Award Plan which amounts were subsequently reduced by 160,319 shares when a grantee’s employment or service as director terminated at which time such grantee’s unvested restricted shares were forfeited and cancelled.  Both plans provide for immediate voting rights but vesting varies according to two vesting schedules.  With respect to shares issued to non-employee directors after June, 2011, shares vest 1/3 on issuance, 1/3 on the 1st anniversary and 1/3 on the second anniversary of the grant date unless earlier vested upon a change in control of the Company.  All other restricted shares vest 25% on the 7th, 8th, 9th and 10th anniversary of the grant date unless earlier vested upon a change in control of the Company.  Restricted shares are valued at the closing NASDAQ market price per share as of the grant date and expensed over the vesting term of the restricted share.