Calculation of Basic and Diluted Earnings per Share

9 Months Ended

Sep. 30, 2011

Calculation of Basic and Diluted Earnings per Share

Note 6. Calculation of Basic and Diluted Earnings per Share

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

(in thousands, except per share amounts)		Three Months Ended September 30,				Nine Months Ended September 30,
		2011		2010		2011		2010
Numerator:
Net Income	$	1,067	$	236	$	2,723	$	1,290
Preferred Stock Dividends		-		(15)		(15)		(45)
Numerator for basic earnings per share - income available to common shareholders		1,067		221		2,708		1,245
Effect of dilutive securities:
6% Convertible Debenture Interest Expense		22		22		66		67
Preferred Stock Dividends		-		-		15		-
Numerator for diluted income per share - income available to common shareholders after assumed conversions	$	1,089	$	243	$	2,789	$	1,312
Denominator:
Denominator for basic income per share - weighted-average shares		2,122		1,908		2,052		1,899
Effect of dilutive securities:
Employee stock options		37		12		40		10
Detachable warrants		555		336		542		274
6% Convertible Debenture		547		566		552		566
Preferred Stock Dividends		3		-		48		-
Dilutive potential common shares		1,142		914		1,182		850
Denominator for diluted income per share - weighted-average shares and assumed conversions		3,264		2,822		3,234		2,749
*Basic income per common share*	$	0.50	$	0.12	$	1.32	$	0.66
*Diluted income per common share*	$	0.33	$	0.09	$	0.86	$	0.48

For the three and nine month periods ended September 30, 2010, approximately 111,000 common shares issuable upon conversion of the 200,000 convertible preferred shares were excluded from the calculation of diluted earnings per share as the conversion price was greater than the average market price of the common shares and, therefore, the effect would be antidilutive.

For the three and nine month periods ended September 30, 2010, approximately 566,000 shares issuable upon conversion of convertible debentures were excluded from the calculation of diluted earnings per share as the conversion price was greater than the average market price of the common shares and, therefore, the effect would be antidilutive.

For the three and nine month periods ended September 30, 2010, approximately 315,000 shares of common stock issuable upon exercise of warrants were excluded from the computation of diluted earnings per share as the effect would be antidilutive.

For the three and nine month periods ended September 30, 2011 and 2010, approximately 24,000 and 153,000, respectively, of shares issuable upon exercise of employee stock options were excluded from the computation of diluted earnings per share because the effect would be antidilutive.