7. Earnings Per Share

Basic earnings per common share is computed by dividing net earnings available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share include the potential dilution that would occur from common shares issuable upon the exercise of outstanding stock options and the conversion of preferred stock. As of December 31, 2014, 3,222,593 shares of common stock were issuable upon the conversion or exercise of options and preferred stock. For the three months ended December 31, 2014 and 2013, there were 1,145,289 and 238,500 shares of common stock equivalents, respectively, excluded from the computation of diluted earnings per share because their effect would have been antidilutive. For the six months ended December 31, 2014 and 2013, there were 1,158,289 and 1,639,654 shares of common stock equivalents, respectively, excluded from the computation of diluted earnings per share because their effect would have been antidilutive.

The following tables summarize the computations of basic and diluted earnings per common share for the three and six months ended December 31, 2014 and 2013:

	Three Months Ended December 31,
	2014			2013
Numerator for basic and diluted earnings per share:
Net income from continuing operations	$	763,000		$	2,163,000
Payment of preferred stock dividends		(25,000	)		(27,000	)
Net income from continuing operations available to common stockholders		738,000			2,136,000
Loss from discontinued operations, net of tax		—			(604,000	)
Loss on sale of discontinued operations, net of tax		(271,000	)		(374,000	)
Net income available to common stockholders	$	467,000		$	1,158,000
Weighted average shares used in computing basic net income per share:		38,987,991			54,099,997
Assumed conversion of preferred stock		1,727,768			2,095,784
Effect of outstanding stock options		634,761			759,960
Weighted average shares used in computing diluted net income per share:		41,350,520			56,955,741
Earnings per common share attributable to common stockholders – basic
Income from continuing operations per common share	$	0.02		$	0.03
Loss from discontinued operations per common share		—			(0.01	)
Earnings per common share attributable to common stockholders – basic	$	0.02		$	0.02
Earnings per common share attributable to common stockholders – diluted
Income from continuing operations per common share	$	0.02		$	0.03
Loss from discontinued operations per common share		—			(0.01	)
Earnings per common share attributable to common stockholders – diluted	$	0.02		$	0.02

	Six Months Ended December 31,
	2014			2013
Numerator for basic and diluted earnings per share:
Net income from continuing operations	$	1,368,000		$	2,275,000
Payment of preferred stock dividends		(52,000	)		(55,000	)
Net income from continuing operations available to common stockholders		1,316,000			2,220,000
Loss from discontinued operations, net of tax		(684,000	)		(992,000	)
Loss on sale of discontinued operations, net of tax		(1,434,000	)		(374,000	)
Net income (loss) available to common stockholders	$	(802,000	)	$	854,000
Weighted average shares used in computing basic net income per share:		46,741,995			54,052,138
Assumed conversion of preferred stock		1,727,768			769,630
Effect of outstanding stock options		520,797			700,259
Weighted average shares used in computing diluted net income per share:		48,990,560			55,522,027
Earnings (loss) per common share attributable to common stockholders – basic
Income from continuing operations per common share	$	0.03		$	0.02
Loss from discontinued operations per common share		(0.05	)		(0.01	)
Earnings (loss) per common share attributable to common stockholders – basic	$	(0.02	)	$	0.01
Earnings (loss) per common share attributable to common stockholders – diluted
Income from continuing operations per common share	$	0.02		$	0.02
Loss from discontinued operations per common share		(0.04	)		(0.01	)
Earnings (loss) per common share attributable to common stockholders – diluted	$	(0.02	)	$	0.01