6. Earnings Per Share

3 Months Ended

Mar. 31, 2014

Earnings Per Share [Abstract]

Earnings Per Share

Basic earnings per share is based on the weighted average number of common shares outstanding during the periods presented.  Diluted earnings per share is based on the weighted average number of common shares outstanding, as well as dilutive potential common shares which, in the Company’s case, comprise shares issuable under convertible notes payable and stock options. The treasury stock method is used to calculate dilutive shares, which reduces the gross number of dilutive shares by the number of shares purchasable from the proceeds of the options and warrants assumed to be exercised.  In a loss period, the calculation for basic and diluted earnings per share is considered to be the same, as the impact of potential common shares is anti-dilutive.

The following table sets forth the computation of basic and diluted earnings per share for the three months ended:

	Three months ended
	March 31, 2014			March 31, 2013
Numerator for basic net income (loss) per share:
Net (loss) income	$	(159,275	)	$	20,764
Denominator for basic net (loss) income per share:
Weighted average common shares outstanding		25,961,883			25,961,883
Basic net (loss) income per share	$	(.01	)	$	.00
Numerator for diluted net (loss) income per share:
Net (loss) income	$	(159,275	)	$	20,764
Effect of dilutive securities - common stock options and interest on convertible notes payable		0			14,342
Diluted earnings per share -net (loss) income available to common stockholders with assumed conversions	$	(159,275	)	$	35,106
Denominator for diluted net income (loss) per share:
Weighted average common shares outstanding		25,961,883			25,961,883
Effect of dilutive securities - common stock options and convertible notes payable		0			21,114,112
Shares used in computing diluted net (loss) income per share		25,961,883			47,075,995
Diluted net (loss) income per share	$	(.01	)	$	.00

For the three months ended March 31, 2014 and 2013, convertible debt and options to purchase 31,704,552 and 3,146,500 shares of common stock, respectively, that could potentially dilute basic earnings per share were excluded from the calculation of diluted earnings per share because the exercise prices were greater than the average market price of the common shares or their inclusion would have been anti-dilutive.