11. Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share includes the effect, if any, from the potential exercise or conversion of securities, such as stock options and warrants, which would result in the issuance of incremental shares of common stock to the extent the effect is not anti-dilutive.

The following presents a reconciliation of basic and diluted net income (loss) per share:

	Three Months Ended December 31,					Nine Months Ended December 31,
	2019		2018			2019		2018

Net income (loss)	$	865,000	$	(3,102,000	)	$	903,000	$	(5,084,000	)

Basic shares		18,961,517		18,810,702			18,895,893		18,861,617
Effect of potentially dilutive securities		344,288		-			367,221		-
Diluted shares		19,305,805		18,810,702			19,263,114		18,861,617
Net income (loss) per share:
Basic net income (loss) per share	$	0.05	$	(0.16	)	$	0.05	$	(0.27	)
Diluted net income (loss) per share	$	0.04	$	(0.16	)	$	0.05	$	(0.27	)

Potential common shares that would have the effect of increasing diluted net income per share or decreasing diluted net loss per share are considered to be anti-dilutive and as such, these shares are not included in calculating diluted net income (loss) per share. For the three months ended December 31, 2019 and 2018, there were 1,047,224 and 1,519,480, respectively, of potential common shares not included in the calculation of diluted net income (loss) per share because their effect was anti-dilutive. For the nine months ended December 31, 2019 and 2018, there were 1,031,624 and 1,519,480, respectively, of potential common shares not included in the calculation of diluted net income (loss) per share because their effect was anti-dilutive.