Note 2: Net income (loss) per Common Share

The following table sets forth the computation of basic and diluted net income (loss) per common share:

	Three months ended				Six months ended
	June 30,				June 30,
(dollars in thousands, except per share amounts)	2018		2017		2018		2017

Numerator:

Net income (loss)	$	4,038	$	1,228	$	6,163	$	9
Adjustment for interest expense on notes (A)		-		-		-		-

Net income (loss), as adjusted	$	4,038	$	1,228	$	6,163	$	9

Denominator:

Weighted average number of shares of common stock outstanding (B)		7,817,628		7,219,423		7,541,332		7,217,943
Weighted average effect of dilutive stock options and other stock compensation		258,480		140,714		243,071		115,163

Weighted average number of shares of common stock outstanding, as adjusted		8,076,108		7,360,137		7,784,403		7,333,106

Net income per common share:

Net income (loss) per common share - Basic	$	0.52	$	0.17	$	0.82	$	0.00

Net income (loss) per common share - Diluted	$	0.50	$	0.17	$	0.79	$	0.00

(A)

An adjustment for interest expense on notes was excluded from the income (loss) per share calculation for the three and six months ended June 30, 2017 as a result of the notes being antidilutive.

(B)

Calculation includes weighted average of 1,408,163 shares in the aggregate issued on May 25 and June 5, 2018 as part of underwritten public offering by the Company.

On May 25, 2018, the Company completed an underwritten, public offering involving the issuance and sale by the Company of 1,224,490 shares of common stock at a public offering price of $24.50 per share. In addition, the Company granted the underwriters a 30-day option to purchase up to an additional 183,673 shares of common stock. On June 1, 2018 the underwriters exercised the option in full, and an additional 183,673 shares of common stock were issued and sold on June 5, 2018. The public offering resulted in gross proceeds to the Company of approximately $34.5 million, or $32.3 million net of the underwriting discount and other offering fees and expenses. We used the net proceeds from the public offering to repay amounts outstanding under the Company’s Revolving Credit, Term Loan and Security Agreement, (“Credit Agreement”). The public offering’s impact on the weighted average number of shares for the three and six months ending June 30, 2018 is 0.6 million shares and 0.3 million shares, respectively.

We had options to purchase 265,150 and 591,700 shares of common stock outstanding at an average price of $34.02 and $30.26 for the three months ended June 30, 2018 and 2017 which were excluded in the computation of diluted net income per common share for the three months ended June 30, 2018 and 2017, respectively. We had options to purchase 265,150 and 616,200 shares of common stock outstanding at an average price of $34.02 and $29.90 which were excluded in the computation of diluted net income per common share for the six months ended June 30, 2018 and 2017, respectively. These outstanding options were not included in the computation of diluted net income per common share because their exercise prices were greater than the average market price of our common stock. The calculation of diluted net income per common share for the three months ended June 30, 2017 excluded 410,204 shares for the assumed conversion of Notes (as defined below) as a result of being anti-dilutive. The calculation of diluted net income per common share for the six months ended June 30, 2017 excluded 408,526 shares, for the assumed conversion of the notes as a result of being anti-dilutive. As of August 17, 2017 the conversion rights associated to the Notes expired and are no longer subject to exercise.