10. Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income 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.

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

	Three Months Ended September 30,				Six Months Ended September 30,
	2017		2016		2017		2016
Net income	$	6,301,000	$	9,143,000	$	13,927,000	$	16,651,000
Basic shares		18,718,709		18,641,324		18,687,179		18,544,118
Effect of potentially dilutive securities		638,100		788,066		683,965		840,550
Diluted shares		19,356,809		19,429,390		19,371,144		19,384,668
Net income per share:

Basic net income per share	$	0.34	$	0.49	$	0.75	$	0.90
Diluted net income per share	$	0.33	$	0.47	$	0.72	$	0.86

The effect of dilutive options excludes (i) 455,339 shares subject to options with exercise prices ranging from $27.40 to $34.17 per share for the three months ended September, 30, 2017, (ii) 291,215 shares subject to options with exercise prices ranging from $28.68 to $34.17 per share for the three months ended September, 30, 2016, (iii) 292,239 shares subject to options with exercise prices ranging from $28.68 to $34.17 per share for the six months ended September 30, 2017, and (iv) 108,815 shares subject to options with exercise prices ranging from $30.91 to $34.17 per share for the six months ended September 30, 2016, which were anti-dilutive.