Note 9 - Basic and Diluted Earnings Per Common Share

9 Months Ended

Sep. 30, 2011

9. BASIC AND DILUTED EARNINGS PER COMMON SHARE:

Basic earnings per common share has been calculated by dividing net income for the period by the weighted average number of common shares outstanding during each period. Diluted earnings per share has been calculated by dividing net income for the period by the weighted average number of common shares and potentially dilutive common shares outstanding during the period. In computing diluted earnings per share, the treasury stock method is used to determine the number of shares assumed to be purchased from the conversion of common shares equivalents or the proceeds of option exercises.

The following table is a summary of the basic and diluted earnings per common share:

	Three months ended September 30, 2011			Three months ended September 30, 2010		Six months ended September 30, 2011		Six months ended September 30, 2010
Numerator for basic and diluted earnings (loss) per common share:
Net income (loss) for the period	$	(1,152,139	)	$	1,083,156	$	141,466	$	880,244
Denominator for basic and diluted earnings (loss) per common share:
Basic weighted average number of common shares outstanding		53,452,205			57,351,161		53,444,959		59,255,739
Effect of outstanding stock options		—			1,834,632		2,303,818		1,967,630
Diluted weighted average number of shares outstanding		53,452,205			59,185,793		55,748,777		61,223,369
Basic earnings (loss) per common share	$	(0.02	)	$	0.02	$	—	$	0.01
Diluted earnings (loss) per common share	$	(0.02	)	$	0.02	$	—	$	0.01

For the three months ended September 30, 2011, 5,511,474 shares underlying potentially dilutive securities of were excluded from the computation of diluted weighted average number of shares outstanding as they were anti-dilutive to the basic loss per share. During the three months ended September 30, 2010, outstanding options to purchase 3,755,000 common shares were not included in the computation of diluted income per common share because all such options had exercise prices greater than the average market price of the common shares.

For the nine months ended September 30, 2011, outstanding options to purchase 3,243,000 shares were not included in the computation of diluted income per common share because all such options had exercise prices greater than the average market price of the common shares and as a result are considered anti-dilutive. During the nine months ended September 30, 2010, outstanding options to purchase 3,023,500 common shares were not included in the computation of diluted income per common share because all such options had exercise prices greater than the average market price of the common shares.

During the nine months ended September 30, 2010, 3,409,300 common shares were repurchased and cancelled under the terms of our stock repurchase program announced in February 2010. No shares were repurchased under this program during the nine months ended September 30, 2011.

The computation of earnings per share and diluted earnings per share for the three and nine months ended September 30, 2010 includes reductions in the number of shares outstanding due to these repurchases. No common shares were repurchased during the three or nine months ended September 30, 2011.