Net Income (Loss) per Common Share

Net income (loss) per common share is computed based on the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is computed similarly but includes the effect of the assumed exercise of dilutive stock options and restricted stock under the treasury stock method.

The Company's restricted shares are entitled to receive dividends and voting rights applicable to the Company's common stock, irrespective of any vesting requirement. Accordingly, the restricted shares are considered a participating security and the Company is required to apply the two-class method to consider the impact of the restricted shares on the calculation of basic and diluted earnings per share. The Company is currently in a net loss position and is therefore not required to present the two-class method; however, in the event the Company is in a net income position, the two-class method must be applied by allocating all earnings during the period to common shares and restricted shares.

The computation of basic and diluted net income (loss) per common share is as follows:



	December 31,
	2019			2018			2017
Net income (loss)	$	(15,223,000	)	$	(4,782,000	)	$	5,459,000

Weighted average common shares outstanding — basic	7,830,000			7,750,000			7,690,000
Effect of dilutive securities	—			—			57,000
Weighted average common and potentially issuable common shares outstanding — diluted	7,830,000			7,750,000			7,747,000

Basic net income (loss) per common share	$	(1.94	)	$	(0.62	)	$	0.71
Diluted net income (loss) per common share	$	(1.94	)	$	(0.62	)	$	0.70