Note 3. Net Income (Loss) Per Share

Basic net income or loss per share is calculated by dividing net income or loss available to common stockholders by the weighted average shares of common stock outstanding for the period. The per share computations reflect the one-for-ten reverse stock split that was effected in July 2016. Diluted net income or loss per share is calculated by dividing net income or loss by the weighted average shares of common stock outstanding for the period plus amounts representing the dilutive effect of securities that are convertible into common stock. Preferred dividends are deducted from net income or loss in arriving at net income or loss attributable to common stockholders. The Company calculates diluted earnings or loss per common share using the treasury stock method and the as-if-converted method, as applicable.

The following table presents the computation of net income or loss per share:

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017		2016
Numerator:
Net income (loss)	$	(70,121	)	$	1,311,209		$	314,970	$	1,450,361
Accretion of dividends on preferred stock		—			(610,781	)		—		(1,214,850	)
Net income (loss) attributable to common stockholders - basic	$	(70,121	)	$	700,428		$	314,970	$	235,511
Accretion of dividends on preferred stock		—			354,270			—		—
Adjustment for change in fair value of warrant liability		—			(381,455	)		—		(460,289	)
Net income (loss) attributable to common stockholders - diluted	$	(70,121	)	$	673,243		$	314,970	$	(224,778	)
Denominator:
Weighted average common shares outstanding
Basic		9,520,285			724,979			9,440,368		695,415
Diluted		9,520,285			4,479,505			10,120,998		695,415
Net income (loss) per share:
Basic	$	(0.01	)	$	0.97		$	0.03	$	0.34
Diluted	$	(0.01	)	$	0.15		$	0.03	$	(0.32	)

Diluted weighted average common shares outstanding for the six months ended June 30, 2017 includes 9,681 warrants and 670,949 options outstanding.

Potentially dilutive securities not included in the calculation of diluted net income (loss) per share because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Preferred redeemable convertible stock, including accumulated dividends		—		3,858,113		—		4,998,688
Employee stock options		384,538		952,940		366,732		1,371,666
Total		384,538		4,811,053		366,732		6,370,354