Note 3. Net Income Per Share

Basic net income per share is calculated by dividing net income 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 per share is calculated by dividing net income 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 in arriving at net income attributable to common stockholders. The Company calculates diluted earnings 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 per share:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2017		2016			2017		2016
Numerator:
Net income	$	234,353	$	1,183,044		$	549,323	$	2,633,405
Accretion of dividends on preferred stock		—		(322,170	)		—		(1,537,021	)
Net income attributable to common stockholders - basic	$	234,353	$	860,874		$	549,323	$	1,096,384
Accretion of dividends on preferred stock		—		186,868			—		125,205
Adjustment for change in fair value of warrant liability		—		—			—		(460,289	)
Net income attributable to common stockholders - diluted	$	234,353	$	1,047,742		$	549,323	$	761,300
Denominator:
Weighted average common shares outstanding
Basic		9,545,235		4,133,020			9,475,708		1,849,647
Diluted		10,169,559		6,689,332			10,238,987		3,103,784
Net income per share:
Basic	$	0.02	$	0.21		$	0.06	$	0.59
Diluted	$	0.02	$	0.16		$	0.05	$	0.25

Diluted weighted average common shares outstanding for the three months ended September 30, 2017 includes 624,324 options outstanding. Diluted weighted average common shares outstanding for the nine months ended September 30, 2017 includes 6,281 warrants and 756,998 options outstanding.

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Preferred redeemable convertible stock, including accumulated dividends		—		788,074		—		3,253,254
Employee stock options		375,277		—		427,645		—
Warrants outstanding		51,003		51,003		—		51,003
Total		426,280		839,077		427,645		3,304,257