NOTE 10.  EARNINGS PER SHARE

Basic earnings per share is computed by dividing earnings by the weighted average number of common shares outstanding during each period.  Diluted earnings per share is computed by dividing earnings by the total of the weighted average number of shares of common stock outstanding during each period, plus the effect of outstanding stock options and unvested restricted stock grants.  Potentially dilutive securities are excluded from the computation of diluted earnings per share if their effect is anti-dilutive.

The following table is a reconciliation of basic and diluted shares of common stock outstanding used in the calculation of earnings per share:

For the three months ended March 31, 2014, basic net loss per share was the same as diluted net loss per share because all potentially dilutive securities were anti-dilutive due to the net loss for the period.  Options to purchase 2,462 shares of common stock and 18 shares of restricted stock were outstanding and anti-dilutive due to the net loss for the three months ended March 31, 2014.  Additionally, options to purchase 513 shares of common stock were outstanding and anti-dilutive because the exercise prices were higher than the average market price of the Company’s common stock for the three months ended March 31, 2014, and 322 shares of unvested restricted stock were outstanding and excluded as their required performance or market conditions were not met.

For the three months ended March 31, 2013, basic net loss per share was the same as diluted net loss per share because all potentially dilutive securities were anti-dilutive due to the net loss for the period.  Options to purchase 1,581 shares of common stock were outstanding and anti-dilutive due to the net loss for the period.  Additionally, options to purchase 1,159 shares of common stock were outstanding and anti-dilutive because the exercise prices were higher than the average market price of the Company’s common stock for the three months ended March 31, 2013, and 750 shares of unvested restricted stock were outstanding and excluded as their required performance or market conditions were not met.