Note 10 Earnings per Share

Income and losses per common share are based upon the weighted average number of common and common equivalent shares outstanding during the period. The reconciling items in the calculation of diluted earnings per share are the dilutive effect of stock options, warrants, and non-vested shares. The potential dilutive impact of non-vested shares is determined using either the treasury stock method or the two-class method, whichever leads to higher dilution. The dilutive impact of stock options and warrants is determined using the treasury stock method.

For the three and six months ended December 31, 2011, the Company had 0 and 7,547,826 options and warrants outstanding that had an exercise price below the average stock price that would have resulted in 0 and 748,473 incremental dilutive shares. The Company also had 204,167 non-vested shares of Company stock that would have resulted in 120,590 and 116,240 incremental dilutive shares for the three and six months ended December 31, 2011. There were no other potentially dilutive items at December 31, 2011. However, as a result of the net loss for the period, there is no dilutive effect.

For the three and six months ended December 31, 2010, the Company had 9,027,826 options and warrants outstanding that had an exercise price below the average stock price for the period that would have resulted in 3,349,430 and 2,919,315 incremental dilutive shares. The Company also had 208,334 non-vested shares of Company stock for the three and six months ended December 31, 2010, that would have resulted in 93,057 and 50,567 incremental dilutive shares for the period. There were no other potentially dilutive items at December 31, 2010. However, as a result of the net loss for the period, there was no dilutive effect.