The Company is authorized to issue up to 100 million shares of common stock. Basic earnings per share (“EPS”) is calculated using the average number of shares of common stock outstanding during each period. Diluted EPS assumes the exercise of all stock options having exercise prices less than the average market price of the common stock using the treasury stock method. A reconciliation of diluted shares consists of the following:

A total of 1,018,900, 1,169,064, and 1,420,940 shares under option were not included because they were anti-dilutive during the years ended December 31, 2012, 2011 and 2010, respectively.

On September 14, 2007, the Board of Directors of the Company adopted a Rights Agreement dated as of September 14, 2007, between the Company and the Registrar and Transfer agent of the Company, as Rights Agent. Ratification of the rights plan required the affirmative vote of at least a majority vote of shares entitled to vote at the June 3, 2009 Annual Meeting. Stockholders did not approve the ratification. The Rights Agreement was redeemed at the rate of 1/10 ^th of $0.01 per share and paid to stockholders at a cost to the Company of approximately $67,000 in 2009. In 2010, the Company received $5,000 for its share of the redemption held as treasury stock.