1 EXHIBIT 11.1 COMPUTATION OF EARNINGS PER SHARE In 1997, the Company adopted SFAS No. 128, Earnings Per Share, effective December 15, 1997. SFAS No. 128 established standards for computing and presenting earnings per share and applies to entities with publicly held common stock or potential common stock. The Company has applied the provisions of SFAS No. 128 and S.E.C. Staff Accounting Bulletin (SAB) No. 98 retroactively to all periods presented. Diluted net loss per share for the year ended December 31, 1997 is the same as basic net loss per share as the inclusion of the potential common stock equivalents would be antidilutive. The following is a reconciliation of shares outstanding for basic and diluted earnings per share: THREE YEAR YEAR MONTHS YEAR ENDED ENDED ENDED ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, SEPTEMBER 30, 1997 1996 1995 1995 ----------- ---------- ----------- ---------- Net income (loss) ....................................... $(5,990,000) $1,337,000 $ 738,000 $1,688,000 Shares outstanding for basic earnings (loss) per share: Weighted average shares outstanding ................. 6,303,216 1,248,118 312,677 1,518,138 ----------- ---------- ---------- --------- Shares outstanding for diluted earnings (loss) per share: Weighted average shares outstanding ................. 6,303,216 1,248,118 312,677 1,518,138 Dilutive effect of options issued to employees ...... -- 1,197,039 987,253 987,253 Dilutive effect of warrants issued to employees ..... -- 327,822 256,309 256,309 Shares issuable upon conversion of preferred stock .. -- 2,631,372 3,173,737 2,247,150 ----------- ---------- ---------- --------- 6,303,216 5,404,351 4,729,976 5,008,850 ----------- ---------- ---------- ---------