This excerpt taken from the KNOT 8-K filed Jul 20, 2006.
“Earnings per Share.” Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the reporting period. Diluted loss per share adjusts basic loss per share for the effects of stock options, restricted common stock, warrants and other potentially dilutive financial instruments, only in the periods in which such effect is dilutive. In addition, the Company adopted EITF No. 03-6