Note 3 - EARNINGS PER SHARE

3 Months Ended

Aug. 31, 2011

Notes to Financial Statements

EARNINGS PER SHARE

Note 3 - Earnings Per Share

Earnings per share is computed based on the weighted average number of common and common equivalent shares (common stock options and ESPP shares) outstanding, when dilutive, during each period using the treasury stock method.

		Three Months Ended
		August 31,
		2011	2010
		(in thousands, except per share amounts)
Numerator: Net income (loss)		$124	$(1,516)
Denominator for basic net income (loss) per share:
	Weighted-average shares outstanding	8,932	8,667
Shares used in basic net income (loss) per share calculation		8,932	8,667
Effect of dilutive securities		168	0
Denominator for diluted net income (loss) per share		9,100	8,667
Basic net income (loss) per share		$0.01	$(0.17)
Diluted net income (loss) per share		$0.01	$(0.17)

 For the purpose of computing diluted earnings per share, weighted average potential common shares do not include stock options with an exercise price greater than the average fair value of the Company’s common stock for the period, as the effect would be anti-dilutive. Stock options to purchase 1,792,000 shares of common stock were outstanding on August 31, 2011, but were not included in the computation of diluted net income per share, because the inclusion of such shares would be anti-dilutive. Potential common shares have not been included in the calculation of diluted net loss per share for the quarter ended August 31, 2010 as the effect would be anti-dilutive. As such, the numerator and the denominator used in computing both basic and diluted net loss per share for the quarter ended August 31, 2010 are the same. Stock options to purchase 2,254,000 shares of common stock were outstanding on August 31, 2010, but not included in the computation of diluted net income per share, because the inclusion of such shares would be anti-dilutive.