3. EARNINGS PER SHARE

3 Months Ended

Aug. 31, 2012

Earnings Per Share

EARNINGS PER SHARE

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,
	2012			2011
	(in thousands, except per share amounts)
Numerator: Net (loss) income	$	(296	)	$	124
Denominator for basic net (loss) income
per share:
Weighted-average shares outstanding		9,166			8,932
Shares used in basic net (loss) income
per share calculation		9,166			8,932
Effect of dilutive securities		—			168
Denominator for diluted net (loss) income
per share		9,166			9,100
Basic net (loss) income per share	$	(0.03	)	$	0.01
Diluted net (loss) income per share	$	(0.03	)	$	0.01

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.  Potential common shares have not been included in the calculation of diluted net loss per share 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 are the same.  Stock options to purchase 2,893,000 shares of common stock were outstanding on August 31, 2012, but were not included in the computation of diluted net loss per share, because the inclusion of such shares 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 loss per share, because the inclusion of such shares would be anti-dilutive.