INCOME (LOSS) PER SHARE

9 Months Ended

Jun. 30, 2011

INCOME (LOSS) PER SHARE

4. INCOME (LOSS) PER SHARE

We compute basic income (loss) per share using the weighted average number of common shares outstanding. The net income (loss) applicable to common shareholders for fiscal 2011 is the net of the net income (loss) for the period less the deemed dividend for the Series A preferred shares from the May 2011 registered direct offering described in Note 3 and less the dividends earned on the outstanding Series A preferred shares.

The Company has three categories of dilutive potential common shares: the Series A preferred shares issued in May 2011 in connection with the registered direct offering, the Warrants issued in connection with same offering in May 2011, and shares issuable upon exercise of options.We compute diluted earnings per share using the if-converted method for preferred stock and the treasury stock method for stock options and warrants.Shares issuable upon exercise of options were not considered in computing diluted earnings per share for the three and nine months ended June 30, 2011 and for the nine months ended June 30, 2010 because they were antidilutive.    Warrants for 2,753,000 common shares and preferred shares for 2,753,000 common shares were not considered in computing diluted earnings per share for the three and nine months ended June 30, 2011 because they were antidilutive.   For the three months ended June 30, 2010, shares issuable upon exercise of options were immaterial to the computation of net income (loss) per share.

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The following table reconciles our computation of basic income(loss) per share to diluted income(loss)per share:

	Three Months EndedJune 30,					Nine Months Ended June 30,
	2011			2010		2011			2010
Basic net income (loss) per share:
Net income (loss)	$	418		$	288	$	1,211		$	(2,411	)
Less: Deemed dividend for Series A Preferred Shares		(3,277	)		—		(3,277	)		—
Less: Preferred dividend		(991	)		—		(991	)		—
Net income (loss) applicable to common shareholders	$	(3,850	)	$	288	$	(3,057	)	$	(2,411	)
Weighted average common shares outstanding		5,911			4,915		5,247			4,915
Basic net income (loss) per share	$	(0.65	)	$	0.06	$	(0.58	)	$	(0.49	)
Diluted net income (loss) per share:
Net income (loss) applicable to common shareholders	$	(3,850	)	$	288	$	(3,057	)	$	(2,411	)
Weighted average common shares outstanding		5,911			4,915		5,247			4,915
Diluted net income (loss) per share	$	(0.65	)	$	0.06	$	(0.58	)	$	(0.49	)