INCOME (LOSS) PER SHARE

6 Months Ended

Mar. 31, 2012

INCOME (LOSS) PER SHARE

3. INCOME (LOSS) PER SHARE

We compute basic income (loss) per share using the weighted average number of common shares outstanding.

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 the 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 six months ended March 31, 2012 because they were anti-dilutive. Warrants for 2,753 common shares and 1,044 common shares issuable upon conversion of preferred shares were not considered in computing diluted earnings per share for the three and six months ended March 31, 2012 because they were also anti-dilutive.

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

	Three Months Ended March 31,					Six Months Ended March 31,
	2012			2011		2012			2011
Basic net income (loss) per share:
Net income (loss) applicable to common shareholders	$	(1,884	)	$	483	$	(3,375	)	$	793
Weighted average common shares outstanding		7,034			4,915		6,989			4,915
Basic net income (loss) per share	$	(0.27	)	$	0.10	$	(0.48	)	$	0.16
Diluted net income (loss) per share:
Diluted net income (loss) applicable to common shareholders	$	(1,884	)	$	483	$	(3,375	)	$	793
Weighted average common shares outstanding		7,034			4,915		6,989			4,915
Dilutive stock options/shares		—			165		—			110
Diluted weighted average common shares outstanding		7,034			5,080		6,989			5,025
Diluted net income (loss) per share	$	(0.27	)	$	0.10	$	(0.48	)	$	0.16