LOSS PER SHARE

We compute basic 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, 2014, respectively, because they were anti-dilutive. Warrants for 810 common shares and 595 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, 2014, respectively, because they were also anti-dilutive. Shares issuable upon exercise of options were not considered in computing diluted earnings per share for the three and six months ended March 31, 2013, respectively, because they were anti-dilutive. Warrants for 1,377 common shares and 668 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, 2013, respectively, because they were anti-dilutive.

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

	Three Months Ended March 31,						Six Months Ended March 31,
	2014			2013			2014			2013

Basic net loss per share:

Net loss applicable to common shareholders	$	(219	)	$	(311	)	$	(881	)	$	(55	)
Weighted average common shares outstanding		7,964			7,657			7,848			7,648

Basic net loss per share	$	(0.03	)	$	(0.04	)	$	(0.11	)	$	(0.01	)

Diluted net loss per share:

Diluted net loss applicable to common shareholders	$	(219	)	$	(311	)	$	(881	)	$	(55	)

Weighted average common shares outstanding		7,964			7,657			7,848			7,648

Series A preferred shares		-			-			-			-
Class A warrants		-			-			-			-
Dilutive stock options/shares		-			-			-			-

Diluted weighted average common shares outstanding		7,964			7,657			7,848			7,648

Diluted net loss per share:	$	(0.03	)	$	(0.04	)	$	(0.11	)	$	(0.01	)