INCOME (LOSS) PER SHARE

12 Months Ended

Sep. 30, 2015

4. 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 income (loss) per share for the year ended September 30, 2014, because they were anti-dilutive. Warrants for 799 common shares and 592 common shares issuable upon conversion of preferred shares were not considered in computing diluted income (loss) per share for the year ended September 30, 2014, because they were also anti-dilutive.

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

	Years Ended September 30,
	2015		2014
Basic net income (loss) per share:
Net income (loss) applicable to common shareholders	$	1,099	$	(1,070)
Weighted average common shares outstanding		8,084		7,960
Basic net income (loss) per share	$	0.14	$	(0.13)

Diluted net income (loss) per share:
Net income (loss) applicable to common shareholders	$	1,099	$	(1,070)
Change in fair value of warrant liability		(487)		—
Diluted net income (loss) applicable to common shareholders	$	612	$	(1,070)

Weighted average common shares outstanding		8,084		7,960
Plus: Incremental shares from assumed conversions:
Series A preferred shares		593		—
Class A warrants		4		—
Dilutive stock options/shares		110		—
Diluted weighted average common shares outstanding		8,791		7,960
Diluted net income (loss) per share	$	0.07	$	(0.13)