4.	INCOME (LOSS) PER SHARE

We compute basic income (loss) per share using the weighted average number of common shares outstanding. The Company has two categories of dilutive potential common shares: the Series A preferred shares issued in May 2011 in connection with the registered direct offering 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, respectively.

Shares issuable upon exercise of options, warrants for 799 common shares and 592 common shares issuable upon conversion of preferred shares were not considered in computing diluted earnings per share for the three and nine months ended June 30, 2016, respectively, because they were anti-dilutive. During the three and nine months ended June 30, 2017, 150 preferred shares (not in thousands) were converted to common shares via cashless conversion resulting in no effect on the diluted net income per share calculation.

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

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Basic net income (loss) per share:

Net income (loss) applicable to common shareholders	$	221	$	(433)	$	655	$	(1,193)
Weighted average common shares outstanding		8,216		8,108		8,157		8,107

Basic net income (loss) per share	$	0.03	$	(0.05)	$	0.08	$	(0.15)
Diluted net income (loss) per share:

Diluted net income (loss) applicable to common shareholders	$	221	$	(433)	$	655	$	(1,193)

Weighted average common shares outstanding		8,216		8,108		8,157		8,107
Plus: Incremental shares from assumed conversions:
Series A preferred shares		518		—		555		—
Dilutive stock options/shares		14		—		8		—
Diluted weighted average common shares outstanding		8,748		8,108		8,720		8,107

Diluted net income (loss) per share	$	0.03	$	(0.05)	$	0.08	$	(0.15)