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 209 vested options 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, 2016, because they were 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,
	2017		2016
Basic net income (loss) per share:

Net income (loss) applicable to common shareholders	$	884	$	(3,230)
Weighted average common shares outstanding		8,178		8,107
Basic net income (loss) per share	$	0.11	$	(0.40)

Diluted net income (loss) per share:

Diluted net income (loss) applicable to common shareholders	$	884	$	(3,230)

Weighted average common shares outstanding		8,178		8,107
Plus: Incremental shares from assumed conversions:
Series A preferred shares		545		—
Dilutive stock options/shares		10		—
Diluted weighted average common shares outstanding		8,733		8,107
Diluted net income (loss) per share	$	0.10	$	(0.40)