3. 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: Series A preferred shares issued in May 2011 in connection with our 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 773 options and 17 common shares issuable upon conversion of preferred shares were not considered in computing diluted income (loss) per share for the three and nine months ended June 30, 2019 because they were anti-dilutive.

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


	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Basic net income (loss) per share:
Net income (loss) applicable to common shareholders	$	(426)	$	(75)	$	(1,080)	$	6
Weighted average common shares outstanding		10,493		8,273		10,343		8,274
Basic net income (loss) per share	$	(0.04)	$	(0.01)	$	(0.10)	$	0.00
Diluted net income per share:
Diluted net income (loss) applicable to common shareholders	$	(426)	$	(75)	$	(1,080)	$	6
Weighted average common shares outstanding		10,493		8,273		10,343		8,274
Plus: Incremental shares from assumed conversions:
Series A preferred shares		—		—		—		351
Dilutive stock options/shares		—		—		—		27
Diluted weighted average common shares outstanding		10,493		8,273		10,343		8,652
Diluted net income (loss) per share	$	(0.04)	$	(0.01)	$	(0.10)	$	0.00