Note 2 – Net income (loss) per share

Basic net income (loss) per share represents net income (loss) divided by the weighted average number of common shares outstanding during the period. As a result of the net loss for the three and nine months ended April 30, 2018 and 2017 diluted weighted average shares outstanding are the same as basic weighted average shares outstanding, and do not include the potential common shares from stock options and unvested restricted stock because to do so would be antidilutive.

For the three and nine months ended April 30, 2018, the number of potential common shares (“in the money options”) and unvested restricted stock excluded from the calculation of diluted earnings per share was 431,000 and 694,000, respectively, because their effect would be antidilutive. For the three and nine months ended April 30, 2017, approximately 987,000 and 865,000 weighted average stock options were excluded from the calculation of diluted weighted average shares outstanding because their effect would be antidilutive.

For the three and nine months ended April 30, 2018, the effect of approximately 581,000 and 194,000 of outstanding “out of the money” options to purchase common shares were excluded from the calculation of diluted net income per share because their effect would be anti-dilutive. For the three and nine months ended April 30, 2017, the effect of approximately zero and 165,000 of outstanding “out of the money” options to purchase common shares were excluded from the calculation of diluted net income per share because their effect would be anti-dilutive.