5.	Net Income (Loss) Per Share

The Company calculates basic income (loss) per share by dividing net income (loss) by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings (loss) per share reflects the effects of potentially dilutive securities. Since the Company incurred a net loss for the nine months ended October 31, 2013, basic and diluted loss per share for this period was the same because the inclusion of dilutive potential common shares related to outstanding stock awards in the calculation would have been antidilutive.

Potential common shares of 720,000 relating to outstanding stock awards to directors and employees have been excluded from diluted weighted average common shares for the nine months ended October 31, 2013, as the effect would have been antidilutive. Additionally, for the nine months ended October 31, 2013, the 1,704,546 outstanding warrants issued to Broadwood would have been anti-dilutive.

The following table presents reconciliations of the numerators and denominators of the basic and diluted loss per share computations for net loss. In the tables below, “Net income (loss)” represents the numerator and “Shares” represents the denominator (in thousands, except per share amounts):

	Three Months Ended October 31,					Nine Months Ended October 31,
	2014			2013		2014		2013

Net income (loss)	$	(330	)	$	551	$	6,487	$	(1,717	)
Basic net income (loss) per share:
Weighted-average shares outstanding-Basic		14,684			14,470		14,684		14,300
Basic net income (loss) per share	$	(0.02	)	$	0.04	$	0.44	$	(0.12	)
Diluted net inome (loss) per share:
Weighted average shares outstanding - basic		14,684			14,470		14,684		14,300
Effect of potentially dilutive securities		202			74		146		-
Weighted average shares outstanding - diluted		14,886			14,544		14,830		14,300
Diluted net income (loss) per share	$	(0.02	)	$	0.04	$	0.44	$	(0.12	)