This excerpt taken from the MERX 10-Q filed Oct 11, 2005.
Note 5. NET LOSS PER SHARE
Basic income (loss) per share is computed using the weighted average number of shares of common stock outstanding for the period. Diluted net income per share is computed using the weighted average number of shares of common stock and potentially dilutive common shares related to stock options and the convertible debenture outstanding during the period. No incremental shares were included in the calculations of net loss per share for the quarters ended August 27, 2005 and August 28, 2004.
The following incremental shares were excluded from the calculation of diluted net loss because including these shares would have been antidilutive: