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UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

JEFFREY SATTERFIELD, Individually and on 

Behalf of All Others Similarly Situated, 

 

 Plaintiff, 

 

v. 

 

LIME ENERGY CO., JOHN O’ROURKE 

and JEFFREY MISTARZ, 

 

Defendants. 

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Case No. 1:12-cv-05704 

 

Honorable Robert W. Gettleman 

Magistrate Judge Daniel G. Martin 

CONSOLIDATED AMENDED 

CLASS ACTION COMPLAINT 

JURY TRIAL DEMANDED 

Lead Plaintiffs Jamie Fang and Kevin J. Fetzer (collectively “Plaintiffs”), individually and on 

behalf of all other persons similarly situated, by and through their undersigned attorneys, allege upon 

personal knowledge as to themselves and their own acts, and upon information and belief as to all 

other matters, based on, inter alia, the investigation conducted by and through their attorneys, which 

included, among other things: a review of wire and press releases published by and regarding Lime 

Energy Co. (“Lime Energy,” “Lime,” or the “Company”); Defendants’ public statements, 

documents, conference calls and announcements; United States Securities and Exchange 

Commission (“SEC”) filings; security analysts’ reports and advisories about the Company; other 

publicly available information; and interviews with confidential witnesses. 

NATURE OF THE ACTION AND OVERVIEW

1. This is a securities fraud class action brought on behalf of all persons who purchased or 

otherwise acquired Lime Energy’s securities traded in the United States between May 14, 2008 and 

December 27, 2012, both dates inclusive (the “Class Period”), alleging violations of Sections 10(b) 

and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated 

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thereunder against Lime Energy and certain of its senior management. This action arises from the 

material misrepresentations that Lime Energy, its current Chief Executive Officer and President John 

O’Rourke (“O’Rourke”), its current Chief Financial Officer Jeffrey Mistarz (“Mistarz”), and its 

former Chief Executive Officer and Chairman of the Board of Directors David R. Asplund 

(“Asplund”) made about Lime Energy’s financial statements, its internal controls and its ability to 

integrate acquired businesses. 

2. Lime Energy is a provider of clean energy solutions which include integrated energy 

engineering, consulting and implementation of solutions which purportedly enable its customers to 

reduce their facilities’ energy consumption, lower their operating and maintenance costs and reduce 

their carbon footprint. The Company was formed in 2006 through 2008 from a series of acquisitions 

by Electric City Corp. of Illinois, which renamed itself and moved the Company’s headquarters to 

Charlotte, North Carolina in 2011. 

3. The new Company struggled for profitability and needed to show increasing revenues and 

income to continue receiving funding to run the Company from investors. Thus, it launched a threeyear strategic plan in 2010 under the direction of O’Rourke, who was charged with the responsibility 

of executing the plan, which was created by Lime’s executive management and approved by its 

Board of Directors. This plan was intended to drive the Company’s profitability and revenue by 

focusing and expanding its utility partnerships throughout the country. 

4. Lime Energy, however, was not equipped to execute the strategic plan and integrate the 

businesses that had been acquired when the new Company was formed. Defendants turned a blind 

eye in reckless disregard to the fact that Lime Energy did not have the accounting systems or internal 

controls in place which could consolidate the financials of the acquired entities and assure that its 

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financial statements were accurate. Indeed, during the Class Period, fictitious revenues were 

booked, which Defendants recklessly allowed to be reported in the Company’s financials. Although 

the Company’s financials could not be relied upon, Defendants nevertheless affirmatively 

misrepresented to the public that the Company was reaping “record earnings” and touted its 

“successful integration” and “synergies” with respect to its subsidiaries. All the while, Defendants 

knowingly or recklessly withheld from the investing public the truth about the Company’s lack of 

controls over its accounting systems and inability to integrate financial information from the 

acquired companies. The record earnings Defendants represented to the market were, in fact, a 

chimera. 

5. Thus, due to a lack of internal controls and an unwillingness to admit that its strategic plan to 

increase profitability and revenues was failing, the Company misreported revenues and income by 

creating fictitious revenue and booking revenue in earlier quarters than it was earned in order to 

make the Company appear more profitable than it actually was. Indeed, as the graphic below – used 

by Lime Energy to lure investors – shows, the Company repeatedly represented to the market that 

revenues were expanding at a record pace. 

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6. As a result of Defendants’ materially false and misleading statements, Lime Energy common 

stock traded at artificially inflated prices throughout the Class Period, reaching a Class Period high of 

$10.10 per share on May 14, 2008. 

7. As detailed herein, several Lime Energy employees raised concerns to Defendants regarding 

the misreporting of revenue, lack of internal controls with respect to accounting, and the financial 

errors that were being made. Nonetheless, even though these issues were well known to Lime Energy 

and the individual Defendants, the Company recklessly continued to publish materially false and 

misleading financial statements in violation of Generally Acceptable Accounting Principles (“GAAP”), 

the Company’s own internal accounting standards, and the federal securities laws. 

8. The Defendants were motivated to issue materially false and misleading statements about the 

Company, inter alia, to continue receiving funding from investors including Richard Kiphart 

(“Kiphart”) the Company’s current Chairman of the Board of Directors, who had told Defendant 

O’Rourke during the Class Period that he would make much needed capital investments in Lime, but 

only if Lime Energy hit certain revenues and net profit numbers. During the Class Period, Kiphart 

advanced lines of credit to the Company and, along with other investors, acquired Lime Energy 

notes which helped fund the new Company’s start up and expansion. To meet the demands of 

investors like Kiphart and prop up the price of the Company’s stock, Defendants recklessly allowed 

false financials to be disseminated to the market from 2008 and proceeding throughout the Class 

Period. Indeed, Lime’s finances were manipulated to make the Company appear more profitable 

than it actually was on a quarterly and year-end basis. 

9. The house of cards began to crumble when the Company was forced to make a partial 

disclosure that it would restate financial results for fiscal 2010 and 2011. On July 16, 2012, the 

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Company disclosed that the Audit Committee of the Board of Directors of Lime Energy had 

determined that the Company’s consolidated financial statements filed with the SEC on Form 10-K 

for the periods ended December 31, 2010 and December 31, 2011, as well as the quarterly report on 

Form 10-Q for the period ended March 31, 2012, may no longer be relied upon. 

10. Specifically, the Company stated that, “[i]n some cases, it appears that non-existent revenue 

may have been recorded” and that “[i]n other cases, it appears that revenue may have been recorded 

earlier than it should have been.” Additionally, Lime Energy indicated that the misreporting may 

potentially require restatement of its previously issued financial statements and that the Company, 

under the supervision of the Audit Committee and with the assistance of outside counsel, is 

conducting an investigation of the misreporting. 

11. On this news of this first disclosure, Lime Energy common stock fell $0.91 per share, or 

44.83%, to close on July 17, 2012, at $1.12 per share, on unusually heavy volume. 

12. On December 27, 2012, the Company made a second disclosure detailing new information 

about the nature of its fraudulent activity. The Company disclosed that the lack of internal controls 

which caused the 2010-2012 financials to be misstated as disclosed on July 17, 2012, actually 

existed for the 2008 and 2009 financials as well, and that Lime’s consolidated financial statements 

reported in the Forms 10-K filed with the SEC for the years ended December 31, 2008 and 

December 31, 2009 (the “2008-2009 Financial Statements”) may no longer be relied upon. The 

Company specifically stated that “[t]he Company’s management and the Audit Committee believe 

that some portion of the Company’s revenue for 2009 and 2008 was recognized earlier than 

permitted under generally accepted accounting principles.” On the disclosure of this additional 

news, the price of Lime’s common stock dropped another 7%. 

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13. By restating its financials, the Defendants have admitted that the representations made in the 

financial statements for the fiscal years 2008 through the first quarter of 2012 were false and 

misleading when made and, indeed, that the misrepresentations were material. 

14. Throughout the Class Period, Defendants made false and/or misleading statements, as well as 

failed to disclose material adverse facts about the Company’s business, operations, and prospects. 

Specifically, Defendants made false and/or misleading statements misrepresenting and/or failing to 

disclose: (1) that the Company was improperly recording revenue, including the creation of fictitious 

revenue and booking revenue in the wrong period for which it was earned; (2) that, as a result, the 

Company’s revenue and financial results were overstated; (3) that, as such, the Company’s financial 

statements were not prepared in accordance with GAAP, and specifically violated FASB CON No. 5 

through their misreporting of revenue; (4) the Company lacked adequate internal and financial 

controls; and (5) that, as a result of the foregoing, the Company’s financial statements were 

materially false and misleading at all relevant times. 

15. As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the 

market value of the Company’s securities, Plaintiffs and other Class members have suffered 

significant losses and damages. Indeed, the Company’s disclosures on July 16, 2012 and December 

27, 2012, which resulted in the declines in the prices of Lime’s common stock noted above, caused 

economic loss to the plaintiffs and all other members of the Class defined herein. 

JURISDICTION AND VENUE

16. The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange Act (15 

U.S.C.§§78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the SEC (17 C.F.R. § 

240.10b-5). 

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17. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. §1331 

and Section 27 of the Exchange Act (15 U.S.C. §78aa). 

18. Venue is proper in this Judicial District pursuant to 28 U.S.C. §1391(b) and Section 27 of 

the Exchange Act (15 U.S.C. §78aa(c)). Substantial acts in furtherance of the alleged fraud or the 

effects of the fraud have occurred in this Judicial District. Many of the acts charged herein, 

including the preparation and dissemination of materially false and/or misleading information, 

occurred in substantial part in this Judicial District. Additionally, Defendant Lime Energy’s 

principal executive offices were located within this Judicial District during the Class Period. 

19. In connection with the acts, transactions, and conduct alleged herein, Defendants directly 

and indirectly used the means and instrumentalities of interstate commerce, including the United 

States mail, interstate telephone communications, and the facilities of a national securities exchange. 

 PARTIES 

Plaintiff

20. Plaintiffs Jamie Fang and Kevin J. Fetzer, as set forth in their previously-filed certifications 

(Dkt. No. 22-3), incorporated by reference herein, purchased Lime Energy common stock during the 

Class Period, and suffered damages as a result of the federal securities law violations and false 

and/or misleading statements and/or material omissions alleged herein. 

Defendants

21. Defendant Lime Energy is a Delaware corporation with its principal executive offices located 

at 16810 Kenton Drive, Suite 240, Huntersville, North Carolina 28078. Prior to August 2011, Lime 

Energy’s principal executive offices were located at 1280 Landmeier Road, Elk Grove Village, 

Illinois 60007. 

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22. Defendant John O’Rourke (“O’Rourke”) was, at all relevant times, Lime Energy’s Chief 

Operating Officer from 2009 to 2011 and has served as the Company’s Chief Executive Officer 

(“CEO”) since June 2011. Defendant O’Rourke was, at all relevant times, a director of the 

Company since July 28, 2011. 

23. Defendant Jeffrey Mistarz (“Mistarz”) was, at all relevant times, Chief Financial Officer 

(“CFO”) of Lime Energy. Defendant Mistarz was intimately involved in reviewing and approving 

the Company’s financials prior to the final numbers being released to the public. Managers were 

required to provide contract financial data to Mistarz, who reconciled revenue monthly and 

quarterly. 

24. Defendants O’Rourke and Mistarz are collectively referred to hereinafter as the “Individual 

Defendants.” The Individual Defendants, because of their positions with the Company, possessed the 

power and authority to control the contents of Lime Energy’s reports to the SEC, press releases and 

presentations to securities analysts, money and portfolio managers and institutional investors, i.e., 

the market. Each Defendant was provided with copies of the Company’s reports and press releases 

alleged herein to be misleading prior to, or shortly after, their issuance and had the ability and 

opportunity to prevent their issuance or cause them to be corrected. Because of their positions and 

access to material non-public information available to them, each of these Defendants knew that the 

adverse facts specified herein had not been disclosed to, and were being concealed from, the public, 

and that the positive representations which were being made were then materially false and/or 

misleading. Further, Defendant Mistarz was charged with the responsibilities of reconciling revenue 

monthly and quarterly financials prior to them being reported to the public. Moreover, Defendant 

O’Rourke was informed of the misreporting of revenues by certain employees during the Class 

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Period. 

Nominal Defendant

25. Nominal Defendant David R. Asplund (“Asplund”) was Lime Energy’s Chief Executive 

Officer from 2006 through June 2011, and Lime Energy’s Chairman of the Board of Directors 

through June 2012. Asplund was named as a defendant in the individual complaints filed in the 

actions which have been consolidated with the instant action. On January 4, 2013, Asplund filed a 

voluntary petition for bankruptcy relief under Chapter 7 of Title 11 of the United States Code. 

Accordingly, pursuant to 11 U.S.C. §362, this action currently is stayed against him individually. 

CLASS ACTION ALLEGATIONS

26. Plaintiffs brings this action as a class action pursuant to Federal Rule of Civil Procedure 

23(a) and (b)(3) on behalf of a class, consisting of all those who purchased Lime Energy’s securities 

between May 14, 2008 and December 27, 2012, both dates inclusive (the “Class Period”), who were 

damaged thereby (the “Class”). Excluded from the Class are Defendants, officers and directors of 

the Company at all relevant times, members of their families and their legal representatives, heirs, 

successors or assigns and any entity in which Defendants have or had a controlling interest. 

27. The members of the Class are so numerous that joinder of all members is impracticable. 

Throughout the Class Period, Lime Energy’s securities were actively traded on the NASDAQ Stock 

Exchange (“NASDAQ”). While the exact number of Class members is unknown to Plaintiff at this 

time and can only be ascertained through appropriate discovery, Plaintiffs believe that there are 

hundreds or thousands of members in the proposed Class. Millions of Lime Energy shares were 

traded publicly during the Class Period on the NASDAQ. As of March 1, 2012, the Company had 

23,975,651 shares of common stock outstanding. Record owners and other members of the Class 

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may be identified from records maintained by Lime Energy or its transfer agent and may be notified 

of the pendency of this action by mail, using the form of notice similar to that customarily used in 

securities class actions. 

28. Plaintiffs’ claims are typical of the claims of the members of the Class as all members of the 

Class are similarly affected by Defendants’ wrongful conduct in violation of federal law that is 

complained of herein. 

29. Plaintiffs will fairly and adequately protect the interests of the members of the Class and has 

retained counsel competent and experienced in class and securities litigation. 

30. Common questions of law and fact exist as to all members of the Class and predominate over 

any questions solely affecting individual members of the Class. Among the questions of law and 

fact common to the Class are: 

 whether the federal securities laws were violated by Defendants’ acts as alleged herein; 

 whether statements made by Defendants to the investing public during the Class Period 

misrepresented material facts about the business, financials, operations and management of 

Lime Energy; 

 whether the Individual Defendants caused Lime Energy to issue false and misleading 

financial statements during the Class Period; 

 whether Defendants acted knowingly or recklessly in issuing false and misleading financial 

statements; 

 whether the prices of Lime Energy common stock during the Class Period were artificially 

inflated because of the Defendants’ conduct complained of herein; and 

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 whether the members of the Class have sustained damages and, if so, what is the proper 

measure of the damages. 

31. A class action is superior to all other available methods for the fair and efficient adjudication 

of this controversy since joinder of all members is impracticable. Furthermore, as the damages 

suffered by individual Class members may be relatively small, the expense and burden of individual 

litigation make it impossible for members of the Class to individually redress the wrongs done to 

them. There will be no difficulty in the management of this action as a class action. 

APPLICABILITY OF PRESUMPTION OF RELIANCE 

(FRAUD-ON-THE-MARKET DOCTRINE)

32. The market for Lime Energy’s securities was open, well-developed and efficient at all 

relevant times. As a result of the materially false and/or misleading statements and/or failures to 

disclose, Lime Energy’s securities traded at artificially inflated prices during the Class Period. 

Plaintiffs and other members of the Class purchased or otherwise acquired the Company’s securities 

relying upon the integrity of the market price of Lime Energy’s securities and market information 

relating to Lime Energy, and have been damaged thereby. 

33. During the Class Period, the artificial inflation of Lime Energy’s stock was caused by the 

material misrepresentations and/or omissions particularized in this Complaint causing the damages 

sustained by Plaintiffs and other members of the Class. As described herein, during the Class 

Period, Defendants made or caused to be made a series of materially false and/or misleading 

statements about Lime Energy’s business, prospects, and operations. These material misstatements 

and/or omissions created an unrealistically positive assessment of Lime Energy and its business, 

operations, and prospects, thus causing the price of the Company’s securities to be artificially 

inflated at all relevant times, and when disclosed, negatively affected the value of the Company 

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stock. Defendants’ materially false and/or misleading statements during the Class Period resulted in 

Plaintiffs and other members of the Class purchasing the Company’s securities at such artificially 

inflated prices, and each of them has been damaged as a result. 

34. At all relevant times, the market for Lime Energy’s securities was an efficient market for the 

following reasons, among others: 

 Lime Energy stock met the requirements for listing, and was listed and actively traded on the 

NASDAQ, a highly efficient and automated market; 

 As a regulated issuer, Lime Energy filed periodic public reports with the SEC and/or the 

NASDAQ; 

 Lime Energy regularly communicated with public investors via established market 

communication mechanisms, including through regular dissemination of press releases on 

the national circuits of major newswire services and through other wide-ranging public 

disclosures, such as communications with the financial press and other similar reporting 

services; and/or 

 Lime Energy was followed by securities analysts employed by brokerage firms who wrote 

reports about the Company, and these reports were distributed to the sales force and certain 

customers of their respective brokerage firms. Each of these reports was publicly available 

and entered the public marketplace. 

35. As a result of the foregoing, the market for Lime Energy’s securities promptly digested 

current information regarding Lime Energy from all publicly available sources and reflected such 

information in Lime Energy’s stock price. Under these circumstances, all purchasers of Lime 

Energy’s securities during the Class Period suffered similar injury through their purchase of Lime 

Energy’s securities at artificially inflated prices and a presumption of reliance applies. 

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SUBSTANTIVE ALLEGATIONS 

Background

36. Lime Energy is purportedly a provider of clean energy solutions. The Company’s services 

include integrated energy engineering, consulting and implementation of solutions which enable its 

customers to reduce their facilities’ energy consumption, lower their operating and maintenance 

costs and reduce their carbon footprint. 

37. On February 25, 2008, Lime Energy’s stock began trading on the NASDAQ Capital Market 

under the trading symbol “LIME.” In June 2008, Lime acquired Applied Energy Management, Inc. 

(“AEM”). AEM provided energy engineering and consulting services and energy efficiency services 

similar to its existing energy efficiency lighting solutions. During 2009, Lime Energy began serving 

utility services clients and in late 2009 it won its first contract to provide utility demand-side 

management services. 

38. During 2010, the Company established Lime Energy Asset Development, LLC (“LEAD”), to 

source, develop and operate renewable and alternative energy assets. During 2011, Lime Energy 

implemented a corporate restructuring to better integrate and streamline its operations. As part of 

this restructuring, it merged many of its subsidiaries, changed the name of Applied Energy 

Management, Inc., to Lime Energy Services Co. and moved its corporate headquarters to 

Huntersville, North Carolina. 

39. Contemporaneously, the Company began focusing its efforts in the utility division, which 

accounted for a huge portion of its profits and revenues during the Class Period. Indeed, during the 

Class Period, Defendants repeatedly informed analysts about the size of the Company’s backlog in its 

utility division as an indicator of future growth. Accordingly, it was all the more reckless of Defendants 

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not to assure that controls were in place to assure that accounting in this core operation of Lime Energy 

were not misstated. 

40. In addition, the Company continued to tout the growth of its utility division. For example, in 

a May 25, 2010 press release, Lime Energy reports “that it has been awarded a competitively bid 

contract to implement the direct install component of New Jersey’s Clean Energy Program, which is 

a national model for energy efficiency and renewable energy. Under this contract, Lime Energy will 

operate exclusively in Bergen, Essex and Hudson counties, where the program is available to 

customers with a monthly electric demand not exceeding 200 kW. The program provides customer 

incentives of up to 80% of the project cost for upgrades including energy efficient lighting, lighting 

controls, energy efficient motors, refrigeration, as well as heating, ventilation and air conditioning 

equipment. As the direct install provider in northern New Jersey, Lime Energy will provide program 

marketing, project development and engineering, material procurement, database administration and 

turnkey project implementation. The program is managed by TRC Energy Services, the market 

manager for New Jersey’s Clean Energy commercial and industrial segment. The direct install 

concept is designed to provide owners of small commercial and industrial buildings with a 

comprehensive package of cost-effective energy efficiency measures, resulting in energy savings not 

typically captured in these types of facilities. The program provides owners with a seamless process 

for energy efficiency analysis and equipment replacement to reduce energy usage and save operating 

costs. Based on the overall size of the statewide program, Lime Energy estimates that it has the 

opportunity to provide more than 8 million kilowatt-hours of energy efficiency resources by 

delivering the program to several hundred customer facilities during the initial contract period which 

concludes at the end of 2010. The potential revenue is estimated to be $3.7 million over this 

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period.” 

Accounting Policies and Pracitices

41. Although GAAP unquestionably required Lime to book revenue in the period in which it was 

earned, it chose not to. As a result, during the Class Period, Lime issued materially false and 

misleading statements regarding the Company’s business and financial results. Specifically, 

Defendants manipulated the recognition of revenues in violation of Statement of Financial Accounting 

Standards (“SFAS”) 48, booking revenues in advance of when they were actually earned, and creating 

completely fictitious revenue, all the while concealing this from investors. 

42. GAAP are those principles recognized by the accounting profession as the conventions, rules 

and procedures necessary to define accepted accounting practice at a particular time. Regulation SX (17 C.F.R. §210.4-01(a)(1)) states that financial statements filed with the SEC which are not 

prepared in accordance with GAAP are presumed to be misleading and inaccurate. Regulation S-X 

also requires that interim financial statements comply with GAAP. 17 C.F.R. § 210.10-01 (a). 

GAAP, as described in Financial Accounting Standards Board (“FASB”) Statement of Concepts No. 

5 (FASB CON No. 5), provides the basic requirements for revenue to be recognizable: (i) revenue 

must have been earned; and (ii) revenue must be realizable (collectible). 

43. Along with FASB CON No. 5, the Company violated American Institute of Certified Public 

Accountants (“AICPA”) Accounting Research Bulletin (ARB) No. 45, Long-Term ConstructionType Contracts (which applies to almost all types of construction contracts including fixed-price or 

lump sum, cost-type, time and material, and unit price contracts) and AICPA Statement of Position 

(“SOP”) 81-1, Accounting for Performance of Construction-Type and Certain Production-Type 

Contracts, which provides necessary guidance on applying GAAP not only for construction 

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contracts, but also for construction-like production activities. ARB No. 45 and SOP 81-1, mandate 

the use of either: (1) the “percentage of completion” method, under which which the construction 

contractor recognizes revenue over the life of the construction contract based on the degree of 

completion: 50% completion means recognition of one-half of revenues, costs, and income; or (2) 

the “completed contract” method, under which all revenues, costs, and income are recognized only 

at completion of the construction project, ordinarily at the end of the construction contract. 

44. Historically – and including part of the Class Period – Lime purported to recognize a portion 

of its revenue on a completed contract basis. During 2011, however, Lime purported to begin 

exclusively recognizing revenue for all its projects under the percentage of completion method. In 

fact, Lime failed to effectively deploy either method during the Class Period. 

45. The Company also violated SEC’s Staff Accounting Bulletin No. 104, Revenue Recognition, 

which sets forth guidelines in the timing of revenue recognition based upon factors such as passage 

of title, installation, payments and client acceptance. 

46. In addition to GAAP and SEC standards, the Company violated its own, internal revenue 

recognition policies, which state as follows: 

We recognize our revenue when all four of the following criteria are met: (i) 

persuasive evidence has been received that an arrangement exists; (ii) delivery of the 

products and/or services has occurred; (iii) the selling price is fixed or determinable; 

and (iv) collectability is reasonably assured. In addition, we follow the provisions of 

the SEC’s Staff Accounting Bulletin No. 104, Revenue Recognition, which sets forth 

guidelines in the timing of revenue recognition based upon factors such as passage of 

title, installation, payments and client acceptance. Any amounts received prior to 

satisfying our revenue recognition criteria are recorded as billings in excess of costs 

and estimated earnings on uncompleted contracts. 

47. Moreover, Lime’s Code of Business Conduct and Ethics specifies that: 

The Company’s responsibilities to its shareholders and the investing public require 

that all transactions fully and accurately be recorded in the Company’s books and 

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records in compliance with all applicable laws. False or misleading entries, 

unrecorded funds or assets, or payments without appropriate supporting 

documentation and approval strictly are prohibited and violate Company policy 

and the law. Additionally, all documentation supporting a transaction fully and 

accurately should describe the nature of the transaction and be processed and 

recordedin a timely fashion. 

.... 

The federal securities laws require the Company to disclose certain information in 

various reports that the Company must file with or submit to the SEC. In addition, 

from time to time the Company makes other public communications, such as issuing 

press releases. The Company requires that its Chief Executive Officer, Chief 

Financial Officer and all other officers, directors and employees who are involved in 

the preparation of SEC reports or other public documents ensure that the information 

disclosed in those documents is full, fair, accurate, timely and understandable. 

Moreover, if any such officer, director or employee becomes aware of any 

material information that he or she believes should be disclosed to the public in 

the Company’s reports filed with the SEC, it is his or her responsibility to bring 

such information to the attention of the Chief Financial Officer or a member of 

the Audit Committee. If you believe that questionable accounting or auditing 

conduct or practices have occurred or are occurring, you should report those 

concerns to a member of Senior Management or a member of the Audit Committee. 

[emphasis added.] 

48. Finally, the Company’s Audit Committee Charter itemizes the responsibilities of its 

members, in relevant part, as follows: 

• Meet with the independent auditors and management of the Company at the 

conclusion of the audit to review the results of the audit, including any comments 

or recommendations of the independent auditors, especially the contents of any 

auditors’ letter to management. 

• Review with the independent auditors and with the financial and accounting 

personnel the adequacy and effectiveness of the Company’s internal controls and 

elicit any recommendations for improving the internal controls or particular areas 

where new or more detailed controls or procedures are desirable. 

• Inquire of management and the independent auditors regarding significant risks or 

exposures and assess the steps management has taken to minimize such risks and 

exposures to the Company. 

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• Review the financial statements contained in the annual report to shareholders with 

management and the independent auditors and, if appropriate, recommend to 

the board that such financial statements be adopted for inclusion in the Corporation’s 

annual report to stockholders. 

• Inquire of the independent auditors regarding their qualitative judgments about 

the appropriateness, not just the acceptability, of the accounting principles and the 

clarity of the financial disclosures. Also inquire of the auditors regarding their 

reasoning in accepting or questioning management’s significant estimates, 

changes or proposed changes in accounting principles and disclosure practices 

management employs for new transactions or events. Resolve disagreements 

between management and the independent auditors regarding financial statement 

disclosure. 

• Investigate any matter brought to its attention within the scope of its duties, with 

the power to retain outside counsel for this purpose if, in its judgment, that is 

appropriate. The costs of such counsel will be paid by the Corporation. 

• Verify that the Company’s auditors have reviewed the Company’s financial 

information prior to filing the Company’s Form 10-Q Reports. 

49. The GAAP rules and Company-wide accounting policies violated in this case are not 

complex. It is simple accounting that revenue cannot be recognized for unexecuted contracts and/or 

where there are significant obligations and/or contingencies relating to such contracts. Yet, the 

Company, in the face of GAAP and its own publicly-acknowledged policy of not recognizing 

revenues from an arrangement until “persuasive evidence has been received that an arrangement 

exists” nevertheless recognized revenues from contracts before they were executed. Lime, 

moreover, failed to apply “contract accounting” principles and “percentage of completion” 

methodology to arrangements in violation of Lime, moreover, failed to apply “contract accounting” 

principles and “completed contract” and/or “percentage of completion” methodology to 

arrangements, in violation of its own established accounting practices, as well as SOP 81-1. 

50. Revenue for projects, therefore, should have been recognized when the Company had a 

signed contract with a customer and when a materials invoice was posted for payment. In its Form 

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10-K filed with the SEC for the years ending 2008-2009, Lime Energy stated: 

Revenue and Profit Recognition 

 We recognize our revenue when all four of the following criteria are met: (i) 

persuasive evidence has been received that an arrangement exists; (ii) delivery of the 

products and/or services has occurred; (iii) the selling price is fixed or determinable; 

and (iv) collectability is reasonably assured. In addition, we follow the provisions of 

the SEC’s Staff Accounting Bulletin No. 104, Revenue Recognition, which sets forth 

guidelines in the timing of revenue recognition based upon factors such as passage of 

title, installation, payments and client acceptance. Any amounts received prior to 

satisfying our revenue recognition criteria are recorded as Billings in Excess of Costs 

and Estimated Earnings on Uncompleted Contracts. 

 Historically, we have recognized revenue primarily on a completed contract 

basis. Under the completed contract method, revenue is recognized once the project 

is substantially complete, resulting in some variability in revenue. This method 

works well with projects that are smaller and shorter in duration. AEM, however, 

recognizes, and will continue to recognize, all of its revenue on a percentage of 

completion basis. AEM’s projects generally are larger in terms of revenue and longer 

in duration; therefore, AEM recognizes revenue throughout the term of the project on 

a percentage of completion method based on the percentage of costs incurred. This 

accuracy of the estimates generated using this method is dependant on our ability to 

accurately estimate the remaining cost to complete the project. Because AEM 

represented approximately 54% of our 2008 revenue, we expect at least for the near 

future that the majority of our revenue will be recognized on a percentage of 

completion basis. Under both methods of revenue recognition, any anticipated losses 

on contracts are charged to operations as soon as they are determinable. 

In its Form 10-K filed with the SEC for the year ending 2010, Lime Energy stated: 

 Revenue and Profit Recognition 

 We recognize our revenue when all four of the following criteria are met: (i) 

persuasive evidence has been received that an arrangement exists; (ii) delivery of the 

products and/or services has occurred; (iii) the selling price is fixed or determinable; 

and (iv) collectability is reasonably assured. In addition, we follow the provisions of 

the SEC’s Staff Accounting Bulletin No. 104, Revenue Recognition, which sets forth 

guidelines in the timing of revenue recognition based upon factors such as passage of 

title, installation, payments and client acceptance. Any amounts received prior to 

satisfying our revenue recognition criteria are recorded as deferred revenue. 

 Historically, we have recognized revenue primarily on a completed contract 

basis. Under the completed contract method, revenue is recognized once the project 

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is substantially complete, resulting in some variability in revenue. This method 

works well with projects that are smaller and shorter in duration. Our public sector 

markets, however, recognize, and will continue to recognize, all of its revenue on a 

percentage of completion basis. Projects in our public sector market are generally 

larger in terms of revenue and longer in duration; therefore, we therefore recognize 

revenue throughout the term of the project on a completion method based on the 

percentage of costs incurred. Approximately half of our revenue is recognized on a 

percentage of completion basis. Under both methods of revenue recognition, any 

anticipated losses on contracts are charged to operations as soon as they are 

determinable. 

In its Form 10-K filed with the SEC for the year ending 2011, Lime Energy stated: 

Revenue and Expense Components

Revenue Recognition 

We recognize our revenue when all four of the following criteria are met: (i) 

persuasive evidence has been received that an arrangement exists; (ii) delivery of the 

products and/or services has occurred; (iii) the selling price is fixed or determinable; 

and (iv) collectability is reasonably assured. In addition, we follow the provisions of 

the SEC’s Staff Accounting Bulletin No. 104, Revenue Recognition, which sets forth 

guidelines in the timing of revenue recognition based upon factors such as passage of 

title, installation, payments and client acceptance. Any amounts received prior to 

satisfying our revenue recognition criteria are recorded as billings in excess of costs 

and estimated earnings on uncompleted contracts. 

We recognize the revenue utilizing the percentage of completion method of 

revenue recognition. Under the percentage of completion method we recognize 

revenue throughout the term of the project based on the percentage of costs incurred. 

Any anticipated losses on contracts are charged to operations as soon as they are 

determinable. 

51. Several Confidential Witnesses have provided evidence that not only did Lime Energy not 

have any internal controls in place to ensure that the above standards were met, but that it was 

commonly known within the Company, including Defendant Mistarz, that material errors were being 

reported in the Company’s financial statements. Revenue was continually booked in the wrong 

quarters, booked to the wrong job, and in certain instances, booked fictitiously. 

52. Not only were these accounting errors taking place, but the most egregious behavior of 

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booking fictitious revenue occurred in the utilities division, which was the Company’s most 

important division — i.e., its core operations. Indeed, as disclosed in the Company’s Form 10-K for 

the year ended December 31, 2011, the Company confirmed the importance of the utilities division: 

Revenue Concentration

During 2011, one utility customer accounted for approximately 21% of our 

consolidated billings while a public utility commission, the Army Corps. of 

Engineers and an ESCO combined to account for an additional 33% of our 

consolidated billings. One utility customer accounted for approximately 17% of our 

consolidated billings during 2010, while two ESCO customers accounted for 

approximately 30% of the consolidated billings during 2009. 

We expect that contracts with large utilities or public utility commissions and 

ESCOs will continue to be a significant and growing source of revenue for us in the 

future, therefore we may experience greater client concentration in future periods 

than we have in the past. 

Confidential Witnesses 

Manipulated Revenues 

53. CW 1 was an accountant in Lime Energy’s Woodbridge (New Jersey) office from May 2010 

until approximately mid-November 2012. 

54. CW1 confirmed that from the time she became employed at Lime Energy in May 2010, Lime 

Energy’s utilities division (which was its largest and most profitable division) had a practice of 

booking revenue on contracts that were not yet finalized. At Lime Energy, revenue for projects 

should have been recognized when the Company had a signed contract with a customer and when a 

materials invoice was posted for payment. Instead, the utilities division had recognized revenue 

improperly: contracts had not been signed by the customer; in the case of New Jersey Direct Installs, 

the contract was not signed by the utility company, which was required; a contract which was part of 

old audit proposal that the Company knew was not going to be approved by the customer; and some 

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contracts never existed in any capacity. CW 1 noticed these improper entries when she reconciled 

the books at the end of each month. In some instances, the Company had taken revenue for a 

contract three months earlier than it should have. In these instances, and when she learned that other 

contracts failed to materialize or did not exist, CW 1 had “to back the revenue out of the books.” 

She did this by making the original revenue entry a negative number. 

55. According to CW 1, things weren’t adding up. For example, the Solomon software system 

showed revenue booked in the fourth quarter of 2011 for a project that was originally proposed in 

2009 which the customer had never signed. CW1 stated that “there was no real belief that the 

revenue was coming in,” despite the revenue already having been booked in Lime Energy’s 

financials. 

56. CW 1 recognized revenue for the utilities division solely based on numbers provided by the 

construction manager and program manager on a project. Only after the books were closed did CW 

1 have time to check the accuracy of the revenue booked. When CW 1 conducted these 

reconciliations, CW 1 found numerous instances where the revenue reported in Solomon was not 

supported by the sales documents on the company’s server. For example, CW 1 observed that 

Solomon showed revenue recognized for contracts that had not been signed or did not appear in the 

project folders as back up documents. Revenue reported in September 2011 was made negative 

revenue when CW 1 closed the books in October 2011. CW1 “always did the adjustment in an 

Excel spreadsheet [and] emailed it to (the controller), who loaded it into Solomon.” The lack of 

controls concerned CW1 who noted that “they should have been auditing me.” 

57. According to CW 1, her direct supervisor Jack Almeida, Vice President of Regional Energy 

Efficiency Operations, participated in a monthly conference call with O’Rourke, Mistarz and either 

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Adam Procell or Jeff Smith of Lime Energy’s Senior Management Team to discuss the Company’s 

utilities business. 

58. CW 1 stated that there was an internal report at Lime Energy called the “monthly cost to 

complete” that the controller sent to all upper management each month. The monthly cost to 

completes, however, contained contracts that were dated after revenue had been booked, which was 

impossible under the Company’s own standards, much less GAAP. The monthly cost to completes 

also included contracts that did not exist. CW 1 noted that any senior manager “could see the 

negative revenue if he looked at the reports job-by-job. By the end of the fourth quarter 2011, (the 

negative revenue) stuck out like a sore thumb.” As such, the “monthly cost to completes were 

inaccurate.” 

59. At the end of each month, it was normal practice for project managers and construction 

managers for the utilities division to send their sales numbers to management. As part of CW 1’s 

informal audit in preparation for reporting to the Senior Team Management, CW 1 found that the 

utilities division had been adding revenue through more jobs to the sales datasheets created by 

project managers and construction managers back to at least 2010. The construction managers knew 

for months that their revenue was inflated “because the managers had been getting yelled at in 

corporate meetings about the backlog being off by the millions.” 

60. Until the end of 2011, the backing out the misreported revenue by reversing the entries to 

negative numbers was ignored by management. By the end of 2011, however, the negative numbers 

grew so large that the senior management could no longer ignore it. At that time, CW1 reported to 

management that numbers were off by $9-$11 million. 

61. In 2011, CW 1 expressed her concerns to Defendant O’Rourke in person when he visited the 

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Woodbridge, New Jersey office. CW 1 told O’Rourke that the Company’s “underbilled is increasing 

because contracts are not matching up.” The underbilled item in the company’s general ledger 

represented the revenue that CW 1 had to “back out” of the system because a contract did not close 

or never existed. CW 1 told Defendant O’Rourke that “the revenue was taken but not billed.” 

Defendant O’Rourke responded to CW 1 that Defendant Mistarz told him that those types of 

discrepancies were standard with companies that are growing as fast as Lime Energy. 

62. The problem of revenue recognition problems was so obvious that CW 1’s administrative 

assistant had identified a problem with the utility division’s reported revenue in December 2011- 

January 2012. CW 1 reported the information up the chain of command, but was told that revenue 

was being misreported so that Lime Energy could hit certain revenues and net profits by the end of 

2011 to satisfy investors such as Kiphart who told O’Rourke that he would make a capital 

investment in Lime Energy if the revenue numbers and net profits were met. “John O’Rourke 

definitely knew that revenue was being misreported.” 

63. In the fall of 2012, Defendant O’Rourke held a video conference meeting, wherein he told 

CW1 and others in attendance that the misreported revenue(disclosed on July 17, 2012) was not a 

big deal and would boil down to a slap on the wrist. Nevertheless, O’Rourke advised CW 1 and the 

others “that we needed to keep our mouths shut or else the shareholders will sue us.” 

Lack of Internal Controls 

64. CW 2 was employed at Lime Energy as a senior accountant from June 2011 until April 2012. 

 She reported directly to Julie Chandler, Lime’s Controller. CW 2 explained that Lime Energy used 

a financial tracking system called Solomon. In mid-2011, Defendant Mistarz installed the system to 

integrate the financials of the nine companies that made up Lime Energy into four or five companies. 

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 CW 2 stated that Lime Energy did not have an internal Information Technology employee to assist 

with the integration. Further, CW 2 stated that all attempts to hire an outside consultant utterly 

failed to merge the companies’ data correctly. CW 2 stated that “there was an incredible lack of 

oversight in accounting.” 

65. CW 2 stated that after the effort to consolidate financials began, errors occurred. Items were 

not categorized correctly and that “the data was not there post-acquisition.” The financials for the 

various Lime Energy companies were supposed to be consolidated, but, according to CW 2, “when 

you looked at the books in the Solomon system, some accounts were in the billions” in terms of 

revenue, “which was not remotely accurate.” The discrepancies were the result of data entry errors 

or mistakes due to lack of training and competence, and that there was no system in place to catch 

the errors. According to CW2, “it was very scary.” 

66. CW 2 stated that Defendant Mistarz, along with only a few other employees at corporate 

headquarters had the ability to make journal entries in Solomon. The Solomon system, however, 

was not set up to identify which journal entries were made by which employees. Toward the end of 

her time at Lime Energy, CW 2 stated that she performed “all the reconciliations for cash, but they 

became impossible to do” because data was not being input to adequately process the 

reconciliations. 

67. The lack of internal controls was obvious to anyone who spent time with the Solomon 

system. For example, in February 2012, CW 2 discovered that a former employee had failed to enter 

accounts receivable payments into Solomon for some of Lime Energy’s biggest clients and in other 

cases double-billed clients. The discovery was made when the Company started receiving large 

checks from some of Lime Energy’s largest customers, including Honeywell, the U.S. Postal Service 

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(“USPS”) and Johnson Controls. The former employee had not indicated in the Solomon system 

that the invoices for these accounts had been sent to the aforementioned companies. The check 

amounts ranged from $270,000 to almost $600,000. CW2 stated that “there were no checks in place 

to catch these errors.” 

68. In another instance, CW2 noted that an employee had gone back into the system to correct an 

invoice, but instead entered the invoice in a second-time, effectively double-billing the client. Even 

though the amounts were large, there was no routine checking for double billing. CW2 stated that it 

did not make sense for such an error to be caught so late in the process 

69. CW 2 took it upon herself to audit Lime Energy’s transactions with USPS, Honeywell and 

Johnson Controls since they were the company’s biggest customers, having accounts in the area of 

$6 or $7 million per customer. CW 2 tried to match the numbers in Solomon with the customer’s 

records and found that they were off by millions of dollars off. CW 2 also found that the Company 

was failing to accurately track retention rates, which negatively impacted the Company’s accounting 

because the amount of revenue expected never matched that amount of revenue received from 

customers. 

70. CW 2 also stated that Lime Energy had no method for backing up accruals, but instead only 

copied and pasted – as a journal entry into Solomon – an Excel spreadsheet of accrual costs that was 

drafted by CW 1. CW2 stated that the auditors “wanted CW1 to provide backup to prove the data 

because an error would be a material difference.” Solomon lacked any back up documentation to 

confirm the accrual amounts, which were integral to providing the Company with a percentage of 

completion on projects. CW 2 recalled telling senior management that she could not confirm the 

numbers in the Solomon system as being accurate. CW 2 also recalled resistance within the 

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Company—from the warehouse employees to sales staff—to provide the supporting documentation 

for accrual costs. 

71. CW 2 stated that she relayed to the Controller and the Executive Vice President of 

Operations her concerns regarding the Company’s financial controls and the errors that were 

occurring, but that changes in the lack of controls did not occur. 

72. According to CW 2, it was widely known in the Company that the Solomon system 

contained inaccurate financials. Indeed, she stated that “everyone knew. There was no financial plan 

and no GAAP analysis.” Moreover, employees were unable to get accurate financial data to 

determine whether they were meeting budget expectations because the data was not in Solomon. 

O’Rourke and Mistarz also were aware of the accounting problems. As CW2 noted, “yes, they 

knew. They absolutely knew.” 

73. CW 3, who reportedly had a degree in accounting, joined Lime Energy as a part-time 

accounts payable employee at Lime Energy’s corporate headquarters in Huntersville, North Carolina 

in June 2011. CW 3 worked at Lime Energy until March 2012 entering vendor invoices into 

Solomon. 

74. CW 3 corroborates CW 2’s testimony regarding difficulties faced in CW 2’s attempts at 

reconciling Lime Energy’s financial accounts. CW 3 recalled that when CW 2 joined the company 

in June 2011, the reconciliations were three or four months behind. There were complaints “about 

not being able to do reconciliations because information (in Solomon) was applied to the wrong 

accounts. The Company accountants did not have the information needed, there was something 

missing. The monthly reconciliations did not always match up.” CW3 also corroborated CW 2’s 

information regarding the billing and checks from large customers, and added that that accounting 

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entries were not verified by a second accounting employee, which was required under SarbanesOxley. 

75. CW 4 was Vice President of the Midwest Region for Lime Energy from August 2006 to May 

2011. CW 4 worked at Lime Energy’s corporate headquarters in Elk Grove, Illinois, and was in 

charge of the profit center revenue for the Midwest region. CW 4 stated that the Vice President of 

each individual profit center was responsible for financial figures provided to Defendant Mistarz, but 

the corporate accounting and consolidation of financials were handled exclusively by Defendant 

Mistarz. “Each area had somebody assigned to gather data for Defendant Mistarz, who oversaw and 

approved every aspect of the accounting and consolidation of financials.” Mistarz reconciled 

revenue monthly and quarterly. ”He had his eyes on whatever anyone reported. Mistarz was a one 

man shop.” 

76. CW 4 relayed that once a proposal to a client became a contract, information was entered 

into Salesforce, which was a reporting function used to monitor account executives and to track the 

progress of the contract. Data entered into Salesforce included the following: customer information, 

contract value, and estimated start and end dates, status of job. CW 4 relayed that standard contracts 

were paid in thirds: one-third upfront, one-third at 50% and one-third after completion. CW 4 stated 

that revenue was not supposed to be booked until they had a signed contract. 

Materially False and Misleading 

Statements Issued During the Class Period

77. The Class Period begins on May 14, 2008. On this day, the Company issued a press release 

entitled “Lime Energy Co. Reports Results for Three-Month Period Ended March 31, 2008.” 

Therein, the Company, in relevant part, stated: 

 First Quarter 2008 Results: 

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 Revenue for the first quarter of 2008 increased 15% to $2,907,479 from 

$2,528,547 for the first quarter of 2007 on higher sales from our Energy 

Services business. 

 Gross profit for the first quarter of 2008 was $149,078 as compared to 

$372,067 for the first quarter of 2007. 

 Operating loss increased $548,668 to $3,889,321 during the first quarter of 

2008 from $3,340,653 during the first quarter of 2007. 

 Net loss increased $922,434 during the first quarter of 2008 to $4,233,373 

from 3,310,939 during the first quarter of 2007. 

 Basic and diluted loss of $0.55 per share for the first quarter of 2008 as 

compared to a loss of $0.46 per share for the first quarter of 2007. 

 Adjusted EBITDA loss increased $549,512 to $2,620,195 from $2,070,683 

for the first quarter of 2007. 

78. Then CEO Asplund, commenting on the results, stated, in pertinent part, as follows: 

Our first quarter financial results were consistent with our expectations for the period 

while at the same time we believe that new projects are in line to deliver the levels of 

growth we discussed during our 2007 year end reporting ... Over 75% of our 

revenue for the quarter came from our Energy Services segment where revenue 

increased approximately 30% over Q1 of 2007. Given that our revenues are highly 

seasonal, we fully expected our results to be lowest this period but then to begin to 

increase quarter-over-quarter and peak in the fourth quarter where we anticipate our 

2008 annual growth to mirror 2007 vs. 2006. 

79. On May 14, 2008, Lime Energy filed its Quarterly Report on Form 10 Q (the “Q1 2008 10-

Q”) with the SEC for the 2008 fiscal first quarter. The Q1 2008 10-Q was signed by Asplund and 

Mistarz, and reaffirmed the Company’s financial results announced that same day. The Q1 2008 10-

Q also contained Sarbanes-Oxley required certifications, signed by Asplund and Mistarz, who 

certified: 

1. I have reviewed this quarterly report on Form 10-Q of Lime Energy 

Co. (the “Registrant”): 

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 2. Based on my knowledge, this report does not contain any untrue 

statement of a material fact or omit to state a material fact necessary to make 

the statements made, in light of the circumstances under which such 

statements were made, not misleading with respect to the period covered by 

this report; 

 3. Based on my knowledge, the financial statements, and other financial 

information included in this report, fairly present in all material respects the 

financial condition, results of operations and cash flows of the Registrant as 

of, and for, the periods present in this report; 

 4. Registrant’s other certifying officer(s) and I are responsible for 

establishing and maintaining disclosure controls and procedures (as defined 

in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over 

financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 

15d-15(f)) for the registrant and have: 

 a) Designed such disclosure controls and procedures, or caused 

such disclosure controls and procedures to be designed under our 

supervision, to ensure that material information relating to the 

registrant, including its consolidated subsidiaries, is made known to 

us by others within those entities, particularly during the period in 

which this report is being prepared; 

 b) Designed such internal control over financial reporting, or 

caused such internal control over financial reporting to be designed 

under our supervision, to provide reasonable assurance regarding the 

reliability of financial reporting and the preparation of financial 

statements for external purposes in accordance with generally 

accepted accounting principles; 

 c) Evaluated the effectiveness of the Registrant’s disclosure 

controls and procedures and presented in this report our conclusions 

about the effectiveness of the disclosure controls and procedures, as 

of the end of the period covered by this report based on such 

evaluation; and 

 d) Disclosed in this report any change in the Registrant’s internal 

control over financing reporting that occurred during the Registrant’s 

most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the 

case of an annual report) that has materially affected, or is reasonably 

likely to materially affect, the Registrant’s internal control over 

financial reporting; and 

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 5. The Registrant’s other certifying officer(s) and I have disclosed, 

based on our most recent evaluation of internal control over financial 

reporting, to the Registrant’s auditors and the Audit Committee of the 

Registrant’s Board of Directors (or persons performing the equivalent 

functions): 

 a) All significant deficiencies and material weaknesses in the 

design or operation of internal control over financial reporting which 

are reasonably likely to adversely affect the Registrant’s ability to 

record, process, summarize and report financial information; and 

 b) Any fraud, whether or not material, that involved 

management or other employees who have a significant role in the 

Registrant’s internal control over financial reporting. 

80. The Q1 2008 10-Q stated that: 

Our management, including our chief executive officer and our chief financial 

officer, maintains our ‘disclosure controls and procedures’ (as defined in Rules 13a15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the 

‘Exchange Act’)) and has evaluated the effectiveness of our disclosure controls and 

procedures as of the end of the period covered by this report. Based on such 

evaluation, our chief executive officer and chief financial officer have concluded 

that, as of March 31, 2008, such disclosure controls and procedures are effective for 

the purpose of ensuring that material information required to be in the reports that we 

submit, file, furnish or otherwise provide to the Securities and Exchange 

Commission is accumulated and communicated to our management, including our 

chief executive officer and chief financial officer, as appropriate to allow timely 

decisions regarding required disclosure. 

81. The Q 1 2008 10-Q also stated that “[t]here have not been any changes in our internal control 

over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter 

ended March 31, 2008 that have materially affected or are reasonably likely to materially affect our 

internal control over financial reporting.” 

82. The statements Defendants made in the Q1 2008 10-Q as specified in Paragraphs 77 to 81 

above were false and/or misleading and/or failed to disclose: (1) that the Company was improperly 

recording revenue, including the creation of fictitious revenue and booking revenue in the wrong 

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period for which it was earned; (2) that, as a result, the Company’s revenue and financial results 

were overstated; (3) that, as such, the Company’s financial statements were not prepared in 

accordance with Generally Accepted Accounting Principles (“GAAP”), and specifically violated 

FASB CON No. 5 through their misreporting of revenue; (4) that the Company lacked adequate 

internal and financial controls; and (5) that, as a result of the foregoing, the Company’s financial 

statements were materially false and misleading at all relevant times. 

83. On August 15, 2008, the Company issued a press release entitled, “Lime Energy Co. Reports 

Results for Three-Month and Six-Month Periods Ended June 30, 2008.” Therein, the Company, in 

relevant part, stated: 

 Results for the three-month period ended June 30, 2008: 

 Revenue for the second quarter of 2008 increased 69% to $6,933,769 from 

$4,102,693 for the second quarter of 2007 on higher sales from our Energy 

Efficiency Services business. 

 Gross profit of $909,326 for the second quarter of 2008 as compared to 

$1,157,969 for the second quarter of 2007. 

 Operating loss of $4,005,603 for the second quarter of 2008 as compared to 

an operating loss of $1,971,924 for the second quarter of 2007. 

 Net loss of $4,530,589 for the second quarter of 2008 as compared to a net 

loss of $2,043,553 during the second quarter of 2007. 

 Basic and diluted loss of $0.57 per share for the second quarter of 2008 as 

compared to a loss of $0.27 per share for the second quarter of 2007. 

 Adjusted EBITDA loss of $2,514,336 for the second quarter of 2008 as 

compared to a loss of $746,149 for the second quarter of 2007. 

Results for six-month period ended June 30, 2008: 

 Revenue for the first half of 2008 increased 48% to $9,841,248 from 

$6,631,240 for the first half of 2007 on higher sales from our Energy 

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Efficiency Services business. 

 Gross profit for the first half of 2008 was $1,058,404 as compared to 

$1,530,036 for the first half of 2007. 

 Operating loss of $7,894,924 for the first half of 2008 as compared to an 

operating loss of $5,312,578 for the first half of 2007. 

 Net loss of $8,763,962 for the first half of 2008 as compared to an operating 

loss of $5,354,492 for the first half of 2007. 

 Basic and diluted loss of $1.12 per share for the first half of 2008 as 

compared to a loss of $0.72 per share for the first half of 2007. 

 Adjusted EBITDA loss of $5,134,531 for the first half of 2008 as compared 

to a loss of $2,816,833 for the first half of 2007. 

84. Asplund, commenting on the results, stated, in pertinent part, as follows: 

Over the last two years, we have invested a substantial amount of money in building 

up Lime Energy which we believe has resulted in its becoming a formidable force in 

the energy efficiency marketplace. With the addition of AEM, we now provide a 

diversified array of energy efficiency services and technologies to commercial and 

industrial companies, energy service companies and utilities on a truly national 

platform. We expect these investments to result in improved financial performance 

through the rest of this year and into 2009... 

85. On August 15, 2008, Lime Energy filed its Quarterly Report on Form 10-Q (the “Q2 2008 

10-Q”) with the SEC for the 2008 fiscal second quarter. The Q2 2008 10-Q was signed by Asplund 

and Mistarz, and reaffirmed the Company’s financial results announced that same day. The Q2 2008 

10-Q also contained Sarbanes-Oxley required certifications, signed by Asplund and Mistarz, 

substantially similar to the certifications contained in Paragraph 79, supra. 

86. The Q2 2008 10-Q also stated that the Company’s internal controls and disclosure 

procedures were effective as stated in Paragraphs 80 to 81, supra. 

87. The statements Defendants made in the Q2 2008 10-Q as specified in Paragraphs 83 to 86 

above were false and/or misleading and/or failed to disclose: (1) that the Company was improperly 

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recording revenue, including the creation of fictitious revenue and booking revenue in the wrong 

period for which it was earned; (2) that, as a result, the Company’s revenue and financial results 

were overstated; (3) that, as such, the Company’s financial statements were not prepared in 

accordance with Generally Accepted Accounting Principles (“GAAP”), and specifically violated 

FASB CON No. 5 through their misreporting of revenue; (4) that the Company lacked adequate 

internal and financial controls; and (5) that, as a result of the foregoing, the Company’s financial 

statements were materially false and misleading at all relevant times. 

88. On November 14, 2008, the Company issued a press release entitled, “Lime Energy Co. 

Reports Results for Three-Month and Nine-Month Periods Ended September 30, 2008.” Therein, 

the Company, in relevant part, stated: 

Results for the three-month period ended September 30, 2008: 

 Revenue for the third quarter of 2008 increased $12,870,989, or $236%, to 

$18,332,079 from $5,461,090 for the third quarter of 2007 on higher sales 

from our Energy Efficiency Services business. 

 Gross profit for the third quarter of 2008 increased $3,093,996, or 216%, to 

$4,528,431 as compared to $1,434,435 for the third quarter of 2007. 

 Selling, general and administrative expenses as a percentage of revenue 

declined from 54.3% during the third quarter of 2007 to 32.7% during the 

third quarter of 2008. 

 Adjusted EBITDA loss declined 45% to $418,313 for the three-month period 

ended September 30, 2008 as compared to a loss of $758,723 for the same 

period in 2007. 

 Operating loss declined 2% to $2,207,008 for the third quarter of 2008 as 

compared to an operating loss of $2,245,411 for the third quarter of 2007. 

 Net loss of $3,138,703 increased 22% for the third quarter of 2008 as 

compared to a net loss of $2,565,425 for the third quarter of 2007. 

 Basic and diluted loss increased 8% to $0.36 per share for the third quarter of 

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35 

2008 as compared to a loss of $0.33 per share for the third quarter of 2007. 

89. Defendants Lime Energy and Asplund, commenting on the results, stated, in pertinent part, 

as follows: 

The company is increasing its revenue guidance for the second half 2008 to between 

$45 million and $50 million from between $40 million and $45 million. Given third 

quarter results, the fourth quarter revenue estimate is therefore in a range of $27 

million and $32 million with positive adjusted EBITDA. 

Although we are very cognizant of the current difficult economic environment, we 

are comfortable increasing our revenue estimate at this time ... To date, we have not 

yet seen a slow down in our business with commercial or industrial customers and 

continue to bid, propose, develop and close new projects. 

90. On November 14, 2008, Lime Energy filed its Quarterly Report on Form 10-Q (the “Q3 

2008 10-Q”) with the SEC for the 2008 fiscal third quarter. The Q2 2008 10-Q was signed by 

Asplund and Mistarz, and reaffirmed the Company’s financial results announced that same day. The 

Q2 2008 10-Q also contained Sarbanes-Oxley required certifications, signed by Asplund and 

Mistarz, substantially similar to the certifications contained in Paragraph 79, supra. 

91. The Q3 2008 10-Q also stated that the Company’s internal controls and disclosure 

procedures were effective as stated in Paragraphs 80 to 81, supra. 

92. The statements Defendants made in the Q3 2008 10-Q as specified in Paragraphs 88 to 91 

above were false and/or misleading and/or failed to disclose: (1) that the Company was improperly 

recording revenue, including the creation of fictitious revenue and booking revenue in the wrong 

period for which it was earned; (2) that, as a result, the Company’s revenue and financial results 

were overstated; (3) that, as such, the Company’s financial statements were not prepared in 

accordance with Generally Accepted Accounting Principles (“GAAP”), and specifically violated 

FASB CON No. 5 through their misreporting of revenue; (4) that the Company lacked adequate 

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internal and financial controls; and (5) that, as a result of the foregoing, the Company’s financial 

statements were materially false and misleading at all relevant times. 

93. On March 10, 2009, the Company issued a press release entitled, “Lime Energy Co. Reports 

Results for Three-Month and Twelve-Month Periods Ended December 31, 2008.” Therein, the 

Company, in relevant part, stated: 

 Results for the three-month period ended December 31, 2008: 

 Revenue for the fourth quarter of 2008 increased $21,659,797 or 293% to 

$29,048,597 from $7,388,800 in the fourth quarter of 2007. 

 Gross profit increased $5,017,728 or 350% during the fourth quarter of 2008 

$6,451,987 compared to $1,434,259 in the fourth quarter of 2007. 

 Adjusted EBITDA income of $1,431,563 during the fourth quarter of 2008 

compared to a loss of $1,182,799 during the fourth quarter of 2007. 

 Selling, General and Administrative expenses declined to 20.1% of revenue 

during the fourth quarter of 2008 from 56.9% of revenue during the third 

quarter of 2007. 

 Operating loss $342,478 during the fourth quarter of 2008 compared to an 

operating loss of $7,309,510 during the same period of 2007. 

 Net loss available to common stockholders of $1,420,875 during the fourth 

quarter of 2008 compared to a loss of $7,632,812 during the fourth quarter of 

2007. 

 Basic and diluted loss of $0.16 per share for the fourth quarter of 2008 as 

compared to $0.99 per share for 2007. 

Results for the twelve-month period ended December 31, 2008: 

 Revenue for 2008 increased $37,740,794, or 194%, to $57,221,924 as 

compared to $19,481,130 for 2007. 

 Gross profit increased $7,640,092 or 174%, to $12,038,822 from $4,398,730 

for 2007. 

 Adjusted EBITDA loss declined 13% to $4,121,281 in 2008 from $4,758,354 

for 2006. 

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 Selling, General and Administrative expense were 35.6% of revenue during 

2008 as compared to 67.1% of revenue during 2007. 

 The operating loss declined 30% to $10,444,410 for 2008, from $14,867,498 

for 2007. 

 Net loss available to common stockholders of $13,323,540 compared to 

$15,552,728 for 2007. 

 Basic and diluted loss of $1.59 per share for 2008 as compared to $2.06 per 

share for 2007. 

94. Asplund, commenting on the results, stated, in pertinent part, as follows: 

We are extremely pleased to report record revenues and the first quarter in our history 

with positive adjusted EBITDA ... This marks another key milestone achieved as we 

work to build Lime Energy into the leading energy efficiency and renewable energy 

solutions provider in the country. In spite of an increasingly difficult economic 

environment, we continued to build upon our platform by hiring and training new 

employees, achieved a 194% increase in revenue for the year and continued to increase 

and diversify our customer base and our energy efficiency solution offerings.

95. On March 11, 2009, Lime Energy filed its Annual Report on Form 10-K (the “2008 10-K”) 

with the SEC for the 2008 fiscal year. The 2008 10-K was signed by Asplund and Mistarz, and 

reaffirmed the Company’s financial results announced that same day. The 2008 10-K also 

contained Sarbanes-Oxley required certifications, signed by Asplund and Mistarz, substantially 

similar to the certifications contained in Paragraph 79, supra. 

96. The 2008 10-K stated that: 

Our management carried out an evaluation, under the supervision and with the 

participation of our Chief Executive Officer and Chief Financial Officer, of the 

effectiveness of our disclosure controls and procedures (as such term is defined in 

Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as 

amended) as of the end of the period covered by this report. Based on the evaluation, 

our Chief Executive Officer and Chief Financial Officer concluded that, as of 

December 31, 2008, our disclosure controls and procedures were effective. 

97. The 2008 10-K also stated that: 

As of the end of the period covered by this report, our management carried out an 

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evaluation, under the supervision and with the participation of our Chief Executive 

Officer and Chief Financial Officer, of the effectiveness of our internal control over 

financial reporting. In carrying out its evaluation, our management used the criteria 

set forth in Internal Control—Integrated Framework issued by the Committee of 

Sponsoring Organizations of the Treadway Commission (‘COSO’). Based on its 

assessment, management concluded that our internal control over financial reporting 

was effective as of December 31, 2008. 

98. The 2008 10-K further stated as follows: “There were no changes in our internal control over 

financial reporting during the quarter ended December 31, 2008 that have materially affected, or are 

reasonably likely to materially affect, our internal control over financial reporting.” 

99. The statements Defendants made in the 2008 10-K as specified in Paragraphs 93 to 98 above 

were false and/or misleading and/or failed to disclose: (1) that the Company was improperly 

recording revenue, including the creation of fictitious revenue and booking revenue in the wrong 

period for which it was earned; (2) that, as a result, the Company’s revenue and financial results 

were overstated; (3) that, as such, the Company’s financial statements were not prepared in 

accordance with Generally Accepted Accounting Principles (“GAAP”), and specifically violated 

FASB CON No. 5 through their misreporting of revenue; (4) that the Company lacked adequate 

internal and financial controls; and (5) that, as a result of the foregoing, the Company’s financial 

statements were materially false and misleading at all relevant times. 

100. On May 12, 2009, the Company issued a press release entitled, “Lime Energy Co. Reports 

Results for Three-Month Period Ended March 31, 2009.” Therein, the Company, in relevant part, 

stated: 

 Results for the three-month period ended March 31, 2009: 

 Revenue of $13,724,758, an $11,477,922 or 511% increase when compared 

to the historical results for the first quarter of 2008 and a $5,118,445 or 60% 

increase over the pro forma results for the first quarter of 2008, assuming the 

acquisition of AEM had occurred on January 1, 2008. 

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 Gross profit of $2,804,836 a $2,771,255 increase over the $33,581 earned in 

the prior year and $1,501,719 or 115% increase over the first quarter 2008 

pro forma gross profit. 

 Gross profit margin of 20.4% as compared to 1.5% earned during the first 

quarter of 2008 and 15.1% earned during the first quarter of 2008 on a pro 

forma basis. 

 Adjusted EBITDA loss of $2,087,472, a $536,959 or 20.5% reduction from 

the loss of $2,624,431 recorded during the first quarter of 2008 and a 

$1,362,229 or 39.5% improvement from the pro forma loss of $3,429,617. 

 Selling, General and Administrative expense increased 1.8% from the pro 

forma expense for the first quarter of 2008. 

 Loss from continuing operations of $3,215,974 an improvement of $187,031 

or 5.5% from the loss of $3,403,005 for the first quarter of 2008 and a 

$1,963,802 or 37.9% improvement from the loss of $5,179,776 for the first 

quarter 2008 on a pro forma basis. 

 Loss from discontinued operations of $392,329, a $438,039 or 52.8% 

reduction from the $830,368 reported for the first quarter of 2008. 

 Net loss available to common stockholders of $4,164,092 compared to a loss 

of $4,233,373 for the first quarter of 2008 and a loss of $6,010,144 on a pro 

forma basis. 

 Basic and diluted loss per common share from continuing operations of $0.34 

as compared to $0.44 per share for the first quarter of 2008 and $0.60 per 

share on a pro forma basis. 

 Basic and diluted loss per common share of $0.38 per share versus a loss of 

$0.55 per share for the first quarter of 2008 and $0.69 per share pro forma. 

101. Asplund, commenting on the results, stated, in pertinent part, as follows: 

The first quarter marked another record quarter of performance for Lime Energy, 

with revenue up 60% from the first quarter of 2008 on a pro forma basis ...This 

increase was across our customer base with sales to commercial and industrial 

customers more than doubling and revenue from federal, state and local governments 

through our ESCO partners increasing by more than 40%. In addition to top-line 

growth, we continued to see strong operating leverage over first quarter 2008 on a 

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pro forma basis with gross margins increasing by over 30% while SG&A increased 

only 1.8% resulting in a 40% improvement in our quarterly adjusted EBITDA loss. 

102. On May 12, 2009, Lime Energy filed its Quarterly Report on Form 10-Q (the “Q1 2009 10-

Q”) with the SEC for the 2010 fiscal first quarter. The Q1 2009 10-Q was signed by Asplund and 

Mistarz, and reaffirmed the Company’s financial results announced that same day. The Q1 2009 10-

Q also contained Sarbanes-Oxley required certifications, signed by Asplund and Mistarz, 

substantially similar to the certifications contained in Paragraph 79, supra. 

103. The Q1 2009 10-Q also stated that the Company’s internal controls and disclosure 

procedures were effective as stated in similar to Paragraphs 80 to 81, supra. 

104. The statements Defendants made in the Q1 2009 10-Q as specified in Paragraphs 100 to 103 

above were false and/or misleading and/or failed to disclose: (1) that the Company was improperly 

recording revenue, including the creation of fictitious revenue and booking revenue in the wrong 

period for which it was earned; (2) that, as a result, the Company’s revenue and financial results 

were overstated; (3) that, as such, the Company’s financial statements were not prepared in 

accordance with Generally Accepted Accounting Principles (“GAAP”), and specifically violated 

FASB CON No. 5 through their misreporting of revenue; (4) that the Company lacked adequate 

internal and financial controls; and (5) that, as a result of the foregoing, the Company’s financial 

statements were materially false and misleading at all relevant times. 

105. On August 12, 2009, the Company issued a press release entitled, “Lime Energy Co. Reports 

Results for Three-Month and Six-Month Periods Ended June 30, 2009.” Therein, the Company, in 

relevant part, stated: 

Results for the three-month period ended June 30, 2009

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 Revenue increased $9,417,279 or 147.7%, to $15,795,187 for the three-month 

period ended June 30, 2009 from $6,377,908 for the same period in 2008. 

Revenue increased $5,640,084 or 55.5% over second quarter 2008 pro forma 

revenue of $10,155,103, assuming the acquisition of Applied Energy 

Management, Inc. had taken place on January 1, 2008. 

 Gross profit increased $1,939,232 or 214.7% to $2,842,383 during the second 

quarter of 2009 compared to $903,151 for the second quarter of 2008. Gross 

profit increased $1,473,309 or 107.6% when compared to the 2008 second 

quarter pro forma gross profit of $1,369,074. The gross margin for the second 

quarter of 2008 was 18.0% compared to 14.2% for the second quarter of 2008 on 

a historical basis and 13.5% on a pro forma basis. 

 Selling, general and administrative expense increased $1,717,843 or 44.8% to 

$5,549,345 during the three-month period ended June 30, 2009 compared to 

$3,831,502 for the same period in 2008. SG&A expense declined $336,863 or 

5.7% when compared to the three-month period ended June 30, 2008 on a pro 

forma basis. 

 The loss from discontinued operations decreased $169,367 or 21.0% to $636,895 

for the second quarter of 2009 from $806,262 during the second quarter of 2008. 

The 2009 loss from discontinued operations includes a $503,407 impairment 

charge related to the reduction in certain assets to be sold to their fair value. 

 Adjusted EBITDA loss declined $291,411 or 11.6% to $2,226,750 during the 

three-month period ended June 30, 2009 from $2,518,161 in the year earlier 

period. The Adjusted EBITDA loss declined $2,158,729 or 49.2% when 

compared to the 2008 pro forma three-month period ended June 30, 2008. 

 The second quarter net loss declined $476,828 or 10.5% to $4,053,589 compared 

to $4,530,589 for the second quarter of 2008. The net loss declined $2,723,882 

or 40.2% when compared to the second quarter of 2008 on a pro forma basis. 

 The basic and diluted net loss per share for the second quarter of 2009 declined 

$0.23 or 38.6% to $0.36 per share from $0.59 per share for the second quarter of 

2008. The basic and diluted loss per share declined $0.42 per share or 53.8% 

when compared 2008 second quarter loss of $0.78 per share a pro forma basis. 

 

Results for the six-month period ended June 30, 2009

 

 Revenue increased $20,895,201 or 242.3%, to $29,519,945 for the six-month 

period ended June 30, 2009 compared to $8,624,744 for the six-month period 

ended June 30, 2008. Revenue increased $10,758,529 or 57.3% compared to pro 

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forma revenue for the second quarter of 2008 of $18,761,416, assuming the 

acquisition of Applied Energy Management, Inc. had taken place on January 1, 

2008. 

 Gross profit increased $4,710,487 or 502.9%, to $5,647,219 for the six months 

ended June 30, 2009 compared to $936,732 for the six months ended June 30, 

2008. Gross profit increased $2,975,028 or 111.3% when compared to the gross 

profit for the six months ended June 30, 2008 on a pro forma basis. 

 Selling, General and Administrative expense increased $3,960,561 or 58.1%, to 

$10,781,982 for the six-month period ended June 30, 2009 compared to 

$6,821,421 for the same period in 2008. SG&A expense declined $245,407 or 

2.2%, when compared to SG&A expense for the six months ended June 30, 2008 

on a pro forma basis of $11,027,389. 

 Adjusted EBITDA loss declined $828,370 or 16.1%, to $4,314,222 for the first 

six months of 2009 compared to $5,142,592 for the same period in 2008. The 

Adjusted EBITDA loss declined $3,520,958 or 44.9%, when compared to the 

six-month period ended June 30, 2008 on a pro forma basis. 

 Net loss declined $1,101,900 or 12.6% to $7,662,062 during the first six months 

of 2009 compared to $8,763,962 for the same period in 2008. The net loss 

declined $5,168,225 or 40.3%, when compared to the net loss for the six-month 

period ended June 30, 2008 on a pro forma basis. 

 The basic and diluted loss per share declined $0.38 or 34.2%, to a loss of $0.74 

per share for the six-month period ended June 30, 2009 compared to a loss of 

$1.12 per share for the same period in 2008. The basic and diluted loss per share 

declined $0.74, or 50.2% when compared to the basic and diluted loss per share 

of $1.48 for the first six months of 2008 on a pro forma basis. 

106. Asplund, commenting on the results, stated, in pertinent part, as follows: 

The second quarter marked another strong quarter of growth for Lime Energy ... 

Organic revenue was up 55% from the second quarter of 2008 on a pro forma basis 

which was particularly notable given a roughly 10% decline in revenue with our 

commercial and industrial customers due to the continued difficult economic 

environment but an almost 100% increase in revenue from the public sector which 

includes our ESCO partners working with federal, state and local entities. In 

addition to further top-line growth, we continued showing operating leverage over 

second quarter 2008 on a pro forma basis with gross margins increasing by 33% 

while SG&A decreased 5.7%, resulting in a 49% improvement in our quarterly 

adjusted EBITDA loss over the pro forma results from the second quarter in 2008. 

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107. On August 12, 2009, Lime Energy filed its Quarterly Report on Form 10-Q (the “Q2 2009 

10-Q”) with the SEC for the 2009 fiscal second quarter. The Q2 2009 10-Q was signed by Asplund 

and Mistarz, and reaffirmed the Company’s financial results announced that same day. The Q2 2009 

10-Q also contained Sarbanes-Oxley required certifications, signed by Asplund and Mistarz, 

substantially similar to the certifications contained in Paragraph 79, supra. 

108. The Q2 2009 10-Q also stated that the Company’s internal controls and disclosure 

procedures were effective as stated in Paragraphs 80 to 81, supra. 

109. The statements Defendants made in the Q2 2009 10-Q as specified in Paragraphs 105 to 108 

above were false and/or misleading and/or failed to disclose: (1) that the Company was improperly 

recording revenue, including the creation of fictitious revenue and booking revenue in the wrong 

period for which it was earned; (2) that, as a result, the Company’s revenue and financial results 

were overstated; (3) that, as such, the Company’s financial statements were not prepared in 

accordance with Generally Accepted Accounting Principles (“GAAP”), and specifically violated 

FASB CON No. 5 through their misreporting of revenue; (4) that the Company lacked adequate 

internal and financial controls; and (5) that, as a result of the foregoing, the Company’s financial 

statements were materially false and misleading at all relevant times. 

110. On November 12, 2009, the Company issued a press release entitled, “Lime Energy Co. 

Reports Results for Three-Month and Nine-Month Periods Ended September 30, 2009.” Therein, 

the Company, in relevant part, stated: 

 Results for the three-month period ended September 30, 2009

 

 Revenue increased $3.3 million or 18.6%, to $21.003 million for the three-month 

period ended September 30, 2009 from $17.709 million for the same period in 

2008. 

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 Gross profit increased $158 thousand or 3.6% to $4.479 million during the third 

quarter of 2009 compared to $4.321 million for the third quarter of 2008. The 

gross margin for the third quarter of 2009 was 21.3% compared to 24.4% for the 

third quarter of 2008. 

 Selling, general and administrative expense increased $222 thousand or 4.0% to 

$5.731 million during the three-month period ended September 30, 2009 

compared to $5.509 million for the same period in 2008. 

 The operating loss declined 15% or $269 thousand to $1.521 million during the 

third quarter of 2009 from $1.79 million in the year earlier period. 

 The loss from discontinued operations decreased $22 thousand or 5.3% to $396 

thousand for the third quarter of 2009 from $418 thousand for the third quarter of 

2008. 

 Adjusted EBITDA loss increased $658 thousand to $697 thousand during the 

three-month period ended September 30, 2009 from $39 thousand in the year 

earlier period. 

 The third quarter net loss increased $752 thousand or 24.0% to $3.891 million 

compared to $3.139 million for the third quarter of 2008. 

 The basic and diluted net loss per share for the third quarter of 2009 declined 

$0.10 or 27.8% to $0.26 per share from $0.36 per share for the third quarter of 

2008. 

 Results for the nine-month period ended September 30, 2009

 

 Revenue increased $24.189 million or 91.9%, to $50.523 million for the ninemonth period ended September 30, 2009 compared to $26.334 million for the 

nine-month period ended September 30, 2008. Revenue increased $14.052 

million or 38.5% compared to pro forma revenue for the nine-month period 

ended September 30, 2008 of $36.471 million, assuming the acquisition of 

Applied Energy Management, Inc. had taken place on January 1, 2008. 

 Gross profit increased $4.867 million or 92.5%, to $10.126 million for the nine 

months ended September 30, 2009 compared to $5.529 million for the nine 

months ended September 30, 2008. Gross profit increased $3.131 million or 

44.8% when compared to the gross profit for the nine months ended 

September 30, 2008 on a pro forma basis. 

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 Selling, General and Administrative expense increased $4.182 million or 33.9%, 

to $16.513 million for the nine-month period ended September 30, 2009 

compared to $12.331 million for the same period in 2008. SG&A expense 

declined $24 thousand or 0.1%, when compared to SG&A expense for the nine 

months ended September 30, 2008 on a pro forma basis of $16.537 million. 

 Adjusted EBITDA loss increased $986 thousand or 28.1%, to $4.493 million for 

the first nine months of 2009 compared to $3.507 million for the same period in 

2008. The Adjusted EBITDA loss declined $1.484 million or 24.8%, when 

compared to a loss of $5.977 million for the nine-month period ended 

September 30, 2008 on a pro forma basis. 

 Net loss declined $349 thousand or 2.9% to $11.554 million during the first nine 

months of 2009 compared to $11.903 million for the same period in 2008. The 

net loss declined $4.415 million or 27.6%, when compared to the net loss for the 

nine-month period ended September 30, 2008 on a pro forma basis. 

 The basic and diluted loss per share declined $0.48 or 32.9%, to a loss of $0.98 

per share for the nine-month period ended September 30, 2009 compared to a 

loss of $1.46 per share for the same period in 2008. The basic and diluted loss 

per share declined $0.86, or 46.7% when compared to the basic and diluted loss 

per share of $1.84 for the first nine months of 2008 on a pro forma basis. 

111. Asplund, commenting on the results, stated, in pertinent part, as follows: 

The third quarter marked another strong quarter of growth for Lime Energy ... We 

continued to grow revenue, show improved operating leverage and support new 

initiatives in engineering, utility program management and direct federal government 

contracting despite the continued challenging economic environment. Results were 

in line with expectations, with consolidated revenue up over 18% from the third 

quarter of 2008. Contributing to the increase was a 24% increase in revenue from 

our commercial and industrial (C&I) business and a 16% increase in our public 

sector work with our ESCO partners. 

112. On November 12, 2009, Lime Energy filed its Quarterly Report on Form 10-Q (the “Q3 2009 

10-Q”) with the SEC for the 2009 fiscal third quarter. The Q3 2009 10-Q was signed by Asplund 

and Mistarz, and reaffirmed the Company’s financial results announced that same day. The Q3 2009 

10-Q also contained Sarbanes-Oxley required certifications, signed by Asplund and Mistarz, 

substantially similar to the certifications contained in Paragraph 79, supra. 

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113. The Q3 2009 10-Q also stated that the Company’s internal controls and disclosure 

procedures were effective through language substantially similar to Paragraphs 80 to 81, supra. 

114. The statements Defendants made in the Q3 2009 10-Q as specified in Paragraphs 110 to 113 

above were false and/or misleading and/or failed to disclose: (1) that the Company was improperly 

recording revenue, including the creation of fictitious revenue and booking revenue in the wrong 

period for which it was earned; (2) that, as a result, the Company’s revenue and financial results 

were overstated; (3) that, as such, the Company’s financial statements were not prepared in 

accordance with Generally Accepted Accounting Principles (“GAAP”), and specifically violated 

FASB CON No. 5 through their misreporting of revenue; (4) that the Company lacked adequate 

internal and financial controls; and (5) that, as a result of the foregoing, the Company’s financial 

statements were materially false and misleading at all relevant times. 

115. On February 23, 2010, Asplund participated in the Piper Jaffray Clean Technology & 

Renewables Conference, at which time he made statements touting the Company’s purported 

“significant full year revenue growth” while emphasizing the Company’s “need to get profitable.” 

116. On March 23, 2010, the Company issued a press release entitled, “Lime Energy Co. Reports 

Results for Three-Month and Twelve-Month Periods Ended December 31, 2009.” Therein, the 

Company, in relevant part, stated: 

Results for the three-month period ended December 31, 2009

 Revenue declined $8.3 million or 29.2%, to $20.3 million for the three-month 

period ended December 31, 2009, from $28.6 million for the same period in 

2008. 

 

 Gross profit decreased $2.9 million or 45.9% to $3.5 million during the 

fourth quarter of 2009 compared to $6.4 million for the fourth quarter of 

2008. The gross margin for the fourth quarter of 2009 was 17.2% compared 

to 22.5% for the fourth quarter of 2008. 

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 Selling, general and administrative expense increased $1.6 million or 28.7% 

to $7.4 million during the three-month period ended December 31, 2009 

compared to $5.8 million for the same period in 2008. This increase was 

primarily due to investments in new initiatives that are expected to be 

significant contributors to 2010 results. 

 

 The loss from continuing operations increased $6.4 million to $7.1 million 

 during the fourth quarter of 2009 from $707,000 in the year earlier period. 

The fourth quarter 2009 loss from continuing operations included a one-time 

non-cash charge of $2.7 million related to the write-off the trade name 

associated with a prior acquisition and a $300,000 reserve for a legal 

settlement. 

 The loss from discontinued operations decreased $64,000 or 15.1% to 

$361,000 for the fourth quarter of 2009 from $425,000 for the fourth quarter 

of 2008. 

 

 The fourth quarter net loss increased $5.4 million to $6.5 million compared 

to $1.1 million for the fourth quarter of 2008. 

 

 The basic and diluted net loss per share from continuing operations for the 

fourth quarter of 2009 increased $0.15 to $0.26 per share from $0.11 per 

share for the fourth quarter of 2008. 

 

 Adjusted EBITDA loss increased $5.2 million to $3.3 million during the 

three-month period ended December 31, 2009 from income of $1.9 million in 

the year earlier period. 

 

Results for the twelve-month period ended December 31, 2009

 

 Revenue increased $15.8 million or 28.8%, to $70.8 million for the twelve-month 

period ended December 31, 2009 compared to $55.0 million for the twelvemonth period ended December 31, 2008. Revenue increased $5.7 million or 

8.7% compared to pro forma revenue for the twelve-month period ended 

December 31, 2008 of $65.1 million, assuming the acquisition of Applied Energy 

Management, Inc. had taken place on January 1, 2008. 

 

 Gross profit increased $1.9 million or 16.4%, to $13.6 million for the twelve 

months ended December 31, 2009 compared to $11.7 million for the twelve 

months ended December 31, 2008. Gross profit increased $180 thousand or 

1.3% when compared to the gross profit for the twelve months ended 

December 31, 2008 on a pro forma basis. 

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 Selling, General and Administrative expense increased $5.8 million or 32.3%, to 

$23.9 million for the twelve-month period ended December 31, 2009 compared 

to $18.1 million for the same period in 2008. SG&A expense increased $1.6 

million or 7.3%, when compared to SG&A expense for the twelve months ended 

December 31, 2008 on a pro forma basis of $22.3 million. 

 

 The loss from continuing operations increased $6.7 million or 63.7%, to $17.3 

million in 2009, from $10.6 million in 2008. The loss from continuing 

operations increased $2.9 million, or 20.0%, from $14.4 million on a pro-forma 

basis. The 2009 results included a one-time non-cash charge of $2.7 million 

related to the write-off the trade name associated with a prior acquisition and a 

$300,000 reserve for a legal settlement. 

 

 The loss from discontinued operations declined $694,000 to $1.8 million in 2009, 

from $2.5 million in 2008. 

 

 Net loss increased $5.0 million or 38.3%, to $18.0 million during the first twelve 

months of 2009, compared to $13.0 million for the same period in 2008. The net 

loss increased $1.1 million or 6.8%, when compared to the net loss for the 

twelve-month period ended December 31, 2008 on a pro forma basis. 

 

 The basic and diluted loss per share from continuing operations declined $0.17 to 

a loss of $1.12 per share for the twelve-month period ended December 31, 2009 

compared to a loss of $1.29 per share for the same period in 2008. The basic and 

diluted loss per share from continuing operations declined $0.54 when compared 

to the basic and diluted loss per share from continuing operations of $1.66 for the 

first twelve months of 2008 on a pro forma basis. 

117. Asplund, commenting on the results, stated, in pertinent part, as follows: 

2009 was a successful and a transitional year for Lime Energy ... We grew revenues 

by 8.7% and increased gross profit by 1.3% over 2008 pro-forma results, 

strengthened our balance sheet and launched several exciting new growth initiatives, 

all in spite of a difficult economic environment. 

118. On March 23, 2010, Lime Energy filed its Annual Report on Form 10-K (the “2009 10-K”) 

with the SEC for the 2009 fiscal year. The 2009 10-K was signed by Asplund and Mistarz, and 

reaffirmed the Company’s financial results announced that same day. The 2009 10-K also 

contained Sarbanes-Oxley required certifications, signed by Asplund and Mistarz, substantially 

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49 

similar to the certifications contained in Paragraph 79, supra. 

119. The 2009 10-K also stated that the Company’s internal controls and disclosure procedures 

were effective through language substantially similar to Paragraphs 96 to 98, supra. 

120. The statements Asplund made at the Piper Jaffray Clean Technology & Renewables 

Conference, and the statements that Defendants made in the 2009 10-K as specified in Paragraphs 

115 to 119 above were false and/or misleading and/or failed to disclose: (1) that the Company was 

improperly recording revenue, including the creation of fictitious revenue and booking revenue in 

the wrong period for which it was earned; (2) that, as a result, the Company’s revenue and financial 

results were overstated; (3) that, as such, the Company’s financial statements were not prepared in 

accordance with Generally Accepted Accounting Principles (“GAAP”), and specifically violated 

FASB CON No. 5 through their misreporting of revenue; (4) that the Company lacked adequate 

internal and financial controls; and (5) that, as a result of the foregoing, the Company’s financial 

statements were materially false and misleading at all relevant times. 

121. On May 13, 2010 the Company issued a press release entitled, “Lime Energy Co. Reports 

Results for Three-Month Period Ended March 31, 2010.” Therein, the Company, in relevant part, 

stated: 

Results for the three-month period ended March 31, 2010:

 Revenue of $11.8 million, a $1.9 million or 13.9% decrease when compared 

to $13.7 million for the first quarter of 2009. 

 Gross profit of $1.9 million, a $900,000 decrease from the $2.8 million 

earned during the first quarter of 2009. 

 Gross profit margin of 15.7% as compared to 20.4% earned during the first 

quarter of 2009. 

 Loss from continuing operations of $4.7 million, compared to a loss from 

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continuing operations of $3.2 million for the three-month period ended 

March 31, 2009. 

 Net loss available to common stockholders of $4.7 million, an increase of 

$500,000 or 12.8% when compared to the $4.2 million loss for the first 

quarter of 2009. 

 Adjusted EBITDA loss of $4.1 million, an increase of $2.4 million compared 

to the $1.7 million loss recorded for the first quarter of 2009. 

 Basic and diluted loss per common share from continuing operations of $0.20 

as compared to $0.34 per share for the first quarter of 2009. 

 Basic and diluted loss per common share of $0.20 per share versus a loss of 

$0.38 per share for the first quarter of 2009. 

122. Defendant Lime Energy, commenting on the results, stated, in pertinent part, as follows: 

We remain optimistic on the growth opportunities in each of our markets and 

continue to expect our total revenue for 2010 to be between $95 million and $100 

million with an adjusted EBITDA loss of between $3 million and $4 million. Our 

backlog remains at $94 million which is the largest and most diversified backlog in 

our history. We also continue to expect our revenue to be heavily weighted toward 

the third and fourth quarters due to the combination of the expected timing of public 

sector projects, the continuing ramp up of our utility program management business 

and the typical seasonal pattern of revenue for our C&I business. We therefore 

expect second quarter revenue to be between $16 million and $16.5 million. 

123. On May 13, 2010, Lime Energy filed its Quarterly Report on Form 10-Q (the “Q1 2010 10-

Q”) with the SEC for the 2010 fiscal first quarter. The Q1 2010 10-Q was signed by Asplund and 

Mistarz, and reaffirmed the Company’s financial results announced that same day. The Q1 2010 10-

Q also contained Sarbanes-Oxley required certifications, signed by Asplund and Mistarz, 

substantially similar to the certifications contained in Paragraph 79, supra. 

124. The Q1 2010 10-Q also stated that the Company’s internal controls and disclosure 

procedures were effective as stated in similar to Paragraphs 80 to 81, supra. 

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125. The statements Defendants made in the Q1 2010 10-Q as specified in Paragraphs 121 to 124 

above were false and/or misleading and/or failed to disclose: (1) that the Company was improperly 

recording revenue, including the creation of fictitious revenue and booking revenue in the wrong 

period for which it was earned; (2) that, as a result, the Company’s revenue and financial results 

were overstated; (3) that, as such, the Company’s financial statements were not prepared in 

accordance with Generally Accepted Accounting Principles (“GAAP”), and specifically violated 

FASB CON No. 5 through their misreporting of revenue; (4) that the Company lacked adequate 

internal and financial controls; and (5) that, as a result of the foregoing, the Company’s financial 

statements were materially false and misleading at all relevant times. 

126. On August 10, 2010, the Company issued a press release entitled, “Lime Energy Co. Reports 

Results for Three-Month and Six-Month Periods Ended June 30, 2010.” Therein, the Company, in 

relevant part, stated: 

Results for the three-month period ended June 30, 2010: 

 Revenue of $17.5 million, a $1.7 million or 10.8% increase when compared 

to $15.8 million for the second quarter of 2009. 

 Gross profit of $4.2 million, a $1.3 million increased from the $2.8 million 

earned during the second quarter of 2009. 

 Gross profit margin of 23.9% as compared to 18.0% earned during the 

second quarter of 2009. 

 Loss from continuing operations of $2.0 million, compared to a loss from 

continuing operations of $3.4 million for the three-month period ended June 

30, 2009. 

 Net loss available to common stockholders of $2.0 million, compared to a 

loss of $4.7 million for the second quarter of 2009. 

 Adjusted EBITDA loss of $1.4 million, compared to the $2.1 million loss 

recorded for the second quarter of 2009[]. 

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 Basic and diluted loss per common share from continuing operations of $0.09 

as compared to $0.31 per share for the second quarter of 2009. 

 Basic and diluted loss per common share of $0.09 per share versus a loss of 

$0.36 per share for the second quarter of 2009. 

Results for the six-month period ended June 30, 2010: 

 Revenue of $29.3 million, a $0.2 million or 0.7%, decrease from the $29.5 

million earned during the first six months of 2009. 

 Gross profit of $6.0 million, a $0.4 million or 7.1%, increase from $5.6 

million earned during the first six months of 2009. 

 Gross profit margin of 20.6% compared to 19.1% for the first half of 2009. 

 Loss from continuing operations of $6.7 million, an increase of $91 thousand 

or 1.4% compared to a loss of $6.6 million for the year earlier period. 

 Net loss available to commons stockholders of $6.7 million, a reduction of 

$2.2 million or 24.1%, compared to $8.9 million for the six-month period 

ended June 30, 2010. 

 Adjusted EBITDA loss of $5.5 million, compared to the $3.8 million loss 

recorded for the six-month period ended June 30, 2009[]. 

 Basic and diluted loss per common share from continuing operations of $0.29 

as compared to $0.71 per share for the six-month period ended June 30, 

2009. 

 Basic and diluted loss per common share of $0.29 per share versus a loss of 

$0.8per share for the six-month period ended June 30, 2009. 

127. Defendant Lime Energy, commenting on the results, stated, in pertinent part, as follows: 

We remain optimistic on the growth opportunities in each of our markets and 

continue to expect our total revenue for 2010 to be between $95 million and $100 

million with an adjusted EBITDA loss of between $3 million and $4 million. Our 

backlog remains at $94 million which is the largest and most diversified backlog in 

our history. We also continue to expect our revenue to be heavily weighted toward 

the third and fourth quarters due to the combination of the expected timing of public 

sector projects, the continuing ramp up of our utility program management business 

and the typical seasonal pattern of revenue for our C&I business. We therefore 

expect second quarter revenue to be between $16 million and $16.5 million. 

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128. On August 10, 2010, Lime Energy filed its Quarterly Report on Form 10-Q (the “Q2 2010 

10-Q”) with the SEC for the 2010 fiscal second quarter. The Q-2 2010 10-Q was signed by Asplund 

and Mistarz, and reaffirmed the Company’s financial results announced that same day. The Q2 2010 

10-Q also contained Sarbanes-Oxley required certifications, signed by Asplund and Mistarz, 

substantially similar to the certifications contained in Paragraph 79, supra. 

129. The Q2 2010 10-Q also stated that the Company’s internal controls and disclosure 

procedures were effective through language substantially similar to Paragraphs 80 to 81, supra. 

130. The statements Defendants made in the Q2 2010 10-Q as specified in Paragraphs 126 to 129 

above were false and/or misleading and/or failed to disclose: (1) that the Company was improperly 

recording revenue, including the creation of fictitious revenue and booking revenue in the wrong 

period for which it was earned; (2) that, as a result, the Company’s revenue and financial results 

were overstated; (3) that, as such, the Company’s financial statements were not prepared in 

accordance with Generally Accepted Accounting Principles (“GAAP”), and specifically violated 

FASB CON No. 5 through their misreporting of revenue; (4) that the Company lacked adequate 

internal and financial controls; and (5) that, as a result of the foregoing, the Company’s financial 

statements were materially false and misleading at all relevant times. 

131. On November 8, 2010, the Company issued a press release entitled, “Lime Energy Co. 

Reports Results for Three-Month and Nine-Month Periods Ended September 30, 2010.” Therein, 

the Company, in relevant part, stated: 

Results for the three-month period ended September 30, 2010: 

 Revenue of $28.1 million, a $7.1 million or 33.7% increase when compared 

to $21.0 million for the third quarter of 2009.

 Gross profit of $6.0 million, a $1.5 million or 33.4% increase from the $4.5 

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million earned during the third quarter of 2009.5 

 Gross profit margin of 21.3%, unchanged from the 21.3% earned during the 

third quarter of 2009. 

 Loss from continuing operations of $382 thousand, compared to a loss from 

continuing operations of $3.5 million for the three-month period ended 

September 30, 2009. 

 Net loss available to common stockholders of $382 thousand, compared to a 

loss of $4.2 million for the third quarter of 2009. 

 Adjusted EBITDA increased $892 thousand to $182 thousand, compared to a 

loss of $704 thousand for the third quarter of 2009[]. 

 Basic and diluted loss per common share from continuing operations of $0.02 

as compared to $0.24 per share for the third quarter of 2009. 

 Basic and diluted loss per common share of $0.02 per share versus a loss of 

$0.26 per share for the third quarter of 2009. 

 Results for the nine-month period ended September 30, 2010:

 Revenue of $57.4 million, a $6.9 million or 13.6%, increase from the $50.5 

million earned during the first nine months of 2009. 

 Gross profit of $12.0 million, a $1.9 million or 18.8%, increase from $10.1 

million earned during the first nine months of 2009. 

 Gross profit margin of 21.0% compared to 20.0% for the first nine months of 

2009. 

 Loss from continuing operations of $7.1 million, a decrease of $3.0 million 

or 29.8% compared to a loss of $10.1 million for the year earlier period. 

 Net loss available to common stockholders of $7.1 million, a reduction of 

$5.9 million or 45.6%, compared to $13.1 million for the nine-month period 

ended September 30, 2010. 

 Adjusted EBITDA loss of $5.3 million, compared to the $4.5 million loss 

recorded for the nine-month period ended September 30, 2009[]. 

 Basic and diluted loss per common share from continuing operations of $0.30 

as compared to $0.87 per share for the nine-month period ended September 

30, 2009. 

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 Basic and diluted loss per common share of $0.30 per share versus a loss of 

$0.98 per share for the nine-month period ended September 30, 2009. 

132. In the press release, Asplund stated that: “Our consolidated revenue for the third quarter of 

2010 increased 33.7% when compared to the year earlier period demonstrating again the capability 

and increasing momentum of our diversified service platform[.]” 

133. Defendant Lime Energy, commenting on the results and the Company’s outlook, stated, in 

pertinent part, as follows: “We continue to expect our total revenue for 2010 to be between $95 

million and $100 million with an adjusted EBITDA loss of between $3 million and $4 million. Our 

current backlog is at $84 million.” 

134. On November 8, 2010, Lime Energy filed its Quarterly Report on Form 10-Q (the “Q3 2010 

10-Q”) with the SEC for the 2010 fiscal third quarter. The Q3 2010 10-Q was signed by Asplund 

and Mistarz, and reaffirmed the Company’s financial results announced that same day. The Q3 

2010 10-Q also contained Sarbanes-Oxley required certifications, signed by Asplund and Mistarz, 

substantially similar to the certifications contained in Paragraph 79, supra. 

135. The Q3 2010 10-Q also stated that the Company’s internal controls and disclosure 

procedures were effective through language substantially similar to Paragraphs 80 to 81, supra. 

136. The statements Defendants made in the Q3 2010 10-Q as specified in Paragraphs 131 to 135 

above were false and/or misleading and/or failed to disclose: (1) that the Company was improperly 

recording revenue, including the creation of fictitious revenue and booking revenue in the wrong 

period for which it was earned; (2) that, as a result, the Company’s revenue and financial results 

were overstated; (3) that, as such, the Company’s financial statements were not prepared in 

accordance with Generally Accepted Accounting Principles (“GAAP”), and specifically violated 

FASB CON No. 5 through their misreporting of revenue; (4) that the Company lacked adequate 

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internal and financial controls; and (5) that, as a result of the foregoing, the Company’s financial 

statements were materially false and misleading at all relevant times. 

137. On March 10, 2011, the Company issued a press release entitled, “Lime Energy Co. Reports 

Results for Three-Month and Twelve-Month Periods Ended December 31, 2010.” Therein, the 

Company, in relevant part, stated: 

Results for the three-month period ended December 31, 2010

 Revenue increased $18.0 million or 89.0%, to $38.3 million during the 

three-month period ended December 31, 2010, from $20.3 million for the 

same period in 2009. 

 Gross profit increased $5.6 million or 159.3%, to $9.0 million during the 

fourth quarter of 2010, when compared to the $3.5 million earned during 

the fourth quarter of 2009. The gross margin for the fourth quarter of 2010 

was 23.6% compared to 17.2% for the fourth quarter of 2009. 

 Selling, general and administrative expense decreased $0.3 million or 

4.5%, to $7.1 million during the three-month period ended December 31, 

2010 from $7.4 million for the same period in 2009. 

 Income from continuing operations was $1.9 million for the fourth quarter 

of 2010, compared to a loss of $7.1 million for the fourth quarter of 2009. 

 Net income was $1.9 million for the three-month period ended December 

31, 2010, compared to a net loss of $6.5 million for three-month period 

ended December 31, 2009. 

 The basic and diluted net income per share from continuing operations for 

the fourth quarter of 2010 was $0.08 per share compared to a net loss per 

share from continuing operations of $0.26 per share for the fourth quarter 

of 2009. 

 Adjusted EBITDA[] was $2.3 million for the three-month period ended 

December 31, 2010, compared to an adjusted EBITDA loss of $3.4 

million for the year earlier period. 

Results for the twelve-month period ended December 31, 2010

 Revenue increased $24.9 million or 35.2%, to $95.7 million for the 

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twelve-month period ended December 31, 2010, when compared to $70.8 

million for the twelve-month period ended December 31, 2009. 

 Gross profit increased $7.5 million or 54.7%, to $21.1 million for the 

twelve months ended December 31, 2010, when compared to $13.6 

million for the twelve months ended December 31, 2009. The gross 

margin was 22.0% for 2010 compared to 19.2% for 2009. 

 Selling, General and Administrative expense increased $1.9 million or 

8.1%, to $25.9 million for the twelve-month period ended December 31, 

2010, when compared to $23.9 million for the same period in 2009. 

 The loss from continuing operations declined $12.0 million or 69.7%, to 

$5.2 million in 2010, from $17.3 million in 2009. 

 Net loss decreased $12.8 million or 70.9%, to $5.2 million during the 

twelve-month period ended December 31, 2010, when compared to the 

$18.0 million net loss for the same period in 2009. 

 The basic and diluted loss per share from continuing operations declined 

$0.90 to a loss of $0.22 per share for 2010, compared to a loss of $1.12 

per share for 2009. 

 Adjusted EBITDA[] loss decreased $4.9 million, or 61.9%, to $3.0 for 

2010, when compared to a loss of $7.8 million for 2009. 

138. Asplund and Lime Energy Co., commenting on the results, stated, in pertinent part, as 

follows: 

The fourth quarter of 2010 highlights the ‘Power of the Platform. It illustrates what 

we have been saying for a while, that the key to us generating sustained profitability 

is to deliver strong revenue growth, hold or improve our gross margins and control 

the growth of our SG&A .... Since re-making the company in 2006, we have grown 

revenue three times faster than SG&A with revenue having grown at a 104.3% 

compounded annual growth rate (CAGR) while SG&A increased at a 29.9% CAGR. 

We currently expect our total revenue for 2011 to be between $122 million and $128 

million with adjusted EBITDA of between $1.0 million and $2.0 million. We expect 

our first quarter revenue to be between $16.0 million and $17.5 million. 

139. On March 10, 2011, Lime Energy filed its Annual Report on Form 10 K (the “2010 10-K”) 

with the SEC for the 2010 fiscal year. The 2010 10 K was signed by Asplund and Mistarz, and 

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reaffirmed the Company’s financial results announced that same day. The 2010 10-K also 

contained Sarbanes-Oxley required certifications, signed by Asplund and Mistarz, substantially 

similar to the certifications contained in Paragraph 79, supra. 

140. The 2010 10-K also stated that the Company’s internal controls and disclosure procedures 

were effective through language substantially similar to Paragraphs 96 to 98, supra. 

141. The statements Defendants made in the 2010 10-K as specified in Paragraphs 137 to 140 

above were false and/or misleading and/or failed to disclose: (1) that the Company was improperly 

recording revenue, including the creation of fictitious revenue and booking revenue in the wrong 

period for which it was earned; (2) that, as a result, the Company’s revenue and financial results 

were overstated; (3) that, as such, the Company’s financial statements were not prepared in 

accordance with Generally Accepted Accounting Principles (“GAAP”), and specifically violated 

FASB CON No. 5 through their misreporting of revenue; (4) that the Company lacked adequate 

internal and financial controls; and (5) that, as a result of the foregoing, the Company’s financial 

statements were materially false and misleading at all relevant times. 

142. On May 12, 2011, the Company issued a press release entitled, “Lime Energy Co. Reports 

Results for Three-Month Period Ended March 31, 2011.” Therein, the Company, in relevant part, 

stated: 

Results for the three-month period ended March 31, 2011:

 Revenue increased $7.2 million, or 60.7%, to $19.0 million when compared 

to $11.8 million for the first quarter of 2010. 

 Gross profit increased $1.8 million, or 94.3%, to $3.6 million from $1.9 

million for the first quarter of 2010. 

 Gross profit margin of 19.0% compared to 15.7% earned during the first 

quarter of 2010. 

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 SG&A expense increased $740 thousand, or 11.5%, to $7.2 million from 

$6.4 million during the first quarter of 2010. 

 Operating loss declined $1 million, or 21.6% to $3.7 million from $4.7 

million for the year earlier period. 

 Adjusted EBITDA loss declined $1 million, or 24.6%, to $3.1 million from 

$4.1 million for the first quarter of 2010[]. 

 Basic and diluted loss per common share of $0.15 per share versus a loss of 

$0.20 per share for the first quarter of 2010. 

143. Defendant Lime Energy, commenting on the results and the Company’s outlook, stated, in 

pertinent part, as follows: “We expect to continue to experience higher revenue for the balance of the 

year, relative to 2010 levels. Our revenue is also expected to continue to be seasonal, with revenue 

continuing to build throughout the year. We currently have about $126 million in backlog, and 

expect our second quarter revenue to be between $24 million and $26 million.” 

144. On May 12, 2011, Lime Energy filed its Quarterly Report on Form 10-Q (the “Q1 2011 10-

Q”) with the SEC for the 2011 fiscal first quarter. The Q1 2011 10-Q was signed by Asplund and 

Mistarz, and reaffirmed the Company’s financial results announced that same day. The Q1 2011 10-

Q also contained Sarbanes-Oxley required certifications, signed by Asplund and Mistarz, 

substantially similar to the certifications contained in Paragraph 79, supra. 

145. The Q1 2011 10-Q also stated that the Company’s internal controls and disclosure 

procedures were effective through language substantially similar to Paragraphs 80 to 81, supra. 

146. The statements Defendants made in the Q1 2011 10-Q as specified in Paragraphs 142 to 145 

above were false and/or misleading and/or failed to disclose: (1) that the Company was improperly 

recording revenue, including the creation of fictitious revenue and booking revenue in the wrong 

period for which it was earned; (2) that, as a result, the Company’s revenue and financial results 

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were overstated; (3) that, as such, the Company’s financial statements were not prepared in 

accordance with Generally Accepted Accounting Principles (“GAAP”), and specifically violated 

FASB CON No. 5 through their misreporting of revenue; (4) that the Company lacked adequate 

internal and financial controls; and (5) that, as a result of the foregoing, the Company’s financial 

statements were materially false and misleading at all relevant times. 

147. On August 8, 2011, the Company issued a press release entitled, “Lime Energy Co. Reports 

Results for Three-Month and Six-Month Periods Ended June 30, 2011.” Therein, the Company, in 

relevant part, stated: 

Results for the three-month period ended June 30, 2011:

 Revenue increased $6.8 million, or 38.6%, to $24.3 million when compared 

to $17.5 million for the second quarter of 2010 

 Gross profit increased $0.3 million, or 7.3%, to $4.5 million from $4.2 

million for the second quarter of 2010. 

 Gross profit margin of 18.5% compared to 23.9% earned during the second 

quarter of 2010. 

 SG&A expense increased $0.7 million, or 11.5%, to $6.8 million from $6.1 

million during the second quarter of 2010. 

 Operating loss increased $1.5 million to $3.6 million from $2.1 million for 

the year earlier period. The second quarter of 2011 included a $1.1 million 

restructuring charge. 

 The net loss increased $1.5 million to $3.5 million from $2.0 million for the 

three-month period ended June 30, 2010. 

 Adjusted EBITDA loss increased $0.4 million to $1.8 million from $1.4 

million for the second quarter of 2010[]. 

 Basic and diluted loss per common share of $0.15 per share versus a loss of 

$0.09 per share for the second quarter of 2010. The restructuring reserve 

contributed $0.05 per share to the loss during the first half of 2011. 

Results for the six-month period ended June 30, 2011:

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 Revenue increased $13.9 million, or 47.5%, to $43.2 million when compared 

to $29.3 million for the first half of 2010. 

 Gross profit increased $2.1 million, or 34.1%, to $8.1 million from $6.0 

million for the first half of 2010. 

 Gross profit margin of 18.8% compared to 20.6% earned during the first half 

of 2010. 

 SG&A expense increased $1.4 million, or 11.5%, to $14.0 million from 

$12.5 million during the first half of 2010. 

 Operating loss increased $0.5 million to $7.3 million from $6.8 million for 

the year earlier period. The first half of 2011 included a $1.1 million 

restructuring charge. 

 The net loss increased $0.5 million to $7.2 million from $6.7 million for the 

six-month period ended June 30, 2010. 

 Adjusted EBITDA loss decreased $0.6 million to $4.9 million from $5.5 

million for the first half of 2010[]. 

 Basic and diluted loss per common share of $0.30 per share versus a loss of 

$0.28 per share for the first half of 2010. The restructuring reserve 

contributed $0.05 per share to the loss during the first half of 2011. 

148. Defendant Lime Energy, commenting on the results and the Company’s outlook, stated, in 

pertinent part, as follows: 

We expect to continue to experience higher revenue for the balance of the year, 

relative to 2010 levels. Our revenue is also expected to continue to be seasonal, with 

revenue continuing to build throughout the year. We currently have about $190 

million in backlog, and expect our third quarter revenue to be between $30 million 

and $35 million. Our backlog includes signed and awarded contracts, including 

multi-year contracts under utility programs. 

149. On August 8, 2011, Lime Energy filed its Quarterly Report on Form 10-Q (the “Q2 2011 10-

Q”) with the SEC for the 2011 fiscal second quarter. The Q2 2011 10-Q was signed by Defendants 

O’Rourke and Mistarz, and reaffirmed the Company’s financial results announced that same day. 

The Q2 2011 10-Q also contained Sarbanes-Oxley required certifications, signed by Defendants 

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O’Rourke and Mistarz, substantially similar to the certifications contained in Paragraph 79, supra. 

150. The Q2 2011 10-Q also stated that the Company’s internal controls and disclosure 

procedures were effective through language substantially similar to Paragraphs 80 to 81, supra. 

151. The statements Defendants made in the Q2 2011 10-Q as specified in Paragraphs 147 to 151 

above were false and/or misleading and/or failed to disclose: (1) that the Company was improperly 

recording revenue, including the creation of fictitious revenue and booking revenue in the wrong 

period for which it was earned; (2) that, as a result, the Company’s revenue and financial results 

were overstated; (3) that, as such, the Company’s financial statements were not prepared in 

accordance with Generally Accepted Accounting Principles (“GAAP”), and specifically violated 

FASB CON No. 5 through their misreporting of revenue; (4) that the Company lacked adequate 

internal and financial controls; and (5) that, as a result of the foregoing, the Company’s financial 

statements were materially false and misleading at all relevant times. 

152. November 8, 2011, the Company issued a press release entitled, “Lime Energy Co. Reports 

Results for Three-Month and Nine-Month Periods Ended September 30, 2011.” Therein, the 

Company, in relevant part, stated: 

Results for the three-month period ended September 30, 2011:

 Revenue increased $4.1 million, or 14.7%, to $32.2 million when compared 

to $28.1 million for the third quarter of 2010. 

 Gross profit increased $1.1 million, or 18.0%, to $7.1 million from $6.0 

million for the third quarter of 2010. 

 Gross profit margin of 21.9% compared to 21.3% earned during the third 

quarter of 2010. 

 SG&A expense increased $122 thousand, or 1.9%, to $6.4 million from $6.3 

million during the third quarter of 2010. 

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 Operating income of $344 thousand as compared to an operating loss of $431 

thousand for the third quarter of 2010. The 2011 third quarter results 

included a $172 thousand restructuring charge, $115 thousand of which was 

the loss on the sale of real estate. 

 The net income of $359 thousand compared to a net loss of $382 thousand 

for the three-month period ended September 30, 2010. 

 Adjusted EBITDA increased $1.1 million to $1.3 million when compared to 

$180 thousand for the third quarter of 2010[]. 

Basic and diluted income per common share of $0.02 per share versus a loss 

of $0.02 per share for the third quarter of 2010.

Results for the nine-month period ended September 30, 2011:

 Revenue increased $18.0 million, or 31.4%%, to $75.4 million when 

compared to $57.4 million for the first nine months of 2010. 

 Gross profit increased $3.1 million, or 26.1%, to $15.1 million from $12.0 

million for the first nine months of 2010. 

 Gross profit margin of 20.1% compared to 21.0% earned during the first nine 

months of 2010. 

 SG&A expense increased $1.6 million, or 8.3%, to $20.4 million from $18.8 

million during the first nine months of 2010. 

 Operating loss declined by $303 thousand to $6.9 million from $7.2 million 

for the nine-month period ended September 2010. The first nine months of 

2011 included a $1.3 million restructuring charge. 

 The net loss declined by $234 thousand to $6.9 million from $7.1 million for 

the nine-month period ended September 30, 2010. 

 Adjusted EBITDA loss decreased by $1.7 million to $3.6 million from $7.1 

million for the first nine months of 2010[]. 

 Basic and diluted loss per common share of $0.29 per share versus a loss of 

$0.30 per share for the first nine months of 2010. The restructuring reserve 

contributed $0.05 per share to the loss during the first nine months of 2011. 

153. Defendant Lime Energy, commenting on the results and the Company’s outlook, stated, in 

pertinent part, as follows: 

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We expect our fourth quarter to be a record quarter in terms of revenue and earnings, 

with revenue projected to be between $47 million and $53 million. We currently 

have about $227 million in backlog, of which approximately $80 million will be 

converted to revenue during 2012. Our backlog includes signed and awarded 

contracts, including multi-year contracts under utility programs and $31 million 

representing 20 years of revenue under contracts for the sale of output from our 

Zemel Road project. 

154. On November 8, 2011, Lime Energy filed its Quarterly Report on Form 10-Q (the “Q3 2011 

10-Q”) with the SEC for the 2011 fiscal third quarter. The Q3 2011 10-Q was signed by Defendants 

O’Rourke and Mistarz, and reaffirmed the Company’s financial results announced that same day. 

The Q3 201110-Q also contained Sarbanes-Oxley required certifications, signed by Defendants 

O’Rourke and Mistarz, substantially similar to the certifications contained in Paragraph 79, supra. 

155. The Q3 2011 10-Q also stated that the Company’s internal controls and disclosure 

procedures were effective through language substantially similar to Paragraphs 80 to 81, supra. 

156. The statements Defendants made in the Q3 2011 10-Q as specified in Paragraphs 152 to 155 

above were false and/or misleading and/or failed to disclose: (1) that the Company was improperly 

recording revenue, including the creation of fictitious revenue and booking revenue in the wrong 

period for which it was earned; (2) that, as a result, the Company’s revenue and financial results 

were overstated; (3) that, as such, the Company’s financial statements were not prepared in 

accordance with Generally Accepted Accounting Principles (“GAAP”), and specifically violated 

FASB CON No. 5 through their misreporting of revenue; (4) that the Company lacked adequate 

internal and financial controls; and (5) that, as a result of the foregoing, the Company’s financial 

statements were materially false and misleading at all relevant times. 

157. On March 8, 2012, the Company issued a press release entitled, “Lime Energy Co. Reports 

Results for Three-Month and Twelve-Month Periods Ended December 31, 2011.” Therein, the 

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Company, in relevant part, stated: 

 Results for the three-month period ended December 31, 2011

 Revenue increased $6.3 million, or 16.5%, to $44.7 million from $38.3 

million for the fourth quarter of 2010. 

 Gross profit increased $232 thousand, or 2.6%, to $9.3 million from $9.0 

million earned during the fourth quarter of 2010. 

 Selling, general & administrative expense increased $810 thousand, or 

11.4%, to $7.9 million from $7.1 million in the year-earlier period. 

 Operating income declined $6.5 million to a loss of $4.7 million from income 

$1.8 million in 2010. The 2011 fourth quarter included a $5.8 million 

impairment loss related to the write-down of the goodwill resulting from 

acquisitions associated with the C&I market. 

 Net loss increased $6.6 million, to $4.7 million from net income of $1.9 

million for the fourth quarter of 2010. 

 Basic and diluted loss per common share of $0.20 per share versus income of 

$0.08 per share for the fourth quarter of 2010. The impairment loss 

contributed $0.25 per share to the basic and diluted loss per share during the 

fourth quarter of 2011. 

 Adjusted EBITDA[] declined $156 thousand, or 6.7%, to $2.2 million from 

$2.3 million for the fourth quarter of 2010. 

Results for the twelve-month period ended December 31, 2011

 Revenue increased $24.4 million, or 25.5%, to $120.1 million from $95.7 

million for 2010. 

 Gross profit increased $3.4 million, or 16%, to $24.4 million, from $21.1 

million in 2010. 

158. Defendant O’Rourke and Lime Energy Co., commenting on the results, stated, in pertinent 

part, as follows: “Our businesses focused on the utility, public sector and federal markets performed 

very well during 2011, increasing their combined revenue by 42% and expanding their gross profit 

margins ... we expect continued growth in revenue and profitability from our other businesses in 

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2012.” 

159. On March 16, 2012, Lime Energy filed its Annual Report on Form 10-K (the “2011 10-K”) 

with the SEC for the 2011 fiscal year. The 2011 10-K was signed by Defendants O’Rourke and 

Mistarz, and reaffirmed the Company’s financial results announced on March 8, 2012. The 201110-

K also contained Sarbanes-Oxley required certifications, signed by Defendants O’Rourke and 

Mistarz, substantially similar to the certifications contained in Paragraph 79, supra. 

160. The 2011 10-K also stated that the Company’s internal controls and disclosure procedures 

were effective through language substantially similar to Paragraphs 96 to 98, supra. 

161. The statements Defendants made in the 2011 10-K as specified in Paragraphs 157 to 160 

above were false and/or misleading and/or failed to disclose: (1) that the Company was improperly 

recording revenue, including the creation of fictitious revenue and booking revenue in the wrong 

period for which it was earned; (2) that, as a result, the Company’s revenue and financial results 

were overstated; (3) that, as such, the Company’s financial statements were not prepared in 

accordance with Generally Accepted Accounting Principles (“GAAP”), and specifically violated 

FASB CON No. 5 through their misreporting of revenue; (4) that the Company lacked adequate 

internal and financial controls; and (5) that, as a result of the foregoing, the Company’s financial 

statements were materially false and misleading at all relevant times. 

162. On March 16, 2012, in an article published by ceocfos.com, Defendant O’Rourke touted the 

need to carry out its “strategic plan” to become profitable. In pertinent part, O’Rourke stated: 

CEOCFO: Mr. O’Rourke, you have been CEO for about a year and were COO before that; how, if 

in any way is Lime Energy changing under your leadership? 

Mr. O’Rourke: Our vision and purpose has always been to build a clean energy future and that 

remains unchanged whether I am COO or CEO. As a leader in the company today, my responsibility 

is to execute our three-year strategic plan laid out in 2010 by the executive team and approved by 

our board. 

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CEOCFO: What is the Lime Energy strategic plan? 

Mr. O’Rourke: Our strategic plan, at least in the near term, is to continue to drive 

profitability for a company that has been unprofitable until now. We intend to increase our 

profitability and revenue by focusing sharply on continuing to develop and expand our utility 

partnerships throughout the country, increasing our market share in the federal space and 

accelerating our product development activity. This will allow us to capitalize on the different 

emerging industry trends that are happening out there. 

* * * 

CEOCFO: What is the financial picture for Lime Energy today? 

Mr. O’Rourke: Our financial outlook is very strong right now. We anticipate being profitable in 

2012, and at the end of the last quarter we reported a backlog of $226 million, of which $80 million

will convert to revenue in 2012, so we are anticipating continued strong year-over-year growth for 

the next few years organically without any acquisitions [emphasis added.] 

163. Indeed, just four days before, on March 12, 2012, Lime’s investor-directed presentation 

materials for the 24th Annual ROTH conference also emphasized this purported “backlog”: 

164. The statements Defendants made in the ceocfos.com article and at the 24th Annual ROTH 

conference as specified in Paragraphs 162 to 163 above were false and/or misleading and/or failed to 

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disclose: (1) that the Company was improperly recording revenue, including the creation of fictitious 

revenue and booking revenue in the wrong period for which it was earned; (2) that, as a result, the 

Company’s revenue and financial results were overstated, including the fictitious “backlog” it 

publicly touted; (3) that, as such, the Company’s financial statements were not prepared in 

accordance with Generally Accepted Accounting Principles (“GAAP”), and specifically violated 

FASB CON No. 5 through their misreporting of revenue; (4) that the Company lacked adequate 

internal and financial controls; and (5) that, as a result of the foregoing, the Company’s financial 

statements were materially false and misleading at all relevant times. 

165. On March 23, 2012, analysts continued to remain positive on the stock in an article published 

in the Charlotte-Business Journal by John Downey, entitled: “Analyst: Lime Energy in Solid 

Position, despite 4Q Loss.” The article, in pertinent part, stated: 

Lime Energy Co. posted a net loss of $4.7 million in the fourth quarter of 2011. But 

analysts who follow the company say those results don’t raise any red flags. “If you 

look, they are outperforming their peers,” says Craig Irwin, who follows Lime at 

Wedbush Securities in Los Angeles. “The headline number is not always the number 

you want to look at to figure out how the company is performing.” 

Further, in discussing its utilities division, the writer called it “the Company’s sweet spot, with 

Lime’s utility-business revenue increasing nearly 42% in 2011 over 2010 levels.” 

166. Further evidence that the Company’s false statements caused analysts and the market to 

pump up the stock is the following article published by Seeking Alpha on April 8, 2012, in which 

hedge fund investment strategist Bret Jensen discloses that despite his previous skepticism regarding 

energy stocks, he had decided, for the first time, to purchase an energy stock (Lime) based on the 

Company’s performance and expectations: 

I have never been a big fan of the alternative energy space for investing. First, the 

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government subsidies that keep the sector afloat runs counter to my fiscal 

conservative, small government ideology. It also always seems to create debacles 

as government is a terrible allocator of capital (see Solyndra). Finally, when 

government support is inevitably withdrawn the favored sector gets crushed. 

* * * 

That being said, I am about to make my first investment in "clean" energy 

segment in a very long time as this stock's risk/reward profile is too good to pass 

up, in my opinion. 

* * * 

7 reasons LIME is worth a flyer at under $3 a share: 

1. It manufacturers no product. Instead it provides services and consulting to entities 

initiating "green" projects. 

2. Its main customers (governments, utilities, etc...) provide stable sources of 

revenues. Sales are predicted to increase around 20% in both FY2012 and 

FY2013. 

3. Insiders have been net buyers of the stock over the last eight months. 

4. It finally turned operating cash flow positive in 4Q2011, it has net cash on the 

balance sheet and is priced at 58% of revenue. 

5. Only two analysts cover the stock. One has a $7 price target and the other an $8 

price target on LIME. 

6. The company is poised to sharply accelerate EPS in the next two years. Although 

it lost 17 cents in FY2011, it is expected to make a 6 cent a profit in FY2012 and 

21 cents a share in FY2013. 

7. The stock has long term technical support at just under current prices ... 

167. May 10, 2012, the Company issued a press release entitled, “Lime Energy Co. Reports 

Results for Three-Month Period Ended March 31, 2012.” Therein, while the Company reported 

minor losses in revenues for the three-month period ended March 31, 2012 (Revenue declined 3.5% 

or $659 thousand, to $18.3 million from $19.0 million for the first quarter of 2011), Defendant 

O’Rourke remained positive on the Company’s outlook: 

The first quarter results were in line with our expectations for what has traditionally 

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been our seasonally slowest quarter of the year ... The quarter’s results included a 

16% year-over year increase in our core energy efficiency business, led by strong 

first quarter growth in our utility market segment... We are confident in our 

trajectory and expect a particularly strong second half as these utility programs ramp 

and further contribute to this year’s expected results. 

We expect our second quarter revenue projected to be between $24 million and $28 

million. We currently have about $224 million in backlog, of which approximately 

$106 million is expected to convert to revenue during the balance of 2012. Our 

backlog includes signed and awarded contracts, including multi-year contracts under 

utility programs and power purchase agreements. We are reiterating our revenue 

guidance of $143 million for the year. 

168. On May 10, 2012, Lime Energy filed its Quarterly Report on Form 10-Q (the “Q1 2012 10-

Q”) with the SEC for the 2012 fiscal first quarter. The Q1 2012 10-Q was signed by Defendants 

O’Rourke and Mistarz, and reaffirmed the Company’s financial results announced that same day. 

The Q1 2012 10-Q also contained Sarbanes-Oxley required certifications, signed by Defendants 

O’Rourke and Mistarz, substantially similar to the certifications contained in Paragraph 79, supra. 

169. The Q1 2012 10-Q also stated that the Company’s internal controls and disclosure 

procedures were effective through language substantially similar to Paragraphs 80 to 81, supra. 

170. The statements Defendants made in the Q1 2012 10-Q as specified in Paragraphs 167 to 169 

above were false and/or misleading and/or failed to disclose: (1) that the Company was improperly 

recording revenue, including the creation of fictitious revenue and booking revenue in the wrong 

period for which it was earned; (2) that, as a result, the Company’s revenue and financial results 

were overstated; (3) that, as such, the Company’s financial statements were not prepared in 

accordance with Generally Accepted Accounting Principles (“GAAP”), and specifically violated 

FASB CON No. 5 through their misreporting of revenue; (4) that the Company lacked adequate 

internal and financial controls; and (5) that, as a result of the foregoing, the Company’s financial 

statements were materially false and misleading at all relevant times. 

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171. The statements made by Defendants and contained, inter alia, in Paragraphs 77 - 170, supra 

were false and/or misleading and/or failed to disclose: (1) that the Company was improperly 

recording revenue, including the creation of fictitious revenue and booking revenue in the wrong 

period for which it was earned; (2) that, as a result, the Company’s revenue and financial results 

were overstated; (3) that, as such, the Company’s financial statements were not prepared in 

accordance with Generally Accepted Accounting Principles (“GAAP”), and specifically violated 

FASB CON No. 5 through their misreporting of revenue; (4) that the Company lacked adequate 

internal and financial controls; and (5) that, as a result of the foregoing, the Company’s financial 

statements were materially false and misleading at all relevant times. 

172. As a result of the foregoing, the Company materially misstated the Company’s reported 

revenues and earnings. 

173. The Company has admitted that its accounting was improper and restated its financial 

statements between 2008 and the first quarter of 2012 to correct for material errors in revenue 

accounting. 

The Truth Begins to Emerge 

The First Partial Disclosure

174. On July 17, 2012, before the market opened, the Company issued a press release entitled, 

“Lime Energy Announces Results of Preliminary Internal Review.” Therein, the Company, in 

relevant part, stated: 

Lime Energy Co. (NASDAQ: LIME) today announced that on Sunday, July 15, 

2012, the Audit Committee of the Board of Directors of Lime Energy Co. (the 

“Company”) determined that the Company’s consolidated financial statements on 

Form 10-K for the periods ended December 31, 2010 and December 31, 2011 and 

quarterly report on Form 10-Q for the period ended March 31, 2012 (the “affected 

financial statements”) may no longer be relied upon. The Audit Committee made 

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that determination based on the results of a partial internal review conducted by the 

Company’s management which was concluded on Friday, July 13, 2012. 

Based on the results of that partial internal review, the Company’s management and 

the Audit Committee believe that some portion of the Company’s revenue was 

improperly recorded. In some cases, it appears that non-existent revenue may 

have been recorded. In other cases, it appears that revenue may have been recorded 

earlier than it should have been. The review did not turn up any indication of 

improper customer billing. 

The Company cannot make a reliable estimate of the magnitude of the misreported 

revenue or the effects on the affected financial statements at this time; the Company 

does, however, currently believe that the cumulative adjustment to revenue for the 

affected financial statements will not exceed $15 million. The Company does expect 

that the misreporting may potentially require restatement of all of the affected 

financial statements. 

The Company, under the supervision of the Audit Committee and with the assistance 

of outside counsel, is currently conducting an investigation of the misreporting. 

The Audit Committee and Lime’s principal financial and accounting officer have 

discussed the matters disclosed in this report with Lime’s independent accountants, 

BDO USA, LLP [emphasis added]. 

175. On the same day, Lime Energy filed a Current Report with the SEC on Form 8-K, entitled 

Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed 

Interim Review, and reaffirming the admissions contained in the July 17, 2012 press release 

regarding the Company’s finances. 

176. On this news, shares of the Company declined $0.91 per share, or 45%, to close on July 17, 

2012, at $1.12 per share, on unusually heavy volume. 

177. Given the seriousness of the Company’s revelations, a swift and severe market reaction was 

inevitable. As Garvin Jabusch, Cofounder and CIO of Green Alpha Advisors and manager of the 

Sierra Club Green Alpha Portfolio, explained in the immediate aftermath: 

The revelation that the company may have recorded “non-existent revenue” is a 

major concern. Somewhat less concerning is “Revenue being reported earlier than it 

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should have been,” which is a violation of the matching principle, and is a relatively 

easy mistake to make and can be readily forgiven if properly restated. But the term 

“non-existent revenue” is a major red flag ... There are only a couple of reasons 

phantom revenue could get booked, and most firms have controls in place to 

make sure that sources of revenue are verified before they’re booked. So at the 

very least, we can say that there are material weaknesses in LIME’s internal 

controls. At worst, some relatively senior person may have misinformed the 

accounting team [emphasis added]. 

178. Analyst Craig Irwin at Wedbush Securities downgraded Lime to “neutral” from 

“outperform,” and Phillip Shen of Roth Capital Partners noted: “We view today’s news as a material 

negative and expect this overhang to persist until investor trust can be regained . . . . We are putting 

our rating, estimates and (price target) under review until further details emerge.” 

179. On November 26, 2012, the Company issued a press release announcing that, on November 

19, 2012, it had received a a second letter from the SEC indicating that the SEC had not received the 

Company’s Form 10-Q for the period ending September 30, 2012 and that the Company remained 

delinquent in the filing of its Form 10-Q for the period ended June 30, 2102, and that, therefore, the 

Company did not comply with the Listing Rule for continued listing on NASDAQ. The Company 

furthered stated that it expected to file the delinquent Forms 10-Q upon completion of the accounting 

review and the restatement of its previously issued financial statements expected to result from the 

review, but not later than February 11, 2013. 

The Second Partial Disclosure 

180. On December 27, 2012, the Company issued a press release entitled, “Lime Energy 

Announces Expansion of Internal Review” containing fresh revelations that the Company had 

misreported revenue, extending all the way back to 2008-2009. Therein, the Company, in relevant 

part, stated: 

Lime Energy Co. (NASDAQ: LIME) today announced that on December 21, 2012, 

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the Audit Committee of the Board of Directors of Lime Energy Co. (the “Company”) 

determined that the Company’s consolidated financial statements on Form 10-K for 

the years ended December 31, 2008 and December 31, 2009 (the “2008 - 2009 

financial statements”) may no longer be relied upon. The Audit Committee made 

that determination based on information discovered in the course of the Company’s 

internal investigation of the misreporting of revenue for the years ended December 

31, 2010 and December 31, 2011 and the quarter ended March 31, 2012 (the “2010 - 

2012 financial statements” and collectively with the 2008 - 2009 financial 

statements, the “affected financial statements”) previously reported in the Current 

Report on Form 8-K filed on July 17, 2012. The Company’s management and the 

Audit Committee believe that some portion of the Company’s revenue for 2009 and 

2008 was recognized earlier than permitted under generally accepted accounting 

principles. Nothing has come to the attention of the Company’s management or the 

Audit Committee that would cause them to believe that any of the misreported 

revenue recorded for 2009 and 2008 should not have been recorded in a later period. 

The Company cannot make a reliable estimate of the magnitude of the misreported 

revenue or the effects on the 2009 or 2008 financial statements at this time. The 

Company does expect that the misreporting will require restatement of the 2009 

financial statements, in addition to the restatement of the 2010 - 2012 financial 

statements. The Company expects to promptly determine whether a restatement of 

the 2008 financial statement will be necessary. The Company also expects that it will 

be able to complete the restatement of the affected financial statements and disclose 

results from its internal investigation during the first quarter of 2013. 

As previously disclosed, the Company, under the supervision of a subcommittee of 

the Audit Committee and with the assistance of outside counsel and forensic 

accountants, is currently conducting an investigation of the misreporting of revenue 

for 2010, 2011 and the first quarter of 2012. That investigation will be expanded to 

include the misreporting of revenue in 2009 and, if necessary, 2008. 

Lime’s principal financial and accounting officer has discussed the matters disclosed 

in this release with Lime’s independent accountants, BDO USA, LLP. 

181. On this news, the stock swooned, closing at $0.56 per share. As Seeking Alpha put it 

immediately following the July 17, 2012 disclosure, “the downside risk that the accounting problems 

are pervasive, and the whole company is a Ponzi scheme” came to fruition and the stock dropped 

another 7%, a statistically significant decline. 

182. The stock has continually traded below $1.00 per share since the revelations. 

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183. On December 31, 2012, John Downey published an article in the Charlotte Business Journal

discussing the Company’s internal investigation. The article states: 

Lime has little to say on the misreporting or the delisting issue beyond what is 

reported in its SEC filings and press releases. It refers reporters to NASDAQ 

delisting rules that note that a decision must be made at the latest with 360 days of 

the failure to report earnings. In Lime's case, that would put its latest possible date 

for a decision into June. 

NASDAQ currently lists Lime as delinquent for failing to publish its second 

quarter and third quarter reports and for its stock price falling below the $1 per 

share minimum set by the exchange. Lime has traded at less than a dollar a share 

since it disclosed its misreporting issues in Mid July. On Dec. 28, it closed at 56 

cents a share. 

184. On January 14, 2013, Lime Energy issued a press release announcing that on January 9, 2013 

it received a letter from The Nasdaq Stock Market LLC (“Nasdaq”) regarding the Company’s failure 

to comply with Nasdaq Listing Rule 5250(c)(1) because the Company had not filed its Quarterly 

Reports on Form 10-Q for the periods ended June 30, and September 30, 2012, and notifying the 

Company that trading of the Company’s common stock would be subject to suspension and the 

Company’s securities removed from listing and registration on the Nasdaq Stock Market on January 

18, 2013. 

Defendants’ Financial Manipulation of Lime’s Reported Results

185. The above-cited financial statements and the statements about the Company’s financial 

results were false and misleading during the Class Period, as such financial information was not 

prepared in conformity with GAAP, nor was the financial information a fair presentation of the 

Company’s operations due to the Company’s improper recognition of revenue, in violation of GAAP 

rules, thereby materially overstating its revenue and assets and understating its losses. 

186. GAAP are those principles recognized by the accounting profession as the conventions, rules 

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and procedures necessary to define accepted accounting practice at a particular time. Regulation S-X 

(17 C.F.R. § 210.4 01(a) (1)) states that financial statements filed with the SEC which are not 

prepared in compliance with GAAP are presumed to be misleading and inaccurate. Regulation S-X 

requires that interim financial statements must also comply with GAAP, with the exception that 

interim financial statements need not include disclosure which would be duplicative of disclosures 

accompanying annual financial statements. 17 C.F.R. § 210.10-01(a). 

187. The full scope and extent of the fraud has not yet been revealed to investors. The Company 

stated that it will file its restatement by the end of the first quarter of 2013. 

188. The fact that Lime Energy announced that its financial statements may need to be restated, 

and informed investors that these financial statements should not be relied upon is an admission that 

they were false and misleading when originally issued (APB No.20, 7-13; SFAS No. 154, 25). 

189. Given these accounting irregularities, the Company announced financial results that were 

in violation of GAAP and the following principles: 

(a) The principle that “interim financial reporting should be based upon the same 

accounting principles and practices used to prepare annual financial statements” was violated (APB 

No. 28, 10); 

(b) The principle that “financial reporting should provide information that is 

useful to present to potential investors and creditors and other users in making rational investment, 

credit, and similar decisions” was violated (FASB Statement of Concepts No. 1, 34); 

(c) The principle that “financial reporting should provide information about the 

economic resources of an Lime Energy, the claims to those resources, and effects of transactions, 

events, and circumstances that change resources and claims to those resources” was violated (FASB 

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Statement of Concepts No. 1, 40); 

(d) The principle that “financial reporting should provide information about an 

Lime Energy’s financial performance during a period” was violated (FASB Statement of Concepts 

No. 1, 42); 

(e) The principle that “financial reporting should provide information about how 

management of an Lime Energy has discharged its stewardship responsibility to owners 

(stockholders) for the use of Lime Energy resources entrusted to it” was violated (FASB Statement 

of Concepts No. 1, 50); 

(f) The principle that “financial reporting should be reliable in that it represents 

what it purports to represent” was violated (FASB Statement of Concepts No. 2, 58-59); 

(g) The principle that “completeness, meaning that nothing is left out of the 

information that may be necessary to insure that it validly represents underlying events and 

conditions” was violated (FASB Statement of Concepts No. 2, 79); and 

(h) The principle that “conservatism be used as a prudent reaction to uncertainty 

to try to ensure that uncertainties and risks inherent in business situations are adequately considered” 

was violated (FASB Statement of Concepts No. 2, 95).

190. Throughout the Class Period, the Defendants orchestrated financial manipulations that were 

designed to, and did, misstate Lime’s financial results. As alleged in the following paragraphs, the 

Defendants had actual knowledge of the falsity of the statements they made, or acted in reckless 

disregard of the truth or falsity of those statements. In doing so, Defendants committed acts, 

practices and participated in a course of business that operated as a fraud or deceit on purchasers of 

Lime's stock during the Class Period. 

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191. Defendants Mistarz and O’Rourke, along with Mr. Asplund were Lime’s top finance and 

accounting executive officers, charged with ensuring the Company's financial results were fairly 

stated and complied with GAAP, and Lime’s disclosed accounting policies. Due to the 

circumstances described in this Complaint, Defendants Mistarz and O’Rourke, along with Mr. 

Asplund, knew, based on their conduct and readily-available accounting expertise, that their alleged 

Class Period misrepresentations were false or misleading and omitted material information. 

192. Between 2008-2012, Defendants regularly manipulated revenues to meet certain financial 

benchmarks in order to gain further investments from its largest shareholder. During this time, Lime 

management conducted meetings and were provided with monthly financials. See ¶ above. 

Fraudulent Revenue Recognition 

193. From at least 2008 through 2012, the Defendants prematurely recognized revenue and 

created fictitious revenue. Prior to and during the Class Period, the Defendants fraudulently 

recognized revenue, many on contracts related to its allegedly most profitable division, its utility 

division by deceptively abusing GAAP’s revenue recognition standards. 

194. As a result of this improper revenue recognition, at least $15 million in revenue was 

improperly recorded during the 2010-2012 period, and additional material amounts for 2008-2009. 

Defendants knew, or were reckless in not knowing, that the making of such revenue entries had no 

accounting basis, violated GAAP, and was solely used meet certain financial benchmarks. 

195. Company finance personnel raised concerns about this practice on several occasions. See ¶¶ 

60, 61-62 and 71-72 above. In approximately 2011, for example, one confidential witness expressed 

her concerns to Defendant O’Rourke in person, telling O’Rourke that the Company’s “underbilled is 

increasing because contracts are not matching up.” In another instance, problems with the utility 

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division’s reported revenue were reported to Julie Chandler, Lime’s Controller, and Jim Smith, 

Executive Vice President of Operations. Notwithstanding these challenges, no action was taken by 

management at the time to end this practice. 

196. Lime’s quarterly and year-end financial results filed with the SEC and signed by Defendants 

Mistarz, Asplund and O’Rourke, represented that the accompanying financial statements included all 

adjustments necessary for fair presentation of Lime’s results. These representations were false and 

misleading when made, as Lime's financial statements for these periods were not a fair presentation 

of Lime's results and were presented in violation of both GAAP and SEC rules. 

197. Creating fictitious revenue and recognizing revenue in periods where the contract was not 

complete on the percentage of completion methodology violates the most basic GAAP requirements. 

GAAP, as described by FASB Statement of Concepts No. 5 (FASB CON No. 5), provides the basic 

requirements for revenue to be recognizable: (i) revenue must have been earned; and (ii) revenue 

must be realizable (collectible). See FASB CON No. 5. Revenues are considered to have been 

earned when the entity has substantially accomplished what it must do to be entitled to the benefits 

represented by the revenues. See SFAS 48 ¶ 6. 

198. In addition, the SEC has issued Staff Accounting Bulletin No. 101, (“SAB 101”), Revenue 

Recognition in Financial Statements, which provides a summary of the SEC’s views in applying 

generally accepted accounting principles, including SFAS 48 and FASB CON No. 5, to revenue 

recognition in financial statements. SAB 101 states that revenue is generally realized or realizable 

and earned when all of the following criteria are met: 

a. Persuasive evidence of an arrangement exists, 

b. Delivery has occurred or services have been rendered, 

c. The seller's price to the buyer is fixed or determinable, and 

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d. Collectability is reasonably assured. 

199. Along with FASB CON No. 5, the Company violated American Institute of Certified Public 

Accountants (“AICPA”) Accounting Research Bulletin (ARB) No. 45, Long-Term ConstructionType Contracts (which applies to almost all types of construction contracts including fixed-price or 

lump sum, cost-type, time and material, and unit price contracts) and AICPA Statement of Position 

(“SOP”) 81-1, Accounting for Performance of Construction-Type and Certain Production-Type 

Contracts, which provides necessary guidance on applying GAAP not only for construction 

contracts, but also for construction-like production activities. ARB No. 45 and SOP 81-1 mandate 

the use of either: (1) the “percentage of completion” method, under which the construction 

contractor recognizes revenue over the life of the construction contract based on the degree of 

completion: 50% completion means recognition of one-half of revenues, costs, and income; or (2) 

the “completed contract” method, under which all revenues, costs, and income are recognized only 

at completion of the construction project, ordinarily at the end of the construction contract. 

200. Finally, the Company’s Audit Committee Charter itemizes the responsibilities of its 

members, in relevant part, as follows: 

• Meet with the independent auditors and management of the Company at the 

conclusion of the audit to review the results of the audit, including any comments 

or recommendations of the independent auditors, especially the contents of any 

auditors’ letter to management. 

• Review with the independent auditors and with the financial and accounting 

personnel the adequacy and effectiveness of the Company’s internal controls and 

elicit any recommendations for improving the internal controls or particular areas 

where new or more detailed controls or procedures are desirable. 

• Inquire of management and the independent auditors regarding significant risks or 

exposures and assess the steps management has taken to minimize such risks and 

exposures to the Company. 

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• Review the financial statements contained in the annual report to shareholders 

with management and the independent auditors and, if appropriate, recommend to 

the board that such financial statements be adopted for inclusion in the Corporation’s 

annual report to stockholders. 

• Inquire of the independent auditors regarding their qualitative judgments about 

the appropriateness, not just the acceptability, of the accounting principles and the 

clarity of the financial disclosures. Also inquire of the auditors regarding their 

reasoning in accepting or questioning management’s significant estimates, changes 

or proposed changes in accounting principles and disclosure practices management 

employs for new transactions or events. Resolve disagreements between 

management 

and the independent auditors regarding financial statement disclosure. 

• Investigate any matter brought to its attention within the scope of its duties, with 

the power to retain outside counsel for this purpose if, in its judgment, that is 

appropriate. The costs of such counsel will be paid by the Corporation. 

• Verify that the Company’s auditors have reviewed the Company’s financial 

information prior to filing the Company’s Form 10-Q Reports. 

201. Lime violated GAAP, SEC rules, and its own revenue recognition policy described in ¶ 46 

above when recording revenue for fictitious clients and improperly recording revenue in the wrong 

period. Revenue clearly wasn’t earned when it was created fictitiously and revenue was not 

realizable when revenue was booked in the wrong quarters for contracts that were not even executed. 

 The adverse information concealed by Defendants during the Class Period and detailed above was 

in violation of Item 303 of Regulation S-K under the federal securities law (17 C.F.R. §229.303). 

FIRST CLAIM 

Violation of Section 10(b) of the Exchange Act and 

Rule 10b-5 Promulgated Thereunder Against All Defendants

202. Plaintiffs repeat and reallege each and every allegation contained above as if fully set forth 

herein. 

203. During the Class Period, Defendants carried out a plan, scheme and course of conduct which 

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was intended to and, throughout the Class Period, did: (i) deceive the investing public, including 

Plaintiff and other Class members, as alleged herein; and (ii) cause Plaintiff and other members of 

the Class to purchase Lime Energy’s securities at artificially inflated prices. In furtherance of this 

unlawful scheme, plan and course of conduct, defendants, and each of them, took the actions set 

forth herein. 

204. Defendants (i) employed devices, schemes, and artifices to defraud; (ii) made untrue 

statements of material fact and/or omitted to state material facts necessary to make the statements 

not misleading; and (iii) engaged in acts, practices, and a course of business which operated as a 

fraud and deceit upon the purchasers of the Company’s securities in an effort to maintain artificially 

high market prices for Lime Energy’s securities in violation of Section 10(b) of the Exchange Act 

and Rule 10b-5. All Defendants are sued either as primary participants in the wrongful and illegal 

conduct charged herein or as controlling persons as alleged below. 

205. Defendants, individually and in concert, directly and indirectly, by the use, means or 

instrumentalities of interstate commerce and/or of the mails, engaged and participated in a 

continuous course of conduct to conceal adverse material information about Lime Energy’s financial 

well-being and prospects, as specified herein. 

206. These Defendants employed devices, schemes and artifices to defraud, while in possession of 

material adverse non-public information and engaged in acts, practices, and a course of conduct as 

alleged herein in an effort to assure investors of Lime Energy’s value and performance and 

continued substantial growth, which included the making of, or the participation in the making of, 

untrue statements of material facts and/or omitting to state material facts necessary in order to make 

the statements made about Lime Energy and its business operations and future prospects in light of 

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the circumstances under which they were made, not misleading, as set forth more particularly herein, 

and engaged in transactions, practices and a course of business which operated as a fraud and deceit 

upon the purchasers of the Company’s securities during the Class Period. 

207. Each of the Individual Defendants’ primary liability, and controlling person liability, arises 

from the following facts: (i) the Individual Defendants were high-level executives and/or directors at 

the Company during the Class Period and members of the Company’s management team or had 

control thereof; (ii) each of these defendants, by virtue of their responsibilities and activities as a 

senior officer and/or director of the Company, was privy to and participated in the creation, 

development and reporting of the Company’s internal budgets, plans, projections and/or reports; (iii) 

each of these defendants enjoyed significant personal contact and familiarity with the other 

defendants and was advised of, and had access to, other members of the Company’s management 

team, internal reports and other data and information about the Company’s finances, operations, and 

sales at all relevant times; and (iv) each of these defendants was aware of the Company’s 

dissemination of information to the investing public which they knew and/or recklessly disregarded 

was materially false and misleading. 

208. The Defendants had actual knowledge of the misrepresentations and/or omissions of 

material facts set forth herein, or acted with reckless disregard for the truth in that they failed to 

ascertain and to disclose such facts, even though such facts were available to them. Such defendants’ 

material misrepresentations and/or omissions were done knowingly or recklessly and for the purpose 

and effect of concealing Lime Energy’s financial well-being and prospects from the investing public 

and supporting the artificially inflated price of its securities. As demonstrated by Defendants’ 

overstatements and/or misstatements of the Company’s business, operations, financial well-being, 

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and prospects throughout the Class Period, Defendants, if they did not have actual knowledge of the 

misrepresentations and/or omissions alleged, were reckless in failing to obtain such knowledge by 

deliberately refraining from taking those steps necessary to discover whether those statements were 

false or misleading. 

209. As a result of the dissemination of the materially false and/or misleading information and/or 

failure to disclose material facts, as set forth above, the market price of Lime Energy’s securities was 

artificially inflated during the Class Period. In ignorance of the fact that market prices of the 

Company’s securities were artificially inflated, and relying directly or indirectly on the false and 

misleading statements made by Defendants, or upon the integrity of the market in which the 

securities trades, and/or in the absence of material adverse information that was known to or 

recklessly disregarded by Defendants, but not disclosed in public statements by Defendants during 

the Class Period, Plaintiff and the other members of the Class acquired Lime Energy’s securities 

during the Class Period at artificially high prices and were damaged thereby. 

210. At the time of said misrepresentations and/or omissions, Plaintiffs and other members of the 

Class were ignorant of their falsity, and believed them to be true. Had Plaintiffs and the other 

members of the Class and the marketplace known the truth regarding the problems that Lime Energy 

was experiencing, which were not disclosed by Defendants, Plaintiffs and other members of the 

Class would not have purchased or otherwise acquired their Lime Energy securities, or, if they had 

acquired such securities during the Class Period, they would not have done so at the artificially 

inflated prices which they paid. 

211. By virtue of the foregoing, Defendants have violated Section 10(b) of the Exchange Act and 

Rule 10b-5 promulgated thereunder. 

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212. As a direct and proximate result of Defendants’ wrongful conduct, Plaintiffs and the other 

members of the Class suffered damages in connection with their respective purchases of the 

Company’s common stock during the Class Period upon the dissemination of the partial disclosures 

of July 16, 2012 and December 27, 2012. 

SECOND CLAIM 

Violation of Section 20(a) of the Exchange 

Act Against the Individual Defendants

213. Plaintiffs repeat and reallege each and every allegation contained above as if fully set forth 

herein. 

214. The Individual Defendants acted as controlling persons of Lime Energy within the meaning 

of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level positions, and 

their ownership and contractual rights, participation in and/or awareness of the Company’s 

operations and/or intimate knowledge of the false financial statements filed by the Company with 

the SEC and disseminated to the investing public, the Individual Defendants had the power to 

influence and control and did influence and control, directly or indirectly, the decision-making of the 

Company, including the content and dissemination of the various statements which Plaintiffs 

contend are false and misleading. The Individual Defendants were provided with or had unlimited 

access to copies of the Company’s reports, press releases, public filings and other statements alleged 

by Plaintiffs to be misleading prior to and/or shortly after these statements were issued and had the 

ability to prevent the issuance of the statements or cause the statements to be corrected. 

215. In particular, each of these Defendants had direct and supervisory involvement in the 

day-to-day operations of the Company and, therefore, is presumed to have had the power to control 

or influence the particular transactions giving rise to the securities violations as alleged herein, and 

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exercised the same. 

216. As set forth above, Lime Energy and the Individual Defendants each violated Section 10(b) 

and Rule 10b-5 by their acts and/or omissions as alleged in this Complaint. By virtue of their 

positions as controlling persons, the Individual Defendants are liable pursuant to Section 20(a) of the 

Exchange Act. As a direct and proximate result of Defendants’ wrongful conduct, Plaintiff and 

other members of the Class suffered damages in connection with their purchases of the Company’s 

securities during the Class Period. 

PRAYER FOR RELIEF

WHEREFORE, Plaintiffs pray for relief and judgment, as follows: 

(a) Determining that this action is a proper class action under Rule 23 of the Federal 

Rules of Civil Procedure; 

(b) Awarding compensatory damages in favor of Plaintiffs and the other Class members 

against all defendants, jointly and severally, for all damages sustained as a result of Defendants’ 

wrongdoing, in an amount to be proven at trial, including interest thereon; 

(c) Awarding Plaintiffs and the Class their reasonable costs and expenses incurred in this 

action, including counsel fees and expert fees; and 

(d) Such other and further relief as the Court may deem just and proper. 

JURY TRIAL DEMANDED

Lead Plaintiffs hereby demand a trial by jury. 

January 18, 2013 Respectfully submitted, 

POMERANTZ GROSSMAN HUFFORD 

DAHLSTROM & GROSS LLP 

/s/ Louis C. Ludwig

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Patrick V. Dahlstrom 

Leigh Handelman Smollar 

Louis C. Ludwig 

Ten South LaSalle Street, Suite 3505 

Chicago, Illinois 60603 

Tel: (312) 377-1181 

Fax: (312) 377-1184 

 Counsel for Lead Plaintiffs 

 GLANCY BINKOW & GOLDBERG 

 LLP 

 Lionel Z. Glancy 

 Michael Goldberg 

 Robert V. Prongay 

 Casey E. Sadler 

 1925 Century Park East, Suite 2100 

 Los Angeles, California 90067 

 Tel: (310) 201-9150 

 Fax: (310) 201-9160 

 Counsel for Plaintiff Jeffrey Satterfield 

 SAXENA WHITE P.A. 

 Maya Saxena 

 Joseph E. White, III 

 Lester R. Hooker 

 Brandon T. Grzandziel 

 2424 N. Federal Highway, Suite 257 

 Boca Raton, Florida 33431 

 Tel: (561) 394-3399 

 Fax: (561) 394-3082 

 Counsel for Plaintiff James L. Clausen 

 WOLF HALDENSTEIN ADLER 

 FREEMAN & HERZ LLC 

 Adam J. Levitt 

 Theodore B. Bell 

 55 West Monroe Street, Suite 1111 

 Chicago, Illinois 60603 

 Tel: (312) 984-0000 

 Fax: (312) 984-0001 

 Counsel for Plaintiff Ray Galbraith

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