##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K/A
 ANNUAL REPORT
Amendment No. 1
 Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
 For the fiscal year ended April 30, 2010
 Commission file number 0-10146
 SERVIDYNE, INC.
  Georgia
    
    58-0522129(State or otherjurisdiction of incorporation or organization)
    
    (I.R.S. Employer
identification No.)
 1945 The Exchange, Suite 300, Atlanta, GA
    
    30339-2029(Address of principal executive offices)
    
    (Zip Code)
 (770) 953-0304
  Title of each class:
    
    Name of each exchange on which registered:Common Stock, $1.00 Par Value Per Share
    
    NASDAQ Global Market
 
   o NO þ
  o NO þ
  YES þ o
 o o
 þ
  Large
Accelerated
Filer oAccelerated
Filer oNon-Accelerated
Filer o(Do
not check if a smaller reporting
company)Smaller Reporting Company þ  o NO þ




---



TABLE OF CONTENTS  Explanatory NotePART IITEM 1. BUSINESSITEM 2. PROPERTIESPART IIITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSPART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESSIGNATURESEX-23.1EX-31.1EX-31.2EX-32.1EX-32.2    Table of Contents  
 Explanatory Note
  Accounting for
Income Taxes
       
    
    Part I  Item 1  Business
    
    Part I  Item 2  Properties
    
    Part II  Item 7  Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    Part II  Item 8  Financial Statements
    
    Part II  Item 9A  Controls and Procedures
   2




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##### Table of Contents



PART I
 
 ITEM 1. BUSINESS
       BPE SEGMENT
  
    
    The BPE Energy Solutionis designed to help building owners and operators substantially
reduce energy consumption and cut utility and operating costs of their existing facilities.
Major elements include: energy modeling; energy audits; building retro-commissioning;
LEED® and ENERGY STAR® certifications; comprehensive preventive
maintenance of energy-consuming equipment; turn-key design and implementation of
energy-saving lighting systems; and retrofits of mechanical and electrical systems.
    
    The BPE Environmental Sustainability Solutionis designed to help building owners and
operators identify and transform wasteful and inefficient facilities into cost-effective,
energy efficient and environmentally sustainable facilities. Major elements include:
energy and sustainability audits; building performance benchmarking and utility monitoring;
retro-commissioning of existing systems; efficiency improvements of existing energy
conversion and water consuming building assets; and other efficiency improvements that
extend the lives of building infrastructures and equipment.
    
    The BPE Occupant Satisfaction Solutionis designed to help building owners and operators
measurably improve the comfort level and satisfaction of their tenants, guests and
employees. Major elements include: proprietary Web/wireless systems to manage guest and
tenant service requests; identification of low-cost and no-cost operating efficiency
improvements; lighting quality upgrades; technical staff training; more consistent control
of building temperature and humidity conditions; and improved reliability of building
systems and controls.
 3




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
    
    The BPE Utility Solutionis designed to be a cost effective and reliable way for
utilities and their customers to modify peak usage of electricity by implementing demand
response programs that utilize smart gridtechnologies, in order to reduce excess demand on
the electric grid, lessen the need for utilities to build expensive new energy generating
plants, and provide substantial ongoing cost savings for building owners and operators. The
Company launched this new product line, marketed under the name Fifth Fuel Management,
during the current fiscal year, by expanding the Companys Web-based iTendant®
platform to create the real-time, energy optimization and demand response system. Major
elements include: comprehensive demand response facility audits; technology-enabled
real-time demand response programs (automatic, semi-automatic and manual); reliable
two-way, fast and secure communication and tracking; retro-commissioning of existing
systems; customized site training; and step-by-step processes for optimized demand response
participation.
  EMPLOYEES AND EMPLOYEE RELATIONS
  SEASONAL NATURE OF BUSINESS
  COMPETITION
  BACKLOG
  IncreaseApril 30,
    
    (Decrease)2010
    
    2009
    
    Amount
    
    PercentageBPE (1)
    
    $
    15,369,000
    
    
    $
    9,885,000
    
    
    $
    5,484,000
    
    
    
    55Other (2)
    
    
    402,000
    
    
    
    392,000
    
    
    
    10,000
    
    
    
    3Total Backlog
    
    $
    15,771,000
    
    
    $
    10,277,000
    
    
    $
    5,494,000
    
    
    
    53
 
 (1)
    
    BPE backlog at April 30, 2010, increased by approximately $5,484,000, or 55%, compared to
the year-earlier period, primarily due to: (a)
    
    an increase of approximately $5,078,000 in energy savings (lighting and
mechanical) projects;(b)
    
    approximately $790,000 in new backlog from the BPE Segments new Fifth Fuel
Management service offering; and(c)
    
    an increase of approximately $249,000 in lighting products from the Companys
lighting distribution business;
 partially offset by:
 (d)
    
    a decrease of approximately $176,000 in productivity software products and
services; and(e)
    
    a decrease of approximately $457,000 in energy management consulting services,
primarily due to the successful completion of multi-year consulting services projects.
 4




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BPE backlog includes some contracts that can be cancelled by customers with less than one
years notice, and assumes such cancellation provisions will not be invoked. The value of
such contracts included in the prior years backlog that were subsequently cancelled was
approximately $70,000 or 0.7%.
 (2)
    
    Other backlog represents rental income under lease agreements at the Companys corporate
headquarters building and other leasehold interests.
  REGULATION
  5




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ITEM 2. PROPERTIES
   6




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PART II
 
 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 INTRODUCTION
     OVERVIEW
 1
  
 1
    
    The Company believes EBITDA is a useful
non-GAAP measurement of the BPE Segments performance, because it provides
information that can be used to further evaluate the operational effectiveness
of the business. One should not consider EBITDA an alternative to, or a more
meaningful indicator of the segments operating performance than, earnings
before taxes as determined in accordance with GAAP. 7




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®
   8




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LIQUIDITY
   RESULTS OF OPERATIONS
 REVENUES
  CHART A
 Years EndedApril 30,
    
    Amount
    
    Percentage2010
    
    2009
    
    Change
    
    ChangeBPE (1)
    
    $
    18,172
    
    
    $
    13,192
    
    
    $
    4,980
    
    
    
    38Other
    
    
    390
    
    
    
    441
    
    
    
    (51
    )
    
    
    (12
    )$
    18,562
    
    
    $
    13,633
    
    
    $
    4,929
    
    
    
    36
 9




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##### Table of Contents



NOTES TO CHART A
 
 (1)
    
    The following table indicates the BPE Segment revenues by service and product type: 
 Years EndedApril 30
    
    Amount
    
    Percentage2010
    
    2009
    
    Change
    
    ChangeEnergy Savings Projects
    
    $
    11,051
    
    
    $
    5,534
    
    
    $
    5,517
    
    
    
    100Lighting Products
    
    
    1,933
    
    
    
    1,665
    
    
    
    268
    
    
    
    16Energy Management Services
    
    
    1,801
    
    
    
    2,319
    
    
    
    (518
    )
    
    
    (22
    )Fifth Fuel Management Services
    
    
    28
    
    
    
    
    
    
    
    28
    
    
    
    Productivity Software
    
    
    3,359
    
    
    
    3,674
    
    
    
    (315
    )
    
    
    (9
    )$
    18,172
    
    
    $
    13,192
    
    
    $
    4,980
    
    
    
    38
  (a)
    
    an increase in energy savings (lighting and mechanical) project revenues
of approximately $5,517,000, primarily due to the substantial increase in revenues
from customers in both the private sector and the government sector, including
revenues of approximately $3,160,000 from several new energy savings project
customers, representing the initial phases of new energy savings program initiatives
for those customers; and(b)
    
    an increase in lighting product revenues of approximately $268,000 due to
improved business conditions;
  (c)
    
    a decrease in energy management services of approximately $518,000 due to
the completion of multi-year consulting services projects; and(d)
    
    a decrease in productivity software revenues of approximately $315,000
due to fewer new implementations with existing large-portfolio customers.
 COST OF REVENUES
   CHART B
 Percentage ofRevenues for theYears Ended
    
    Years EndedApril 30,
    
    April 30,2010
    
    2009
    
    2010
    
    2009BPE (1)
    
    $
    12,301
    
    
    $
    8,562
    
    
    
    68
    
    
    
    65Other
    
    
    747
    
    
    
    750
    
    
    
    192
    
    
    
    170$
    13,048
    
    
    $
    9,312
    
    
    
    70
    
    
    
    68
 10




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NOTES TO CHART B
 
 (1)
    
    BPE Segment cost of revenues increased by approximately $3,739,000, or 44%, in fiscal
2010 compared to fiscal 2009, primarily due to the corresponding increase in revenues (see
Chart A).On a percentage-of-revenues basis, BPE Segment cost of revenues increased by approximately
3% in fiscal 2010 compared to fiscal 2009, primarily due to a change in the mix of services
and products. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
   CHART C
 Percentage ofRevenues for theYears Ended
    
    Years EndedApril 30,
    
    April 30,2010
    
    2009
    
    2010
    
    2009BPE (1)
    
    $
    5,830
    
    
    $
    5,717
    
    
    
    32
    
    
    
    43Corporate (2)
    
    
    3,953
    
    
    
    4,168
    
    
    
    21
    
    
    
    31$
    9,783
    
    
    $
    9,885
    
    
    
    53
    
    
    
    73
 NOTES TO CHART C
 
 (1)
    
    BPE Segment SG&A expenses increased by approximately $113,000, or 2%, in fiscal 2010
compared to fiscal 2009, primarily due to approximately $236,000 of one-time, outside
consulting costs, partially offset by a decrease in general and administrative costs and
product and project development expenses.On a percentage-of-revenues basis, BPE Segment SG&A expenses decreased by approximately 11%
in fiscal 2010 compared to fiscal 2009, primarily due to the increase in revenues (see Chart
A) without a corresponding proportional increase in expenses.(2)
    
    Corporate SG&A expenses decreased by approximately $215,000, or 5%, in fiscal 2010
compared to fiscal 2009, primarily due to a decrease in legal fees of approximately
$230,000 related to costs incurred in the prior year to settle an insurance claim,
decreased SEC compliance costs, and a decrease in personnel-related costs, consulting fees
and other legal fees, partially offset by an increase in fair value of deferred executive
compensation plan liabilities of approximately $166,000.On a percentage-of-revenue basis, Corporate SG&A expenses decreased from 31% of revenues to
21% of revenues in fiscal 2010 compared to fiscal 2009, primarily due to the increase in
revenues (see Chart A), while expenses decreased. 11




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EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
   CHART D
 Years Ended
    
    (Increase)April 30,
    
    Decrease2010
    
    2009
    
    AmountBPE (1)
    
    $
    64
    
    
    $
    (1,126
    )
    
    $
    1,190Corporate
    
    
    (4,415
    )
    
    
    (4,424
    )
    
    
    9Total
    
    $
    (4,351
    )
    
    $
    (5,550
    )
    
    $
    1,199
 NOTES TO CHART D
 
 (1)
    
    BPE Segment earnings before income taxes of approximately $64,000 for fiscal 2010
represents earnings growth of approximately $1,190,000 compared to the same
period in fiscal 2009, primarily due to the increase in revenues of approximately
$4,980,000 (see Chart A), an increase in gross margin of approximately $1,240,000, and an
increase in other income of approximately $68,000, partially offset by an increase in SG&A
expenses of approximately $113,000 (see Chart C). The financial performance improvement of
the BPE Segment is the result of improving business conditions combined with the
containment of overhead costs. INCOME TAX BENEFIT
  INTEREST COSTS
  ACQUISITIONS
 Fiscal 2010
  Fiscal 2009
  12




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DISCONTINUED OPERATIONS
     LIQUIDITY AND CAPITAL RESOURCES
  13




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(a)
    
    losses in fiscal 2010 from continuing operations before depreciation, amortization and
income taxes of approximately $3,366,000;(b)
    
    an increase in net accounts receivable of approximately $1,396,000, primarily due to
growth in BPE Segment activity, as well as the timing of billing and receipt of payments;
and(c)
    
    an increase in cost and earnings in excess of billings of approximately $306,000;
  (d)
    
    a net increase in trade accounts payable, accrued expenses, and other liabilities of
approximately $1,648,000, primarily due to growth in BPE Segment activity, as well as the
timing and submission of payments; and(e)
    
    a decrease in other current and long-term assets of approximately $85,000.
  (a)
    
    approximately $463,000 used for additions to intangible assets, primarily related to
enhancements to the BPE Segments proprietary technology solutions, and to purchase
accounting software; and(b)
    
    approximately $257,000 used for additions to property and equipment, primarily related
to vehicle and computer hardware purchases, and energy efficiency upgrades at the corporate
headquarters building.
  (a)
    
    proceeds from long-term loans against the Companys interest in the cash surrender
value of certain life insurance policies of approximately $982,000;
  (b)
    
    scheduled principal payments on the mortgage note on the corporate headquarters
building of approximately $112,000;(c)
    
    payment of the regular quarterly cash dividends to shareholders of approximately
$185,000;(d)
    
    scheduled principal payments on other debt of $185,000; and(e)
    
    repurchases of shares of the Companys common stock of approximately $31,000.
    14




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Mortgage Note
  15




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Secured Letter of Credit
  Repurchases of Common Stock
  EFFECTS OF INFLATION ON REVENUES AND OPERATING PROFITS
   CRITICAL ACCOUNTING POLICIES
  Revenue Recognition
  16




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Long-Lived Assets: Property & Equipment and Capitalized Software
    
    
    A significant decrease in the market price of a long-lived asset;
    
    A current-period operating or cash flow loss combined with a history of operating or
cash flow losses or a projection or forecast that demonstrates continuing losses associated
with the use of a long-lived asset;
    
    The Company has received purchase offers at prices below carrying value;
    
    A real estate asset that has a significant vacancy rate or significant rollover exposure
from one or more tenants;
 17




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
    
    A major tenant experiencing financial difficulties that may jeopardize the tenants
ability to meet its lease obligations; and
    
    Depressed market conditions;
    
    
    A change in the estimated remaining useful life of the asset;
    
    A change in the manner in which the asset is used in the income-generating business of
the Company; or
    
    A current-period operating or cash flow loss combined with a history of operating or
cash flow losses, or a projection or forecast that demonstrates continuing losses
associated with the use of a long-lived asset.
  Valuation of Goodwill and Other Indefinite-Lived Intangible Assets
    18




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Income Taxes
  19




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Discontinued Operations
  Recent Accounting Pronouncements
 The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles
 20




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Subsequent Events
 Subsequent Events
 Financial
Instruments
 Intangibles 
Goodwill and Other; General Intangibles Other than Goodwill Risks
and Uncertainties Intangibles  Goodwill and Other Business Combinations
 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
   21




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22




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
       July 28, 2010
    
    (June 2, 2011 as to the effects of the restatement discussed in Note 19 and to the
effects of the recast for discontinued operations and segments in
Notes 4 and 14)
 23




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SERVIDYNE, INC.
 April 30,2010
    
    
    2009(Restated)
    
    
    (Restated)ASSETSCURRENT ASSETS:Cash and cash equivalents (Note 2)
    
    $
    1,923,641
    
    
    $
    4,821,126Receivables:Trade accounts and notes, net of allowance for doubtful accounts of
$58,989 and $115,422, respectively
    
    
    953,075
    
    
    
    1,130,360Contracts, net of allowance for doubtful accounts of $22,530 and
$4,294, respectively, including retained amounts of $675,281 and
$219,385, respectively (Note 17)
    
    
    3,337,177
    
    
    
    1,764,327Costs and earnings in excess of billings (Notes 5 and 17)
    
    
    715,129
    
    
    
    408,950Assets of discontinued operations (Note 4)
    
    
    188,827
    
    
    
    487,492Deferred income taxes (Notes 10 and 19)
    
    
    360,097
    
    
    
    468,047Other current assets (Note 2)
    
    
    1,247,844
    
    
    
    1,464,761Total current assets
    
    
    8,725,790
    
    
    
    10,545,063PROPERTY AND EQUIPMENT, net (Note 6)
    
    
    4,805,542
    
    
    
    4,942,129ASSETS OF DISCONTINUED OPERATIONS (Note 4)
    
    
    13,767,227
    
    
    
    15,926,552DEFERRED INCOME TAXES (Notes 10 and 19)
    
    
    1,160,371
    
    
    
    329,001OTHER ASSETS:Real estate held for future development or sale
    
    
    853,109
    
    
    
    853,109Intangible assets, net (Note 16)
    
    
    2,395,874
    
    
    
    2,395,163Goodwill (Note 16)
    
    
    6,354,002
    
    
    
    6,354,002Other assets (Note 2)
    
    
    2,890,357
    
    
    
    2,571,577Total assets
    
    $
    40,952,272
    
    
    $
    43,916,596LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Trade and subcontractors payables
    
    $
    2,465,112
    
    
    $
    841,383Accrued expenses
    
    
    1,378,538
    
    
    
    1,257,137Deferred revenue
    
    
    507,383
    
    
    
    601,347Billings in excess of costs and earnings (Note 5)
    
    
    53,100
    
    
    
    28,215Liabilities of discontinued operations (Note 4)
    
    
    520,308
    
    
    
    547,485Short-term debt and current maturities of long-term debt
    
    
    270,592
    
    
    
    295,685Total current liabilities
    
    
    5,195,033
    
    
    
    3,571,252LIABILITIES OF DISCONTINUED OPERATIONS (Note 4)
    
    
    13,587,832
    
    
    
    17,181,813OTHER LIABILITIES
    
    
    1,039,633
    
    
    
    824,877MORTGAGE NOTES PAYABLE, less current maturities (Note 7)
    
    
    4,107,996
    
    
    
    4,229,587OTHER LONG-TERM DEBT, less current maturities (Note 8)
    
    
    1,832,000
    
    
    
    1,000,000Total liabilities
    
    
    25,762,494
    
    
    
    26,807,529COMMITMENTS AND CONTINGENCIES (Note 18)SHAREHOLDERS EQUITY:Common stock, $1 par value; 10,000,000 shares authorized;
3,919,773 issued and 3,676,383 outstanding at April 30, 2010;
3,917,778 issued and 3,691,369 outstanding at April 30, 2009
    
    
    3,919,773
    
    
    
    3,917,778Additional paid-in capital
    
    
    6,206,521
    
    
    
    6,026,101Retained earnings
    
    
    6,069,629
    
    
    
    8,139,988Treasury stock (common shares) of 243,390 and 226,409, respectively
    
    
    (1,006,145
    )
    
    
    (974,800
    )Total shareholders equity
    
    
    15,189,778
    
    
    
    17,109,067Total liabilities and shareholders equity
    
    $
    40,952,272
    
    
    $
    43,916,596
 See accompanying notes to consolidated financial statements.
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SERVIDYNE, INC.
 Year Ended April 30,2010
    
    
    2009(Restated)
    
    
    (Restated)REVENUES:Building Performance Efficiency (BPE) (Note 17)
    
    $
    18,171,536
    
    
    $
    13,192,310Other
    
    
    389,994
    
    
    
    440,62818,561,530
    
    
    
    13,632,938COST OF REVENUES:BPE
    
    
    12,300,803
    
    
    
    8,562,024Other
    
    
    746,919
    
    
    
    750,11613,047,722
    
    
    
    9,312,140SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
    
    
    9,783,066
    
    
    
    9,885,189OTHER (INCOME) AND EXPENSES:Other income (Note 2)
    
    
    (308,279
    )
    
    
    (332,291
    )Interest income
    
    
    (12,482
    )
    
    
    (95,564
    )Interest expense
    
    
    402,104
    
    
    
    412,44181,343
    
    
    
    (15,414
    )LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
    
    
    (4,350,601
    )
    
    
    (5,548,977
    )INCOME TAX EXPENSE (BENEFIT) (Notes 10 and 19):Current
    
    
    13,309
    
    
    
    Deferred
    
    
    (1,595,357
    )
    
    
    (1,528,625
    )(1,582,048
    )
    
    
    (1,528,625
    )LOSS FROM CONTINUING OPERATIONS
    
    
    (2,768,553
    )
    
    
    (4,020,352
    )DISCONTINUED OPERATIONS (Note 4):Earnings (loss) from discontinued operations, adjusted for applicable income
tax expense (benefit) of $235,423 and ($609,446), respectively
    
    
    142,443
    
    
    
    (996,561
    )Gain on disposition of income-producing properties, adjusted for applicable
income tax expense of $447,808 and $0, respectively
    
    
    740,831
    
    
    
    EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS
    
    
    883,274
    
    
    
    (996,561
    )NET LOSS
    
    $
    (1,885,279
    )
    
    $
    (5,016,913
    )NET (LOSS) EARNINGS PER SHARE (Note 13):From continuing operations  basic and diluted
    
    $
    (0.75
    )
    
    $
    (1.08
    )From discontinued operations  basic and diluted
    
    
    .24
    
    
    
    (.27
    )NET LOSS PER SHARE  BASIC AND DILUTED
    
    $
    (0.51
    )
    
    $
    (1.35
    )
 See accompanying notes to consolidated financial statements.
 25




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SERVIDYNE, INC.
 AdditionalCommon Stock
    
    
    Paid-In
    
    
    Retained
    
    
    TreasuryShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Stock
    
    
    TotalBALANCES at April 30, 2008
    
    
    3,708,836
    
    
    $
    3,708,836
    
    
    $
    5,045,100
    
    
    $
    14,511,159
    
    
    $
    (798,717
    )
    
    $
    22,466,378Net loss (as restated)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,016,913
    )
    
    
    
    
    
    
    (5,016,913
    )Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    205,118
    
    
    
    
    
    
    
    
    
    
    
    205,118Common stock acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (135,507
    )
    
    
    (135,507
    )Common stock issued
    
    
    22,781
    
    
    
    22,781
    
    
    
    68,469
    
    
    
    
    
    
    
    
    
    
    
    91,250Cash
dividends declared 
$0.134 per share (adjusted for
stock dividend)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (501,259
    )
    
    
    
    
    
    
    (501,259
    )Stock
dividend declared 
5% at market value
on date declared
    
    
    186,161
    
    
    
    186,161
    
    
    
    707,414
    
    
    
    (852,999
    )
    
    
    (40,576
    )
    
    
    BALANCES
at April 30, 2009 (as restated)
    
    
    3,917,778
    
    
    $
    3,917,778
    
    
    $
    6,026,101
    
    
    $
    8,139,988
    
    
    $
    (974,800
    )
    
    $
    17,109,067Net loss (as restated)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,885,279
    )
    
    
    
    
    
    
    (1,885,279
    )Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    182,415
    
    
    
    
    
    
    
    
    
    
    
    182,415Common stock acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31,345
    )
    
    
    (31,345
    )Common stock issued
    
    
    1,995
    
    
    
    1,995
    
    
    
    (1,995
    )
    
    
    
    
    
    
    
    
    
    
    Cash dividends declared 
$0.047 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (185,080
    )
    
    
    
    
    
    
    (185,080
    )BALANCES
at April 30, 2010 (as restated)
    
    
    3,919,773
    
    
    $
    3,919,773
    
    
    $
    6,206,521
    
    
    $
    6,069,629
    
    
    $
    (1,006,145
    )
    
    $
    15,189,778
 See accompanying notes to consolidated financial statements.
 26




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##### Table of Contents



SERVIDYNE, INC.
 Fiscal Year Ended2010
    
    
    2009(Restated)
    
    
    (Restated)Cash flows from operating activities:Net loss
    
    $
    (1,885,279
    )
    
    $
    (5,016,913
    )Adjustments to reconcile net loss to net
cash used in operating activities:(Earnings) loss from discontinued operations, net of tax
    
    
    (883,274
    )
    
    
    996,561Loss on disposal of assets
    
    
    1,378
    
    
    
    9,683Depreciation and amortization
    
    
    985,174
    
    
    
    1,068,801Amortization of mortgage discount
    
    
    
    
    
    
    (20,000
    )Deferred tax benefit (Note 19)
    
    
    (1,621,430
    )
    
    
    (1,572,109
    )Stock compensation expense
    
    
    182,415
    
    
    
    205,118Adjustment to cash surrender value of life insurance
    
    
    (62,442
    )
    
    
    (66,633
    )Straight-line rent
    
    
    22,357
    
    
    
    (14,422
    )Provision for doubtful accounts, net
    
    
    (38,197
    )
    
    
    (1,163
    )Changes in assets and liabilities:Receivables
    
    
    (1,357,368
    )
    
    
    659,553Costs and earnings in excess of billings
    
    
    (306,179
    )
    
    
    (133,196
    )Other current and long-term assets
    
    
    84,611
    
    
    
    (342,407
    )Trade and subcontractors payable
    
    
    1,623,729
    
    
    
    (138,267
    )Accrued expenses and deferred revenue
    
    
    27,437
    
    
    
    8,217Accrued incentive compensation
    
    
    
    
    
    
    (494,000
    )Billings in excess of costs and earnings
    
    
    24,885
    
    
    
    (34,344
    )Other liabilities
    
    
    (2,900
    )
    
    
    (14,672
    )Net cash used in operating activities
    
    
    (3,205,083
    )
    
    
    (4,900,193
    )Cash flows from investing activities:Acquisition, net of cash acquired
    
    
    
    
    
    
    (902,657
    )Premiums paid on officers life insurance policies
    
    
    (61,464
    )
    
    
    (56,000
    )Release of restricted cash held in escrow
    
    
    
    
    
    
    3,470,700Purchase of held to maturity investments
    
    
    
    
    
    
    (150,000
    )Additions to property and equipment
    
    
    (257,195
    )
    
    
    (306,539
    )Additions to intangible assets
    
    
    (462,750
    )
    
    
    (328,249
    )Proceeds from sale of property and equipment
    
    
    2,000
    
    
    
    Net cash (used in) provided by investing activities
    
    
    (779,409
    )
    
    
    1,727,255Cash flows from financing activities:Long-term loan proceeds
    
    
    982,000
    
    
    
    Mortgage repayments
    
    
    (111,684
    )
    
    
    (103,383
    )Debt repayments
    
    
    (185,000
    )
    
    
    (280,875
    )Repurchase of common stock
    
    
    (31,345
    )
    
    
    (135,507
    )Cash dividends paid to shareholders
    
    
    (185,080
    )
    
    
    (501,259
    )Net cash provided by (used in) financing activities
    
    
    468,891
    
    
    
    (1,021,024
    )DISCONTINUED OPERATIONS:Operating activities
    
    
    1,051,139
    
    
    
    1,069,799Investing activities
    
    
    (141,881
    )
    
    
    (188,909
    )Financing activities
    
    
    (291,142
    )
    
    
    (248,749
    )Net cash provided by discontinued operations
    
    
    618,116
    
    
    
    632,141Net decrease in cash and cash equivalents
    
    
    (2,897,485
    )
    
    
    (3,561,821
    )Cash at beginning of period
    
    
    4,821,126
    
    
    
    8,382,947Cash at end of period
    
    $
    1,923,641
    
    
    $
    4,821,126Supplemental disclosure of non-cash investing and financing activities:Issuance of Common Stock under 2000 Stock Award Plan
    
    $
    4,434
    
    
    $
    24,792Supplemental schedule of cash flow information:Cash paid during the year for interest
    
    $
    1,094,304
    
    
    $
    1,303,887Cash paid during the year for income taxes, net
    
    $
    
    
    
    $
    
 See accompanying notes to consolidated financial statements.
 27




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##### Table of Contents



Total assets acquired, net of cash
    
    $
    1,577,844Total liabilities assumed
    
    
    (583,937
    )Net assets acquired, net of cash
    
    
    993,907Less value of shares issued for acquisition
    
    
    (91,250
    )Total cash paid (including acquisition costs)
    
    $
    902,657
  Elimination of mortgage note payable
    
    $
    (3,159,348
    )Disposition of income-producing property, net
    
    
    1,727,165Disposition of other related assets and liabilities, net
    
    
    193,545
 See accompanying notes to consolidated financial statements.
 28




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##### Table of Contents



SERVIDYNE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended April 30, 2010, and April 30, 2009
 1. ORGANIZATION AND BUSINESS
   2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 (A) Principles of consolidation and basis of presentation
  Property, Plant and Equipment
 (B) Use of estimates
  (C) Revenue recognition
  29




---



##### Table of Contents



(D) Cash and cash equivalents and short-term investments
  (E) Long-lived assets: property & equipment and capitalized software
    
    
    A significant decrease in the market price of a long-lived asset;
    
    A current-period operating or cash flow loss combined with a history of operating or
cash flow losses or a projection or forecast that demonstrates continuing losses associated
with the use of a long-lived asset;
    
    The Company has received purchase offers at prices below carrying value;
    
    A real estate asset that has a significant vacancy rate or significant rollover exposure
from one or more tenants;
 30




---



##### Table of Contents




    
    A major tenant experiencing financial difficulties that may jeopardize the tenants
ability to meet its lease obligations; and
    
    Depressed market conditions.
     
    
    A change in the estimated remaining useful life of the asset;
    
    A change in the manner in which the asset is used in the income generating business of
the Company; or
    
    A current-period operating or cash flow loss combined with a history of operating or
cash flow losses, or a projection or forecast that demonstrates continuing losses
associated with the use of a long-lived asset.
  31




---



##### Table of Contents



(F) Goodwill and other intangible assets
  Acquired computer software
    
    3 yearsProprietary technology solutions
    
    5 yearsCustomer relationships
    
    5 years
       32




---



##### Table of Contents



(G) Income taxes
    (H) Derivative instruments and hedging activities
  (I) Discontinued operations
  33




---



##### Table of Contents



(J) Other current assets
  2010
    
    2009Inventory
    
    $
    537,624
    
    
    $
    654,443Prepaid software consulting
    
    
    
    
    
    
    132,731Prepaid real estate taxes
    
    
    48,928
    
    
    
    65,685Deferred costs
    
    
    31,248
    
    
    
    92,210Prepaid insurance
    
    
    47,468
    
    
    
    117,004Prepaid rent
    
    
    35,783
    
    
    
    48,905Deposits
    
    
    44,400
    
    
    
    44,400Prepaid consulting fees
    
    
    25,000
    
    
    
    25,000Unbilled engineering revenue
    
    
    170,520
    
    
    
    112,690Other receivables
    
    
    117,660
    
    
    
    8,798Other
    
    
    189,213
    
    
    
    162,895$
    1,247,844
    
    
    $
    1,464,761
 (K) Other assets
  2010
    
    2009Cash surrender value of life insurance
    
    $
    1,447,224
    
    
    $
    1,323,318Deferred executive compensation
    
    
    947,023
    
    
    
    733,378Certificate of deposit
    
    
    450,000
    
    
    
    450,000Straight-line rent receivable
    
    
    24,228
    
    
    
    46,584Notes receivable
    
    
    9,000
    
    
    
    9,250Other
    
    
    12,882
    
    
    
    9,047$
    2,890,357
    
    
    $
    2,571,577
 (L) Other income
  (M) Recent accounting pronouncements
 The FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles
 Subsequent Events
 34




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##### Table of Contents



Subsequent Events
 Financial
Instruments
 Intangibles 
Goodwill and Other; General Intangibles Other than Goodwill Risks
and Uncertainties Intangibles  Goodwill and Other Business Combinations
 3. STOCK COMPENSATION
    35




---



##### Table of Contents



Stock options
  2010
    
    
    2009Weighted
    
    
    
    
    
    
    WeightedOptions to
    
    
    Average
    
    
    Options to
    
    
    AveragePurchase
    
    
    Exercise
    
    
    Purchase
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding at beginning of year
    
    
    482,486
    
    
    $
    4.46
    
    
    
    483,536
    
    
    $
    4.45Granted
    
    
    
    
    
    
    
    
    
    
    10,500
    
    
    
    5.24Forfeited
    
    
    
    
    
    
    
    
    
    
    (11,550
    )
    
    
    4.59Expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at end of year
    
    
    482,486
    
    
    $
    4.46
    
    
    
    482,486
    
    
    $
    4.46Vested at end of year
    
    
    471,986
    
    
    $
    4.44
    
    
    
    471,986
    
    
    $
    4.44Non-vested at end of year, that are expected to vest
    
    
    10,500
    
    
    $
    5.24
    
    
    
    10,500
    
    
    $
    5.24
   Weighted AverageExercise
    
    Number of
    
    Remaining ContractualPrice
    
    Outstanding Options
    
    Term (Years)$4.42
    
    
    415,629
    
    
    
    2.53$4.59
    
    
    55,440
    
    
    
    4.90$5.19
    
    
    917
    
    
    
    4.13$5.24
    
    
    10,500
    
    
    
    3.12
  Expected life (years)
    
    
    5Dividend yield
    
    
    2.55
    %Expected stock price volatility
    
    
    37.11
    %Risk-free interest rate
    
    
    3.73
    %Fair value of options granted
    
    $
    1.16
   36




---



##### Table of Contents



Stock appreciation rights
  2010
    
    
    2009Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseSARs
    
    
    Price
    
    
    SARs
    
    
    PriceOutstanding at beginning of year
    
    
    565,350
    
    
    $
    4.37
    
    
    
    411,600
    
    
    $
    4.26Granted
    
    
    381,500
    
    
    
    3.11
    
    
    
    184,000
    
    
    
    4.57Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    (19,425
    )
    
    
    4.62
    
    
    
    (30,250
    )
    
    
    3.98Outstanding at end of year
    
    
    927,425
    
    
    $
    3.85
    
    
    
    565,350
    
    
    $
    4.37Vested at end of year
    
    
    88,200
    
    
    $
    3.88
    
    
    
    
    
    
    $
    Non-vested at end of year, that
are expected to vest
    
    
    589,305
    
    
    $
    3.91
    
    
    
    405,299
    
    
    $
    4.26
 rd th th
  Weighted AverageExercise
    
    Outstanding
    
    Vested
    
    Remaining ContractualPrice
    
    SARs
    
    SARs
    
    Term (Years)$3.94
    
    
    180,495
    
    
    
    54,810
    
    
    
    6.16$3.79
    
    
    109,830
    
    
    
    33,390
    
    
    
    6.61$4.19
    
    
    10,500
    
    
    
    0
    
    
    
    7.12$6.19
    
    
    33,600
    
    
    
    0
    
    
    
    7.42$5.00
    
    
    52,500
    
    
    
    0
    
    
    
    7.99$4.76
    
    
    136,500
    
    
    
    0
    
    
    
    8.13$4.00
    
    
    22,500
    
    
    
    0
    
    
    
    8.39$2.30
    
    
    30,000
    
    
    
    0
    
    
    
    9.11$4.00
    
    
    200,000
    
    
    
    0
    
    
    
    9.55$2.12
    
    
    20,000
    
    
    
    0
    
    
    
    9.61$2.09
    
    
    131,500
    
    
    
    0
    
    
    
    9.90
  37




---



##### Table of Contents



2010
    
    2009Expected life (years)
    
    
    5
    
    
    
    5Dividend yield
    
    
    3.82
    %
    
    
    2.59
    %Expected stock price volatility
    
    
    55.88
    %
    
    
    37.25
    %Risk-free interest rate
    
    
    2.38
    %
    
    
    3.45
    %Fair value of SARs granted
    
    $
    0.40
    
    
    $
    0.91
  Shares of restricted stock
    2010
    
    
    2009Weighted
    
    
    
    
    
    
    WeightedNumber of
    
    
    Average
    
    
    Number of
    
    
    AverageShares of
    
    
    Fair Value
    
    
    Shares of
    
    
    Fair ValueRestricted
    
    
    per Share
    
    
    Restricted
    
    
    per ShareStock
    
    
    on Grant Date
    
    
    Stock
    
    
    on Grant DateNon-vested restricted stock at beginning of year
    
    
    5,295
    
    
    $
    4.77
    
    
    
    1,785
    
    
    $
    4.27Granted
    
    
    2,600
    
    
    
    2.11
    
    
    
    5,800
    
    
    
    4.72Forfeited
    
    
    (500
    )
    
    
    2.12
    
    
    
    (505
    )
    
    
    4.21Vested
    
    
    (4,245
    )
    
    
    4.55
    
    
    
    (1,785
    )
    
    
    4.23Non-vested restricted stock at end of year
    
    
    3,150
    
    
    $
    2.99
    
    
    
    5,295
    
    
    $
    4.77
 4. DISCONTINUED OPERATIONS
    38




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##### Table of Contents



39




---



##### Table of Contents



2010
    
    2009Rental revenues
    
    $
    2,388,143
    
    
    $
    2,598,515Rental property operating expenses, including depreciation
    
    
    2,010,277
    
    
    
    2,045,849Loss on impairment of income-producing property
    
    
    
    
    
    
    2,158,673Operating earnings (loss) from discontinued operations
    
    
    377,866
    
    
    
    (1,606,007
    )Income tax (expense) benefit
    
    
    (235,423
    )
    
    
    609,446Operating earnings (loss) from discontinued operations, net of tax
    
    
    142,443
    
    
    
    (996,561
    )Gain on disposition of income-producing properties
    
    
    1,188,639
    
    
    
    Income tax expense
    
    
    (447,808
    )
    
    
    Gain on disposition of income-producing properties, net of tax
    
    
    740,831
    
    
    
    Earnings (loss) from discontinued operations, net of tax
    
    $
    883,274
    
    
    $
    (996,561
    )
 Balances atApril 30, 2010
    
    April 30, 2009Assets of discontinued operationsAccounts receivable
    
    $
    92,402
    
    
    $
    238,217Deferred income taxes
    
    
    50,660
    
    
    
    54,315Other current assets
    
    
    45,765
    
    
    
    194,960Total current
    
    
    188,827
    
    
    
    487,492Property and equipment
    
    
    13,259,155
    
    
    
    15,246,802Intangible assets
    
    
    414,543
    
    
    
    515,433Other assets
    
    
    93,529
    
    
    
    164,317Total non-current
    
    
    13,767,227
    
    
    
    15,926,552Total assets of discontinued operations
    
    $
    13,956,054
    
    
    $
    16,414,044Liabilities of discontinued operationsAccounts payable and accrued expenses
    
    $
    274,077
    
    
    $
    169,258Deferred revenue
    
    
    
    
    
    
    107,054Current maturities of mortgage notes and long-term debt payable
    
    
    246,231
    
    
    
    271,173Total current
    
    
    520,308
    
    
    
    547,485Deferred income taxes
    
    
    2,972,327
    
    
    
    3,190,760Mortgage notes payable
    
    
    10,615,505
    
    
    
    13,991,053Total non-current
    
    
    13,587,832
    
    
    
    17,181,813Total liabilities of discontinued operations
    
    $
    14,108,140
    
    
    $
    17,729,298
 40




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##### Table of Contents



As of April 30, 2010ReclassificationRelated to
    
    As Recast forDiscontinuance
    
    DiscontinuedAdjustments for
    
    of Real Estate
    
    Operations andAs Originally
    
    Discontinued
    
    Segment
    
    Segment ChangeReported
    
    Operations
    
    Reporting
    
    (Note 19)Consolidated balance sheetASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    1,923,641
    
    
    $
    
    
    
    $
    
    
    
    $
    1,923,641Receivables:Trade accounts and notes, net of allowance for doubtful accounts
    
    
    1,045,477
    
    
    
    (92,402
    )
    
    
    
    
    
    
    953,075Contracts, net of allowance for doubtful accounts
    
    
    3,337,177
    
    
    
    
    
    
    
    
    
    
    
    3,337,177Costs and earnings in excess of billings
    
    
    715,129
    
    
    
    
    
    
    
    
    
    
    
    715,129Assets of discontinued operations
    
    
    
    
    
    
    188,827
    
    
    
    
    
    
    
    188,827Deferred income taxes
    
    
    451,875
    
    
    
    (50,660
    )
    
    
    
    
    
    
    401,215Other current assets
    
    
    1,293,609
    
    
    
    (45,765
    )
    
    
    
    
    
    
    1,247,844Total current assets
    
    
    8,766,908
    
    
    
    
    
    
    
    
    
    
    
    8,766,908INCOME-PRODUCING PROPERTIES, net
    
    
    17,382,252
    
    
    
    (13,259,155
    )
    
    
    (4,123,097
    )
    
    
    PROPERTY AND EQUIPMENT, net
    
    
    682,445
    
    
    
    
    
    
    
    4,123,097
    
    
    
    4,805,542ASSETS OF DISCONTINUED OPERATIONS
    
    
    
    
    
    
    13,767,227
    
    
    
    
    
    
    
    13,767,227DEFERRED INCOME TAXES
    
    
    
    
    
    
    1,718,954
    
    
    
    
    
    
    
    1,718,954OTHER ASSETS:Real estate held for future development or sale
    
    
    853,109
    
    
    
    
    
    
    
    
    
    
    
    853,109Intangible assets, net
    
    
    2,810,417
    
    
    
    (414,543
    )
    
    
    
    
    
    
    2,395,874Goodwill
    
    
    6,354,002
    
    
    
    
    
    
    
    
    
    
    
    6,354,002Other assets
    
    
    2,983,886
    
    
    
    (93,529
    )
    
    
    
    
    
    
    2,890,357Total assets
    
    $
    39,833,019
    
    
    $
    1,718,954
    
    
    $
    
    
    
    $
    41,551,973LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Trade and subcontractors payables
    
    $
    2,483,996
    
    
    $
    (18,884
    )
    
    $
    
    
    
    $
    2,465,112Accrued expenses
    
    
    1,633,731
    
    
    
    (255,193
    )
    
    
    
    
    
    
    1,378,538Deferred revenue
    
    
    507,383
    
    
    
    
    
    
    
    
    
    
    
    507,383Billings in excess of costs and earnings
    
    
    53,100
    
    
    
    
    
    
    
    
    
    
    
    53,100Liabilities of discontinued operations
    
    
    
    
    
    
    520,308
    
    
    
    
    
    
    
    520,308Short-term debt and current maturities of long-term debt
    
    
    516,823
    
    
    
    (246,231
    )
    
    
    
    
    
    
    270,592Total current liabilities
    
    
    5,195,033
    
    
    
    
    
    
    
    
    
    
    
    5,195,033DEFERRED INCOME TAXES
    
    
    1,253,373
    
    
    
    (1,253,373
    )
    
    
    
    
    
    
    LIABILITIES OF DISCONTINUED OPERATIONS
    
    
    
    
    
    
    13,587,832
    
    
    
    
    
    
    
    13,587,832OTHER LIABILITIES
    
    
    1,039,633
    
    
    
    
    
    
    
    
    
    
    
    1,039,633MORTGAGE NOTES PAYABLE, less current maturities
    
    
    14,723,501
    
    
    
    (10,615,505
    )
    
    
    
    
    
    
    4,107,996OTHER LONG-TERM DEBT, less current maturities
    
    
    1,832,000
    
    
    
    
    
    
    
    
    
    
    
    1,832,000Total liabilities
    
    
    24,043,540
    
    
    
    1,718,954
    
    
    
    
    
    
    
    25,762,494COMMITMENTS AND CONTINGENCIESSHAREHOLDERS EQUITY:Common stock
     
     
3,919,773
     
     
     

     
     
     

     
     
     
3,919,773Additional paid-in capital
     
     
6,206,521
     
     
     

     
     
     

     
     
     
6,206,521Retained earnings
     
     
6,669,330
     
     
     

     
     
     

     
     
     
6,669,330Treasury stock (common shares)
     
     
(1,006,145
     )
     
     

     
     
     

     
     
     
(1,006,145
)Total shareholders equity
    
    
    15,789,479
    
    
    
    
    
    
    
    
    
    
    
    15,789,479Total liabilities and shareholders equity
    
    $
    39,833,019
    
    
    $
    1,718,954
    
    
    $
    
    
    
    $
    41,551,973
 41




---



##### Table of Contents



As of April 30, 2009ReclassificationRelated to
    
    As Recast forDiscontinuance
    
    DiscontinuedAdjustments for
    
    of Real Estate
    
    Operations andAs Originally
    
    Discontinued
    
    Segment
    
    Segment ChangeReported
    
    Operations
    
    Reporting
    
    (Note 19)Consolidated balance sheetASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    4,821,126
    
    
    $
    
    
    
    $
    
    
    
    $
    4,821,126Receivables:Trade accounts and notes, net of allowance for doubtful accounts
    
    
    1,277,508
    
    
    
    (147,148
    )
    
    
    
    
    
    
    1,130,360Contracts, net of allowance for doubtful accounts
    
    
    1,764,327
    
    
    
    
    
    
    
    
    
    
    
    1,764,327Costs and earnings in excess of billings
    
    
    408,950
    
    
    
    
    
    
    
    
    
    
    
    408,950Assets of discontinued operations
    
    
    314,906
    
    
    
    172,586
    
    
    
    
    
    
    
    487,492Deferred income taxes
    
    
    529,708
    
    
    
    (4,600
    )
    
    
    
    
    
    
    525,108Other current assets
    
    
    1,485,599
    
    
    
    (20,838
    )
    
    
    
    
    
    
    1,464,761Total current assets
    
    
    10,602,124
    
    
    
    
    
    
    
    
    
    
    
    10,602,124INCOME-PRODUCING PROPERTIES, net
    
    
    17,630,790
    
    
    
    (13,486,217
    )
    
    
    (4,144,573
    )
    
    
    PROPERTY AND EQUIPMENT, net
    
    
    797,556
    
    
    
    
    
    
    
    4,144,573
    
    
    
    4,942,129ASSETS OF DISCONTINUED OPERATIONS
    
    
    1,909,434
    
    
    
    14,017,118
    
    
    
    
    
    
    
    15,926,552DEFERRED INCOME TAXES
    
    
    
    
    
    
    701,403
    
    
    
    
    
    
    
    701,403OTHER ASSETS:Real estate held for future development or sale
    
    
    853,109
    
    
    
    
    
    
    
    
    
    
    
    853,109Intangible assets, net
    
    
    2,832,286
    
    
    
    (437,123
    )
    
    
    
    
    
    
    2,395,163Goodwill
    
    
    6,354,002
    
    
    
    
    
    
    
    
    
    
    
    6,354,002Other assets
    
    
    2,665,355
    
    
    
    (93,778
    )
    
    
    
    
    
    
    2,571,577Total assets
    
    $
    43,644,656
    
    
    $
    701,403
    
    
    $
    
    
    
    $
    44,346,059LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Trade and subcontractors payables
    
    $
    851,633
    
    
    $
    (10,250
    )
    
    $
    
    
    
    $
    841,383Accrued expenses
    
    
    1,388,229
    
    
    
    (131,092
    )
    
    
    
    
    
    
    1,257,137Deferred revenue
    
    
    601,347
    
    
    
    
    
    
    
    
    
    
    
    601,347Billings in excess of costs and earnings
    
    
    28,215
    
    
    
    
    
    
    
    
    
    
    
    28,215Liabilities of discontinued operations
    
    
    175,541
    
    
    
    371,944
    
    
    
    
    
    
    
    547,485Short-term debt and current maturities of long-term debt
    
    
    526,287
    
    
    
    (230,602
    )
    
    
    
    
    
    
    295,685Total current liabilities
    
    
    3,571,252
    
    
    
    
    
    
    
    
    
    
    
    3,571,252DEFERRED INCOME TAXES
    
    
    2,246,919
    
    
    
    (2,246,919
    )
    
    
    
    
    
    
    LIABILITIES OF DISCONTINUED OPERATIONS
    
    
    3,370,826
    
    
    
    13,810,987
    
    
    
    
    
    
    
    17,181,813OTHER LIABILITIES
    
    
    824,877
    
    
    
    
    
    
    
    
    
    
    
    824,877MORTGAGE NOTES PAYABLE, less current maturities
    
    
    15,092,252
    
    
    
    (10,862,665
    )
    
    
    
    
    
    
    4,229,587OTHER LONG-TERM DEBT, less current maturities
    
    
    1,000,000
    
    
    
    
    
    
    
    
    
    
    
    1,000,000Total liabilities
    
    
    26,106,126
    
    
    
    701,403
    
    
    
    
    
    
    
    26,807,529COMMITMENTS AND CONTINGENCIESSHAREHOLDERS EQUITY:Common stock
     
     
3,917,778
     
     
     

     
     
     

     
     
     
3,917,778Additional paid-in capital
     
     
6,026,101
     
     
     

     
     
     

     
     
     
6,026,101Retained earnings
     
     
8,569,451
     
     
     

     
     
     

     
     
     
8,569,451Treasury stock (common shares)
     
     
(974,800
     )
     
     

     
     
     

     
     
     
(974,800
)Total shareholders equity
    
    
    17,538,530
    
    
    
    
    
    
    
    
    
    
    
    17,538,530Total liabilities and shareholders equity
    
    $
    43,644,656
    
    
    $
    701,403
    
    
    $
    
    
    
    $
    44,346,059
 42




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##### Table of Contents



For the Year Ended April 30, 2010As Recast forAdjustments for
    
    DiscontinuedAs Originally
    
    Discontinued
    
    OperationsReported
    
    Operations
    
    (Note 19)Consolidated statement of operationsREVENUES:Building Performance Efficiency (BPE)
    
    $
    18,171,536
    
    
    $
    
    
    
    $
    18,171,536Other (formerly Real Estate)
    
    
    2,727,565
    
    
    
    (2,337,571
    )
    
    
    389,99420,899,101
    
    
    
    (2,337,571
    )
    
    
    18,561,530COST OF REVENUES:BPE
    
    
    12,300,803
    
    
    
    
    
    
    
    12,300,803Other (formerly Real Estate)
    
    
    1,862,609
    
    
    
    (1,115,690
    )
    
    
    746,91914,163,412
    
    
    
    (1,115,690
    )
    
    
    13,047,722SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
    
    
    9,797,862
    
    
    
    (14,796
    )
    
    
    9,783,066OTHER (INCOME) AND EXPENSES:Other income
    
    
    (294,029
    )
    
    
    (14,250
    )
    
    
    (308,279
    )Interest income
    
    
    (12,507
    )
    
    
    25
    
    
    
    (12,482
    )Interest expense
    
    
    1,083,810
    
    
    
    (681,706
    )
    
    
    402,104777,274
    
    
    
    (695,931
    )
    
    
    81,343LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
    
    
    (3,839,447
    )
    
    
    (511,154
    )
    
    
    (4,350,601
    )INCOME TAX EXPENSE (BENEFIT):Current
    
    
    13,309
    
    
    
    
    
    
    
    13,309Deferred
    
    
    (1,479,522
    )
    
    
    (286,073
    )
    
    
    (1,765,595
    )(1,466,213
    )
    
    
    (286,073
    )
    
    
    (1,752,286
    )LOSS FROM CONTINUING OPERATIONS
    
    
    (2,373,234
    )
    
    
    (225,081
    )
    
    
    (2,598,315
    )DISCONTINUED OPERATIONS:(Loss) gain from discontinued operations, adjusted for applicable
income tax benefit (expense)
    
    
    (82,638
    )
    
    
    225,081
    
    
    
    142,443Gain on disposition of income-producing properties, adjusted for
applicable income tax expense
    
    
    740,831
    
    
    
    
    
    
    
    740,831EARNINGS FROM DISCONTINUED OPERATIONS
    
    
    658,193
    
    
    
    225,081
    
    
    
    883,274NET LOSS
    
    $
    (1,715,041
    )
    
    $
    
    
    
    $
    (1,715,041
    )NET (LOSS) EARNINGS PER SHARE:From continuing operations  basic and diluted
    
    $
    (0.64
    )
    
    $
    (0.06
    )
    
    $
    (0.70
    )From discontinuing operations  basic and diluted
    
    
    0.18
    
    
    
    0.06
    
    
    
    0.24NET LOSS PER SHARE  BASIC AND DILUTED
    
    $
    (0.46
    )
    
    $
    
    
    
    $
    (0.46
    )
 43




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##### Table of Contents



For the Year Ended April 30, 2009As Recast forAdjustments for
    
    DiscontinuedAs Originally
    
    Discontinued
    
    OperationsReported
    
    Operations
    
    (Note 19)Consolidated statement of operationsREVENUES:Building Performance Efficiency (BPE)
    
    $
    13,192,310
    
    
    $
    
    
    
    $
    13,192,310Other (formerly Real Estate)
    
    
    2,791,571
    
    
    
    (2,350,943
    )
    
    
    440,62815,983,881
    
    
    
    (2,350,943
    )
    
    
    13,632,938COST OF REVENUES:BPE
    
    
    8,562,024
    
    
    
    
    
    
    
    8,562,024Other (formerly Real Estate)
    
    
    1,787,236
    
    
    
    (1,037,120
    )
    
    
    750,11610,349,260
    
    
    
    (1,037,120
    )
    
    
    9,312,140SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
    
    
    9,898,010
    
    
    
    (12,821
    )
    
    
    9,885,189OTHER (INCOME) AND EXPENSES:Other income
    
    
    (317,322
    )
    
    
    (14,969
    )
    
    
    (332,291
    )Interest income
    
    
    (107,180
    )
    
    
    11,616
    
    
    
    (95,564
    )Interest expense
    
    
    1,107,986
    
    
    
    (695,545
    )
    
    
    412,441Loss on impairment of income-producing property
    
    
    
    
    
    
    
    
    
    
    683,484
    
    
    
    (698,898
    )
    
    
    (15,414
    )LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
    
    
    (4,946,873
    )
    
    
    (602,104
    )
    
    
    (5,548,977
    )INCOME TAX BENEFIT:Current
    
    
    
    
    
    
    
    
    
    
    Deferred
    
    
    (1,671,004
    )
    
    
    (287,084
    )
    
    
    (1,958,088
    )(1,671,004
    )
    
    
    (287,084
    )
    
    
    (1,958,088
    )LOSS FROM CONTINUING OPERATIONS
    
    
    (3,275,869
    )
    
    
    (315,020
    )
    
    
    (3,590,889
    )DISCONTINUED OPERATIONS:Loss from discontinued operations, adjusted for applicable income
tax benefit
    
    
    (1,311,581
    )
    
    
    315,020
    
    
    
    (996,561
    )LOSS FROM DISCONTINUED OPERATIONS
    
    
    (1,311,581
    )
    
    
    315,020
    
    
    
    (996,561
    )NET LOSS
    
    $
    (4,587,450
    )
    
    $
    
    
    
    $
    (4,587,450
    )NET LOSS PER SHARE:From continuing operations  basic and diluted
    
    $
    (0.88
    )
    
    $
    (0.08
    )
    
    $
    (0.96
    )From discontinuing operations  basic and diluted
    
    
    (0.35
    )
    
    
    0.08
    
    
    
    (0.27
    )NET LOSS PER SHARE  BASIC AND DILUTED
    
    $
    (1.23
    )
    
    $
    
    
    
    $
    (1.23
    )
 44




---



##### Table of Contents



As of April 30, 2010ReclassificationRelated to
    
    As Recast forDiscontinuance
    
    DiscontinuedAdjustments for
    
    of Real Estate
    
    Operations andAs Originally
    
    Discontinued
    
    Segment
    
    Segment ChangeReported
    
    Operations
    
    Reporting
    
    (Note 19)Consolidated statement of cash flowsCash flows from operating activities:Net loss
    
    $
    (1,715,041
    )
    
    $
    
    
    
    $
    
    
    
    $
    (1,715,041
    )Adjustments to reconcile net loss to net
cash used in operating activities:Earnings from discontinued operations, net of tax
    
    
    (658,193
    )
    
    
    (225,081
    )
    
    
    
    
    
    
    (883,274
    )Loss on disposal of assets
    
    
    1,378
    
    
    
    
    
    
    
    
    
    
    
    1,378Depreciation and amortization
    
    
    1,377,176
    
    
    
    (392,002
    )
    
    
    
    
    
    
    985,174Deferred tax benefit
    
    
    (1,505,595
    )
    
    
    (286,073
    )
    
    
    
    
    
    
    (1,791,668
    )Stock compensation expense
    
    
    182,415
    
    
    
    
    
    
    
    
    
    
    
    182,415Adjustment to cash surrender value of life insurance
    
    
    (62,442
    )
    
    
    
    
    
    
    
    
    
    
    (62,442
    )Straight-line rent
    
    
    22,606
    
    
    
    (249
    )
    
    
    
    
    
    
    22,357Provision for doubtful accounts, net
    
    
    (9,188
    )
    
    
    (29,009
    )
    
    
    
    
    
    
    (38,197
    )Changes in assets and liabilities:Receivables
    
    
    (1,331,631
    )
    
    
    (25,737
    )
    
    
    
    
    
    
    (1,357,368
    )Costs and earnings in excess of billings
    
    
    (306,179
    )
    
    
    
    
    
    
    
    
    
    
    (306,179
    )Other current and long-term assets
    
    
    59,684
    
    
    
    24,927
    
    
    
    
    
    
    
    84,611Trade and subcontractors payable
    
    
    1,632,363
    
    
    
    (8,634
    )
    
    
    
    
    
    
    1,623,729Accrued expenses and deferred revenue
    
    
    151,538
    
    
    
    (124,101
    )
    
    
    
    
    
    
    27,437Billings in excess of costs and earnings
    
    
    24,885
    
    
    
    
    
    
    
    
    
    
    
    24,885Other liabilities
    
    
    (2,900
    )
    
    
    
    
    
    
    
    
    
    
    (2,900
    )Net cash used in operating activities
    
    
    (2,139,124
    )
    
    
    (1,065,959
    )
    
    
    
    
    
    
    (3,205,083
    )Cash flows from investing activities:Premiums paid on officers life insurance policies
    
    
    (61,464
    )
    
    
    
    
    
    
    
    
    
    
    (61,464
    )Additions to income-producing properties
    
    
    (228,006
    )
    
    
    93,119
    
    
    
    134,887
    
    
    
    Additions to property and equipment
    
    
    (122,308
    )
    
    
    
    
    
    
    (134,887
    )
    
    
    (257,195
    )Additions to intangible assets
    
    
    (511,992
    )
    
    
    49,242
    
    
    
    
    
    
    
    (462,750
    )Proceeds from sale of property and equipment
    
    
    2,000
    
    
    
    
    
    
    
    
    
    
    
    2,000Net cash used in investing activities
    
    
    (921,770
    )
    
    
    142,361
    
    
    
    
    
    
    
    (779,409
    )Cash flows from financing activities:Long-term loan proceeds
    
    
    982,000
    
    
    
    
    
    
    
    
    
    
    
    982,000Mortgage repayments
    
    
    (343,215
    )
    
    
    231,531
    
    
    
    
    
    
    
    (111,684
    )Debt repayments
    
    
    (185,000
    )
    
    
    
    
    
    
    
    
    
    
    (185,000
    )Repurchase of common stock
    
    
    (31,345
    )
    
    
    
    
    
    
    
    
    
    
    (31,345
    )Cash dividends paid to shareholders
    
    
    (185,080
    )
    
    
    
    
    
    
    
    
    
    
    (185,080
    )Net cash provided by financing activities
    
    
    237,360
    
    
    
    231,531
    
    
    
    
    
    
    
    468,891DISCONTINUED OPERATIONS:Operating activities
    
    
    (13,319
    )
    
    
    1,064,458
    
    
    
    
    
    
    
    1,051,139Investing activities
    
    
    (1,021
    )
    
    
    (140,860
    )
    
    
    
    
    
    
    (141,881
    )Financing activities
    
    
    (59,611
    )
    
    
    (231,531
    )
    
    
    
    
    
    
    (291,142
    )Net cash (used in) provided by discontinued operations
    
    
    (73,951
    )
    
    
    692,067
    
    
    
    
    
    
    
    618,116Net decrease in cash and cash equivalents
    
    
    (2,897,485
    )
    
    
    
    
    
    
    
    
    
    
    (2,897,485
    )Cash at beginning of period
    
    
    4,821,126
    
    
    
    
    
    
    
    
    
    
    
    4,821,126Cash at end of period
    
    $
    1,923,641
    
    
    $
    
    
    
    $
    
    
    
    $
    1,923,641
 45




---



##### Table of Contents



As of April 30, 2009ReclassificationRelated to
    
    As Recast forDiscontinuance
    
    DiscontinuedAdjustments for
    
    of Real Estate
    
    Operations andAs Originally
    
    Discontinued
    
    Segment
    
    Segment ChangeReported
    
    Operations
    
    Reporting
    
    (Note 19)Consolidated statement of cash flowsCash flows from operating activities:Net loss
    
    $
    (4,587,450
    )
    
    $
    
    
    
    $
    
    
    
    $
    (4,587,450
    )Adjustments to reconcile net loss to net
cash used in operating activities:Loss from discontinued operations, net of tax
    
    
    1,311,581
    
    
    
    (315,020
    )
    
    
    
    
    
    
    996,561Loss on disposal of assets
    
    
    9,683
    
    
    
    
    
    
    
    
    
    
    
    9,683Depreciation and amortization
    
    
    1,453,882
    
    
    
    (385,081
    )
    
    
    
    
    
    
    1,068,801Amortization of mortgage discount
    
    
    (20,000
    )
    
    
    
    
    
    
    
    
    
    
    (20,000
    )Deferred tax benefit
    
    
    (1,714,488
    )
    
    
    (287,084
    )
    
    
    
    
    
    
    (2,001,572
    )Stock compensation expense
    
    
    205,118
    
    
    
    
    
    
    
    
    
    
    
    205,118Adjustment to cash surrender value of life insurance
    
    
    (66,633
    )
    
    
    
    
    
    
    
    
    
    
    (66,633
    )Straight-line rent
    
    
    (28,778
    )
    
    
    14,356
    
    
    
    
    
    
    
    (14,422
    )Provision for doubtful accounts, net
    
    
    4,878
    
    
    
    (6,041
    )
    
    
    
    
    
    
    (1,163
    )Changes in assets and liabilities:Receivables
    
    
    667,583
    
    
    
    (8,030
    )
    
    
    
    
    
    
    659,553Costs and earnings in excess of billings
    
    
    (133,196
    )
    
    
    
    
    
    
    
    
    
    
    (133,196
    )Other current and long-term assets
    
    
    (327,463
    )
    
    
    (14,944
    )
    
    
    
    
    
    
    (342,407
    )Trade and subcontractors payable
    
    
    (137,777
    )
    
    
    (490
    )
    
    
    
    
    
    
    (138,267
    )Accrued expenses and deferred revenue
    
    
    (24,873
    )
    
    
    33,090
    
    
    
    
    
    
    
    8,217Accrued incentive compensation
    
    
    (494,000
    )
    
    
    
    
    
    
    
    
    
    
    (494,000
    )Billings in excess of costs and earnings
    
    
    (34,344
    )
    
    
    
    
    
    
    
    
    
    
    (34,344
    )Other liabilities
    
    
    (14,674
    )
    
    
    2
    
    
    
    
    
    
    
    (14,672
    )Net cash used in operating activities
    
    
    (3,930,951
    )
    
    
    (969,242
    )
    
    
    
    
    
    
    (4,900,193
    )Cash flows from investing activities:Acquisition, net of cash acquired
    
    
    (902,657
    )
    
    
    
    
    
    
    
    
    
    
    (902,657
    )Premiums paid on officers life insurance policies
    
    
    (56,000
    )
    
    
    
    
    
    
    
    
    
    
    (56,000
    )Release of restricted cash held in escrow
    
    
    3,470,700
    
    
    
    
    
    
    
    
    
    
    
    3,470,700Purchase of held to maturity investments
    
    
    (150,000
    )
    
    
    
    
    
    
    
    
    
    
    (150,000
    )Additions to income-producing properties
    
    
    (189,831
    )
    
    
    49,458
    
    
    
    140,373
    
    
    
    Additions to property and equipment
    
    
    (166,166
    )
    
    
    
    
    
    
    (140,373
    )
    
    
    (306,539
    )Additions to intangible assets
    
    
    (358,160
    )
    
    
    29,911
    
    
    
    
    
    
    
    (328,249
    )Net cash provided by investing activities
    
    
    1,647,886
    
    
    
    79,369
    
    
    
    
    
    
    
    1,727,255Cash flows from financing activities:Mortgage repayments
    
    
    (321,091
    )
    
    
    217,708
    
    
    
    
    
    
    
    (103,383
    )Debt repayments
    
    
    (280,875
    )
    
    
    
    
    
    
    
    
    
    
    (280,875
    )Repurchase of common stock
    
    
    (135,507
    )
    
    
    
    
    
    
    
    
    
    
    (135,507
    )Cash dividends paid to shareholders
    
    
    (501,259
    )
    
    
    
    
    
    
    
    
    
    
    (501,259
    )Net cash used in financing activities
    
    
    (1,238,732
    )
    
    
    217,708
    
    
    
    
    
    
    
    (1,021,024
    )DISCONTINUED OPERATIONS:Operating activities
    
    
    100,555
    
    
    
    969,244
    
    
    
    
    
    
    
    1,069,799Investing activities
    
    
    (109,538
    )
    
    
    (79,371
    )
    
    
    
    
    
    
    (188,909
    )Financing activities
    
    
    (31,041
    )
    
    
    (217,708
    )
    
    
    
    
    
    
    (248,749
    )Net cash (used in) provided by discontinued operations
    
    
    (40,024
    )
    
    
    672,165
    
    
    
    
    
    
    
    632,141Net decrease in cash and cash equivalents
    
    
    (3,561,821
    )
    
    
    
    
    
    
    
    
    
    
    (3,561,821
    )Cash at beginning of period
    
    
    8,382,947
    
    
    
    
    
    
    
    
    
    
    
    8,382,947Cash at end of period
    
    $
    4,821,126
    
    
    $
    
    
    
    $
    
    
    
    $
    4,821,126
 46




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##### Table of Contents



5. CONTRACTS IN PROGRESS
  2010
    
    2009Costs and earnings in excess of billings:Accumulated costs and earnings
    
    $
    4,030,255
    
    
    $
    2,129,684Amounts billed
    
    
    3,315,126
    
    
    
    1,720,734$
    715,129
    
    
    $
    408,950Billings in excess of costs and earnings:Amounts billed
    
    $
    5,149,164
    
    
    $
    2,574,827Accumulated costs and earnings
    
    
    5,096,064
    
    
    
    2,546,612$
    53,100
    
    
    $
    28,215
 6. PROPERTY AND EQUIPMENT
  Estimateduseful lives
    
    2010
    
    2009Land
    
    
    N/A
    
    
    $
    660,000
    
    
    $
    660,000Buildings and improvements
    
    3-39 years
    
    
    5,991,900
    
    
    
    5,845,791Equipment
    
    3-10 years
    
    
    1,296,278
    
    
    
    1,661,297Vehicles
    
    3-5 years
    
    
    344,562
    
    
    
    296,783$
    8,292,740
    
    
    $
    8,463,871Less  accumulated depreciation
    
    
    
    
    
    
    3,487,198
    
    
    
    3,521,742$
    4,805,542
    
    
    $
    4,942,129
  7. MORTGAGE NOTE PAYABLE AND LEASES
    47




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##### Table of Contents



Year ending April 30,
    
    Owned
    
    Leaseback2011
    
    $
    148,000
    
    
    $
    255,0002012
    
    
    148,000
    
    
    
    255,0002013
    
    
    148,000
    
    
    
    149,0002014
    
    
    21,000
    
    
    
    2015
    
    
    
    
    
    
    Thereafter
    
    
    
    
    
    
    Total
    
    $
    465,000
    
    
    $
    659,000
  Owned Income-ProducingProperties
    
    LeasebackMortgage Payments
    
    Center RentalYear ending April 30,
    
    Principal
    
    Interest
    
    Payments2011
    
    $
    120,591
    
    
    $
    323,490
    
    
    $
    105,2032012
    
    
    130,345
    
    
    
    313,799
    
    
    
    105,2032013
    
    
    3,977,651
    
    
    
    76,846
    
    
    
    61,3682014
    
    
    
    
    
    
    
    
    
    
    2015
    
    
    
    
    
    
    
    
    
    
    Thereafter
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    4,228,587
    
    
    $
    714,135
    
    
    $
    271,774
  Secured letter of credit
  48




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##### Table of Contents



8. OTHER LONG-TERM DEBT
  2010
    
    2009Note payable bearing interest at 4.5%; principal and interest
payments due in full at maturity; no maturity date; secured by
related life insurance policy
    
    $
    370,000
    
    
    $
    Note payable bearing interest at 4.5%; principal and interest
payments due in full at maturity; no maturity date; secured by
related life insurance policy
    
    
    200,000
    
    
    
    Note payable bearing interest at 6.0%; principal and interest
payments due in full at maturity in December 2011
    
    
    412,000
    
    
    
    Note payable, net of discount ($150,000 at April 30, 2010),
bearing interest at the prime rate plus 1.5% (4.75% at April 30,
2010); interest only payments due monthly; matures December
18, 2011; secured by all general assets of a Company subsidiary
    
    
    850,000
    
    
    
    850,000Note payable bearing interest at 6.8%; interest due annually on
December 31, beginning December 31, 2004, and principal
payments due annually in installments as defined in the
agreement commencing on December 19, 2008; matures on
December 19, 2010
    
    
    150,000
    
    
    
    235,000Note payable bearing interest at 8.0%; interest due quarterly on a
calendar year commencing on September 30, 2008, and principal
payments due in full at maturity on June 6, 2009
    
    
    
    
    
    
    100,000Total other long-term debt
    
    
    1,982,000
    
    
    
    1,185,000Less current maturities
    
    
    150,000
    
    
    
    185,000Total other long-term debt, less current maturities
    
    $
    1,832,000
    
    
    $
    1,000,000
  Fiscal Year Ending April 30,2011
    
    $
    150,0002012
    
    
    1,262,0002013
    
    
    2014
    
    
    2015
    
    
    Thereafter
    
    
    570,000Total
    
    $
    1,982,000
  49




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9. FAIR VALUE OF FINANCIAL INSTRUMENTS
  
    
    Level 1 Quoted prices in active markets for identical assets or liabilities.
    
    Level 2 Inputs other than quoted prices which are observable for an asset or
liability, either directly or indirectly, for substantially the full term of the financial
instrument.
    
    Level 3 Unobservable inputs for an asset or liability when little or no market data
is available.
      50




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10. INCOME TAXES
  Current
    
    Deferred
    
    TotalYear ended April 30, 2010Federal
    
    $
    
    
    
    $
    (1,486,321
    )
    
    $
    (1,486,321
    )State and local
    
    
    13,309
    
    
    
    (109,036
    )
    
    
    (95,727
    )$
    13,309
    
    
    $
    (1,595,357
    )
    
    $
    (1,582,048
    )Year ended April 30, 2009Federal
    
    $
    
    
    
    $
    (1,893,193
    )
    
    $
    (1,893,193
    )State and local
    
    
    
    
    
    
    364,568
    
    
    
    364,568$
    
    
    
    $
    (1,528,625
    )
    
    $
    (1,528,625
    )
  2010
    
    2009Computed expected benefit
    
    $
    (1,479,204
    )
    
    $
    (1,886,652
    )State and local income taxes
    
    
    (265,038
    )
    
    
    63,579Permanent items
    
    
    (8,803
    )
    
    
    (6,638
    )State net operating loss adjustment
    
    
    
    
    
    
    (127,775
    )Valuation Allowance
    
    
    170,238
    
    
    
    429,463Other
    
    
    759
    
    
    
    (602
    )$
    (1,582,048
    )
    
    $
    (1,528,625
    )
 51




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##### Table of Contents



2010
    
    2009Deferred income tax assets:Items not currently deductible for tax purposes:Net
operating loss carryforwards, federal and state, and credits (1)
    
    $
    3,898,970
    
    
    $
    3,088,066Valuation allowance
    
    
    (750,214
    )
    
    
    (665,561
    )Property and equipment, principally because of differences
in capitalized interest
    
    
    54,118
    
    
    
    53,981Capitalized costs
    
    
    38,116
    
    
    
    41,823Bad debt reserves
    
    
    30,005
    
    
    
    45,492Deferred compensation plan expenses
    
    
    369,423
    
    
    
    281,754Equity-based compensation expenses
    
    
    223,107
    
    
    
    152,283Compensated absences
    
    
    52,354
    
    
    
    46,048Other accrued expenses
    
    
    318,266
    
    
    
    393,241Other
    
    
    54,197
    
    
    
    90,816Gross deferred income tax assets
    
    
    4,288,342
    
    
    
    3,527,943Deferred income tax liabilities:Property and equipment, principally because of differences
in depreciation and capitalized interest
    
    
    (441,552
    )
    
    
    (581,060
    )Intangible assets, principally because of differences in amortization
    
    
    (870,182
    )
    
    
    (740,925
    )Gain on real estate sales structured as tax-deferred like-kind exchanges
    
    
    (1,363,186
    )
    
    
    (1,359,749
    )Other
    
    
    (92,954
    )
    
    
    (49,161
    )Gross deferred income tax liability
    
    
    (2,767,874
    )
    
    
    (2,730,895
    )Net deferred income tax asset of continuing operations
    
    $
    1,520,468
    
    
    $
    797,048Net deferred income tax liability of discontinued operations (Note 4)
    
    
    (2,921,667
    )
    
    
    (3,136,445
    )Total net deferred income tax liability
    
    $
    (1,401,199
    )
    
    $
    (2,339,397
    )
 
 (1)
    
    The federal NOL carryforwards and all significant state NOL carryforwards expire
between the fiscal years 2024 and 2030.    11. 401(K) PLAN
  52




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12. SHAREHOLDERS EQUITY
      53




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13. NET (LOSS) EARNINGS PER SHARE
   For the year Ended April 30, 2010Earnings (loss)
    
    Shares
    
    Per Share AmountBasic EPS  loss per share from continuing operations
    
    $
    (2,768,553
    )
    
    
    3,685,834
    
    
    $
    (0.75
    )Basic EPS  earnings per share from discontinued operations
    
    
    883,274
    
    
    
    3,685,834
    
    
    
    0.24Effect of dilutive securities
    
    
    
    
    
    
    
    
    
    
    Diluted EPS  loss per share
    
    $
    (1,885,279
    )
    
    
    3,685,834
    
    
    $
    (0.51
    )
 For the Year Ended April 30, 2009Loss
    
    Shares
    
    Per Share AmountBasic EPS  loss per share from continuing operations
    
    $
    (4,020,352
    )
    
    
    3,716,700
    
    
    $
    (1.08
    )Basic EPS  loss per share from discontinued operations
    
    
    (996,561
    )
    
    
    3,716,700
    
    
    
    (0.27
    )Effect of dilutive securities
    
    
    
    
    
    
    
    
    
    
    Diluted EPS  loss per share
    
    $
    (5,016,913
    )
    
    
    3,716,700
    
    
    $
    (1.35
    )
 14. SEGMENT REPORTING
 Segment Reporting
 ® ®
 54




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##### Table of Contents



2010
    
    2009Customer 1
    
    
    27
    %
    
    
    16
    %
   55




---



##### Table of Contents



For the Year EndedApril 30, 2010
    
    BPE
    
    Corporate (1)
    
    Eliminations
    
    ConsolidatedRevenues from unaffiliated customersBPE Segment services and products:Energy savings projects
    
    $
    11,051,059
    
    
    
    
    
    
    
    
    
    
    $
    11,051,059Lighting products
    
    
    1,932,521
    
    
    
    
    
    
    
    
    
    
    
    1,932,521Energy management services
    
    
    1,801,271
    
    
    
    
    
    
    
    
    
    
    
    1,801,271Fifth fuel management services
    
    
    28,000
    
    
    
    
    
    
    
    
    
    
    
    28,000Productivity software
    
    
    3,358,685
    
    
    
    
    
    
    
    
    
    
    
    3,358,685Total revenues from unaffiliated customers
    
    $
    18,171,536
    
    
    $
    389,994
    
    
    $
    
    
    
    $
    18,561,530Intersegment revenue
    
    
    223,799
    
    
    
    301,702
    
    
    
    (525,501
    )
    
    
    Total revenues from continuing
operations
    
    $
    18,395,335
    
    
    $
    691,696
    
    
    $
    (525,501
    )
    
    $
    18,561,530Loss from continuing
operations before income taxes
    
    $
    (998,225
    )
    
    $
    (3,279,661
    )
    
    $
    (72,715
    )
    
    $
    (4,350,601
    )Segment assets
    
    $
    14,715,108
    
    
    $
    43,535,833
    
    
    $
    (17,298,669
    )
    
    $
    40,952,272Goodwill
    
    $
    6,354,002
    
    
    $
    
    
    
    $
    
    
    
    $
    6,354,002Interest expenses
    
    $
    82,044
    
    
    $
    339,393
    
    
    $
    (19,333
    )
    
    $
    402,104Depreciation and amortization
    
    $
    702,424
    
    
    $
    282,750
    
    
    $
    
    
    
    $
    985,174Capital expenditures (2)
    
    $
    93,270
    
    
    $
    163,925
    
    
    $
    
    
    
    $
    257,195
 For the Year EndedApril 30, 2009
    
    BPE
    
    Corporate (1)
    
    Eliminations
    
    ConsolidatedRevenues from unaffiliated customersBPE Segment services and products:Energy savings projects
    
    $
    5,533,925
    
    
    
    
    
    
    
    
    
    
    $
    5,533,925Lighting products
    
    
    1,664,855
    
    
    
    
    
    
    
    
    
    
    
    1,664,855Energy management services
    
    
    2,319,433
    
    
    
    
    
    
    
    
    
    
    
    2,319,433Fifth fuel management services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Productivity software
    
    
    3,674,097
    
    
    
    
    
    
    
    
    
    
    
    3,674,097Total revenues from unaffiliated customers
    
    $
    13,192,310
    
    
    $
    440,628
    
    
    $
    
    
    
    $
    13,632,938Intersegment revenue
    
    
    20,362
    
    
    
    303,317
    
    
    
    (323,679
    )
    
    
    Total revenues from continuing
operations
    
    $
    13,212,672
    
    
    $
    743,945
    
    
    $
    (323,679
    )
    
    $
    13,632,938Loss from continuing
operations before income taxes
    
    $
    (2,310,134
    )
    
    $
    (3,224,281
    )
    
    $
    (14,562
    )
    
    $
    (5,548,977
    )Segment assets
    
    $
    14,118,447
    
    
    $
    49,420,882
    
    
    $
    (19,622,733
    )
    
    $
    43,916,596Goodwill
    
    $
    6,354,002
    
    
    $
    
    
    
    $
    
    
    
    $
    6,354,002Interest expenses
    
    $
    93,717
    
    
    $
    348,536
    
    
    $
    (29,812
    )
    
    $
    412,441Depreciation and amortization
    
    $
    822,459
    
    
    $
    246,342
    
    
    $
    
    
    
    $
    1,068,801Capital expenditures (2)
    
    $
    55,306
    
    
    $
    251,233
    
    
    $
    
    
    
    $
    306,539
 
 (1)
    
    The Corporate net loss in each period is derived from corporate headquarters
activities, which consist primarily of the following: rental revenues from tenants
in the Companys corporate headquarters building and related rental and operating
costs, salaries and benefits of Corporate Headquarters executive officers and staff,
equity-based compensation expenses, depreciation and amortization expenses, and
costs related to the Companys status as a publicly-held company, which include,
among other items, legal fees, non-employee directors fees, consulting expenses,
investor relations expenses, corporate audit and tax fees, Nasdaq listing fees, and
other Securities & Exchange Commission (SEC) and Sarbanes-Oxley compliance and
financial reporting costs. All relevant costs related to the business operations of
the Companys BPE Segment are either paid directly by BPE or are allocated to BPE by
the Corporate Headquarters. The allocation method is dependent on the nature of each
expense item. Allocated expenses include, among other items, accounting services, information technology
services, insurance costs, and audit and tax preparation fees. 56




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(2)
    
    Includes property and equipment expenditures only. 15. ACQUISITIONS
 Fiscal 2010
  Fiscal 2009
    Assets andLiabilitiesAcquiredfrom Seller
    
    
    Estimated LifeCurrent assets
    
    $
    322,514Property, furniture and equipment, net
    
    
    58,699
    
    
    Various (3-5)Trade name
    
    
    61,299
    
    
    15 yearsNon-compete agreements
    
    
    63,323
    
    
    2 yearsCustomer relationships
    
    
    186,632
    
    
    5 yearsGoodwill
    
    
    895,285
    
    
    IndefiniteTotal assets acquired
    
    $
    1,587,752Current liabilities
    
    
    (483,937
    )Long-term liabilities
    
    
    (100,000
    )Net assets acquired
    
    $
    1,003,815
 57




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##### Table of Contents



Fiscal Year EndedApril 30, 2009Revenues
    
    $
    13,831Loss from continuing operations
    
    $
    (4,022
    )Loss from discontinued operations
    
    $
    (997
    )Net loss
    
    $
    (5,018
    )Loss per share from continuing operations  basic and diluted
    
    $
    (1.08
    )Loss per share from discontinued operations  basic and diluted
    
    $
    (0.27
    )Net loss per share  basic and diluted
    
    $
    (1.35
    )
 58




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16. GOODWILL AND OTHER INTANGIBLE ASSETS
  April 30, 2010Gross Carrying
    
    
    AccumulatedAmount
    
    
    AmortizationIntangible assets, subject to amortization:BPE proprietary technology solutions
    
    $
    4,096,802
    
    
    $
    2,827,071Acquired computer software
    
    
    676,837
    
    
    
    493,885Real estate lease costs
    
    
    49,170
    
    
    
    19,459Customer relationships
    
    
    404,632
    
    
    
    286,433Deferred loan costs
    
    
    122,686
    
    
    
    95,082Non-compete agreements
    
    
    63,323
    
    
    
    60,684Tradename
    
    
    61,299
    
    
    
    7,834Other
    
    
    44,882
    
    
    
    42,016$
    5,519,631
    
    
    $
    3,832,464Intangible assets and goodwill, not subject to amortization:Trademark
    
    $
    708,707Goodwill
    
    $
    6,354,002
 April 30, 2009Gross Carrying
    
    
    AccumulatedAmount
    
    
    AmortizationIntangible assets, subject to amortization:BPE proprietary technology solutions
    
    $
    3,689,695
    
    
    $
    2,340,980Acquired computer software
    
    
    466,589
    
    
    
    458,883Real estate lease costs
    
    
    49,170
    
    
    
    9,972Customer relationships
    
    
    404,632
    
    
    
    252,216Deferred loan costs
    
    
    122,686
    
    
    
    82,813Non-compete agreements
    
    
    63,323
    
    
    
    29,023Tradename
    
    
    61,299
    
    
    
    3,746Other
    
    
    45,844
    
    
    
    39,149$
    4,903,238
    
    
    $
    3,216,782Intangible assets and goodwill, not subject to amortization:Trademark
    
    $
    708,707Goodwill
    
    $
    6,354,002
 Aggregate amortization expense for all amortizable intangible assets:For the year ended April 30, 2010
    
    $
    594,770For the year ended April 30, 2009
    
    
    688,025
 Estimated future amortization expenses for all amortized intangible assets for the fiscal years ended:2011
    
    $
    589,6792012
    
    
    450,6742013
    
    
    302,6272014
    
    
    210,2172015
    
    
    93,075Thereafter
    
    
    40,895$
    1,687,167
 59




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##### Table of Contents



17. RELATED PARTIES
  18. COMMITMENTS AND CONTINGENCIES
  19. RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS
 Accounting for Income Taxes
   60




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As of and for the Year Ended April 30, 2010As Recast forDiscontinuedOperations andSegmentChange
(Note 4)
    
    Adjustments
    
    As RestatedConsolidated balance sheet accounts impacted by
restatement:Deferred income taxes
    
    $
    401,215
    
    
    $
    (41,118
    )
    
    $
    360,097Total current assets
    
    
    8,766,908
    
    
    
    (41,118
    )
    
    
    8,725,790Deferred income taxes (non-current)
    
    
    1,718,954
    
    
    
    (558,583
    )
    
    
    1,160,371Total assets
    
    
    41,551,973
    
    
    
    (599,701
    )
    
    
    40,952,272Retained earnings
    
    
    6,669,330
    
    
    
    (599,701
    )
    
    
    6,069,629Total shareholders equity
    
    
    15,789,479
    
    
    
    (599,701
    )
    
    
    15,189,778Total liabilities and shareholders equity
    
    
    41,551,973
    
    
    
    (599,701
    )
    
    
    40,952,272Consolidated statement of operations accounts impacted by restatement:Income tax expense (benefit)  deferred
    
    $
    (1,765,595
    )
    
    $
    170,238
    
    
    $
    (1,595,357
    )Total income tax expense (benefit)
    
    
    (1,752,286
    )
    
    
    170,238
    
    
    
    (1,582,048
    )Loss from continuing operations
    
    
    (2,598,315
    )
    
    
    (170,238
    )
    
    
    (2,768,553
    )Net loss
    
    
    (1,715,041
    )
    
    
    (170,238
    )
    
    
    (1,885,279
    )Net loss per share from continuing operations
    
    $
    (0.70
    )
    
    $
    (0.05
    )
    
    $
    (0.75
    )Net earnings (loss) per share from discontinued operations
    
    
    0.24
    
    
    
    
    
    
    
    0.24Net loss per share  basic and diluted
    
    
    (0.46
    )
    
    
    (0.05
    )
    
    
    (0.51
    )Consolidated statement of cash flows accounts impacted by restatement:Net loss
     
$
(1,715,041
)
     
$
(170,238
)
     
$
(1,885,279
)Deferred tax benefit
     
     
(1,791,668
)
     
     
170,238
     
     
     
(1,621,430
)
 As of and for the Year Ended April 30, 2009As Recast forDiscontinuedOperations andSegmentChange 
(Note 4)
    
    Adjustments
    
    As RestatedConsolidated balance sheet accounts impacted by
restatement:Deferred income taxes
    
    $
    525,108
    
    
    $
    (57,061
    )
    
    $
    468,047Total current assets
    
    
    10,602,124
    
    
    
    (57,061
    )
    
    
    10,545,063Deferred income taxes (non-current)
    
    
    701,403
    
    
    
    (372,402
    )
    
    
    329,001Total assets
    
    
    44,346,059
    
    
    
    (429,463
    )
    
    
    43,916,596Retained earnings
    
    
    8,569,451
    
    
    
    (429,463
    )
    
    
    8,139,988Total shareholders equity
    
    
    17,538,530
    
    
    
    (429,463
    )
    
    
    17,109,067Total liabilities and shareholders equity
    
    
    44,346,059
    
    
    
    (429,463
    )
    
    
    43,916,596Consolidated statement of operations accounts impacted by restatement:Income tax expense (benefit)  deferred
    
    $
    (1,958,088
    )
    
    $
    429,463
    
    
    $
    (1,528,625
    )Total income tax expense (benefit)
    
    
    (1,958,088
    )
    
    
    429,463
    
    
    
    (1,528,625
    )Loss from continuing operations
    
    
    (3,590,889
    )
    
    
    (429,463
    )
    
    
    (4,020,352
    )Net loss
    
    
    (4,587,450
    )
    
    
    (429,463
    )
    
    
    (5,016,913
    )Net loss per share from continuing operations
    
    $
    (0.96
    )
    
    $
    (0.12
    )
    
    $
    (1.08
    )Net loss per share from discontinued operations
    
    
    (0.27
    )
    
    
    
    
    
    
    (0.27
    )Net loss per share  basic and diluted
    
    
    (1.23
    )
    
    
    (0.12
    )
    
    
    (1.35
    )Consolidated statement of cash flows accounts impacted by restatement:Net loss
     
$
(4,587,450
)
     
$
(429,463
)
     
$
(5,016,913
)Deferred tax benefit
     
     
(2,001,572
)
     
     
429,463

     
     
(1,572,109
)
  61




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20. SUBSEQUENT EVENTS
  
    
    approximately $6.9 million for assumption of the mortgage note;
    
    approximately $0.5 million for funding of repair escrows; and
    
    approximately $0.6 million for closing costs and prorations.
 ITEM 9A. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
   Changes in Internal Control Over Financial Reporting
  MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
    62




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##### Table of Contents



Accounting for Income Taxes
 
    
    develop and implement additional procedures to increase the level of review,
evaluation and validation of the Companys valuation of deferred
tax assets; and
    
    increase the level of knowledge among Company employees in the area of
accounting for income taxes.
   63




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PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (A)
 
 
  Exhibit No.
    
    Exhibit Title3.1
    
    
    Amended and Restated Articles of Incorporation of Servidyne, Inc., dated September
22, 2008 (included as Exhibit 3.1 to the Companys Form 8-K filed with the SEC on
September 25, 2008 and incorporated herein by reference).3.2
    
    
    Amended and Restated Bylaws of Servidyne, Inc., dated November 28, 2007 (included as
Exhibit 3(b) to the Companys Form 8-K filed with the SEC on November 30, 2007 and
incorporated herein by reference).10.1
    
    
    Directors Deferred Compensation Plan (included with the Companys Form 10-K for the
year ended April 30, 1991, File No. 0-10146, and incorporated herein by reference).#10.2
    
    
    2000 Stock Award Plan (included as Exhibit 4 to the Companys Form S-8 filed with
the SEC on September 29, 2000, File No. 333-46920, and incorporated herein by
reference).#10.3
    
    
    Alan R. Abrams Split Dollar Life Insurance Agreement dated May 31, 2001 (included as
Exhibit 10(i) to the Companys Form 10-K for the year ended April 30, 2001 filed
with the SEC on July 18, 2001, File No. 0-10146, and incorporated herein by
reference).#10.4
    
    
    J. Andrew Abrams Split Dollar Life Insurance Agreement dated May 31, 2001 (included
as Exhibit 10(j) to the Companys Form 10-K for the year ended April 30, 2001 filed
with the SEC on July 18, 2001, File No. 0-10146, and incorporated herein by
reference).#10.5
    
    
    Summary Description of Annual Incentive Bonus Plan (included as Exhibit 10(i) to the
Companys Form 10-Q for the quarter ended October 31, 2005 filed with the SEC on
December 15, 2005, File No. 0-10146, and incorporated herein by reference).#10.6
    
    
    Form of Stock Appreciation Rights Agreement (included as Exhibit 10(j) to the
Companys Form 10-K for the year ended April 30, 2006 filed with the SEC on July 31,
2006 and incorporated herein by reference).#10.7
    
    
    Form of Related Party Promissory Note (included as Exhibit 10.1 to the Companys
Form 10-Q for the quarter ended October 31, 2010 filed with the SEC on December 15,
2010).21.1
    
    
    List of the Companys Subsidiaries. *23.1
    
    
    Consent of Deloitte & Touche LLP.31.1
    
    
    Certification of the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.




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##### Table of Contents



Exhibit No.
    
    Exhibit Title31.2
    
    
    Certification of the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of the CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of the CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 #
    
    Management compensatory plan or arrangement.*
    
    Filed with the original filing of this annual report. (B)




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##### Table of Contents



SERVIDYNE, INC.Dated: June 2, 2011
    By:
    /s/ Alan R. AbramsAlan R. AbramsChief Executive OfficerDated: June 2, 2011
    
    /s/ Rick A. PaternostroRick A. PaternostroChief Financial Officer