##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q/A
 (Amendment
No. 1)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended June 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number 001-33887
 Orion Energy Systems, Inc.
 (Exact name of Registrant as specified in its charter)
 Wisconsin
    
    39-1847269(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification number)2210 Woodland Drive, Manitowoc, Wisconsin
    
    54220(Address of principal executive offices)
    
    (Zip code)
 Registrants telephone number, including area code: (920) 892-9340
 Yes þ No o
 Yes o No o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 Yes o No þ




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##### Table of Contents



EXPLANATORY NOTE
 As used herein, unless otherwise expressly stated or the context otherwise requires, all
references to Orion, we, us, our, Company and similar references are to Orion Energy
Systems, Inc. and its consolidated subsidiaries.
    
 
 
     2




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##### 



Orion Energy Systems, Inc.
 Quarterly Report On Form 10-Q/A
 For The Quarter Ended June 30, 2009
 Table Of Contents
 Page(s)PART I FINANCIAL INFORMATIONITEM 1. Financial Statements (unaudited)
    
    
    4Condensed Consolidated Balance Sheets as of March 31, 2009 and June 30, 2009
    
    
    4Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2008 and 2009
    
    
    5Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2008 and 2009
    
    
    6Notes to the Condensed Consolidated Financial Statements
    
    
    7ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    30ITEM 4. Controls and Procedures
    
    
    30PART II OTHER INFORMATION
    
    
    31ITEM 1. Legal Proceedings
    
    
    31ITEM 1A. Risk Factors
    
    
    31ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    31ITEM 5. Other Information
    
    
    32ITEM 6. Exhibits
    
    
    33SIGNATURES
    
    
    34EX-31.1EX-31.2EX-32.1EX-32.2
   3




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1:
    
    Financial Statements
 ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
 (in thousands, except share and per share amounts)
 March 31,
    
    
    June 30,2009
    
    
    2009(As Restated)AssetsCash and cash equivalents
    
    $
    36,163
    
    
    $
    26,861Short-term investments
    
    
    6,490
    
    
    
    7,250Accounts receivable, net of allowances of $222 and $245
    
    
    11,572
    
    
    
    11,798Inventories, net
    
    
    20,232
    
    
    
    20,990Deferred tax assets
    
    
    548
    
    
    
    1,150Prepaid expenses and other current assets
    
    
    3,369
    
    
    
    2,304Total current assets
    
    
    78,374
    
    
    
    70,353Property and equipment, net
    
    
    22,999
    
    
    
    23,799Patents and licenses, net
    
    
    1,404
    
    
    
    1,390Deferred tax assets
    
    
    593
    
    
    
    1,194Long-term accounts receivable
    
    
    
    
    
    
    1,304Other long-term assets
    
    
    352
    
    
    
    351Total assets
    
    $
    103,722
    
    
    $
    98,391Liabilities and Shareholders EquityAccounts payable
    
    $
    7,817
    
    
    $
    4,385Accrued expenses
    
    
    2,315
    
    
    
    2,050Current maturities of long-term debt
    
    
    815
    
    
    
    755Total current liabilities
    
    
    10,947
    
    
    
    7,190Long-term debt, less current maturities
    
    
    3,647
    
    
    
    3,493Other long-term liabilities
    
    
    433
    
    
    
    463Total liabilities
    
    
    15,027
    
    
    
    11,146Commitments and contingencies (See Note F)Shareholders equity:Preferred stock, $0.01 par value: Shares authorized: 30,000,000 shares at March 31, 2009
and June 30, 2009; no shares issued and outstanding at March 31, 2009 and June 30, 2009
    
    
    
    
    
    
    Common stock, no par value: Shares authorized: 200,000,000 at March 31, 2009 and June
30, 2009; shares issued: 28,875,879 and 29,088,953 at March 31, 2009 and June 30, 2009;
shares outstanding: 21,528,783 and 21,707,843 at March 31, 2009 and June 30, 2009
    
    
    
    
    
    
    Additional paid-in capital
    
    
    118,907
    
    
    
    119,598Treasury stock: 7,347,096 and 7,381,110 common shares at March 31, 2009 and June 30, 2009
    
    
    (31,536
    )
    
    
    (31,686
    )Accumulated other comprehensive (loss) income
    
    
    (32
    )
    
    
    58Retained earnings (deficit)
    
    
    1,356
    
    
    
    (725
    )Total shareholders equity
    
    
    88,695
    
    
    
    87,245Total liabilities and shareholders equity
    
    $
    103,722
    
    
    $
    98,391
   4




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##### Table of Contents



ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except share and per share amounts)
 Three Months Ended June 30,2008
    
    
    2009(As Restated)Product revenue
    
    $
    12,889
    
    
    $
    11,924Service revenue
    
    
    3,217
    
    
    
    1,951Total revenue
    
    
    16,106
    
    
    
    13,875Cost of product revenue
    
    
    8,613
    
    
    
    8,748Cost of service revenue
    
    
    2,296
    
    
    
    1,255Total cost of revenue
    
    
    10,909
    
    
    
    10,003Gross profit
    
    
    5,197
    
    
    
    3,872Operating expenses:General and administrative
    
    
    2,615
    
    
    
    3,163Sales and marketing
    
    
    2,652
    
    
    
    3,152Research and development
    
    
    418
    
    
    
    419Total operating expenses
    
    
    5,685
    
    
    
    6,734Loss from operations
    
    
    (488
    )
    
    
    (2,862
    )Other income (expense):Interest expense
    
    
    (67
    )
    
    
    (54
    )Dividend and interest income
    
    
    617
    
    
    
    236Total other income (expense)
    
    
    550
    
    
    
    182Income (loss) before income tax
    
    
    62
    
    
    
    (2,680
    )Income tax expense (benefit)
    
    
    28
    
    
    
    (600
    )Net income (loss)
    
    $
    34
    
    
    $
    (2,080
    )Basic net income (loss) per share attributable to common shareholders
    
    $
    0.00
    
    
    $
    (0.10
    )Weighted-average common shares outstanding
    
    
    27,038,353
    
    
    
    21,588,364Diluted net income (loss) per share attributable to common shareholders
    
    $
    0.00
    
    
    $
    (0.10
    )Weighted-average common shares and share equivalents outstanding
    
    
    30,015,198
    
    
    
    21,588,364
   5




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##### Table of Contents



ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 Three Months Ended June 30,2008
    
    
    2009(As Restated)Operating activitiesNet income (loss)
    
    $
    34
    
    
    $
    (2,080
    )Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    401
    
    
    
    679Stock-based compensation expense
    
    
    458
    
    
    
    320Change in allowance and notes
    
    
    
    
    
    
    22Deferred income tax benefit
    
    
    (242
    )
    
    
    (1,203
    )Other
    
    
    55
    
    
    
    5Changes in operating assets and liabilities:Accounts receivable
    
    
    5,212
    
    
    
    (248
    )Inventories
    
    
    (3,163
    )
    
    
    (758
    )Prepaid
expenses and other assets and liabilities
    
    
    (679
    )
    
    
    (209
    )Accounts payable
    
    
    (676
    )
    
    
    (3,432
    )Accrued expenses
    
    
    (451
    )
    
    
    (265
    )Net cash provided by (used in) operating activities
    
    
    949
    
    
    
    (7,169
    )Investing activitiesPurchase of property and equipment
    
    
    (3,045
    )
    
    
    (1,452
    )Purchase of short-term investments
    
    
    (22,663
    )
    
    
    (669
    )Additions to patents and licenses
    
    
    (1,024
    )
    
    
    (12
    )Proceeds from sales of long term assets
    
    
    1,155
    
    
    
    Gain on sale of long term investment
    
    
    (361
    )
    
    
    Note receivable from sale of long term investment
    
    
    (297
    )
    
    
    Net cash used in investing activities
    
    
    (26,235
    )
    
    
    (2,133
    )Financing activitiesPayment of long-term debt
    
    
    (198
    )
    
    
    (215
    )Repurchase of common stock into treasury
    
    
    
    
    
    
    (150
    )Excess benefit for deferred taxes on stock-based compensation
    
    
    819
    
    
    
    Deferred financing costs and offering costs
    
    
    7
    
    
    
    Proceeds from issuance of common stock
    
    
    561
    
    
    
    365Net cash provided by financing activities
    
    
    1,189
    
    
    
    Net decrease in cash and cash equivalents
    
    
    (24,097
    )
    
    
    (9,302
    )Cash and cash equivalents at beginning of period
    
    
    78,312
    
    
    
    36,163Cash and cash equivalents at end of period
    
    $
    54,215
    
    
    $
    26,861Supplemental cash flow information:Cash paid for interest
    
    $
    94
    
    
    $
    73Cash paid for income taxes
    
    
    83
    
    
    
    30Supplemental disclosure of non-cash investing and financing
activitiesLong term note receivable received on sale of investment
    
    $
    297
    
    
    
    
   6




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##### Table of Contents



ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
 
 UNAUDITED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 NOTE A  DESCRIPTION OF BUSINESS
 Organization
  NOTE B  RESTATEMENT OF FINANCIAL STATEMENTS
      Consolidated Balance Sheets as of June 30, 2009As previouslyreported
    
    
    Adjustments
    
    
    As RestatedAssets:Accounts receivable
    
    $
    11,474
    
    
    $
    324
    
    
    $
    11,798Deferred tax assets, current
    
    
    534
    
    
    
    616
    
    
    
    1,150Prepaid expenses and other current assets
    
    
    2,508
    
    
    
    (204
    )
    
    
    2,304Total current assets
    
    
    69,617
    
    
    
    736
    
    
    
    70,353Property, plant and equipment
    
    
    24,652
    
    
    
    (853
    )
    
    
    23,799Deferred tax assets, long-term
    
    
    1,603
    
    
    
    (409
    )
    
    
    1,194Accounts receivable, long-term
    
    
    
    
    
    
    1,304
    
    
    
    1,304Total assets
    
    
    97,613
    
    
    
    778
    
    
    
    98,391Liabilities and Shareholders Equity:Accrued expenses
    
    
    1,965
    
    
    
    85
    
    
    
    2,050Shareholders equity:Retained deficit
    
    
    (1,418
    )
    
    
    693
    
    
    
    (725
    )
  7




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##### Table of Contents



Consolidated Statements of OperationsThree months ended June 30, 2009As previouslyreported
    
    
    Adjustments
    
    
    As RestatedProduct revenue
    
    $
    10,677
    
    
    $
    1,247
    
    
    $
    11,924Cost of product revenue
    
    
    7,872
    
    
    
    876
    
    
    
    8,748Interest expense
    
    
    (56
    )
    
    
    2
    
    
    
    (54
    )Dividend and interest income
    
    
    123
    
    
    
    113
    
    
    
    236Income tax benefit
    
    
    (393
    )
    
    
    (207
    )
    
    
    (600
    )Net (loss) income
    
    
    (2,773
    )
    
    
    693
    
    
    
    (2,080
    )Net (loss) income per share attributable to common
shareholders  basic and diluted
    
    $
    (0.13
    )
    
    $
    0.03
    
    
    $
    (0.10
    )Weighted average common shares outstanding  basic and diluted
    
    
    21,588,364
    
    
    
    
    
    
    
    21,588,364
 Consolidated Statements of Cash FlowsThree months ended June 30, 2009As previouslyreported
    
    
    Adjustments
    
    
    As RestatedNet (loss) income
    
    $
    (2,773
    )
    
    $
    693
    
    
    $
    (2,080
    )Deferred income tax benefit
    
    
    (997
    )
    
    
    (206
    )
    
    
    (1,203
    )Accounts receivable
    
    
    98
    
    
    
    (346
    )
    
    
    (248
    )Prepaid
expenses and other assets and liabilities
    
    
    872
    
    
    
    (1,081
    )
    
    
    (209
    )Accrued expenses
    
    
    (331
    )
    
    
    66
    
    
    
    (265
    )Net cash used in operating activities
    
    
    (6,317
    )
    
    
    (852
    )
    
    
    (7,169
    )Purchase of property and equipment
    
    
    (1,795
    )
    
    
    343
    
    
    
    (1,452
    )Purchase of property and equipment held under
operating leases
    
    
    (509
    )
    
    
    509
    
    
    
    Net cash used in investing activities
    
    
    (2,985
    )
    
    
    852
    
    
    
    (2,133
    )
 NOTE C  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Principles of consolidation
  Basis of presentation
   8




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Use of estimates
  Cash and cash equivalents
  Short-term investments available for sale
  March 31, 2009Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    
    
    
    
    Cash and Cash
    
    
    Short TermCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value
    
    
    Equivalents
    
    
    InvestmentsMoney market funds
    
    $
    14,114
    
    
    $
    
    
    
    $
    
    
    
    $
    14,114
    
    
    $
    14,114
    
    
    $
    Bank certificate of deposit
    
    
    9,007
    
    
    
    
    
    
    
    
    
    
    
    9,007
    
    
    
    6,207
    
    
    
    2,800Commercial paper
    
    
    3,690
    
    
    
    
    
    
    
    
    
    
    
    3,690
    
    
    
    
    
    
    
    3,690Corporate obligations
    
    
    2,257
    
    
    
    
    
    
    
    (7
    )
    
    
    2,250
    
    
    
    2,250
    
    
    
    Government agency obligations
    
    
    12,412
    
    
    
    
    
    
    
    (25
    )
    
    
    12,387
    
    
    
    12,387
    
    
    
    Total
    
    $
    41,480
    
    
    $
    
    
    
    $
    (32
    )
    
    $
    41,448
    
    
    $
    34,958
    
    
    $
    6,490
 June 30, 2009Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    
    
    
    
    Cash and Cash
    
    
    Short TermCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value
    
    
    Equivalents
    
    
    InvestmentsMoney market funds
    
    $
    20,367
    
    
    $
    
    
    
    $
    
    
    
    $
    20,367
    
    
    $
    20,367
    
    
    $
    Bank certificate of deposit
    
    
    9,070
    
    
    
    
    
    
    
    
    
    
    
    9,070
    
    
    
    5,517
    
    
    
    3,553Commercial paper
    
    
    3,639
    
    
    
    58
    
    
    
    
    
    
    
    3,697
    
    
    
    
    
    
    
    3,697Total
    
    $
    33,076
    
    
    $
    58
    
    
    $
    
    
    
    $
    33,134
    
    
    $
    25,884
    
    
    $
    7,250
 Fair Value Measurements
 Level 1 
    
    Quoted prices in active markets for identical assets or liabilities.Level 2 
    
    Inputs other than Level 1 that are observable, either directly or indirectly, such
as quoted prices for similar assets or
liabilities; quoted prices in markets that are not active; or other inputs that are observable
or can be corroborated by observable market data for substantially the full term of the assets
or liabilities.Level 3 
    
    Unobservable inputs that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities.
  9




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Fair value of financial instruments
  Accounts receivable
   Fiscal 2010
    
    $
    41Fiscal 2011
    
    
    25Total gross receivable
    
    
    66Less: amount representing interest
    
    
    (5
    )Net contracts receivable
    
    $
    61
 Inventories
    10




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March 31,
    
    
    June 30,2009
    
    
    2009Raw materials and components
    
    $
    9,629
    
    
    $
    10,818Work in process
    
    
    1,753
    
    
    
    1,237Finished goods
    
    
    8,850
    
    
    
    8,935$
    20,232
    
    
    $
    20,990
 Property and Equipment
  March 31,
    
    
    June 30,2009
    
    
    2009(As Restated)Land and land improvements
    
    $
    822
    
    
    $
    1,386Buildings
    
    
    5,435
    
    
    
    13,798Furniture, fixtures and office equipment
    
    
    3,432
    
    
    
    3,868Plant equipment
    
    
    6,882
    
    
    
    7,054Construction in progress
    
    
    11,366
    
    
    
    3,21927,937
    
    
    
    29,325Less: accumulated depreciation and amortization
    
    
    (4,938
    )
    
    
    (5,526
    )Net property and equipment
    
    $
    22,999
    
    
    $
    23,799
  March 31,
    
    
    June 30,2009
    
    
    2009Equipment
    
    $
    1,104
    
    
    $
    1,104Less: accumulated amortization
    
    
    (477
    )
    
    
    (506
    )Net equipment
    
    $
    627
    
    
    $
    598
  Patents and Licenses
  Long-Term Receivables
  Investment
   11




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Other Long-Term Assets
  Accrued Expenses
    Three Months EndedJune 30,2008
    
    
    2009Beginning of period
    
    $
    69
    
    
    $
    55Provision to cost of revenue
    
    
    3
    
    
    
    10Charges
    
    
    (9
    )
    
    
    End of period
    
    $
    63
    
    
    $
    65
 Revenue Recognition
 Revenue Recognition
 
    
    persuasive evidence of an arrangement exists;
    
    delivery has occurred and title has passed to the customer;
    
    the sales price is fixed and determinable and no further obligation exists; and
    
    collectability is reasonably assured
  Revenue Arrangements With Multiple Deliverables
    12




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##### Table of Contents



March 31,
    
    
    June 30,2009
    
    
    2009Deferred revenue  current liability
    
    $
    103
    
    
    $
    116Deferred revenue  long term liability
    
    
    36
    
    
    
    64Total deferred revenue
    
    $
    139
    
    
    $
    180
 Income Taxes
 Accounting for Income Taxes Accounting for Uncertainty in Income Taxes  an Interpretation of FASB Statement No.
109.
  Three Months Ended
    
    
    Three Months EndedJune 30, 2008
    
    
    June 30, 2009Unrecognized tax benefits as of beginning of period
    
    $
    392
    
    
    $
    397Decreases relating to settlements with tax authorities
    
    
    (5
    )
    
    
    Additions based on tax positions related to the current period positions
    
    
    6
    
    
    
    1Unrecognized tax benefits as of end of period
    
    $
    393
    
    
    $
    398
   Three Months Ended
    
    
    Three Months EndedJune 30, 2008
    
    
    June 30, 2009(As Restated)Statutory federal tax rate
    
    
    34.0
    %
    
    
    (34.0
    )%State taxes, net
    
    
    5.1
    %
    
    
    2.6
    %Stock-based compensation expense
    
    
    3.0
    %
    
    
    5.0
    %Federal tax credit
    
    
    (1.5
    )%
    
    
    (3.5
    )%State tax credit
    
    
    (1.0
    )%
    
    
    (0.4
    )%Permanent items
    
    
    0.0
    %
    
    
    0.1
    %Change in valuation reserve
    
    
    0.0
    %
    
    
    5.1
    %Other, net
    
    
    (0.3
    )%
    
    
    2.7
    %Effective income tax rate
    
    
    39.3
    %
    
    
    (22.4
    )%
  13




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Stock Option Plans
  Three Months Ended June 30,2008
    
    
    2009Weighted average expected term
    
    6.0 years
    
    5.3 yearsRisk-free interest rate
    
    
    3.24
    %
    
    
    2.23
    %Expected volatility
    
    
    60
    %
    
    
    60
    %Expected forfeiture rate
    
    
    2
    %
    
    
    3
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
 Net Income (Loss) per Common Share
   Three Months Ended June 30,(in thousands except share amounts)
    
    2008
    
    
    2009(As Restated)Numerator:Numerator for diluted net income (loss) per common share
    
    $
    34
    
    
    $
    (2,080
    )Denominator:Weighted-average common shares outstanding
    
    
    27,038,353
    
    
    
    21,588,364Weighted-average effect of assumed conversion of stock
options and warrants
    
    
    2,976,845
    
    
    
    869,552Weighted-average common shares and common share
equivalents outstanding
    
    
    30,015,198
    
    
    
    22,457,916
 Concentration of Credit Risk and Other Risks and Uncertainties
    14




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Segment Information
 Disclosures about Segments of an Enterprise and Related Information
  Recent Accounting Pronouncements
 Determination of the Useful Life of Intangible Assets Goodwill and Other
Intangible Assets
 Interim Disclosures
about Fair Value of Financial Instruments. Disclosures about Fair Value of Financial Instruments,
 Recognition and
Presentation of Other-Than Temporary Impairments
 Determining Fair Value When the Volume and Level
of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions
That Are not Orderly Fair Value Measurements
 Subsequent Events
  15




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##### Table of Contents



Accounting for Transfers of Financial
Assets  an amendment of FASB Statement No. 140.
 Amendments to FASB Interpretation No.
46(R).
 NOTE D  RELATED PARTY TRANSACTIONS
     NOTE E  LONG-TERM DEBT
  March 31,
    
    
    June 30,2009
    
    
    2009Term note
    
    $
    1,235
    
    
    $
    1,182First mortgage note payable
    
    
    990
    
    
    
    973Debenture payable
    
    
    885
    
    
    
    876Lease obligations
    
    
    227
    
    
    
    158Other long-term debt
    
    
    1,125
    
    
    
    1,059Total long-term debt
    
    
    4,462
    
    
    
    4,248Less current maturities
    
    
    (815
    )
    
    
    (755
    )Long-term debt, less current maturities
    
    $
    3,647
    
    
    $
    3,493
  16




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##### Table of Contents



Revolving Credit Agreement
     NOTE F  COMMITMENTS AND CONTINGENCIES
 Operating Leases and Purchase Commitments
  Litigation
     17




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##### Table of Contents



NOTE G  SHAREHOLDERS EQUITY
 Share Repurchase
Program
  Shareholder Rights Plan
     NOTE H  STOCK OPTIONS AND WARRANTS
   18




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##### Table of Contents



Three months ended June 30,2008
    
    
    2009Cost of product revenue
    
    $
    65
    
    
    $
    59General and administrative
    
    
    254
    
    
    
    122Sales and marketing
    
    
    126
    
    
    
    129Research and development
    
    
    13
    
    
    
    10Total
    
    $
    458
    
    
    $
    320
   Options OutstandingWeightedWeighted
    
    
    AverageShares
    
    
    
    
    
    
    Average
    
    
    Remaining
    
    
    AggregateAvailable for
    
    
    Number
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicGrant
    
    
    of Shares
    
    
    Price
    
    
    Term (in years)
    
    
    valueBalance at March 31, 2009
    
    
    1,070,954
    
    
    
    3,680,945
    
    
    $
    3.40
    
    
    
    6.82Granted stock options
    
    
    (242,227
    )
    
    
    242,227
    
    
    
    3.74Granted shares
    
    
    (1,323
    )
    
    
    
    
    
    
    Forfeited
    
    
    56,600
    
    
    
    (56,600
    )
    
    
    7.33Exercised
    
    
    
    
    
    
    (190,565
    )
    
    
    1.66Balance at June 30, 2009
    
    
    884,004
    
    
    
    3,676,007
    
    
    $
    3.45
    
    
    
    6.88
    
    
    $
    4,429,024Exercisable at June 30, 2009
    
    
    
    
    
    
    1,713,655
    
    
    $
    2.49
    
    
    
    5.26
    
    
    $
    2,912,265
   Non-vested at March 31, 2009
    
    
    1,821,827Granted
    
    
    242,227Vested
    
    
    (45,102
    )Forfeited
    
    
    (56,600
    )Non-vested at June 30, 2009
    
    
    1,962,352
   WeightedAverageNumber of
    
    
    ExerciseShares
    
    
    PriceBalance at March 31, 2009
    
    
    488,504
    
    
    $
    2.31Issued
    
    
    
    
    
    
    Exercised
    
    
    (21,186
    )
    
    
    2.30Cancelled
    
    
    
    
    
    
    Balance at June 30, 2009
    
    
    467,318
    
    
    $
    2.31
  19




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##### Table of Contents



Number ofExercise Price
    
    
    
    
    Warrants
    
    
    Expiration$
    2.25
    
    
    
    
    
    38,980
    
    
    Fiscal 2014$
    2.30
    
    
    
    
    
    391,078
    
    
    Fiscal 2010$
    2.50
    
    
    
    
    
    37,260
    
    
    Fiscal 2011Total
    
    
    
    
    467,318
 NOTE I  SUBSEQUENT EVENTS
   20




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following discussion and analysis should be read in conjunction with our unaudited consolidated
financial statements and related notes, included elsewhere in this Quarterly Report on Form 10-Q/A.
The information below has been adjusted to reflect the impact of the restatement of our financial
results which is more fully described in Note B Restatement to the unaudited consolidated
financial statements contained in this Quarterly Report on Form 10-Q/A and under the paragraph
Restatement of Previously Issued Consolidated Financial Statements below and does not reflect any
subsequent information or events occurring after the Original Filing or to modify or update those
disclosures affected by subsequent events.
 Cautionary Note Regarding Forward-Looking Statements
 Any statements in this Quarterly Report on Form 10-Q/A about our expectations, beliefs, plans,
objectives, prospects, financial condition, assumptions or future events or performance are not
historical facts and are forward-looking statements as that term is defined under the federal
securities laws. These statements are often, but not always, made through the use of words or
phrases such as believe, anticipate, should, intend, plan, will, expects,
estimates, projects, positioned, strategy, outlook and similar words. You should read the
statements that contain these types of words carefully. Such forward-looking statements are subject
to a number of risks, uncertainties and other factors that could cause actual results to differ
materially from what is expressed or implied in such forward-looking statements. There may be
events in the future that we are not able to predict accurately or over which we have no control.
Potential risks and uncertainties include, but are not limited to, those discussed in Part I, Item
1A. Risk Factors in our 2009 Annual Report filed on Form 10-K for the year ended March 31, 2009
and elsewhere in this Quarterly Report. We urge you not to place undue reliance on these
forward-looking statements, which speak only as the date of this report. We do not undertake any
obligation to release publicly any revisions to such forward-looking statements to reflect events
or uncertainties after the date hereof or to reflect the occurrence of unanticipated events.
 Restatement of Previously Issued Consolidated Financial Statements
    
 
 
  21




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##### Table of Contents



Consolidated Balance Sheets as of June 30, 2009As previouslyreported
    
    
    Adjustments
    
    
    As RestatedAssets:Accounts receivable
    
    $
    11,474
    
    
    $
    324
    
    
    $
    11,798Deferred tax assets, current
    
    
    534
    
    
    
    616
    
    
    
    1,150Prepaid expenses and other current assets
    
    
    2,508
    
    
    
    (204
    )
    
    
    2,304Total current assets
    
    
    69,617
    
    
    
    736
    
    
    
    70,353Property and equipment, net
    
    
    24,652
    
    
    
    (853
    )
    
    
    23,799Deferred tax assets, long-term
    
    
    1,603
    
    
    
    (409
    )
    
    
    1,194Accounts receivable, long-term
    
    
    
    
    
    
    1,304
    
    
    
    1,304Total assets
    
    
    97,613
    
    
    
    778
    
    
    
    98,391Liabilities and Shareholders Equity:Accrued expenses
    
    
    1,965
    
    
    
    85
    
    
    
    2,050Shareholders equity:Retained deficit
    
    
    (1,418
    )
    
    
    693
    
    
    
    (725
    )
 Consolidated Statements of OperationsThree months ended June 30, 2009As previouslyreported
    
    
    Adjustments
    
    
    As RestatedProduct revenue
    
    $
    10,677
    
    
    $
    1,247
    
    
    $
    11,924Cost of product revenue
    
    
    7,872
    
    
    
    876
    
    
    
    8,748Interest expense
    
    
    (56
    )
    
    
    2
    
    
    
    (54
    )Dividend and interest income
    
    
    123
    
    
    
    113
    
    
    
    236Income tax benefit
    
    
    (393
    )
    
    
    (207
    )
    
    
    (600
    )Net (loss) income
    
    
    (2,773
    )
    
    
    693
    
    
    
    (2,080
    )Net (loss) income per share attributable to common
shareholders  basic and diluted
    
    $
    (0.13
    )
    
    $
    0.03
    
    
    $
    (0.10
    )Weighted average common shares outstanding  basic and diluted
    
    
    21,588,364
    
    
    
    
    
    
    
    21,588,364
 Consolidated Statements of Cash FlowsThree months ended June 30, 2009As previouslyreported
    
    
    Adjustments
    
    
    As RestatedNet (loss) income
    
    $
    (2,773
    )
    
    $
    693
    
    
    $
    (2,080
    )Deferred income tax benefit
    
    
    (997
    )
    
    
    (206
    )
    
    
    (1,203
    )Accounts receivable
    
    
    98
    
    
    
    (346
    )
    
    
    (248
    )Prepaid
expenses and other assets and liabilities
    
    
    872
    
    
    
    (1,081
    )
    
    
    (209
    )Accrued expenses
    
    
    (331
    )
    
    
    66
    
    
    
    (265
    )Net cash used in operating activities
    
    
    (6,317
    )
    
    
    (852
    )
    
    
    (7,169
    )Purchase of property and equipment
    
    
    (1,795
    )
    
    
    343
    
    
    
    (1,452
    )Purchase of property and equipment held under
operating leases
    
    
    (509
    )
    
    
    509
    
    
    
    Net cash used in investing activities
    
    
    (2,985
    )
    
    
    852
    
    
    
    (2,133
    )
   22




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##### Table of Contents



Overview
      Revenue and Expense Components
 Revenue.
   23




---



##### Table of Contents



Backlog.
 Cost of Revenue.
  24




---



##### Table of Contents



Gross Margin.
 Operating Expenses.
      Interest Expense.
 Dividend and Interest Income.
  25




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##### Table of Contents



Income Taxes.
  Results of Operations
  Three Months Ended June 30,2008
    
    
    2009(As Restated)
    
    
    (As Restated)% of
    
    
    (As Restated)
    
    
    % of
    
    
    %Amount
    
    
    Revenue
    
    
    Amount
    
    
    Revenue
    
    
    ChangeProduct revenue
    
    $
    12,889
    
    
    
    80.0
    %
    
    $
    11,924
    
    
    
    85.9
    %
    
    
    (7.5
    )%Service revenue
    
    
    3,217
    
    
    
    20.0
    %
    
    
    1,951
    
    
    
    14.1
    %
    
    
    (39.4
    )%Total revenue
    
    
    16,106
    
    
    
    100.0
    %
    
    
    13,875
    
    
    
    100.0
    %
    
    
    (13.9
    )%Cost of product revenue
    
    
    8,613
    
    
    
    53.5
    %
    
    
    8,748
    
    
    
    63.1
    %
    
    
    1.6
    %Cost of service revenue
    
    
    2,296
    
    
    
    14.3
    %
    
    
    1,255
    
    
    
    9.0
    %
    
    
    (45.3
    )%Total cost of revenue
    
    
    10,909
    
    
    
    67.8
    %
    
    
    10,003
    
    
    
    72.1
    %
    
    
    (8.3
    )%Gross profit
    
    
    5,197
    
    
    
    32.2
    %
    
    
    3,872
    
    
    
    27.9
    %
    
    
    (25.5
    )%General and administrative expenses
    
    
    2,615
    
    
    
    16.2
    %
    
    
    3,163
    
    
    
    22.8
    %
    
    
    21.0
    %Sales and marketing expenses
    
    
    2,652
    
    
    
    16.4
    %
    
    
    3,152
    
    
    
    22.7
    %
    
    
    18.9
    %Research and development expenses
    
    
    418
    
    
    
    2.6
    %
    
    
    419
    
    
    
    3.0
    %
    
    
    0.2
    %Loss from operations
    
    
    (488
    )
    
    
    (3.0
    )%
    
    
    (2,862
    )
    
    
    (20.6
    )%
    
    
    (486.5
    )%Interest expense
    
    
    67
    
    
    
    0.4
    %
    
    
    54
    
    
    
    0.4
    %
    
    
    (19.4
    )%Dividend and interest income
    
    
    617
    
    
    
    3.8
    %
    
    
    236
    
    
    
    1.7
    %
    
    
    (61.8
    )%Income (loss) before income tax
    
    
    62
    
    
    
    0.4
    %
    
    
    (2,680
    )
    
    
    (19.3
    )%
    
    NMIncome tax expense (benefit)
    
    
    28
    
    
    
    0.2
    %
    
    
    (600
    )
    
    
    (4.3
    )%
    
    NMNet income(loss)
    
    $
    34
    
    
    
    0.2
    %
    
    $
    (2,080
    )
    
    
    (15.0
    )%
    
    NM
 
 NM = Not Meaningful Revenue.
 Cost of Revenue and Gross Margin.
  26




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##### Table of Contents



Operating Expenses
 General and Administrative.
 Sales and Marketing.
 Research and Development.
 Interest Expense.
 Dividend and Interest Income.
 Income Taxes.
 Liquidity and Capital Resources
 Overview
   Cash Flows
  Three Months EndedJune 30,2008
    
    
    2009(As Restated)Operating activities
    
    $
    949
    
    
    $
    (7,169
    )Investing activities
    
    
    (26,235
    )
    
    
    (2,133
    )Financing activities
    
    
    1,189
    
    
    
    Increase (decrease) in cash and cash equivalents
    
    $
    (24,097
    )
    
    $
    (9,302
    )
  27




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##### Table of Contents



Cash Flows Related to Operating Activities.
   Cash Flows Related to Investing Activities.
  Cash Flows Related to Financing Activities.
  Working Capital
    28




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##### Table of Contents



Indebtedness
 Revolving Credit Agreement
     Capital Spending
   29




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##### Table of Contents



Contractual Obligations and Commitments
  Less than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Total
    
    
    Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    YearsBank debt obligations
    
    $
    4,248
    
    
    $
    755
    
    
    $
    1,227
    
    
    $
    986
    
    
    $
    1,280Cash interest payments on debt
    
    
    1,116
    
    
    
    218
    
    
    
    333
    
    
    
    203
    
    
    
    362Operating lease obligations
    
    
    3,665
    
    
    
    1,110
    
    
    
    1,897
    
    
    
    451
    
    
    
    207Purchase order and cap-ex commitments (1)
    
    
    11,379
    
    
    
    10,204
    
    
    
    1,175
    
    
    
    
    
    
    
    Total
    
    $
    20,408
    
    
    $
    12,287
    
    
    $
    4,632
    
    
    $
    1,640
    
    
    $
    1,849
 
 (1)
    
    Reflects non-cancellable purchase order commitment in the amount of $10.6 million for certain
inventory items entered into in order to secure better pricing and ensure materials on hand
and capital expenditure commitments in the amount of $0.8 million for improvements to
information technology systems and manufacturing equipment and tooling. Off-Balance Sheet Arrangements
  Inflation
  Critical Accounting Policies and Estimates
  Recent Accounting Pronouncements
  
 ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4.
    
    CONTROLS AND PROCEDURES
  Evaluation of Disclosure Controls and Procedures
   30




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##### Table of Contents



PART II OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
     
 ITEM 1A.
    
    RISK FACTORS
  
 ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 (b) Use of Proceeds
   31




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##### Table of Contents



ITEM 5.
    
    OTHER INFORMATION
 Statistical Data
  Cumulative FromDecember 1, 2001Through June 30, 2009(in thousands, unaudited)HIF lighting systems sold(1)
    
    
    1,524Total units sold (including HIF lighting systems)
    
    
    1,973Customer kilowatt demand reduction(2)
    
    
    460Customer kilowatt hours saved(2)(3)
    
    
    8,530,438Customer electricity costs saved(4)
    
    $
    642,984Indirect carbon dioxide emission reductions from customers energy savings (tons)(5)
    
    
    5,550Square footage retrofitted(6)
    
    
    782,041
 
 (1)
    
    HIF lighting systems includes all HIF units sold under the brand name Compact Modular and
its predecessor, Illuminator.(2)
    
    A substantial majority of our HIF lighting systems, which generally operate at approximately
224 watts per six-lamp fixture, are installed in replacement of HID fixtures, which generally
operate at approximately 465 watts per fixture in commercial and industrial applications. We
calculate that each six-lamp HIF lighting system we install in replacement of an HID fixture
generally reduces electricity consumption by approximately 241 watts (the difference between
465 watts and 224 watts). In retrofit projects where we replace fixtures other than HID
fixtures, or where we replace fixtures with products other than our HIF lighting systems
(which other products generally consist of products with lamps similar to those used in our
HIF systems, but with varying frames, ballasts or power packs), we generally achieve similar
wattage reductions (based on an analysis of the operating wattages of each of our fixtures
compared to the operating wattage of the fixtures they typically replace). We calculate the
amount of kilowatt demand reduction by multiplying (i) 0.241 kilowatts per six-lamp equivalent
unit we install by (ii) the number of units we have installed in the period presented,
including products other than our HIF lighting systems (or a total of approximately 2.0
million units).(3)
    
    We calculate the number of kilowatt hours saved on a cumulative basis by assuming the
reduction of 0.241 kilowatts of electricity consumption per six-lamp equivalent unit we
install and assuming that each such unit has averaged 7,500 annual operating hours since its
installation.(4)
    
    We calculate our customers electricity costs saved by multiplying the cumulative total
customer kilowatt hours saved indicated in the table by $0.077 per kilowatt hour. The national
average rate for 2008, which is the most current full year for which this information is
available, was $0.098 per kilowatt hour according to the United States Energy Information
Administration.(5)
    
    We calculate this figure by multiplying (i) the estimated amount of carbon dioxide emissions
that result from the generation of one kilowatt hour of electricity (determined using the
Emissions and Generation Resource Integration Database, or EGrid, prepared by the United
States Environmental Protection Agency), by (ii) the number of customer kilowatt hours saved
as indicated in the table. The calculation of indirect carbon dioxide emissions reductions
reflects the most recent Environmental Protection Agency eGrid data.(6)
    
    Based on 1.97 million total units sold, which contain a total of approximately 9.9 million
lamps. Each lamp illuminates approximately 75 square feet. The majority of our installed
fixtures contain six lamps and typically illuminate approximately 450 square feet.  32




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##### Table of Contents



ITEM 6.
    
    EXHIBITS
 (a) Exhibits
 31.1
    
    
    Certification of Chief Executive Officer of Orion Energy Systems, Inc. pursuant to Rule
13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as
amended.31.2
    
    
    Certification of Chief Financial Officer of Orion Energy Systems, Inc. pursuant to Rule
13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as
amended.32.1
    
    
    Certification of Chief Executive Officer of Orion Energy Systems, Inc. pursuant to Rule
13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of Chief Financial Officer of Orion Energy Systems, Inc. pursuant to Rule
13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  33




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##### Table of Contents



SIGNATURE
  ORION ENERGY SYSTEMS, INC.
RegistrantBy                 /s/ Scott R. JensenScott R. JensenChief Financial Officer  34




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##### Table of Contents



Exhibit Index to Form 10-Q/A for the Period Ended June 30, 2009
 31.1
    
    
    Certification of Chief Executive Officer of Orion Energy Systems, Inc. pursuant to Rule
13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.31.2
    
    
    Certification of Chief Financial Officer of Orion Energy Systems, Inc. pursuant to Rule
13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.32.1
    
    
    Certification of Chief Executive Officer of Orion Energy Systems, Inc. pursuant to Rule
13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of Chief Financial Officer of Orion Energy Systems, Inc. pursuant to Rule
13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  35