##### 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, 2010
 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
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o 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.
    
    
    No impact to our cash, cash equivalents, short-term investments; or overall cash flow;
    
    Increase in our revenue of $2.3 million (17%), a decrease in our net loss of $0.5 million
(50%) and a reduction in our loss per share of $0.03 (60%); and
    
    Increases in our current
assets of $3.4 million (5%), an increase in our total assets of $1.0
million (1%), a reduction in our total liabilities of
$0.3 million (2%) and a reduction in our retained
deficit of $1.2 million (31%).
     2




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##### 



Orion Energy Systems, Inc.
 Quarterly Report On Form 10-Q/A
 For The Quarter Ended June 30, 2010
 Table Of Contents
 Page(s)PART I FINANCIAL INFORMATION4ITEM 1. Financial Statements (unaudited)
    
    
    4Condensed Consolidated Balance Sheets as of March 31, 2010 and June 30, 2010
    
    
    4Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2009 and 2010
    
    
    5Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2009 and 2010
    
    
    6Notes to the Condensed Consolidated Financial Statements
    
    
    7ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    30ITEM 4. Controls and Procedures
    
    
    30PART II OTHER INFORMATION
    
    
    30ITEM 1. Legal Proceedings
    
    
    30ITEM 1A. Risk Factors
    
    
    31ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    31ITEM 5. Other Information
    
    
    32ITEM 6. Exhibits
    
    
    33SIGNATURES
    
    
    34Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 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 30,2010
    
    
    2010(As Restated)
    
    
    (As Restated)AssetsCash and cash equivalents
    
    $
    23,364
    
    
    $
    16,196Short-term investments
    
    
    1,000
    
    
    
    1,007Accounts receivable, net of allowances of $382 and $335
    
    
    15,991
    
    
    
    12,895Inventories, net
    
    
    25,991
    
    
    
    30,027Deferred tax assets
    
    
    1,244
    
    
    
    1,758Prepaid expenses and other current assets
    
    
    4,112
    
    
    
    5,123Total current assets
    
    
    71,702
    
    
    
    67,006Property and equipment, net
    
    
    28,193
    
    
    
    28,048Patents and licenses, net
    
    
    1,590
    
    
    
    1,595Deferred tax assets
    
    
    974
    
    
    
    1,236Long-term accounts receivable
    
    
    2,092
    
    
    
    3,360Other long-term assets
    
    
    27
    
    
    
    1,268Total assets
    
    $
    104,578
    
    
    $
    102,513Liabilities and Shareholders EquityAccounts payable
    
    $
    7,761
    
    
    $
    6,452Accrued expenses and other
    
    
    4,128
    
    
    
    3,597Current maturities of long-term debt
    
    
    562
    
    
    
    583Total current liabilities
    
    
    12,451
    
    
    
    10,632Long-term debt, less current maturities
    
    
    3,156
    
    
    
    3,002Deferred revenue, long-term
    
    
    186
    
    
    
    227Other long-term liabilities
    
    
    398
    
    
    
    400Total liabilities
    
    
    16,191
    
    
    
    14,261Commitments and contingencies (See Note G)Shareholders equity:Preferred stock, $0.01 par value: Shares authorized: 30,000,000 shares at March 31, 2010
and June 30, 2010; no shares issued and outstanding at March 31, 2010 and June 30, 2010
    
    
    
    
    
    
    Common stock, no par value: Shares authorized: 200,000,000 at March 31, 2010 and June
30, 2010; shares issued: 29,911,203 and 30,080,634 at March 31, 2010 and June 30, 2010;
shares outstanding: 22,442,380 and 22,595,903 at March 31, 2010 and June 30, 2010
    
    
    
    
    
    
    Additional paid-in capital
    
    
    122,515
    
    
    
    122,969Treasury stock: 7,468,823 and 7,484,731 common shares at March 31, 2010 and June 30, 2010
    
    
    (32,011
    )
    
    
    (32,062
    )Retained deficit
    
    
    (2,117
    )
    
    
    (2,655
    )Total shareholders equity
    
    
    88,387
    
    
    
    88,252Total liabilities and shareholders equity
    
    $
    104,578
    
    
    $
    102,513
   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 30,2009
    
    
    2010(As Restated)
    
    
    (As Restated)Product revenue
    
    $
    11,924
    
    
    $
    15,758Service revenue
    
    
    1,951
    
    
    
    1,219Total revenue
    
    
    13,875
    
    
    
    16,977Cost of product revenue
    
    
    8,748
    
    
    
    10,307Cost of service revenue
    
    
    1,255
    
    
    
    917Total cost of revenue
    
    
    10,003
    
    
    
    11,224Gross profit
    
    
    3,872
    
    
    
    5,753Operating expenses:General and administrative
    
    
    3,163
    
    
    
    2,945Sales and marketing
    
    
    3,152
    
    
    
    3,590Research and development
    
    
    419
    
    
    
    610Total operating expenses
    
    
    6,734
    
    
    
    7,145Loss from operations
    
    
    (2,862
    )
    
    
    (1, 392
    )Other income (expense):Interest expense
    
    
    (54
    )
    
    
    (70
    )Dividend and interest income
    
    
    236
    
    
    
    93Total other income (expense)
    
    
    182
    
    
    
    23Loss before income tax
    
    
    (2,680
    )
    
    
    (1,369
    )Income tax benefit
    
    
    (600
    )
    
    
    (833
    )Net loss
    
    $
    (2,080
    )
    
    $
    (536
    )Basic net loss per share attributable to common shareholders
    
    $
    (0.10
    )
    
    $
    (0.02
    )Weighted-average common shares outstanding
    
    
    21,588,364
    
    
    
    22,523,107Diluted net loss per share attributable to common shareholders
    
    $
    (0.10
    )
    
    $
    (0.02
    )Weighted-average common shares and share equivalents outstanding
    
    
    21,588,364
    
    
    
    22,523,107
   5




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ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Three Months Ended June 30,2009
    
    
    2010(As Restated)
    
    
    (As Restated)Operating activitiesNet loss
    
    $
    (2,080
    )
    
    $
    (536
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    679
    
    
    
    762Stock-based compensation expense
    
    
    320
    
    
    
    248Deferred income tax benefit
    
    
    (1,203
    )
    
    
    (776
    )Change in allowance for notes and accounts receivable
    
    
    22
    
    
    
    (47
    )Other
    
    
    5
    
    
    
    19Changes in operating assets and liabilities:Accounts receivable
    
    
    (248
    )
    
    
    3,143Inventories
    
    
    (758
    )
    
    
    (4,036
    )Prepaid
expenses and other assets and liabilities
    
    
    (209
    )
    
    
    (3,215
    )Accounts payable
    
    
    (3,432
    )
    
    
    (1,309
    )Accrued expenses
    
    
    (265
    )
    
    
    (533
    )Net cash used in operating activities
    
    
    (7,169
    )
    
    
    (6,280
    )Investing activitiesPurchase of property and equipment
    
    
    (1,452
    )
    
    
    (582
    )Purchase of property and equipment held under operating leases
    
    
    
    
    
    
    (4
    )Purchase of short-term investments
    
    
    (669
    )
    
    
    (7
    )Additions to patents and licenses
    
    
    (12
    )
    
    
    (35
    )Long term investments
    
    
    
    
    
    
    (206
    )Net cash used in investing activities
    
    
    (2,133
    )
    
    
    (834
    )Financing activitiesPayment of long-term debt
    
    
    (215
    )
    
    
    (133
    )Repurchase of common stock into treasury
    
    
    (150
    )
    
    
    Deferred financing costs
    
    
    
    
    
    
    (57
    )Proceeds from issuance of common stock
    
    
    365
    
    
    
    136Net cash provided by (used in) financing activities
    
    
    
    
    
    
    (54
    )Net decrease in cash and cash equivalents
    
    
    (9,302
    )
    
    
    (7,168
    )Cash and cash equivalents at beginning of period
    
    
    36,163
    
    
    
    23,364Cash and cash equivalents at end of period
    
    $
    26,861
    
    
    $
    16,196Supplemental cash flow information:Cash paid for interest
    
    $
    73
    
    
    $
    63Cash paid for income taxes
    
    
    30
    
    
    
    28Supplemental disclosure of non-cash investing and financing activities:Shares surrendered into treasury for stock option exercise
    
    $
    
    
    
    $
    51
   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, 2010As Previouslyreported
    
    
    Adjustments
    
    
    As RestatedAssets:Accounts receivable
    
    $
    11,653
    
    
    $
    1,242
    
    
    $
    12,895Deferred tax assets, current
    
    
    170
    
    
    
    1,588
    
    
    
    1,758Prepaid expenses and other current assets
    
    
    4,561
    
    
    
    562
    
    
    
    5,123Total current assets
    
    
    63,614
    
    
    
    3,392
    
    
    
    67,006Property, plant and equipment
    
    
    31,923
    
    
    
    (3,875
    )
    
    
    28,048Deferred tax assets, long-term
    
    
    3,152
    
    
    
    (1,916
    )
    
    
    1,236Accounts receivable, long-term
    
    
    
    
    
    
    3,360
    
    
    
    3,360Total assets
    
    
    101,552
    
    
    
    961
    
    
    
    102,513Liabilities and Shareholders Equity:Accrued Expenses
    
    
    3,449
    
    
    
    148
    
    
    
    3,597Deferred revenue, long-term
    
    
    648
    
    
    
    (421
    )
    
    
    227Shareholders equity:Retained deficit
    
    
    (3,889
    )
    
    
    1,234
    
    
    
    (2,655
    )
  7




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##### Table of Contents



Consolidated Statements of OperationsThree months ended June 30, 2010As Previouslyreported
    
    
    Adjustments
    
    
    As RestatedProduct revenue
    
    $
    13,469
    
    
    $
    2,289
    
    
    $
    15,758Cost of product revenue
    
    
    8,525
    
    
    
    1,782
    
    
    
    10,307Dividend and interest income
    
    
    10
    
    
    
    83
    
    
    
    93Income tax benefit
    
    
    (904
    )
    
    
    71
    
    
    
    (833
    )Net loss
    
    
    (1,055
    )
    
    
    519
    
    
    
    (536)
    )Net loss per share attributable to common shareholders -
basic and diluted
    
    $
    (0.05
    )
    
    $
    0.03
    
    
    $
    (0.02
    )Weighted average common shares outstanding  basic and diluted
    
    
    22,523,107
    
    
    
    
    
    
    
    22,523,107
 Consolidated Statements of Cash FlowsThree months ended June 30, 2010As PreviouslyReported
    
    
    Adjustments
    
    
    As RestatedNet loss
    
    $
    (1,055
    )
    
    $
    519
    
    
    $
    (536
    )Depreciation and amortization
    
    
    908
    
    
    
    (146
    )
    
    
    762Deferred income tax benefit
    
    
    (756
    )
    
    
    (20
    )
    
    
    (776
    )Accounts receivable
    
    
    3,011
    
    
    
    132
    
    
    
    3,143Prepaid expenses and other assets and liabilities
    
    
    (1,153
    )
    
    
    (2,062
    )
    
    
    (3,215
    )Accrued expenses
    
    
    (395
    )
    
    
    (138
    )
    
    
    (533
    )Net cash used in operating activities
    
    
    (4,565
    )
    
    
    (1,715
    )
    
    
    (6,280
    )Purchase of property and equipment
    
    
    (580
    )
    
    
    (2
    )
    
    
    (582
    )Purchase or property and equipment under operating leases
    
    
    (1,721
    )
    
    
    1,717
    
    
    
    (4
    )Net cash used in investing activities
    
    
    (2,549
    )
    
    
    1,715
    
    
    
    (834
    )
 NOTE C  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Principles of consolidation
  Reclassifications
   8




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##### Table of Contents



Basis of presentation
    Use of estimates
  Reclassification
  Short-term investments available for sale
  March 31, 2010Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    
    
    
    
    Cash and Cash
    
    
    Short TermCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value
    
    
    Equivalents
    
    
    InvestmentsMoney market funds
    
    $
    22,297
    
    
    $
    
    
    
    $
    
    
    
    $
    22,297
    
    
    $
    22,297
    
    
    $
    Bank certificate of deposit
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    
    
    
    
    1,000Total
    
    $
    23,297
    
    
    $
    
    
    
    $
    
    
    
    $
    23,297
    
    
    $
    22,297
    
    
    $
    1,000
 June 30, 2010Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    
    
    
    
    Cash and Cash
    
    
    Short TermCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value
    
    
    Equivalents
    
    
    InvestmentsMoney market funds
    
    $
    553
    
    
    $
    
    
    
    $
    
    
    
    $
    553
    
    
    $
    553
    
    
    $
    Bank certificate of deposit
    
    
    1,007
    
    
    
    
    
    
    
    
    
    
    
    1,007
    
    
    
    
    
    
    
    1,007Total
    
    $
    1,560
    
    
    $
    
    
    
    $
    
    
    
    $
    1,560
    
    
    $
    553
    
    
    $
    1,007
  Fair value of financial instruments
   9




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Accounts receivable
   Fiscal 2011
    
    $
    178Fiscal 2012
    
    
    338Fiscal 2013
    
    
    338Fiscal 2014
    
    
    270Fiscal 2015
    
    
    135Total gross receivable
    
    
    1,259Less: amount representing interest
    
    
    (190
    )Net contracts receivable
    
    $
    1,069
 Inventories
    March 31,
    
    
    June 30,2010
    
    
    2010Raw materials and components
    
    $
    11,107
    
    
    $
    10,525Work in process
    
    
    669
    
    
    
    834Finished goods
    
    
    14,215
    
    
    
    18,668$
    25,991
    
    
    $
    30,027
 Property and Equipment
  March 31,
    
    
    June 30,2010
    
    
    2010(As Restated)
    
    
    (As Restated)Land and land improvements
    
    $
    1,436
    
    
    $
    1,436Buildings
    
    
    14,072
    
    
    
    14,205Furniture, fixtures and office equipment
    
    
    6,615
    
    
    
    6,859Equipment leased to customers under power purchase agreements
    
    
    
    
    
    
    2,655Plant equipment
    
    
    7,627
    
    
    
    7,665Construction in progress
    
    
    5,774
    
    
    
    3,30235,524
    
    
    
    36,122Less: accumulated depreciation and amortization
    
    
    (7,331
    )
    
    
    (8,074
    )Net property and equipment
    
    $
    28,193
    
    
    $
    28,048
  10




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##### Table of Contents



March 31,
    
    
    June 30,2010
    
    
    2010Equipment
    
    $
    25
    
    
    $
    25Less: accumulated amortization
    
    
    (20
    )
    
    
    (21
    )Net equipment
    
    $
    5
    
    
    $
    4
  Patents and Licenses
  Long-Term Finance Receivables
  Other Long-Term Assets
  Accrued Expenses
    Three Months EndedJune 30,2009
    
    
    2010Beginning of period
    
    $
    55
    
    
    $
    60Provision to cost of product revenue
    
    
    10
    
    
    
    48Charges
    
    
    
    
    
    
    (49
    )End of period
    
    $
    65
    
    
    $
    59
 Revenue Recognition
   11




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##### Table of Contents




    
    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
        March 31,
    
    
    June 30,2010
    
    
    2010(As Restated)
    
    
    (As Restated)Deferred revenue  current liability
    
    $
    338
    
    
    $
    182Deferred revenue  long term liability
    
    
    186
    
    
    
    227Total deferred revenue
    
    $
    524
    
    
    $
    409
 Income Taxes
   12




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##### Table of Contents



Income Taxes
  Stock Option Plans
  Three Months Ended June 30,2009
    
    
    2010Weighted average expected term
    
    5.3 years
    
    5.7 yearsRisk-free interest rate
    
    
    2.23
    %
    
    
    2.25
    %Expected volatility
    
    
    60
    %
    
    
    60
    %Expected forfeiture rate
    
    
    3
    %
    
    
    10
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
 Net Income (Loss) per Common Share
  Three Months EndedJune 30,2009
    
    
    2010(As Restated)
    
    
    (As Restated)Net loss (in thousands)
    
    $
    (2,080
    )
    
    $
    (536
    )Net loss per common share:Basic
    
    $
    (0.10
    )
    
    $
    (0.02
    )Diluted
    
    $
    (0.10
    )
    
    $
    (0.02
    )Weighted-average common shares outstanding used in:Basic
    
    
    21,588,364
    
    
    
    22,523,107Diluted
    
    
    21,588,364
    
    
    
    22,523,107
    June 30,
    
    
    June 30,2009
    
    
    2010Warrants
    
    
    467,318
    
    
    
    76,240Stock Options
    
    
    3,676,007
    
    
    
    3,769,2824,143,325
    
    
    
    3,845,522
  13




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Concentration of Credit Risk and Other Risks and Uncertainties
     Segment Information
   Recent Accounting Pronouncements
 Multiple-Deliverable
Revenue Arrangements  a consensus of the FASB Emerging Issues Task Force
 NOTE D  RELATED PARTY TRANSACTIONS
     14




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##### Table of Contents



NOTE E  LONG-TERM DEBT
  March 31,
    
    
    June 30,2010
    
    
    2010Term note
    
    $
    1,017
    
    
    $
    960First mortgage note payable
    
    
    926
    
    
    
    908Debenture payable
    
    
    847
    
    
    
    838Lease obligations
    
    
    7
    
    
    
    5Other long-term debt
    
    
    921
    
    
    
    874Total long-term debt
    
    
    3,718
    
    
    
    3,585Less current maturities
    
    
    (562
    )
    
    
    (583
    )Long-term debt, less current maturities
    
    $
    3,156
    
    
    $
    3,002
 Revolving Credit Agreement
     NOTE F  INCOME TAXES
   Three Months Ended June 30,2009
    
    
    2010(As Restated)
    
    
    (As Restated)Statutory federal tax rate
    
    
    (34.0
    )%
    
    
    (34.0
    )%State taxes, net
    
    
    2.6
    %
    
    
    (6.1
    )%Stock-based compensation expense
    
    
    5.0
    %
    
    
    (15.4
    )%Federal tax credit
    
    
    (3.5
    )%
    
    
    5.8
    %State tax credit
    
    
    (0.4
    )%
    
    
    0.0
    %Permanent items
    
    
    0.1
    %
    
    
    (3.7
    )%Change in valuation reserve
    
    
    5.1
    %
    
    
    (7.5
    )%Other, net
    
    
    2.7
    %
    
    
    0.1
    %Effective income tax rate
    
    
    (22.4
    )%
    
    
    (60.8
    )%
  15




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##### Table of Contents



Uncertain tax positions
   Three Months Ended
    
    
    Three Months EndedJune 30, 2009
    
    
    June 30, 2010Unrecognized tax benefits as of beginning of period
    
    $
    397
    
    
    $
    398Decreases relating to settlements with tax authorities
    
    
    
    
    
    
    Additions based on tax positions related to the current period positions
    
    
    1
    
    
    
    1Unrecognized tax benefits as of end of period
    
    $
    398
    
    
    $
    399
 NOTE G  COMMITMENTS AND CONTINGENCIES
 Operating Leases and Purchase Commitments
   16




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##### Table of Contents



Litigation
     NOTE H  SHAREHOLDERS EQUITY
 Share Repurchase Program
  Shareholder Rights Plan
    17




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##### Table of Contents



NOTE I  STOCK OPTIONS AND WARRANTS
    Three months ended June 30,2009
    
    
    2010Cost of product revenue
    
    $
    59
    
    
    $
    36General and administrative
    
    
    122
    
    
    
    98Sales and marketing
    
    
    129
    
    
    
    109Research and development
    
    
    10
    
    
    
    5Total
    
    $
    320
    
    
    $
    248
   Options OutstandingWeightedWeighted
    
    
    AverageShares
    
    
    
    
    
    
    Average
    
    
    Remaining
    
    
    AggregateAvailable for
    
    
    Number
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicGrant
    
    
    of Shares
    
    
    Price
    
    
    Term (in years)
    
    
    valueBalance at March 31, 2010
    
    
    569,690
    
    
    
    3,546,249
    
    
    $
    3.66
    
    
    
    6.87Granted stock options
    
    
    (471,165
    )
    
    
    471,165
    
    
    
    3.77Granted shares
    
    
    (5,419
    )
    
    
    Forfeited
    
    
    84,120
    
    
    
    (84,120
    )
    
    
    3.32Exercised
    
    
    
    
    
    
    (164,012
    )
    
    
    1.14Balance at June 30, 2010
    
    
    177,226
    
    
    
    3,769,282
    
    
    $
    3.76
    
    
    
    7.20
    
    
    $
    1,997,686Exercisable at June 30, 2010
    
    
    
    
    
    
    1,707,842
    
    
    $
    3.21
    
    
    
    5.68
    
    
    $
    1,492,906
   18




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##### Table of Contents



Non-vested at March 31, 2010
    
    
    1,789,119Granted
    
    
    471,165Vested
    
    
    (114,724
    )Forfeited
    
    
    (84,120
    )Non-vested at June 30, 2010
    
    
    2,061,440
   WeightedAverageNumber of
    
    
    ExerciseShares
    
    
    PriceBalance at March 31, 2010
    
    
    76,240
    
    
    $
    2.37Issued
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Cancelled
    
    
    
    
    
    
    Balance at June 30, 2010
    
    
    76,240
    
    
    $
    2.37
  Number ofExercise Price
    
    Warrants
    
    
    Expiration$2.25
    
    
    38,980
    
    
    Fiscal 2014$2.50
    
    
    3  37,260
    
    
    Fiscal 2011Total
    
    
    76,240
  19




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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
  Restatement of Previously Issued Consolidated Financial Statements
    
    
    No impact to our cash, cash equivalents, short-term investments; or overall cash flow;
    
    Increase in our revenue of $2.3 million (17%), a decrease in our net loss of $0.5 million
(50%) and a reduction in our loss per share of $0.03 (60%); and
    
    Increases in our current
assets of $3.4 million (5%), an increase in our total assets of $1.0
million (1%), a reduction in our total liabilities of
$0.3 million (2%) and a reduction in our retained
deficit of $1.2 million (31%).
   Consolidated Balance Sheets as of June 30, 2010As Previouslyreported
    
    
    Adjustments
    
    
    As RestatedAssets:Accounts receivable
    
    $
    11,653
    
    
    $
    1,242
    
    
    $
    12,895Deferred tax assets, current
    
    
    170
    
    
    
    1,588
    
    
    
    1,758Prepaid expenses and other current assets
    
    
    4,561
    
    
    
    562
    
    
    
    5,123Total current assets
    
    
    63,614
    
    
    
    3,392
    
    
    
    67,006Property, plant and equipment
    
    
    31,923
    
    
    
    (3,875
    )
    
    
    28,048Deferred tax assets, long-term
    
    
    3,152
    
    
    
    (1,916
    )
    
    
    1,236Accounts receivable, long-term
    
    
    
    
    
    
    3,360
    
    
    
    3,360Total assets
    
    
    101,552
    
    
    
    961
    
    
    
    102,513Liabilities and Shareholders Equity:Accrued Expenses
    
    
    3,449
    
    
    
    148
    
    
    
    3,597Deferred revenue, long-term
    
    
    648
    
    
    
    (421
    )
    
    
    227Shareholders equity:Retained deficit
    
    
    (3,889
    )
    
    
    1,234
    
    
    
    (2,655
    )
  20




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##### Table of Contents



Consolidated Statements of OperationsThree months ended June 30, 2010As Previouslyreported
    
    
    Adjustments
    
    
    As RestatedProduct revenue
    
    $
    13,469
    
    
    $
    2,289
    
    
    $
    15,758Cost of product revenue
    
    
    8,525
    
    
    
    1,782
    
    
    
    10,307Dividend and interest income
    
    
    10
    
    
    
    83
    
    
    
    93Income tax benefit
    
    
    (904
    )
    
    
    71
    
    
    
    (833
    )Net loss
    
    
    (1,055
    )
    
    
    519
    
    
    
    (536
    )Net loss per share attributable to common shareholders  basic and diluted
    
    $
    (0.05
    )
    
    $
    0.03
    
    
    $
    (0.02
    )Weighted average common shares outstanding  basic and diluted
    
    
    22,523,107
    
    
    
    
    
    
    
    22,523,107
 Consolidated Statements of Cash FlowsThree months ended June 30, 2010As PreviouslyReported
    
    
    Adjustments
    
    
    As RestatedNet loss
    
    $
    (1,055
    )
    
    $
    519
    
    
    $
    (536
    )Depreciation and amortization
    
    
    908
    
    
    
    (146
    )
    
    
    762Deferred income tax benefit
    
    
    (756
    )
    
    
    (20
    )
    
    
    (776
    )Accounts receivable
    
    
    3,011
    
    
    
    132
    
    
    
    3,143Prepaid expenses and other assets and liabilities
    
    
    (1,153
    )
    
    
    (2,062
    )
    
    
    (3,215
    )Accrued expenses
    
    
    (395
    )
    
    
    (138
    )
    
    
    (533
    )Net cash used in operating activities
    
    
    (4,565
    )
    
    
    (1,715
    )
    
    
    (6,280
    )Purchase of property and equipment
    
    
    (580
    )
    
    
    (2
    )
    
    
    (582
    )Purchase or property and equipment under operating leases
    
    
    (1,721
    )
    
    
    1,717
    
    
    
    (4
    )Net cash used in investing activities
    
    
    (2,549
    )
    
    
    1,715
    
    
    
    (834
    )
 Overview
     21




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Revenue and Expense Components
 Revenue.
   22




---



##### Table of Contents



Contracted Revenue.
  23




---



##### Table of Contents



Backlog.
 Cost of Revenue.
 Gross Margin.
 Operating Expenses.
    24




---



##### Table of Contents



Compensation  Stock Compensation
 Interest Expense.
 Dividend and Interest Income.
 Income Taxes.
   25




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##### Table of Contents



Results of Operations
  Three Months Ended June 30,2009
    
    
    2010(As Restated)
    
    
    (As Restated)
    
    
    (As Restated)
    
    
    (As Restated)
    
    
    (As Restated)% of
    
    
    
    
    
    
    % of
    
    
    %Amount
    
    
    Revenue
    
    
    Amount
    
    
    Revenue
    
    
    ChangeProduct revenue
    
    $
    11,924
    
    
    
    85.9
    %
    
    $
    15,758
    
    
    
    92.8
    %
    
    
    32.2
    %Service revenue
    
    
    1,951
    
    
    
    14.1
    %
    
    
    1,219
    
    
    
    7.2
    %
    
    
    (37.5
    )%Total revenue
    
    
    13,875
    
    
    
    100.0
    %
    
    
    16,977
    
    
    
    100.0
    %
    
    
    22.4
    %Cost of product revenue
    
    
    8,748
    
    
    
    63.0
    %
    
    
    10,307
    
    
    
    60.7
    %
    
    
    17.8
    %Cost of service revenue
    
    
    1,255
    
    
    
    9.0
    %
    
    
    917
    
    
    
    5.4
    %
    
    
    (26.9
    )%Total cost of revenue
    
    
    10,003
    
    
    
    72.1
    %
    
    
    11,224
    
    
    
    66.1
    %
    
    
    12.2
    %Gross profit
    
    
    3,872
    
    
    
    27.9
    %
    
    
    5,753
    
    
    
    33.9
    %
    
    
    48.6
    %General and administrative expenses
    
    
    3,163
    
    
    
    22.8
    %
    
    
    2,945
    
    
    
    17.3
    %
    
    
    (6.9
    )%Sales and marketing expenses
    
    
    3,152
    
    
    
    22.7
    %
    
    
    3,590
    
    
    
    21.1
    %
    
    
    13.9
    %Research and development expenses
    
    
    419
    
    
    
    3.0
    %
    
    
    610
    
    
    
    3.6
    %
    
    
    45.6
    %Loss from operations
    
    
    (2,862
    )
    
    
    (20.6
    )%
    
    
    (1,392
    )
    
    
    (8.2
    )%
    
    
    51.4
    %Interest expense
    
    
    54
    
    
    
    0.4
    %
    
    
    70
    
    
    
    0.4
    %
    
    
    (29.6
    )%Interest income
    
    
    236
    
    
    
    1.7
    %
    
    
    93
    
    
    
    0.5
    %
    
    
    (60.6
    )%Loss before income tax
    
    
    (2,680
    )
    
    
    (19.3
    )%
    
    
    (1,369
    )
    
    
    (8.1
    )%
    
    
    (48.9
    )%Income tax (benefit)
    
    
    (600
    )
    
    
    (4.3
    )%
    
    
    (833
    )
    
    
    (4.9
    )%
    
    
    38.8
    %Net loss
    
    $
    (2,080
    )
    
    
    (15.0
    )%
    
    $
    (536
    )
    
    
    (3.2
    )%
    
    
    74.2
    %
 Contracted Revenue.
 Revenue.
 Cost of Revenue and Gross Margin.
 Operating Expenses
 General and Administrative.
 Sales and Marketing.
  26




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##### Table of Contents



Research and Development.
 Interest Expense.
 Interest Income.
 Income Taxes.
 Liquidity and Capital Resources
 Overview
  Cash Flows
  Three Months EndedJune 30,2009
    
    
    2010(As Restated)
    
    
    (As Restated)Operating activities
    
    $
    (7,169
    )
    
    $
    (6,280
    )Investing activities
    
    
    (2,133
    )
    
    
    (834
    )Financing activities
    
    
    
    
    
    
    (54
    )Increase (decrease) in cash and cash equivalents
    
    $
    (9,302
    )
    
    $
    (7,168
    )
 Cash Flows Related to Operating Activities.
    27




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##### Table of Contents



Cash Flows Related to Investing Activities.
  Cash Flows Related to Financing Activities.
  Working Capital
    Indebtedness
 Revolving Credit Agreement
    28




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##### Table of Contents



Capital Spending
  Contractual Obligations and Commitments
  Less than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Total
    
    
    Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    YearsBank debt obligations
    
    $
    3,580
    
    
    $
    578
    
    
    $
    1,154
    
    
    $
    754
    
    
    $
    1,094Capital lease obligations
    
    
    5
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    Cash interest payments on debt
    
    
    906
    
    
    
    181
    
    
    
    269
    
    
    
    155
    
    
    
    301Operating lease obligations
    
    
    2,633
    
    
    
    1,003
    
    
    
    1,289
    
    
    
    265
    
    
    
    76Purchase order and cap-ex commitments (1)
    
    
    12,702
    
    
    
    12,408
    
    
    
    294
    
    
    
    
    
    
    
    Total
    
    $
    19,826
    
    
    $
    14,175
    
    
    $
    3,006
    
    
    $
    1,174
    
    
    $
    1,471
 
 (1)
    
    Reflects non-cancellable purchase order commitment in the amount of $12.1 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 $0.6 million for improvements to
information technology systems, renewable energy products and manufacturing equipment and
tooling. Off-Balance Sheet Arrangements
  Inflation
  Critical Accounting Policies and Estimates
   29




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##### Table of Contents



Recent Accounting Pronouncements
  
 ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4.
    
    CONTROLS AND PROCEDURES
  Evaluation of Disclosure Controls and Procedures
   
 PART II OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
     30




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##### Table of Contents



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, 2010(in thousands, unaudited)HIF lighting systems sold(1)
    
    
    1,810Total units sold (including HIF lighting systems)
    
    
    2,353Customer kilowatt demand reduction(2)
    
    
    552Customer kilowatt hours saved(2)(3)
    
    
    12,146,316Customer electricity costs saved(4)
    
    $
    935,266Indirect carbon dioxide emission reductions from customers energy savings (tons)(5)
    
    
    8,073Square footage retrofitted(6)
    
    
    923,459
 
 (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 2.35
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 2009, which is the most current full year for which this information is
available, was $0.0989 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.(5)
    
    Based on 2.35 million total units sold, which contain a total of approximately 11.75 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
 10.1
    
    
    Credit Agreement, dated June 30, 2010, by and among Orion Energy Systems, Inc., Orion
Asset Management LLC, Clean Energy Solutions, LLC and JP Morgan Chase Bank, N.A.
(Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated June 28,
2010 of Orion Energy Systems, Inc.).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
(Principal Financial Officer and Authorized Signatory)  34




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##### Table of Contents



Exhibit Index to Form 10-Q for the Period Ended June 30, 2010
 10.1
    
    
    Credit Agreement, dated June 30, 2010, by and among Orion Energy Systems, Inc., Orion Asset
Management LLC, Clean Energy Solutions, LLC and JP Morgan Chase Bank, N.A. (Incorporated by
reference to Exhibit 10.1 to the Current Report on Form 8-K dated June 28, 2010 of Orion
Energy Systems, Inc.).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