##### 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 December 31, 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.
    
 
 
     2




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##### 



Orion Energy Systems, Inc.
 Quarterly Report On Form 10-Q/A
 For The Quarter Ended December 31, 2010
 Table Of Contents
 Page(s)PART I FINANCIAL INFORMATIONITEM 1. Financial Statements (unaudited)Condensed Consolidated Balance Sheets as of March 31, 2010 and December 31, 2010
    
    
    4Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2009 and 2010
    
    
    5Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2009 and 2010
    
    
    6Notes to the Condensed Consolidated Financial Statements
    
    
    7ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    22ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    35ITEM 4. Controls and Procedures
    
    
    35PART II OTHER INFORMATIONITEM 1. Legal Proceedings
    
    
    36ITEM 1A. Risk Factors
    
    
    36ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    36ITEM 4. Removed and Reserved
    
    
    37ITEM 5. Other Information
    
    
    37ITEM 6. Exhibits
    
    
    38SIGNATURES
    
    
    39Exhibit 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,
    
    
    December 31,2010
    
    
    2010(As Restated)
    
    
    (As Restated)AssetsCash and cash equivalents
    
    $
    23,364
    
    
    $
    9,858Short-term investments
    
    
    1,000
    
    
    
    1,010Accounts receivable, net of allowances of $382 and $467
    
    
    15,991
    
    
    
    26,241Inventories, net
    
    
    25,991
    
    
    
    32,230Deferred tax assets
    
    
    1,244
    
    
    
    1,754Prepaid expenses and other current assets
    
    
    4,112
    
    
    
    4,726Total current assets
    
    
    71,702
    
    
    
    75,819Property and equipment, net
    
    
    28,193
    
    
    
    30,991Patents and licenses, net
    
    
    1,590
    
    
    
    1,634Deferred tax assets
    
    
    974
    
    
    
    1,059Long-term accounts receivable
    
    
    2,092
    
    
    
    4,886Other long-term assets
    
    
    27
    
    
    
    2,963Total assets
    
    $
    104,578
    
    
    $
    117,352Liabilities and Shareholders EquityAccounts payable
    
    $
    7,761
    
    
    $
    15,363Accrued expenses and other
    
    
    4,128
    
    
    
    3,993Current maturities of long-term debt
    
    
    562
    
    
    
    1,261Total current liabilities
    
    
    12,451
    
    
    
    20,617Long-term debt, less current maturities
    
    
    3,156
    
    
    
    4,618Deferred revenue, long-term
    
    
    186
    
    
    
    1,036Other long-term liabilities
    
    
    398
    
    
    
    399Total liabilities
    
    
    16,191
    
    
    
    26,670Commitments and contingencies (See Note G)Shareholders equity:Preferred stock, $0.01 par value: Shares authorized: 30,000,000 shares at March 31, 2010 and
December 31, 2010; no shares issued and outstanding at March 31, 2010 and December 31, 2010
    
    
    
    
    
    
    Common stock, no par value: Shares authorized: 200,000,000 at March 31, 2010 and December
31, 2010; shares issued: 29,911,203 and 30,224,199 at March 31, 2010 and December 31, 2010;
shares outstanding: 22,442,380 and 22,792,302 at March 31, 2010 and December 31, 2010
    
    
    
    
    
    
    Additional paid-in capital
    
    
    122,515
    
    
    
    123,965Treasury stock: 7,468,823 and 7,431,897 common shares at March 31, 2010 and December 31, 2010
    
    
    (32,011
    )
    
    
    (31,767
    )Shareholder notes receivable
    
    
    
    
    
    
    (157
    )Accumulated deficit
    
    
    (2,117
    )
    
    
    (1,359
    )Total shareholders equity
    
    
    88,387
    
    
    
    90,682Total liabilities and shareholders equity
    
    $
    104,578
    
    
    $
    117,352
   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 December 31,
    
    
    Nine Months Ended December 31,2009
    
    
    2010
    
    
    2009
    
    
    2010As Restated
    
    
    As Restated
    
    
    As Restated
    
    
    As RestatedProduct revenue
    
    $
    18,737
    
    
    $
    28,048
    
    
    $
    45,879
    
    
    $
    58,891Service revenue
    
    
    2,090
    
    
    
    2,008
    
    
    
    4,897
    
    
    
    3,994Total revenue
    
    
    20,827
    
    
    
    30,056
    
    
    
    50,776
    
    
    
    62,885Cost of product revenue
    
    
    11,860
    
    
    
    19,228
    
    
    
    30,729
    
    
    
    39,280Cost of service revenue
    
    
    1,568
    
    
    
    1,674
    
    
    
    3,455
    
    
    
    3,089Total cost of revenue
    
    
    13,428
    
    
    
    20,902
    
    
    
    34,184
    
    
    
    42,369Gross profit
    
    
    7,399
    
    
    
    9,154
    
    
    
    16,592
    
    
    
    20,516Operating expenses:General and administrative
    
    
    3,051
    
    
    
    2,709
    
    
    
    9,357
    
    
    
    8,642Sales and marketing
    
    
    3,063
    
    
    
    3,235
    
    
    
    9,176
    
    
    
    10,124Research and development
    
    
    404
    
    
    
    614
    
    
    
    1,315
    
    
    
    1,797Total operating expenses
    
    
    6,518
    
    
    
    6,558
    
    
    
    19,848
    
    
    
    20,563Income (loss) from operations
    
    
    881
    
    
    
    2,596
    
    
    
    (3,256
    )
    
    
    (47
    )Other income (expense):Interest expense
    
    
    (66
    )
    
    
    (98
    )
    
    
    (192
    )
    
    
    (223
    )Dividend and interest income
    
    
    157
    
    
    
    189
    
    
    
    539
    
    
    
    435Total other income (expense)
    
    
    91
    
    
    
    91
    
    
    
    347
    
    
    
    212Income (loss) before income tax
    
    
    972
    
    
    
    2,687
    
    
    
    (2,909
    )
    
    
    165Income tax expense (benefit)
    
    
    218
    
    
    
    1,931
    
    
    
    (652
    )
    
    
    (594
    )Net income (loss)
    
    $
    754
    
    
    $
    756
    
    
    $
    (2,257
    )
    
    $
    759Basic net income (loss) per share
    
    $
    0.03
    
    
    $
    0.03
    
    
    $
    (0.10
    )
    
    $
    0.03Weighted-average common shares outstanding
    
    
    21,792,175
    
    
    
    22,726,426
    
    
    
    21,709,799
    
    
    
    22,629,776Diluted net income (loss) per share
    
    $
    0.03
    
    
    $
    0.03
    
    
    $
    (0.10
    )
    
    $
    0.03Weighted-average common shares and share
equivalents outstanding
    
    
    22,567,575
    
    
    
    23,110,633
    
    
    
    21,709,799
    
    
    
    23,061,360
   5




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##### Table of Contents



ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Nine Months Ended December 31,2009
    
    
    2010(As Restated)
    
    
    (As Restated)Operating activitiesNet loss
    
    $
    (2,257
    )
    
    $
    759Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation and amortization
    
    
    1,956
    
    
    
    2,341Stock-based compensation expense
    
    
    1,064
    
    
    
    931Deferred income tax benefit
    
    
    (813
    )
    
    
    (595
    )Change in allowance for notes and accounts receivable
    
    
    384
    
    
    
    85Other
    
    
    15
    
    
    
    25Changes in operating assets and liabilities:Accounts receivable
    
    
    (2,969
    )
    
    
    (10,335
    )Inventories
    
    
    (4,285
    )
    
    
    (6,239
    )Prepaid
expenses and other assets and liabilities
    
    
    (2,752
    )
    
    
    (5,102
    )Accounts payable
    
    
    5,193
    
    
    
    7,602Accrued expenses
    
    
    738
    
    
    
    (136
    )Net cash used in operating activities
    
    
    (3,726
    )
    
    
    (10,664
    )Investing activitiesPurchase of property and equipment
    
    
    (4,142
    )
    
    
    (2,887
    )Purchase of property and equipment leased to customers
under operating leases
    
    
    (1,903
    )
    
    
    (2,126
    )Purchase of short-term investments
    
    
    
    
    
    
    (10
    )Sale of short-term investments
    
    
    5,522
    
    
    
    Additions to patents and licenses
    
    
    (186
    )
    
    
    (158
    )Proceeds from sales of long-term assets
    
    
    6
    
    
    
    1Long-term assets
    
    
    
    
    
    
    (330
    )Net cash used in investing activities
    
    
    (703
    )
    
    
    (5,510
    )Financing activitiesPayment of long-term debt
    
    
    (640
    )
    
    
    (528
    )Proceeds from long-term debt
    
    
    200
    
    
    
    2,689Proceeds from shareholder notes
    
    
    
    
    
    
    1Repurchase of common stock into treasury
    
    
    (400
    )
    
    
    Excess tax benefits from stock-based compensation
    
    
    95
    
    
    
    193Deferred financing costs and offering costs
    
    
    
    
    
    
    (61
    )Proceeds from issuance of common stock
    
    
    947
    
    
    
    374Net cash provided by financing activities
    
    
    202
    
    
    
    2,668Net decrease in cash and cash equivalents
    
    
    (4,227
    )
    
    
    (13,506
    )Cash and cash equivalents at beginning of period
    
    
    36,163
    
    
    
    23,364Cash and cash equivalents at end of period
    
    $
    31,936
    
    
    $
    9,858Supplemental cash flow information:Cash paid for interest
    
    $
    215
    
    
    $
    192Cash paid for income taxes
    
    
    30
    
    
    
    31Supplemental disclosure of non-cash investing and financing
activitiesShares issued from treasury for stock note receivable
    
    $
    
    
    
    $
    158Shares 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
      7




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##### Table of Contents



Consolidated Balance Sheets as of December 31, 2010As Previouslyreported
    
    
    Adjustments
    
    
    As RestatedAssets:Accounts receivable
    
    $
    24,326
    
    
    $
    1,915
    
    
    $
    26,241Deferred tax assets, current
    
    
    502
    
    
    
    1,252
    
    
    
    1,754Prepaid expenses and other current assets
    
    
    3,140
    
    
    
    1,586
    
    
    
    4,726Total current assets
    
    
    71,066
    
    
    
    4,753
    
    
    
    75,819Property and equipment, net
    
    
    37,741
    
    
    
    (6,750
    )
    
    
    30,991Deferred tax assets, long-term
    
    
    2,662
    
    
    
    (1,603
    )
    
    
    1,059Accounts receivable, long-term
    
    
    
    
    
    
    4,886
    
    
    
    4,886Total assets
    
    
    116,066
    
    
    
    1,286
    
    
    
    117,352Accrued expenses
    
    
    4,190
    
    
    
    (197
    )
    
    
    3,993Deferred revenue
    
    
    1,599
    
    
    
    (563
    )
    
    
    1,036Total liabilities
    
    
    27,430
    
    
    
    (760
    )
    
    
    26,670Shareholders equity:Retained deficit
    
    
    (3,405
    )
    
    
    2,046
    
    
    
    (1,359
    )
 Consolidated Statements of OperationsThree months ended December 31, 2010
    
    
    Nine months ended December 31, 2010As Previously
    
    
    
    
    
    
    
    
    
    
    As Previouslyreported
    
    
    Adjustments
    
    
    As Restated
    
    
    reported
    
    
    Adjustments
    
    
    As RestatedProduct revenue
    
    $
    27,663
    
    
    $
    385
    
    
    $
    28,048
    
    
    $
    54,080
    
    
    $
    4,811
    
    
    $
    58,891Cost of product revenue
    
    
    18,784
    
    
    
    444
    
    
    
    19,228
    
    
    
    35,566
    
    
    
    3,714
    
    
    
    39,280Dividend and interest income
    
    
    3
    
    
    
    186
    
    
    
    189
    
    
    
    19
    
    
    
    416
    
    
    
    435Income tax expense (benefit)
    
    
    1,915
    
    
    
    16
    
    
    
    1,931
    
    
    
    (777
    )
    
    
    183
    
    
    
    (594
    )Net income (loss)
    
    
    644
    
    
    
    112
    
    
    
    756
    
    
    
    (571
    )
    
    
    1,330
    
    
    
    759Net income (loss) per share attributable to common
shareholders  basic
    
    $
    0.03
    
    
    $
    
    
    
    $
    0.03
    
    
    $
    (0.03
    )
    
    $
    0.06
    
    
    $
    0.03Net income (loss) per share attributable to common
shareholders  diluted
    
    $
    0.03
    
    
    $
    
    
    
    $
    0.03
    
    
    $
    (0.03
    )
    
    $
    0.06
    
    
    $
    0.03Weighted average common shares outstanding  basic
    
    
    22,726,426
    
    
    
    
    
    
    
    22,726,426
    
    
    
    22,629,776
    
    
    
    
    
    
    
    22,629,776Weighted average common shares outstanding  diluted
    
    
    23,110,633
    
    
    
    
    
    
    
    23,110,633
    
    
    
    22,629,776
    
    
    
    
    
    
    
    23,061,360
 Consolidated Statements of Cash FlowsNine months ended December 31, 2010As Previouslyreported
    
    
    Adjustments
    
    
    As RestatedNet (loss) income
    
    $
    (571
    )
    
    $
    1,330
    
    
    $
    759Depreciation and Amortization
    
    
    3,145
    
    
    
    (804
    )
    
    
    2,341Deferred income tax benefit
    
    
    (597
    )
    
    
    2
    
    
    
    (595
    )Accounts receivable
    
    
    (9,794
    )
    
    
    (541
    )
    
    
    (10,335
    )Prepaid
expenses and other assets and liabilities
    
    
    (350
    )
    
    
    (4,752
    )
    
    
    (5,102
    )Accrued expenses
    
    
    346
    
    
    
    (482
    )
    
    
    (136
    )Net cash used in operating activities
    
    
    (5,417
    )
    
    
    (5,247
    )
    
    
    (10,664
    )Purchase of property and equipment
    
    
    (2,885
    )
    
    
    (2
    )
    
    
    (2,887
    )Purchase of property and equipment held under operating leases
    
    
    (7,375
    )
    
    
    5,249
    
    
    
    (2,126
    )Net cash used in investing activities
    
    
    (10,757
    )
    
    
    5,247
    
    
    
    (5,510
    )
  8




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##### Table of Contents



NOTE C  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Principles of consolidation
  Basis of presentation
    Use of estimates
  Reclassification
  Cash and cash equivalents
  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 certificates of deposit
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    
    
    
    
    1,000Total
    
    $
    23,297
    
    
    $
    
    
    
    $
    
    
    
    $
    23,297
    
    
    $
    22,297
    
    
    $
    1,000
  9




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##### Table of Contents



December 31, 2010Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    
    
    
    
    Cash and Cash
    
    
    Short TermCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value
    
    
    Equivalents
    
    
    InvestmentsMoney market funds
    
    $
    484
    
    
    $
    
    
    
    $
    
    
    
    $
    484
    
    
    $
    484
    
    
    $
    Bank certificate of deposit
    
    
    1,010
    
    
    
    
    
    
    
    
    
    
    
    1,010
    
    
    
    
    
    
    
    1,010Total
    
    $
    1,494
    
    
    $
    
    
    
    $
    
    
    
    $
    1,494
    
    
    $
    484
    
    
    $
    1,010
   Fair value of financial instruments
  Accounts receivable
  Inventories
    March 31,
    
    
    December 31,2010
    
    
    2010Raw materials and components
    
    $
    11,107
    
    
    $
    14,128Work in process
    
    
    669
    
    
    
    402Finished goods
    
    
    14,215
    
    
    
    17,700$
    25,991
    
    
    $
    32,230
  10




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##### Table of Contents



Property and Equipment
  March 31,
    
    
    December 31,2010
    
    
    2010(As Restated)
    
    
    (As Restated)Land and land improvements
    
    $
    1,436
    
    
    $
    1,474Buildings
    
    
    14,072
    
    
    
    15,749Furniture, fixtures and office equipment
    
    
    6,615
    
    
    
    8,056Equipment leased to customers under Power Purchase Agreements
    
    
    
    
    
    
    2,659Plant equipment
    
    
    7,627
    
    
    
    7,919Construction in progress
    
    
    5,774
    
    
    
    4,57035,524
    
    
    
    40,427Less: accumulated depreciation and amortization
    
    
    (7,331
    )
    
    
    (9,436
    )Net property and equipment
    
    $
    28,193
    
    
    $
    30,991
  Patents and Licenses
  Long-term Finance Receivables
  Other Long-Term Assets
   Fiscal 2013
    
    $
    336Fiscal 2014
    
    
    336Fiscal 2015
    
    
    403Total gross long-term receivable
    
    
    1,075Less: amount representing interest
    
    
    (164
    )Net long-term receivable
    
    $
    911
 Accrued Expenses
    11




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Three Months Ended
    
    
    Nine Months EndedDecember 31,
    
    
    December 31,2009
    
    
    2010
    
    
    2009
    
    
    2010Beginning of period
    
    $
    42
    
    
    $
    59
    
    
    $
    55
    
    
    $
    60Provision to cost of revenue
    
    
    40
    
    
    
    20
    
    
    
    60
    
    
    
    95Charges
    
    
    (44
    )
    
    
    (18
    )
    
    
    (77
    )
    
    
    (94
    )End of period
    
    $
    38
    
    
    $
    61
    
    
    $
    38
    
    
    $
    61
 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
      12




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##### Table of Contents



March 31,
    
    
    December 31,2010
    
    
    2010(As Restated)
    
    
    (As Restated)Deferred revenue  current liability
    
    $
    338
    
    
    $
    276Deferred revenue  long term liability
    
    
    186
    
    
    
    1,036Total deferred revenue
    
    $
    524
    
    
    $
    1,312
 Income Taxes
  Income Taxes
   13




---



##### Table of Contents



Stock Option Plans
  Three Months Ended December 31,
    
    
    Nine Months Ended December 31,2009
    
    
    2010
    
    
    2009
    
    
    2010Weighted average expected term
    
    5.9 years
    
    
    6.0 years
    
    
    6.4 years
    
    
    5.6 yearsRisk-free interest rate
    
    
    2.33
    %
    
    
    1.47
    %
    
    
    2.56
    %
    
    
    2.06
    %Expected volatility
    
    
    60
    %
    
    
    74.8
    %
    
    
    60
    %
    
    
    60% - 74.8
    %Expected forfeiture rate
    
    
    3
    %
    
    
    10
    %
    
    
    3
    %
    
    
    10
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
 Net Income (Loss) per Common Share
  Three months Ended December 31,
    
    
    Nine months Ended December 31,2009
    
    
    2010
    
    
    2009
    
    
    2010(As Restated)
    
    
    (As Restated)
    
    
    (As Restated)
    
    
    (As Restated)Net income (loss) (in thousands)
    
    $
    754
    
    
    $
    756
    
    
    $
    (2,257
    )
    
    $
    759Net income (loss) per common share:Basic
    
    $
    0.03
    
    
    $
    0.03
    
    
    $
    (0.10
    )
    
    $
    0.03Diluted
    
    $
    0.03
    
    
    $
    0.03
    
    
    $
    (0.10
    )
    
    $
    0.03Weighted-average common shares outstanding used in:Basic
    
    
    21,792,175
    
    
    
    22,726,426
    
    
    
    21,709,799
    
    
    
    22,629,776Diluted
    
    
    22,567,575
    
    
    
    23,110,633
    
    
    
    21,709,799
    
    
    
    23,061,360
   December 31,
    
    
    December 31,2009
    
    
    2010Warrants
    
    
    357,144
    
    
    
    45,040Stock Options
    
    
    3,564,200
    
    
    
    3,651,6483,921,344
    
    
    
    3,696,688
 Concentration of Credit Risk and Other Risks and Uncertainties
     14




---



##### Table of Contents



Recent Accounting Pronouncements
 Disclosures about the
Credit Quality of Financing Receivables and the Allowance for Credit Losses
 Multiple-Deliverable Revenue
Arrangements
 NOTE D  RELATED PARTY TRANSACTIONS
   NOTE E  LONG-TERM DEBT
  March 31,
    
    
    December 31,2010
    
    
    2010Term note
    
    $
    1,017
    
    
    $
    843Customer equipment finance note payable
    
    
    
    
    
    
    2,318First mortgage note payable
    
    
    926
    
    
    
    872Debenture payable
    
    
    847
    
    
    
    817Lease obligations
    
    
    7
    
    
    
    2Other long-term debt
    
    
    921
    
    
    
    1,027Total long-term debt
    
    
    3,718
    
    
    
    5,879Less: current maturities
    
    
    (562
    )
    
    
    (1,261
    )Long-term debt, less current maturities
    
    $
    3,156
    
    
    $
    4,618
  15




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##### Table of Contents



New Debt Arrangements
   Revolving Credit Agreement
     NOTE F  INCOME TAXES
   16




---



##### Table of Contents



Nine Months Ended December 31,2009
    
    
    2010(As Restated)
    
    
    (As Restated)Statutory federal tax rate
    
    
    (34.0
    )%
    
    
    34.0
    %State taxes, net
    
    
    2.6
    %
    
    
    2.0
    %Stock-based compensation expense
    
    
    5.0
    %
    
    
    (388.7
    )%Federal tax credit
    
    
    (3.5
    )%
    
    
    (14.7
    )%State tax credit
    
    
    (0.4
    )%
    
    
    (2.2
    )%State valuation allowance
    
    
    0.1
    %
    
    
    8.0
    %Permanent items
    
    
    5.1
    %
    
    
    7.0
    %Other, net
    
    
    2.7
    %
    
    
    (5.4
    )%Effective income tax rate
    
    
    (22.4
    )%
    
    
    (360.0
    )%
    Uncertain tax positions
   Nine Months Ended
    
    
    Nine Months EndedDecember 31, 2009
    
    
    December 31, 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
  17




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##### Table of Contents



NOTE G  COMMITMENTS AND CONTINGENCIES
 Operating Leases and Purchase Commitments
  Litigation
      18




---



##### Table of Contents



NOTE H  SHAREHOLDERS EQUITY
 Employee Stock Purchase Plan
  As of December 31, 2010Shares Issued
    
    
    Closing
    
    
    Shares Issued
    
    
    Dollar Value
    
    
    RepaymentPeriod
    
    Under ESPP Plan
    
    
    Market Price
    
    
    Under  Loan Program
    
    
    Of Loans Issued
    
    
    Of LoansQuarter Ended September 30, 2010
    
    
    40,560
    
    
    $
    3.17
    
    
    
    38,202
    
    
    $
    121,100
    
    
    $
    Quarter Ended December 31, 2010
    
    
    12,274
    
    
    
    3.34
    
    
    
    10,898
    
    
    
    36,400
    
    
    
    844Total
    
    
    52,834
    
    
    $
    3.21
    
    
    
    49,100
    
    
    $
    157,500
    
    
    $
    844
  NOTE I  STOCK OPTIONS AND WARRANTS
    Three Months Ended December 31,
    
    
    Nine Months Ended December 31,2009
    
    
    2010
    
    
    2009
    
    
    2010Cost of product revenue
    
    $
    51
    
    
    $
    42
    
    
    $
    163
    
    
    $
    116General and administrative
    
    
    135
    
    
    
    147
    
    
    
    400
    
    
    
    417Sales and marketing
    
    
    205
    
    
    
    123
    
    
    
    472
    
    
    
    377Research and development
    
    
    10
    
    
    
    9
    
    
    
    29
    
    
    
    21Total
    
    $
    401
    
    
    $
    321
    
    
    $
    1,064
    
    
    $
    931
   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
    
    
    
    6.87Amendment to Plan
    
    
    1,500,000Granted stock options
    
    
    (609,077
    )
    
    
    609,077
    
    
    
    3.66Granted shares in lieu of cash compensation
    
    
    (11,976
    )
    
    
    
    
    
    
    Forfeited
    
    
    218,658
    
    
    
    (218,658
    )
    
    
    3.88Exercised
    
    
    
    
    
    
    (285,020
    )
    
    
    1.31Balance at December 31, 2010
    
    
    1,667,295
    
    
    
    3,651,648
    
    
    $
    3.80
    
    
    
    6.65
    
    
    $
    2,080,575Exercisable at December 31, 2010
    
    
    
    
    
    
    1,748,281
    
    
    $
    3.34
    
    
    
    4.96
    
    
    $
    1,581,405
  19




---



##### Table of Contents



Non-vested at March 31, 2010
    
    
    1,789,119Granted
    
    
    609,077Vested
    
    
    (276,171
    )Forfeited
    
    
    (218,658
    )Non-vested at December 31, 2010
    
    
    1,903,367
   WeightedAverageNumber of
    
    
    ExerciseShares
    
    
    PriceBalance at March 31, 2010
    
    
    76,240
    
    
    $
    2.37Issued
    
    
    
    
    
    
    Exercised
    
    
    (16,000
    )
    
    
    2.50Cancelled
    
    
    (15,200
    )
    
    
    2.50Balance at December 31, 2010
    
    
    45,040
    
    
    $
    2.28
  Number ofExercise Price
    
    Warrants
    
    
    Expiration$2.25
    
    
    38,980
    
    
    Fiscal 2014$2.50
    
    
    6,060
    
    
    Fiscal 2011Total
    
    
    45,040
 NOTE J  SEGMENTS
  Energy Management
  Engineered Systems
   20




---



##### Table of Contents



Corporate and Other
  Revenues
    
    
    Operating (Loss) ProfitFor the Three Months Ended December 31,
    
    
    For the Three Months Ended December 31,(dollars in thousands)
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010(As Restated)
    
    
    (As Restated)
    
    
    (As Restated)
    
    
    (As Restated)Segments:Energy Management
    
    $
    18,204
    
    
    $
    19,739
    
    
    $
    2,689
    
    
    $
    3,203Engineered Systems
    
    
    2,623
    
    
    
    10,317
    
    
    
    (199
    )
    
    
    976Corporate and Other
    
    
    
    
    
    
    
    
    
    
    (1,609
    )
    
    
    (1,583
    )$
    20,827
    
    
    $
    30,056
    
    
    $
    881
    
    
    $
    2,596
 Revenues
    
    
    Operating (Loss) ProfitFor the Nine Months Ended December 31,
    
    
    For the Nine Months Ended December 31,(dollars in thousands)
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010(As Restated)
    
    
    (As Restated)
    
    
    (As Restated)
    
    
    (As Restated)Segments:Energy Management
    
    $
    44,681
    
    
    $
    49,507
    
    
    $
    2,160
    
    
    $
    4,795Engineered Systems
    
    
    6,095
    
    
    
    13,378
    
    
    
    (511
    )
    
    
    135Corporate and Other
    
    
    
    
    
    
    
    
    
    
    (4,905
    )
    
    
    (4,977
    )$
    50,776
    
    
    $
    62,885
    
    
    $
    (3,256
    )
    
    $
    (47
    )
 Total Assets
    
    
    Deferred Revenue(dollars in thousands)
    
    March 31, 2010
    
    
    December 31, 2010
    
    
    March 31, 2010
    
    
    December 31, 2010(As Restated)
    
    
    (As Restated)
    
    
    (As Restated)
    
    
    (As Restated)Segments:Energy Management
    
    $
    58,332
    
    
    $
    71,289
    
    
    $
    390
    
    
    $
    536Engineered Systems
    
    
    3,976
    
    
    
    12,199
    
    
    
    134
    
    
    
    776Corporate and Other
    
    
    42,270
    
    
    
    33,864
    
    
    
    
    
    
    
    $
    104,578
    
    
    $
    117,352
    
    
    $
    524
    
    
    $
    1,312
   21




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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 Prior Period 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 Prior Period Financial Statements
    Background of the Restatement
    
 
  22




---



##### Table of Contents




  Consolidated Balance Sheets as of December 31, 2010As Previouslyreported
    
    
    Adjustments
    
    
    As RestatedAssets:Accounts receivable
    
    $
    24,326
    
    
    $
    1,915
    
    
    $
    26,241Deferred tax assets, current
    
    
    502
    
    
    
    1,252
    
    
    
    1,754Prepaid expenses and other
current assets
    
    
    3,140
    
    
    
    1,586
    
    
    
    4,726Total current assets
    
    
    71,066
    
    
    
    4,753
    
    
    
    75,819Property and equipment, net
    
    
    37,741
    
    
    
    (6,750
    )
    
    
    30,991Deferred tax assets, long-term
    
    
    2,662
    
    
    
    (1,603
    )
    
    
    1,059Accounts receivable, long-term
    
    
    
    
    
    
    4,886
    
    
    
    4,886Total assets
    
    
    116,066
    
    
    
    1,286
    
    
    
    117,352Accrued expenses
    
    
    4,190
    
    
    
    (197
    )
    
    
    3,993Deferred revenue
    
    
    1,599
    
    
    
    (563
    )
    
    
    1,036Total liabilities
    
    
    27,430
    
    
    
    (760
    )
    
    
    26,670Shareholders equity:Retained deficit
    
    
    (3,405
    )
    
    
    2,046
    
    
    
    (1,359
    )
 Consolidated Statements of OperationsThree months ended December 31, 2010
    
    
    Nine months ended December 31, 2010As Previously
    
    
    
    
    
    
    
    
    
    
    As Previouslyreported
    
    
    Adjustments
    
    
    As Restated
    
    
    reported
    
    
    Adjustments
    
    
    As RestatedProduct revenue
    
    $
    27,663
    
    
    $
    385
    
    
    $
    28,048
    
    
    $
    54,080
    
    
    $
    4,811
    
    
    $
    58,891Cost of product revenue
    
    
    18,784
    
    
    
    444
    
    
    
    19,228
    
    
    
    35,566
    
    
    
    3,714
    
    
    
    39,280Dividend and interest income
    
    
    3
    
    
    
    186
    
    
    
    189
    
    
    
    19
    
    
    
    416
    
    
    
    435Income tax expense (benefit)
    
    
    1,915
    
    
    
    16
    
    
    
    1,931
    
    
    
    (777
    )
    
    
    183
    
    
    
    (594
    )Net income (loss)
    
    
    644
    
    
    
    112
    
    
    
    756
    
    
    
    (571
    )
    
    
    1,330
    
    
    
    759Net income (loss) per share
attributable to common
shareholders  basic
    
    $
    0.03
    
    
    $
    
    
    
    $
    0.03
    
    
    $
    (0.03
    )
    
    $
    0.06
    
    
    $
    0.03Net income (loss) per share
attributable to common
shareholders  diluted
    
    $
    0.03
    
    
    $
    
    
    
    $
    0.03
    
    
    $
    (0.03
    )
    
    $
    0.06
    
    
    $
    0.03Weighted average common
shares outstanding  basic
    
    
    22,726,426
    
    
    
    
    
    
    
    22,726,426
    
    
    
    22,629,776
    
    
    
    
    
    
    
    22,629,776Weighted average
common shares outstanding -
diluted
    
    
    23,110,633
    
    
    
    
    
    
    
    23,110,633
    
    
    
    22,629,776
    
    
    
    
    
    
    
    23,061,360
  23




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##### Table of Contents



Consolidated Statements of Cash FlowsNine months ended December 31, 2010As Previouslyreported
    
    
    Adjustments
    
    
    As RestatedNet (loss) income
    
    $
    (571
    )
    
    $
    1,330
    
    
    $
    759Depreciation and Amortization
    
    
    3,145
    
    
    
    (804
    )
    
    
    2,341Deferred income tax benefit
    
    
    (597
    )
    
    
    2
    
    
    
    (595
    )Accounts receivable
    
    
    (9,794
    )
    
    
    (541
    )
    
    
    (10,335
    )Prepaid
expenses and other assets and liabilities
    
    
    (350
    )
    
    
    (4,752
    )
    
    
    (5,102
    )Accrued expenses
    
    
    346
    
    
    
    (482
    )
    
    
    (136
    )Net cash used in operating activities
    
    
    (5,417
    )
    
    
    (5,247
    )
    
    
    (10,664
    )Purchase of property and equipment
    
    
    (2,885
    )
    
    
    (2
    )
    
    
    (2,887
    )Purchase of property and equipment
held under operating leases
    
    
    (7,375
    )
    
    
    5,249
    
    
    
    (2,126
    )Net cash used in investing activities
    
    
    (10,757
    )
    
    
    5,247
    
    
    
    (5,510
    )
 Overview
       24




---



##### Table of Contents



Revenue and Expense Components
 Revenue.
  25




---



##### Table of Contents



Fiscal 2011 remainder
    
    $
    130Fiscal 2012
    
    
    432Fiscal 2013
    
    
    432Fiscal 2014
    
    
    431Beyond
    
    
    1,896Total expected future discounted revenue from PPAs
    
    $
    3,321
     26




---



##### Table of Contents



Contracted Revenue.
 Three months ended
    
    
    Nine months endedDecember 31, 2010
    
    
    December 31, 2010Total Contracted Revenues
    
    $
    26.7
    
    
    $
    74.8Change in backlog (1)
    
    
    5.1
    
    
    
    (5.4
    )Contracted Revenue backlog from OTAs and PPAs (2)
    
    
    (2.3
    )
    
    
    (6.3
    )Other miscellaneous
    
    
    0.6
    
    
    
    (0.2
    )Revenue  GAAP basis
    
    $
    30.1
    
    
    $
    62.9
 (1)
    
    Change in backlog reflects the (increase) or decrease in cash orders at the end of the
respective period where product delivery or service performance has not yet occurred. GAAP
revenue will be recognized when the performance conditions have been satisfied, typically
within 90 days from the end of the period.(2)
    
    Contracted Revenue from OTAs and PPAs are subtracted to reconcile the GAAP revenue as
recognition of GAAP revenue will occur in future periods upon completion of the installation
for OTAs or monthly revenue recognition for PPAs. Backlog.
  27




---



##### Table of Contents



Cost of Revenue.
 Gross Margin.
 Operating Expenses.
      28




---



##### Table of Contents



Interest Expense.
 Dividend and Interest Income.
 Income Taxes.
  Results of Operations
  Three Months Ended December 31,
    
    
    Nine Months Ended December 31,2009
    
    
    2010
    
    
    
    
    
    
    2009
    
    
    2010(As Restated)
    
    
    (As Restated)
    
    
    (As Restated)
    
    
    (As Restated)
    
    
    (As Restated)
    
    
    (As Restated)
    
    
    (As Restated)
    
    
    (As Restated)
    
    
    (As Restated)
    
    
    (As Restated)% of
    
    
    
    
    
    
    % of
    
    
    %
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    %Amount
    
    
    Revenue
    
    
    Amount
    
    
    Revenue
    
    
    Change
    
    
    Amount
    
    
    Revenue
    
    
    Amount
    
    
    Revenue
    
    
    ChangeProduct revenue
    
    $
    18,737
    
    
    
    90.0
    %
    
    $
    28,048
    
    
    
    93.3
    %
    
    
    49.7
    %
    
    $
    45,879
    
    
    
    90.4
    %
    
    $
    58,891
    
    
    
    93.6
    %
    
    
    28.4
    %Service revenue
    
    
    2,090
    
    
    
    10.0
    %
    
    
    2,008
    
    
    
    6.7
    %
    
    
    (3.9
    )%
    
    
    4,897
    
    
    
    9.6
    %
    
    
    3,994
    
    
    
    6.4
    %
    
    
    (18.4
    )%Total revenue
    
    
    20,827
    
    
    
    100.0
    %
    
    
    30,056
    
    
    
    100.0
    %
    
    
    44.3
    %
    
    
    50,776
    
    
    
    100.0
    %
    
    
    62,885
    
    
    
    100.0
    %
    
    
    23.8
    %Cost of product revenue
    
    
    11,860
    
    
    
    56.9
    %
    
    
    19,228
    
    
    
    64.0
    %
    
    
    62.1
    %
    
    
    30,729
    
    
    
    60.5
    %
    
    
    39,280
    
    
    
    62.5
    %
    
    
    27.8
    %Cost of service revenue
    
    
    1,568
    
    
    
    7.5
    %
    
    
    1,674
    
    
    
    5.6
    %
    
    
    6.8
    %
    
    
    3,455
    
    
    
    6.8
    %
    
    
    3,089
    
    
    
    4.9
    %
    
    
    (10.6
    )%Total cost of revenue
    
    
    13,428
    
    
    
    64.5
    %
    
    
    20,902
    
    
    
    69.5
    %
    
    
    55.7
    %
    
    
    34,184
    
    
    
    67.3
    %
    
    
    42,369
    
    
    
    67.4
    %
    
    
    23.9
    %Gross profit
    
    
    7,399
    
    
    
    35.5
    %
    
    
    9,154
    
    
    
    30.5
    %
    
    
    23.7
    %
    
    
    16,592
    
    
    
    32.7
    %
    
    
    20,516
    
    
    
    32.6
    %
    
    
    23.6
    %General and administrative expenses
    
    
    3,051
    
    
    
    14.6
    %
    
    
    2,709
    
    
    
    9.0
    %
    
    
    (11.2
    )%
    
    
    9,357
    
    
    
    18.4
    %
    
    
    8,642
    
    
    
    13.7
    %
    
    
    (7.6
    )%Sales and marketing expenses
    
    
    3,063
    
    
    
    14.7
    %
    
    
    3,235
    
    
    
    10.8
    %
    
    
    5.6
    %
    
    
    9,176
    
    
    
    18.1
    %
    
    
    10,124
    
    
    
    16.1
    %
    
    
    10.3
    %Research and development expenses
    
    
    404
    
    
    
    1.9
    %
    
    
    614
    
    
    
    2.0
    %
    
    
    52.0
    %
    
    
    1,315
    
    
    
    2.6
    %
    
    
    1,797
    
    
    
    2.9
    %
    
    
    36.7
    %Income (loss) from operations
    
    
    881
    
    
    
    4.2
    %
    
    
    2,596
    
    
    
    8.6
    %
    
    
    194.7
    %
    
    
    (3,256
    )
    
    
    (6.4
    )%
    
    
    (47
    )
    
    
    (0.1
    )%
    
    
    98.6
    %Interest expense
    
    
    66
    
    
    
    0.3
    %
    
    
    98
    
    
    
    0.3
    %
    
    
    50.0
    %
    
    
    192
    
    
    
    0.4
    %
    
    
    223
    
    
    
    0.4
    %
    
    
    16.1
    %Dividend and interest income
    
    
    157
    
    
    
    0.8
    %
    
    
    189
    
    
    
    0.6
    %
    
    
    21.0
    %
    
    
    539
    
    
    
    1.1
    %
    
    
    435
    
    
    
    0.7
    %
    
    
    (19.3
    )%Income (loss) before income tax
    
    
    972
    
    
    
    4.7
    %
    
    
    2,687
    
    
    
    8.9
    %
    
    
    176.4
    %
    
    
    (2,909
    )
    
    
    (5.7
    )%
    
    
    165
    
    
    
    0.3
    %
    
    
    105.7
    %Income tax expense (benefit)
    
    
    218
    
    
    
    1.0
    %
    
    
    1,931
    
    
    
    6.4
    %
    
    
    (785.8
    )%
    
    
    (652
    )
    
    
    (1.3
    )%
    
    
    (594
    )
    
    
    (0.9
    )%
    
    
    8.9
    %Net income (loss)
    
    $
    754
    
    
    
    3.6
    %
    
    $
    756
    
    
    
    2.5
    %
    
    
    0.1
    %
    
    $
    (2,257
    )
    
    
    (4.4
    )%
    
    $
    759
    
    
    
    1.2
    %
    
    
    133.6
    %
  29




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##### Table of Contents



Consolidated
 Revenue.
 Cost of Revenue and Gross Margin.
 General and Administrative Expense.
 Sales and Marketing Expense.
 Research and Development Expense.
 Interest Expense.
 Interest Income.
  30




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##### Table of Contents



Income Taxes.
 Contracted Revenue.
 Energy Management Segment
  For the Three Months Ended December 31,
    
    
    For the Nine Months Ended December 31,(dollars in thousands)
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Revenues
    
    $
    18,204
    
    
    $
    19,739
    
    
    $
    44,681
    
    
    $
    49,507Operating income
    
    
    2,689
    
    
    
    3,203
    
    
    
    2,160
    
    
    
    4,795Operating margin
    
    
    14.8
    %
    
    
    16.2
    %
    
    
    4.8
    %
    
    
    9.7
    %
   Engineered Systems Segment
  For the Three Months Ended December 31,
    
    
    For the Nine Months Ended December 31,(dollars in thousands)
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Revenues
    
    $
    2,623
    
    
    $
    10,317
    
    
    $
    6 ,095
    
    
    $
    13,378Operating (loss) income
    
    
    (199
    )
    
    
    976
    
    
    
    (511
    )
    
    
    135Operating margin
    
    
    (7.6
    )%
    
    
    9.5
    %
    
    
    (8.4
    )%
    
    
    1.0
    %
  31




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##### Table of Contents



Liquidity and Capital Resources
 Overview
  Cash Flows
  Nine Months EndedDecember 31,2009
    
    
    2010(As Restated)
    
    
    (As Restated)Operating activities
    
    $
    (3,726
    )
    
    $
    (10,664
    )Investing activities
    
    
    (703
    )
    
    
    (5,510
    )Financing activities
    
    
    202
    
    
    
    2,668Decrease in cash and cash equivalents
    
    $
    (4,227
    )
    
    $
    (13,506
    )
 Cash Flows Related to Operating Activities.
    32




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##### Table of Contents



Cash Flows Related to Investing Activities.
  Cash Flows Related to Financing Activities.
  Working Capital
    33




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##### Table of Contents



Indebtedness
 Revolving Credit Agreement
     Capital Spending
  Contractual Obligations and Commitments
  Less than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Total
    
    
    Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    YearsBank debt obligations
    
    $
    5,877
    
    
    $
    1,261
    
    
    $
    2,315
    
    
    $
    1,632
    
    
    $
    669Capital lease obligations
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    Cash interest payments on debt
    
    
    1,209
    
    
    
    312
    
    
    
    403
    
    
    
    174
    
    
    
    320Operating lease obligations
    
    
    9,217
    
    
    
    1,699
    
    
    
    2,301
    
    
    
    1,670
    
    
    
    3,547Purchase order and cap-ex commitments (1)
    
    
    13,460
    
    
    
    9,643
    
    
    
    3,817
    
    
    
    
    
    
    
    Total
    
    $
    29,765
    
    
    $
    12,917
    
    
    $
    8,836
    
    
    $
    3,476
    
    
    $
    4,536
  (1)
    
    Reflects non-cancellable purchase order commitment in the amount of $13.4 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 $0.1 million for improvements to information technology systems, renewable
energy products and manufacturing equipment and tooling.  34




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##### Table of Contents



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
    35




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##### Table of Contents



PART II OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
      
 ITEM 1A.
    
    RISK FACTORS
   36




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##### Table of Contents



ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 (b) Use of Proceeds
  
 ITEM 4.
    
    REMOVED AND RESERVED
 
 ITEM 5.
    
    OTHER INFORMATION
 Statistical Data
  Cumulative FromDecember 1, 2001Through December 31, 2010(in thousands, unaudited)HIF lighting systems sold(1)
    
    
    1,973Total units sold (including HIF lighting systems)
    
    
    2,593Customer kilowatt demand reduction(2)
    
    
    607Customer kilowatt hours saved(2)(3)
    
    
    14,321,538Customer electricity costs saved(4)
    
    $
    1,102,758Indirect carbon dioxide emission reductions from customers energy savings (tons)(5)
    
    
    9,519Square footage retrofitted(6)
    
    
    1,010,057
  (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 2.59
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.  37




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##### Table of Contents



(6)
    
    Based on 2.59 million total units sold, which contain a total of approximately 12.95 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. 
 ITEM 6.
    
    EXHIBITS
 (a) Exhibits
 10.1
    
    
    Orion Energy Systems, Inc. 2004 Stock and Incentive Awards Plan, as amended
(incorporated by reference to Appendix A to the definitive proxy statement of Orion Energy
Systems, Inc. filed on Schedule 14A on September 10, 2010).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.
 
  38




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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)  39




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##### Table of Contents



Exhibit Index to Form 10-Q for the Period Ended December 31, 2010
 10.1
    
    
    Orion Energy Systems, Inc. 2004 Stock and Incentive Awards Plan, as amended (incorporated by
reference to Appendix A to the definitive proxy statement of Orion Energy Systems, Inc. filed
on Schedule 14A on September 10, 2010).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.
  40