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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
ANNUAL REPORT
Amendment No. 1
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended April 30, 2010
Commission file number 0-10146
SERVIDYNE, INC.
(Exact name of registrant as specified in its charter)
     
Georgia   58-0522129
     
(State or other
jurisdiction of incorporation or organization)
  (I.R.S. Employer
identification No.)
     
1945 The Exchange, Suite 300, Atlanta, GA   30339-2029
     
(Address of principal executive offices)   (Zip Code)
Registrant’s telephone number, including area code: (770) 953-0304
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
     
Title of each class:   Name of each exchange on which registered:
Common Stock, $1.00 Par Value Per Share   NASDAQ Global Market
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
(Title of Class)
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.
YES o NO þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Act.
YES o NO þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES þ NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K/A or any amendment to this Form 10-K/A. þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer oAccelerated Filer o 
Non-Accelerated Filer o
(Do not check if a smaller reporting company)
Smaller Reporting Company þ
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES o NO þ
     The aggregate market value of Common Stock held by non-affiliates of the registrant as of October 31, 2009, was $3,664,564. See Part III of the original filing of this report for a definition of non-affiliates. The number of shares of Common Stock of the registrant outstanding as of April 30, 2010, was 3,676,383.
 
 

 


TABLE OF CONTENTS

Explanatory Note
PART I
ITEM 1. BUSINESS
ITEM 2. PROPERTIES
PART II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
SIGNATURES
EX-23.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2


Table of Contents

Explanatory Note
Servidyne, Inc. is filing this Amendment No.1 to the Company’s Annual Report on Form 10-K/A for the year ended April 30, 2010, originally filed with the Securities and Exchange Commission (the “SEC”) on July 28, 2010 (the “Original Annual Report”), to restate and recast the Consolidated Balance Sheets as of April 30, 2010 and 2009, the Consolidated Statements of Operations, Shareholders’ Equity and Cash Flows for the years ended April 30, 2010 and 2009, and certain footnote disclosures thereto.
The need to restate the financial statements resulted from an error in the application of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, Accounting for Income Taxes, related to the recoverability of deferred tax assets, which was discovered in March 2011 in connection with the performance of the third quarter 2011 review. During the third quarter of fiscal 2011, the Company moved from a consolidated net deferred tax liability position into a consolidated net deferred tax asset position, which highlighted a potential recoverability issue related to its deferred tax assets. Accordingly, the Company performed an analysis of recoverability by weighing all positive evidence of recovery against all negative evidence of recovery. Because the Company was in a three-year cumulative book loss position, it was determined that the future earnings projections of the Company over the relatively long net operating loss carryforward period did not represent objectively verifiable positive evidence of recovery, and that the recent historical results were objectively verifiable negative evidence.
The Company determined that it had no exposure to non-recoverability at the federal jurisdiction level due to adequate future taxable income offsetting federal net operating losses through the form of deferred tax liabilities. The exposure to non-recoverability was determined to exist at the state jurisdiction level. As a result of this analysis, the Company recorded a full valuation allowance in the amount of $857,000 on its state deferred tax assets during the quarter ended January 31, 2011, as filed in the Company’s Form 10-Q for the period.
Upon further analysis during April 2011, the Company determined that it had actually entered into the three-year cumulative book loss position in the fourth quarter of fiscal year 2009. As a result, the Company should not have used future earnings projections to analyze recoverability since the fourth quarter of fiscal 2009. The result of this error is that the Company understated its deferred tax asset valuation allowance by approximately $600,000 and $429,000 as of April 30, 2010 and 2009, respectively. Additionally, the Company understated its net loss by approximately $170,000 and $429,000 for the fiscal years ended April 30, 2010, and 2009, respectively.
In addition, the financial statements have been recast as a result of two items which occurred since the original filing: sales of income-producing properties and a change in segment reporting. To reflect the sales of income-producing properties since the original filing, the assets, liabilities and operating results of the disposed properties have been reclassified in the financial statements as discontinued operations. In addition, the change in segment reporting relates to the discontinuance of the Company’s Real Estate Segment as a result of the sale of the last income-producing property other than the corporate headquarters facility during the fiscal quarter ended January 31, 2011. As a result, the book value of the corporate headquarters facility has been reclassified from “Income-Producing Properties, net” to “Property and Equipment, net” on the balance sheets.
See Notes 4, 14, and 19 to the consolidated financial statements for more information regarding the recasting and restatement.
Also, Item 6. Selected Financial Data has not been included in this annual report. This item is not required due to the Company’s status as a “Smaller Reporting Company;” however, as the Company still had the Real Estate Segment in its original filing, Item 6 was included to aid the reader in understanding the complexity of the accounting treatment for discontinued operations. With the discontinuance of the segment, the Company has not included the item in this amendment and currently does not intend to include it in future filings. As such, the information in Item 6 as filed in the original filing should not be relied on as it has not been recast for discontinued operations that occurred subsequent to the original filing, nor updated to reflect the restatement.
The following sections have been amended from the Original Annual Report as a result of the recasting and restatement described above:
    Part I — Item 1 — Business
 
    Part I — Item 2 — Properties
 
    Part II — Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
    Part II — Item 8 — Financial Statements
 
    Part II — Item 9A — Controls and Procedures
Pursuant to the rules of the SEC, Item 15 of Part IV has also been amended to include the currently dated certification from the Company’s Chief Executive Officer and Chief Financial Officer as required by Sections 302 and 906. The certifications of the Company’s Chief Executive Officer and Chief Financial Officer are attached as Exhibits 31 and 32.
Except as set forth herein, the original filing of the annual report has not been amended. The original filing should be read in conjunction with this Amendment No. 1. To the extent not addressed herein or in the original filing, events occurring subsequent to the fiscal year ended April 30, 2010, have been or will be addressed in the Company’s filings with the SEC for subsequent periods.

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PART I
ITEM 1. BUSINESS
Servidyne, Inc. provides comprehensive energy efficiency and demand response solutions, sustainability programs, and other building performance-enhancing products and services to owners and operators of existing buildings, energy services companies, and public and investor-owned utilities.
As used herein, the terms we, our, us and the “Company” refers to Servidyne, Inc. and its subsidiaries and predecessors, unless the context indicates otherwise.
The Company was organized under Delaware law in 1960 to succeed to the business of A. R. Abrams, Inc., which was founded in 1925 by Alfred R. Abrams as a sole proprietorship. In 1984, the Company changed its state of incorporation from Delaware to Georgia. In 2006, the Company changed its name from Abrams Industries, Inc. to Servidyne, Inc.
The Company operates through one (1) wholly-owned segment, Building Performance Efficiency (“BPE”). During the third quarter of fiscal 2011, the Company sold its last owned income-producing property, other than its corporate headquarters facility. As a result, the Company’s Real Estate Segment is no longer considered a reportable segment. Accordingly, the Company has removed all references to the Real Estate Segment from this annual report, and will not report results of the Real Estate Segment in future periodic reports.
Further information on the Company’s operating segment is discussed below. Financial information for the segment is set forth in Note 14 “Segment Reporting” to the consolidated financial statements.
In June 2008, Atlantic Lighting & Supply Co., LLC (“ALS, LLC”), a wholly-owned subsidiary of the Company, acquired the business and assets of Atlantic Lighting & Supply Co., Inc. ALS, LLC is a distributor of cutting-edge energy efficient lighting products, and is now part of the BPE Segment.
BPE SEGMENT
The BPE Segment provides comprehensive energy efficiency and demand response solutions, sustainability programs, and other products and services that significantly enhance the operating and financial performance of existing buildings. BPE offers strategic programs and services that enable building owners and operators to optimize the short-term and long-term financial performance of their building portfolios by cutting energy consumption and other operating costs, while reducing greenhouse gas emissions and improving the comfort and satisfaction of their buildings’ occupants. The Company conducts such operations under the names Servidyne Systems, The Wheatstone Energy Group, and Atlantic Lighting & Supply Co. BPE’s offerings include the following:
    The BPE Energy Solution is designed to help building owners and operators substantially reduce energy consumption and cut utility and operating costs of their existing facilities. Major elements include: energy modeling; energy audits; building retro-commissioning; LEED® and ENERGY STAR® certifications; comprehensive preventive maintenance of energy-consuming equipment; turn-key design and implementation of energy-saving lighting systems; and retrofits of mechanical and electrical systems.
 
    The BPE Environmental Sustainability Solution is designed to help building owners and operators identify and transform wasteful and inefficient facilities into cost-effective, energy efficient and environmentally sustainable facilities. Major elements include: energy and sustainability audits; building performance benchmarking and utility monitoring; retro-commissioning of existing systems; efficiency improvements of existing energy conversion and water consuming building assets; and other efficiency improvements that extend the lives of building infrastructures and equipment.
 
    The BPE Occupant Satisfaction Solution is designed to help building owners and operators measurably improve the comfort level and satisfaction of their tenants, guests and employees. Major elements include: proprietary Web/wireless systems to manage guest and tenant service requests; identification of low-cost and no-cost operating efficiency improvements; lighting quality upgrades; technical staff training; more consistent control of building temperature and humidity conditions; and improved reliability of building systems and controls.

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    The BPE Utility Solution is designed to be a cost effective and reliable way for utilities and their customers to modify peak usage of electricity by implementing demand response programs that utilize smart grid technologies, in order to reduce excess demand on the electric grid, lessen the need for utilities to build expensive new energy generating plants, and provide substantial ongoing cost savings for building owners and operators. The Company launched this new product line, marketed under the name Fifth Fuel Management™, during the current fiscal year, by expanding the Company’s Web-based iTendant® platform to create the real-time, energy optimization and demand response system. Major elements include: comprehensive demand response facility audits; technology-enabled real-time demand response programs (automatic, semi-automatic and manual); reliable two-way, fast and secure communication and tracking; retro-commissioning of existing systems; customized site training; and step-by-step processes for optimized demand response participation.
The BPE Segment serves a broad range of markets in the United States and internationally, including owners and operators of corporate, commercial office, hospitality, gaming, retail, light industrial, distribution, healthcare, government, multi-family, military, education and institutional buildings and facilities; energy service companies (ESCOs); and public and investor-owned utility companies. Contracts are primarily obtained through negotiations with customers, but may also be obtained through competitive bids on larger energy savings and infrastructure upgrade projects and programs.
EMPLOYEES AND EMPLOYEE RELATIONS
At April 30, 2010, the Company employed 94 salaried employees and 8 hourly employees. The Company believes that its relations with its employees are good.
SEASONAL NATURE OF BUSINESS
The Company’s business generally is not seasonal. However, certain retail customers may choose to delay the implementation of energy savings projects during the peak winter holiday season.
COMPETITION
The industries in which the Company operates are highly competitive. The BPE Segment’s competition is widespread and ranges from multi-national companies to local and regional firms.
BACKLOG
The following table indicates the backlog of contracts:
                                 
                    Increase
    April 30,   (Decrease)
    2010   2009   Amount   Percentage
BPE (1)
  $ 15,369,000     $ 9,885,000     $ 5,484,000       55  
Other (2)
    402,000       392,000       10,000       3  
               
Total Backlog
  $ 15,771,000     10,277,000     $ 5,494,000       53  
     
 
(1)   BPE backlog at April 30, 2010, increased by approximately $5,484,000, or 55%, compared to the year-earlier period, primarily due to:
  (a)   an increase of approximately $5,078,000 in energy savings (lighting and mechanical) projects;
 
  (b)   approximately $790,000 in new backlog from the BPE Segment’s new Fifth Fuel Management™ service offering; and
 
  (c)   an increase of approximately $249,000 in lighting products from the Company’s lighting distribution business;
  partially offset by:   
  (d)   a decrease of approximately $176,000 in productivity software products and services; and
 
  (e)   a decrease of approximately $457,000 in energy management consulting services, primarily due to the successful completion of multi-year consulting services projects.

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    BPE backlog includes some contracts that can be cancelled by customers with less than one year’s notice, and assumes such cancellation provisions will not be invoked. The value of such contracts included in the prior year’s backlog that were subsequently cancelled was approximately $70,000 or 0.7%.
(2)   Other backlog represents rental income under lease agreements at the Company’s corporate headquarters building and other leasehold interests.
Other than as noted above, the Company estimates that a substantial majority of the backlog at April 30, 2010, will be recognized prior to April 30, 2011. No assurance can be given as to future backlog levels or whether the Company will actually realize earnings from revenues that result from the backlog at April 30, 2010.
REGULATION
The Company is subject to the authority of various federal, state, and local regulatory agencies, including, among others, the Occupational Safety and Health Administration and the Environmental Protection Agency. The Company is also subject to local zoning regulations and building codes. Management believes that the Company is in substantial compliance with all governmental regulations. Management believes that the Company’s compliance with federal, state, and local provisions, which have been enacted or adopted for regulating the discharge of materials into the environment, does not adversely affect the capital expenditures, earnings, or competitive position of the Company.

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ITEM 2. PROPERTIES
The Company owns its corporate headquarters building, which contains approximately 65,880 square feet of leasable office space. The building is located in the North x Northwest Office Park, 1945 The Exchange, in suburban Atlanta, Georgia. The Company utilizes 25,928 square feet of this building as its main office and the remainder of the leasable space is either currently leased to third parties or vacant. In addition, in conjunction with the Company’s acquisition of Atlantic Lighting & Supply Co., Inc. in June 2008, the Company assumed a lease for 25,654 square feet of office and warehouse space, which lease is currently scheduled to expire in May 2015.
In order to gain corporate clarity and to fund its continuing operations and investment in its BPE Segment, the Company disposed of several income-producing properties during fiscal years 2009, 2010 and 2011. See ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS under the “DISCONTINUED OPERATIONS” section for further details. As a result, the Company’s real estate assets now consist of only its corporate headquarters building; a commercially-zoned land parcel in North Ft. Myers, Florida; and commercially-zoned land parcels in Oakwood, Georgia.

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PART II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The Company has one operating segment, the BPE Segment. The Company through the BPE Segment continues to add new products and service offerings, which may come in part from future business acquisitions.
During the third quarter of fiscal 2011, the Company sold its last owned income-producing property, other than its corporate headquarters facility. As a result, the Company’s Real Estate Segment is no longer considered a reportable segment. Accordingly, the Company has removed all references to the Real Estate Segment from this annual report, and will not report results of the Real Estate Segment in future periodic reports (Note 14 “Segment Reporting” to the consolidated financial statements for more information). In addition, the figures in the following charts for both periods presented do not include former Real Estate Segment revenues, costs of revenues, selling, general and administrative expenses, and loss from continuing operations before income taxes associated with certain formerly owned income-producing properties, which have been sold or otherwise disposed; such amounts have been reclassified as discontinued operations (see “Critical Accounting Policies — Discontinued Operations” later in this discussion and analysis section).
The Company’s financial conditions, results of operations and cash flows as of and for the years ended April 30, 2010 and 2009, have been recast and restated. All information and disclosures in this management’s discussion and analysis have been updated to reflect the effects of such recasting and restatement. For a more detailed description of the recasting and restatement, see Notes 4, 14, and 19 of the Notes to the accompanying consolidated financial statements in this Amendment No. 1 to the Company’s 2010 Annual Report on Form 10-K/A.
In “RESULTS OF OPERATIONS” below, changes in revenues, costs of revenues, selling, general and administrative expenses, and loss from continuing operations before income taxes from period to period are analyzed on a segment basis. For other information on a consolidated basis, please see the Company’s consolidated financial statements.
OVERVIEW
The Company entered fiscal year 2010 with a backlog of approximately $10 million, which substantially contributed to the year-over-year increase in BPE revenues of 38% compared to the prior year, including a 100% year-over-year increase in Energy Savings Projects revenues. Although BPE revenues outpaced new orders during the first six (6) months of the current fiscal year, leading to a decline in backlog during that period, new order activity began to strengthen beginning in September 2009, and new order bookings increased sequentially in both the third and fourth quarters. The BPE Segment was awarded approximately $12.4 million in new orders during the fourth quarter, including order bookings from customers in both the private sector and the government sector. As a result, the BPE Segment produced revenue growth of 52%, earnings before taxes of approximately $98,000, and positive EBITDA1 of approximately $307,000 (earnings before taxes plus interest of approximately $18,000 plus depreciation and amortization of approximately $191,000) in the fourth quarter. BPE backlog as of April 30, 2010, was approximately $15.4 million, which was 79% higher than the backlog at January 31, 2010, and 55% higher than the backlog at April 30, 2009. The $15.4 million in backlog as of April 30, 2010, represents the highest backlog achieved by the BPE Segment in the Company’s history.
The Company believes that the recent increase in BPE order activity is a direct result of three (3) distinct factors: the success of the Company’s enhanced sales and marketing efforts, which were initiated in fiscal 2009; an overall improvement in the capital spending environment for many of the BPE Segment’s customers; and the beginning of the long-anticipated infusion of U.S. government expenditures for energy efficiency upgrades of government facilities. The Company believes that these factors will continue to be favorable for the BPE Segment in fiscal year 2011. Management currently expects that the BPE Segment will generate positive EBITDA for the full fiscal year 2011, as revenues remain strong; however, EBITDA on a quarterly basis is more sensitive to fluctuations in the timing of revenues and may not be positive in an individual quarter. Moreover, management believes that a longer period of time will be required before the BPE Segment is able to generate sufficient sustained cash flow to fully fund the Company’s operations.
 
1   The Company believes EBITDA is a useful non-GAAP measurement of the BPE Segment’s performance, because it provides information that can be used to further evaluate the operational effectiveness of the business. One should not consider EBITDA an alternative to, or a more meaningful indicator of the segment’s operating performance than, earnings before taxes as determined in accordance with GAAP.

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The Company has enjoyed initial success in marketing the BPE Segment’s new product line, Fifth Fuel Management™. As a result, the Company currently anticipates that new order activity will be generated by this new offering over the next several quarters. The BPE Segment has expanded its sales force to offer this new technology-enabled demand response and energy efficiency system to a network of utilities and independent system operators in the U.S., as well as to owners and operators of large commercial office buildings, retail stores, hotels, light industrial facilities and institutional buildings. In February 2010, the Company received its initial multi-year orders for this new offering, and Fifth Fuel Management™ order bookings totaled approximately $800,000 in the fourth quarter of fiscal 2010. The Company created Fifth Fuel Management™ by expanding its Web-based iTendant® platform to become a real-time, energy optimization and demand response system. The new system was successfully tested at several large luxury hotels during the second quarter of fiscal 2010 in a pilot program for a major U.S. electric utility, implementing the demand response participation by controlling the hotels’ peak time energy usage. Demand response is emerging as a critical tactic to help address the growing imbalance in the supply and demand of generated electric power in the United States. The Company designed Fifth Fuel Management™ to be a cost effective and reliable way for utilities to optimize their customers’ demand response participation and to enable owners and operators of large, complex buildings to maximize the value of their investments in energy efficiency. In addition, the Company expects Fifth Fuel Management™ will provide additional opportunities for sales of the BPE Segment’s existing services and products, which can enable the BPE Segment to leverage its established customer base of building owners and operators to help utilities gain better utilization of their existing energy generating facilities and infrastructures. The Company believes the BPE Segment is now much better positioned to participate in the growing utility market sector, and as a result, anticipates that it will begin generating additional recurring revenues over the next year through new multi-year contracts with utilities. However, the Company’s ability to develop the new Fifth Fuel Management™ offering to its full potential will require additional capital.
To support revenue growth over a longer time horizon, in addition to the inherent potential of the utility market sector, the Company anticipates continued strong BPE order growth from the government sector and from customers in the private sector. The Company’s BPE Segment offers the government sector many of the same offerings provided to private sector customers, including energy savings projects and other energy efficiency-focused products and services, usually by acting as a subcontractor to large energy services company (“ESCO”) partners to provide services to end-user government facilities. Through this channel, the BPE Segment provides services to a wide range of government facilities, including U.S. military bases, federal and state prisons, and large public educational facilities, school districts, and a variety of other federal, state and municipal buildings and facilities. The Company believes that future growth in BPE’s government business should be underpinned by two (2) federal actions: in December 2008, the U.S. Department of Energy (“DOE”) announced a program to fund $80 billion of energy savings performance contracts through sixteen (16) large ESCOs to improve the energy efficiency of government buildings; and in February 2009, President Obama signed the American Recovery and Reinvestment Act of 2009, which is providing an additional approximately $75 billion for the performance of energy efficiency projects in government buildings. The Company has existing business relationships with half of these sixteen (16) selected ESCOs and a long history of providing these exact types of services to the government sector. As a result, the Company believes that it is well positioned to perform a significant amount of these funded projects.
While the potential market demand for the BPE Segment’s offerings appears to be quite promising, there can be no assurance that this will result in sustained revenue growth, particularly if recent macro-economic conditions were to continue, or worsen, for an extended period of time.

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LIQUIDITY
Despite the recent successes and achievements described above, the Company’s full year loss from operations in fiscal year 2010 resulted in significant usage of the Company’s cash, continuing the trend of substantial cash usage to fund operating losses in recent fiscal quarters, with the exception of the second quarter of fiscal 2010, when the Company generated approximately $27,000 in positive cash flow from operations. Although as noted above, the BPE Segment generated positive EBITDA and net earnings from operations in the fourth quarter of fiscal 2010 and is expected to continue improved financial performance in fiscal year 2011, a longer period of time will be required before the BPE Segment is able to generate sufficient sustained cash flow to fully fund the Company’s operations. The Company believes that it has, or can obtain, sufficient capital resources to operate its business in the ordinary course until the BPE Segment begins to generate sufficient sustained cash flow to fund the Company’s operations, which it may seek to obtain using any of the methods described below in “Liquidity and Capital Resources”; however, there can be no assurance that the Company would be successful in the efforts.
Historically, earnings before taxes have been indicative of the BPE Segment’s cash flow before taking into account the timing of receivables and payables. Given the continuing substantial revenue growth and earnings that the Company currently expects the BPE Segment to achieve in the next few fiscal quarters, the timing of when the segment will begin to generate consistent positive cash flow from operations will be dependent on the timing of collections on customer receivables and payments to vendors and suppliers. In addition, there can be no guarantee that the expected substantial revenue growth, positive EBITDA and net earnings from operations at the BPE Segment will actually occur, particularly if recent macro-economic conditions continue, or worsen, for an extended period of time. See “Liquidity and Capital Resources” later in this discussion and analysis section for more information.
RESULTS OF OPERATIONS
REVENUES
Consolidated revenues from continuing operations, prior to intercompany revenues, were $18,561,530 in fiscal 2010 compared to $13,632,938 in fiscal 2009. This represents an increase in revenues of 36%.
CHART A
REVENUES FROM CONTINUING OPERATIONS
(Dollars in Thousands)
                                 
    Years Ended        
    April 30,   Amount   Percentage
    2010   2009   Change   Change
     
BPE (1)
  $ 18,172     $ 13,192     $ 4,980       38  
Other
    390       441       (51 )     (12 )
             
 
  $ 18,562     $ 13,633     $ 4,929       36  
     

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NOTES TO CHART A
 
(1)   The following table indicates the BPE Segment revenues by service and product type:
BPE SEGMENT REVENUES — SUMMARY BY SERVICE & PRODUCT TYPE
(Dollars in Thousands)
                                 
    Years Ended        
    April 30   Amount   Percentage
    2010   2009   Change   Change
     
Energy Savings Projects
  $ 11,051     $ 5,534     $ 5,517       100  
Lighting Products
    1,933       1,665       268       16  
Energy Management Services
    1,801       2,319       (518 )     (22 )
Fifth Fuel Management Services
    28             28        
Productivity Software
    3,359       3,674       (315 )     (9 )
             
 
  $ 18,172     $ 13,192     $ 4,980       38  
     
BPE Segment revenues increased by approximately $4,980,000, or 38%, in fiscal 2010 compared to fiscal 2009, primarily due to:
  (a)   an increase in energy savings (lighting and mechanical) project revenues of approximately $5,517,000, primarily due to the substantial increase in revenues from customers in both the private sector and the government sector, including revenues of approximately $3,160,000 from several new energy savings project customers, representing the initial phases of new energy savings program initiatives for those customers; and
 
  (b)   an increase in lighting product revenues of approximately $268,000 due to improved business conditions;
partially offset by:
  (c)   a decrease in energy management services of approximately $518,000 due to the completion of multi-year consulting services projects; and
 
  (d)   a decrease in productivity software revenues of approximately $315,000 due to fewer new implementations with existing large-portfolio customers.
COST OF REVENUES
As a percentage of total revenues from continuing operations (see Chart A), the total applicable costs of revenues (see Chart B), prior to intercompany costs, were 70% and 68% for fiscal years 2010 and 2009, respectively. In reviewing Chart B, the reader should recognize that the volume of revenues generally will affect the amounts and percentages presented.
The figures in Chart B are prior to intercompany costs.
CHART B
COST OF REVENUES FROM CONTINUING OPERATIONS
(Dollars in Thousands)
                                 
                    Percentage of
                    Revenues for the
    Years Ended   Years Ended
    April 30,   April 30,
    2010   2009   2010   2009
     
BPE (1)
  $ 12,301     $ 8,562       68       65  
Other
    747       750       192       170  
                     
 
  $ 13,048     $ 9,312       70       68  
     

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NOTES TO CHART B
 
(1)   BPE Segment cost of revenues increased by approximately $3,739,000, or 44%, in fiscal 2010 compared to fiscal 2009, primarily due to the corresponding increase in revenues (see Chart A).
 
    On a percentage-of-revenues basis, BPE Segment cost of revenues increased by approximately 3% in fiscal 2010 compared to fiscal 2009, primarily due to a change in the mix of services and products.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
As a percentage of total revenues from continuing operations (see Chart A), the total applicable selling, general and administrative expenses (“SG&A”) (see Chart C), prior to intercompany expenses, were 53% and 73% in fiscal years 2010 and 2009, respectively. In reviewing Chart C, the reader should recognize that the volume of revenues generally will affect the amounts and percentages presented. The percentages in Chart C are based upon expenses as they relate to segment revenues from continuing operations (see Chart A), with the exception that Corporate and total expenses relate to total consolidated revenues from continuing operations.
The figures in Chart C are prior to intercompany expenses.
CHART C
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
FROM CONTINUING OPERATIONS
(Dollars in Thousands)
                                 
                    Percentage of
                    Revenues for the
    Years Ended   Years Ended
    April 30,   April 30,
    2010   2009   2010   2009
     
BPE (1)
  $ 5,830     $ 5,717       32       43  
Corporate (2)
    3,953       4,168       21       31  
                     
 
  $ 9,783     $ 9,885       53       73  
     
NOTES TO CHART C
 
(1)   BPE Segment SG&A expenses increased by approximately $113,000, or 2%, in fiscal 2010 compared to fiscal 2009, primarily due to approximately $236,000 of one-time, outside consulting costs, partially offset by a decrease in general and administrative costs and product and project development expenses.
 
    On a percentage-of-revenues basis, BPE Segment SG&A expenses decreased by approximately 11% in fiscal 2010 compared to fiscal 2009, primarily due to the increase in revenues (see Chart A) without a corresponding proportional increase in expenses.
 
(2)   Corporate SG&A expenses decreased by approximately $215,000, or 5%, in fiscal 2010 compared to fiscal 2009, primarily due to a decrease in legal fees of approximately $230,000 related to costs incurred in the prior year to settle an insurance claim, decreased SEC compliance costs, and a decrease in personnel-related costs, consulting fees and other legal fees, partially offset by an increase in fair value of deferred executive compensation plan liabilities of approximately $166,000.
 
    On a percentage-of-revenue basis, Corporate SG&A expenses decreased from 31% of revenues to 21% of revenues in fiscal 2010 compared to fiscal 2009, primarily due to the increase in revenues (see Chart A), while expenses decreased.

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EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
Consolidated loss from continuing operations before income taxes was $4,350,601 in fiscal 2010 compared to $5,548,977 in fiscal 2009, a year-over-year improvement of $1,198,376, or 22%.
The figures in Chart D are prior to intercompany revenues, costs and expenses.
CHART D
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
(Dollars in Thousands)
                         
    Years Ended   (Increase)
    April 30,   Decrease
    2010   2009   Amount
     
BPE (1)
  $ 64     $ (1,126 )   $ 1,190  
Corporate
    (4,415 )     (4,424 )     9  
     
Total
  $ (4,351 )   $ (5,550 )   $ 1,199  
     
NOTES TO CHART D
 
(1)   BPE Segment earnings before income taxes of approximately $64,000 for fiscal 2010 represents earnings growth of approximately $1,190,000 compared to the same period in fiscal 2009, primarily due to the increase in revenues of approximately $4,980,000 (see Chart A), an increase in gross margin of approximately $1,240,000, and an increase in other income of approximately $68,000, partially offset by an increase in SG&A expenses of approximately $113,000 (see Chart C). The financial performance improvement of the BPE Segment is the result of improving business conditions combined with the containment of overhead costs.
INCOME TAX BENEFIT
The Company’s effective rate for income taxes, based upon estimated annual income tax rates, approximated 36.4% of loss from continuing operations before income taxes in fiscal 2010 and 27.5% in fiscal 2009. The effective rates in both years reflect the valuation allowances recorded against the Company’s state deferred tax assets as described in Note 19 to the consolidated financial statements.
INTEREST COSTS
Interest costs of $402,104 and $412,441 in fiscal years 2010 and 2009, respectively, were primarily related to the mortgage on the corporate headquarters building. There was no capitalized interest in any of the years presented.
ACQUISITIONS
Fiscal 2010
There were no acquisitions in fiscal 2010.
Fiscal 2009
On June 6, 2008, Atlantic Lighting & Supply Co., LLC (“AL&S LLC”), an indirect wholly-owned subsidiary of the Company, acquired the business and substantially all of the assets and assumed certain operating liabilities of Atlantic Lighting & Supply Co., Inc. (the “Seller”) for a total consideration, including the assumption of certain operating liabilities, of approximately $1.5 million (excluding acquisition costs). The Seller was engaged in the business of distributing energy efficient lighting products to owners and operators of commercial buildings, and the Company is continuing to conduct this business. The acquisition was made pursuant to an asset purchase agreement dated June 6, 2008, between the Company, AL&S LLC, the Seller, and the shareholders of the Seller. The consideration consisted of 17,381 newly-issued shares of the Company’s common stock, with a fair value of $91,250, the payment of approximately $618,000 in cash to the Seller, the payment of approximately $165,000 in cash to satisfy outstanding debt to two (2) lenders of the Seller, and the assumption of certain operating liabilities of the Seller that totaled approximately $584,000. The amounts and types of the consideration were determined through negotiations among the parties.

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DISCONTINUED OPERATIONS
On January 29, 2010, the Company disposed of its interest in its owned office building in Newnan, Georgia. In this transaction, the Company transferred its approximately $2.0 million interest in the property and related assets to the note holder, which satisfied in full the Company’s liability for the approximately $3.2 million remaining balance on the property’s non-recourse mortgage loan. Correspondingly, the Company recognized a non-cash pre-tax gain of approximately $1.2 million in the third quarter of fiscal 2010 as a result of the elimination of the balance of the indebtedness on the property. The Company’s federal and state tax liabilities on the disposition were approximately $0.4 million. These tax liabilities primarily resulted from the pre-tax gain on the disposition, partially offset by operating losses of the property during fiscal 2010. These tax liabilities were offset by the Company’s net operating loss carry-forwards for tax purposes.
On June 9, 2010, the Company sold its owned shopping center in Jacksonville, Florida, for a sales price of approximately $9.9 million. The sale generated net cash proceeds of approximately $2 million, after deducting approximately $0.5 million for funding of repair escrows and approximately $0.6 million for closing costs and prorations, and net of the approximately $6.9 million mortgage note, which was assumed by the buyer. The Company recognized a pre-tax gain on the sale of approximately $190,000, including approximately $75,000 in additional pre-tax gain recognized in the second and third quarters of fiscal 2011 as the result of the successful completion of contractual conditions and other cost-basis adjustments (see Note 4 “Discontinued Operations” to the consolidated financial statements for more information). The Company’s federal and state tax liabilities on the disposition were approximately $94,000. These tax liabilities primarily resulted from the pre-tax gain on the disposition and the operating earnings of the property during the current fiscal year. These tax liabilities were offset by the Company’s net operating loss carry-forwards for tax purposes.
On December 15, 2010, the Company sold its owned shopping center in Smyrna, Tennessee, for a sales price of approximately $4.3 million. The sale generated net cash proceeds of approximately $250,000, after deducting approximately $125,000 for closing costs and prorations, and net of the approximately $3.9 million mortgage note, which was assumed by the buyer. The Company recognized a pre-tax loss on the sale of approximately $6,000. Prior to the sale, the Company recorded an impairment loss of approximately $590,000 in the condensed consolidated statement of operations in the second quarter of fiscal 2011 (see Note 4 “Discontinued Operations” to the consolidated financial statements for more information). The Company recognized federal and state tax benefits of approximately $198,000 on the disposition. These tax benefits primarily resulted from the operating losses of the property during the current fiscal year, which included the impairment loss of approximately $590,000 mentioned above.
In accordance with GAAP, the Company’s financial statements have been prepared with the results of operations and cash flows of these disposed properties shown as discontinued operations. All historical statements have been recast in accordance with GAAP.
LIQUIDITY AND CAPITAL RESOURCES
Between April 30, 2009, and April 30, 2010, the Company’s cash decreased by a total of $2,897,485, or 60%. The Company’s working capital decreased by approximately $3,443,000, or 49%, between April 30, 2009, and April 30, 2010, which was largely the result of current year losses from continuing operations before depreciation, amortization and income taxes, as well as discretionary capital expenditures and scheduled regular debt service payments.

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The following describes the changes in the Company’s cash from April 30, 2009, to April 30, 2010:
Operating activities used cash of approximately $3,205,000, primarily as a result of:
  (a)   losses in fiscal 2010 from continuing operations before depreciation, amortization and income taxes of approximately $3,366,000;
 
  (b)   an increase in net accounts receivable of approximately $1,396,000, primarily due to growth in BPE Segment activity, as well as the timing of billing and receipt of payments; and
 
  (c)   an increase in cost and earnings in excess of billings of approximately $306,000;
partially offset by:
  (d)   a net increase in trade accounts payable, accrued expenses, and other liabilities of approximately $1,648,000, primarily due to growth in BPE Segment activity, as well as the timing and submission of payments; and
 
  (e)   a decrease in other current and long-term assets of approximately $85,000.
Investing activities used cash of approximately $779,000, primarily as a result of:
  (a)   approximately $463,000 used for additions to intangible assets, primarily related to enhancements to the BPE Segment’s proprietary technology solutions, and to purchase accounting software; and
 
  (b)   approximately $257,000 used for additions to property and equipment, primarily related to vehicle and computer hardware purchases, and energy efficiency upgrades at the corporate headquarters building.
Financing activities provided cash of approximately $469,000, primarily as a result of:
  (a)   proceeds from long-term loans against the Company’s interest in the cash surrender value of certain life insurance policies of approximately $982,000;
partially offset by:
  (b)   scheduled principal payments on the mortgage note on the corporate headquarters building of approximately $112,000;
 
  (c)   payment of the regular quarterly cash dividends to shareholders of approximately $185,000;
 
  (d)   scheduled principal payments on other debt of $185,000; and
 
  (e)   repurchases of shares of the Company’s common stock of approximately $31,000.
Discontinued operations provided cash of approximately $618,000, primarily as a result of the sales of real estate assets.
While the Company’s operations used approximately $1,957,000 of cash during the first quarter of fiscal 2010, the level of cash usage moderated in the second and third quarters, as operations provided approximately $72,000 of cash during those six (6) months. During the fourth quarter of fiscal 2010, operating activities used approximately $1,321,000 of cash, primarily due to a decrease in advance billings on large energy savings projects, as well as expenditures needed to service the revenue growth of the BPE Segment. The increase in BPE Segment orders during fiscal 2010 is expected to result in substantially higher revenues in fiscal 2011, and management believes that the BPE Segment will be able to generate positive cash flow from operations during the year as a result. However, management believes that a longer period of time will be required before the BPE Segment is able to generate sufficient sustained cash flow to fully fund the Company’s operations. The Company believes that it has sufficient capital resources on hand to operate its business in the ordinary course for the next twelve (12) months. The Company also currently believes that it has, or can obtain, sufficient capital resources to continue to operate its business in the ordinary course until the BPE Segment begins to generate sufficient cash flow to fund the Company’s operations, although there can be no guarantee that this will be the case, particularly if the macro-economic conditions experienced during fiscal 2010 continue for an extended period of time, or worsen.
Achieving sufficient positive cash flow from the operations of the BPE Segment to fund the Company’s operations will depend on the occurrence of a number of assumed factors, including the timing and volume of additional revenues generated by new material contracts, which historically have been difficult to predict, and the timing of collections of customer receivables and payments to vendors and suppliers. Consequently, there can be no assurance that the Company will achieve sufficient positive cash flow to fund the Company’s operations through BPE Segment operations in the near term, or at all.

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The Company historically has generated substantial liquidity from the periodic sales of real estate assets, and the proceeds from such sales often have then been redeployed to fund the establishment and growth of the BPE Segment. Most recently, during the first quarter of fiscal 2011, the Company successfully closed on the sale of its owned shopping center in Jacksonville, Florida, generating net cash proceeds of approximately $2 million. Also, during the third quarter of fiscal 2011, the Company successfully closed on the sale of its owned shopping center in Smyrna, Tennessee, generating net cash proceeds of approximately $250,000. As a cumulative result of real estate asset sales in recent years, the Company’s real estate assets now consist of only the corporate headquarters building in metropolitan Atlanta, Georgia; a commercially-zoned land parcel in North Ft. Myers, Florida; and commercially-zoned land parcels in Oakwood, Georgia. Given the declines in commercial real estate markets and asset valuations in the United States in recent years, the Company may be unable to sell any of its remaining real estate assets as described above at acceptable prices, or at all, in the near future.
The Company in recent years has not utilized bank lines of credit for operating purposes and does not currently have in place any such line of credit. As of April 30, 2010, the Company has drawn $982,000 in loans against its interest in the cash surrender value of certain life insurance policies; however, there is currently minimal additional borrowing capacity left under such policies.
In the event that currently available cash, cash generated from operations and cash generated from real estate sales were not sufficient to meet future operating cash requirements, the Company would need to sell additional real estate or other assets at potentially otherwise unacceptable prices, seek external debt financing or refinancing of existing debt, seek to raise funds through the issuance of equity securities, or limit growth or curtail operations to levels consistent with the constraints imposed by the available cash and cash flow, or any combination of these options. In addition, the development of the BPE Segment’s new Fifth Fuel Management™ offering to its full potential will require the investment of additional capital, which the Company may seek to raise through outside sources or the sale of assets.
The Company’s ability to secure debt or equity financing or to sell real estate or other assets, whether for normal working capital and capital expenditure purposes or to fully develop the Fifth Fuel Management™ offering, could be limited by economic and financial conditions at any time, but likely would be severely limited by credit, equity and real estate market conditions similar to those that have existed in recent years. Management cannot provide assurance that any reductions in planned expenditures or in operations would be sufficient to cover potential shortfalls in available cash, or that debt or equity financing or real estate or other asset sales would be available on terms acceptable to the Company, if at all, in which event the Company could deplete its capital resources before achieving sufficient cash flow to fund operations. Moreover, depending on the form of such additional capital, the equity interests of the Company’s existing shareholders could be diluted.
The Company has no material commitments for capital expenditures. However, the Company does expect that total capital spending in fiscal year 2011 will approximate $1,230,000, including BPE Segment expenditures of approximately $560,000 for proprietary technology solutions and approximately $240,000 for property and equipment, and Corporate Headquarters expenditures of approximately $430,000. The Company’s uses of cash are not expected to change materially in the near future.
Mortgage Note
At April 30, 2010, the Company had one (1) remaining mortgage note, in the principal amount of approximately $4.0 million, associated with the corporate headquarters building, with a maturity date of August 1. 2012. This property is pledged as collateral on the note. Exculpatory provisions of the mortgage note limit the Company’s liability for repayment to its interest in the property. Additionally, the mortgage note contains a provision that requires a Company subsidiary to maintain a net worth of at least $2 million. The subsidiary’s net worth was approximately $16.4 million as of April 30, 2010. The mortgage note contains no other financial covenants. None of the Company’s long-term debt obligations have any financial or non-financial covenants.

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Secured Letter of Credit
In conjunction with terms of the mortgage on the corporate headquarters building, the Company is required to provide for potential future tenant improvement costs and lease commissions with additional collateral, in the form of a letter of credit in the amount of $300,000 from July 17, 2005, through July 16, 2008, and $450,000 from July 17, 2008, through August 1, 2012. The letter of credit is secured by a certificate of deposit, which is recorded on the accompanying balance sheet as a non-current other asset as of April 30, 2010, and April 30, 2009.
Repurchases of Common Stock
In March 2008, the Company’s Board of Directors authorized the repurchase of up to 50,000 shares of the Company’s common stock during the twelve-month period ending on March 5, 2009. In December 2008, the Board of Directors increased the authorization to repurchase the Company’s common stock to 100,000 shares during the twelve-month period ending on March 5, 2009. In February 2009, the Board of Directors authorized the repurchase of up to 100,000 shares of the Company’s common stock during the twelve-month period ending on March 5, 2010. In March 2010, the Board of Directors authorized the repurchase of up to 100,000 shares of the Company’s common stock during the twelve-month period ending on March 15, 2011. The Company repurchased 48,890 shares of its common stock in fiscal 2009 for a total cost of approximately $136,000, and the Company repurchased 16,981 shares of its common stock in fiscal 2010 for a total cost of approximately $31,000.
EFFECTS OF INFLATION ON REVENUES AND OPERATING PROFITS
The effects of inflation upon the Company’s operating results are varied. Inflation in recent years has been modest and has had minimal effect on the Company.
The BPE Segment generally engages in contracts of short duration with fixed prices, which typically would minimize any erosion of its profit margin due to inflation. The BPE Segment also has some contracts that are renewed on an annual basis. At the time of renewal, contract fees may be increased by either the year-over-year increase in the consumer price index, as stated in the contract, or upon customer approval. As inflation affects the Company’s costs, primarily personnel, the Company could seek a price increase for its contracts in order to protect its profit margin.
CRITICAL ACCOUNTING POLICIES
A critical accounting policy is one that is both important to the portrayal of the Company’s financial position and results of operations, and requires the Company to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying consolidated financial statements and related notes. In preparing these financial statements, the Company has made its best estimates and used its best judgments regarding certain amounts included in the financial statements, giving due consideration to materiality. The application of these accounting policies involves the exercise of judgment and the use of assumptions regarding future uncertainties, and as a result, actual results could differ from those estimates. Management believes that the Company’s critical accounting policies include:
Revenue Recognition
Revenues derived from implementation, training, support, and base service license fees from customers accessing the Company’s proprietary technology solutions on an application service provider (“ASP”) basis are recognized when all of the following conditions are met: there is persuasive evidence of an arrangement; service has been provided to the customer; the collection of fees is probable; and the amount of fees to be paid by the customer is fixed and determinable. The Company’s license arrangements do not include general rights of return. Revenues are recognized ratably over the contract period, which is typically no longer than twelve (12) months, beginning on the commencement date of each contract. Amounts that have been invoiced are recorded in accounts receivable and in revenue or deferred revenue, depending on the timing of when the revenue recognition criteria have been met. Additionally, the Company defers such direct costs and amortizes them over the same time period as the revenue is recognized.

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Energy management services are accounted for separately and are recognized as the services are rendered. Revenues derived from sales of proprietary technology solutions (other than ASP solutions) and sales of hardware products are recognized when the respective technology solutions and hardware products are sold.
Energy savings project revenues are reported on the percentage-of-completion method, using costs incurred to date in relation to estimated total costs of the contracts to measure the stage of completion. Original contract prices are adjusted for change orders in the amounts that are reasonably estimated. The nature of the change orders usually involves a change in the scope of the project, for example, a change in the number or type of units being installed. The price of change orders is based on the specific materials, labor, and other project costs affected. Contract revenue and costs are adjusted to reflect change orders when they are approved by both the Company and its customer for both scope and price. For a change order that is unpriced; that is, the scope of the work to be performed is defined, but the adjustment to the contract price is to be negotiated later, the Company evaluates the particular circumstances of that specific instance in determining whether to adjust the contract revenue and/or costs related to the change order. For unpriced change orders, the Company will record revenue in excess of costs related to a change order on a contract only when the Company deems that the adjustment to the contract price is probable based on its historical experience with that customer. The cumulative effects of changes in estimated total contract costs and revenues (change orders) are recorded in the period in which the facts requiring such revisions become known, and are accounted for using the percentage-of-completion method. At the time it is determined that a contract is expected to result in a loss, the entire estimated loss is recorded. Energy efficient lighting product revenues are recognized when the products are shipped.
Long-Lived Assets: Property & Equipment and Capitalized Software
The Company’s corporate headquarters building and related assets are stated at historical cost or, if the Company determines that impairment has occurred, at fair market value, and are depreciated for financial reporting purposes using the straight-line method over the respective estimated useful lives. Significant additions that extend asset lives are capitalized and are depreciated over their respective estimated useful lives. Normal maintenance and repair costs are expensed as incurred.
Other property and equipment are recorded at historical cost and are depreciated for financial reporting purposes using the straight-line method over the estimated useful lives of the respective assets.
The Company’s most significant tangible long-lived assets are the corporate headquarters building and related assets. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company examines long-lived assets for such indications of impairment on a quarterly basis. The types of events and circumstances that might indicate impairment include, but are not limited to, the following:
    A significant decrease in the market price of a long-lived asset;
 
    A current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset;
 
    The Company has received purchase offers at prices below carrying value;
 
    A real estate asset that has a significant vacancy rate or significant rollover exposure from one or more tenants;

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    A major tenant experiencing financial difficulties that may jeopardize the tenant’s ability to meet its lease obligations; and
 
    Depressed market conditions;
When there are indicators of impairment, the recoverability of long-lived assets is measured by a comparison of the carrying amount of the asset against the future net undiscounted cash flows expected to be generated by the asset. The Company estimates future undiscounted cash flows using assumptions regarding occupancy, counter-party creditworthiness, costs of leasing including tenant improvements and leasing commissions, rental rates and expenses of the property, as well as the expected holding period and cash to be received from disposition. The Company has considered all of these factors in its undiscounted cash flows.
The BPE Segment has long-lived assets that consist primarily of capitalized software costs, classified as intangible assets, net on the balance sheet, as well as a portion of the property and equipment on the balance sheet. Software development costs are accounted for as required for software in a Web hosting arrangement. Software development costs that are incurred in a preliminary project stage are expensed as incurred. Costs that are incurred during the application development stage are capitalized and reported at the lower of unamortized cost or net realizable value. Capitalization ceases when the computer software development project, including testing of the computer software, is substantially complete and the software product is ready for its intended use. Capitalized costs are amortized on a straight-line basis over the estimated economic life of the product.
Events or circumstances which would trigger an impairment analysis of these long-lived assets include:
    A change in the estimated remaining useful life of the asset;
 
    A change in the manner in which the asset is used in the income-generating business of the Company; or
 
    A current-period operating or cash flow loss combined with a history of operating or cash flow losses, or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset.
Long-lived assets in the BPE Segment are grouped together for purposes of impairment analysis, as assets and liabilities of the BPE Segment are not independent of one another. Annually at the end of the fiscal third quarter, unless events or circumstances occur in the interim as discussed above, the Company reviews its BPE Segment’s long-lived assets for impairment. Future undiscounted cash flows of the segment, as measured in its goodwill impairment analysis, are used to determine whether impairment of long-lived assets exists in the BPE Segment.
Valuation of Goodwill and Other Indefinite-Lived Intangible Assets
Goodwill and other intangible assets with indefinite lives are reviewed for impairment annually at the end of the fiscal third quarter, or whenever events or changes in circumstances indicate that the carrying basis of an asset may not be recoverable. All of the Company’s goodwill and other indefinite-lived intangible assets are assigned to the BPE Segment, which has also been determined to be the reporting unit.
The Company performed the annual impairment analysis of goodwill and other indefinite-lived intangible assets for the BPE Segment in the quarter ended January 31, 2010. The annual analysis resulted in a determination of no impairment in fiscal 2010. As of April 30, 2010, the Company does not believe that any of its goodwill or other indefinite-lived intangible assets are impaired.
The valuation methodologies used to calculate the fair value of the BPE Segment were the discounted cash flow method of the income approach and the guideline company method of the market approach. The Company believes that these two (2) methodologies are commonly used valuation methodologies. GAAP states that both methodologies are acceptable in determining the fair value of a reporting unit. In assessing the fair value of the BPE Segment, the Company believes a market participant would likely consider both the cash flow generating ability of the reporting unit, as well as current market multiples of companies facing similar risks in the marketplace.

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With the income approach, the cash flows anticipated over several periods, plus a terminal value at the end of that time horizon, are discounted to their present value using an appropriate rate of return. Projected cash flows are discounted to present value using an estimated weighted average cost of capital, reflecting returns to both equity and debt investors. The Company believes that this is a relevant and beneficial method to use in determining fair value, because it explicitly considers the future cash flow generating potential of the reporting unit.
In the guideline company method of the market approach, the value of a reporting unit is estimated by comparing the subject to similar businesses or “guideline” companies whose securities are actively traded in public markets. The comparison is generally based on data regarding each of the companies’ stock price and earnings, which is expressed as a fraction known as a “multiple.” The premise of this method is that if the guideline public companies are sufficiently similar to each other, then their multiples should be similar. The multiples for the guideline companies are analyzed, adjusted for differences as compared to the subject company, and then applied to the applicable business characteristics of the subject company to arrive at an indication of the fair value. The Company believes that the inclusion of a market approach analysis in the fair value calculation is beneficial, because it provides an indication of value based on external, market-based measures.
In the application of the income approach, financial projections were developed for use in the discounted cash flow calculations. Significant assumptions included revenue growth rates; margin rates; SG&A costs; and working capital and capital expenditure requirements over a period of ten (10) years. Revenue growth rate and margin rate assumptions were developed using historical Company data, current backlog, specific customer commitments, status of outstanding customer proposals, and future economic and market conditions expected. Consideration was then given to the estimated SG&A costs, working capital, and capital expenditures required to deliver the revenue and margin determined. The other significant assumption used with the income approach was the assumed rate at which to discount the cash flows. The rate was determined by utilizing the weighted average cost of capital method.
In the income approach model, three (3) separate financial projection scenarios were prepared using the above assumptions: the first used the expected revenue growth rates, the second used higher revenue growth rates, and the third used lower revenue growth rates. The discount rates used in the scenarios ranged from 19% for the lower growth scenario to 21% in the higher growth scenario. In each of the three (3) discounted cash flow models, there was no indication of goodwill impairment. For the assessment of fair value of the BPE Segment based on the income approach, the results of the three (3) scenarios were weighted equally (33% for the expected case and 33% each for the other scenarios) to produce the applicable fair value indication using the income approach. The weightings reflect the Company’s view of the relative likelihood of each scenario.
In the application of the market approach, the Company considered valuation multiples derived from five (5) public comparable companies that were identified as belonging to a group of industry peers. The applicable financial multiples of the comparable companies were adjusted for profitability and size and then applied to the BPE Segment. This result also indicated that no impairment existed.
The comparable companies selected for the market approach were similar to the BPE Segment in terms of business description and markets served. As such, the Company believes a market participant is likely to consider the market approach in determining the fair value of the BPE Segment. In addition, the Company believes a market participant will consider the cash flow generating capacity of the BPE Segment using an income approach. Both the market and income approaches provide meaningful indications of the fair value of the BPE Segment. The outcomes of the income approach and the market approach were weighted 70% and 30%, respectively, with the resulting fair value compared to the carrying value of the BPE Segment.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and to tax loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

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The Company periodically reviews its deferred tax assets (“DTA”) to assess whether it is more likely than not that a tax asset will not be realized. The realization of a DTA ultimately depends on the existence of sufficient taxable income. A valuation allowance is established against a DTA if there is not sufficient evidence that it will be realized. The Company weighs all available evidence in order to determine whether it is more likely than not that a DTA will be realized in a future period. The Company considers general economic conditions, market and industry conditions, as well as internal Company specific conditions, trends, management plans, and other data in making this determination.
Evidence considered is weighted according to the degree that it can be objectively verified. Reversals of temporary differences are weighted with more significance than projections of future earnings of the Company.
Positive evidence considered includes, among others, the following: deferred tax liabilities in excess of DTA, future reversals of temporary differences, Company historical evidence of not having DTAs expire prior to utilization, and long carryforward period remaining for net operating loss (“NOL”) carryforwards.
Negative evidence considered includes, among others, lack of cumulative taxable income in recent years, and the fact that the current real estate market conditions and lack of readily available credit could make it difficult for the Company to trigger gains on sales of real estate.
The valuation allowance currently recorded against the DTA for state NOL carryforwards was recorded because of a lack of sufficient positive evidence to support its realization due to the recent dispositions of real estate assets and recurring losses.
The Company will have to generate $8.1 million of taxable income in future years to realize the federal NOL carryforwards and an additional $25.4 million of taxable income in future years to realize the state NOL carryforwards. These amounts of taxable income would allow for the reversal of the $3.8 million DTA related to NOL carryforwards. There is a long carryforward period remaining for the NOL carryforwards. The oldest federal NOL carryforwards will expire in the April 30, 2024, tax-year, and the most recent federal NOL carryforwards will expire in the April 30, 2028, tax-year. The significant state NOL carryforwards will also expire between the April 30, 2024, and April 30, 2028, tax years. The Company has no material permanent book/tax differences.
The Company has no material uncertain tax position obligations. The Company’s policy is to record interest and penalties as a component of income tax expense (benefit) in the consolidated statement of operations.
Discontinued Operations
The gains and losses from the disposition of certain income-producing real estate assets, and associated liabilities, operating results, and cash flows are reflected as discontinued operations in the consolidated financial statements for all periods presented. Although net earnings are not affected, the Company has reclassified results that were previously included in continuing operations as discontinued operations for qualifying dispositions.
Recent Accounting Pronouncements
In June 2009, the Financial Accounting Standards Board (“FASB”) issued guidance now codified as FASB Accounting Standards Codification (“ASC”) topic 105-10, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (“ASC 105-10” or the “Codification”), which became effective for interim and annual periods ending after September 15, 2009. Other than resolving certain minor inconsistencies in current U.S. GAAP, the Codification does not change GAAP, but rather is intended to make it easier to find and research GAAP applicable to particular transactions or specific accounting issues. The Codification organizes previous accounting pronouncements into approximately 90 accounting topics and is now considered to be the single source of authoritative U.S. GAAP. The Company adopted ASC 105-10 in the second quarter of fiscal 2010. Adoption had no impact on the determination or reporting of the Company’s financial results. All references to specific authoritative guidance have been updated within this report to reflect the new Accounting Standards Codification structure.

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In May 2009, the FASB issued guidance now codified as FASB ASC topic 855, Subsequent Events (“ASC 855”). ASC 855 modifies the names of the two types of subsequent events and, for public entities, modifies the definition of subsequent events to refer to events or transactions that occur after the balance sheet date but before the financial statements are issued. Also, ASC 855 requires that entities disclose the date through which subsequent events have been evaluated and the basis for that date. ASC 855 was effective for all interim and annual periods ending after June 15, 2009. The Company adopted ASC 855 in the first quarter of fiscal 2010.
In February 2010, the FASB issued new guidance codified as FASB Accounting Standards Update (“ASU”) 2010-09, Subsequent Events (“ASU 2010-09”). ASU 2010-09 updates FASB ASC 855. ASU 2010-09 removes the requirement to disclose the date through which an entity has evaluated subsequent events. The Company adopted the previously issued guidance included in ASC 855 in the first quarter of fiscal 2010. The Company adopted ASU 2010-09 in the third quarter of fiscal 2010. The Company has determined that adoption did not have a significant impact on the determination or reporting of the Company’s financial results.
In April 2009, the FASB issued new guidance now codified within FASB ASC topic 825, Financial Instruments (“ASC 825”). Following this new guidance, ASC 825 requires disclosure about the fair value of financial instruments for publicly traded companies in interim reporting periods, as well as in annual reporting periods. The Company adopted the new provisions of ASC 825 in the first quarter of fiscal 2010. See Note 10 “Fair Value of Financial Instruments” to the consolidated financial statements for fair value disclosure of the Company’s financial instruments.
In April 2008, the FASB issued guidance now codified as FASB ASC Subtopic 350-30, Intangibles — Goodwill and Other; General Intangibles Other than Goodwill (“ASC 350-30”) and ASC topic 275, Risks and Uncertainties (“ASC 275”). This new guidance was designed to improve the consistency between the useful life of a recognized intangible asset under ASC 350, Intangibles — Goodwill and Other, and the period of expected cash flows used to measure the fair value of the asset under ASC 805, Business Combinations, and other guidance under GAAP. The Company adopted ASC 350-30 and ASC 275 in the first quarter of fiscal 2010. The Company has determined that adoption did not have a significant impact on the determination or reporting of the Company’s financial results.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain statements contained or incorporated by reference in this Annual Report on Form 10-K/A, including without limitation, statements containing the words “believes,” “anticipates,” “estimates,” “expects,” “plans,” “projects,” “forecasts,” and words of similar import, are forward-looking statements within the meaning of the federal securities laws. Forward-looking statements in this report include, without limitation: the Company’s expected continuing strengthening of orders and achievement of positive EBITDA for its BPE Segment; trends in the BPE Segment’s government business and private sector business; the Company’s expectations of generating additional recurring revenues as a result of the BPE Segment’s new Fifth Fuel Management™ offering; and the expected timing of the recognition as revenue of current backlog. Such forward-looking statements involve known and unknown risks, uncertainties, and other matters which may cause the actual past results, performance, or achievements of the Company to be materially different from any future results, performance, or uncertainties expressed or implied by such forward-looking statements.
The factors set forth in “ITEM 1A. RISK FACTORS” could cause actual results to differ materially from those predicted in the Company’s forward-looking statements. In addition, factors relating to general global, national, regional, and local economic conditions, including international political instability, national defense, homeland security, natural disasters, terrorism, employment levels, wage and salary levels, consumer confidence, availability of credit and financial market conditions, taxation policies, the Sarbanes-Oxley Act, SEC reporting requirements, fees paid to vendors in order to remain in compliance with the Sarbanes-Oxley Act and SEC requirements, interest rates, capital spending, energy and other utility costs, and inflation could positively or adversely impact the Company and its customers, suppliers, and sources of capital. Any significant adverse impact from these factors could result in material adverse effects on the Company’s results of operations and financial condition.

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The Company is also at risk for many other matters beyond its control, including, but not limited to: the potential loss of significant customers; the Company’s future ability to sell or refinance its real estate; the possibility of not achieving projected revenues from existing backlog or not realizing earnings from such revenues; the cost and availability of insurance; the ability of the Company to attract and retain key personnel; weather conditions; changes in laws and regulations, including changes in GAAP and regulatory requirements of the SEC and the NASDAQ stock market; overall vacancy rates in the markets where the Company leases retail and office space; overall capital spending trends in the economy; the timing and amount of earnings recognition related to the possible sale of real estate properties held for sale; delays in or cancellations of customers’ orders; inflation; the level and volatility of energy and gasoline prices; the level and volatility of interest rates; the failure of a subcontractor to perform; the deterioration in the financial stability of an anchor tenant, significant customer, or subcontractor; and the possible impact, if any, on earnings due to the ultimate disposition of legal proceedings in which the Company may be involved.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Servidyne, Inc.
Atlanta, Georgia
We have audited the accompanying consolidated balance sheets of Servidyne, Inc. and subsidiaries (the “Company”) as of April 30, 2010 and 2009, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the two years in the period ended April 30, 2010. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Servidyne, Inc. and subsidiaries as of April 30, 2010 and 2009, and the results of their operations and their cash flows for each of the two years in the period ended April 30, 2010, in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 19 to the consolidated financial statements, the accompanying consolidated financial statements have been restated. As discussed in Notes 4 and 14, the Company has also recast its consolidated financial statements to reflect the effects of discontinued operations and a change in reportable segments.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
July 28, 2010 (June 2, 2011 as to the effects of the restatement discussed in Note 19 and to the effects of the recast for discontinued operations and segments in Notes 4 and 14)

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SERVIDYNE, INC.
CONSOLIDATED BALANCE SHEETS
                 
    April 30,  
    2010     2009  
    (Restated)     (Restated)  
ASSETS
               
CURRENT ASSETS:
               
Cash and cash equivalents (Note 2)
  $ 1,923,641     $ 4,821,126  
Receivables:
               
Trade accounts and notes, net of allowance for doubtful accounts of $58,989 and $115,422, respectively
    953,075       1,130,360  
Contracts, net of allowance for doubtful accounts of $22,530 and $4,294, respectively, including retained amounts of $675,281 and $219,385, respectively (Note 17)
    3,337,177       1,764,327  
Costs and earnings in excess of billings (Notes 5 and 17)
    715,129       408,950  
Assets of discontinued operations (Note 4)
    188,827       487,492  
Deferred income taxes (Notes 10 and 19)
    360,097       468,047  
Other current assets (Note 2)
    1,247,844       1,464,761  
 
           
 
               
Total current assets
    8,725,790       10,545,063  
PROPERTY AND EQUIPMENT, net (Note 6)
    4,805,542       4,942,129  
ASSETS OF DISCONTINUED OPERATIONS (Note 4)
    13,767,227       15,926,552  
DEFERRED INCOME TAXES (Notes 10 and 19)
    1,160,371       329,001  
OTHER ASSETS:
               
Real estate held for future development or sale
    853,109       853,109  
Intangible assets, net (Note 16)
    2,395,874       2,395,163  
Goodwill (Note 16)
    6,354,002       6,354,002  
Other assets (Note 2)
    2,890,357       2,571,577  
 
           
Total assets
  $ 40,952,272     $ 43,916,596  
 
           
 
               
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
CURRENT LIABILITIES:
               
Trade and subcontractors payables
  $ 2,465,112     $ 841,383  
Accrued expenses
    1,378,538       1,257,137  
Deferred revenue
    507,383       601,347  
Billings in excess of costs and earnings (Note 5)
    53,100       28,215  
Liabilities of discontinued operations (Note 4)
    520,308       547,485  
Short-term debt and current maturities of long-term debt
    270,592       295,685  
 
           
 
               
Total current liabilities
    5,195,033       3,571,252  
 
               
LIABILITIES OF DISCONTINUED OPERATIONS (Note 4)
    13,587,832       17,181,813  
OTHER LIABILITIES
    1,039,633       824,877  
MORTGAGE NOTES PAYABLE, less current maturities (Note 7)
    4,107,996       4,229,587  
OTHER LONG-TERM DEBT, less current maturities (Note 8)
    1,832,000       1,000,000  
 
           
 
               
Total liabilities
    25,762,494       26,807,529  
 
           
 
               
COMMITMENTS AND CONTINGENCIES (Note 18)
               
 
               
SHAREHOLDERS’ EQUITY:
               
Common stock, $1 par value; 10,000,000 shares authorized; 3,919,773 issued and 3,676,383 outstanding at April 30, 2010; 3,917,778 issued and 3,691,369 outstanding at April 30, 2009
    3,919,773       3,917,778  
Additional paid-in capital
    6,206,521       6,026,101  
Retained earnings
    6,069,629       8,139,988  
Treasury stock (common shares) of 243,390 and 226,409, respectively
    (1,006,145 )     (974,800 )
 
           
 
               
Total shareholders’ equity
    15,189,778       17,109,067  
 
           
Total liabilities and shareholders’ equity
  $ 40,952,272     $ 43,916,596  
 
           
See accompanying notes to consolidated financial statements.

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SERVIDYNE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
                 
    Year Ended April 30,  
    2010     2009  
    (Restated)     (Restated)  
REVENUES:
               
Building Performance Efficiency (“BPE”) (Note 17)
  $ 18,171,536     $ 13,192,310  
Other
    389,994       440,628  
 
           
 
    18,561,530       13,632,938  
 
           
 
               
COST OF REVENUES:
               
BPE
    12,300,803       8,562,024  
Other
    746,919       750,116  
 
           
 
    13,047,722       9,312,140  
 
           
 
               
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
    9,783,066       9,885,189  
 
           
 
               
OTHER (INCOME) AND EXPENSES:
               
Other income (Note 2)
    (308,279 )     (332,291 )
Interest income
    (12,482 )     (95,564 )
Interest expense
    402,104       412,441  
 
           
 
    81,343       (15,414 )
 
           
 
               
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
    (4,350,601 )     (5,548,977 )
 
               
INCOME TAX EXPENSE (BENEFIT) (Notes 10 and 19):
               
Current
    13,309        
Deferred
    (1,595,357 )     (1,528,625 )
 
           
 
    (1,582,048 )     (1,528,625 )
 
           
 
               
LOSS FROM CONTINUING OPERATIONS
    (2,768,553 )     (4,020,352 )
 
           
 
               
DISCONTINUED OPERATIONS (Note 4):
               
Earnings (loss) from discontinued operations, adjusted for applicable income tax expense (benefit) of $235,423 and ($609,446), respectively
    142,443       (996,561 )
Gain on disposition of income-producing properties, adjusted for applicable income tax expense of $447,808 and $0, respectively
    740,831        
 
           
EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS
    883,274       (996,561 )
 
           
 
               
NET LOSS
  $ (1,885,279 )   $ (5,016,913 )
 
           
 
               
NET (LOSS) EARNINGS PER SHARE (Note 13):
               
From continuing operations — basic and diluted
  $ (0.75 )   $ (1.08 )
From discontinued operations — basic and diluted
    .24       (.27 )
 
           
NET LOSS PER SHARE — BASIC AND DILUTED
  $ (0.51 )   $ (1.35 )
 
           
See accompanying notes to consolidated financial statements.

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

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SERVIDYNE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
                 
    Fiscal Year Ended  
    2010     2009  
    (Restated)     (Restated)  
Cash flows from operating activities:
               
Net loss
  $ (1,885,279 )   $ (5,016,913 )
Adjustments to reconcile net loss to net cash used in operating activities:
               
(Earnings) loss from discontinued operations, net of tax
    (883,274 )     996,561  
Loss on disposal of assets
    1,378       9,683  
Depreciation and amortization
    985,174       1,068,801  
Amortization of mortgage discount
          (20,000 )
Deferred tax benefit (Note 19)
    (1,621,430 )     (1,572,109 )
Stock compensation expense
    182,415       205,118  
Adjustment to cash surrender value of life insurance
    (62,442 )     (66,633 )
Straight-line rent
    22,357       (14,422 )
Provision for doubtful accounts, net
    (38,197 )     (1,163 )
Changes in assets and liabilities:
               
Receivables
    (1,357,368 )     659,553  
Costs and earnings in excess of billings
    (306,179 )     (133,196 )
Other current and long-term assets
    84,611       (342,407 )
Trade and subcontractors payable
    1,623,729       (138,267 )
Accrued expenses and deferred revenue
    27,437       8,217  
Accrued incentive compensation
          (494,000 )
Billings in excess of costs and earnings
    24,885       (34,344 )
Other liabilities
    (2,900 )     (14,672 )
 
           
Net cash used in operating activities
    (3,205,083 )     (4,900,193 )
 
           
 
               
Cash flows from investing activities:
               
Acquisition, net of cash acquired
          (902,657 )
Premiums paid on officers’ life insurance policies
    (61,464 )     (56,000 )
Release of restricted cash held in escrow
          3,470,700  
Purchase of held to maturity investments
          (150,000 )
Additions to property and equipment
    (257,195 )     (306,539 )
Additions to intangible assets
    (462,750 )     (328,249 )
Proceeds from sale of property and equipment
    2,000        
 
           
Net cash (used in) provided by investing activities
    (779,409 )     1,727,255  
 
           
 
               
Cash flows from financing activities:
               
Long-term loan proceeds
    982,000        
Mortgage repayments
    (111,684 )     (103,383 )
Debt repayments
    (185,000 )     (280,875 )
Repurchase of common stock
    (31,345 )     (135,507 )
Cash dividends paid to shareholders
    (185,080 )     (501,259 )
 
           
Net cash provided by (used in) financing activities
    468,891       (1,021,024 )
 
           
 
               
DISCONTINUED OPERATIONS:
               
Operating activities
    1,051,139       1,069,799  
Investing activities
    (141,881 )     (188,909 )
Financing activities
    (291,142 )     (248,749 )
 
           
Net cash provided by discontinued operations
    618,116       632,141  
 
           
 
               
Net decrease in cash and cash equivalents
    (2,897,485 )     (3,561,821 )
Cash at beginning of period
    4,821,126       8,382,947  
 
           
Cash at end of period
  $ 1,923,641     $ 4,821,126  
 
           
 
               
Supplemental disclosure of non-cash investing and financing activities:
               
Issuance of Common Stock under 2000 Stock Award Plan
  $ 4,434     $ 24,792  
Supplemental schedule of cash flow information:
               
Cash paid during the year for interest
  $ 1,094,304     $ 1,303,887  
Cash paid during the year for income taxes, net
  $     $  
See accompanying notes to consolidated financial statements.

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Supplementary Disclosures of Noncash Investing and Financing Activities:
On June 6, 2008, the Company purchased substantially all of the assets and certain liabilities of Atlantic Lighting & Supply Co., Inc. for $902,657 in cash (net of cash received and including acquisition costs) and 17,381 shares of Servidyne common stock. The related assets and liabilities at the date of acquisition were as follows:
         
Total assets acquired, net of cash
  $ 1,577,844  
Total liabilities assumed
    (583,937 )
 
     
Net assets acquired, net of cash
    993,907  
 
       
Less value of shares issued for acquisition
    (91,250 )
 
       
 
     
Total cash paid (including acquisition costs)
  $ 902,657  
 
     
On January 29, 2010, the Company transferred its interest in an income-producing property and related assets to the note holder, which satisfied in full the Company’s liability for the related mortgage note payable.
         
Elimination of mortgage note payable
  $ (3,159,348 )
Disposition of income-producing property, net
    1,727,165  
Disposition of other related assets and liabilities, net
    193,545  
See accompanying notes to consolidated financial statements.

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SERVIDYNE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended April 30, 2010, and April 30, 2009
1. ORGANIZATION AND BUSINESS
Servidyne, Inc. (together with its subsidiaries, the “Company”) was organized under Delaware law in 1960. In 1984, the Company changed its state of incorporation from Delaware to Georgia. The Company provides comprehensive energy efficiency and demand response solutions, sustainability programs, and other building performance-enhancing products and services to owners and operators of existing buildings, energy services companies, and public and investor-owned utilities.
During the third quarter of fiscal 2011, the Company sold its last owned income-producing property, other than its corporate headquarters facility. As a result, the Company’s Real Estate Segment is no longer considered a reportable segment. Accordingly, the Company has removed all references to the Real Estate Segment from this annual report, and will not report results of the Real Estate Segment in future periodic reports. The only operating segment of the Company is the Building Performance Efficiency (“BPE”) Segment which performs the services as described above. See Note 14 “Segment Reporting” for more information.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) Principles of consolidation and basis of presentation
The consolidated financial statements include the accounts of Servidyne, Inc., and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
The Company has made reclassifications related to certain income-producing properties that have been sold in accordance with the guidance now codified as Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 360-35, Property, Plant and Equipment (“ASC 360-35”). As a result of these sales, the Company’s financial statements have been prepared with the results of operations and cash flows of these disposed properties shown as discontinued operations. Further, the assets and liabilities of these disposed properties are reflected in discontinued operations on the balance sheets. In addition, the book value of the corporate headquarters facility which was previously presented in “Income-Producing Properties, net” is now presented in “Property and Equipment, net” in the balance sheets.
(B) Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
(C) Revenue recognition
Revenues derived from implementation, training, support, and base service license fees from customers accessing the Company’s proprietary technology solutions on an application service provider (“ASP”) basis are recognized when all of the following conditions are met: there is persuasive evidence of an arrangement; service has been provided to the customer; the collection of fees is probable; and the amount of fees to be paid by the customer is fixed and determinable. The Company’s license arrangements do not include general rights of return. Revenues are recognized ratably over the contract period, which is typically no longer than twelve (12) months, beginning on the commencement date of each contract. Amounts that have been invoiced are recorded in accounts receivable and in revenue or deferred revenue, depending on the timing of when the revenue recognition criteria have been met. Additionally, the Company defers such direct costs and amortizes them over the same time period as the revenue is recognized.

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Energy management services are accounted for separately and are recognized as the services are rendered. Revenues derived from sales of proprietary technology solutions (other than ASP solutions) and sales of hardware products are recognized when the respective software solutions and hardware products are sold.
Energy savings project revenues are reported on the percentage-of-completion method, using costs incurred to date in relation to estimated total costs of the contracts to measure the stage of completion. Original contract prices are adjusted for change orders in the amounts that are reasonably estimated. The nature of the change orders usually involves a change in the scope of the project, for example, a change in the number or type of units being installed. The price of change orders is based on the specific materials, labor, and other project costs affected. Contract revenue and costs are adjusted to reflect change orders when they are approved by both the Company and its customer for both scope and price. For a change order that is unpriced; that is, the scope of the work to be performed is defined, but the adjustment to the contract price is to be negotiated later, the Company evaluates the particular circumstances of that specific instance in determining whether to adjust the contract revenue and/or costs related to the change order. For unpriced change orders, the Company will record revenue in excess of costs related to a change order on a contract only when the Company deems that the adjustment to the contract price is probable based on its historical experience with that customer. The cumulative effects of changes in estimated total contract costs and revenues (change orders) are recorded in the period in which the facts requiring such revisions become known, and are accounted for using the percentage-of-completion method. At the time it is determined that a contract is expected to result in a loss, the entire estimated loss is recorded. Energy efficient lighting product revenues are recognized when the products are shipped.
(D) Cash and cash equivalents and short-term investments
Cash and cash equivalents include money market funds and other highly liquid financial instruments. The Company considers all highly liquid financial instruments with original maturities of three (3) months or less to be cash equivalents. The Company considers financial instruments with maturities of three (3) months to one (1) year to be short-term investments. The Company has classified all short-term investments as “held to maturity.” As of April 30, 2010, and April 30, 2009, the Company had an investment in a certificate of deposit, which is included in long-term other assets, that secures a letter of credit on a mortgage note payable that matures in August 2012.
(E) Long-lived assets: property & equipment and capitalized software
The Company’s corporate headquarters building and related assets are stated at historical cost or, if the Company determines that impairment has occurred, at fair market value, and are depreciated for financial reporting purposes using the straight-line method over the respective estimated useful lives. Significant additions that extend asset lives are capitalized and are depreciated over their respective estimated useful lives. Normal maintenance and repair costs are expensed as incurred.
Other property and equipment are recorded at historical cost and are depreciated for financial reporting purposes using the straight-line method over the estimated useful lives of the respective assets.
The Company’s most significant tangible long-lived assets are the corporate headquarters building and related assets. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company examines long-lived assets for such indications of impairment on a quarterly basis. The types of events and circumstances that might indicate impairment include, but are not limited to, the following:
    A significant decrease in the market price of a long-lived asset;
 
    A current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset;
 
    The Company has received purchase offers at prices below carrying value;
 
    A real estate asset that has a significant vacancy rate or significant rollover exposure from one or more tenants;

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    A major tenant experiencing financial difficulties that may jeopardize the tenant’s ability to meet its lease obligations; and
 
    Depressed market conditions.
When there are indicators of impairment, the recoverability of long-lived assets is measured by a comparison of the carrying amount of the asset against the future net undiscounted cash flows expected to be generated by the asset. The Company estimates future undiscounted cash flows using assumptions regarding occupancy, counter-party creditworthiness, costs of leasing including tenant improvements and leasing commissions, rental rates and expenses of the property, as well as the expected holding period and cash to be received from disposition. The Company has considered all of these factors in its undiscounted cash flows.
During the fourth quarter of fiscal 2009, the anchor tenant of the Company’s owned office building in Newnan, Georgia, operated by the Company’s former Real Estate Segment, defaulted on its lease obligations and subsequently vacated its leased space. Given this event, the Company revised the estimated future undiscounted cash flows expected to be generated by the property and determined that the carrying amount of the related long-lived assets was not recoverable. Accordingly, the Company performed a fair value analysis of the property, determined that its fair market value was less than its current book value, and therefore recorded an impairment loss of approximately $2,007,000 in the fourth quarter of fiscal 2009. The estimated fair value of the Newnan office building at April 30, 2009, was approximately $1,761,000. This determination was based on a number of factors, including a discounted cash flow analysis, quoted prices for similar assets, and management’s judgment. On January 29, 2010, the Company transferred its approximately $2.0 million interest in the property and related assets to the note holder, which satisfied in full the Company’s liability for the approximately $3.2 million remaining balance on the property’s non-recourse mortgage loan. Correspondingly, the Company recognized a pre-tax gain of approximately $1.2 million in the third quarter of fiscal 2010 as a result of the elimination of the balance of the indebtedness on the property. See Note 4 “Discontinued Operations” for further information.
The Company has long-lived assets that primarily consist of capitalized software costs, classified as intangible assets, net on the balance sheet, as well as property and equipment on the balance sheet in addition to the corporate headquarters building as discussed above. Software development costs are accounted for as required for software in a Web hosting arrangement. Software development costs that are incurred in a preliminary project stage are expensed as incurred. Costs that are incurred during the application development stage are capitalized and reported at the lower of unamortized cost or net realizable value. Capitalization ceases when the computer software development project, including testing of the computer software, is substantially complete and the software product is ready for its intended use. Capitalized costs are amortized on a straight-line basis over the estimated economic life of the product.
Events or circumstances which would trigger an impairment analysis of these long-lived assets include:
    A change in the estimated remaining useful life of the asset;
 
    A change in the manner in which the asset is used in the income generating business of the Company; or
 
    A current-period operating or cash flow loss combined with a history of operating or cash flow losses, or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset.
Long-lived assets of the BPE Segment are grouped together for purposes of impairment analysis, as assets and liabilities of the BPE Segment are not independent of one another. Annually at the end of the fiscal third quarter, unless events or circumstances occur in the interim, as discussed above, the Company reviews its BPE Segment’s long-lived assets for impairment. Future undiscounted cash flows of the segment, as measured in its goodwill impairment analysis, are used to determine whether impairment of long-lived assets exists in the BPE Segment.

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(F) Goodwill and other intangible assets
Intangible assets primarily consist of trademarks, acquired computer software, proprietary technology solutions, and customer relationships. The trademarks are not amortized as they have indefinite lives. However, the acquired computer software, proprietary technology solutions, and customer relationships are amortized using the straight-line method over the following estimated useful lives:
     
Acquired computer software
  3 years
Proprietary technology solutions
  5 years
Customer relationships
  5 years
Goodwill and other intangible assets with indefinite lives are reviewed for impairment annually at the end of the fiscal third quarter, or whenever events or changes in circumstances indicate that the carrying basis of an asset may not be recoverable. All of the Company’s goodwill and other indefinite-lived intangible assets are assigned to the BPE Segment, which has also been determined to be the reporting unit.
The Company performed the annual impairment analysis of goodwill and other indefinite-lived intangible assets for the BPE Segment in the quarter ended January 31, 2010. The annual analysis resulted in a determination of no impairment in fiscal 2010. As of April 30, 2010, the Company does not believe that any of its goodwill or other indefinite-lived intangible assets are impaired.
The valuation methodologies used to calculate the fair value of the BPE Segment were the discounted cash flow method of the income approach and the guideline company method of the market approach. The Company believes that these two (2) methodologies are commonly used valuation methodologies. U.S. Generally Accepted Accounting Principles (“GAAP”) states that both methodologies are acceptable in determining the fair value of a reporting unit. In assessing the fair value of the BPE Segment, the Company believes a market participant would likely consider both the cash flow generating ability of the reporting unit, as well as current market multiples of companies facing similar risks in the marketplace.
With the income approach, the cash flows anticipated over several periods, plus a terminal value at the end of that time horizon, are discounted to their present value using an appropriate rate of return. Projected cash flows are discounted to present value using an estimated weighted average cost of capital, reflecting returns to both equity and debt investors. The Company believes that this is a relevant and beneficial method to use in determining fair value, because it explicitly considers the future cash flow generating potential of the reporting unit.
In the guideline company method of the market approach, the value of a reporting unit is estimated by comparing the subject to similar businesses or “guideline companies” whose securities are actively traded in public markets. The comparison is generally based on data regarding each of the companies’ stock prices and earnings, which is expressed as a fraction known as a “multiple.” The premise of this method is that if the guideline public companies are sufficiently similar to each other, then their multiples should be similar. The multiples for the guideline companies are analyzed, adjusted for differences as compared to the subject company, and then applied to the applicable business characteristics of the subject company to arrive at an indication of the fair value. The Company believes that the inclusion of a market approach analysis in the fair value calculation is beneficial, because it provides an indication of value based on external, market-based measures.
In the application of the income approach, financial projections were developed for use in the discounted cash flow calculations. Significant assumptions included revenue growth rates, margin rates, SG&A costs, and working capital and capital expenditure requirements over a period of ten (10) years. Revenue growth rate and margin rate assumptions were developed using historical Company data, current backlog, specific customer commitments, status of outstanding customer proposals, and future economic and market conditions expected. Consideration was then given to the estimated SG&A costs, working capital, and capital expenditures required to deliver the revenue and margin determined. The other significant assumption used with the income approach was the assumed rate at which to discount the cash flows. The rate was determined by utilizing the weighted average cost of capital method.

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In the income approach model, three (3) separate financial projection scenarios were prepared using the above assumptions: the first used the expected revenue growth rates, the second used higher revenue growth rates, and the third used lower revenue growth rates. The discount rates used in the scenarios ranged from 19% for the lower growth scenario to 21% in the higher growth scenario. In each of the three (3) discounted cash flow models, there was no indication of goodwill impairment. For the assessment of fair value of the BPE Segment based on the income approach, the results of the three (3) scenarios were weighted equally (33% for the expected case and 33% each for the other scenarios) to produce the applicable fair value indication using the income approach. The weightings reflect the Company’s view of the relative likelihood of each scenario.
In the application of the market approach, the Company considered valuation multiples derived from five (5) public comparable companies that were identified as belonging to a group of industry peers. The applicable financial multiples of the comparable companies were adjusted for profitability and size and then applied to the BPE Segment. This result also indicated that no impairment existed.
The comparable companies selected for the market approach were similar to the BPE Segment in terms of business description and markets served. As such, the Company believes a market participant is likely to consider the market approach in determining the fair value of the BPE Segment. In addition, the Company believes a market participant will consider the cash flow generating capacity of the BPE Segment using an income approach. Both the market and income approaches provide meaningful indications of the fair value to the BPE Segment. The outcomes of the income approach and the market approach were weighted 70% and 30%, respectively, with the resulting fair value compared to the carrying value of the BPE Segment.
(G) Income taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and to tax loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
The Company periodically reviews its deferred tax assets (“DTA”) to assess whether it is more likely than not that a tax asset will not be realized. The realization of a DTA ultimately depends on the existence of sufficient taxable income. A valuation allowance is established against a DTA if there is not sufficient evidence that it will be realized. The Company weighs all available evidence in order to determine whether it is more-likely-than-not that a DTA will be realized in a future period. The Company considers general economic conditions, market and industry conditions, as well as internal Company specific conditions, trends, management plans, and other data in making this determination.
Evidence considered is weighted according to the degree that it can be objectively verified. Reversals of temporary differences are weighted with more significance than projections of future earnings of the Company.
(H) Derivative instruments and hedging activities
Derivative instruments are recognized in the balance sheet at fair value, and changes in the fair value of such instruments are recognized currently in earnings, unless specific hedge accounting criteria are met. In the years ended April 30, 2010, and April 30, 2009, the Company had no derivative instruments or hedging activities.
(I) Discontinued operations
The gains and losses from the disposition of certain income-producing real estate assets, and associated liabilities, operating results, and cash flows are reflected as discontinued operations in the consolidated financial statements for all periods presented. Although net earnings are not affected, the Company has reclassified results that were previously included in continuing operations as discontinued operations for qualifying dispositions.

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(J) Other current assets
Other current assets consisted of the following as of April 30, 2010, and April 30, 2009:
                 
    2010   2009
 
Inventory
  $ 537,624     $ 654,443  
Prepaid software consulting
          132,731  
Prepaid real estate taxes
    48,928       65,685  
Deferred costs
    31,248       92,210  
Prepaid insurance
    47,468       117,004  
Prepaid rent
    35,783       48,905  
Deposits
    44,400       44,400  
Prepaid consulting fees
    25,000       25,000  
Unbilled engineering revenue
    170,520       112,690  
Other receivables
    117,660       8,798  
Other
    189,213       162,895  
 
         
 
  $ 1,247,844     $ 1,464,761  
 
(K) Other assets
Other assets consisted of the following as of April 30, 2010, and April 30, 2009:
                 
    2010   2009
 
Cash surrender value of life insurance
  $ 1,447,224     $ 1,323,318  
Deferred executive compensation
    947,023       733,378  
Certificate of deposit
    450,000       450,000  
Straight-line rent receivable
    24,228       46,584  
Notes receivable
    9,000       9,250  
Other
    12,882       9,047  
 
         
 
  $ 2,890,357     $ 2,571,577  
 
(L) Other income
Other income for the year ended April 30, 2010, included changes in the fair value of deferred executive compensation plan assets of approximately $174,000. Other income for the year ended April 30, 2009, included $285,000 related to a January 30, 2009, settlement of an insurance claim.
(M) Recent accounting pronouncements
In June 2009, the Financial Accounting Standards Board (“FASB”) issued guidance now codified as FASB ASC topic 105-10, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (“ASC 105-10” or the “Codification”), which became effective for interim and annual periods ending after September 15, 2009. Other than resolving certain minor inconsistencies in current GAAP, the Codification does not change GAAP, but rather is intended to make it easier to find and research GAAP applicable to particular transactions or specific accounting issues. The Codification organizes previous accounting pronouncements into approximately 90 accounting topics and is now considered to be the single source of authoritative U.S. GAAP. The Company adopted ASC 105-10 in the second quarter of fiscal 2010. Adoption had no impact on the determination or reporting of the Company’s financial results. All references to specific authoritative guidance have been updated within this report to reflect the new Accounting Standards Codification structure.
In May 2009, the FASB issued guidance now codified as FASB ASC topic 855, Subsequent Events (“ASC 855”). ASC 855 modifies the names of the two types of subsequent events and, for public entities, modifies the definition of subsequent events to refer to events or transactions that occur after the balance sheet date but before the financial statements are issued. Also, ASC 855 requires that entities disclose the date through which subsequent events have been evaluated and the basis for that date. ASC 855 was effective for all interim and annual periods ending after June 15, 2009. The Company adopted ASC 855 in the first quarter of fiscal 2010.

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In February 2010, the FASB issued new guidance codified as FASB Accounting Standards Update (“ASU”) 2010-09, Subsequent Events (“ASU 2010-09”). ASU 2010-09 updates FASB ASC 855. ASU 2010-09 removes the requirement to disclose the date through which an entity has evaluated subsequent events. The Company adopted the previously issued guidance included in ASC 855 in the first quarter of fiscal 2010. The Company adopted ASU 2010-09 in the third quarter of fiscal 2010. The Company has determined that adoption did not have a significant impact on the determination or reporting of the Company’s financial results.
In April 2009, the FASB issued new guidance now codified within FASB ASC topic 825, Financial Instruments (“ASC 825”). Following this new guidance, ASC 825 requires disclosure about the fair value of financial instruments for publicly traded companies in interim reporting periods, as well as in annual reporting periods. The Company adopted the new provisions of ASC 825 in the first quarter of fiscal 2010. See Note 10 “Fair Value of Financial Instruments” for fair value disclosure of the Company’s financial instruments.
In April 2008, the FASB issued guidance now codified as FASB ASC Subtopic 350-30, Intangibles — Goodwill and Other; General Intangibles Other than Goodwill (“ASC 350-30”) and ASC topic 275, Risks and Uncertainties (“ASC 275”). This new guidance was designed to improve the consistency between the useful life of a recognized intangible asset under ASC 350, Intangibles — Goodwill and Other, and the period of expected cash flows used to measure the fair value of the asset under ASC 805, Business Combinations, and other guidance under GAAP. The Company adopted ASC 350-30 and ASC 275 in the first quarter of fiscal 2010. The Company has determined that adoption did not have a significant impact on the determination or reporting of the Company’s financial results.
3. STOCK COMPENSATION
On June 5, 2008, the Company declared a stock dividend of five percent (5%) to all shareholders of record on June 18, 2008. Accordingly, on July 1, 2008, the Company issued 177,708 shares of stock pursuant to the stock dividend. All stock options and stock appreciation rights (“SARs”) have been adjusted retroactively to increase the number of stock options and SARs outstanding to account for the stock dividend for all periods presented.
The Company has three (3) outstanding types of equity-based incentive compensation instruments in effect with employees, non-employee directors and certain outside service providers: stock options, SARs, and restricted stock. Most of these equity-based instruments have been granted under the terms of the Company’s 2000 Stock Award Plan (the “2000 Award Plan”). The total number of shares that can be granted under the 2000 Award Plan is 1,155,000 shares. The Company typically uses authorized, unissued shares to provide shares for these equity-based instruments.
For the years ended April 30, 2010, and April 30, 2009, the Company’s net loss included $182,415 and $205,118, respectively, of total equity-based compensation expenses, and $69,319 and $78,265, respectively, of related income tax benefits. All of these expenses are included in selling, general and administrative expenses in the consolidated statements of operations. At April 30, 2010, there were total unrecognized equity-based compensation expenses of $341,201 that are expected to be recognized over a weighted average period of approximately 1.9 years.

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Stock options
A summary of stock options activity for the fiscal years ended April 30 is as follows:
                                 
    2010     2009  
            Weighted             Weighted  
    Options to     Average     Options to     Average  
    Purchase     Exercise     Purchase     Exercise  
    Shares     Price     Shares     Price  
Outstanding at beginning of year
    482,486     $ 4.46       483,536     $ 4.45  
Granted
                10,500       5.24  
Forfeited
                (11,550 )     4.59  
Expired
                       
Exercised
                       
 
                       
Outstanding at end of year
    482,486     $ 4.46       482,486     $ 4.46  
 
                       
Vested at end of year
    471,986     $ 4.44       471,986     $ 4.44  
 
                       
Non-vested at end of year, that are expected to vest
    10,500     $ 5.24       10,500     $ 5.24  
 
                       
Stock options typically vest over a period of two (2) years. The maximum contractual term of the stock options is ten (10) years. As of April 30, 2010, and April 30, 2009, 98% of the outstanding stock options were exercisable, but none were “in the money.”
A summary of information about all stock options outstanding as of April 30, 2010, is as follows:
                 
            Weighted Average
Exercise   Number of   Remaining Contractual
Price   Outstanding Options   Term (Years)
 
$4.42
    415,629       2.53  
$4.59
    55,440       4.90  
$5.19
    917       4.13  
$5.24
    10,500       3.12  
The Company estimates the fair value of each stock option award on the date of grant using the Black-Scholes option-pricing model. The risk free interest rate utilized in the Black-Scholes calculation is the interest rate of the U.S. Treasury Bill having the same maturity period as the expected life of the stock option awards. The expected life of the stock options granted is based on the estimated holding period of the respective awarded stock options. The expected volatility of the stock options granted is based on the historical volatility of the Company’s stock over the preceding five-year period using the month-end closing stock price. The fair value for the stock options granted in fiscal 2009 was estimated on the respective grant date using the following weighted average assumptions in the Black-Scholes option-pricing model:
         
Expected life (years)
    5  
Dividend yield
    2.55 %
Expected stock price volatility
    37.11 %
Risk-free interest rate
    3.73 %
Fair value of options granted
  $ 1.16  
There were no stock options granted in fiscal 2010.
Compensation expenses related to the vesting of options for fiscal years 2010 and 2009 were $3,867 and $22,900, respectively, and the related income tax benefits were $1,470 and $9,023, respectively.

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Stock appreciation rights
A summary of SARs activity for the fiscal years ended April 30 is as follows:
                                 
    2010     2009  
            Weighted             Weighted  
            Average             Average  
            Exercise             Exercise  
    SARs     Price     SARs     Price  
Outstanding at beginning of year
    565,350     $ 4.37       411,600     $ 4.26  
Granted
    381,500       3.11       184,000       4.57  
Exercised
                       
Forfeited
    (19,425 )     4.62       (30,250 )     3.98  
 
                       
Outstanding at end of year
    927,425     $ 3.85       565,350     $ 4.37  
 
                       
Vested at end of year
    88,200     $ 3.88           $  
 
                       
Non-vested at end of year, that are expected to vest
    589,305     $ 3.91       405,299     $ 4.26  
 
                       
All SARs have a five-year vesting period. Typically, thirty percent (30%) of the SARs will vest on the third (3rd) year anniversary of the date of grant, thirty percent (30%) will vest on the fourth (4th) year anniversary of the date of grant, and forty percent (40%) will vest on the fifth (5th) year anniversary of the date of grant. All SARs have early vesting provisions by which one hundred percent (100%) of the SARs would vest immediately (1) on the date of a change in control of the Company; or (2) if the Company’s stock price were to close at or above a certain price for ten (10) consecutive trading days. For SARs granted prior to the stock dividend that occurred in the first quarter of fiscal 2009, the triggering price for early vesting is $19.05 per share. For SARs granted subsequent to the stock dividend that occurred in the first quarter of fiscal 2009, the triggering price for early vesting for SARs issued under the 2000 Award Plan is $20.00 per share, and the triggering price for early vesting for SARs not issued under the 2000 Award Plan is $19.05 per share. The maximum contractual term of all SARs is ten (10) years. As of April 30, 2010, none of the outstanding SARs, vested or non-vested, were “in the money.”
A summary of information about SARs outstanding as of April 30, 2010, is as follows:
                         
                    Weighted Average
Exercise   Outstanding   Vested   Remaining Contractual
Price   SARs   SARs   Term (Years)
 
$3.94
    180,495       54,810       6.16  
$3.79
    109,830       33,390       6.61  
$4.19
    10,500       0       7.12  
$6.19
    33,600       0       7.42  
$5.00
    52,500       0       7.99  
$4.76
    136,500       0       8.13  
$4.00
    22,500       0       8.39  
$2.30
    30,000       0       9.11  
$4.00
    200,000       0       9.55  
$2.12
    20,000       0       9.61  
$2.09
    131,500       0       9.90  
The Company estimates the fair value of each award of SARs on the date of grant using the Black-Scholes option-pricing model. The risk-free interest rate utilized in the Black-Scholes calculation is the interest rate of the U.S. Treasury Bill having the same maturity period as the expected life of the Company’s SARs awards. The expected life of the SARs granted is based on the estimated holding period of the respective SARs awards. The expected volatility is based on the historical volatility of the Company’s stock over the preceding five-year period using the month-end closing stock price.

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The fair value of the SARs granted during the fiscal years ended April 30 was estimated on the respective grant dates using the following weighted average assumptions in the Black-Scholes option-pricing model:
                 
    2010   2009
                 
Expected life (years)
    5       5  
Dividend yield
    3.82 %     2.59 %
Expected stock price volatility
    55.88 %     37.25 %
Risk-free interest rate
    2.38 %     3.45 %
Fair value of SARs granted
  $ 0.40     $ 0.91  
Compensation expenses related to the vesting of SARs for fiscal years 2010 and 2009 were $169,721 and $164,315, respectively, and related income tax benefits were $64,495 and $62,439, respectively.
Shares of restricted stock
Periodically, the Company has awarded shares of restricted stock to employees, non-employee directors and certain outside service providers. The awards are recorded at fair market value on the date of grant and typically vest over a period of one (1) year. As of April 30, 2010, there were unrecognized compensation expenses totaling $3,838 related to grants of shares of restricted stock, which the Company expects to be recognized over the ensuing year.
Compensation expenses related to the vesting of shares of restricted stock for fiscal years 2010 and 2009 were $8,827 and $17,903, respectively, and related income tax benefits were $3,354 and $6,803, respectively.
A summary of restricted stock activity for the fiscal years ended April 30 is as follows:
                                 
    2010     2009  
            Weighted             Weighted  
    Number of     Average     Number of     Average  
    Shares of     Fair Value     Shares of     Fair Value  
    Restricted     per Share     Restricted     per Share  
    Stock     on Grant Date     Stock     on Grant Date  
Non-vested restricted stock at beginning of year
    5,295     $ 4.77       1,785     $ 4.27  
Granted
    2,600       2.11       5,800       4.72  
Forfeited
    (500 )     2.12       (505 )     4.21  
Vested
    (4,245 )     4.55       (1,785 )     4.23  
 
                       
Non-vested restricted stock at end of year
    3,150     $ 2.99       5,295     $ 4.77  
 
                       
4. DISCONTINUED OPERATIONS
The gains and losses from the disposition of certain income-producing real estate assets, and associated liabilities, operating results, and cash flows are reflected as discontinued operations in the consolidated financial statements for all periods presented. Although net earnings are not affected, the Company has reclassified results that were previously included in continuing operations as discontinued operations for qualifying dispositions.
The Company classifies an asset as held for sale when the asset is under a binding sales contract with minimal contingencies, and the buyer is materially at risk if the buyer fails to complete the transaction. However, each potential transaction is evaluated based on its separate facts and circumstances. Pursuant to this standard, as of April 30, 2010, and April 30, 2009, the Company had no income-producing real estate assets that were classified as held for sale.
Interest expense specifically related to mortgage debt on real estate assets that have been sold or otherwise disposed is allocated to the results of discontinued operations. The Company has elected not to allocate to discontinued operations other consolidated interest that is not directly attributable to the sold properties or related to other operations of the Company.

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During the fourth quarter of fiscal 2009, the anchor tenant of the former Real Estate Segment’s owned office building in Newnan, Georgia, defaulted on its lease obligations, and subsequently vacated its leased space during the first quarter of fiscal 2010. Accordingly, management did not anticipate that this tenant would make any additional lease payments. Given this event, management determined that the building’s fair market value was less than its book value at that time, and therefore the Company recorded an impairment loss of approximately $2,007,000 in the fourth quarter of fiscal 2009. Additionally, given this event, the Company also recorded an impairment loss of approximately $151,000 in the fourth quarter of fiscal 2009 to write off the remaining net book value of the anchor tenant’s capitalized lease cost, which was initially recorded as an intangible asset when the owned office building was acquired in fiscal 2007.
On January 29, 2010, the Company transferred its approximately $2.0 million interest in the property and related assets to the note holder, which satisfied in full the Company’s liability for the approximately $3.2 million remaining balance on the property’s non-recourse mortgage loan. Correspondingly, the Company recognized a pre-tax gain of approximately $1.2 million in the third quarter of fiscal 2010 as a result of the elimination of the balance of the indebtedness on the property.
On June 9, 2010, the former Real Estate Segment sold its owned shopping center in Jacksonville, Florida, for a sales price of approximately $9.9 million. The sale generated net cash proceeds of approximately $2 million, after deducting approximately $0.5 million for funding of repair escrows and approximately $0.6 million for closing costs and prorations, and net of the approximately $6.9 million mortgage note, which was assumed by the buyer. The Company recognized a pre-tax gain on the sale of approximately $190,000, including approximately $75,000 in additional pre-tax gain recognized in the second and third quarters of fiscal 2011 as the result of the successful completion of contractual conditions and other cost-basis adjustments. See Note 20 “Subsequent Events.”
On December 15, 2010, the former Real Estate Segment sold its owned shopping center in Smyrna, Tennessee, for a sales price of approximately $4.3 million. The sale generated net cash proceeds of approximately $250,000, after deducting approximately $125,000 for closing costs and prorations, and net of the approximately $3.9 million mortgage note, which was assumed by the buyer. The Company recognized a pre-tax loss on the sale of approximately $6,000 in the third quarter of fiscal 2011. Prior to the sale, the Company recorded an impairment loss of approximately $590,000 in the second quarter of fiscal 2011.

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As a result of these real estate transactions, the Company’s financial statements have been prepared with the results of operations and cash flows of these three (3) disposed properties shown as discontinued operations. All historical statements have been recast in accordance with GAAP. Summarized financial information for discontinued operations for the fiscal years ended April 30 is as follows:
                 
    2010   2009
 
Rental revenues
  $ 2,388,143     $ 2,598,515  
Rental property operating expenses, including depreciation
    2,010,277       2,045,849  
Loss on impairment of income-producing property
          2,158,673  
     
 
Operating earnings (loss) from discontinued operations
    377,866       (1,606,007 )
Income tax (expense) benefit
    (235,423 )     609,446  
     
Operating earnings (loss) from discontinued operations, net of tax
    142,443       (996,561 )
 
Gain on disposition of income-producing properties
    1,188,639        
Income tax expense
    (447,808 )      
     
Gain on disposition of income-producing properties, net of tax
    740,831        
     
Earnings (loss) from discontinued operations, net of tax
  $ 883,274     $ (996,561 )
     
                 
    Balances at
    April 30, 2010   April 30, 2009
Assets of discontinued operations
               
Accounts receivable
  $ 92,402     $ 238,217  
Deferred income taxes
    50,660       54,315  
Other current assets
    45,765       194,960  
     
Total current
    188,827       487,492  
Property and equipment
    13,259,155       15,246,802  
Intangible assets
    414,543       515,433  
Other assets
    93,529       164,317  
     
Total non-current
    13,767,227       15,926,552  
     
Total assets of discontinued operations
  $ 13,956,054     $ 16,414,044  
     
 
               
Liabilities of discontinued operations
               
Accounts payable and accrued expenses
  $ 274,077     $ 169,258  
Deferred revenue
          107,054  
Current maturities of mortgage notes and long-term debt payable
    246,231       271,173  
     
Total current
    520,308       547,485  
Deferred income taxes
    2,972,327       3,190,760  
Mortgage notes payable
    10,615,505       13,991,053  
     
Total non-current
    13,587,832       17,181,813  
     
Total liabilities of discontinued operations
  $ 14,108,140     $ 17,729,298  
     

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The following tables reflect the effects of the adjustments on the Company’s consolidated financial statements when compared to the Company’s Original Annual Report as a result of recasting the discontinued operations and the discontinuance of the former Real Estate Segment. The effects of the disposition of the Company’s owned office building in Newnan, Georgia, are included in the “As Originally Reported” amounts as of and for the years ended April 30, 2010 and 2009. The recasted amounts in the following tables are carried forward to Note 19 “Restatement of Consolidated Financial Statements,” which presents the effects of the correction of the error associated with the valuation allowance on deferred income taxes.
                                 
    As of April 30, 2010
                    Reclassification    
                    Related to   As Recast for
                    Discontinuance   Discontinued
            Adjustments for   of Real Estate   Operations and
    As Originally   Discontinued   Segment   Segment Change
    Reported   Operations   Reporting   (Note 19)
Consolidated balance sheet
                               
ASSETS
                               
CURRENT ASSETS:
                               
Cash and cash equivalents
  $ 1,923,641     $     $     $ 1,923,641  
Receivables:
                               
Trade accounts and notes, net of allowance for doubtful accounts
    1,045,477       (92,402 )           953,075  
Contracts, net of allowance for doubtful accounts
    3,337,177                   3,337,177  
Costs and earnings in excess of billings
    715,129                   715,129  
Assets of discontinued operations
          188,827             188,827  
Deferred income taxes
    451,875       (50,660 )           401,215  
Other current assets
    1,293,609       (45,765 )           1,247,844  
     
Total current assets
    8,766,908                   8,766,908  
INCOME-PRODUCING PROPERTIES, net
    17,382,252       (13,259,155 )     (4,123,097 )      
PROPERTY AND EQUIPMENT, net
    682,445             4,123,097       4,805,542  
ASSETS OF DISCONTINUED OPERATIONS
          13,767,227             13,767,227  
DEFERRED INCOME TAXES
          1,718,954             1,718,954  
OTHER ASSETS:
                               
Real estate held for future development or sale
    853,109                   853,109  
Intangible assets, net
    2,810,417       (414,543 )           2,395,874  
Goodwill
    6,354,002                   6,354,002  
Other assets
    2,983,886       (93,529 )           2,890,357  
     
Total assets
  $ 39,833,019     $ 1,718,954     $     $ 41,551,973  
     
LIABILITIES AND SHAREHOLDERS’ EQUITY
                               
CURRENT LIABILITIES:
                               
Trade and subcontractors payables
  $ 2,483,996     $ (18,884 )   $     $ 2,465,112  
Accrued expenses
    1,633,731       (255,193 )           1,378,538  
Deferred revenue
    507,383                   507,383  
Billings in excess of costs and earnings
    53,100                   53,100  
Liabilities of discontinued operations
          520,308             520,308  
Short-term debt and current maturities of long-term debt
    516,823       (246,231 )           270,592  
     
Total current liabilities
    5,195,033                   5,195,033  
DEFERRED INCOME TAXES
    1,253,373       (1,253,373 )            
LIABILITIES OF DISCONTINUED OPERATIONS
          13,587,832             13,587,832  
OTHER LIABILITIES
    1,039,633                   1,039,633  
MORTGAGE NOTES PAYABLE, less current maturities
    14,723,501       (10,615,505 )           4,107,996  
OTHER LONG-TERM DEBT, less current maturities
    1,832,000                   1,832,000  
     
Total liabilities
    24,043,540       1,718,954             25,762,494  
COMMITMENTS AND CONTINGENCIES                                
SHAREHOLDERS’ EQUITY:                                
Common stock
    3,919,773                   3,919,773  
Additional paid-in capital
    6,206,521                   6,206,521  
Retained earnings
    6,669,330                   6,669,330  
Treasury stock (common shares)
    (1,006,145 )                 (1,006,145 )
     
Total shareholders’ equity
    15,789,479                   15,789,479  
     
Total liabilities and shareholders’ equity
  $ 39,833,019     $ 1,718,954     $     $ 41,551,973  
     

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

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    For the Year Ended April 30, 2010
                    As Recast for
            Adjustments for   Discontinued
    As Originally   Discontinued   Operations
    Reported   Operations   (Note 19)
Consolidated statement of operations
                       
REVENUES:
                       
Building Performance Efficiency (“BPE”)
  $ 18,171,536     $     $ 18,171,536  
Other (formerly “Real Estate”)
    2,727,565       (2,337,571 )     389,994  
     
 
    20,899,101       (2,337,571 )     18,561,530  
     
COST OF REVENUES:
                       
BPE
    12,300,803             12,300,803  
Other (formerly “Real Estate”)
    1,862,609       (1,115,690 )     746,919  
     
 
    14,163,412       (1,115,690 )     13,047,722  
     
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
    9,797,862       (14,796 )     9,783,066  
     
OTHER (INCOME) AND EXPENSES:
                       
Other income
    (294,029 )     (14,250 )     (308,279 )
Interest income
    (12,507 )     25       (12,482 )
Interest expense
    1,083,810       (681,706 )     402,104  
     
 
    777,274       (695,931 )     81,343  
     
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
    (3,839,447 )     (511,154 )     (4,350,601 )
INCOME TAX EXPENSE (BENEFIT):
                       
Current
    13,309             13,309  
Deferred
    (1,479,522 )     (286,073 )     (1,765,595 )
     
 
    (1,466,213 )     (286,073 )     (1,752,286 )
     
LOSS FROM CONTINUING OPERATIONS
    (2,373,234 )     (225,081 )     (2,598,315 )
     
DISCONTINUED OPERATIONS:
                       
(Loss) gain from discontinued operations, adjusted for applicable income tax benefit (expense)
    (82,638 )     225,081       142,443  
Gain on disposition of income-producing properties, adjusted for applicable income tax expense
    740,831             740,831  
     
EARNINGS FROM DISCONTINUED OPERATIONS
    658,193       225,081       883,274  
     
NET LOSS
  $ (1,715,041 )   $     $ (1,715,041 )
     
 
                       
NET (LOSS) EARNINGS PER SHARE:
                       
From continuing operations — basic and diluted
  $ (0.64 )   $ (0.06 )   $ (0.70 )
From discontinuing operations — basic and diluted
    0.18       0.06       0.24  
     
NET LOSS PER SHARE — BASIC AND DILUTED
  $ (0.46 )   $     $ (0.46 )
     

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    For the Year Ended April 30, 2009
                    As Recast for
            Adjustments for   Discontinued
    As Originally   Discontinued   Operations
    Reported   Operations   (Note 19)
Consolidated statement of operations
                       
REVENUES:
                       
Building Performance Efficiency (“BPE”)
  $ 13,192,310     $     $ 13,192,310  
Other (formerly “Real Estate”)
    2,791,571       (2,350,943 )     440,628  
     
 
    15,983,881       (2,350,943 )     13,632,938  
     
COST OF REVENUES:
                       
BPE
    8,562,024             8,562,024  
Other (formerly “Real Estate”)
    1,787,236       (1,037,120 )     750,116  
     
 
    10,349,260       (1,037,120 )     9,312,140  
     
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
    9,898,010       (12,821 )     9,885,189  
     
OTHER (INCOME) AND EXPENSES:
                       
Other income
    (317,322 )     (14,969 )     (332,291 )
Interest income
    (107,180 )     11,616       (95,564 )
Interest expense
    1,107,986       (695,545 )     412,441  
Loss on impairment of income-producing property
                 
     
 
    683,484       (698,898 )     (15,414 )
     
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
    (4,946,873 )     (602,104 )     (5,548,977 )
INCOME TAX BENEFIT:
                       
Current
                 
Deferred
    (1,671,004 )     (287,084 )     (1,958,088 )
     
 
    (1,671,004 )     (287,084 )     (1,958,088 )
     
LOSS FROM CONTINUING OPERATIONS
    (3,275,869 )     (315,020 )     (3,590,889 )
     
DISCONTINUED OPERATIONS:
                       
Loss from discontinued operations, adjusted for applicable income tax benefit
    (1,311,581 )     315,020       (996,561 )
     
LOSS FROM DISCONTINUED OPERATIONS
    (1,311,581 )     315,020       (996,561 )
     
NET LOSS
  $ (4,587,450 )   $     $ (4,587,450 )
     
 
                       
NET LOSS PER SHARE:
                       
From continuing operations — basic and diluted
  $ (0.88 )   $ (0.08 )   $ (0.96 )
From discontinuing operations — basic and diluted
    (0.35 )     0.08       (0.27 )
     
NET LOSS PER SHARE — BASIC AND DILUTED
  $ (1.23 )   $     $ (1.23 )
     

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

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

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5. CONTRACTS IN PROGRESS
Assets and liabilities that are related to contracts in progress, including contracts receivable, are included in current assets and current liabilities, respectively, as they will be liquidated in the normal course of contract completion, which is expected to occur within one year. Amounts billed and costs and earnings recognized on contracts in progress at April 30 were:
                 
    2010   2009
 
Costs and earnings in excess of billings:
               
Accumulated costs and earnings
  $ 4,030,255     $ 2,129,684  
Amounts billed
    3,315,126       1,720,734  
 
 
  $ 715,129     $ 408,950  
 
Billings in excess of costs and earnings:
               
Amounts billed
  $ 5,149,164     $ 2,574,827  
Accumulated costs and earnings
    5,096,064       2,546,612  
 
 
  $ 53,100     $ 28,215  
 
6. PROPERTY AND EQUIPMENT
The major components of property and equipment and their estimated useful lives at April 30 were as follows:
                         
    Estimated        
    useful lives   2010   2009
 
Land
    N/A     $ 660,000     $ 660,000  
Buildings and improvements
  3-39 years     5,991,900       5,845,791  
Equipment
  3-10 years     1,296,278       1,661,297  
Vehicles
  3-5 years     344,562       296,783  
 
 
          $ 8,292,740     $ 8,463,871  
Less — accumulated depreciation
            3,487,198       3,521,742  
 
 
          $ 4,805,542     $ 4,942,129  
 
Depreciation expense from continuing operations for the years ended April 30, 2010, and April 30, 2009, was $390,404 and $376,464, respectively. These amounts are included in selling, general, and administrative expenses on the accompanying consolidated statements of operations.
7. MORTGAGE NOTE PAYABLE AND LEASES
At April 30, 2010, the Company had one(1) remaining mortgage note associated with the corporate headquarters building. This property is pledged as collateral on the note. Exculpatory provisions of the mortgage note limit the Company’s liability for repayment to its interest in the property. Additionally, the mortgage note contains a provision that requires a Company subsidiary to maintain a net worth of at least $2 million. The subsidiary’s net worth was approximately $16.4 million as of April 30, 2010. The mortgage note contains no other financial covenants.
The Company leases a shopping center under a leaseback arrangement expiring in fiscal year 2013. The Company’s lease on that property contains exculpatory provisions that limit the Company’s liability for payment to its interest in the lease. The leaseback shopping center is subleased to the Kmart Corporation. The term of the Company’s lease either is the same as, or may be extended to correspond to, the term of the sublease.
All leases are operating leases. The leases with tenants in the Company’s corporate headquarters building require tenants to make fixed rental payments over a period of approximately five (5) years.

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Base rental revenues recognized from tenants in the corporate headquarters building in fiscal years 2010 and 2009 were approximately $169,000 and $151,000, respectively. Base rental revenues recognized from the leaseback shopping center were approximately $255,000 in both fiscal years 2010 and 2009.
The approximate future minimum annual rental revenues from the corporate headquarters building and the leaseback center at April 30, 2010, were projected as follows:
                 
Year ending April 30,   Owned   Leaseback
 
2011
  $ 148,000     $ 255,000  
2012
    148,000       255,000  
2013
    148,000       149,000  
2014
    21,000        
2015
           
Thereafter
           
 
Total
  $ 465,000     $ 659,000  
 
The expected future minimum principal and interest payments on the mortgage note payable for the corporate headquarters building at April 30, 2010, and the approximate future minimum rentals expected to be paid on the leaseback center, were as follows:
                         
    Owned Income-Producing    
    Properties   Leaseback
    Mortgage Payments   Center Rental
Year ending April 30,   Principal   Interest   Payments
 
2011
  $ 120,591     $ 323,490     $ 105,203  
2012
    130,345       313,799       105,203  
2013
    3,977,651       76,846       61,368  
2014
                 
2015
                 
Thereafter
                 
 
Total
  $ 4,228,587     $ 714,135     $ 271,774  
 
As of April 30, 2010, the mortgage note payable was due on August 1, 2012, and bore interest at a rate of 7.75%. At April 30, 2010, the weighted average interest rate for all outstanding debt was 6.90%, including other long-term debt and credit facilities (see Note 9 “Other Long-Term Debt”).
Secured letter of credit
In conjunction with terms of the mortgage on the corporate headquarters building, the Company is required to provide for potential future tenant improvement costs and lease commissions with additional collateral in the form of a letter of credit in the amount of $300,000 from July 17, 2005, through July 16, 2008, and $450,000 from July 17, 2008, through August 1, 2012. The letter of credit is secured by a certificate of deposit, which is recorded on the accompanying consolidated balance sheets as a non-current other asset as of April 30, 2010, and 2009.

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8. OTHER LONG-TERM DEBT
Other long-term debt at April 30 was as follows:
                 
    2010   2009
 
Note payable bearing interest at 4.5%; principal and interest payments due in full at maturity; no maturity date; secured by related life insurance policy
  $ 370,000     $  
Note payable bearing interest at 4.5%; principal and interest payments due in full at maturity; no maturity date; secured by related life insurance policy
    200,000        
Note payable bearing interest at 6.0%; principal and interest payments due in full at maturity in December 2011
    412,000        
Note payable, net of discount ($150,000 at April 30, 2010), bearing interest at the prime rate plus 1.5% (4.75% at April 30, 2010); interest only payments due monthly; matures December 18, 2011; secured by all general assets of a Company subsidiary
    850,000       850,000  
Note payable bearing interest at 6.8%; interest due annually on December 31, beginning December 31, 2004, and principal payments due annually in installments as defined in the agreement commencing on December 19, 2008; matures on December 19, 2010
    150,000       235,000  
Note payable bearing interest at 8.0%; interest due quarterly on a calendar year commencing on September 30, 2008, and principal payments due in full at maturity on June 6, 2009
          100,000  
Total other long-term debt
    1,982,000       1,185,000  
Less current maturities
    150,000       185,000  
 
Total other long-term debt, less current maturities
  $ 1,832,000     $ 1,000,000  
 
The future minimum principal payments due on other long-term debt are as follows:
         
Fiscal Year Ending April 30,        
2011
  $ 150,000  
2012
    1,262,000  
2013
     
2014
     
2015
     
Thereafter
    570,000  
 
Total
  $ 1,982,000  
 
The other long-term debt obligations have no financial or non-financial covenants.

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9. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value of financial instruments is estimated based on a hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs. The fair value hierarchy prioritizes the inputs to valuation techniques into three broad levels whereby the highest priority is given to Level 1 inputs, and the lowest priority is given to Level 3 inputs. The three broad categories are:
    Level 1 — Quoted prices in active markets for identical assets or liabilities.
 
    Level 2 — Inputs other than quoted prices which are observable for an asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
 
    Level 3 — Unobservable inputs for an asset or liability when little or no market data is available.
In determining fair values, the Company utilizes valuation techniques which maximize the use of observable inputs and minimize the use of unobservable inputs. Considerable judgment is necessary to interpret Level 2 and Level 3 inputs in determining fair value. Accordingly, there can be no assurance that the fair values of financial instruments presented in this footnote are indicative of amounts that may ultimately be realized upon sale or disposition of these financial instruments.
Financial instruments in the Company’s consolidated financial statements that are measured and recorded at fair value on a recurring basis are (1) deferred executive compensation plan assets, which are included in “Other Assets” in the consolidated balance sheet; and (2) the corresponding liability owed to the plan participants that is equal in value to the plan assets, which is included in “Other Liabilities” in the consolidated balance sheet. Given that the plan assets are invested in mutual funds and money market funds for which quoted market prices are readily available, the quoted prices are considered Level 1 inputs. Based on the quoted prices of the related investments, the fair value of the deferred executive compensation plan assets, and the corresponding liability, was $947,023 and $733,378 as of April 30, 2010, and April 30, 2009, respectively.
In addition to the financial instruments listed above which are required to be carried at fair value, the Company has determined that the carrying amounts of its cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate fair value due to their short-term maturities.
The Company has a certificate of deposit (“CD”) in the amount of $450,000 as of April 30, 2010, which is included within “Other assets” in the Company’s consolidated balance sheet. This CD secures a letter of credit, which is required by the terms of the mortgage on the Company’s owned corporate headquarters building. Based on the rates currently available on certificates of deposit with similar terms, the CD’s carrying amount approximates its fair value as of April 30, 2010. See Note 7 “Mortgage Notes Payable and Leases” for more information.
Based on the borrowing rates currently available for mortgage notes with similar terms and average maturities, the carrying value of the mortgage notes payable is a reasonable estimate of fair value. The fair value of mortgage notes payable was $4,368,245 and $4,340,273 as of April 30, 2010, and April 30, 2009, respectively. Based on the borrowing rates currently available for bank loans with similar terms and average maturities, the carrying value of the other debt is considered a reasonable estimate of fair value. The fair value of other debt was $1,950,109 and $1,123,744 as of April 30, 2010, and April 30, 2009, respectively.

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10. INCOME TAXES
The expense (benefit) for income taxes from continuing operations consists of the following:
                         
    Current   Deferred   Total
 
Year ended April 30, 2010
                       
Federal
  $     $ (1,486,321 )   $ (1,486,321 )
State and local
    13,309       (109,036 )     (95,727 )
 
 
  $ 13,309     $ (1,595,357 )   $ (1,582,048 )
 
Year ended April 30, 2009
                       
Federal
  $     $ (1,893,193 )   $ (1,893,193 )
State and local
          364,568       364,568  
 
 
  $     $ (1,528,625 )   $ (1,528,625 )
 
Total income tax benefits from continuing operations recognized in the consolidated statements of operations differs from the amounts computed by applying the federal income tax rate of 34% to pretax loss, as a result of the following:
                 
    2010   2009
 
Computed “expected” benefit
  $ (1,479,204 )   $ (1,886,652 )
State and local income taxes
    (265,038 )     63,579  
Permanent items
    (8,803 )     (6,638 )
State net operating loss adjustment
          (127,775 )
Valuation Allowance
    170,238       429,463  
Other
    759       (602 )
 
 
  $ (1,582,048 )   $ (1,528,625 )
 

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The tax effects of the temporary differences that gave rise to the significant portions of the deferred income tax assets and deferred income tax liabilities at April 30 are presented below:
                 
    2010   2009
 
Deferred income tax assets:
               
Items not currently deductible for tax purposes:
           
Net operating loss carryforwards, federal and state, and credits (1)
  $ 3,898,970     $ 3,088,066  
Valuation allowance
    (750,214 )     (665,561 )
Property and equipment, principally because of differences in capitalized interest
    54,118       53,981  
Capitalized costs
    38,116       41,823  
Bad debt reserves
    30,005       45,492  
Deferred compensation plan expenses
    369,423       281,754  
Equity-based compensation expenses
    223,107       152,283  
Compensated absences
    52,354       46,048  
Other accrued expenses
    318,266       393,241  
Other
    54,197       90,816  
 
Gross deferred income tax assets
    4,288,342       3,527,943  
 
Deferred income tax liabilities:
               
Property and equipment, principally because of differences in depreciation and capitalized interest
    (441,552 )     (581,060 )
Intangible assets, principally because of differences in amortization
    (870,182 )     (740,925 )
Gain on real estate sales structured as tax-deferred like-kind exchanges
    (1,363,186 )     (1,359,749 )
Other
    (92,954 )     (49,161 )
 
Gross deferred income tax liability
    (2,767,874 )     (2,730,895 )
 
Net deferred income tax asset of continuing operations
  $ 1,520,468     $ 797,048  
Net deferred income tax liability of discontinued operations (Note 4)
    (2,921,667 )     (3,136,445 )
 
Total net deferred income tax liability
  $ (1,401,199 )   $ (2,339,397 )
 
 
(1)   The federal NOL carryforwards and all significant state NOL carryforwards expire between the fiscal years 2024 and 2030.
The valuation allowance against deferred tax assets at April 30, 2010, and April 30, 2009, was $750,214 and $665,561, respectively. The valuation allowance reduces tax deferred tax assets to an amount that represents management’s best estimate of the amount of such deferred tax assets that most likely will be realized.
The Company has no material FIN 48 obligations. The Company’s policy is to record interest and penalties as a component of income tax expense (benefit) in the consolidated statement of operations.
The Company and its subsidiaries’ income tax returns are subject to examination by federal and state tax jurisdictions for fiscal years 2007 through 2009.
11. 401(K) PLAN
The Company has a 401(k) plan (the “Plan”) which covers the majority of its employees. Pursuant to the provisions of the Plan, eligible employees may make salary deferral (before tax) contributions of up to one hundred percent (100%) of their total compensation per plan year, not to exceed a specified maximum annual contribution as determined by the Internal Revenue Service. The Plan also includes provisions that authorize the Company to make additional discretionary contributions. Such contributions, if made, are allocated among all eligible employees as determined under the Plan. The trustee under the Plan invests the assets of each participant’s account, as directed by the participant. The Plan assets currently do not include any stock of the Company. Funded discretionary employer contributions to the Plan for fiscal years 2010 and 2009 were approximately $61,000 and $62,000, respectively. The net assets in the Plan, which is administered by an independent trustee and which are not included in the Company’s consolidated financial statements, were approximately $5,619,000 and $4,050,000 at April 30, 2010, and April 30, 2009, respectively. In conjunction with the acquisition of the assets of Servidyne Systems, Inc. in fiscal 2002, the Company assumed a 401(k) plan (the “Servidyne Systems Plan”), which covered a significant number of the employees. Under the provisions of the Servidyne Systems Plan, participants could contribute up to one hundred percent (100%) of their compensation per plan year, not to exceed a specified maximum annual contribution as determined by the Internal Revenue Service. The Servidyne Systems Plan was frozen as of January 1, 2003, and no additional employee or employer contributions were funded after that date.

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12. SHAREHOLDERS’ EQUITY
In fiscal 2001, the Company’s shareholders approved the 2000 Stock Award Plan (the “2000 Award Plan”). The 2000 Award Plan permits the grant of incentive and non-qualified stock options, non-restricted, restricted and performance stock awards, and stock appreciation rights to directors, employees, independent contractors, advisors, consultants and other outside service providers to the Company, as determined by the Compensation Committee of the Board of Directors. The term and vesting requirements of each award are determined by the Compensation Committee, but in no event may the term of any award exceed ten (10) years. Incentive Stock Options granted under the 2000 Award Plan provide for the purchase of the Company’s common stock at not less than fair market value on the date the stock option is granted. As of April 30, 2010, there can be no additional grants of awards under the 2000 Award Plan, as the ten-year term of the plan has ended. Prior to that date, the total number of shares that could have been granted under the 2000 Award Plan was 1,155,000 shares (share amount adjusted for stock dividends).
The Company issued 52,500 SARs (adjusted for stock dividend) outside of the 2000 Stock Award Plan, with an exercise price of $5.00 (adjusted for stock dividends) and an exercise period of ten (10) years, to one (1) employee in April 2008. Further, the Company issued 52,500 SARs (adjusted for stock dividend) outside of the 2000 Stock Award Plan, with an exercise price of $4.76 (adjusted for stock dividends) and an exercise period of ten (10) years, to one (1) employee in June 2008. The SARs awarded have a five-year vesting period, in which thirty percent (30%) of the SARs will vest on the third year anniversary of the date of grant, thirty percent (30%) will vest on the fourth year anniversary of the date of grant, and forty percent (40%) will vest on the fifth year anniversary of the date of grant, with an early vesting provision by which one hundred percent (100%) of SARs would vest immediately if the Company’s stock price closes at or above $19.05 per share (adjusted for stock dividends) for ten (10) consecutive trading days or on the date of a change in control of the Company.
The Company issued 200,000 SARs outside of the 2000 Stock Award Plan, with an exercise price of $4.00 and an exercise period of ten (10) years, to two (2) outside service providers in November 2009. These SARs may not be exercised by the grantees prior to shareholder approval of the grants or a determination by the Company that such shareholder approval is not required. Further, the Company issued 20,000 SARs outside of the 2000 Stock Award Plan, with an exercise price of $2.12 and an exercise period of ten (10) years, to one employee in December 2009. The SARs awarded have a five-year vesting period, in which thirty percent (30%) of the SARs will vest on the third year anniversary of the date of grant, thirty percent (30%) will vest on the fourth year anniversary of the date of grant, and forty percent (40%) will vest on the fifth year anniversary of the date of grant, with an early vesting provision by which one hundred percent (100%) of SARs would vest immediately if the Company’s stock price closes at or above $19.05 for ten (10) consecutive trading days or on the date of a change in control of the Company.
The Company issued 57,750 stock warrants (adjusted for stock dividends) outside the 2000 Stock Award Plan with an exercise price of $4.42 (adjusted for stock dividends), to unrelated third parties in December 2003, of which none had been exercised as of April 30, 2010.
In March 2008, the Company’s Board of Directors authorized the repurchase of up to 50,000 shares of the Company’s common stock during the twelve-month period ending on March 5, 2009. In December 2008, the Board of Directors increased the authorization to repurchase the Company’s common stock to 100,000 shares during the twelve-month period ending on March 5, 2009. In February 2009, the Board of Directors authorized the repurchase of up to 100,000 shares of the Company’s common stock during the twelve-month period ending on March 5, 2010. In March 2010, the Board of Directors authorized the repurchase of up to 100,000 shares of the Company’s common stock during the twelve-month period ending on March 15, 2011. The Company repurchased 16,981 and 48,890 shares in fiscal years 2010 and 2009, respectively.

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13. NET (LOSS) EARNINGS PER SHARE
Earnings per share are calculated in accordance with GAAP, which requires dual presentation of basic and diluted earnings per share on the face of the statement of operations for all entities with complex capital structures. Basic and diluted weighted average share differences, if any, result solely from dilutive common stock options, restricted stock, SARs and stock warrants. Basic earnings (loss) per share are computed by dividing net earnings (loss) by the weighted average shares outstanding during the reporting period. Potential dilutive common shares are calculated in accordance with the treasury stock method, which assumes that the proceeds from the exercise of all stock options, restricted stock, SARs and stock warrants would be used to repurchase common shares at the average market value. The number of shares remaining after the exercise proceeds were exhausted represents the potentially dilutive effect of the stock options, restricted stock, SARs and stock warrants. The dilutive effect on the number of common shares would have been 10,337 in 2010 and 54,832 in 2009. Because the Company had losses from continuing operations for all periods presented, all stock equivalents were anti-dilutive during these periods, and therefore, are excluded when determining the diluted weighted average number of shares outstanding.
The following tables set forth the computations of basic and diluted net earnings (loss) per share:
                         
    For the year Ended April 30, 2010
    Earnings (loss)   Shares   Per Share Amount
 
Basic EPS — loss per share from continuing operations
  $ (2,768,553 )     3,685,834     $ (0.75 )
Basic EPS — earnings per share from discontinued operations
    883,274       3,685,834       0.24  
Effect of dilutive securities
                 
 
Diluted EPS — loss per share
  $ (1,885,279 )     3,685,834     $ (0.51 )
 
                         
    For the Year Ended April 30, 2009
    Loss   Shares   Per Share Amount
 
Basic EPS — loss per share from continuing operations
  $ (4,020,352 )     3,716,700     $ (1.08 )
Basic EPS — loss per share from discontinued operations
    (996,561 )     3,716,700       (0.27 )
Effect of dilutive securities
                 
 
Diluted EPS — loss per share
  $ (5,016,913 )     3,716,700     $ (1.35 )
 
14. SEGMENT REPORTING
In recent years the Company disposed of the vast majority of its real estate holdings, selling its last owned income-producing property, other than its corporate headquarters facility, in December 2010 (see Note 4 “Discontinued Operations” for more information). As a result, during the third quarter of fiscal 2011, following authoritative guidance in ASC 280, Segment Reporting, the Company performed a reassessment of the applicable quantitative and qualitative thresholds for segment reporting and determined that the BPE Segment is the Company’s only reportable segment. The Company identified this reportable segment based on internal management reporting and management decision-making responsibilities.
The BPE Segment assists its customer base of multi-site owners and operators of corporate, commercial office, hospitality, gaming, retail, education, light industrial, government, institutional, and health care buildings, as well as energy services companies and public and investor-owned utilities, in improving facility operating performance, reducing energy consumption, and lowering ownership and operating costs, while improving the level of service and comfort for building occupants, through its: (1) energy efficiency engineering and analytical consulting services, including energy surveys and audits, facility studies, retro-commissioning services, utility monitoring services, building qualification for ENERGY STAR ® and LEED® certifications, HVAC retrofit design, and energy simulations and modeling; (2) facility management software programs, including its iTendant platform using Web and wireless technologies; (3) energy saving lighting programs and energy related services and infrastructure upgrade projects that reduce energy consumption and operating costs; and (4) comprehensive technology-enabled real-time demand response programs (automatic, semi-automatic and manual) and services through the Company’s new Fifth Fuel Management™ platform, including two-way, fast and secure communication and tracking; retro-commissioning of existing systems; customized site training; and step-by-step processes for optimized demand response participation. The primary geographic focus for the BPE Segment is the continental United States.

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The BPE Segment is managed separately and maintains separate personnel, except for accounting, human resources, information technology, and some clerical shared services. Management evaluates and monitors the performance of the segment based primarily on the consistency with the Company’s long-term strategic objectives. The significant accounting policies utilized by the BPE Segment are the same as those summarized in Note 2 “Summary of Significant Accounting Policies.”
Total revenues by operating segment include both revenues from unaffiliated customers, as reported in the Company’s consolidated statements of operations, and intersegment revenues, which are generally at prices negotiated between segments.
The Company derived revenues from direct transactions with customers aggregating more than ten percent (10%) of consolidated revenues from continuing operations as follows:
                 
    2010   2009
Customer 1
    27 %     16 %
The table below shows selected financial data on an operating segment basis, including intersegment revenues, costs and expenses. Information previously reported as “Real Estate” and “Parent” is now combined in “Corporate.”
BPE Segment assets are those that are used in the operation of the segment, including receivables due from Corporate, if any. Corporate’s assets primarily consist of its investments in subsidiaries, the corporate headquarters building and related assets, cash and cash equivalents, the cash surrender value of life insurance, assets related to deferred compensation plans, and assets from discontinued operations.

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

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(2)   Includes property and equipment expenditures only.
15. ACQUISITIONS
Fiscal 2010
There were no acquisitions in fiscal year 2010.
Fiscal 2009
In June 2008, Atlantic Lighting & Supply Co., LLC (“AL&S LLC”), an indirect wholly-owned subsidiary of the Company, acquired the business and substantially all of the assets and assumed certain operating liabilities of Atlantic Lighting & Supply Co., Inc. (the “Seller”) for a total consideration, including the assumption of certain operating liabilities, of approximately $1.5 million (excluding acquisition costs). The Seller was engaged in the business of distributing energy efficient lighting products to building owners and operators, and the Company is continuing to conduct this business. The acquisition was made pursuant to an asset purchase agreement dated June 6, 2008, between the Company, AL&S LLC, the Seller, and the shareholders of the Seller (the “Agreement”). The consideration consisted of 17,381 newly-issued shares of the Company’s common stock, with a fair value of $91,250, the payment of approximately $618,000 in cash to the Seller, the payment of approximately $165,000 in cash to satisfy outstanding debt to two (2) lenders of the Seller, and the assumption of certain operating liabilities of the Seller that totaled approximately $584,000. The amounts and types of the consideration were determined through negotiations among the parties.
Pursuant to the Agreement, AL&S LLC acquired substantially all of the assets of the Seller, including cash, accounts receivable, inventory, personal property and equipment, proprietary information, intellectual property, and the Seller’s right, title, and interest to assigned contracts. Only certain specified operating liabilities of the Seller were assumed, including executory obligations under assigned contracts and certain current balance sheet operating liabilities.
During fiscal 2009, the Company finalized its allocation of the purchase price. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition.
                 
    Assets and        
    Liabilities        
    Acquired        
    from Seller     Estimated Life  
Current assets
  $ 322,514          
Property, furniture and equipment, net
    58,699     Various (3-5)
Trade name
    61,299     15 years
Non-compete agreements
    63,323     2 years
Customer relationships
    186,632     5 years
Goodwill
    895,285     Indefinite
 
             
Total assets acquired
  $ 1,587,752          
 
               
Current liabilities
    (483,937 )        
Long-term liabilities
    (100,000 )        
 
             
Net assets acquired
  $ 1,003,815          
 
             

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The goodwill amount is not subject to amortization. The amounts assigned to all intangible assets are deductible for tax purposes over a period of fifteen (15) years. The goodwill amount has been assigned to the BPE Segment.
The following table summarizes what the results of operations of the Company would have been on a pro forma basis for fiscal year 2009, if the acquisition had occurred prior to the beginning of the period. These results do not purport to represent what the results of operations for the Company actually would have been or to be indicative of the future results of operations of the Company (unaudited, in thousands, except for per share amounts).
         
    Fiscal Year Ended
    April 30, 2009
Revenues
  $ 13,831  
Loss from continuing operations
  $ (4,022 )
Loss from discontinued operations
  $ (997 )
Net loss
  $ (5,018 )
 
       
Loss per share from continuing operations — basic and diluted
  $ (1.08 )
Loss per share from discontinued operations — basic and diluted
  $ (0.27 )
Net loss per share — basic and diluted
  $ (1.35 )

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16. GOODWILL AND OTHER INTANGIBLE ASSETS
The gross carrying amounts and accumulated amortization for all of the Company’s intangible assets are as follows:
                 
    April 30, 2010  
    Gross Carrying     Accumulated  
    Amount     Amortization  
Intangible assets, subject to amortization:
               
BPE proprietary technology solutions
  $ 4,096,802     $ 2,827,071  
Acquired computer software
    676,837       493,885  
Real estate lease costs
    49,170       19,459  
Customer relationships
    404,632       286,433  
Deferred loan costs
    122,686       95,082  
Non-compete agreements
    63,323       60,684  
Tradename
    61,299       7,834  
Other
    44,882       42,016  
 
           
 
  $ 5,519,631     $ 3,832,464  
 
           
 
               
Intangible assets and goodwill, not subject to amortization:
               
Trademark
  $ 708,707          
 
             
Goodwill
  $ 6,354,002          
 
             
                 
    April 30, 2009  
    Gross Carrying     Accumulated  
    Amount     Amortization  
Intangible assets, subject to amortization:
               
BPE proprietary technology solutions
  $ 3,689,695     $ 2,340,980  
Acquired computer software
    466,589       458,883  
Real estate lease costs
    49,170       9,972  
Customer relationships
    404,632       252,216  
Deferred loan costs
    122,686       82,813  
Non-compete agreements
    63,323       29,023  
Tradename
    61,299       3,746  
Other
    45,844       39,149  
 
           
 
  $ 4,903,238     $ 3,216,782  
 
           
 
               
Intangible assets and goodwill, not subject to amortization:
               
Trademark
  $ 708,707          
 
             
Goodwill
  $ 6,354,002          
 
             
         
Aggregate amortization expense for all amortizable intangible assets:
       
For the year ended April 30, 2010
  $ 594,770  
For the year ended April 30, 2009
    688,025  
         
Estimated future amortization expenses for all amortized intangible assets for the fiscal years ended:
2011
  $ 589,679  
2012
    450,674  
2013
    302,627  
2014
    210,217  
2015
    93,075  
Thereafter
    40,895  
 
     
 
  $ 1,687,167  
 
     

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The Company capitalized $406,143 and $266,229 for the development of proprietary technology solutions in fiscal years 2010 and 2009, respectively.
17. RELATED PARTIES
The Company recognized approximately $958,000 in revenue for the year ended April 30, 2010, from an affiliate of a member of the Board of Directors associated with a contract for energy savings projects. The related accounts receivable and costs and earnings in excess of billings as of April 30, 2010, were $238,000 and $290,000, respectively.
18. COMMITMENTS AND CONTINGENCIES
The Company is subject to legal proceedings and other claims that arise from time to time in the ordinary course of business. While the resolution of these matters cannot be predicted with certainty, the Company believes that the final outcome of any such matters would not have a material adverse effect on the Company’s financial position or results of operations.
19. RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS
The need to restate the financial statements resulted from an error in the application of ASC 740, Accounting for Income Taxes, related to the recoverability of deferred tax assets, which was discovered in March 2011 in connection with the performance of the third quarter 2011 review. During the third quarter of fiscal 2011, the Company moved from a consolidated net deferred tax liability position into a consolidated net deferred tax asset position, which highlighted a potential recoverability issue related to its deferred tax assets. Accordingly, the Company performed an analysis of recoverability by weighing all positive evidence of recovery against all negative evidence of recovery. Because the Company was in a three-year cumulative book loss position, it was determined that the future earnings projections of the Company over the relatively long net operating loss carryforward period did not represent objectively verifiable positive evidence of recovery, and that the recent historical results were objectively verifiable negative evidence.
The Company determined that it had no exposure to non-recoverability at the federal jurisdiction level due to adequate future taxable income offsetting federal net operating losses through the form of deferred tax liabilities. The exposure to non-recoverability was determined to exist at the state jurisdiction level. As a result of this analysis, the Company recorded a full valuation allowance in the amount of $857,000 on its state deferred tax assets during the quarter ended January 31, 2011, as filed in the Company’s Form 10-Q for the period.
Upon further analysis during April 2011, the Company determined that it had actually entered into the three-year cumulative book loss position in the fourth quarter of fiscal year 2009. As a result, the Company should not have used future earnings projections to analyze recoverability since the fourth quarter of fiscal 2009. The result of this error is that the Company understated its deferred tax asset valuation allowance by approximately $600,000 and $429,000 as of April 30, 2010 and 2009, respectively. Additionally, the Company understated its net loss by approximately $170,000 and $429,000 for the fiscal years ended April 30, 2010 and 2009, respectively.

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The results of the above are summarized in the tables below.
                         
    As of and for the Year Ended April 30, 2010
    As Recast for        
    Discontinued        
    Operations and        
    Segment        
    Change
(Note 4)
   
Adjustments
   
As Restated
Consolidated balance sheet accounts impacted by restatement:
                       
Deferred income taxes
  $ 401,215     $ (41,118 )   $ 360,097  
Total current assets
    8,766,908       (41,118 )     8,725,790  
Deferred income taxes (non-current)
    1,718,954       (558,583 )     1,160,371  
Total assets
    41,551,973       (599,701 )     40,952,272  
Retained earnings
    6,669,330       (599,701 )     6,069,629  
Total shareholders’ equity
    15,789,479       (599,701 )     15,189,778  
Total liabilities and shareholders’ equity
    41,551,973       (599,701 )     40,952,272  
 
                       
Consolidated statement of operations accounts impacted by restatement:
                       
Income tax expense (benefit) — deferred
  $ (1,765,595 )   $ 170,238     $ (1,595,357 )
Total income tax expense (benefit)
    (1,752,286 )     170,238       (1,582,048 )
Loss from continuing operations
    (2,598,315 )     (170,238 )     (2,768,553 )
Net loss
    (1,715,041 )     (170,238 )     (1,885,279 )
Net loss per share from continuing operations
  $ (0.70 )   $ (0.05 )   $ (0.75 )
Net earnings (loss) per share from discontinued operations
    0.24             0.24  
Net loss per share — basic and diluted
    (0.46 )     (0.05 )     (0.51 )
Consolidated statement of cash flows accounts impacted by restatement:                        
Net loss   $ (1,715,041 )   $ (170,238 )   $ (1,885,279 )
Deferred tax benefit     (1,791,668 )     170,238       (1,621,430 )
                         
    As of and for the Year Ended April 30, 2009
    As Recast for        
    Discontinued        
    Operations and        
    Segment        
    Change 
(Note 4)
   
Adjustments
   
As Restated
Consolidated balance sheet accounts impacted by restatement:
                       
Deferred income taxes
  $ 525,108     $ (57,061 )   $ 468,047  
Total current assets
    10,602,124       (57,061 )     10,545,063  
Deferred income taxes (non-current)
    701,403       (372,402 )     329,001  
Total assets
    44,346,059       (429,463 )     43,916,596  
Retained earnings
    8,569,451       (429,463 )     8,139,988  
Total shareholders’ equity
    17,538,530       (429,463 )     17,109,067  
Total liabilities and shareholders’ equity
    44,346,059       (429,463 )     43,916,596  
 
                       
Consolidated statement of operations accounts impacted by restatement:
                       
Income tax expense (benefit) — deferred
  $ (1,958,088 )   $ 429,463     $ (1,528,625 )
Total income tax expense (benefit)
    (1,958,088 )     429,463       (1,528,625 )
Loss from continuing operations
    (3,590,889 )     (429,463 )     (4,020,352 )
Net loss
    (4,587,450 )     (429,463 )     (5,016,913 )
Net loss per share from continuing operations
  $ (0.96 )   $ (0.12 )   $ (1.08 )
Net loss per share from discontinued operations
    (0.27 )           (0.27 )
Net loss per share — basic and diluted
    (1.23 )     (0.12 )     (1.35 )
Consolidated statement of cash flows accounts impacted by restatement:                        
Net loss   $ (4,587,450 )   $ (429,463 )   $ (5,016,913 )
Deferred tax benefit     (2,001,572 )     429,463       (1,572,109 )
Additionally, subsequent to the filing of the Form 10-K for the year ended April 30, 2010, the Company has included a disclosure associated with a BPE contract with a related party. See Note 17 “Related Parties” for more information.

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20. SUBSEQUENT EVENTS
On June 9, 2010, the Company sold its owned shopping center located in Jacksonville, Florida, for a sales price of approximately $9.9 million. The sale generated a pre-tax gain of approximately $120,000. As part of this transaction, the buyer assumed in full the mortgage note payable on the property. Net cash proceeds were approximately $2 million, after deducting:
    approximately $6.9 million for assumption of the mortgage note;
 
    approximately $0.5 million for funding of repair escrows; and
 
    approximately $0.6 million for closing costs and prorations.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Management has evaluated the Company’s disclosure controls and procedures as defined by Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report. This evaluation was carried out with the participation of the Company’s Chief Executive Officer and Chief Financial Officer. No system of controls, no matter how well designed and operated, can provide absolute assurance that the objectives of the system of controls are met, and no evaluation of controls can provide absolute assurance that the system of controls has operated effectively in all cases. The Company’s disclosure controls and procedures, however, are designed to provide reasonable assurance that the objectives of disclosure controls and procedures are met.
In connection with the restatement of certain financial statements described in more detail elsewhere in this Amendment 1, related to the timing of recording a valuation allowance on the Company’s state deferred tax assets, management of the Company has re-evaluated the effectiveness of the Company’s disclosure controls and procedures as of April 30, 2010. As a result of that re-evaluation, the Chief Executive Officer and Chief Financial Officer have determined that, due to the material weakness in internal control over financial reporting described below, the Company’s disclosure controls and procedures were not effective as of such date. Additional information regarding the restatement is contained in Note 19 to the accompanying consolidated financial statements included in the filing.
Changes in Internal Control Over Financial Reporting
There was no change in the Company’s internal control over financial reporting that occurred during the period covered by this annual report on Form 10-K that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; however, as described below, it is expected that changes in the Company’s internal control over financial reporting will be made that will materially affect, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of Servidyne, Inc. and subsidiaries (the “Company”) is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become ineffective because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, the risk.
The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of April 30, 2010. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.

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Based on its assessment, management initially concluded that, as of April 30, 2010, the Company’s internal control over financial reporting was effective based on those criteria; however, as a result of the identification of the issue that caused the restatement described in Note 19 to the consolidated financial statements and management’s determination that there is a material weakness in the area of accounting for income taxes, as described below, the Chief Executive Officer and Chief Financial Officer have subsequently concluded that the Company’s internal controls over financial reporting were not effective as of April 30, 2010.
A material weakness in internal control over financial reporting is a deficiency, or a combination of deficiencies, such that there is a reasonable possibility that a material misstatement of a company’s financial statement will not be prevented or detected on a timely basis by the company’s internal controls. The restatement of the Company’s financial statements resulted from an error in the timing of recording a valuation allowance for its state deferred tax assets in accordance with ASC 740, Accounting for Income Taxes, related to the recoverability of the deferred tax assets, as more fully described in Note 19 to the consolidated financial statement included in this Amendment 1. Management believes that this error constitutes a material weakness in the design of the Company’s internal control over financial reporting in the area of accounting for income taxes and has begun to take the following steps to remediate the deficiency:
    develop and implement additional procedures to increase the level of review, evaluation and validation of the Company’s valuation of deferred tax assets; and
 
    increase the level of knowledge among Company employees in the area of accounting for income taxes.
In doing both of the above, the Company expect that it will be in a position to place less reliance on third-party tax professionals.
The management of the Company is committed to a strong internal control environment, and believe that, when fully implemented, these remediation actions will represent significant improvements. The remediation actions are not expected to result in material costs to the Company. Further, management anticipates completing this remediation effort before the 2011 Annual Report is filed in July 2011.

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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) The following documents are filed as part of this Amendment No. 1 to the Annual Report on Form 10-K/A:
         1. Financial Statements:

Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets at April 30, 2010, and April 30, 2009
Consolidated Statements of Operations for the Years Ended April 30, 2010, and April 30, 2009
Consolidated Statements of Shareholders’ Equity for the Years Ended April 30, 2010, and April 30, 2009
Consolidated Statements of Cash Flows for the Years Ended April 30, 2010, and April 30, 2009
Notes to Consolidated Financial Statements
          3.Exhibits:
             
    Exhibit No.   Exhibit Title
 
    3.1     Amended and Restated Articles of Incorporation of Servidyne, Inc., dated September 22, 2008 (included as Exhibit 3.1 to the Company’s Form 8-K filed with the SEC on September 25, 2008 and incorporated herein by reference).
 
           
 
    3.2     Amended and Restated Bylaws of Servidyne, Inc., dated November 28, 2007 (included as Exhibit 3(b) to the Company’s Form 8-K filed with the SEC on November 30, 2007 and incorporated herein by reference).
 
           
 
    10.1     Directors Deferred Compensation Plan (included with the Company’s Form 10-K for the year ended April 30, 1991, File No. 0-10146, and incorporated herein by reference).#
 
           
 
    10.2     2000 Stock Award Plan (included as Exhibit 4 to the Company’s Form S-8 filed with the SEC on September 29, 2000, File No. 333-46920, and incorporated herein by reference).#
 
           
 
    10.3     Alan R. Abrams Split Dollar Life Insurance Agreement dated May 31, 2001 (included as Exhibit 10(i) to the Company’s Form 10-K for the year ended April 30, 2001 filed with the SEC on July 18, 2001, File No. 0-10146, and incorporated herein by reference).#
 
           
 
    10.4     J. Andrew Abrams Split Dollar Life Insurance Agreement dated May 31, 2001 (included as Exhibit 10(j) to the Company’s Form 10-K for the year ended April 30, 2001 filed with the SEC on July 18, 2001, File No. 0-10146, and incorporated herein by reference).#
 
           
 
    10.5     Summary Description of Annual Incentive Bonus Plan (included as Exhibit 10(i) to the Company’s Form 10-Q for the quarter ended October 31, 2005 filed with the SEC on December 15, 2005, File No. 0-10146, and incorporated herein by reference).#
 
           
 
    10.6     Form of Stock Appreciation Rights Agreement (included as Exhibit 10(j) to the Company’s Form 10-K for the year ended April 30, 2006 filed with the SEC on July 31, 2006 and incorporated herein by reference).#
 
           
 
    10.7     Form of Related Party Promissory Note (included as Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended October 31, 2010 filed with the SEC on December 15, 2010).
 
           
 
    21.1     List of the Company’s Subsidiaries. *
 
           
 
    23.1     Consent of Deloitte & Touche LLP.
 
           
 
    31.1     Certification of the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 


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    Exhibit No.   Exhibit Title
 
    31.2     Certification of the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
           
 
    32.1     Certification of the CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
           
 
    32.2     Certification of the CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
#   Management compensatory plan or arrangement.
 
*   Filed with the original filing of this annual report.
(B) The Company hereby files as exhibits to this Amendment No. 1 to its Annual Report on Form 10-K/A the exhibits set forth in Item 15(A)3 hereof.

 


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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to be signed on its behalf by the undersigned, thereunto duly authorized.
         
  SERVIDYNE, INC.
 
 
Dated: June 2, 2011  By:   /s/ Alan R. Abrams    
    Alan R. Abrams   
    Chief Executive Officer   
 
     
Dated: June 2, 2011    /s/ Rick A. Paternostro    
    Rick A. Paternostro   
    Chief Financial Officer