SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

SERVIDYNE, INC.

Georgia		58-0522129
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

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

Former name, former address, former fiscal year, if changed since last report: N/A

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 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. (Check one):

Large accelerated filer o		Accelerated Filer o		Non-accelerated filer   o (Do not check if a smaller reporting company)		Smaller Reporting Company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o       No þ

The number of shares of $1.00 par value Common Stock of the Registrant outstanding as of February 28, 2009, was 3,691,569.

 

 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

		January 31, 2009				April 30, 2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	5,730,561			$	8,382,947
Restricted cash			—				3,470,700
Receivables (Note 5)			3,528,902				3,735,930
Less: Allowance for doubtful accounts			(110,845	)			(127,007	)
Costs and earnings in excess of billings			386,506				275,754
Deferred income taxes			521,036				750,488
Other current assets			1,608,824				1,011,304
Total current assets			11,664,984				17,500,116
INCOME-PRODUCING PROPERTIES, net			21,519,183				21,773,409
PROPERTY AND EQUIPMENT, net			845,978				811,900
OTHER ASSETS:
Real estate held for future development or sale			853,109				853,109
Intangible assets, net (Note 9)			3,173,252				3,222,125
Goodwill (Note 9)			6,354,003				5,458,717
Other assets			2,697,137				2,696,174
Total assets		$	47,107,646			$	52,315,550
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Trade and subcontractors payables		$	869,247			$	550,360
Accrued expenses			1,363,768				1,143,794
Deferred revenue			640,089				848,197
Accrued incentive compensation			—				494,000
Billings in excess of costs and earnings			170,737				62,559
Current maturities of mortgage notes and other long-term debt			556,461				631,736
Total current liabilities			3,600,302				3,730,646
DEFERRED INCOME TAXES			3,465,955				5,271,441
OTHER LIABILITIES			814,103				1,138,316
MORTGAGE NOTES PAYABLE, less current maturities			18,324,190				18,603,769
OTHER LONG-TERM DEBT, less current maturities			1,000,000				1,105,000
Total liabilities			27,204,550				29,849,172
COMMITMENTS AND CONTINGENCIES (Note 13)
SHAREHOLDERS’ EQUITY:
Common stock, $1 par value; 10,000,000 shares authorized; 3,918,078 issued and 3,691,569 outstanding at January 31, 2009, 3,708,836 issued and 3,539,770 outstanding at April 30, 2008			3,918,078				3,708,836
Additional paid-in capital			5,972,610				5,045,100
Retained earnings			10,987,208				14,511,159
Treasury stock (common shares) 226,509 at January 31, 2009, and 169,066 at April 30, 2008			(974,800	)			(798,717	)
Total shareholders’ equity			19,903,096				22,466,378
Total liabilities and shareholders’ equity		$	47,107,646			$	52,315,550

See accompanying notes to condensed consolidated financial statements.

SERVIDYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

		THIRD QUARTER ENDED								NINE MONTHS ENDED
		JANUARY 31,								JANUARY 31,
		2009				2008				2009				2008
REVENUES:
Building Performance Efficiency (“BPE”)		$	3,338,921			$	3,220,444			$	9,493,104			$	11,973,959
Real Estate			818,893				895,264				2,407,713				4,335,446
			4,157,814				4,115,708				11,900,817				16,309,405
COST OF REVENUES:
BPE			2,098,300				2,158,725				6,018,788				8,104,705
Real Estate			527,710				515,624				1,562,375				1,671,702
			2,626,010				2,674,349				7,581,163				9,776,407
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:			2,471,359				2,319,813				7,572,496				6,982,322
OTHER (INCOME) AND EXPENSES:
Other income (Note 12)			(280,510	)			(9,899	)			(317,454	)			(77,045	)
Interest income			(8,560	)			(83,289	)			(111,618	)			(195,046	)
Interest expense			318,083				345,516				980,847				1,032,875
			29,013				252,328				551,775				760,784
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			(968,568	)			(1,130,782	)			(3,804,617	)			(1,210,108	)
INCOME TAX BENEFIT			(477,206	)			(423,501	)			(1,560,132	)			(505,719	)
LOSS FROM CONTINUING OPERATIONS			(491,362	)			(707,281	)			(2,244,485	)			(704,389	)
DISCONTINUED OPERATIONS:
(Loss) earnings from discontinued operations, adjusted for applicable income tax expense (benefit) of $0, ($1,832), $0 and $11,219, respectively			—				(2,988	)			—				18,305
Gain on sale of income-producing real estate, adjusted for applicable income tax expense of $0, $792,218, $0, and $1,521,172, respectively			—				1,292,567				—				2,481,914
EARNINGS FROM DISCONTINUED OPERATIONS			—				1,289,579				—				2,500,219
NET (LOSS) EARNINGS		$	(491,362	)		$	582,298			$	(2,244,485	)		$	1,795,830
NET (LOSS) EARNINGS PER SHARE — BASIC
From continuing operations		$	(0.13	)		$	(0.19	)		$	(0.60	)		$	(0.19	)
From discontinued operations			—				0.35				—				0.67
NET (LOSS) EARNINGS PER SHARE — BASIC		$	(0.13	)		$	0.16			$	(0.60	)		$	0.48
NET (LOSS) EARNINGS PER SHARE — DILUTED
From continuing operations		$	(0.13	)		$	(0.19	)		$	(0.60	)		$	(0.19	)
From discontinued operations			—				0.35				—				0.67
NET (LOSS) EARNINGS PER SHARE — DILUTED		$	(0.13	)		$	0.16			$	(0.60	)		$	0.48
DIVIDENDS PER SHARE		$	0.038			$	0.034			$	0.114			$	0.103
WEIGHTED AVERAGE SHARES OUTSTANDING — BASIC			3,711,559				3,714,245				3,726,066				3,708,588
WEIGHTED AVERAGE SHARES OUTSTANDING — DILUTED			3,711,559				3,714,245				3,726,066				3,708,588

See accompanying notes to condensed consolidated financial statements.

SERVIDYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

		NINE MONTHS ENDED
		JANUARY 31,
		2009				2008
CONTINUING OPERATIONS:
Cash flows from operating activities:
Net (loss) earnings		$	(2,244,485	)		$	1,795,830
Earnings from discontinued operations, net of tax			—				(2,500,219	)
Adjustments to reconcile net (loss) earnings to net cash used in operating activities:
Loss on sale of real estate			—				89,179
Loss on disposal of assets			11,654				14,330
Depreciation and amortization			1,208,196				1,122,288
Amortization of mortgage discount			(20,000	)			(22,500	)
Deferred tax benefit			(1,560,132	)			(505,719	)
Stock compensation expense			151,927				97,210
Adjustment to cash surrender value of life insurance			(103,614	)			(45,453	)
Straight-line rent			(57,344	)			24,640
Provision for doubtful accounts, net			(16,162	)			100,812
Changes in assets and liabilities:
Receivables			325,550				(1,301,180	)
Costs and earnings in excess of billings			(110,752	)			(736,081	)
Other current assets			(263,603	)			283,178
Trade and subcontractors payable			(120,649	)			205,069
Accrued expenses and deferred revenue			(32,535	)			181,324
Accrued incentive compensation			(494,000	)			(196,516	)
Billings in excess of costs and earnings			108,178				(113,110	)
Other liabilities			(14,224	)			175,537
Net cash used in operating activities			(3,247,895	)			(1,331,381	)
Cash flows from investing activities:
Purchase of available-for-sale security			—				(2,900,000	)
Deposit of cash proceeds from sale of real estate held in escrow			—				(3,436,200	)
Release of restricted cash held in escrow			3,470,700				—
Deposit of restricted cash			(139,833	)			—
Purchase of held to maturity investment			(150,000	)			—
Additions to income-producing properties			(170,238	)			(644,898	)
Additions to property and equipment			(147,631	)			(164,426	)
Additions to intangible assets			(263,005	)			(212,513	)
Acquisition, net of cash acquired			(902,657	)			—
Net cash provided by (used in) investing activities			1,697,336				(7,358,037	)
Cash flows from financing activities:
Real estate loan proceeds			—				3,200,000
Mortgage repayments			(258,978	)			(2,500,000	)
Debt repayments			(280,875	)			(479,714	)
Repurchase of common stock			(135,507	)			—
Deferred loan costs paid			—				(57,346	)
Exercise of stock options			—				51,000
Cash dividends paid to shareholders			(426,467	)			(381,746	)
Net cash used in financing activities			(1,101,827	)			(167,806	)
DISCONTINUED OPERATIONS:
Operating activities			—				319,230
Investing activities			—				14,616,120
Financing activities			—				(6,187,504	)
Net cash provided by discontinued operations			—				8,747,846
Net decrease in cash and cash equivalents			(2,652,386	)			(109,378	)
Cash at beginning of period			8,382,947				5,662,894
Cash at end of period		$	5,730,561			$	5,553,516

See accompanying notes to condensed consolidated financial statements.

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

See accompanying notes to condensed consolidated financial statements.

SERVIDYNE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2009, AND APRIL 30, 2008
(UNAUDITED)

NOTE 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’s Building Performance Efficiency (“BPE”) Segment provides energy efficiency solutions, sustainability programs, and other building performance enhancing products and services to owners and operators of buildings. The Company’s Real Estate Segment engages in commercial real estate investment and development.

NOTE 2. UNAUDITED STATEMENTS

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to such rules and regulations, although management believes that the accompanying disclosures are adequate to make the information presented not misleading. In the opinion of management, the accompanying financial statements contain all adjustments, consisting of normal recurring accruals that are necessary for a fair statement of the results for the interim periods presented. These financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2008. Results of operations for interim periods are not necessarily indicative of annual results.

Restatement of Previously Issued Condensed Consolidated Financial Statements

Subsequent to the issuance of the October 31, 2008, condensed consolidated financial statements, the Company determined that interest income and certain components of other income were not presented in accordance with SEC Regulation S-X, Article 5, Rule 5-03, “Income Statement.” In periods prior to the quarter ended January 31, 2009, the Company included interest income and certain components of other income in the determination of total revenues. Beginning in the quarter ended January 31, 2009, the Company revised its presentation of interest income and certain components of other income to “other (income) and expenses” in the condensed consolidated statement of operations. Prior period amounts have been restated to conform to this new presentation. The Company does not believe that these restatements are material to the Company’s condensed consolidated financial statements for the quarter ended January 31, 2009, or for the consolidated financial statements for any prior quarterly or annual periods.

Reclassification of Previously Issued Condensed Consolidated Financial Statements

In periods prior to the quarter ended January 31, 2009, the Company included interest expense together with cost of revenues and selling, general and administrative expenses in the determination of total operating expenses. Beginning in the quarter ended January 31, 2009, the Company reclassified interest expense to “other (income) and expenses” in the condensed consolidated statement of operations. Prior period amounts have been reclassified to conform to this new presentation.

NOTE 3. RECENT ACCOUNTING PRONOUNCEMENTS

In December 2007, the FASB issued Statement of Financial Accounting Standard (“SFAS”) No. 141

(revised 2007), “Business Combinations” (“SFAS 141(R)”), which replaces SFAS No. 141, “Business Combinations.” SFAS 141(R) retains the underlying concepts of SFAS 141 in that all business combinations are still required to be accounted for at fair value under the acquisition method of accounting, but SFAS 141(R) changed the method of applying the acquisition method in a number of significant aspects. Acquisition costs will generally be expensed as incurred; non-controlling interests will be valued at fair value at the acquisition date; in-process research and development will be recorded at fair value as an indefinite-lived intangible asset at the acquisition date; restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. SFAS 141(R) will be effective on a prospective basis for all business combinations for which the acquisition date is on or after the beginning of the first annual period subsequent to December 15, 2008, with the exception of the accounting for valuation allowances on deferred taxes and acquired tax contingencies. SFAS 141(R) amends SFAS 109 such that adjustments made to valuation allowances on deferred taxes and acquired tax contingencies associated with acquisitions that closed prior to the effective date of SFAS 141(R) would also apply the provisions of SFAS 141(R). Early adoption is not permitted. The Company is currently evaluating the effects, if any, that SFAS 141(R) may have on the Company’s financial statements.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles (“GAAP”), and expands disclosures about fair value measurements. SFAS 157 applies where other accounting pronouncements require or permit fair value measurements; it does not require any new fair value measurements under GAAP. The effects of adoption are determined by the types of instruments carried at fair value in the Company’s financial statements at the time of adoption, as well as the method utilized to determine their fair values prior to adoption. SFAS 157 was effective for financial assets and liabilities on May 1, 2008. SFAS 157 will be effective for non-financial assets and liabilities, including assets measured at fair value due to impairments, on May 1, 2009. The Company has determined that this statement did not have a significant impact on the determination or reporting of the Company’s financial results for the fiscal year ended April 30, 2009, and will not have a significant impact for the fiscal year ended April 30, 2010.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—including an amendment of FASB Statement No. 115” (“SFAS 159”). SFAS 159 was effective for the Company on May 1, 2008. This statement permits entities to choose to measure many financial instruments and certain other items at fair value. This statement also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. Unrealized gains and losses on items for which the fair value option is elected will be reported in earnings. The Company elected not to apply the fair value option to its existing financial assets and liabilities on SFAS 159’s effective date. Thus, this statement did not have an impact on the determination or reporting of the Company’s financial results.

In April 2008, the FASB issued FASB Staff Position No. 142-3, “Determining the Useful Life of Intangible Assets” (“FSP 142-3”). FSP 142-3 was designed to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”), and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141 (revised 2007), “Business Combinations”, and other guidance under GAAP. FSP 142-3 will be effective for the

Company on May 1, 2009. Early adoption is prohibited. The Company is currently evaluating the effects, if any, that FSP 142-3 may have on the Company’s financial statements.

NOTE 4. EQUITY-BASED COMPENSATION

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, stock appreciation rights, and restricted stock.

For the third quarter and the nine months ended January 31, 2009, total equity-based compensation expenses were $53,992 and $151,927, respectively, and the related income tax benefits were $20,517 and $57,925, respectively. Comparatively, for the third quarter and the nine months ended January 31, 2008, total equity-based compensation expenses were $35,749 and $97,210, respectively, and the related income tax benefits were $13,585 and $36,940, respectively. All of these expenses are included in selling, general and administrative expenses in the condensed consolidated statements of operations.

Stock Options

A summary of stock options activity for the nine months ended January 31, 2009, is as follows:

						Weighted
		Options to				Average
		Purchase				Exercise
		Shares				Price
Outstanding at April 30, 2008			483,536			$	4.45
Granted			10,500				5.24
Exercised			—				—
Forfeited / Expired			(11,550	)			4.59
Outstanding at January 31, 2009			482,486			$	4.46
Vested at January 31, 2009			471,986			$	4.44

As of January 31, 2009, 471,986, or 98%, of the outstanding stock options were exercisable, but none of the outstanding stock options were “in the money.”

A summary of information about all stock options outstanding as of January 31, 2009, is as follows:

						Weighted Average
Exercise		Number of				Remaining Contractual
Price		Outstanding Options				Life (Years)
$4.42			415,629				3.77
$4.59			55,440				6.15
$5.19			917				5.38
$5.24			10,500				4.37

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 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 of the stock options granted in the nine months ended January 31, 2009, was estimated on the respective grant dates 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

Compensation expenses related to the vesting of options for the third quarter and the nine months ended January 31, 2009, were $8,039 and $15,195, respectively, and the related income tax benefits were $3,055 and $5,968, respectively, related to the vesting of options. Comparatively, there were no compensation expenses or related tax benefits related to the vesting of options in the third quarter or the nine months ended January 31, 2008.

Stock Appreciation Rights (SARs)

A summary of SARs activity for the nine months ended January 31, 2009, is as follows:

						Weighted
						Average
		SAR				Exercise
		Units				Price
Outstanding at April 30, 2008			411,600			$	4.26
Granted			184,000				4.57
Exercised			—				—
Forfeited			(5,250	)			3.88
Outstanding at January 31, 2009			590,350			$	4.36
Vested at January 31, 2009			—			$	—

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 on the U.S. Treasury Bill having the same maturity 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 awards. The expected volatility of the SARs 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 of the SARs granted in the nine months ended January 31, 2009, was estimated on the respective grant dates using the following weighted average assumptions in the Black-Scholes option-pricing model:

Expected life (years)			5
Dividend yield			2.59	%
Expected stock price volatility			37.25	%
Risk-free interest rate			3.45	%
Fair value of SARs granted		$	0.91

Compensation expenses related to the vesting of SARs for the third quarter and the nine months ended January 31, 2009, were $40,537 and $123,778, respectively, and related income tax benefits were $15,405 and $47,035, respectively, related to the vesting of SARs. Comparatively, compensation expenses related to vesting of SARs for the third quarter and the nine months ended January 31, 2008, were $32,397 and $89,053, respectively, and related income tax benefits were $12,311 and $33,840, 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 January 31, 2009, there were unrecognized compensation expenses totaling $13,328 related to grants of shares of restricted stock, which the Company expects to be recognized over the ensuing year. For the quarters ended January 31, 2009, and January 31, 2008, compensation expenses related to the vesting of shares of restricted stock were $5,416 and $3,352, respectively, and the related income tax benefits were $2,058 and $1,274, respectively.

In the nine months ended January 31, 2009, and January 31, 2008, compensation expenses related to the vesting of shares of restricted stock were $12,954 and $8,157, respectively, and the related income tax benefits were $4,922 and $3,100, respectively.

The following table summarizes restricted stock activity for the nine months ended January 31, 2009:

						Weighted Average
		Number of				Fair Value
		Shares of				per Share
		Restricted Stock				on Grant Date
Non-vested restricted stock at April 30, 2008			1,785			$	4.27
Granted			5,800				4.72
Vested			(1,785	)			—
Forfeited			(205	)			—
Non-vested restricted stock at January 31, 2009			5,595			$	4.61

NOTE 5. RECEIVABLES

All net contract and trade receivables are expected to be collected within one (1) year.

NOTE 6. DISCONTINUED OPERATIONS

Sales of Income-Producing Properties

The Company is in the business of creating long-term value by periodically realizing gains through the sale of real estate assets, and then redeploying its capital by reinvesting the proceeds from such sales in new real estate assets or other segments of the Company. Effective as of fiscal 2003, the Company adopted SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”), which requires, among other things, that the operating results of certain income-producing assets be included in discontinued operations in the statements of operations for all periods presented. 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 January 31, 2009, the Company had no income-producing properties that were classified as held for sale.

On December 13, 2007, the Company sold its owned office park located in Marietta, Georgia, and recognized a pre-tax gain on the sale of approximately $2.1 million. On July 31, 2007, the Company sold its leasehold interest in the land and its owned shopping center building located in Columbus, Georgia, and its owned shopping center located in Orange Park, Florida, and recognized a pre-tax gain on the sales of approximately $1.9 million. As a result of these transactions, the Company’s financial statements have been prepared with the results of operations and cash flows of these sold properties shown as discontinued operations. All historical statements have been restated in accordance with SFAS 144. Summarized financial information for discontinued operations for the third quarter and the nine months ended January 31, 2009, and January 31, 2008, is as follows:

		Third Quarter Ended								Nine Months Ended
		January 31,								January 31,
		2009				2008				2009				2008
REAL ESTATE SEGMENT
Rental revenues		$	—			$	195,980			$	—			$	1,172,304
Rental property operating expenses, including depreciation			—				200,800				—				1,142,780
Operating (loss) earnings from discontinued operations			—				(4,820	)			—				29,524
Income tax benefit (expense)			—				1,832				—				(11,219	)
Operating (loss) earnings from discontinued operations, net of tax			—				(2,988	)			—				18,305
Gain on sale of income-producing properties			—				2,084,785				—				4,003,086
Income tax expense			—				(792,218	)			—				(1,521,172	)
Gain on sale of income-producing properties, net of tax			—				1,292,567				—				2,481,914
Earnings from discontinued operations, net of tax		$	—			$	1,289,579			$	—			$	2,500,219

NOTE 7. OPERATING SEGMENTS

The table below shows selected financial data on a segment basis before intersegment eliminations. For financial data on a segment basis after intersegment eliminations, refer to Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. In this presentation, management fee expenses charged by the Parent Company are not included in the Segments’ results.

The Company has modified the table of operating segments financial data to better represent how the chief operating decision maker (“CODM”) reviews the performance of each operating segment. Previously, the CODM included discontinued operations from sales of income-producing properties and income taxes in the review. As the real estate market deteriorated throughout this fiscal year, it became evident that it would not be advantageous for the Company to sell any income-producing properties in the near term, and therefore the Company does not anticipate having any discontinued operations for some period of time. As a result, the CODM has changed focus to results from continuing operations. To better reflect this, “(Loss) earnings from continuing operations before income taxes” has replaced “Net (loss) earnings by segment” for all periods presented.

For the Nine Months
Ended January 31, 2009		BPE				Real Estate				Parent (1)				Eliminations				Consolidated
Revenues from unaffiliated customers
BPE Segment services and products:
Energy savings projects		$	1,373,724															$	1,373,724
Lighting products			461,245																461,245
Energy management services			520,761																520,761
Productivity software			983,191																983,191
Total revenues from unaffiliated customers		$	3,338,921			$	818,893			$	—			$	—			$	4,157,814
Intersegment revenue			—				126,356				—				(126,356	)			—
Total revenues from continuing operations		$	3,338,921			$	945,249			$	—			$	(126,356	)		$	4,157,814
(Loss) earnings from continuing operations before income taxes		$	(481,401	)		$	130,781			$	(615,926	)		$	(2,022	)		$	(968,568	)
For the Nine Months
Ended January 31, 2009		BPE				Real Estate				Parent (1)				Eliminations				Consolidated
Revenues from unaffiliated customers
BPE Segment services and products:
Energy savings projects		$	3,545,614															$	3,545,614
Lighting products			1,378,075																1,378,075
Energy management services			1,762,224																1,762,224
Productivity software			2,807,191																2,807,191
Total revenues from unaffiliated customers		$	9,493,104			$	2,407,713			$	—			$	—			$	11,900,817
Intersegment revenue			—				409,388				—				(409,388	)			—
Total revenues from continuing operations		$	9,493,104			$	2,817,101			$	—			$	(409,388	)		$	11,900,817
(Loss) earnings from continuing operations before income taxes		$	(1,861,363	)		$	541,501			$	(2,472,217	)		$	(12,538	)		$	(3,804,617	)
For the Third Quarter
Ended January 31, 2008		BPE				Real Estate				Parent (1)				Eliminations				Consolidated
Revenues from unaffiliated customers
BPE Segment services and products:
Energy savings projects		$	1,840,590															$	1,840,590
Lighting products			—																—
Energy management services			494,350																494,350
Productivity software			885,504																885,504
Total revenues from unaffiliated customers		$	3,220,444			$	895,264			$	—			$	—			$	4,115,708
Intersegment revenue			—				149,268				—				(149,268	)			—
Total revenues from continuing operations		$	3,220,444			$	1,044,532			$	—			$	(149,268	)		$	4,115,708
(Loss) earnings from continuing operations before income taxes		$	(465,021	)		$	319,259			$	(601,944	)		$	(6,026	)		$	(1,130,782	)
For the Nine Months
Ended January 31, 2008		BPE				Real Estate				Parent (1)				Eliminations				Consolidated
Revenues from unaffiliated customers
BPE Segment services and products:
Energy savings projects		$	7,750,989															$	7,750,989
Lighting products			—																—
Energy management services			1,725,249																1,725,249
Productivity software			2,497,721																2,497,721
Total revenues from unaffiliated customers		$	11,973,959			$	4,335,446			$	—			$	—			$	16,309,405
Intersegment revenue			—				444,373				—				(444,373	)			—
Total revenues from continuing operations		$	11,973,959			$	4,779,819			$	—			$	(444,373	)		$	16,309,405
(Loss) earnings from continuing operations before income taxes		$	(774,725	)		$	2,452,314			$	(2,858,546	)		$	(29,151	)		$	(1,210,108	)

NOTE 8. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing net earnings (loss) by the weighted average shares outstanding during the reporting period. Diluted earnings (loss) per share is computed giving effect to dilutive stock equivalents resulting from outstanding stock options, restricted stock and stock appreciation rights. The dilutive effect on the number of common shares for the first nine months of fiscal 2009 and fiscal 2008 was 474 shares and 232,591 shares, respectively. Because the Company had a loss from continuing operations for the third quarter and the nine months ended January 31, 2009, as well as for the third quarter and the nine months ended January 31, 2008, all stock equivalents were anti-dilutive during these periods, and therefore, are excluded when determining the diluted weighted average number of shares outstanding.

On June 5, 2008, the Company declared a stock dividend of five percent (5%) for all shareholders of record on June 18, 2008; accordingly, on July 1, 2008, the Company distributed 177,708 newly issued shares of stock to those shareholders. Earnings (loss) per share has been adjusted retroactively to include the shares issued and outstanding pursuant to the stock dividend as outstanding for all periods presented.

NOTE 9. GOODWILL AND OTHER INTANGIBLE ASSETS

The gross carrying amounts and accumulated amortization for all of the Company’s intangible assets as of January 31, 2009, and April 30, 2008, are as follows:

		January 31, 2009
		Gross Carrying				Accumulated
		Amount				Amortization
Intangible assets, subject to amortization:
Proprietary BPE software solutions		$	3,609,411			$	2,202,764
Acquired computer software			466,589				464,892
Real estate lease costs			860,865				283,809
Customer relationships			404,632				242,884
Deferred loan costs			331,488				121,330
Non-compete agreements			63,323				21,108
Tradename			61,299				2,724
Other			28,659				22,210
		$	5,826,266			$	3,361,721
Intangible assets and goodwill, not subject to amortization:
Trademark		$	708,707
Goodwill		$	6,354,003

		April 30, 2008
		Gross Carrying				Accumulated
		Amount				Amortization
Intangible assets, subject to amortization:
Proprietary BPE software solutions		$	3,403,208			$	1,788,415
Acquired computer software			462,555				453,038
Real estate lease costs			823,091				208,966
Customer relationships			218,000				188,933
Deferred loan costs			331,488				94,170
Other			28,660				20,062
		$	5,267,002			$	2,753,584
Intangible assets and goodwill, not subject to amortization:
Trademark		$	708,707
Goodwill		$	5,458,717

Aggregate amortization expense for all amortizable intangible assets:
For the nine months ended January 31, 2009		$	616,486
For the nine months ended January 31, 2008		$	560,838
For the quarter ended January 31, 2009		$	209,758
For the quarter ended January 31, 2008		$	186,364

Estimated amortization expense for all amortizable intangible assets recorded as of January 31, 2009, for the remainder of fiscal year 2009 and each of the next five (5) fiscal years and thereafter is as follows:

Remainder of fiscal year 2009		$	199,989
2010			675,791
2011			536,636
2012			383,421
2013			261,315
2014			174,594
Thereafter			232,799
		$	2,464,545

The Company recently completed its annual testing of goodwill and indefinite-lived intangible assets for impairment in the most recent quarter ended January 31, 2009, as required in accordance with SFAS 142. The result of the valuation was that no impairment existed as of January 31, 2009. All of the Company’s goodwill and indefinite-lived intangible assets are assigned to the BPE Segment, which has also been determined to be the reporting unit.

The valuation methodologies used to calculate the fair value of BPE were the discounted cash flow method of the income approach and the guideline company method of the market approach.

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 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 as 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 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 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 17% for the lower growth scenario to 19% for the higher growth scenario. For the assessment of fair value of the BPE Segment based on the income approach, the results of the three scenarios were weighted (60% for the expected case and 20% 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 four 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.

The comparable companies selected for the market approach were similar to the BPE Segment in terms of business description and markets served; therefore, the results of the income approach and market approach were equally weighted and compared to the carrying value of the BPE Segment. This test of fair value indicated that no impairment existed at January 31, 2009.

NOTE 10. DISPOSITIONS

Fiscal 2009

There were no dispositions in the first nine months of fiscal 2009.

Fiscal 2008

On March 28, 2008, the City of Oakwood, Georgia, acquired in lieu of formal condemnation approximately 1.8 acres of the Company’s undeveloped land located in Oakwood, Georgia, for a price of $860,000, which resulted in a pre-tax gain on the transaction of approximately $581,000. For income tax purposes, the Company treated this transaction as an involuntary conversion under Section 1033 of the Internal Revenue Code, which allows for tax deferral of the gain if the Company acquires a qualified replacement property by no later than April 30, 2011. The Company currently intends to use the net proceeds from this transaction to acquire a qualified replacement property. There can be no assurance, however, that the Company will be able to successfully complete such acquisition.

On December 13, 2007, the Company sold its owned office park located in Marietta, Georgia, for a price of $10.3 million, resulting in a pre-tax gain on the sale of approximately $2.085 million. After selling expenses and repayment of the mortgage loan and associated costs, the sale generated cash proceeds of approximately $3.4 million. The Company intended to use the net proceeds from this sale to acquire an income-producing property, which would have qualified the sale under Internal Revenue Code Section 1031 for federal income tax deferral (“1031 deferral”), and therefore placed the proceeds with a qualified third party intermediary in connection therewith. However, the Company did not complete such acquisition, and therefore the proceeds were released from the intermediary to the Company on June 11, 2008. Because the Company did not complete the 1031 deferral, a taxable gain was recognized in the quarter ended July 31, 2008, which resulted in the deferred tax liability related to the previously deferred gain becoming a current tax liability.

On July 31, 2007, the Company sold: (1) its leasehold interest in a shopping center in Jacksonville, Florida; (2) its leasehold interest in the land and its owned shopping center building located in Columbus, Georgia; and (3) its owned shopping center located in Orange Park, Florida; for a total combined sales price of $6.8 million, resulting in a pre-tax gain of approximately $3.8 million. After selling expenses, the sales generated net cash proceeds of approximately $6.4 million. In addition, the Company purchased its minority partners’ interests in the Columbus, Georgia, land and shopping center building by utilizing two notes payable totaling $400,000. Both notes were paid off as of July 31, 2008. In accordance with SFAS 144, the sale of the leasehold interest in the shopping center in Jacksonville, Florida, is recorded in Real Estate revenues on the accompanying condensed consolidated statement of operations, and the sales of its leasehold interest in the land and the owned shopping center building located in Columbus, Georgia, and the owned shopping center located in Orange Park, Florida, are recorded in discontinued operations in the accompanying condensed consolidated statement of operations for the nine months ended January 31, 2008.

NOTE 11. ACQUISITIONS

On June 6, 2008, Atlantic Lighting & Supply Co., LLC (“AL&S LLC”), an indirect wholly-owned subsidiary of the Company, acquired 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 commercial property owners and managers, 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 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 the quarter ended January 31, 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

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 the third quarter and nine months ended January 31, 2009, with comparative prior year figures, 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 (in thousands, except for per share amounts).

		Quarter Ended								Nine Months Ended
		January 31,								January 31,
		2009				2008				2009				2008
Revenues		$	4,158			$	4,927			$	12,098			$	18,860
Net (loss) earnings		$	(491	)		$	482			$	(2,246	)		$	1,728
Net (loss) earnings per share — basic		$	(0.13	)		$	0.13			$	(0.60	)		$	0.47
Net (loss) earnings per share — diluted		$	(0.13	)		$	0.13			$	(0.60	)		$	0.47

NOTE 12. OTHER INCOME

Other income for the third quarter and the nine months ended January 31, 2009, includes $285,000 related to a January 30, 2009, settlement of an insurance claim.

NOTE 13. 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.

NOTE 14. SUBSEQUENT EVENT

On February 27, 2009, the Company entered into a lease modification and assignment agreement with the anchor tenant of the Company’s office building located in Newnan, Georgia. The agreement modified the lease termination date from March 2014 to February 2011 and reduced the rent, resulting in a $179,000 decrease in the Real Estate backlog reported for January 31, 2009. The agreement also assigned the lease to the company that acquired the tenant.

As part of the consideration under the agreement, the tenant paid the Company approximately $163,000 in cash. As further consideration, the Company received promissory notes totaling $100,000 in exchange for release of the personal guarantees of certain principals of the tenant. In addition, future payments contingent upon the tenant’s income were pledged to the Company. The Company also has the right to recover a portion of the tenant’s leased space to lease to other tenants and has the option to terminate the lease early.

The promissory notes and contingent payments were pledged as collateral to the property’s mortgage lender, and $117,000 of the cash payment was deposited into a restricted cash account with the mortgage lender. The Company measured the carrying amount of this property against the future net undiscounted cash flows expected to be generated by this property and determined that no impairment exists.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the condensed consolidated financial statements, including the notes to those statements, which are presented elsewhere in this report. The Company also recommends that this discussion and analysis be read in conjunction with management’s discussion and analysis section and the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2008.

The following discussion has been updated to reflect the restatements and the reclassifications discussed in Note 2 to the condensed consolidated financial statements.

The Company’s fiscal year 2009 will end on April 30, 2009.

During fiscal year 2009, the Company believes that the deterioration in the general economy has resulted in delays in the receipt of orders particularly for the Company’s Energy Savings Projects which require capital expenditures from customers. However, the Company’s offerings are designed to reduce the costs of operating buildings with a focus on energy efficiency. Both cost reduction opportunities and energy efficiency measures are financially and politically driven in today’s economic environment. Beginning in October 2008, order activity began to increase dramatically and over the next four months from October 2008 to January 2009, the BPE Segment received orders in excess of $8,700,000. This resulted in a backlog at January 31, 2009, of approximately $11.3 million—an increase of nearly 60% from the backlog at the beginning of the year at April 30, 2008. The Company will recognize revenue from a significant portion of these new orders well into fiscal year 2010.

Given this strong growth, the Company expects the BPE Segment to be cash flow positive within the next twelve months with revenues continuing to grow. To support revenue growth over a longer time horizon, in addition to multi-year programs that have already begun with large customers in the private sector as discussed above, the Company anticipates strong growth from its government business. This business offers many of the same offerings, Energy Savings Projects and other energy efficiency focused offerings, by acting as a subcontractor to large energy services company (“ESCO”) partners to provide services to end-user government agency facilities. Through this business, the BPE Segment provides services to a wide-range of government facilities, from U.S. military bases to Federal and State prisons to large public educational facilities. The future growth in the Company’s government business should be underpinned by two recent U.S. Government actions: in December 2008, the U.S. Department of Energy (“DOE”) announced a program to fund $80 billion worth of energy savings performance contracts to sixteen (16) large ESCOs to improve energy efficiency in government buildings; and in February 2009, President Obama signed the American Recovery and Reinvestment Act of 2009, which will provide approximately an additional $20 billion for the performance of energy efficiency projects in government buildings. The Company has existing business relationships with half of the sixteen ESCOs awarded contracts by the DOE and a long history of providing these exact types of services for the government. The Company should be well positioned to perform a significant amount of these projects.

While the recent increased order activity in the BPE Segment may indicate that the Company’s customers’ capital expenditure constraints are relaxing, there can be no assurance that such increased order activity can be sustained, particularly if recent macro-economic conditions were to continue, or worsen, for an extended period of time.

The Company’s Real Estate Segment is in the business of creating long-term value by periodically realizing gains through the sale of existing real estate assets, and then redeploying its capital by reinvesting the proceeds from such sales in new real estate assets or in other segments of the Company. The Company has historically generated substantial liquidity from the periodic sale of its real estate assets held for investment. However, the current real estate portfolio consists of a limited number of properties, and given recent declines in commercial real estate values in the United States, the Company may elect to not sell or be unable to sell any of its real estate assets in the near future. Since December 2007, the period over which the U.S. economy has been in recession, the Real Estate Segment has seen continued interest from prospective tenants, and has signed new leases and/or lease extensions with third parties at its two shopping centers and at its two office buildings. Marketing efforts continue to be a primary focus for the Real Estate Segment. The Company is continuing to monitor the sales and operating performance of the Real Estate Segment’s tenants, and is reducing Real Estate Segment operating costs. As of January 31, 2009, the Company’s income-producing properties were 91% leased.

The decreased order activity that the BPE Segment encountered earlier in the fiscal year, beginning in the Company’s third fiscal quarter of 2008 and continuing into the second fiscal quarter of 2009, combined with the cash utilized in the Company’s June 2008 acquisition of its lighting distribution business, resulted in significant usage of the Company’s cash during those quarters; however, cash usage has significantly moderated during the most recent fiscal quarter ended January 31, 2009. The Company believes that it has sufficient capital resources to operate its business in the ordinary course until the BPE Segment begins to generate cash flow from operations, which is expected to occur within the next twelve months, although there can be no guarantee that this will be the case, particularly if recent macro-economic conditions continue, or worsen, for an extended period of time. See “Liquidity and capital resources” for more information.

Results of operations of the third quarter and first nine months of fiscal 2009, compared to the third quarter and first nine months of fiscal 2008.

In the following charts, changes in revenues, cost of revenues, selling, general and administrative expenses, and (loss) earnings from continuing operations before income taxes from period to period are analyzed on a segment basis, net of intersegment eliminations. For net earnings and similar profit information on a consolidated basis, please refer to the Company’s condensed consolidated financial statements. For net earnings presented by segment before intercompany eliminations, refer to Note 7. Operating Segments in the Notes to the Condensed Consolidated Financial Statements

Pursuant to SFAS 144, the figures shown in the following charts for all periods presented do not include Real Estate Segment revenues, cost of revenues, and selling, general and administrative expenses generated by certain formerly owned income-producing properties that have been sold; such amounts have been reclassified to discontinued operations. See “Critical Accounting Policies - Discontinued Operations” later in this discussion and analysis section.

REVENUES
From Continuing Operations

For the third quarter of fiscal 2009, consolidated revenues from continuing operations, net of inter-segment eliminations, were $4,157,814, compared to $4,115,708 for the third quarter of fiscal 2008, an increase of approximately 1%. For the first nine months of fiscal 2009, consolidated revenues from continuing operations were $11,900,817, compared to $16,309,405 for the first nine months of fiscal 2008, a decrease of approximately 27%.

CHART A
REVENUES FROM CONTINUING OPERATIONS — SUMMARY BY SEGMENT
(Dollars in Thousands)

		Third Quarter Ended																Nine Months Ended
		January 31,								Amount				Percentage				January 31,								Amount				Percentage
		2009				2008				Change				Change				2009				2008				Change				Change
BPE (1)		$	3,339			$	3,220			$	119				4			$	9,493			$	11,974				$(2,481	)			(21	)
Real Estate (2)			819				895				(76	)			(8	)			2,408				4,335				(1,927	)			(44	)
		$	4,158			$	4,115			$	43				1			$	11,901			$	16,309				$(4,408	)			(27	)

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)

		Third Quarter Ended																Nine Months Ended
		January 31,								Amount				Percentage				January 31,								Amount				Percentage
		2009				2008				Change				Change				2009				2008				Change				Change
Energy Savings Projects		$	1,374			$	1,840			$	(466	)			(25	)		$	3,546			$	7,751			$	(4,205	)			(54	)
Lighting Products			461				—				461				—			$	1,378			$	—				1,378				—
Energy Management Services			521				494				27				5				1,762				1,725				37				2
Productivity Software			983				886				97				11				2,807				2,498				309				12
		$	3,339			$	3,220			$	119				4			$	9,493			$	11,974			$	(2,481	)			(21	)

BPE Segment revenues increased by approximately $119,000, or 4%, in the third quarter of fiscal 2009 compared to the same period in fiscal 2008, primarily due to:

	(a)		lighting product revenues of approximately $461,000 as a result of the Company’s acquisition during the first quarter of fiscal 2009 of its new lighting distribution business; and
	(b)		an increase in productivity software products and services revenues of approximately $97,000;

partially offset by:

(c)

energy savings (lighting and mechanical) project revenues that were approximately $466,000 lower than in the year-earlier period, primarily due to delays in the receipt of certain orders. However, the Company received these previously delayed orders in the third fiscal quarter. This contributed to a BPE backlog at January 31, 2009, which was 62% higher than backlog levels at October 31, 2008. See further discussion on the BPE Segment backlog below.

BPE Segment revenues decreased by approximately $2,481,000 , or 21%, in the first nine months of fiscal 2009 compared to the same period in fiscal 2008, primarily due to:

(a)

energy savings (lighting and mechanical) project revenues that were approximately $4,205,000 lower than in the year-earlier period, primarily because of:

i.

delays in the receipt of certain orders, as described above;

and

ii.

the absence of revenues of approximately $1 million that were generated by a one-time special project for a large retail customer in the year-earlier period;

partially offset by:

iii.

revenues of approximately $1,152,000 from several new energy savings project customers, representing the initial phases of new energy savings program initiatives for those customers;

The year-over-year decline in energy savings project revenues for the first nine months was partially offset by:

(b)

lighting product revenues of approximately $1,378,000, as the result of the Company’s acquisition during the first quarter of fiscal 2009 of its lighting distribution business; and

(c)

an increase in productivity software products and services revenues of approximately $309,000.

		While management believes that the decrease in BPE Segment revenues in the first nine months is due in part to the general deterioration of the overall economy and its effect on certain of the Company’s customers, revenues in the third quarter were higher than last year, and order activity continued to strengthen significantly in the third fiscal quarter. As a result, management believes that the Company is well positioned to continue to grow BPE Segment revenues.
(2)		Real Estate Segment revenues decreased by $76,000, or 8%, in the third quarter of fiscal 2009 compared to the same period in fiscal 2008, primarily as a result of a decrease in rental income of approximately $146,000 due to the expiration of an anchor tenant lease in January 2008 at the Company’s owned headquarters building in Atlanta, Georgia, partially offset by rental income of approximately $25,000 from new tenant leases at the same property, as well as increased rental income and expense reimbursements at other properties.
		Real Estate Segment revenues decreased by $1,927,000, or 44%, in the first nine months of fiscal 2009 compared to the same period in fiscal 2008, primarily due to:

(a)

the absence of revenues of approximately $1,553,000 generated in the first quarter of fiscal 2008 by the sale of the Company’s leasehold interest in its shopping center in Jacksonville, Florida, and the absence of $75,000 in rental revenues in the current year due to the sale of this property; and

(b)

a decrease in rental revenues of approximately $519,000 due to the expiration of an anchor tenant lease in January 2008 at the Company’s owned headquarters building in Atlanta, Georgia;

partially offset by:

	(c)		approximately $66,000 in rental revenues as the result of an early lease termination in the first quarter of fiscal 2009;
	(d)		approximately $85,000 in rental revenues from new tenant leases at the Company’s owned headquarters building; and
	(e)		approximately $35,000 in expense reimbursements from tenants due to higher real estate taxes and property repair and maintenance expenses.

The following table indicates the backlog of contracts and rental income, by segment.

										Increase
		January 31,								(Decrease)
		2009				2008				Amount				Percentage
BPE (1)		$	11,313,000			$	6,328,000				4,985,000				79
Real Estate (2)			2,914,000				2,994,000				(80,000	)			(3	)
Less: Intersegment eliminations (3)			(543,000	)			(528,000	)			(15,000	)			3
Total Backlog		$	13,684,000			$	8,794,000			$	4,890,000				56

(1)

BPE backlog at January 31, 2009, increased by approximately $4,985,000 compared to the year-earlier period, primarily due to:

	(a)		an increase of approximately $5,683,000 in energy savings (lighting and mechanical) projects; and
	(b)		an increase of approximately $237,000 in productivity software products and services;

partially offset by:

(c)

a decrease of approximately $935,000 in energy management consulting services, primarily as a result of the successful completion of approximately $850,000 of multi-year consulting services projects.

The Company estimates that a substantial majority of the BPE backlog at January 31, 2009, will be recognized prior to January 31, 2010.

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 $151,000, or 1.3%.

(2)

Real Estate backlog at January 31, 2009, decreased by approximately $80,000 compared to the year-earlier period, primarily due to a decrease in future rental revenues at the Company’s owned office building located in Newnan, Georgia, partially offset by an increase in the amount of leased office space at the Company’s owned headquarters building in Atlanta, Georgia.

(3)

Represents rental revenues at the Company’s owned headquarters building to be paid to the Real Estate Segment by the Parent Company and the BPE Segment.

COST OF REVENUES
From Continuing Operations

As a percentage of total segment revenues from continuing operations (see Chart A), the total applicable costs of revenues (see Chart B) were 63% and 65% for the third quarters of fiscal 2009 and 2008, respectively, and 64% and 60% for the first nine months of fiscal 2009 and 2008, 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 net of intersegment eliminations.

CHART B
COST OF REVENUES
FROM CONTINUING OPERATIONS SUMMARY BY SEGMENT
(Dollars in Thousands)

										Percentage of Segment																Percentage of Segment
										Revenues for the																Revenues for the
		Third Quarter Ended								Third Quarter Ended								Nine Months Ended								Nine Months Ended
		January 31,								January 31,								January 31,								January 31,
		2009				2008				2009				2008				2009				2008				2009				2008
BPE (1)		$	2,098			$	2,159				63				67			$	6,019			$	8,105				63				68
Real Estate (2)			528				516				64				58				1,562				1,672				65				39
		$	2,626			$	2,675				63				65			$	7,581			$	9,777				64				60

NOTES TO CHART B

(1)

BPE Segment cost of revenues decreased by approximately $2,086,000, or 26%, in the first nine months of fiscal 2009 compared to the same period in fiscal 2008, primarily due to the corresponding decrease in revenues (See Chart A).

On a percentage-of-revenues basis, BPE Segment cost of revenues decreased by 4% and 5%, respectively, in the third quarter and first nine months of fiscal 2009 compared to the same periods in fiscal 2008, primarily due to a change in the mix of services and products.

(2)

Real Estate Segment cost of revenues decreased by approximately $110,000, or 7%, for the first nine months of fiscal 2009 compared to the same period in fiscal 2008, primarily due to:

	(a)		the absence of sales costs and leaseback expenses of approximately $147,000 that were included in the prior year as a result of the sale of the Company’s leasehold interest in a shopping center located in Jacksonville, Florida, in July 2007;
	(b)		a decrease in rental operating costs of approximately $89,000 primarily due to lower tenant occupancy at the Company’s owned headquarters building in Atlanta, Georgia;

partially offset by:

(c)

an increase in rental operating costs of approximately $88,000, primarily as the result of higher real estate taxes and property maintenance and repair expenses, a portion of which is reimbursable by the tenants, and higher legal fees;

On a percentage-of-revenues basis, Real Estate Segment cost of revenues increased approximately 7% and 26% in the third quarter and first nine months of fiscal 2009, respectively. The percentage increase in the third quarter compared to the prior year period was primarily due to higher legal fees relative to the lower revenues for the quarter, as mentioned directly above. The percentage increase in the first nine months compared to the prior year period was primarily due to the inclusion of revenues of $1,553,000 in the prior year that were generated by the sale of the Company’s leasehold interest in a shopping center located in Jacksonville, Florida, in July 2007; the costs of the sale included in the prior year were approximately $95,000.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
From Continuing Operations

As a percentage of total segment revenues from continuing operations (see Chart A), the total applicable selling, general and administrative expenses (“SG&A”) (see Chart C), net of intersegment eliminations, were 60% and 57% for the third quarters of fiscal 2009 and 2008, respectively, and 64% and 43% for the first nine months of fiscal 2009 and 2008, 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 (Chart A), except that Parent and total expenses relate to consolidated revenues from continuing operations.

CHART C
SELLING, GENERAL AND ADMINSTRATIVE EXPENSES
FROM CONTINUING OPERATIONS BY SEGMENT
(Dollars in Thousands)

										Percentage of Segment																Percentage of Segment
										Revenues for the																Revenues for the
		Third Quarter Ended								Third Quarter Ended								Nine Months Ended								Nine Months Ended
		January 31,								January 31,								January 31,								January 31,
		2009				2008				2009				2008				2009				2008				2009				2008
BPE (1)		$	1,418			$	1,268				42				39			$	4,440			$	3,928				47				33
Real Estate (2)			168				214				21				24				502				599				21				14
Parent (3)			885				838				21				20				2,630				2,455				22				15
		$	2,471			$	2,320				59				56			$	7,572			$	6,982				64				43