Good afternoon and welcome to the Orion Energy System’s second quarter 2010 conference call. (Operator instructions) I’d will now turn the call over to Victoria. You may begin.

Thank you, Sarah, and thank you for joining us for Orion Energy Systems Fiscal 2010 second quarter conference call. With me on the call today are Neal Verfuerth, CEO, Jim Kackley, President and COO, and Scott Jensen, CFO. Before we begin, I will read the Safe Harbor Statement. Our remarks that follow, including answers to your questions, include statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are generally identified as such, because the context of such statements will include words such as believe, anticipate, expect, or words of similar importance. Similarly, statements that describe future plans, objectives, or goals are also forward-looking statements. These forward-looking statements are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters that we have described in our press release issued this afternoon and our filings with the SEC, except as described in these filings, we disclaim any obligations to update these forward-looking statements, which may not be updated until our next quarterly conference call. Now, I'd like to turn the call over to Neal.

Thank you, Victoria. First, I'd like to welcome everyone to our Orion Energy Systems fiscal 2010 second quarter conference call. Let me begin by discussing a few highlights from the quarter before moving to a more detailed discussion how Orion is positioned to take advantage of these trends. As we reported earlier this afternoon, we exceeded our second quarter guidance reporting revenues of $14.6 million and a net loss of $0.06 per diluted share. Additionally, we realized positive operating cash flows from the Q210. I believe the sequential improving now results show signs of stabilization in the market and renewed optimism amongst our customers. We’re seeing them actually starting to free up some of these CapEx budgets that have been frozen for the last several quarters. Going forward in our attempt to give our investor base a little more visibility into how we see things, we’re going to start reporting our bookings for the quarter. Scott will provide a more complete definition of the bookings in his commentary, but I wanted to spend a few minutes setting the stage for how we measure our results. Total bookings for the quarter were $20.3 million, including $2.4 million of our Orion virtual power plant supply agreement, which provide future reclaim revenue for up to five years. Given the increasing number of OVPP deals we are completing, we believe this number more effectively communicates how we measure our performance on a quarterly basis. Let me quickly review a few highlights from the quarter. First of all, we signed a new major customer with a large facility footprint across North America. The significance of this was this was a customer that we talked in terms of the antiquated system right out of the shoot as opposed to looking at a phased approach for layering…

Thank you, Neal. As many of you know, my role recently changed from being a board member to Chief Operating Officer, which brings with it a different perspective on a company. So I want to spend a few minutes today discussing my initial perceptions in stepping into my new role in July. I’ll also discuss what we see as barriers to entry into our position in the marketplace, the operational organizational initiatives already underway, and my area of focus going forward. After being completely immersed in Orion’s business over the last three months, I continue to be impressed by the caliber of talent within this organization. Innovation is at the heart of everything we do and employees all level share a passion for solving problems by developing technology and services that will take our existing and potential customers off the grid. They’re brave, smart, hard working and understand the enormous opportunity before us. Orion’s aggressive R&D strategies far exceed those of our competitors and the result is a smart product line that outperforms in the marketplace. Testimony to this is that Orion’s one job lately retrofitting facilities that had recently been retrofitted with competitors fluorescent technology. I’ve also spent time with customers and I see a lot of others in the business world. It’s clear to me now that the discussion of energy efficiency is a top priority for businesses as well as for our administration. The converging macro trends make it almost irresponsible for companies to avoid talking about how they can reduce not only their energy consumption, but also their strain on the grid. Oftentimes stakeholders are asking for it. In some cases, pressuring corporate management teams to act sooner than later. Given all this, I’ll share what I see as barriers to entry. Neal and the Orion…

Thank you, Jim. Our reported revenues for the second quarter of fiscal 2010 were $14.6 million compared to $18.8 million for the second quarter of fiscal 2009,which represents a decrease of 22%. This decline in revenues was primarily driven by the continued impact of the overall economy on our home sale and retail customers, as well as the increase in our financed customer field. Partners revenue for the quarter were 43% of total revenues, up from 32% of total revenues in our most recent first quarter. On an annual basis, we continue to expect that partner revenues will contribute approximately 40% of our total revenues. As Neal mentioned earlier, our financing or OVPP deals, continue to gain traction. During the second quarter of fiscal 2010, we secured 31 new Orion virtual power plant mega watt supply contracts, representing gross income streams of $2.4 million. Revenue for these customer projects will be recognized across the 60-month term of the agreements. If these projects had been structured as cash transactions, Orion would have recognized $1 million of incremental revenue within the quarter and reduced watts per share by approximately $0.02. Bookings for the quarter were $20.3 million, including $2.4 million of OVPP supply agreements versus $20.2 million in the same period last year. For the six months ended September 30th, bookings were $35.8 million, including $4.7 million of OVPP supply agreements, compared to $33.6 million during the first six months of fiscal 2009. Since this is a new metric we will be providing, let me give you some color on how we define our bookings. Our reported bookings have two components. First, our cash bookings are based upon customer purchase orders received in hand. Second, our OVPP bookings are based upon the gross future revenue streams over the expected life of the…

(Operator instructions) We’ll take a question from Glenn Wortman with Sidoti & Company. Glenn Wortman – Sidoti & Company: Can you guys give more detail on where you saw the improved order rates during the quarter and how those order rates are tracking so far in the present quarter.

We’re definitely seeing an improvement from what it has been over the last couple of quarters and are optimistic that the order will be consistent with the guidance that we put out there for the next quarter. Glenn Wortman – Sidoti & Company: Do you expect to stay cash flow positive in the second half of the year?

We’re certainly working hard to that end, Glenn. Having said that, we’re not ready to commit to an annualized number and we also are very cognizant of our cash balances and putting our cash to work in the areas where we think it brings the greatest return to our shareholders. Glenn Wortman – Sidoti & Company: Can you talk about those ongoing power projects you’ve referenced in the past and are you getting any traction with some of those newer product lines, street lights and parking lights?

We’re getting some traction certainly. The testing that all of these various sites are going through is working out very favorably. I just saw a very interesting article, actually almost a white paper of sorts come out from the Dark Sky Association. Essentially their latest recommendation is for street lighting. The linear fluorescent is the best choice due to LED providing some adverse effect on humans and animals. So that certainly works out in our favor and Dark Sky is an initiative that’s been in the works now for several years, way beyond what the stimulus kind of was a catalyst to. So the stimulus, still a lot of uncertainty is just how the dollars are flowing and there’s a lot of moving parts out there, but we have a lot of lines in the water and we’re going to keep doing what we’re doing and we’re optimistic. We’ve got the right product, we’re talking to the right people. Now we just wait for things to run the natural course.

We’ll take our next question from Bill Nasgovitz with Heartland Funds Bill Nasgovitz – Heartland Funds: What level of sales do you need to break even in the business on a quarterly basis?

I think if you read into our guidance there, Bill, you would assume that that would be in the $17.5 to $18 million dollar range. Bill Nasgovitz – Heartland Funds: Do you expect your buyback to be active in this quarter?

We do not. Bill Nasgovitz – Heartland Funds: So you’re husbanding cash?

We are for now.

Your next question comes from Brian Kramer – Roth Capital Partners. Brian Kramer – Roth Capital Partners: I’d like to go back to one clarification. I know you mentioned the OVPP 31. Is that for the quarter or for the first six months?

That’s for the quarter. Brian Kramer – Roth Capital Partners: Okay, that would probably be smaller projects relative to some last quarter. Is that something that you’re seeing? Do you expect…last quarter I think it was about 16, but it was roughly the same size in terms of revenue. What’s kind of the dynamic there?

This is Jim, Brian. When I look at the list, there doesn’t seem to be any particular pattern to it. I think as more and more people get interesting and understand what we’ve got to offer here, I expect we’ll continue to see a variety of levels of deals and perhaps some larger ones. Brian Kramer – Roth Capital Partners: The outdoor lighting and the solar units, there’s three. Jim, I think you mentioned there’s three projects. Were these all in the solar area, the OTV, the Orion Technology Ventures group you’re looking at for these OVPV projects?

Yes, there were three PV projects that we’re working on at the moment. Brian Kramer – Roth Capital Partners: Is one of those Salindra or is that separate?

Salindra is a manufacturer. We’re continuing to look at the different technologies, but the end users are other companies. Brian Kramer – Roth Capital Partners: Scott, maybe if you could just go over the margin improvement again.

The real key margin drivers certainly for us in the quarter and as we referenced on our last call, we did have some headcount reductions in our production facility, but really took the opportunity of what has been certainly as everybody is aware of a slower economy and taking the opportunity to really reorganize and reengineer some of our assembly stations and the product flow of product within the facility. So we were able to get some efficiencies then around just throughput within the plant and really reducing premium cost where in the past we might have had to incur overtime to get the same number of fixtures out. We’ve continued to really focus on areas of discretionary spending as well, but we’re very pleased with the margin improvement that we delivered in this quarter.

Our next question comes from Eric Prouty with Canaccord. Eric Prouty – Canaccord Adams: Scott, I don’t know if you might have mentioned this earlier, I might have missed it, but what is the total value of the VPPs that you signed up so far since inception?

Eric, we’ve got 67 contracts right now that we have signed with $6.2 million dollars of gross future revenue streams. Eric Prouty – Canaccord Adams: Also, from a sales standpoint, guys. Do you have the team base as far as headcount goes that you need to execute in your plan or are you adding sales people this time and just what’s the count number you have?

Current number we have is 78 that are involved in our sales process and that includes everyone from those that are out calling on national customers to those that interface with our partners and contractors to those that work on warranties and all aspects of that. Are we continuing to hire? I would say the answer to that is yes, very selectively. Our new head of HR is working with us on a process to really refine the way we select sales people so that we have as a hit ratio as we can and we always look for really top notch people that might be available. So we’re continuing to look in that direction. The job that Neal has assigned me is to have the organization ready so that when we hit more growth than even the ones that we’ve commented on today, we’re in a position to be able to handle it. So that’s what our target is. Eric Prouty – Canaccord Adams: In the past, you’ve worked with utilities in helping to implement some of their efficiency programs, etc. I guess seeing that little pickup in activity starting in that arena, are you guys seeing any interest out of the utility channels? Is there any opportunity there going forward?

Absolutely. I think some of the impetus behind these programs fizzes out a little bit when the economy slowed down and some of these didn’t have quite the same needs as they have just a year before that in meeting their demand requirements, but again, just like everything else, it’s cyclical and it’s coming back around again and I’ve had some very interesting conversations myself with some large utilities and I think they’re starting to really view our value proposition as a big part of advanced planning and meeting our objectives, because they just can’t get the other generating assets they traditionally put in place and permitted and all the other issues. That little bit of a reprieve of sorts just over the last three quarters or so. Eric Prouty – Canaccord Adams: In a similar vein, any opportunity to link up and work with some of the larger esco-type companies to help them implement some of their projects, larger or government projects that they work on?

Yes, actually, we’ve got a project going on right now, Eric, with light pipe down to the military base and I think it’s actually the second largest military base in the system and we see that as an opportunity. I have had a lot of experience over my career dealing with JCI and Honeywell, etc, and I think we’re going to start seeing more business from them giving the fact that not only have the product, we also have the ability to help deliver the savings. Eric Prouty – Canaccord Adams: Congratulations on seeing improvements here. Thanks a lot, guys.

Next we’ll go to Jeff Osborne with Thomas Weisel. Jeff Osborne – Thomas Weisel Partners: Scott, you mentioned a couple of things on the G&A front with one-time expenses. I heard the $250,000 for the facility, but I missed the other figure you gave. Was that a receivables write-off that you mentioned?

It was an adjustment for some receivables and a long-term investment that as evaluated felt that asset was imperative and we needed to make an adjustment. Just over $300,000, Jeff. Jeff Osborne – Thomas Weisel Partners: And you wrote it down to zero. There’s no additional write-offs for that?

I don’t have a specific answer to that, but we took a healthy charge. Jeff Osborne – Thomas Weisel Partners: Can you mention what CapEx was for the quarter as well as depreciation and any preliminary reads?

The G&A was $646,000 and then CapEx in the quarter was just over $700,000. Really right now as we look at the business and where we’re investing our dollars, certainly the software projects, the ERP system, and some other opportunities that we have on the sales side to really provide more effective tools to our sales force is where we’re spending our money. So that number has come down. Having said that, we’re certainly spending some resources in terms of human capital to look at new opportunities. So we’ll evaluate those opportunities as they present themselves in the future, but you’re correct. We’ve got a facility that is set up to run significantly higher volumes than what we’ve been experiencing and we’re set up to be able to quickly turn orders in a growth mode and we don’t need a lot of capital infused into our manufacturing facility and the tech center is in place now. Jeff Osborne – Thomas Weisel Partners: Historically you’ve given the unit, a shift in the quarter, I was wondering if you could share that number. I know it may be a little misleading now that a million dollars of revenue impacted with the OTV product line or sales channel, but it would be helpful just to get a sense of any pricing pressure that you might be getting in the market.

I don’t have the unit shift in front of me, but I will certainly circle back with you. As I would say in regards to pricing, we’re not really seeing anything different in the marketplace right now. Competitive behavior or any pricing pressure that’s outside of the normal negotiation process on selling CapEx equipment. Jeff Osborne – Thomas Weisel Partners: Then the last quantification number, you’ve talked about var and channel partners and this call you mentioned 40% of revenue going forward. How do we think about that channel strategy. Is it more geographic, just shot gun spreading it out, are you going more targeted, one or two guys per region?

We actually have just in the last probably six months or so refined the vetting process. There’s actually an application process that the individual that we’re considering and we look of course geographically, we look at what they have their own customer base, and as things move forward one of the things we’re doing is we’ve got our curriculum directory here. We’re actually looking at a testing out procedure to make sure that as our technologies evolve and the product line expands, they have the right technical confidence. We’re getting a lot more sophisticated in selecting the partners and making sure they can go the distance with us as we see our business evolve. Jeff Osborne – Thomas Weisel Partners: Can you talk about the nature of the three PPV projects that you’re doing. Are you doing more EPC or just doing site design in combination with maybe a roofing partner that you’ve already worked with before. Just kind of what the strategy there is, but more importantly just as we move forward two to three years out. The solar installation business and integration for commercial buildings is a huge drain on cash flow for companies involved in that industry. So how do you intend to handle inventory management of inverters and modules and leverage the balance sheet, which Scott alluded to. Just how do we think about how much resources you’re willing to put forth and actually what you’re specifically going to be doing?

Right now, Jeff, we’re still in the testing stages, but what I think I can share with you from what I’ve seen in the marketplace from some advantages that we have that others don’t have from being the integrator is I’m hearing many, many times where the integrator is buying an option for access to the roof. Given the fact we’ve got three quarters of a billion square feet of customer space we’re already converted the inside of the building and we’ve done them right and they’ve saved a lot of money. It’s a much easier sell for us to go to the top side of the building. So I think that’s one of the advantages that will save us from having cash flow drain that many of the others are seeing out there and I think we’ve developed a core competency here in doing projects from coast-to-coast in a variety of buildings and fast paced environments like a Coke bottling facility or a Anheuser-Busch brewery or Miller brewery or something, which gives us a leg up on these guys that just don’t have the experience in going across a national footprint. Once you’ve worked on the inside of these fast paced buildings successfully and done it and hone your skills working on tops out on the roof where there’s nothing else going on is pretty much a piece of cake. Jeff, the other objective of adversity is not only to get a lot of these contracts at the seller product, but also to teach them about our business so they become our integration partners on the ground in market. So again, we don’t have all the T&E and all the other expenses, the non-value added expenses that people are trying to do this across the national footprint half from one location. Jeff Osborne – Thomas Weisel Partners: Is it more right to think about this as an additive sale to the install base as opposed to something you’re going to be marketing on a national basis going after the hundreds of seller integrators that are already out there? Is that fair?

That’s absolutely fair. Jeff Osborne – Thomas Weisel Partners: Okay. Perfect. Thank you.

There’s no further questions in the queue at this time. I’d like to close out the call. We do appreciate your attendance and have a nice afternoon. Thank you.