Our operating activities used $16.3 million in cash in the current quarter, due primarily to a $9.2 million increase in the balance of accounts receivable and a $10.3 million decrease in the balance of accounts payable and accrued expenses. We reduced our long-term debt by $631,000 to a balance of $3.5 million. This long-term debt amount represented 4.2% and 2.8% of total stockholders' equity and consolidated total assets as of April 30, 2009, respectively.
Primarily due to the scheduled performance of the work included in the contract backlog of GPS and GRP at April 30, 2009, we expect to report operating results for the remainder of the current fiscal year that are profitable and that include net cash provided by operations. However, current economic conditions in the United States, including a deep recession and severe disruptions in the credit markets, could adversely affect our results of operations in future periods, particularly if the economic recession is prolonged or if government efforts to stabilize financial institutions, to restore order to credit markets, to stimulate spending and to arrest rising unemployment are not effective. The current instability in the financial markets may make it difficult for certain of our customers, particularly for projects funded by private investment, to access the credit markets to obtain financing for new construction projects on satisfactory terms or at all. We may encounter increased levels of deferrals and delays related to new construction projects in the future. Difficulty in obtaining adequate financing due to the unprecedented disruption in the credit markets may significantly increase the rate at which our customers defer, delay or cancel proposed new construction projects. Such deferrals, delays or cancellations could have an adverse impact on our future operating results. We anticipate that the increased political focus on energy independence and the negative environmental impact of fossil fuels may spur the development of alternative and renewable power facilities which should result in new power facility opportunities for us in the future. More than half of the states have adopted formal green-energy goals and federal support for infrastructure spending remains strong. An energy infrastructure renewal program is included in the federal economic stimulus package, making funds available for energy projects such as energy transmission and distribution systems and alternative energy power sources and including tax incentives to encourage capital investment in renewable energy sources.
In order to capitalize on emerging opportunities in a portion of this market, we formed a company with a wind-energy development firm in June 2008 for the purpose of constructing wind-energy farms for project owners. The company, Gemma Renewable Power, LLC ("GRP"), was awarded a project to design and build the expansion of a wind farm in Illinois. During the current quarter, we achieved substantial completion of the construction of a biodiesel production plant in Texas, the fourth such project that we have completed within a two-year period, and are pursuing other alternative fuel-production opportunities. Moreover, we continue to observe renewed interest in gas-fired generation as electric utilities and independent power producers look to diversify their generation options. We believe that the initiatives in many states to reduce emissions of carbon dioxide and other "greenhouse gases," and utilities' desire to fill demand for additional power prior to the completion of more sizeable or controversial projects, are also stimulating renewed demand for gas-fired power plants. Our two largest current projects include the construction of gas-fired electricity-generation plants. While it is unclear what the impact of current economic conditions might have on the timing or financing of such future projects, we expect that gas-fired power plants will continue to be an important component of long-term power generation development in the United States because these facilities are more efficient and produce fewer emissions than coal-fired power plants and we believe our capabilities and expertise will position us as a market leader for these projects.
In summary, it is uncertain what impacts the current recession and financial/credit crisis in the United States may have on our business. We are continuously alert for effects of this crisis that may be impacting our business currently and any new developments that may affect us going forward. Moreover, the continuing global uncertainty and poor overall economic conditions may impair our visibility to an unusual degree. Current or deteriorating future conditions could potentially lead to the delay, curtailment or cancellation of proposed and existing projects, thus decreasing the overall demand for our services, adversely impacting our results of operations and weakening our financial condition.
Nevertheless, we remain cautiously optimistic about our long-term growth opportunities. We are focused on expanding our position in the growing power markets where we expect investments to be made based on forecasts of increasing electricity demand extending decades into the future. We believe that our expectations are reasonable and that our future plans are based on reasonable assumptions. However, such forward-looking statements, by their nature, involve risks and uncertainties, and they should be considered in conjunction with the risk factors included in Item 1A of the 2009 Annual Report.

Comparison of the Results of Operations for the Three Months Ended April 30, 2009 and 2008
The following schedule compares the results of our operations for the three months ended April 30, 2009 and 2008. Except where noted, the percentage amounts represent the percentage of net revenues for the corresponding quarter. As analyzed below the schedule, we reported net income of $3.0 million for the three months ended April 30, 2009, or $0.22 per diluted share. For the three months ended April 30, 2008, we reported net income of $1.6 million, or $0.14 per diluted share.

                                                       Three Months Ended April 30,
                                                  2009                              2008
Net revenues
Power industry services                $ 58,035,000           91.9 %     $ 44,008,000           90.9 %
Nutritional products                      2,817,000            4.5 %        2,399,000            5.0 %
Telecommunications infrastructure
services                                  2,258,000            3.6 %        1,999,000            4.1 %

Net revenues                             63,110,000          100.0 %       48,406,000          100.0 %
Cost of revenues **
Power industry services                  51,375,000           88.5 %       38,576,000           87.7 %
Nutritional products                      2,558,000           90.8 %        2,323,000           96.8 %
Telecommunications infrastructure
services                                  1,749,000           77.5 %        1,774,000           88.7 %

Cost of revenues                         55,682,000           88.2 %       42,673,000           88.2 %

Gross profit                              7,428,000           11.8 %        5,733,000           11.8 %
Selling, general and administrative
expenses                                  3,214,000            5.1 %        4,011,000            8.3 %

Income from operations                    4,214,000            6.7 %        1,722,000            3.5 %
Interest expense                            (62,000 )              *         (120,000 )              *
Investment income                            51,000                *          504,000            1.0 %
Equity in the earnings of the
unconsolidated subsidiary                   610,000            1.0 %                -              -

Income from operations before
income taxes                              4,813,000            7.6 %        2,106,000            4.3 %
Income tax expense                       (1,846,000 )         (2.9 )%        (551,000 )         (1.1 )%

Net income                             $  2,967,000            4.7 %     $  1,555,000            3.2 %

* Less than 1%.

** The cost of
revenues
percentage
amounts
represent
the
percentage
of net
revenues of
the
applicable
segment.

Net Revenues
Power Industry Services
The net revenues of the power industry services business increased by $14.0 million, or 31.9%, to $58.0 million for the three months ended April 30, 2009 compared with net revenues of $44.0 million for the corresponding period of the prior year. The net revenues of this business represented 91.9% of consolidated net revenues for the quarter ended April 30, 2009. This business represented 90.9% of consolidated net revenues for the quarter ended April 30, 2008. Our energy-plant construction contract backlog was $404 million at April 30, 2009, not including the backlog of GRP in the amount of $19 million (see the discussion of our investment in this unconsolidated subsidiary below). The comparable construction contract backlog amount was $456 million at January 31, 2009.
The most significant customer of the power industry services business for the quarter ended April 30, 2009 was a large utility company that represented approximately 94.1% of the net revenues of this business segment for the current quarter, and represented approximately 86.6% of our consolidated net revenues for the current quarter. For this significant customer, we are constructing a natural gas-fired combined cycle power plant in California. Construction is expected to be completed in calendar year 2010. This customer represented 33.6 % of the net revenues of this business segment for the quarter ended April 30, 2008, and represented 30.5% of our consolidated net revenues for the prior quarter. The other significant customer of the power industry services business for the quarter ended April 30, 2008 represented approximately 66.0% of the net revenues of this business and 60.0% of consolidated net revenues for the quarter, respectively. For this customer, we constructed two biofuels production facilities located in Texas, one of which was completed in the fourth quarter last year and the other was substantially completed in the current quarter.

Nutritional Products
The net revenues of the nutritional products business increased by $418,000, or 17.4%, to $2.8 million for the three months ended April 30, 2009 compared with net revenues of $2.4 million for the corresponding period of the prior year. The net revenues of this business represented 4.5% of consolidated net revenues for the quarter ended April 30, 2009. This business represented 5.0% of consolidated net revenues for the quarter ended April 30, 2008.
The increase in net revenues between quarters was primarily was due to the sale of products to new customers which represented 40.1% of the net revenues of this business for the current quarter. During the current quarter, VLI also commenced the manufacture of a powder-based product for an existing customer pursuant to a much larger program. This customer represented 25.1% of the net revenues of this business for the current quarter. However, three customers that represented 33.5% of net revenues for the three months ended April 30, 2008 terminated their relationships with VLI, and net revenues obtained from the sale of products to other existing customers of VLI declined by 38.1% between the quarters. VLI is primarily a contract manufacturer of nutritional products. The ability to quickly replace lost customers or to increase the product offerings sold to existing customers is hampered by the long sales cycle inherent in our type of business. The length of time between the beginning of contract negotiation and the first sale to a new customer could exceed six months including extended periods of product testing and acceptance. The value of unfilled sales orders that we believe to be firm at April 30, 2009 was $2.5 million compared with a value of $1.5 million at January 31, 2009. Telecommunications Infrastructure Services The net revenues of the telecommunications infrastructure services business for the three months ended April 30, 2009 were $2.3 million compared with net revenues of $2.0 million for the corresponding quarter of the prior year, representing a 13.0% increase between quarters. The net revenues of this business represented 3.6% of consolidated net revenues for the quarter ended April 30, 2009 and 4.1% of consolidated net revenues for the quarter ended April 30, 2008. Inside premises revenues increased by 34.8% between the quarters, representing 56.2% of this segment's business for the current quarter and primarily reflecting increased services provided to government-sector customers. This increase more than offset the 6.5% decline in outside plant revenues between the quarters which was due to the decrease in commercial and residential construction activity in the region.
The range of wiring services that we provide to our inside premises customers include cable and data rack installation; equipment room and telecom closet design and build-out; raceway design and installation; and cable identification, testing, labeling and documentation. Services provided to our outside plant customers include trenchless directional boring and other underground services, aerial cabling services, and the installation of buried cable and wire communication and electric lines.
Cost of Revenues
As a result of the increased gross profit contribution of GPS and improvement in the profitability of the net revenues of VLI and SMC, our overall gross profit increased to $7.4 million for the three months ended April 30, 2009 from $5.7 million for the three months ended April 30, 2008, an increase of 30.0% between the quarters. Our overall gross profit percentage was 11.8% for both the current and prior quarters.
The cost of revenues for the power industry services business of GPS increased in the three months ended April 30, 2009 to $51.4 million from $38.6 million for the three months ended April 30, 2008, and the cost of revenues as a percentage of corresponding net revenues increased to 88.5% for the current quarter from 87.7% for the first quarter of last year. The slight increase in this percentage in the current quarter was due primarily to a change in the mix of projects between quarters. Certain sales-type taxes that are assessed by government authorities and collected from customers are included in cost of revenues. Accordingly, these amounts are considered contract costs in the performance of percentage complete calculations and the determination of net revenues. The amounts of such costs were $2.3 million and $481,000 for the three months ended April 30, 2009 and 2008, respectively. Although the cost of revenues for the nutritional products business of VLI increased in the three-month period ended April 30, 2009 to $2.6 million from $2.3 million for the three months ended April 30, 2008, the cost of revenues percentage decreased to 90.8% of net revenues for the current quarter from a percentage of 96.8% for the corresponding quarter of the prior year due to the increase in net revenues between the quarters. Although the net revenues of the telecommunications infrastructure services business of SMC increased between the quarters, the cost of revenues declined slightly to $1.7 million in the current quarter from $1.8 million in the prior quarter, resulting in a lower cost of revenues percentage in the current quarter. The cost of revenues percentages for the three months ended April 30, 2009 and 2008 were 77.5% and 88.7%, respectively, with the improvement primarily relating to the efficient completion of several inside premises projects during the current quarter.

Selling, General and Administrative Expenses These costs decreased by $797,000, or 19.9%, to $3.2 million for the current quarter from $4.0 million for the first quarter last year. Amortization expense related to purchased intangible assets decreased by approximately $683,000 in the current quarter compared with the first quarter of last year as the amortization expense related to the contractual customer relationships of GPS was completed last year and the scheduled amortization of the intangible assets of VLI and SMC was eliminated with the recording of impairment losses related to these assets last year. In addition, compensation expense related to stock options decreased by $125,000 to $272,000 for the current quarter from $397,000 in the same quarter one year ago.
Other Income and Expense
We reported investment income of $51,000 for the three months ended April 30, 2009 compared to investment income of $504,000 for the three months ended April 30, 2008. Our cash balances are invested in liquid money-market type collective funds. The balance of cash and cash equivalents has declined by approximately $8.8 million over the last year from the balance at April 30, 2008, a decrease of 13.1%. Moreover, investment returns have declined between the quarters as short-term interest rates have dropped substantially over the last year. Interest expense decreased to $62,000 for the current quarter from $120,000 in the corresponding quarter of last year as the overall level of debt between the years was reduced. Debt payments have reduced the total balance of debt (including current and noncurrent portions) to approximately $3.5 million at April 30, 2009 from approximately $6.1 million at April 30, 2008. In June 2008, we announced that GPS had entered into a business partnership for the design and construction of wind-energy farms located in the United States and Canada. The business partners each own 50% of the new company, GRP, which has begun a construction project to expand a wind farm in Illinois. Our share of the earnings of GRP for the current quarter was approximately $610,000. Income Tax Expense
For the three months ended April 30, 2009, we incurred income tax expense of $1.8 million, reflecting an effective income tax rate of 38.4%. The effective tax rate for the current quarter differed from the expected federal income tax rate of 34% due primarily to the effect of state income tax expense and true-up adjustments made to the income tax payable accounts, which more than offset the tax benefit of the domestic manufacturing deduction.
For the three months ended April 30, 2008, we incurred income tax expense of $551,000 reflecting an effective income tax rate of 26.2%. The effective tax rate for the prior quarter differed from the expected federal income tax rate of 34% due primarily to the domestic manufacturing deduction, treated as a permanent difference for income tax accounting purposes, and a credit to the deferred tax provision in the approximate amount of $116,000 reflecting the effect of the change in state rate rates applied to our deferred tax items. Liquidity and Capital Resources as of April 30, 2009 The balance of cash and cash equivalents was approximately $57.9 million as of April 30, 2009 compared to a balance of $74.7 million as of January 31, 2009, representing a decrease of $16.8 million during the current quarter. We also have an available balance of $4.25 million under our revolving line of credit financing arrangement with Bank of America (the "Bank"). The Company's consolidated working capital increased during the current quarter from approximately $53.6 million as of January 31, 2009 to approximately $56.1 million as of April 30, 2009.
Although we reported net income of approximately $3.0 million for the current quarter, we used net cash of $16.3 million in operations. Since January 31, 2009, we experienced changes in the amounts of several operating asset and liability accounts that represented uses of cash due to the timing of cash receipts and disbursements on projects. During the current quarter, the increase in accounts receivable represented a $9.2 million use of cash as activity on the California power plant project increased. We used cash during the current quarter to make payments reducing the amount of accounts payable and accrued liabilities by $10.3 million. The amount of non-cash adjustments to net income for the quarter represented a net source of cash of $484,000, including deferred tax expense of $567,000, stock compensation expense of $272,000 and depreciation and amortization of $236,000, offset by equity in the earnings of GRP in the amount of $610,000.

Net cash provided by operations for the three months ended April 30, 2008 was $2.5 million as we reported net income of approximately $1.6 million and our net non-cash expenses were approximately $610,000. In addition, cash in the amount of $4.1 million was released from escrow accounts. Cash was used during the prior quarter to reduce accounts payable and accrued expenses by $1.4 million, primarily at GPS. Cash of approximately $1.3 million was used during the prior quarter in connection with increases in accounts receivable, earnings in excess of billings, inventories and prepaid expenses and other assets. In addition, billings in excess of contract revenues declined by $1.1 million during the prior quarter.
During the three months ended April 30, 2009, net cash was used in connection with investing and financing activities in the amounts of $25,000 and $441,000, respectively. During the current quarter, we used cash to make equipment purchases of $32,000 and principal payments on long-term debt of $631,000, and received cash proceeds from the exercise of stock warrants and options in the amount of $190,000.
During the three months ended April 30, 2008, investing activities consisted of the cash payment of $2,000,000 in contingent acquisition price to the former owners of GPS and the purchase of equipment for $117,000. Net cash of $576,000 was also used in financing activities during the three months ended April 30, 2008 as we made debt principal payments of $646,000 but received cash proceeds of $70,000 in connection with the sale of common stock pursuant to the exercise of stock options and warrants.
The financing arrangements with the Bank provide for the measurement at our fiscal year-end and at each of our fiscal quarter-ends (using a rolling 12-month period) of certain financial covenants, determined on a consolidated basis, including requirements that the ratio of total funded debt to EBITDA (as defined) not exceed 2 to 1, that the ratio of senior funded debt to EBITDA (as . . .