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Energy Focus, Inc. Reports First Quarter Results, Accelerates Transformation to Energy Solutions Business

Posted on: Monday, 4 May 2009, 15:00 CDT

SOLON, Ohio, May 4 /PRNewswire-FirstCall/ -- Energy Focus, Inc. (Nasdaq: EFOI) today announced financial results for the first quarter ended March 31, 2009. Financial and operating highlights include the following: Revenues for the first quarter of 2009 were $2.8 million, a decrease of 42% over the sales of $4.8 million for the same quarter in 2008. Net loss in the quarter was $3.0 million ($0.21 per share) as compared to the net loss of $3.4 million ($0.28 per share) in the first quarter of 2008. The company finished the first quarter with a balance sheet showing cash at $6.8 million and total shareholders' equity of $13.9 million. Cash utilization for the first quarter of 2009 was $3.8 million, compared to $3.2 million for the first quarter of 2008. Operating expenses decreased by 28%, or $1.3 million, for the first quarter of 2009, as compared to the same quarter in 2008.

"While the year over year operating quarterly expense reduction of $1.3MM was helpful, it clearly wasn't nearly enough to offset the $2.0 MM quarter over quarter decline in sales we experienced," said Joe Kaveski, CEO, Energy Focus, Inc. "The decline is closely coupled to Energy Focus' legacy businesses which almost totally rely on new construction. Given the drastic decline in the new construction market and the opportunity presented for revitalizing existing buildings provided by the government's $787 billion stimulus initiative, I have decided to accelerate Energy Focus' transition to becoming a fully integrated lighting energy systems and solutions company focused on serving the existing buildings market. I have, therefore, initiated the following actions:

1. As of today, the company is dramatically reducing overhead expenses an additional 30%. These further expense reductions are designed to enable the company to sufficiently reduce its cash burn to continue to operate, during our transition, even if the current rate of sales does not improve this year. In order to achieve these reductions, management salaries have been reduced and certain planned expenses will be eliminated or postponed.
2. The company is accelerating its efforts to expand its lighting energy solutions business through increased marketing and sales as well as through the formation of additional strategic partnerships.
3. The company will fund the accelerated transformation by reorganizing and/or spinning off its non-strategic legacy businesses, including the swimming pools product line.
4. The company will continue to explore external financing alternatives with the goals of improving our financial flexibility while supporting the transition to becoming a fully integrated lighting energy systems and solutions company.
5. The company will re-direct and accelerate its new product development resources toward support of its new lighting energy systems and solutions business. Supplementing its LED dock and globe light products supporting industrial lighting solutions, Energy Focus will introduce several energy efficient LED lighting products over the next year. Included are LED parking garage and landscape lighting products to support its existing buildings offering, LED lights especially designed for lighting cold environments to support the company's cold storage solutions, and an LED track light replacement for halogen spotlights to support its supermarket and retail solutions for which customers have expressed interest. Several additional LED technology lighting products supporting solutions are also planned for 2010."

Mr. Kaveski continued, "While this will be a difficult year for Energy Focus, I believe it will be one in which the company will emerge as a strong player in the lighting energy solutions space. In 2007, only about 25% of Energy Focus' products saved energy over alternatives. Last year it increased to approximately 50%. By the end of this year, I expect the company's transformation to a solutions business to be complete with the overwhelming majority of our sales to be about energy solutions."

Energy Focus, Inc. management will host a conference call on May, 4, 2009 at 4:30 p.m. EDT (1:30 p.m. PDT) to review the first quarter 2009 financial results and other corporate events, followed by a Q & A session. Dialing 1-888-542-9137 (US/Canada) or 1-706-758-4961 (International/Local) can access the call. The conference ID number is 97395145. Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. The conference call will also be available over the Internet at http://www.efoi.com in the Investor Relations area of the site. A replay of the conference call will be available two hours after the call for the following seven days by dialing 1-800-642-1687 (US/Canada) or 1-706-645-9291 (international/local) and entering the following pass code: 97395145. Also, an instant replay of the conference call will be available over the Internet at http://www.efoi.com.

About Energy Focus

Energy Focus, Inc. is the leading supplier of energy solutions and the world's only supplier of EFO(R), a lighting technology that is more efficient than conventional electric lamps. Energy Focus solutions provides energy savings, aesthetic, safety and maintenance cost benefits over conventional lighting. Customers include supermarket chains, retail stores, museums, theme parks and casinos, hotels, swimming pool builders and many others. Company headquarters are located at 32000 Aurora Rd., Solon, OH 44139. The company has additional offices in Pleasanton, CA, the United Kingdom, and Germany. For more information, see http://www.efoi.com.

Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include statements regarding the business outlook for 2009 and thereafter. Investors are cautioned that all forward-looking statements involve risks and uncertainties. Actual results may differ materially from the results predicted. For more information about potential factors that could affect Energy Focus financial results, please refer to the Company's SEC reports, including its Annual Reports on Form 10-K and its quarterly reports on Form 10-Q. These forward-looking statements speak only as of the date hereof. Energy Focus disclaims any intention or obligation to update or revise any forward-looking statements.

ENERGY FOCUS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (amounts in thousands) March 31, December 31, 2009 2008 (unaudited) ASSETS Current assets: Cash and cash equivalents $6,800 $10,568 Accounts receivable trade, net 2,183 2,668 Inventories, net 5,337 5,539 Prepaid and other current assets 597 639 Total current assets 14,917 19,414 Fixed assets net 3,891 4,096 Other assets 104 142 Total assets $18,912 $23,652 LIABILITIES Current liabilities: Accounts payable $1,490 $2,767 Accrued liabilities 1,329 1,621 Deferred revenue 74 191 Credit line borrowings 1,776 1,904 Current portion of long-term bank borrowings 53 54 Total current liabilities 4,722 6,537 Other deferred liabilities 71 81 Long-term bank borrowings 219 245 Total liabilities 5,012 6,863 SHAREHOLDERS' EQUITY Common stock 1 1 Additional paid-in capital 66,061 65,865 Accumulated other comprehensive income 207 251 Accumulated deficit (52,369) (49,328) Total shareholders' equity 13,900 16,789 Total liabilities and shareholders' equity $18,912 $23,652 ENERGY FOCUS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (amounts in thousands except per share amounts) (unaudited) Three months ended March 31, 2009 2008 Net sales $2,805 $4,837 Cost of sales 2,487 3,593 Gross profit 318 1,244 Operating expenses Research and development 230 401 Sales and marketing 1,880 2,878 General and administrative 1,224 1,370 Total operating expenses 3,334 4,649 Loss from operations (3,016) (3,405) Other income (expense): Other income 1 2 Interest expense (26) (6) Loss before income taxes (3,041) (3,409) Provision for income taxes - (40) Net loss $(3,041) $(3,449) Net loss per share - basic and diluted $(0.21) $(28.00) Share used in computing net loss per share - basic and diluted 14,835 12,227

SOURCE Energy Focus, Inc.

Source: PR Newswire

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