Company Quick10K Filing
Energy Focus
Price0.47 EPS-1
Shares12 P/E-1
MCap6 P/FCF-1
Net Debt-1 EBIT-9
TEV5 TEV/EBIT-1
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-09-30 Filed 2020-11-12
10-Q 2020-06-30 Filed 2020-08-13
S-1 2020-04-09 Public Filing
10-Q 2020-03-31 Filed 2020-05-13
10-K 2019-12-31 Filed 2020-03-24
10-Q 2019-09-30 Filed 2019-11-13
10-Q 2019-06-30 Filed 2019-09-13
10-Q 2019-03-31 Filed 2019-07-22
10-K 2018-12-31 Filed 2019-04-01
10-Q 2018-09-30 Filed 2018-11-09
10-Q 2018-06-30 Filed 2018-08-08
10-Q 2018-03-31 Filed 2018-05-02
10-K 2017-12-31 Filed 2018-02-22
10-Q 2017-09-30 Filed 2017-11-08
10-Q 2017-06-30 Filed 2017-08-09
10-Q 2017-03-31 Filed 2017-05-04
10-K 2016-12-31 Filed 2017-02-23
10-Q 2016-09-30 Filed 2016-11-14
10-Q 2016-06-30 Filed 2016-08-11
10-Q 2016-03-31 Filed 2016-05-11
10-K 2015-12-31 Filed 2016-03-10
10-Q 2015-09-30 Filed 2015-11-04
10-Q 2015-06-30 Filed 2015-08-05
10-Q 2015-03-31 Filed 2015-05-05
10-K 2014-12-31 Filed 2015-03-12
10-Q 2014-09-30 Filed 2014-11-13
10-Q 2014-06-30 Filed 2014-08-13
10-Q 2014-03-31 Filed 2014-05-13
10-K 2013-12-31 Filed 2014-03-27
10-Q 2013-09-30 Filed 2013-11-13
10-Q 2013-06-30 Filed 2013-08-13
10-Q 2013-03-31 Filed 2013-05-15
10-K 2012-12-31 Filed 2013-03-27
10-Q 2012-09-30 Filed 2012-11-14
10-Q 2012-06-30 Filed 2012-08-14
10-Q 2012-03-31 Filed 2012-05-15
10-K 2011-12-31 Filed 2012-03-30
10-Q 2011-09-30 Filed 2011-11-14
10-Q 2011-06-30 Filed 2011-08-15
10-Q 2011-03-31 Filed 2011-05-12
10-K 2010-12-31 Filed 2011-03-31
10-Q 2010-09-30 Filed 2010-11-12
10-Q 2010-06-30 Filed 2010-08-12
10-Q 2010-03-31 Filed 2010-05-13
10-K 2009-12-31 Filed 2010-03-31
8-K 2021-01-21 Regulation FD
8-K 2021-01-19 Earnings, Regulation FD
8-K 2020-12-15 Regulation FD
8-K 2020-11-12 Earnings, Exhibits
8-K 2020-10-14
8-K 2020-10-05
8-K 2020-09-17
8-K 2020-09-17
8-K 2020-08-17
8-K 2020-08-13
8-K 2020-06-11
8-K 2020-05-13
8-K 2020-05-12
8-K 2020-04-23
8-K 2020-03-19
8-K 2020-01-24
8-K 2020-01-15
8-K 2020-01-09
8-K 2019-12-17
8-K 2019-11-25
8-K 2019-11-13
8-K 2019-09-13
8-K 2019-08-23
8-K 2019-08-14
8-K 2019-08-09
8-K 2019-07-22
8-K 2019-07-19
8-K 2019-06-24
8-K 2019-05-21
8-K 2019-05-20
8-K 2019-05-15
8-K 2019-05-15
8-K 2019-05-06
8-K 2019-04-05
8-K 2019-03-29
8-K 2019-02-21
8-K 2019-01-18
8-K 2018-12-11
8-K 2018-11-07
8-K 2018-08-08
8-K 2018-06-20
8-K 2018-05-18
8-K 2018-05-02
8-K 2018-04-16
8-K 2018-02-22

EFOI 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Note 1. Nature of Operations
Note 2. Basis of Presentation and Summary of Significant Accounting Policies
Note 3. Restructuring
Note 4. Inventories
Note 5. Property and Equipment
Note 6. Leases
Note 7. Debt
Note 8. Income Taxes
Note 9. Stockholders' Equity
Note 10. Commitments and Contingencies
Note 11. Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 a20200930exhibit31110-q.htm
EX-31.2 a20200930exhibit31210-q.htm
EX-32.1 a20200930exhibit32110-q.htm

Energy Focus Earnings 2020-09-30

Balance SheetIncome StatementCash Flow
0.10.10.0-0.0-0.1-0.12012201420172020
Assets, Equity
0.10.10.0-0.0-0.1-0.12012201420172020
Rev, G Profit, Net Income
0.10.10.0-0.0-0.1-0.12012201420172020
Ops, Inv, Fin

efoi-20200930
000092416812/312020Q3FALSEENERGY FOCUS, INC/DE0.2us-gaap:AccountingStandardsUpdate201602Member0.20.50.050.2P1Y0.20.50.050.50.0500009241682020-01-012020-09-30xbrli:shares00009241682020-11-09iso4217:USD00009241682020-09-3000009241682019-12-310000924168efoi:PaycheckProtectionProgramCARESActMember2020-09-30iso4217:USDxbrli:shares0000924168us-gaap:ConvertiblePreferredStockMember2020-09-300000924168us-gaap:ConvertiblePreferredStockMember2019-12-3100009241682020-07-012020-09-3000009241682019-07-012019-09-3000009241682019-01-012019-09-30xbrli:pure0000924168us-gaap:PreferredStockMember2019-12-310000924168us-gaap:CommonStockMember2019-12-310000924168us-gaap:AdditionalPaidInCapitalMember2019-12-310000924168us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310000924168us-gaap:RetainedEarningsMember2019-12-310000924168us-gaap:CommonStockMember2020-01-012020-03-310000924168us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-3100009241682020-01-012020-03-310000924168us-gaap:PreferredStockMember2020-01-012020-03-310000924168us-gaap:RetainedEarningsMember2020-01-012020-03-310000924168us-gaap:PreferredStockMember2020-03-310000924168us-gaap:CommonStockMember2020-03-310000924168us-gaap:AdditionalPaidInCapitalMember2020-03-310000924168us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310000924168us-gaap:RetainedEarningsMember2020-03-3100009241682020-03-310000924168us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-3000009241682020-04-012020-06-300000924168us-gaap:CommonStockMember2020-04-012020-06-300000924168us-gaap:PreferredStockMember2020-04-012020-06-300000924168us-gaap:RetainedEarningsMember2020-04-012020-06-300000924168us-gaap:PreferredStockMember2020-06-300000924168us-gaap:CommonStockMember2020-06-300000924168us-gaap:AdditionalPaidInCapitalMember2020-06-300000924168us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300000924168us-gaap:RetainedEarningsMember2020-06-3000009241682020-06-300000924168us-gaap:CommonStockMember2020-07-012020-09-300000924168us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300000924168us-gaap:RetainedEarningsMember2020-07-012020-09-300000924168us-gaap:PreferredStockMember2020-09-300000924168us-gaap:CommonStockMember2020-09-300000924168us-gaap:AdditionalPaidInCapitalMember2020-09-300000924168us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300000924168us-gaap:RetainedEarningsMember2020-09-300000924168us-gaap:CommonStockMember2018-12-310000924168us-gaap:AdditionalPaidInCapitalMember2018-12-310000924168us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310000924168us-gaap:RetainedEarningsMember2018-12-3100009241682018-12-3100009241682018-01-012018-12-310000924168us-gaap:RetainedEarningsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310000924168srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310000924168us-gaap:CommonStockMember2019-01-012019-03-310000924168us-gaap:AdditionalPaidInCapitalMember2019-01-012019-03-3100009241682019-01-012019-03-310000924168us-gaap:RetainedEarningsMember2019-01-012019-03-310000924168us-gaap:CommonStockMember2019-03-310000924168us-gaap:AdditionalPaidInCapitalMember2019-03-310000924168us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-03-310000924168us-gaap:RetainedEarningsMember2019-03-3100009241682019-03-310000924168us-gaap:CommonStockMember2019-04-012019-06-300000924168us-gaap:AdditionalPaidInCapitalMember2019-04-012019-06-3000009241682019-04-012019-06-300000924168us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-04-012019-06-300000924168us-gaap:RetainedEarningsMember2019-04-012019-06-300000924168us-gaap:CommonStockMember2019-06-300000924168us-gaap:AdditionalPaidInCapitalMember2019-06-300000924168us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-06-300000924168us-gaap:RetainedEarningsMember2019-06-3000009241682019-06-300000924168us-gaap:AdditionalPaidInCapitalMember2019-07-012019-09-300000924168us-gaap:RetainedEarningsMember2019-07-012019-09-300000924168us-gaap:CommonStockMember2019-09-300000924168us-gaap:AdditionalPaidInCapitalMember2019-09-300000924168us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-09-300000924168us-gaap:RetainedEarningsMember2019-09-3000009241682019-09-300000924168efoi:AustinCreditFacilityMember2020-01-012020-09-300000924168efoi:AustinCreditFacilityMember2019-01-012019-09-300000924168efoi:NewCreditFacilitiesMember2020-01-012020-09-300000924168efoi:NewCreditFacilitiesMember2019-01-012019-09-3000009241682020-06-110000924168srt:MaximumMember2019-12-172019-12-170000924168srt:MinimumMember2019-12-172019-12-1700009241682020-06-022020-06-020000924168us-gaap:CustomerConcentrationRiskMember2020-07-012020-09-300000924168us-gaap:CustomerConcentrationRiskMember2020-01-012020-09-300000924168us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberefoi:DistributorToTheU.S.NavyMember2020-07-012020-09-300000924168us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberefoi:RegionalCommercialLightingRetrofitCompanyMember2020-07-012020-09-300000924168us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberefoi:DistributorToTheUSNavyCombinedWithSalesToShipbuildersMember2020-07-012020-09-300000924168us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberefoi:DistributorToTheU.S.NavyMember2019-07-012019-09-300000924168us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberefoi:RegionalCommercialLightingRetrofitCompanyMember2019-07-012019-09-300000924168us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberefoi:USNavyGlobalHealthcareProviderMember2019-07-012019-09-300000924168us-gaap:SalesRevenueNetMemberefoi:USNavyAndShipbuildersMemberus-gaap:CustomerConcentrationRiskMember2019-07-012019-09-300000924168us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberefoi:DistributorToTheU.S.NavyMember2020-01-012020-09-300000924168us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberefoi:RegionalCommercialLightingRetrofitCompanyMember2020-01-012020-09-300000924168us-gaap:SalesRevenueNetMemberefoi:USNavyAndShipbuildersMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-09-300000924168us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberefoi:DistributorToTheU.S.NavyMember2019-01-012019-09-300000924168us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberefoi:RegionalCommercialLightingRetrofitCompanyMember2019-01-012019-09-300000924168us-gaap:SalesRevenueNetMemberefoi:USNavyAndShipbuildersMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-09-300000924168us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberefoi:DistributorToTheU.S.NavyMember2020-01-012020-09-300000924168us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberefoi:DistributorToTheU.S.NavyMember2019-01-012019-12-310000924168us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberefoi:RegionalCommercialLightingRetrofitCompanyMember2019-01-012019-12-310000924168us-gaap:CustomerConcentrationRiskMemberefoi:TwoOffshoreSuppliersMembersrt:MaximumMemberus-gaap:AccountsReceivableMember2020-07-012020-09-300000924168us-gaap:CustomerConcentrationRiskMemberefoi:TwoOffshoreSuppliersMemberus-gaap:AccountsReceivableMembersrt:MinimumMember2020-07-012020-09-300000924168us-gaap:CustomerConcentrationRiskMemberefoi:TwoOffshoreSuppliersMembersrt:MaximumMemberus-gaap:AccountsReceivableMember2020-01-012020-09-300000924168us-gaap:CustomerConcentrationRiskMemberefoi:TwoOffshoreSuppliersMemberus-gaap:AccountsReceivableMembersrt:MinimumMember2020-01-012020-09-300000924168us-gaap:CustomerConcentrationRiskMemberefoi:TwoOffshoreSuppliersMemberus-gaap:AccountsPayableMembersrt:MinimumMember2020-01-012020-09-300000924168us-gaap:CustomerConcentrationRiskMemberefoi:TwoOffshoreSuppliersMembersrt:MaximumMemberus-gaap:AccountsPayableMember2020-01-012020-09-300000924168us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberefoi:OneOffshoreSupplierMember2019-07-012019-09-300000924168us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberefoi:OneOffshoreSupplierMember2019-01-012019-09-300000924168us-gaap:CustomerConcentrationRiskMemberefoi:OneOffshoreSupplierMemberus-gaap:AccountsPayableMember2020-01-012020-09-300000924168us-gaap:CustomerConcentrationRiskMemberefoi:OneDomesticSupplierMemberus-gaap:AccountsPayableMember2020-01-012020-09-300000924168efoi:CommercialProductsMember2020-07-012020-09-300000924168efoi:CommercialProductsMember2019-07-012019-09-300000924168efoi:CommercialProductsMember2020-01-012020-09-300000924168efoi:CommercialProductsMember2019-01-012019-09-300000924168efoi:MMMProductsMember2020-07-012020-09-300000924168efoi:MMMProductsMember2019-07-012019-09-300000924168efoi:MMMProductsMember2020-01-012020-09-300000924168efoi:MMMProductsMember2019-01-012019-09-300000924168us-gaap:NonUsMemberus-gaap:SalesRevenueNetMemberus-gaap:GeographicConcentrationRiskMember2019-07-012019-09-300000924168us-gaap:NonUsMemberus-gaap:SalesRevenueNetMemberus-gaap:GeographicConcentrationRiskMember2019-01-012019-09-300000924168us-gaap:StockOptionMember2020-07-012020-09-300000924168us-gaap:RestrictedStockUnitsRSUMember2020-07-012020-09-300000924168us-gaap:WarrantMember2020-07-012020-09-300000924168us-gaap:ConvertibleDebtMember2020-07-012020-09-300000924168us-gaap:StockOptionMember2020-01-012020-09-300000924168us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-09-300000924168us-gaap:WarrantMember2020-01-012020-09-300000924168us-gaap:ConvertibleDebtMember2020-01-012020-09-300000924168us-gaap:CommonStockMember2019-07-012019-09-300000924168us-gaap:ConvertibleDebtMember2019-07-012019-09-300000924168us-gaap:StockOptionMember2019-01-012019-09-300000924168us-gaap:RestrictedStockUnitsRSUMember2019-01-012019-09-300000924168us-gaap:WarrantMember2019-01-012019-09-300000924168srt:MinimumMember2016-01-012016-03-310000924168srt:MaximumMember2016-01-012016-03-310000924168efoi:LEDFLTubularLEDLampsExcludingRedCapsMember2019-10-012019-10-310000924168efoi:AllOtherProductsMember2019-10-012019-10-310000924168efoi:InstitutionalInvestorMember2020-01-012020-01-310000924168efoi:InstitutionalInvestorMember2020-01-310000924168us-gaap:PrivatePlacementMember2020-01-012020-01-3100009241682020-01-012020-01-310000924168us-gaap:PrivatePlacementMember2020-01-012020-09-300000924168us-gaap:PrivatePlacementMember2020-01-310000924168efoi:NotePurchaseAgreementMember2020-01-012020-01-310000924168us-gaap:FairValueInputsLevel1Member2020-09-300000924168us-gaap:FairValueInputsLevel2Member2020-09-300000924168us-gaap:FairValueInputsLevel3Member2020-09-300000924168us-gaap:WarrantMembersrt:MinimumMember2020-01-012020-09-300000924168srt:MaximumMemberus-gaap:WarrantMember2020-01-012020-09-300000924168us-gaap:WarrantMember2020-01-012020-09-300000924168us-gaap:FacilityClosingMemberefoi:A2017RestructuringPlanMember2020-07-012020-09-300000924168us-gaap:FacilityClosingMemberefoi:A2017RestructuringPlanMember2019-12-310000924168us-gaap:FacilityClosingMemberefoi:A2017RestructuringPlanMember2020-09-3000009241682019-01-012019-12-310000924168us-gaap:EquipmentMembersrt:MinimumMember2020-01-012020-09-300000924168srt:MaximumMemberus-gaap:EquipmentMember2020-01-012020-09-300000924168us-gaap:EquipmentMember2020-09-300000924168us-gaap:EquipmentMember2019-12-310000924168efoi:ToolingMembersrt:MinimumMember2020-01-012020-09-300000924168efoi:ToolingMembersrt:MaximumMember2020-01-012020-09-300000924168efoi:ToolingMember2020-09-300000924168efoi:ToolingMember2019-12-310000924168us-gaap:VehiclesMember2020-01-012020-09-300000924168us-gaap:VehiclesMember2020-09-300000924168us-gaap:VehiclesMember2019-12-310000924168us-gaap:FurnitureAndFixturesMember2020-01-012020-09-300000924168us-gaap:FurnitureAndFixturesMember2020-09-300000924168us-gaap:FurnitureAndFixturesMember2019-12-310000924168us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2020-01-012020-09-300000924168us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2020-09-300000924168us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2019-12-310000924168us-gaap:LeaseholdImprovementsMember2020-09-300000924168us-gaap:LeaseholdImprovementsMember2019-12-310000924168efoi:FinanceLeaseRightOfUseAssetMember2020-09-300000924168efoi:FinanceLeaseRightOfUseAssetMember2019-12-310000924168us-gaap:ConstructionInProgressMember2020-09-300000924168us-gaap:ConstructionInProgressMember2019-12-310000924168us-gaap:RevolvingCreditFacilityMemberefoi:InventoryFacilityMember2020-08-110000924168us-gaap:RevolvingCreditFacilityMemberefoi:InventoryFacilityMemberus-gaap:LondonInterbankOfferedRateLIBORMember2020-08-110000924168us-gaap:RevolvingCreditFacilityMemberefoi:InventoryFacilityMember2020-08-112020-08-110000924168efoi:ReceivablesFacilityMemberus-gaap:RevolvingCreditFacilityMember2020-08-110000924168efoi:ReceivablesFacilityMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:PrimeRateMember2020-08-110000924168efoi:ReceivablesFacilityMemberus-gaap:RevolvingCreditFacilityMember2020-08-112020-08-110000924168us-gaap:RevolvingCreditFacilityMemberefoi:AustinFacilityMemberus-gaap:PrimeRateMember2020-08-112020-08-110000924168us-gaap:RevolvingCreditFacilityMember2019-12-310000924168us-gaap:RevolvingCreditFacilityMemberefoi:AustinFacilityMember2020-08-112020-08-110000924168us-gaap:RevolvingCreditFacilityMemberefoi:AustinFacilityMember2020-08-110000924168us-gaap:RevolvingCreditFacilityMemberefoi:AustinFacilityMember2019-12-310000924168us-gaap:RevolvingCreditFacilityMemberefoi:InventoryFacilityMember2020-09-300000924168efoi:ReceivablesFacilityMemberus-gaap:RevolvingCreditFacilityMember2020-09-300000924168us-gaap:ConvertibleDebtMember2019-03-292019-03-290000924168us-gaap:ConvertibleDebtMember2019-03-292019-06-300000924168us-gaap:SubsequentEventMember2019-07-012021-12-3100009241682020-01-160000924168us-gaap:ConvertibleDebtMember2020-01-160000924168us-gaap:ConvertibleDebtMember2020-01-162020-01-160000924168efoi:NotePurchaseAgreementMember2019-11-250000924168efoi:NotePurchaseAgreementMember2019-11-252019-11-250000924168efoi:NotePurchaseAgreementMember2019-11-292019-11-290000924168efoi:NotePurchaseAgreementMemberefoi:DebtInstrumentPeriodTwoMember2019-11-292019-11-290000924168efoi:NotePurchaseAgreementMember2020-01-012020-09-300000924168efoi:NotePurchaseAgreementMember2020-09-300000924168efoi:NotePurchaseAgreementMember2019-12-310000924168efoi:NotePurchaseAgreementMembersrt:MinimumMember2019-11-292019-11-290000924168efoi:NotePurchaseAgreementMembersrt:MaximumMember2019-11-292019-11-290000924168efoi:PaycheckProtectionProgramCARESActMember2020-04-172020-04-170000924168efoi:PaycheckProtectionProgramCARESActMember2020-04-170000924168efoi:PaycheckProtectionProgramCARESActMember2020-04-172020-09-300000924168us-gaap:DomesticCountryMember2019-12-310000924168us-gaap:StateAndLocalJurisdictionMember2019-12-310000924168us-gaap:SeriesAPreferredStockMember2020-01-162020-01-1600009241682019-03-2900009241682020-01-150000924168us-gaap:ConvertiblePreferredStockMember2020-01-150000924168efoi:InstitutionalInvestorMember2020-07-012020-09-300000924168us-gaap:PrivatePlacementMember2020-07-012020-09-300000924168us-gaap:PrivatePlacementMember2020-09-300000924168us-gaap:CostOfSalesMember2020-07-012020-09-300000924168us-gaap:CostOfSalesMember2019-07-012019-09-300000924168us-gaap:CostOfSalesMember2020-01-012020-09-300000924168us-gaap:CostOfSalesMember2019-01-012019-09-300000924168us-gaap:ResearchAndDevelopmentExpenseMember2020-07-012020-09-300000924168us-gaap:ResearchAndDevelopmentExpenseMember2019-07-012019-09-300000924168us-gaap:ResearchAndDevelopmentExpenseMember2020-01-012020-09-300000924168us-gaap:ResearchAndDevelopmentExpenseMember2019-01-012019-09-300000924168us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-07-012020-09-300000924168us-gaap:SellingGeneralAndAdministrativeExpensesMember2019-07-012019-09-300000924168us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-01-012020-09-300000924168us-gaap:SellingGeneralAndAdministrativeExpensesMember2019-01-012019-09-300000924168us-gaap:RestrictedStockUnitsRSUMember2019-12-310000924168us-gaap:RestrictedStockUnitsRSUMember2020-09-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
Form 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
 
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _____________ to _____________
      
Commission file number 001-36583
 
ENERGY FOCUS, INC.
(Exact name of registrant as specified in its charter)  
Delaware 94-3021850
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
   
32000 Aurora Road, Suite B Solon, OH
(Address of principal executive offices)
   
44139
(Zip Code)
(Registrant’s telephone number, including area code): (440) 715-1300
 
None
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
 
Title of each classTrading
Symbol(s)
Name of each exchange
on which registered
Common Stock, par value $0.0001 per shareEFOIThe Nasdaq Stock Market LLC
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     No
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes     No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes     No
 
The number of outstanding shares of the registrant’s common stock, $0.0001 par value, as of November 9, 2020 was 3,501,646.



TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Page
ITEM 1.FINANCIAL STATEMENTS
  
a.
Condensed Consolidated Balance Sheets as of September 30, 2020 (Unaudited) and December 31, 2019
  
b.
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019 (Unaudited)
  
c.
Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2020 and 2019 (Unaudited)
d.
Condensed Consolidated Statements of Changes in Stockholders' Equity for the three and nine months ended September 30, 2020 and 2019 (Unaudited)
 
e.
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019 (Unaudited)
  
f.Notes to the Condensed Consolidated Financial Statements (Unaudited)
  
ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
ITEM 4.CONTROLS AND PROCEDURES
   
PART II - OTHER INFORMATION
   
ITEM 1.LEGAL PROCEEDINGS
ITEM 1A.RISK FACTORS
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
ITEM 3.DEFAULTS UPON SENIOR SECURITIES
ITEM 4.MINE SAFETY DISCLOSURES
ITEM 5.OTHER INFORMATION
  
ITEM 6.EXHIBITS
  
SIGNATURES

1


PART I - FINANCIAL INFORMATION

Forward-looking statements

Unless the context otherwise requires, all references to “Energy Focus,” “we,” “us,” “our,” “our company” or “the Company” refer to Energy Focus, Inc., a Delaware corporation and its predecessor entity for the applicable periods, considered as a single enterprise.
This Quarterly Report on Form 10-Q (this “Quarterly Report”) includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “feels,” “seeks,” “forecasts,” “projects,” “intends,” “plans,” “may,” “will,” “should,” “could” or “would” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Quarterly Report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies, capital expenditures and the industry in which we operate.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Although we base these forward-looking statements on assumptions that we believe are reasonable when made in light of information currently available to us, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and industry developments may differ materially from statements made in or suggested by the forward-looking statements contained in this Quarterly Report. In addition, even if our results of operations, financial condition and liquidity, and industry developments are consistent with the forward-looking statements contained in this Quarterly Report, those results or developments may not be indicative of results or developments in subsequent periods.

We believe that important factors that could cause our actual results to differ materially from forward-looking statements include, but are not limited to, the risks and uncertainties outlined under “Risk Factors” under Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019 and other matters described in this Quarterly Report and our other filings with the Securities and Exchange Commission generally. Some of these factors include:

disruptions and a slowing in the U.S. and global economy and business interruptions experienced by us, our customers and our suppliers as a result of the coronavirus (“COVID-19”) pandemic and related stay-at-home orders, quarantine policies, school attendance restrictions and restrictions on travel, trade and business operations;
our ability to realize the expected novelty, disinfection effectiveness, affordability and estimated delivery timing of our ultraviolet light disinfection (“UVCD”) products and their performance and cost compared to other products;
market acceptance of our light-emitting diode (“LED”) lighting, control and UVCD technologies and products;
our need for additional financing in the near term to continue our operations;
our ability to refinance or extend maturing debt on acceptable terms or at all;
our ability to continue as a going concern for a reasonable period of time;
our ability to implement plans to increase sales and control expenses;
our reliance on a limited number of customers for a significant portion of our revenue, and our ability to maintain or grow such sales levels;
our ability to add new customers to reduce customer concentration;
our reliance on a limited number of third-party suppliers and research and development partners, our ability to manage third-party product development and obtain critical components and finished products from such suppliers on acceptable terms and of acceptable quality, and the impact of our fluctuating demand on the stability of such suppliers;
our ability to timely and efficiently transport products from our third-party suppliers to our facility by ocean marine channels;
our ability to increase demand in our targeted markets and to manage sales cycles that are difficult to predict and may span several quarters;
the timing of large customer orders, significant expenses and fluctuations between demand and capacity as we invest in growth opportunities;
2


our ability to compete effectively against companies with lower cost structures or greater resources, or more rapid development efforts, and new competitors in our target markets;
our ability to successfully scale our network of sales representatives, agents, and distributors to match the sales reach of larger, established competitors;
our ability to attract and retain qualified personnel, and to do so in a timely manner;
the impact of any type of legal inquiry, claim or dispute;
general economic conditions in the United States and in other markets in which we operate or secure products;
our dependence on military maritime customers and on the levels and timing of government funding available to such customers, as well as the funding resources of our other customers in the public sector and commercial markets;
the possible impact on our military maritime customers and their ability to honor the timing for existing orders or place future orders due to COVID-19 breakouts amongst personnel that might impact the use of ships in service;
business interruptions resulting from geopolitical actions, including war and terrorism, natural disasters, including earthquakes, typhoons, floods and fires, or from health epidemics or pandemics or other contagious outbreaks;
our ability to respond to new lighting technologies and market trends, and fulfill our warranty obligations with safe and reliable products;
any delays we may encounter in making new products available or fulfilling customer specifications;
any flaws or defects in our products or in the manner in which they are used or installed;
our ability to protect our intellectual property rights and other confidential information, and manage infringement claims by others;
our compliance with government contracting laws and regulations, through both direct and indirect sale channels, as well as other laws, such as those relating to the environment and health and safety;
risks inherent in international markets, such as economic and political uncertainty, changing regulatory and tax requirements and currency fluctuations, including tariffs and other potential barriers to international trade;
our ability to maintain effective internal controls and otherwise comply with our obligations as a public company; and
our ability to regain compliance with the continued listing standards of The Nasdaq Stock Market (“Nasdaq”).

In light of the foregoing, we caution you not to place undue reliance on our forward-looking statements. Any forward-looking statement that we make in this Quarterly Report speaks only as of the date of such statement, and we undertake no obligation to update any forward-looking statement or to publicly announce the results of any revision to any of those statements to reflect future events or developments, except as required by law. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should only be viewed as historical data. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us.

Energy Focus®, Intellitube®, RedCap®, EnFocus™, nUVo™, abUV™ and mUVe™ are our registered trademarks. We may also refer to trademarks of other corporations and organizations in this document.
3


ITEM 1. FINANCIAL STATEMENTS
ENERGY FOCUS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
September 30,
2020
December 31,
2019
(Unaudited)
ASSETS
Current assets:
Cash$2,574 $350 
Trade accounts receivable, less allowances of $10 and $28, respectively
3,366 2,337 
Inventories, net5,259 6,168 
Prepaid and other current assets1,361 479 
Total current assets12,560 9,334 
Property and equipment, net420 389 
Operating lease, right-of-use asset923 1,289 
Restructured lease, right-of-use asset161 322 
Other assets3 405 
Total assets$14,067 $11,739 
LIABILITIES  
Current liabilities:  
Accounts payable$3,089 $1,340 
Accrued liabilities257 186 
Accrued legal and professional fees237 215 
Accrued payroll and related benefits662 360 
Accrued sales commissions76 32 
Accrued restructuring18 24 
Accrued warranty reserve230 195 
Deferred revenue105 18 
Operating lease liabilities588 550 
Restructured lease liabilities250 319 
Finance lease liabilities3 3 
Warrant liability2,928  
Convertible notes 1,700 
Iliad Note, net of discount and loan origination fees192 885 
PPP loan362  
Credit line borrowings, net of loan origination fees2,025 715 
Total current liabilities11,022 6,542 
Other liabilities 14 
Operating lease liabilities, net of current portion472 906 
Restructured lease liabilities, net of current portion 168 
Finance lease liabilities, net of current portion1 4 
PPP loan, net of current maturities433  
Iliad Note, net of current maturities 109 
Total liabilities11,928 7,743 
STOCKHOLDERS' EQUITY
Preferred stock, par value $0.0001 per share:
  
Authorized: 5,000,000 shares (3,300,000 shares designated as Series A Convertible Preferred Stock) at September 30, 2020 and 2,000,000 shares (no shares designated as Series A Convertible Preferred Stock) at December 31, 2019
  
Issued and outstanding: 2,597,470 at September 30, 2020 and no shares outstanding at December 31, 2019
  
Common stock, par value $0.0001 per share:
Authorized: 50,000,000 shares at September 30, 2020 and 30,000,000 shares at December 31, 2019
Issued and outstanding: 3,428,268 at September 30, 2020 and 2,485,684 at December 31, 2019
  
Additional paid-in capital133,062 128,873 
Accumulated other comprehensive loss(3)(3)
Accumulated deficit(130,920)(124,874)
Total stockholders' equity2,139 3,996 
Total liabilities and stockholders' equity$14,067 $11,739 
The accompanying notes are an integral part of these condensed consolidated financial statements.
4


ENERGY FOCUS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited) 
Three months ended
September 30,
Nine months ended
September 30,
2020201920202019
Net sales$5,964 $2,915 $13,082 $9,174 
Cost of sales4,588 1,887 9,331 8,157 
Gross profit1,376 1,028 3,751 1,017 
Operating expenses:
Product development401 191 996 1,035 
Selling, general, and administrative2,003 1,689 6,003 5,524 
Restructuring(16)(19)(44)243 
Total operating expenses2,388 1,861 6,955 6,802 
Loss from operations(1,012)(833)(3,204)(5,785)
Other expenses (income):
Interest expense124 67 344 136 
Loss on extinguishment of debt159  159  
(Gain) loss from change in fair value of warrants(153) 2,274  
Other expenses25 46 67 144 
Loss before income taxes(1,167)(946)(6,048)(6,065)
Benefit from income taxes(2) (2) 
Net loss$(1,165)$(946)$(6,046)$(6,065)
Net loss per share - basic and diluted
Net loss$(0.35)$(0.38)$(1.89)$(2.47)
Weighted average shares of common stock outstanding:
Basic and diluted *3,308 2,474 3,196 2,455 
* Shares outstanding for prior periods have been restated for the 1-for-5 reverse stock split effective June 11, 2020.

The accompanying notes are an integral part of these condensed consolidated financial statements.
5


ENERGY FOCUS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
(Unaudited)

Three months ended
September 30,
Nine months ended
September 30,
 2020201920202019
Net loss$(1,165)$(946)$(6,046)$(6,065)
Other comprehensive loss:
Foreign currency translation adjustments   (2)
Comprehensive loss$(1,165)$(946)$(6,046)$(6,067)

The accompanying notes are an integral part of these condensed consolidated financial statements. 
6


ENERGY FOCUS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands)
(Unaudited)
Preferred
Stock
Common
Stock
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive Loss
Accumulated
Deficit
Total
Stockholders'
Equity
SharesAmountShares*Amount
Balance at December 31, 2019 $ 2,486 $ $128,873 $(3)$(124,874)$3,996 
Issuance of common stock under employee stock option and stock purchase plans— — 5 — — — — — 
Issuance of common stock and warrants— — 688 — 2,749 — — 2,749 
Offering costs on issuance of common stock and warrants— — — — (474)— — (474)
Warrant liability— — — — (1,636)— — (1,636)
Conversion of notes to preferred stock2,709 — — — 1,769 — — 1,769 
Stock-based compensation— — — — 20 — — 20 
Net loss for the three months ended March 31, 2020— — — — — — (541)(541)
Balance at March 31, 20202,709 $ 3,179 $ $131,301 $(3)$(125,415)$5,883 
Issuance of common stock under employee stock option and stock purchase plans— — — — 30 — — 30 
Common stock withheld in lieu of income tax withholding on vesting of restricted stock units— — — — (3)— — (3)
Issuance of common stock upon the exercise of warrants— — 15 — 103 — — 103 
Issuance of common stock upon conversion from preferred stock(112)— 22 — — — — — 
Stock-based compensation— — — — 41 — — 41 
Net loss for the three months ended June 30, 2020— — — — — — (4,340)(4,340)
Balance at June 30, 20202,597 $ 3,216 $ $131,472 $(3)$(129,755)$1,714 
Issuance of common stock under employee stock option and stock purchase plans— — 30 — — — — — 
Stock-based compensation— — — — 35 — — 35 
Issuance of common stock upon the exercise of warrants— — 182 — 1,555 — — 1,555 
Net loss for the three months ended September 30, 2020— — — — — $— (1,165)(1,165)
Balance at September 30, 20202,597 $ 3,428 $ $133,062 $(3)$(130,920)$2,139 

*Shares outstanding for prior periods have been restated for the 1-for-5 reverse stock split effective June 11, 2020.
7


ENERGY FOCUS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands)
(Unaudited)
Common
Stock
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Stockholders'
Equity
Shares*Amount
Balance at December 31, 20182,418 $ $128,368 $(1)$(117,315)$11,052 
Adjustment to beginning retained earnings upon adoption of Topic 842
— — — — (186)(186)
Issuance of common stock under employee stock option and stock purchase plans30 — — — — — 
Common stock withheld in lieu of income tax withholding on vesting of restricted stock units(10)— (111)— — (111)
Stock-based compensation— — 543 — — 543 
Net loss for the three months ended March 31, 2019— — — — (2,865)(2,865)
Balance at March 31, 20192,438 $ $128,800 $(1)$(120,366)$8,433 
Issuance of common stock under employee stock option and stock purchase plans36 — — — — — 
Common stock withheld in lieu of income tax withholding on vesting of restricted stock units— — (5)— — (5)
Stock-based compensation— — (20)— — (20)
Foreign currency translation adjustment— — — (2)— (2)
Net loss for the three months ended June 30, 2019— — — — (2,254)(2,254)
Balance at June 30, 20192,474 $ $128,775 $(3)$(122,620)$6,152 
Stock-based compensation— — 34 — — 34 
Net loss for the three months ended September 30, 2019— — — — (946)(946)
Balance at September 30, 20192,474 $ $128,809 $(3)$(123,566)$5,240 


*Shares outstanding for prior periods have been restated for the 1-for-5 reverse stock split effective June 11, 2020.


The accompanying notes are an integral part of these condensed consolidated financial statements.
8


ENERGY FOCUS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Nine months ended
September 30,
20202019
Cash flows from operating activities:
Net loss$(6,046)$(6,065)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation140 277 
Stock-based compensation96 557 
Change in fair value of warrant liabilities2,274  
Provision for doubtful accounts receivable(21)20 
Provision for slow-moving and obsolete inventories(229)(643)
Provision for warranties34 107 
Amortization of loan discounts and origination fees221 72 
Loss on dispositions of property and equipment 15 
Changes in operating assets and liabilities:
Accounts receivable(1,070)400 
Inventories1,138 1,301 
Prepaid and other assets(471)368 
Accounts payable1,811 (2,311)
Accrued and other liabilities453 (421)
Deferred revenue87 (6)
Total adjustments4,463 (264)
Net cash used in operating activities(1,583)(6,329)
Cash flows from investing activities:  
Acquisitions of property and equipment(171)(57)
Net cash used in investing activities(171)(57)
Cash flows from financing activities:
Proceeds from the issuance of common stock and warrants2,749  
Proceeds from the exercise of warrants676  
Offering costs paid on the issuance of common stock and warrants
(474) 
Proceeds from PPP loan795  
Principal payments under finance lease obligations(3)(2)
Proceeds from exercise of stock options and employee stock purchase plan purchases30  
Common stock withheld in lieu of income tax withholding on vesting of restricted stock units(3)(116)
Payments on the Iliad Note(976) 
Payments for Deferred Financing & Termination Fees(320) 
Net proceeds from (payment on) credit line borrowings - AFS(719)(896)
Net proceeds from (payment on) credit line borrowings - New Facilities2,223  
Proceeds from convertible notes 1,700 
Net cash provided by financing activities3,978 686 
Effect of exchange rate changes on cash (1)
Net increase (decrease) in cash and restricted cash2,224 (5,701)
Cash and restricted cash, beginning of period692 6,335 
Cash and restricted cash, end of period$2,916 $634 
Classification of cash and restricted cash:  
Cash$2,574 $292 
Restricted cash held in other assets342 342 
Cash and restricted cash$2,916 $634 

The accompanying notes are an integral part of these condensed consolidated financial statements.
9

ENERGY FOCUS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)

NOTE 1. NATURE OF OPERATIONS

Energy Focus, Inc. (“we”, “us”, “our” or “the Company”) engages in the design, development, manufacturing, marketing and sale of energy-efficient lighting systems and controls and recently announced development of ultraviolet light disinfection (“ UVCD”) products. We develop, market and sell high quality light-emitting diode (“LED”) lighting products and UVCD products and controls in the commercial and military maritime markets (“MMM”). Our mission is to enable our customers to run their facilities and offices with greater energy efficiency, productivity, and wellness through advanced LED retrofit and UVCD solutions. Our goal is to be the LED and human-centric lighting (“HCL”) technology and market leader for the most demanding applications where performance, quality and health are considered paramount. We specialize in LED lighting retrofit by replacing fluorescent, high-intensity discharge lighting and other types of lamps in institutional buildings for primarily indoor lighting applications with our innovative, high-quality commercial and military tubular LED (“TLED”), as well as other LED and lighting control products.

On June 11, 2020, in accordance with previous stockholder approval, our Board of Directors effected a 1-for-5 (the “Split Ratio”) reverse stock split of the Company’s common stock, par value $0.0001 per share. The reverse stock split became effective immediately upon the filing of the Certificate of Amendment to the Company’s Certificate of Incorporation, as amended (the “Certificate of Incorporation”), with the Delaware Secretary of State (the “Effective Time”). At the Effective Time, every five shares of common stock issued and outstanding automatically combined into one validly issued, fully paid and non-assessable share of common stock. No fractional shares were issued as a result of the reverse stock split. The $0.0001 par value per share of common stock and other terms of the common stock were not affected by the reverse stock split. The number of authorized shares of common stock under the Certificate of Incorporation remained unchanged at 50,000,000 shares. Proportional adjustments were made to the conversion and exercise prices of our outstanding warrants and stock options, and to the number of shares issued and issuable under our stock incentive plans in connection with the reverse stock split. The current financial statements as well as prior period financial statements have been retroactively adjusted to reflect the reverse stock split. Preferred shares outstanding were not affected by the reverse stock split and, as such, those shares have not been adjusted.

NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary organized in Taiwan during 2019. All significant inter-company balances and transactions have been eliminated. Unless indicated otherwise, the information in the Notes to the Consolidated Financial Statements relates to our operations.

We have prepared the accompanying financial data for the three and nine months ended September 30, 2020 and 2019 pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The accompanying financial data and information should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2019 (“2019 Annual Report”). The Condensed Consolidated Balance Sheet as of December 31, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

In the opinion of management, the accompanying condensed consolidated financial statements contain all normal and recurring adjustments necessary to present fairly our Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019, Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019, Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2020 and 2019, Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2020 and 2019, and Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019.

10

ENERGY FOCUS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)
Use of estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management’s best knowledge of current events and actions that may impact us in the future, actual results may vary from the estimates. Estimates include, but are not limited to, the establishment of reserves for accounts receivable, sales returns, inventory obsolescence and warranty claims; the useful lives of property and equipment; valuation allowance for net deferred taxes; the cost and offsetting income related to sub-leased property; and stock-based compensation. In addition, estimates and assumptions associated with the determination of the fair value of financial instruments and evaluation of long-lived assets for impairment requires considerable judgment. Actual results could differ from those estimates and such differences could be material.

Certain risks and concentrations

We have certain customers whose net sales individually represented 10% or more of our total net sales, or whose net trade accounts receivable balance individually represented 10% or more of our total net trade accounts receivable; we have certain suppliers, which individually represent 10% or more of our total purchases, or whose trade accounts payable balance individually represented 10% or more of our total trade accounts payable balance, as follows:

For the three months ended September 30, 2020, sales to our primary distributor for the U.S. Navy and a regional commercial lighting retrofit company accounted for approximately 67% and 12% of net sales, respectively. When sales to our primary distributor for the U.S. Navy are combined with sales to shipbuilders for the U.S. Navy, total net sales of products for the U.S. Navy comprised approximately 68% of net sales for the same period. For the three months ended September 30, 2019, sales to our primary distributor for the U.S. Navy, a regional commercial lighting retrofit company and a global healthcare provider accounted for approximately 27%, 14% and 15% of net sales, respectively. When sales to our primary distributor for the U.S. Navy are combined with sales to a shipbuilder for the U.S. Navy, total net sales of products for the U.S. Navy comprised approximately 30% of net sales for the same period.

For the nine months ended September 30, 2020, sales to our primary distributor for the U.S. Navy and a regional commercial lighting retrofit company accounted for approximately 52% and 14% of net sales, respectively. When sales to our primary distributor for the U.S. Navy are combined with sales to shipbuilders for the U.S. Navy, total net sales of products for the U.S. Navy comprised approximately 58% of net sales for the same period. For the nine months ended September 30, 2019, sales to our primary distributor for the U.S. Navy and a regional commercial lighting retrofit company accounted for approximately 20% and 23% of net sales for the same period. When sales to our primary distributor for the U.S. Navy are combined with sales to a shipbuilder for the U.S. Navy, total net sales of products for the U.S. Navy comprised approximately 27% of net sales for the same period.

Our primary distributor for the U.S. Navy accounted for approximately 73% and 10% of net trade accounts receivable, respectively, at September 30, 2020 and December 31, 2019. A large regional retrofit company accounted for 41% of our net trade accounts receivable at December 31, 2019.

Two offshore suppliers accounted for approximately 25% and 20%, respectively, of our total expenditures for the three months ended September 30, 2020. These same two suppliers accounted for approximately 19% and 14%, respectively, of our total expenditures for the nine months ended September 30, 2020. At September 30, 2020, these offshore suppliers accounted for approximately 24% and 35% of our trade accounts payable balance.

For the three and nine months ended September 30, 2019, one offshore supplier accounted for approximately 18% and 20% total purchases, respectively. This same offshore supplier accounted for approximately, 36.7% of our trade accounts payable balance at September 30, 2019. One domestic supplier accounted for approximately 16% of our trade accounts payable balance at September 30, 2019.

Recent accounting pronouncements

In June 2016, the Financial Accounting Standards Board issued Accounting Standard Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which significantly changes the accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on
11

ENERGY FOCUS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)
expected losses to estimate credit losses on certain financial instruments, including trade receivables, and requires an entity to recognize an allowance based on its estimate of expected credit losses rather than incurred losses. For smaller reporting companies, this standard will be effective for interim and annual periods starting after December 15, 2022 and will generally require adoption on a modified retrospective basis. We are in the process of evaluating the impact of the standard.

Revenue

Net sales include revenues from sales of products and shipping and handling charges, net of estimates for product returns. Revenue is measured at the amount of consideration we expect to receive in exchange for the transferred products. We recognize revenue at the point in time when we transfer the promised products to the customer and the customer obtains control over the products. Distributors’ obligations to us are not contingent upon the resale of our products. We recognize revenue for shipping and handling charges at the time the goods are shipped to the customer, and the costs of outbound freight are included in cost of sales. We provide for product returns based on historical return rates. While we incur costs for sales commissions to our sales employees and outside agents, we recognize commission costs concurrent with the related revenue, as the amortization period is less than one year. We do not incur any other incremental costs to obtain contracts with our customers. Our product warranties are assurance-type warranties, which promise the customer that the products are as specified in the contract. Therefore, the product warranties are not a separate performance obligation and are accounted for as described below. Sales taxes assessed by governmental authorities are accounted for on a net basis and are excluded from net sales.

The following table provides a disaggregation of product net sales for the periods presented (in thousands):

Three months ended
September 30,
Nine months ended
September 30,
 2020201920202019
Net sales:    
Commercial$1,456 $1,733 $4,250 $5,847 
MMM products4,508 1,182 8,832 3,327 
Total net sales$5,964 $2,915 $13,082 $9,174 

Accounts Receivable

Our trade accounts receivable consist of amounts billed to and currently due from customers. Our customers are concentrated in the United States. In the normal course of business, we extend unsecured credit to our customers related to the sale of our products. Credit is extended to customers based on an evaluation of the customer’s financial condition and the amounts due are stated at their estimated net realizable value. During the first eleven months of 2019, we evaluated and monitored the creditworthiness of each customer on a case-by-case basis. However, during December 2019, we transitioned to an account receivable insurance program with a high credit worthy insurance company where we have the large majority of the accounts receivable insured with a portion of self-retention. This third party also provides creditworthiness ratings and metrics that significantly assist us in evaluating the creditworthiness of both existing and new customers. We maintain allowances for sales returns and doubtful accounts receivable to provide for the estimated number of accounts receivable that will not be collected. The allowance is based on an assessment of customer creditworthiness and historical
payment experience, the age of outstanding receivables, and performance guarantees to the extent applicable. Past due amounts are written off when our internal collection efforts have been unsuccessful, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. We do not generally require collateral from our customers.

Our standard payment terms with customers are net 30 days from the date of shipment, and we do not generally offer extended payment terms to our customers, but exceptions are made in some cases to certain customers or with particular orders. Accordingly, we do not adjust trade accounts receivable for the effects of financing, as we expect the period between the transfer of product to the customer and the receipt of payment from the customer to be in line with our standard payment terms.



12

ENERGY FOCUS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)
Geographic information

All of our long-lived fixed assets are located in the United States. There were no net sales attributable to customers outside the United States for both the three and nine months ended September 30, 2020. There were no net sales attributable to customers outside the United States for the three months ended September 30, 2019 and less than 1% for the nine months ended September 30, 2019. The geographic location of our net sales is derived from the destination to which we ship the product.

Net loss per share

Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted loss per share gives effect to all dilutive potential shares of common stock outstanding during the period. Dilutive potential shares of common stock consist of incremental shares upon the exercise of stock options, warrants and convertible securities, unless the effect would be anti-dilutive.

The following table presents a reconciliation of basic and diluted loss per share computations (in thousands):

Three months ended
September 30,
Nine months ended
September 30,
 2020201920202019
Numerator:  
Net loss$(1,165)$(946)$(6,046)$(6,065)
  
Denominator:
Basic weighted average shares of common stock outstanding *3,308 2,474 3,196 2,455 
   * Shares outstanding for prior periods have been restated for the 1-for-5 stock split effective June 11, 2020.

As a result of the net loss we incurred for the three months ended September 30, 2020, options, restricted share units, warrants and convertible securities representing approximately 117 thousand, 13 thousand, 321 thousand and 519 thousand shares of common stock, respectively, were excluded from the basic loss per share calculation, because their inclusion would have been anti-dilutive. As a result of the net loss we incurred for the nine months ended September 30, 2020, options, restricted share units, warrants and convertible securities representing approximately 57 thousand, 7 thousand, 152 thousand and 531 thousand shares of common stock, respectively, were excluded from the basic loss per share calculation, because of this same reason.

As a result of the net loss we incurred for the three months ended September 30, 2019, options and restricted share units representing approximately zero shares of common stock, respectively, and convertible securities representing approximately 514 thousand shares of common stock, were excluded from the basic loss per share calculation as their inclusion would have been anti-dilutive. As a result of the net loss we incurred for the nine months ended September 30, 2019, options, restricted share units and convertible securities representing approximately zero, 31 thousand and 507 thousand, shares of common stock, respectively, were excluded from the basic loss per share calculation, because of this same reason.











13

ENERGY FOCUS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)
Product warranties

Through March 31, 2016, we warranted finished goods against defects in material and workmanship under normal use and service for periods generally between one and five years. Beginning April 1, 2016, we warrant our commercial Tubular LED Lamps (“TLEDs”), the troffer luminaires, and certain Globe Lights for a period of ten years (excluding RedCap® and our Battery Backup TLEDs), and all other LED products for five years per the Terms and Conditions outlined on our website. Beginning in October 2019, TLEDs (excluding RedCap®