ENERGY FOCUS, INC/DE - Quarter Report: 2024 March (Form 10-Q)

Total current assets Property and equipment, net Operating lease, right-of-use asset Total assets$ $ LIABILITIES Current liabilities: Accounts payable$ $ Accounts payable - related party Accrued liabilities Accrued legal and professional fees Accrued payroll and related benefits Accrued sales commissions Accrued warranty reserve Operating lease liabilities Advanced capital contribution Promissory notes payable, net of discounts and loan origination fees Total current liabilities

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ENERGY FOCUS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)


	March 31, 2024	December 31, 2023
	(Unaudited)

Operating lease liabilities, net of current portion
Total liabilities

STOCKHOLDERS' EQUITY
Preferred stock, par value $ per share:
Authorized: shares ( designated as Series A Convertible Preferred Stock) at March 31, 2024 and December 31, 2023
Issued and outstanding: at March 31, 2024 and December 31, 2023
Common stock, par value $ per share:
Authorized: shares at March 31, 2024 and December 31, 2023
Issued and outstanding: at March 31, 2024 and at December 31, 2023
Additional paid-in capital
Accumulated other comprehensive loss	()	()
Accumulated deficit	()	()
Total stockholders' equity
Total liabilities and stockholders' equity	$	$

) ) $()$()$ — — — — $()$()$

Accumulated
Other
Comprehensive
Loss

Accumulated
Deficit

Total
Stockholders'
Equity

Amount

Shares*

Amount

()

—

()

—

()

) ) )() ) )))) )()

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ENERGY FOCUS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	2024	2023
Cash flows from financing activities:
Issuance of common stock and warrants








Payments on the 2022 Streeterville Note	()	()




Net payments on proceeds from the credit line borrowings - Credit Facilities		()
Net cash (used in) provided by financing activities	()



Net (decrease) increase in cash	()
Cash beginning of period
Cash end of period	$	$

Non-cash investing and financing activities:
Debt-to-equity exchange transactions	$	$

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

ENERGY FOCUS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

NOTE 1.

NOTE 2.

ENERGY FOCUS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

million for the three months ended March 31, 2024 and $ million for the twelve months ended December 31, 2023, and total cash used in operating activities of $ million for the three months ended March 31, 2024 and $ million for the twelve months ended December 31, 2023, we determined that substantial doubt about our ability to continue as a going concern continues to exist at March 31, 2024. As a result of restructuring actions and initiatives, we have tailored our operating expenses to be more in line with our expected sales volumes; however, we continue to incur losses and have a substantial accumulated deficit.

Additionally, global supply chain and logistics constraints are impacting our inventory purchasing strategy, as we seek to manage both shortages of available components and longer lead times in obtaining components while balancing the development and implementation of an inventory reduction plan. Disruptions in global logistics networks are also impacting our lead times and ability to efficiently and cost-effectively transport products from our third-party suppliers to our facility. As a result, we will continue to review and pursue selected external funding sources to ensure adequate financial resources to execute across the timelines required to achieve these objectives including, but not limited to, the following:

•obtaining financing from traditional or non-traditional investment capital organizations or individuals;

•obtaining funding from the sale of our common stock or other equity or debt instruments; and

•obtaining debt financing with lending terms that more closely match our business model and capital needs.

There can be no assurance that we will obtain funding on acceptable terms, in a timely fashion, or at all. Obtaining additional funding contains risks, including:

•additional equity financing may not be available to us on satisfactory terms, particularly in light of the current price of our common stock, and any equity we are able to issue could lead to dilution for current stockholders and have rights, preferences and privileges senior to our common stock;

•loans or other debt instruments may have terms or conditions, such as interest rate, restrictive covenants, conversion features, refinancing demands, and control or revocation provisions, which are not acceptable to management or the Company’s Board of Directors (the “Board of Directors”); and

•the current environment in the capital markets and volatile interest rates, combined with our capital constraints, may prevent us from being able to obtain adequate debt financing.

Considering both quantitative and qualitative information, we continue to believe that the combination of our plans to ensure adequate external funding, timely re-organizational actions, current financial position, liquid resources, obligations due or anticipated within the next year, development and implementation of an excess inventory reduction plan, plans and initiatives in our research and development, product development and sales and marketing, and development of potential channel partnerships, if adequately executed, could provide us with an ability to finance our operations through the next twelve months and may mitigate the substantial doubt about our ability to continue as a going concern.

Nasdaq Capital Market Compliance

As of the date of this Quarterly Report, the Company believes it has maintained compliance with the Minimum Stockholders’ Equity Rule, which requires listed companies to maintain stockholders’ equity of at least $ million for continued listing on the Nasdaq Capital Market. To become compliant with the Bid Price Rule, which has a minimum bid price of at least $ per share as one of its continued listing requirements, the Company effected a 1-for-7 reverse stock split to increase the per share trading price of the common stock effective June 16, 2023 (See Note 8, “Stockholders’ Equity”).

However, there can be no assurance that the Company will be able to maintain compliance with the Minimum Stockholders’ Equity Rule, Bid Price Rule, or other Nasdaq listing requirements. If the Company fails to maintain compliance with Nasdaq’s continued listing standards in accordance with the Panel’s decision, the Company’s common stock will be subject to delisting from Nasdaq.

ENERGY FOCUS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

$ MMM products Total net sales$ $ $ $ Less: Reserve for Credit Losses()()()Net Accounts Receivable$ $ $

Activity related to our reserve for credit losses for the three months ended March 31, 2024 was as follows (in thousands):


Allowance for credit loss as of December 31, 2023	$	()
Reduction of reserve for credit losses as of March 31, 2024
Allowance for credit loss as of March 31, 2024	$	()

Activity related to our reserve for credit losses for the three months ended March 31, 2023 was as follows (in thousands):


Allowance for credit loss as of December 31, 2022	$	()
Cumulative effect of the implementation of ASC 326	()
Allowance for credit loss as of January 1, 2023	()
Reserve for credit losses as of March 31, 2023	()
Prior year reclassification of sales returns out of allowance for doubtful accounts	()
Allowance for credit loss as of March 31, 2023	$	()

Geographic information

All of our long-lived fixed assets are located in the United States. For the three months ended March 31, 2024, and 2023, approximately % of sales were attributable to customers in the United States. The geographic location of our net sales is derived from the destination to which we ship the product.

ENERGY FOCUS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

)$() Denominator:Basic and diluted weighted average shares of common stock outstanding )()) ()$()

NOTE 4.

to years)$ $

Tooling (useful life to years)

Vehicles (useful life years)

Leasehold improvements (the shorter of useful life or lease life) $ $ Operating lease liabilities$ $ ) $ $

Total unearned stock-based compensation was $ thousand at March 31, 2024, compared to $ thousand at March 31, 2023. These costs will be charged to expense and amortized on a straight-line basis in future periods. The weighted average period over which the unearned compensation at March 31, 2024 is expected to be recognized is approximately years.

Stock options

For the three months ended March 31, 2024 and 2023, the Company did not grant any stock options.

Options outstanding under all plans have a contractual life of , and vesting periods between one and . $ Granted

114.6 13.2 — 609

* Pursuant to Regulation S-T, this interactive data file is not deemed filed for purposes of Section 11 of the Securities Act, or Section 18 of the Exchange Act, or otherwise subject to the liabilities of these sections.

+ Filed herewith.

++ This exhibit shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act or the Exchange Act.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			ENERGY FOCUS, INC.

Date:	May 13, 2024	By:	/s/ Chiao Chieh Jay Huang
			Chiao Chieh Jay Huang
			Chief Executive Officer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

ENERGY FOCUS, INC/DE - Quarter Report: 2024 March (Form 10-Q)

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