Energy Focus, Inc. Reports Third Quarter 2009 Results

Financial and operating highlights include the following:

 * Net sales from continuing operations of $3.0 million for the
   third quarter 2009 decreased 9.1%, with respect to second
   quarter 2009 net sales from continuing operations of $3.3
   million and 47.4% versus third quarter 2008 net sales from
   continuing operations of $5.7 million.
 * Cash utilization increased during the third quarter of 2009 to
   $2.3 million, compared to $1.2 million for the second quarter of
   2009 and a cash accretion of $193,000 for the third quarter of
   2008. The company finished the third quarter with cash in the
   amount of $3.3 million (which includes $0.2 million of cash
   belonging to its German subsidiary, which has been classified as
   discontinued operations in its consolidated financial statements)
   and total shareholders' equity of $9.5 million.
 * The net loss in the quarter was $2.7 million ($0.17 per share)
   compared to a net loss of $2.3 million ($0.16 per share) in the
   second quarter of 2009, an increase of $269,000.
 * Operating expenses were reduced $181,000 (net of a restructuring
   expense of $125,000) for the quarter compared to the second
   quarter of 2009 and $428,000, or 13.4% compared to the third
   quarter of 2008.  Continued reductions in expenses are expected
   in Q4.

"Sales are running about 47% year over year and, unfortunately, are not expected to improve soon given that the principal source of these sales is our legacy businesses that are so dependent on new residential and commercial construction -- in particular our pool business that is tied strongly to new construction in the residential housing market," said Joe Kaveski, Energy Focus CEO. "This underlines the appropriateness of our strategy to exit these businesses and refocus the company's resources to provide turnkey lighting energy services to the growing public sector existing building market."

"We spent $2.3 million cash this quarter which included expenses of about $1.0 million for restructuring and debt pay down, as well as legal and accounting fees associated with our rights offering, acquisition and divestiture efforts. Cash use for normal operations of $1.3 million declined about $100,000 compared to the last quarter due to continued reductions in overhead," continued Mr. Kaveski. "Cash usage for normal operations is expected to continue to decline in the fourth quarter with continued improvements in efficiency."

"In addition we've made significant progress on our plan to acquire a lighting retrofit business with the successful completion of our rights offering which will provide funding for the acquisition," added Mr. Kaveski. "We've recently received an additional $3.2 million in new government contracts and have made our first sales through the GSA Federal Supply Schedule."

Energy Focus, Inc. management will host a conference call today, Monday, November 16th at 4:30 p.m. EST (1:30 p.m. PST) to review the third quarter, 2009 financial results and other corporate events, followed by a Q & A session. Dialing 1-877-604-9668 (U.S./Canada) or 1-719-325-4812 (international/local) can access the call. The conference ID number is 6142751. Participants are asked to call the assigned number approximately ten minutes before the conference call begins.

The conference call will also be available over the Internet at http://www.energyfocusinc.com/investors/events/category/investors 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 1-877-604-9668 (U.S./Canada) or 1-719-325-4812 (international/local) and entering the following pass code: 6142751. Also, an instant replay of the conference call will be available over the Internet at http://www.energyfocusinc.com/investors/events/category/investors on November 16, 2009 and will remain available for one year in the Investor Relations area of the site.

About Energy Focus

Energy Focus, Inc. is a leading supplier of energy efficient lighting solutions. These solutions provide energy savings, aesthetics, safety and maintenance cost benefits over conventional lighting. Our long-standing relationship with the United States Government includes numerous research and development projects for the DOE and DARPA, creating energy efficient LED lighting systems for the United States Navy fleet and the next generation Very High Efficiency Solar Cell. Customers include supermarket chains, the United States government, state and local governmental agencies, retail stores, museums, theme parks and casinos, hotels, swimming pool builders and many others. Company headquarters are located in Solon, OH, with additional offices in Pleasanton, CA, the United Kingdom, and Germany. For more information, see http://www.efoi.com.

The Energy Focus, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6633

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 our future business outlook, our products, our solutions, and our/or our work with leading customers including governmental agencies. 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 Report 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)

                                           September 30,  December 31,
                                               2009           2008
                                            (unaudited)
                                           ------------- -------------


 ASSETS

 Current assets:
  Cash and cash equivalents                $      1,839  $     10,568
  Restricted cash held in certificates of
   deposit                                        1,300            --
  Accounts receivable trade, net                  1,195         2,617
  Inventories, net                                4,675         5,539
  Prepaid and other current assets                  579           311
  Current assets of discontinued operations         720            --
                                           ------------- -------------
   Total current assets                          10,308        19,035

 Fixed assets net                                 3,270         4,459
 Other assets                                        --           142
                                           ------------- -------------
   Total assets                            $     13,578  $     23,636
                                           ============= =============

 LIABILITIES

 Current liabilities:
  Accounts payable                         $      1,268  $      2,644
  Accrued liabilities                             1,295         1,602
  Deferred revenue                                   28           191
  Credit line borrowings                          1,289         1,904
  Current portion of long-term bank
   borrowings                                        --            54
  Current liabilities of discontinued
   operations                                       133            --
                                           ------------- -------------
   Total current liabilities                      4,013         6,395

 Other deferred liabilities                           7            81
 Long-term bank borrowings                           70           245
                                           ------------- -------------
   Total liabilities                              4,090         6,721

 SHAREHOLDERS' EQUITY

 Preferred stock, par value $0.0001 per
  share:
  Authorized: 2,000,000 shares in 2009 and
   2008
  Issued and outstanding: no shares in 2009
   and 2008

 Common stock, par value $0.0001 per share:
  Authorized: 30,000,000 shares in 2009 and
   2008
  Issued and outstanding: 15,079,0000 in
   2009 and 14,835,000 in 2008                        1             1
 Additional paid-in capital                      66,476        65,865
 Accumulated other comprehensive income             347           377
 Accumulated deficit                            (57,336)      (49,328)
                                           ------------- -------------
   Total shareholders' equity                     9,488        16,915
                                           ------------- -------------
   Total liabilities and shareholders'
    equity                                 $     13,578  $     23,636
                                           ============= =============

                          ENERGY FOCUS, INC.
                              CONDENSED
                CONSOLIDATED STATEMENTS OF OPERATIONS
           (amounts in thousands except per share amounts)
                             (unaudited)

                                Three months ended   Nine months ended
                                   September 30,       September 30,
                                ------------------  ------------------
                                  2009      2008      2009      2008
                                --------  --------  --------  --------

 Net sales                      $ 3,023   $ 5,691   $ 8,871   $16,526
 Cost of sales                    2,700     3,912     7,508    11,838
                                --------  --------  --------  --------
   Gross profit                     323     1,779     1,363     4,688

 Operating expenses:
  Research and development          (61)      194       270       599
  Sales and marketing             1,429     1,710     4,549     6,288
  General and administrative      1,408     1,300     3,845     4,018
  Restructuring                     125        --       125        --
                                --------  --------  --------  --------
   Total operating expenses       2,901     3,204     8,789    10,905
                                --------  --------  --------  --------
    Loss from operations         (2,578)   (1,425)   (7,426)   (6,217)

 Other income (expense):
  Other (expense) income            (88)      (40)       79       (30)
  Interest (expense) income         (21)       31       (61)       81
                                --------  --------  --------  --------

 Loss from continuing operations
  before income taxes            (2,687)   (1,434)   (7,408)   (6,166)

 Provision for income taxes          --       (40)       --      (120)
                                --------  --------  --------  --------

 Net loss from continuing
  operations                    $(2,687)  $(1,474)  $(7,408)  $(6,286)

 Discontinued operations:

  Income (loss) from operations
   of discontinued operations        69      (110)     (600)     (386)

  Provision for income taxes         --        --        --        --
                                --------  --------  --------  --------

   Income (loss) from
    discontinued operations          69      (110)     (600)     (386)
                                --------  --------  --------  --------

 Net loss                       $(2,618)  $(1,584)  $(8,008)  $(6,672)
                                ========  ========  ========  ========

 Net loss per share - basic and
  diluted                       $ (0.17)  $ (0.11)  $ (0.54)  $ (0.48)
                                ========  ========  ========  ========


 Shares used in computing net
  loss per share - basic and
  diluted                        15,079    14,832    14,946    13,950
                                ========  ========  ========  ========

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Energy Focus, Inc.

CONTACT:  Energy Focus, Inc.
Media Contact:
Public Relations Office
(440) 715-1295
pr@efoi.com
CleanTech IR, Inc.
Investor Contact:
310-541-6824
btanous@cleantech-ir.com

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