ý
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE
ACT
OF 1934
|
o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
Delaware
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94-3021850
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|
(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Part
I - FINANCIAL INFORMATION
|
|||
Item
1
|
Financial
Statements:
|
||
a.
|
Condensed
Consolidated Balance Sheets at June 30, 2008 (unaudited) and December
31,
2007
|
3
|
|
b.
|
Condensed
Consolidated Statements of Operations for the Three Months and Six
Months
Ended June 30, 2008 and 2007 (unaudited)
|
4
|
|
c.
|
Condensed
Consolidated Statements of Comprehensive Income (Loss) for the Three
Months and Six Months Ended June 30, 2008 and 2007 (unaudited)
|
5
|
|
d.
|
Condensed
Consolidated Statements of Cash Flows for the Six Months Ended June
30,
2008 and 2007 (unaudited)
|
6
|
|
e.
|
Notes
to Condensed Consolidated Financial Statements (unaudited)
|
7
|
|
Item
2
|
Management’s
Discussion and Analysis of Results of Operations and Financial Condition
|
15
|
|
Item
3
|
Quantitative
and Qualitative Disclosures About Market Risk
|
19
|
|
Item
4
|
Controls
and Procedures
|
19
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|
Part
II - OTHER INFORMATION
|
|||
Item
1
|
Legal
Proceedings
|
21
|
|
Item
1A
|
Risk
Factors
|
21
|
|
Item
6
|
Exhibits
|
21
|
|
Signatures
|
22
|
||
Exhibit
Index
|
23
|
June 30,
2008
|
December 31,
2007
|
||||||
(unaudited)
|
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
12,249
|
$
|
8,412
|
|||
Accounts
receivable trade, net
|
4,588
|
3,698
|
|||||
Inventories,
net
|
6,510
|
6,888
|
|||||
Prepaid
and other current assets
|
395
|
381
|
|||||
Total
current assets
|
23,742
|
19,379
|
|||||
Fixed
assets, net
|
5,040
|
5,316
|
|||||
Goodwill,
net
|
4,451
|
4,359
|
|||||
Other
assets
|
120
|
59
|
|||||
Total
assets
|
$
|
33,353
|
$
|
29,113
|
|||
LIABILITIES
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
2,456
|
$
|
2,265
|
|||
Accrued
liabilities
|
1,577
|
1,473
|
|||||
Deferred
revenue
|
202
|
244
|
|||||
Credit
line borrowings
|
328
|
1,159
|
|||||
Short-term
bank borrowings
|
1,374
|
1,726
|
|||||
Total
current liabilities
|
5,937
|
6,867
|
|||||
Other
deferred liabilities
|
182
|
62
|
|||||
Deferred
tax liabilities
|
332
|
252
|
|||||
Long-term
bank borrowings
|
308
|
314
|
|||||
Total
liabilities
|
6,759
|
7,495
|
|||||
SHAREHOLDERS’
EQUITY
|
|||||||
Common
stock
|
1
|
1
|
|||||
Additional
paid-in capital
|
65,580
|
55,682
|
|||||
Accumulated
other comprehensive income
|
981
|
815
|
|||||
Accumulated
deficit
|
(39,968
|
)
|
(34,880
|
)
|
|||
Total
shareholders’ equity
|
26,594
|
21,618
|
|||||
Total
liabilities and shareholders’ equity
|
$
|
33,353
|
$
|
29,113
|
|
Three months
ended June 30,
|
|
Six months
ended June 30,
|
|
|||||||||
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
||||
Net
sales
|
$
|
7,616
|
$
|
6,704
|
$
|
12,453
|
$
|
11,713
|
|||||
Cost
of sales
|
5,173
|
4,424
|
8,766
|
7,963
|
|||||||||
Gross
profit
|
2,443
|
2,280
|
3,687
|
3,750
|
|||||||||
Operating
expenses:
|
|||||||||||||
Research
and development
|
684
|
675
|
1,601
|
1,158
|
|||||||||
Sales
and marketing
|
2,220
|
2,328
|
4,582
|
4,948
|
|||||||||
General
and administrative
|
1,182
|
1,067
|
2,552
|
2,145
|
|||||||||
Restructure
expense
|
—
|
89
|
—
|
89
|
|||||||||
Total
operating expenses
|
4,086
|
4,159
|
8,735
|
8,340
|
|||||||||
Loss
from operations
|
(1,643
|
)
|
(1,879
|
)
|
(5,048
|
)
|
(4,590
|
)
|
|||||
Other
income (expense):
|
|||||||||||||
Other
income/(expense)
|
30
|
35
|
32
|
42
|
|||||||||
Interest
income/(expense)
|
14
|
40
|
8
|
139
|
|||||||||
Loss
before income taxes
|
(1,599
|
)
|
(1,804
|
)
|
(5,008
|
)
|
(4,409
|
)
|
|||||
Provision
for income taxes
|
(40
|
)
|
(66
|
)
|
(80
|
)
|
(67
|
)
|
|||||
Net
loss
|
$
|
(1,639
|
)
|
$
|
(1,870
|
)
|
$
|
(5,088
|
)
|
$
|
(4,476
|
)
|
|
Net
loss per share – basic and diluted
|
$
|
(0.11
|
)
|
$
|
(0.16
|
)
|
$
|
(0.38
|
)
|
$
|
(0.39
|
)
|
|
Shares
used in computing net loss per share – basic and
diluted
|
14,830
|
11,489
|
13,521
|
11,484
|
Three months
ended June 30,
|
|
Six months
ended June 30,
|
|
||||||||||
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
||||
Net loss
|
$
|
(1,639
|
)
|
$
|
(1,870
|
)
|
$
|
(5,088
|
)
|
$
|
(4,476
|
)
|
|
Other
comprehensive income (loss)
|
|||||||||||||
Foreign
currency translation adjustments
|
7
|
46
|
166
|
102
|
|||||||||
Net
unrealized gain (loss) on securities
|
—
|
12
|
—
|
(9
|
)
|
||||||||
Comprehensive
loss
|
$
|
(1,632
|
)
|
$
|
(1,812
|
)
|
$
|
(4,922
|
)
|
$
|
(4,383
|
)
|
Six Months Ended June 30,
|
|||||||
2008
|
2007
|
||||||
Cash
flows from operating activities:
|
|||||||
Net
loss
|
$
|
(5,088
|
)
|
$
|
(4,476
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|||||||
Depreciation
|
621
|
642
|
|||||
Stock-based
compensation
|
433
|
495
|
|||||
Unrealized
gain (loss) from marketable securities
|
—
|
(9
|
)
|
||||
Provision
for doubtful accounts receivable
|
(266
|
)
|
17
|
||||
Deferred
taxes
|
80
|
96
|
|||||
Gain
on disposal of fixed assets
|
1
|
—
|
|||||
Changes
in assets and liabilities:
|
|||||||
Accounts
receivable
|
(583
|
)
|
1,357
|
||||
Inventories
|
466
|
(385
|
)
|
||||
Prepaid
and other current assets
|
(13
|
)
|
(301
|
)
|
|||
Other
assets
|
(58
|
)
|
20
|
||||
Accounts
payable
|
177
|
(1,595
|
)
|
||||
Deferred
revenue
|
(41
|
)
|
—
|
||||
Accrued
liabilities
|
213
|
54
|
|||||
Total
adjustments
|
1,030
|
391
|
|||||
Net
cash used in operating activities
|
(4,058
|
)
|
(4,085
|
)
|
|||
Cash
flows from investing activities:
|
|||||||
Purchase
of short-term investments
|
—
|
(37,090
|
)
|
||||
Sale
of short-term investments
|
—
|
42,648
|
|||||
Acquisition
of fixed assets
|
(298
|
)
|
(281
|
)
|
|||
Net
cash provided by (used in) investing activities
|
(298
|
)
|
5,277
|
||||
Cash
flows from financing activities:
|
|||||||
Cash
proceeds from issuances of common stock, net
|
9,335
|
—
|
|||||
Cash
proceeds from exercise of stock options
|
130
|
385
|
|||||
Proceeds
from credit line borrowings
|
1,968
|
63
|
|||||
Payments
of credit line borrowings
|
(2,813
|
)
|
(58
|
)
|
|||
Proceeds
from long-term borrowings
|
—
|
160
|
|||||
Payments
of long-term bank borrowings
|
(358
|
)
|
(360
|
)
|
|||
Net
cash provided by financing activities
|
8,262
|
190
|
|||||
Effect
of exchange rate changes on cash
|
(69
|
)
|
(113
|
)
|
|||
Net
increase in cash and cash equivalents
|
3,837
|
1,269
|
|||||
Cash
and cash equivalents, beginning of period
|
8,412
|
3,705
|
|||||
Cash
and cash equivalents, end of period
|
$
|
12,249
|
$
|
4,974
|
Three months
ended June 30,
|
|
Six months
ended June 30,
|
|
||||||||||
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
||||
Numerator
- net loss
|
$
|
(1,639
|
)
|
$
|
(1,870
|
)
|
$
|
(5,088
|
)
|
$
|
(4,476
|
)
|
|
Denominator
- basic and diluted weighted
|
|||||||||||||
average
shares outstanding
|
14,830
|
11,489
|
13,521
|
11,484
|
|||||||||
Basic
and diluted net loss per share
|
$
|
(0.11
|
)
|
$
|
(0.16
|
)
|
$
|
(0.38
|
)
|
$
|
(0.39
|
)
|
Six
months
ended
June 30,
|
|||||||
2008
|
2007
|
||||||
Expected
life of option
|
4.0
years
|
4.0
years
|
|||||
Risk
free interest rate
|
2.83
|
%
|
4.75
|
%
|
|||
Expected
volatility
|
66
|
%
|
56
|
%
|
Three
months
ended
June 30,
|
Six
months
ended
June 30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Balance
at the beginning of the period
|
$
|
190
|
$
|
200
|
$
|
212
|
$
|
230
|
|||||
Accruals
for warranties issued during the period
|
85
|
136
|
138
|
169
|
|||||||||
Settlements
made during the period (in cash or in kind)
|
(85
|
)
|
(124
|
)
|
(160
|
)
|
(187
|
)
|
|||||
Balance
at the end of the period
|
$
|
190
|
$
|
212
|
$
|
190
|
$
|
212
|
June 30,
|
December 31,
|
||||||
2008
|
2007
|
||||||
Raw
materials
|
$
|
4,899
|
$
|
5,965
|
|||
Inventory
reserve
|
(776
|
)
|
(713
|
)
|
|||
Finished
goods
|
2,387
|
1,636
|
|||||
$
|
6,510
|
$
|
6,888
|
June 30,
|
December 31,
|
||||||
2008
|
2007
|
||||||
Equipment (useful
life 5 years)
|
$
|
8,827
|
$
|
8,654
|
|||
Tooling
(useful life 2-5 years)
|
2,752
|
2,751
|
|||||
Furniture
and fixtures (useful life 5 years)
|
226
|
225
|
|||||
Computer
software (useful life 3 years)
|
472
|
417
|
|||||
Leasehold
improvements (the shorter of useful or lease life)
|
1,726
|
1,576
|
|||||
14,003
|
13,623
|
||||||
Less
accumulated depreciation and amortization
|
(8,963
|
)
|
(8,307
|
)
|
|||
$
|
5,040
|
$
|
5,316
|
Through
June 30,
|
U.S.A.
|
|
Germany
|
|
Total
|
|||||
2009
|
$
|
1,474
|
$
|
228
|
$
|
1,702
|
||||
2010
|
—
|
63
|
63
|
|||||||
2011
|
—
|
68
|
68
|
|||||||
2012
|
—
|
70
|
70
|
|||||||
2013
|
—
|
74
|
74
|
|||||||
2014
and Thereafter
|
—
|
33
|
33
|
|||||||
Total
Commitment
|
$
|
1,474
|
$
|
536
|
$
|
2,010
|
|
Three months
ended June 30,
|
|
Six months
ended June 30,
|
|
|||||||||
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
||||
United
States Domestic
|
$
|
4,447
|
$
|
4,491
|
$
|
7,027
|
$
|
7,779
|
|||||
Other
Countries
|
3,169
|
2,213
|
5,426
|
3,934
|
|||||||||
$
|
7,616
|
$
|
6,704
|
$
|
12,453
|
$
|
11,713
|
|
Three
months
ended
June 30,
|
Six
months
ended
June 30,
|
|||||||||||
2008
|
|
2007
|
|
2008
|
|
2007
|
|||||||
Pool
Lighting
|
$
|
2,740
|
$
|
3,621
|
$
|
4,347
|
$
|
6,102
|
|||||
Commercial
Lighting
|
4,876
|
3,083
|
8,106
|
5,611
|
|||||||||
$
|
7,616
|
$
|
6,704
|
$
|
12,453
|
$
|
11,713
|
June 30,
|
December 31,
|
||||||
2008
|
2007
|
||||||
United
States Domestic
|
$
|
7,320
|
$
|
7,791
|
|||
Germany
|
1,903
|
1,773
|
|||||
Other
Countries
|
268
|
111
|
|||||
$
|
9,491
|
$
|
9,675
|
Three months
|
|
Six months
|
|
||||||||||
|
|
ended June 30,
|
|
ended June 30,
|
|
||||||||
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
||||
Gross
expenses for research and development
|
$
|
981
|
$
|
864
|
$
|
2,001
|
$
|
1,534
|
|||||
Deduct:
credits from DOE contracts
|
(297
|
)
|
(189
|
)
|
(400
|
)
|
(376
|
)
|
|||||
Net
research and development expense
|
$
|
684
|
$
|
675
|
$
|
1,601
|
$
|
1,158
|
(b)
|
Changes
in internal control over financial
reporting.
|
Exhibit
Number
|
Description
of Documents
|
|
31.1
|
Rule
13a-14(a) Certification of Chief Executive Officer.
|
|
31.2
|
Rule
13a-14(a) Certification of Chief Financial Officer.
|
|
32.1
|
Statement
of Chief Executive Officer under Section 906 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. §1350).
|
|
32.2
|
Statement
of Chief Financial Officer under Section 906 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. §1350).
|
ENERGY
FOCUS, INC.
|
||
Date:
July 31, 2008
|
By:
|
/s/
Joseph G. Kaveski
|
Joseph
G. Kaveski
|
||
Chief Executive Officer
|
||
By:
|
/s/
Nicholas G. Berchtold
|
|
Nicholas
G. Berchtold
|
||
Chief Financial Officer
|
||
(Principal Financial and Accounting Officer)
|
Exhibit
Number
|
Description
of Documents
|
|
31.1
|
Rule
13a-14(a) Certification of Chief Executive Officer.
|
|
31.2
|
Rule
13a-14(a) Certification of Chief Financial Officer.
|
|
32.1
|
Statement
of Chief Executive Officer under Section 906 of the Sarbanes Oxley
Act of 2002 (18 U.S.C. §1350).
|
|
32.2
|
Statement
of Chief Financial Officer under Section 906 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. §1350).
|