ENERGY FOCUS, INC/DE Q4 FY2021 earnings call

• Steven Socolof became interim CEO, focusing on supporting the team, executing initiatives, ensuring disciplines, and cash management. - Reorganized the team, realigned business functions. - Recruited new board members Jeff Parker and Brian Lagarto. - Greg Galluccio discussed new products: next-gen red cap emergency lighting, focused power line control technology (won top product award), and nUVo UVC disinfection solutions (traveler and tower products launched).

For the fourth quarter of 2021, net sales were $2.4 million, down 35.8% from Q4 2020. Commercial products sales were $1.2 million (48.6% of total net sales) flat compared to Q4 2020. Military products sales decreased due to government funding delays. For the full year 2021, net sales were $9.9 million. Commercial products net sales were $4.7 million (47.5% of total), military and maritime products were $5.2 million (52.5% of total). Gross profit in Q4 2021 was $0.2 million (7.9% margin), down from $1.4 million (38.3% margin) in Q4 2020. Full year 2021 gross profit was $1.7 million (17.2% of net sales).

• Expect to grow revenue and see results in next few quarters. - Anticipate meaningful contribution in the second half of 2021. - If quarterly sales levels exceed $4 million, overall gross margins expected to be in mid-twenties, approaching high twenties with new products and initiatives.

• Market challenges and slow development of new product portfolio in prior years. - Supply chain issues impacting product launch and go-to-market plans. - Impact of COVID-19 on commercial projects' timing and pace. - Delays in military funding availability affecting military product sales.

Q: What's different in accelerating commercial efforts?

A: Restructured organization, realigned engineering/operations, changed supply base work; launching new red cap emergency lighting and in focus power line control products. Greg added pull-through on standard lighting products with improved product management.

Q: Status of ABR UV product?

A: Shelved as first samples didn't meet expectations; prioritizing other products like nUVo traveler and tower.

Q: Status of military contracts?

A: Military business is made-to-order; not seen orders released yet, but continue to bid on future opportunities