Energy Focus, Inc. Reports Second Quarter 2008 Results

14% year over year growth is driven by record EFO(R) sales

SOLON, Ohio, July 31 /PRNewswire-FirstCall/ -- Energy Focus, Inc.
(Nasdaq: EFOI) today announced financial results for the second quarter ended
June 30, 2008.
Financial and operating highlights include the following:
-- Revenues for the second quarter of 2008 were $7.6 million, an increase
of 14% over the sales of $6.7 million for the second quarter in 2007. The net
loss in the quarter was $1.6 million ($0.11 per share) compared to the net
loss of $1.9 million ($0.16 per share) in the second quarter of 2007.
-- The company finished the second quarter with a balance sheet showing
cash at $12.2 million and total shareholders' equity of $26.6 million, which
includes $9.3 million, received March 17, 2008 from an equity financing, net
of expenses. Cash utilization for the second quarter of 2008 was $2.6 million,
compared to $0.4 million for the second quarter of 2007.
-- Operating expenses decreased by 2%, $73,000, for the quarter compared
to the second quarter of 2007. The improvement was the result of actions taken
in 2007 having effect in 2008. Continued reductions in expenses are expected
in Q3 and Q4.
-- EFO(R) sales increased to $4.0 million for the second quarter of 2008,
compared to $1.5 million for the second quarter of 2007, nearly double the
previous record, exceeding 50% the company's quarterly sales.
-- The company exceeded its first half projections of approximately 40% of
EFO(R) sales expected for the year. The company is holding to a previously
forecast doubling of EFO(R) sales in 2008 as compared to 2007, with EFO(R)
sales accounting for about 50% of the company's revenue in 2008.
"I am encouraged by our clear momentum towards growth and profitability,"
said Joe Kaveski, CEO of Energy Focus, Inc. "Our year over year growth coupled
with our margin improvement and cost reduction initiatives are designed to
move the company towards being cash positive in 2009."
Mr. Kaveski continued, "The Company is very focused on accelerating its
cost reduction and cash conservation initiatives while increasing revenues
through our new strategic direction of being a turnkey energy solutions
provider."
Energy Focus, Inc. management will host a conference call on July 31, 2008
at 4:30 p.m. EDT (1:30 p.m. PDT) to review the Second Quarter 2008 Financial
Results and other corporate events, followed by a Q & A session. Dialing
1-888-542-9137 (US/Canada) or 1-706-758-4961 (International/Local) can access
the call. The conference ID number is 57749055. Participants are asked to call
the assigned number approximately 10 minutes before the conference call
begins. The conference call will also be available over the Internet at
http://www.energyfocusinc.com 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 7 days by dialing 1-800-642-1687 (US/Canada) or 1-706-645-9291
(international/local) and entering the following pass code: 57749055. Also, an
instant replay of the conference call will be available over the Internet at
http://www.energyfocusinc.com.
About Energy Focus
Energy Focus, Inc. is the leading supplier of energy solutions and the
world's only supplier of EFO(R), a lighting technology which is more efficient
than conventional electric lamps. Energy Focus products are designed,
manufactured and marketed for the commercial lighting, sign and swimming pool,
and spa markets. Energy Focus solutions provides energy savings, aesthetic,
safety and maintenance cost benefits over conventional lighting. Customers
include supermarket chains, retail stores, museums, theme parks and casinos,
hotels, swimming pool builders, spa manufacturers and many others. Company
headquarters are located at 32000 Aurora Rd., Solon, OH 44139. The company has
additional offices in Pleasanton, CA, United Kingdom and Germany. For more
information, see http://www.energyfocusinc.com.
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 the business
outlook for 2008 and thereafter the potential growth of EFO sales based upon
its energy savings over conventional lighting. Investors are cautioned that
all forward-looking statements involve risks and uncertainties. Actual results
may differ materially from the results predicted. Risk factors that could
affect the Company's future include, but are not limited to, a slowing of the
U.S. and world economy and its effects on Energy Focus' markets, failure to
develop marketable products from new technologies, failure of EFO or other new
products to meet performance expectations, higher than anticipated expenses,
unanticipated costs of integrating acquisitions into the Energy Focus
operation, delays in manufacturing of products, increased competition, other
adverse sales and distribution factors and greater than anticipated costs
and/or warranty expenses. For more information about potential factors which
could affect Energy Focus financial results, please refer to the Company's SEC
reports, including its Annual Reports 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)

June 30, December 31,
2008 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

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

Three months Six months
ended June 30, 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)

Benefit from (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

SOURCE Energy Focus, Inc.

Joseph Kaveski, CEO, or John Davenport, President, or Eric Hilliard, COO, or
Nick Berchtold, CFO, all of Energy Focus, Inc., +1-440-715-1300; or Investor
Relations, John Baldissera of BPC Financial Marketing, 1-800-368-1217, for
Energy Focus, Inc.