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<SEC-DOCUMENT>0001299933-09-003443.txt : 20090819
<SEC-HEADER>0001299933-09-003443.hdr.sgml : 20090819
<ACCEPTANCE-DATETIME>20090819171638
ACCESSION NUMBER:		0001299933-09-003443
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20090813
ITEM INFORMATION:		Results of Operations and Financial Condition
FILED AS OF DATE:		20090819
DATE AS OF CHANGE:		20090819

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ENERGY FOCUS, INC/DE
		CENTRAL INDEX KEY:			0000924168
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTRIC LIGHTING & WIRING EQUIPMENT [3640]
		IRS NUMBER:				943021850
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-24230
		FILM NUMBER:		091024911

	BUSINESS ADDRESS:	
		STREET 1:		32000 AURORA ROAD
		CITY:			SOLON
		STATE:			OH
		ZIP:			44139
		BUSINESS PHONE:		5104900719

	MAIL ADDRESS:	
		STREET 1:		32000 AURORA ROAD
		CITY:			SOLON
		STATE:			OH
		ZIP:			44139

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	FIBERSTARS INC /CA/
		DATE OF NAME CHANGE:	19940527
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>htm_34026.htm
<DESCRIPTION>LIVE FILING
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<TITLE> Energy Focus, Inc. (Form: 8-K) </TITLE>
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		UNITED STATES<BR>
	SECURITIES AND EXCHANGE COMMISSION
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	WASHINGTON, D.C. 20549
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	FORM 8-K
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	CURRENT REPORT
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	Pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934
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	Date of Report (Date of Earliest Event Reported):
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	&nbsp;
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	August 13, 2009
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	Energy Focus, Inc.
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<BR>__________________________________________<BR>
	(Exact name of registrant as specified in its charter)
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	Delaware
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	0-24230
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	94-3021850
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_____________________<BR>
	(State or other jurisdiction
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	(Commission
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	of incorporation)
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	File Number)
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	Identification No.)
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	32000 Aurora Road, Solon, Ohio
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	&nbsp;
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	44139
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_________________________________<BR>
	(Address of principal executive offices)
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___________<BR>
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	Registrant&#146;s telephone number, including area code:
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	440-715-1300
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	Not Applicable
<BR>______________________________________________<BR>
	Former name or former address, if changed since last report
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	&nbsp;
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<!-- CoverPageRegistrant END --><P><FONT SIZE="2">
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:</FONT>
</P>
<P><FONT SIZE="2">
[&nbsp;&nbsp;]&nbsp;&nbsp;Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)<br>
[&nbsp;&nbsp;]&nbsp;&nbsp;Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)<br>
[&nbsp;&nbsp;]&nbsp;&nbsp;Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))<br>
[&nbsp;&nbsp;]&nbsp;&nbsp;Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))<br>
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<B>
	Item 2.02 Results of Operations and Financial Condition.
</B>
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On August 13, 2009, Energy Focus, Inc. issued a press release announcing its financial results for the quarter ended June 30, 2009, and hosted an investor call to discuss those results.<br><br>A copy of the press release is furnished with this Report as Exhibit 99.1 and is incorporated in this Report by reference.  A copy of the written transcript of the investor conference call is also furnished with this Report as Exhibit 99.2 and is incorporated in this Report by reference.<br><br>The information in this Report is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that Section.  The information in this Report shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933.<br>
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	SIGNATURES
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	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 hereunto duly authorized.
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	Energy Focus, Inc.
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<I>
	August 19, 2009
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<I>
	By:
</I>
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<I>
	Joseph G. Kaveski
</I>
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<I>
	Name: Joseph G. Kaveski
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	Title: Chief Executive Officer
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	Exhibit&nbsp;Index
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	Exhibit No.
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	99.1
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Press Release dated August 13, 2009 announcing financial results for the quarter ended June 30, 2009.
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	99.2
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	&nbsp;
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Transcript of Investor Conference Call held August 13, 2009 discussing financial results for the quarter ended June 30, 2009.
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<BODY style="font-family: 'Times New Roman',Times,serif">


<P align="center" style="font-size: 10pt"><FONT style="font-size: 14pt"><B>ENERGY FOCUS, INC. REPORTS SECOND QUARTER 2009 RESULTS</B></FONT>



<P align="left" style="font-size: 14pt"><FONT style="font-size: 12pt">SOLON, Ohio, August&nbsp;13, 2009 &#151; Energy Focus, Inc. (NASDAQ: EFOI) today announced financial
results for the second quarter ended June&nbsp;30, 2009.
<BR>
Financial and operating highlights include the following:
</FONT>

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    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Net sales at $3.8&nbsp;million for the second quarter 2009 increased 36.0%, with respect to
first quarter 2009 sales of $2.8&nbsp;million. However, this was a decrease of 49.9% versus
the second quarter in 2008.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 12pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Cash utilization was markedly reduced during the second quarter of 2009 to $1.2&nbsp;million,
compared to $3.8&nbsp;million for the first quarter of 2009 and $2.6&nbsp;million for the second
quarter of 2008. The company finished the second quarter with a balance sheet showing cash
of $5.6&nbsp;million, and total shareholders&#146; equity of $11.9&nbsp;million. .</TD>
</TR>

</TABLE>


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    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The net loss in the quarter was $2.3&nbsp;million ($0.16 per share) compared to the net loss
of 3.0&nbsp;million ($0.21 per share) in the first quarter of 2009, an improvement of $0.7
million.</TD>
</TR>

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    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Operating expenses were reduced $229,000 (net of a non-cash charge for impairment of
fixed assets of $165,000) for the quarter compared to the first quarter of 2009 and $1.0
million or 24.0% compared to the second quarter of 2008. Continued reductions in expenses
are expected in Q3 and Q4</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:2%; font-size: 12pt">&#148;While the business environment remains extremely challenging and our sales are lower when
compared to 2008, I am nonetheless encouraged to see sales improving quarter over quarter,&#148; said
Joe Kaveski, CEO of Energy Focus, Inc. &#147;I would also like to report that we are making good
progress towards accelerating our transformation out of the residential and new construction
markets and into the existing building market. The company has retained a broker to
aggressively market its legacy businesses. In addition, the company continues to secure existing
building energy solutions projects in the private sector and is intensifying its efforts to
develop sales partnerships to take advantage of stimulus money available for public sector
buildings. In particular, we have received a great deal of interest from the introduction of
our new line of LED based general illumination parking garage fixtures which are positioned to
capitalize on projects funded with stimulus money. Furthermore, I am very excited that the US
Government has recently awarded Energy Focus a $1.4&nbsp;million contract to supply the next
generation of LED based lighting for US Navy ships. Finally, the company continues to be
focused on improving its financial position both by aggressively reducing costs as well as by
exploring external financing alternatives.&#148;


<P align="left" style="font-size: 12pt">Energy Focus, Inc. management will host a conference call on Thursday, August&nbsp;13th at 4:30 p.m. EDT
(1:30 p.m. PDT) to review the second quarter, 2009 financial results and other corporate events,
followed by a Q & A session. Dialing 1-888-417-2254 (US/Canada)


<P align="left" style="font-size: 12pt">or 1-719-457-2639 (International/Local) can access the call. The conference ID number is 6204981.
Participants are asked to call the assigned number approximately 10 minutes before the conference
call begins.


<P align="left" style="font-size: 12pt">The conference call will also be available over the Internet at 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&nbsp;days by dialing 888-203-1112 (US/Canada) or 719-457-0820 (international/local) and
entering the following pass code: 6204981. Also, an instant replay of the conference call will be
available over the Internet at http://www.energyfocusinc.com on August&nbsp;13, 2009 and will remain
available for one year in the Investor Relations area of the site.


<P align="left" style="font-size: 12pt">About Energy Focus
<BR>
Energy Focus, Inc. is a leading supplier of energy solutions and the world&#146;s only supplier of EFO&#174;,
a lighting technology that is more efficient than conventional electric lamps. Energy Focus
solutions provides energy savings, aesthetic, safety and maintenance cost benefits over
conventional lighting. Energy Focus also has a long standing relationship with the US Government.&nbsp;
Energy Focus&#146; numerous Research and Development projects for the DOE and DARPA include creating
energy efficient LED lighting systems for the US Navy fleet and the next generation Very High
Efficiency Solar Cell.&nbsp;Customers include supermarket chains, the US government, retail stores,
museums, theme parks and casinos, hotels, swimming pool builders and many others. Company
headquarters are located at 32000 Aurora Rd., Solon, OH 44139. The company has additional offices
in Pleasanton, CA, the United Kingdom, and Germany. For more information, see
<U>http://www.energyfocusinc.com</U>.
<BR>
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 2009 and thereafter. 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&#146;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.


<P align="left" style="font-size: 12pt">Media Contact:


<P align="left" style="font-size: 12pt; text-indent: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Energy Focus, Inc., Public Relations Office


<P align="left" style="font-size: 12pt; text-indent: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (440)&nbsp;715-1295


<P align="left" style="font-size: 12pt; text-indent: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>pr@energyfocusinc.com</U>


<P align="left" style="font-size: 12pt">Investor Contact:


<P align="left" style="font-size: 12pt; text-indent: 4%">CleanTech IR, Inc.



<P align="left" style="margin-left:4%; font-size: 12pt">310-541-6824
<BR>
<U>btanous@cleantech-ir.com</U>


<P align="center" style="font-size: 10pt; display: none">1
<!-- PAGEBREAK -->

<P align="center" style="font-size: 12pt"><FONT style="font-size: 10pt"><B>ENERGY FOCUS, INC.</B></FONT>



<P align="center" style="font-size: 10pt"><B>CONDENSED<BR>
CONSOLIDATED BALANCE SHEETS</B><BR>
<B><I>(amounts in thousands)</I></B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="67%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center"><B>(unaudited)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Current assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5,613</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">10,568</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Accounts receivable trade, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,903</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,668</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Inventories, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,928</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,539</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Prepaid and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">639</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,744</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,414</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Fixed assets, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,096</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">16,428</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">23,652</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><B>LIABILITIES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Current liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,222</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,767</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Accrued liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,621</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Deferred revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">191</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Credit line borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,776</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,904</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Current portion of long-term borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,537</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Other deferred liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Long-term borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">245</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,538</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,863</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><B>SHAREHOLDERS&#146; EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><I>Preferred stock, par value $0.0001 per share:</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Authorized: 2,000,000 shares in 2009 and 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Issued and outstanding: no shares in 2009 and 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><I>Common stock, par value $0.0001 per share:</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Authorized: 30,000,000 shares in 2009 and 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Issued and outstanding:15,079,000 in 2009 and
14,835,000 in 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66,238</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,865</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Accumulated other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">369</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">251</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Accumulated deficit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(54,718</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(49,328</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,890</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,789</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total liabilities and shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">16,428</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">23,652</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt; display: none">2
<!-- PAGEBREAK -->


<P align="center" style="font-size: 10pt"><B>ENERGY FOCUS, INC.<BR>
CONDENSED<BR>
CONSOLIDATED STATEMENTS OF OPERATIONS</B><BR>
<B><I>(amounts in thousands except per share amounts)</I></B><BR>
<B>(unaudited)</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>Three months</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>Six months</B></TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>ended June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>ended June 30,</B></TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7,616</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">12,453</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Cost of sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,016</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,766</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">799</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,117</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,687</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">192</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">483</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">493</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Sales and marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,712</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,530</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,690</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,202</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,426</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,552</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Loss on impairment of assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">165</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">165</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:40px; text-indent:-10px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,270</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,086</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,735</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:50px; text-indent:-10px">Loss from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,471</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,643</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,487</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,048</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Other income (expense):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Other income/(expense)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">146</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">147</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Interest income/ (expense)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(24</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(50</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:50px; text-indent:-10px">Loss before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,349</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,599</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,390</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,008</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Benefit from (provision for) income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(40</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(80</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:50px; text-indent:-10px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(2,349</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(1,639</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(5,390</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(5,088</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
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    <TD align="right">&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Net loss per share &#150; basic and diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.16</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.11</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.36</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.38</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
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    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
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    <TD align="right">&nbsp;</TD>
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    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Shares used in computing net loss per share &#150;
basic and diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,915</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,877</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,521</TD>
    <TD>&nbsp;</TD>
</TR>
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    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
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<P align="center" style="font-size: 10pt"><FONT style="font-size: 12pt"><B>ENERGY FOCUS, INC.</B></FONT>



<P align="center" style="font-size: 12pt"><B>Moderator: Joe Kaveski<BR>
August&nbsp;13, 2009<BR>
3:30 pm CT</B>



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    <TD><FONT style="font-size: 10pt">Operator: Good day, and welcome to the Energy Focus Second Quarter Earnings Release
conference call. Today&#146;s conference is being recorded.</FONT></TD>
</TR>

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<P align="left" style="margin-left:4%; font-size: 10pt">At this time, I would like to turn the conference over to Mr.&nbsp;Joe Kaveski, Chief Executive
Officer. Please precede, sir.


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    <TD>Joe Kaveski: Thank you, (Rica) and thanks to our shareholders and guests joining us today for
our second-quarter earnings call.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:4%; font-size: 10pt">We have a lot to share with you today, but before we begin, I&#146;d like to turn over the call
to Nick Berchtold, our chief financial officer, for the reading of our Safe Harbor
Statement. Nick?


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    <TD>Nick Berchtold: Thanks, Joe. Today&#146;s discussion may contain some statements that may be
considered forward-looking in nature. These forward-looking statements may include comments
relating to 2009 financial projections or other comments relating to the company&#146;s strategic
plans, objectives, expectations or intentions. These matters involve risks and uncertainties,
and actual results may differ materially from those projected or implied in the
forward-looking statements. Factors that could cause actual results to materially differ from
the forward-looking statements in this presentation are set forth in our most recent annual
report on form 10-K for 2008 and our second-quarter 2009 form 10-Q.</TD>
</TR>

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<P align="left" style="margin-left:4%; font-size: 10pt">And now, Joe, I&#146;ll turn it back to you.


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    <TD>Joe Kaveski: Thanks, Nick. Today, I&#146;d just like to make a few brief comments concerning our
second-quarter results and then provide a brief progress update on our announcement earlier
this year to accelerate our transformation into becoming an integrating lighting energy
systems and solutions provider focused keenly on the existing building market. Following my
comments, I&#146;m going to turn the call back over to Nick Berchtold, our Chief Financial Officer,
to provide some depth and clarity around our financial results, and then we would be delighted
to answer questions from our shareholders today.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:4%; font-size: 10pt">So to begin, this is a challenging time for Energy Focus, as I remain disappointed that this
year&#146;s sales were significantly lower than the same period last year. Considering that our
businesses have been historically tied to the private sector, the residential housing market
and the commercial construction industry, I guess this is to be expected. Recently, the
chairman of Philips North American Lighting Business said that Philips doesn&#146;t see any
meaningful improvement until the summer of 2010 and that the new construction industry is
practically gone. In general, I concur. Energy Focus has experienced project delays, and
some of our commercial customers continue to hold onto their dollars very tightly.



<P align="left" style="margin-left:4%; font-size: 10pt">However, I do believe we saw some encouraging events that occurred during our second quarter
and that are worth mentioning. Specifically, our second-quarter sales increased 36% over
our first quarter, indicating that our businesses tied to the residential housing and
construction industries appear to be stabilizing, and the market for the new lighting energy
solutions business looks even better, considering that large energy services companies,
including Honeywell, Siemens, Johnson Controls, who are focused on existing building energy
retrofits are now beginning to receive contracts that were delayed due to the potential of
stimulus money and that financing is becoming available again through banks and leasing
companies to fund energy efficiency projects.



<P align="left" style="margin-left:4%; font-size: 10pt">Now let me say a few words on the progress to accelerate the transformation into a
fully-integrated lighting energy systems and solutions provider. As it relates to our
existing building energy solutions focus, we continue to secure solutions projects and make
progress in the refrigerated warehouse industry as we secure projects from new customers and
add additional facilities from existing customers. Second, we have made progress in
nurturing key alliances with partnerships with ESCOs and lighting retrofit companies. One
example is with a new lighting retrofit company we are jointly developing proposals in the
public sector using Energy Focus&#146; technologies to create a competitive advantage.



<P align="left" style="margin-left:4%; font-size: 10pt">As for our progress in producing mainstream LED-based products versus specialty lighting
products for existing buildings, with the addition of the LED garage parking fixture family
that we introduced in July, we now have four product families of advanced LED lighting
solutions. These LED parking garage fixtures represent a very low-cost, yet very
high-performance alternative to two, three and four-lamp fluorescent fixtures that are
designed for cold and wet environments.



<P align="left" style="margin-left:4%; font-size: 10pt">Our 10-year dock lights continue to sell very well to the transportation industry and are
now penetrating into the large retail chains. Our new family of LED landscape lighting
fixtures is beginning to appear on private and public sector projects and buildings and are
being proposed on additional public sector projects by our partners, and we are now
proposing our new LED and CMH track light family that are designed to replace MR16s and
75-watt halogen bulbs. These luminaries offer incredible visual performance with typically
a 2-year simple payback in museum and retail application. What&#146;s important here is that all
of these LED fixture families are specifically designed for the existing building market and
offer incredible performance with great return on investment. They also easily work in new
construction applications.



<P align="left" style="margin-left:4%; font-size: 10pt">As for our progress in developing and deploying advanced lighting for the military, our $1.4
million (NAVSEA)&nbsp;contract announced 2&nbsp;weeks ago is very different from other contracts that
we have previously secured from the U.S. Government. This agreement calls for the U.S. Navy
to actually buy our LED lights. This contract is American Recovery and Reinvestment Act
complaint such that it can be used as a vehicle for stimulus money to fund additional energy
improvement work with the Navy. And just this afternoon I signed another $500,000 contract
from the Department of Defense to develop and provide more advanced LED lighting for the
Navy. You will see the details in the press release that we will issue early next week.



<P align="left" style="margin-left:4%; font-size: 10pt">Now let me take a moment to discuss what we are doing to allow Energy Focus&#146; orderly
transition to becoming a solutions business. We continue to work to divest one or more of
our legacy businesses. We are very serious about this, and we&#146;ve engaged a seasoned
business broker to assist in the marketing and sale of these businesses. We also continue
to evaluate additional financing. This includes loans from traditional and nontraditional
financial institutions and/or possibly a modest capital raise via rights offering. And of
course, we continue to make good progress towards our 30% year-over-year cost reduction
target. Today, our costs have been reduced by 24% compared to last year and will continue
to decline further.



<P align="left" style="margin-left:4%; font-size: 10pt">Since our last call, we have implemented numerous cost-reduction actions, including the
transfer of additional products to our Mexican facility, reduced management salaries,
consolidation of our European operations to the U.K., which allowed us to sell a building in
Germany, partnering with a leading offshore company to provide the manufacturing of some of
our LED products, and further reduced administrative and support personnel.



<P align="left" style="margin-left:4%; font-size: 10pt">So before I turn the call over to Nick, I&#146;d like to summarize my comments by saying again
that this is a very difficult business environment for Energy Focus. We are seeing
improvements especially in the existing building markets, which is exactly where our focus
is. We continue to aggressively reduce cost, and that personally I remain optimistic about
our ability to ride through the economic downturn and grow in 2010.



<P align="left" style="margin-left:4%; font-size: 10pt">So at this time, I&#146;d like to turn over the call to Nick Berchtold, our Chief Financial
Officer, to discuss our financials in more detail. Nick?


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    <TD>Nick Berchtold: Thanks, Joe. Again, I&#146;d like to thank you again for joining our conference call
today. Now I&#146;d like to provide you with an overview of results obtained during the second
quarter for 2009. Specifically, I&#146;ll be reviewing consolidated second-quarter revenues, gross
profits, operating expenses, net income and earnings per share, and lastly we&#146;ll focus on
selected working capital items.</TD>
</TR>

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<P align="left" style="margin-left:4%; font-size: 10pt">So first, let&#146;s discuss second-quarter revenues. As Joe has already discussed in his
overview, the second-quarter financial results continue to reflect a challenging environment
which confronts both our company as well as the entire global economy. Second-quarter
revenues were $3.8&nbsp;million, which represented, unfortunately, a 49.9% decline; in revenues
from the second-quarter 2008 revenues of $7.6&nbsp;million. Second quarter 2008 revenues were,
however, favorably impacted by over $500,000 in VHESC-related solar consortium revenues as
well as over $1.1&nbsp;million in Middle East destined revenues generated by our European
affiliates.



<P align="left" style="margin-left:4%; font-size: 10pt">While second-quarter 2009 revenues were disappointing on a year-over-year basis, again, the
revenues for second quarter did improve 36% over the first-quarter 2009 revenues of $2.8
million despite continued softness in the U.S. pool and European lighting markets. Our
sales leadership led by Steve Gasperson, Michael Morrison and Gerrit Reinders, as well as
fully supported by the entire organization, are laser-focused on providing our directors,
our shareholders and our company quarter-over-quarter revenue growth and recovery.



<P align="left" style="margin-left:4%; font-size: 10pt">Further, I believe it important to also advise you that during the second quarter 2009,
revenues were adversely impacted by the company&#146;s completion of the reorganization of its
German subsidiary. While second-quarter revenues for this subsidiary declined $457,000, or
48% from 2008 levels, this reorganization has most importantly re-established the overhead
cost footprint necessary to achieve cash flow neutrality while also providing a definable
path to business profitability in the near term future. Currently reported financial
results from this subsidiary supports that this reorganization has, in fact, worked and was
absolutely vital to sustaining the ongoing solvency of this business unit.



<P align="left" style="margin-left:4%; font-size: 10pt">So now I&#146;d like to discuss gross profits. Second-quarter gross profits were $799,000, or
20.9% of revenues, versus $2.4&nbsp;million, or 32.1% of revenues for the second quarter 2008
period. The second quarter 2009 gross profit result does include a non-cash inventory
impairment charge of $223,000, resulting from the revaluation of inventory at our German
subsidiary created by the previously discussed reorganization. Excluding this non-cash
charge, the second-quarter 2009 gross profit increased to 26.8%.



<P align="left" style="margin-left:4%; font-size: 10pt">As has been previously stated by Joe and myself, the company continues to aggressively
address its fixed overhead footprints as it aligns the structure of the business to reflect
the current global economic climate. These efforts include, again, materials resourcing,
manufacturing relocation and consolidation, part number rationalization and numerous
additional fixed-overhead cost reductions.



<P align="left" style="margin-left:4%; font-size: 10pt">So now let me talk a few minutes about operating expenses. Second quarter 2009 operating
expenses decreased 20% versus the comparable period prior year. Specifically,
second-quarter 2009 operating expenses decreased to $3.3&nbsp;million versus the second-quarter
2008 operating expense figure of $4&nbsp;million. 2009 results do include an additional $165,000
non-cash impairment charge recorded on the sale of certain German subsidiary fixed assets.
Excluding this non-cash impairment charge, operating expenses improved 24% versus prior
year. Further, second quarter 2009 operating expenses decreased an additional 2% versus
first quarter 2009 operating expenses of $3.3&nbsp;million.



<P align="left" style="margin-left:4%; font-size: 10pt">Net operating expense reductions were the result of significant reductions in sales and
marketing expenses, including reduced commissions expense associated with lower volumes
combined with the reorganization of our German subsidiary. Total cost reductions from these
activities approximate $1.1&nbsp;million, and secondly, the company did unfortunately have to
incur additional headcount reductions which resulted in approximately $540,000 worth of
savings. As Joe mentioned, the company also enacted a voluntary payroll reduction program
for its senior officers and selected key executives for the remainder of 2009, which, when
complete, will provide approximately $200,000 of additional cash flow savings.



<P align="left" style="margin-left:4%; font-size: 10pt">In summary, regarding operating expenses, the company continues to aggressively manage all
operating expenses as it executes its transition into a turnkey lighting energy solutions
company.



<P align="left" style="margin-left:4%; font-size: 10pt">And now I&#146;d like to review net income and earnings per share. For the 3&nbsp;months ended June
30, 2009, the net loss was $2.3&nbsp;million, which equates to 16-cent per share loss.
Comparable period 2008 loss was $1.6&nbsp;million, which equates to an 11-cents per share loss.
However, I think the important thing to note is on the 6&nbsp;months YTD net loss figure. On a
revenue stream of $6.6&nbsp;million for the first 6&nbsp;months of 2009, the net loss was $5.3
million, which equates to a 36-cent per share loss compared to first-half 2008 revenue
stream of $12.4&nbsp;million, so almost double, resulting in a net loss of $5&nbsp;million or 38 cents
per share. So these numbers reflect the fact that the company&#146;s cost reduction efforts are,
in fact, making a difference in this very difficult and challenging economy.



<P align="left" style="margin-left:4%; font-size: 10pt">So now let&#146;s review selected working capital items as reflected on the balance sheet. I am
pleased to report that the company continues to make progress in its cash position resulting
from its intense focus on cash and working capital management. First, cash and cash
equivalents held decreased to $5.6&nbsp;million. However, second-quarter usage of cash decreased
to $1.2&nbsp;million. This represents 48% of the second-quarter 2008 usage of $2.5&nbsp;million and
32% of the first quarter 2009 usage of $3.8&nbsp;million.



<P align="left" style="margin-left:4%; font-size: 10pt">So next, let&#146;s discuss accounts receivable. The company continued to improve accounts
receivable velocity versus both second quarter 2008 and first quarter 2009 results.
Accounts receivable velocity improved 16.3% to 44.9&nbsp;days at the end of the second quarter
2009 versus 53.7&nbsp;days at the end of the second quarter 2008. Similarly, accounts receivable
velocity improved 35.8% versus first quarter 2009 accounts receivable velocity as a result
of the company&#146;s historical pool and spa early buy programs coming to a seasonal end.



<P align="left" style="margin-left:4%; font-size: 10pt">Contrary to what typically happens in a very difficult economic environment, all of our
operating units recorded improvements in accounts receivable velocity versus second quarter
2008 as a result of the focus on cash management and its emphasis continued to permeate
throughout our organization.



<P align="left" style="margin-left:4%; font-size: 10pt">So next, I&#146;d like to talk to you about inventory. Inventory on hand (net of reserves)
decreased to $4.9&nbsp;million at June&nbsp;30, 2009 versus $6.5&nbsp;million at the end of the June&nbsp;2008.
Excluding various inventory impairment charges recorded in December&nbsp;2008 and June&nbsp;2009, the
reduction in gross inventory was still $288,000, or 4.4% from June&nbsp;30, 2008 levels. It&#146;s
important to note that while this decrease is small, inventory levels in LED dock lights and
landscape lights among other product lines did remain stable or increase as the company
continues to receive increased sales orders for these parts, which are deliverable in the
second half of the year.



<P align="left" style="margin-left:4%; font-size: 10pt">Most importantly, the company continues to intensely manage inventory purchases at all
levels, and I expect to be able to continue to report further improvements in inventory
velocity as we proceed throughout the remainder of 2009.



<P align="left" style="margin-left:4%; font-size: 10pt">From an accounts payable perspective, our trade payables declined by $1.5&nbsp;million, or 55%
from December&nbsp;31, 2008 levels and by $268,000 or 18% from March&nbsp;31, 2009 levels. Total
trade payables as of June&nbsp;30, 2009 was $1.2&nbsp;million.



<P align="left" style="margin-left:4%; font-size: 10pt">Next, I&#146;d like to talk briefly about external debt. During the second quarter of 2009, the
company reduced its third-party debt by an additional $202,000 from its March&nbsp;31 levels and
a total of $357,000 from its December&nbsp;31, 2008 levels. Total outstanding third-party debt
as of June&nbsp;30 was $1.8&nbsp;million. The primary contribution to this reduction was the
company&#146;s 100% repayment of the remaining outstanding loan balance on the German subsidiary
facility mortgage, which was paid using the proceeds from the sale of that facility.



<P align="left" style="margin-left:4%; font-size: 10pt">And lastly, I&#146;d like to talk briefly about long-term banking relationships. The company is
actively engaged in discussions with alternative potential financing sources to replace the
existing line of credit with Silicon Valley Bank, who is the company&#146;s current commercial
lender, and we are currently reviewing various credit agreement proposals that we have
received from these various financial institutions.



<P align="left" style="margin-left:4%; font-size: 10pt">So in summary, the second-quarter results showed consistent quarter-over-quarter
improvements in both working capital and operating expense performance despite significant
reorganizational charges and a very sluggish global economic condition. I am confident that
we will continue to experience improvement in these areas. The laser focus on cash
management at all levels of the organization continues and remains the cornerstone to the
successful transition of our company into a high-technology turnkey lighting energy
solutions business.



<P align="left" style="margin-left:4%; font-size: 10pt">So in closing, I&#146;d like to thank you for the opportunity to speak with you today. And I
would now like to turn the conference call back to our operator so that we can have our
question-and-answer period.


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    <TD>Operator: Thank you, sir. The question-and-answer will be conducted electronically. If you would
like to ask a question, please do so by pressing the star key followed by the digit 1 on your
touchtone telephone. If you are using a speakerphone, please make sure your mute function is
turned off to allow your signal to reach our equipment. Once again if you would like to ask a
question, please do so by pressing the star key followed by the digit 1 on your touchtone
telephone.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:4%; font-size: 10pt">And we&#146;ll take our first question from Robert Smith with the Center for Performance
Investing.


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    <TD>Robert Smith: Hi. Good afternoon.</TD>
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    <TD>Joe Kaveski: Good afternoon, Robert.</TD>
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    <TD>Robert Smith: So guys, what &#150; are you seeing anything from the &#150; any government programs about the
economy stimulus program?</TD>
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    <TD>Joe Kaveski: They are beginning to take hold in the marketplace, and that is reflected in my
comments relative to the energy services companies. It appears as though many of the public
sector state, local and federal agencies that had energy projects that were being queued up
for latter part of last year and earlier this year basically went on pause for the moment to
see if they couldn&#146;t benefit from applying stimulus funding to those projects. It took a
little bit, although it was relatively swift for government, to determine the kind of rules of
the engagement and to determine how to tap into that stimulus money that was made available to
those agencies, and you know now basically those projects are beginning to be let here close
to home.</TD>
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<P align="left" style="margin-left:4%; font-size: 10pt">You know we just recently received the contract from (NAVSEA), where one of the important
requirements was that it be American Recovery and Reinvestment Act compliant. And although
I don&#146;t know the specific hoops that the contract administrators had to go through to be
able to make it that way, their standard Navy contract was very important to them because it
does allow for additional work to be performed utilizing additional stimulus money. So it&#146;s
just an example of how that project perhaps got slowed down because they wanted to be able
to tap into that stimulus money.


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    <TD>Robert Smith: Joe, when you say that, are there any changes of note since I last saw you in
Lightfair in New York? I mean you kind of laid out what the possibilities were for the next
year or 2, and you were very, let&#146;s say optimistic. So...</TD>
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    <TD>Joe Kaveski: I remain optimistic. You know that where we are headed is clearly where the market
is. It is in existing buildings, it is in providing energy solutions. Lighting is one of the
greatest opportunities that exist for energy efficiency, and so we have the technologies right
now that we are developing and retooling towards that existing building market, and you know
we have placed a great emphasis on developing partnerships too with the energy services
companies and the lighting retrofit companies that are really the ones that are the vehicle to
a lot of government energy efficiency projects. And so, yes, I remain optimistic.</TD>
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    <TD>Robert Smith: Do you have a big enough footprint to participate in the bigger projects?</TD>
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    <TD>Joe Kaveski: Well, therein lies, again, the strategy of our strategic alliances with those
lighting retrofit companies and energy services companies. They do have the sales bandwidth
in the footprint. In terms of our ability to provide product to them, we have excess capacity
that will allow us to quickly and efficiently support that. So I&#146;m not concerned from that
perspective.</TD>
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    <TD>Robert Smith: How could the latest &#150; how big could the latest government development contract in
LED for the ships be? I mean ...</TD>
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    <TD>Joe Kaveski: Well, the one that we were just awarded was $500,000.</TD>
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    <TD>John Davenport: That&#146;s this afternoon.</TD>
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    <TD>Joe Kaveski: That&#146;s this afternoon.</TD>
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    <TD>Robert Smith: Yes, OK. The prior one, I guess, was $1.4&nbsp;million?</TD>
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    <TD>Joe Kaveski: Right.</TD>
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    <TD>Robert Smith: So how big can these guys become? I mean ...</TD>
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    <TD>Joe Kaveski: I have with us Roger Buelow, our Chief Technology Officer, who interfaces very
heavily with the government, and Roger, maybe you can offer some comments on that.</TD>
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    <TD>Roger Buelow: Yes. So how about the (NAVSEA)&nbsp;contract for $1.4&nbsp;million, Joe mentioned that
included both development and also sales of lights to be installed in submarines. A lot of
those products, in addition to be useful on submarines, especially one in particular, are also
very useful throughout the fleet. So as an example, going on to one aircraft carrier, it
would be about $1.5&nbsp;million in sales, and across the fleet, for just for that one product,
there is a market size which is on the order of $40&nbsp;million. And of course that&#146;s one
product. We&#146;re developing a total of four (products)&nbsp;under the (NAVSEA)&nbsp;contract, and we have
several others from previous contracts and also this new one Joe just mentioned that we signed
today.</TD>
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    <TD>Robert Smith: Yes, and what has to happen I mean as far as the different phases and you know the
timelines?</TD>
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    <TD>Roger Buelow: The timelines for getting additional sales with the military?</TD>
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    <TD>Robert Smith: Yes, for the &#150; for this specific ship &#150; well, when you say $40&nbsp;million, I mean what
kind of phased development would you have to have &#150; would have to be seen and what kind of
timeline?</TD>
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    <TD>Joe Kaveski: Yes, this is a very different deal, Robert. These are actually products. So when
these products are delivered to the Virginia class of submarines, they will be ordered by
somebody who&#146;s actually in the business of procuring products; for example, for that aircraft
carrier that Roger was talking about. This is very different from anything we&#146;ve done before.
It&#146;s going from R&D for this to the product sale. We&#146;ve been working towards this for
several years, and a lot of credit goes to the R&D team for bringing this home. So it&#146;s a big
deal for us.</TD>
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    <TD>Roger Buelow: And so one of the things in particular, that Joe mentioned is that this contract is
ARRA compliant. So what that means is the Navy can use stimulus money to &#150; as soon as they
get stimulus money in one day, they can augment that contract the next day to get more lights
on the ships, and so like I said, there&#146;s that one product line which represents tens of
millions. The total U.S. market, for U.S. Navy, for all lighting fixtures, approaches $1
billion. It&#146;s a huge market, and these ships go through retrofits once every 5&nbsp;years. So
that&#146;s magnitude of opportunity we are getting on board the ships.</TD>
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<P align="left" style="margin-left:4%; font-size: 10pt">We&#146;ve also had contact from foreign navies. So as you know when ships retire from the U.S.
Navy, they go to our allies often, and so we&#146;ve received calls from foreign navies in terms
of how they can upgrade their older ships with these same lights. I&#146;m getting a lot of
strong interest there too.


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    <TD>Robert Smith: Have you made any further progress in the solar area?</TD>
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    <TD>Joe Kaveski: Absolutely. We are beginning to quote solar jobs in our solution business. So
yes, we are making progress, and it&#146;s our goal to actually sell solar this year with solar
sales on the books through our solutions channel. We are also moving, of course, again, on
the R&D front, and maybe, Roger, you want to mention a little bit about that.</TD>
</TR>

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    <TD>Roger Buelow: Right. So &#150; on the R&D front, both under DARPA&#146;s VHESC project and also
independently, we have been working on high efficiency and also lower-cost ways to make solar
cells. And we&#146;ve had good breakthroughs. We are not ready to write up the papers on them or
to report them yet, but I&#146;d remark that we&#146;ve had significant progress in the lab.</TD>
</TR>

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    <TD>Robert Smith: Well, would you &#150; can you give us some guidance I mean on that?</TD>
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    <TD>Roger Buelow: No, I really can&#146;t. Anything that comes out of the DARPA programs has to be
published and cleared ahead of time by DARPA, and for the things that we&#146;ve internally funded,
it would be unwise for us to disclose ...</TD>
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    <TD>Robert Smith: Yes. OK, so its success is tied to DARPA, and when would the next phase begin?</TD>
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    <TD>Roger Buelow: We are &#150; we&#146;re very eager to hear that answer ourselves. We&#146;re very hopeful that
it can &#150; would start very, very soon.</TD>
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    <TD>Robert Smith: OK, characterizing very, very soon, is it by year end?</TD>
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    <TD>Robert Smith: I mean I don&#146;t know &#150; I don&#146;t know what to say about a phrase like very, very soon.
I mean it ...</TD>
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    <TD>Nick Berchtold: Robert, what we can tell you is we are in constant contact with the partners of
VHESC, and our shareholders will know as soon as we have information that we can provide that
we can share. But to surmise when the government will execute this is not advisable at this
point.</TD>
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    <TD>Robert Smith: OK, but you guys have supplied the data?</TD>
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    <TD>Joe Kaveski: Yes, absolutely. We have a Phase I and II contract on the books, and we are fully
expecting to participate when the government funds this program further.</TD>
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    <TD>Robert Smith: OK, thanks. Good luck going forward, you all.</TD>
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    <TD>Joe Kaveski: Appreciate it very much. Pleasure to see you again. OK.</TD>
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    <TD>Operator: All right, we&#146;ll take our next question from Larry Southam with My Broker LLC.</TD>
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    <TD>Larry Southam: Good afternoon. I&#146;m new to the situation. I&#146;d seen the name earlier and hadn&#146;t
had a chance to see your &#150; to hear your presentation. Could you give me a better feel for
just how your product line breaks out these days in terms of &#150; in terms of markets?</TD>
</TR>

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    <TD>Joe Kaveski: Sure, Larry. I&#146;ll characterize it as a current and future and against a
historical.</TD>
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    <TD>Larry Southam: Right.</TD>
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    <TD>Joe Kaveski: Historically, we were a specialty lighting manufacturer that really served &#150; let&#146;s
call it four or five primary markets, one of them being the residential pool market, where we
remain the industry leader for pools.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:4%; font-size: 10pt">The other market is what I would characterize as the food services supermarket industry,
where we have many customers like Whole Foods and Supervalu Albertsons and Giant Eagle,
Redners to name a few. We also are in some very prominent museums because of the nature of
our historical technology meaning no UV, and so you know we don&#146;t destroy artwork, for
instance. And some work performed with our product in museums that you might recognize
include the Clinton Museum, the Appleton Museum, and the Winston Churchill Museum.



<P align="left" style="margin-left:4%; font-size: 10pt">Of course the military market has been a historical market for us, and I was delighted to be
able to make the announcement today. And lastly, we have been involved in retail. So
customers such as The Limited, Tiffany&#146;s, Bath Bodyworks, Victoria Secrets &#150; those markets
have been where we&#146;ve historically played, and we&#146;ve historically played with technologies
that I would call specialty.



<P align="left" style="margin-left:4%; font-size: 10pt">As we are moving forward in the existing building marketplace, we will continue in those
markets, but our technologies have changed and are changing rapidly more towards solid state
type of luminaries. But probably one of the fundamental differences is that you would
characterize our technologies before as primarily specialty applications. They do a great
job of lighting up a hallway or putting a light on a &#150; on a piece of artwork, and now our
technologies are basically going mainstream towards general illumination with application
towards all markets. So in essence, we go from a market size that&#146;s probably about $5
billion historically to now a market size that others have valued well over $100&nbsp;billion,
and the emphasis is clearly towards the existing building market.


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    <TD>Larry Southam: All right. OK, on some of the &#150; so some of the new products you&#146;re developing you
expect to, instead of being a customized type of application, you&#146;re expecting to be able to
have this as a broader line &#150; broader application catalogue item?</TD>
</TR>

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    <TD>Joe Kaveski: Absolutely, and ...</TD>
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    <TD>Larry Southam: And how do you then get that sold?</TD>
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    <TD>Joe Kaveski: That&#146;s sold through a variety of channels. We have our own direct selling force.
We do go through value-added resellers and partners, and we do go through energy services
companies. You know but I think the fundamental thing that I&#146;d like to leave our guests with
and our shareholders today is that technology&#146;s supplied &#150; lighting technologies for the
existing building market, they are and must be by design a technology that provide same or
better performance with a great return on investment, and that&#146;s why our LED based product
technologies that offer great performance and typically provide a 2-year simple payback. It&#146;s
a perfect match, and so that&#146;s where we&#146;re headed. We&#146;re keenly focused on being able to get
that return up and to have technologies that plug and play into the existing building
marketplace.</TD>
</TR>

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    <TD>Larry Southam: OK. Now, in the LED, I presume you&#146;re buying the &#150; buying the tips and basically
assembling fixtures?</TD>
</TR>

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    <TD>Joe Kaveski: You are correct. You know we basically buy the highest-quality chips from the
major manufacturers, like (Cree), like Philips, Lumileds, and Nichia). And we do a great job
of trying to identify what those chips are. But then from that point, the secret sauce that
we bring to bear is the superior ability to get the thermals right within those luminaires,
the ability to actually capture the light that&#146;s coming out of that chip which is no trivial
task.</TD>
</TR>

</TABLE>


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    <TD>Larry Southam: Right.</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Joe Kaveski: And that&#146;s where we really shine relative to our optics technology and our optic IP
and our coatings IP, and quite honestly, that is why I think the U.S. Government, and one of
the reasons why we think of ourselves, as maybe a poster child for DARPA in the military
because our technologies are second to none.</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Larry Southam: OK, and then following up on the military side, the $1.4&nbsp;million initial contract,
which I gather is a development for fixtures, but then installation with supplying them to the
submarine. What is timing on that? When should revenues &#150; over what period should revenues
appear?</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Roger Buelow: You&#146;re right. Part of that is for development of the fixtures and part of it is
for delivery of the fixtures. We have not disclosed that breakdown, but I can give you the
time period is about 1&nbsp;year in which the development work will take place, and then we&#146;ll be
supplying for the life of the ships over 4&nbsp;years.</TD>
</TR>

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    <TD>Larry Southam: OK. Very good. Thank you.</TD>
</TR>

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    <TD>Joe Kaveski: Well, thank you again for your time.</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Operator: And as a reminder if you would like to ask a question, please do so by pressing the star
key followed by the digit 1 on your touchtone telephone.</TD>
</TR>

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    <TD>Joe Kaveski: All right.</TD>
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    <TD width="1%">&nbsp;</TD>
    <TD>Operator: All right, and we do have another question from Robert Smith with the Center for
Performing Investing.</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Robert Smith: Yes, you don&#146;t think I&#146;m going to let you go so quickly. So has there been anything
further for &#150; from the work that you did for the W Hotel chain?</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Joe Kaveski: No &#151; other than we continue to have a happy customer.</TD>
</TR>

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    <TD>Robert Smith: But have you retrofitted any other units, or?</TD>
</TR>

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    <TD>Joe Kaveski: We have not done additional &#147;W&#148; Hotels.</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Robert Smith: I mean I guess it&#146;s partially because of what&#146;s happening in the general economy.
But I mean I assume they&#146;re pleased with what you did for them?</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Joe Kaveski: I have not received any word otherwise, so &#150; and when I went out to the &#147;W&#148; and
visited it personally, they seemed to be very happy with it, and clearly we&#146;re saving them a
ton of money.</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Robert Smith: With the kind of restructuring that you&#146;ve been going through and cutbacks and
everything, what can you say about the R&D effort here?</TD>
</TR>

</TABLE>


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    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Joe Kaveski: Delighted. It&#146;s becoming more focused than ever on being able to commercialize
technologies. We are seeing some great results and some great performance, and I&#146;m looking
for bigger and better things as we go forward, and you know I will share with you that it was
recently conveyed to me that under $150&nbsp;million let&#146;s call it stimulus-funded program through
DOE&#146;s ARPA-E program.</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Roger Buelow: Department of Energy.</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Joe Kaveski: The Department of Energy, solicited proposals for leading-edge ideas to improve
energy efficiency in existing buildings. From industry, they&#146;ve received 3,500 proposals. As
I understand it, 150 proposals were asked and encouraged to be expanded upon, and we were a
part of &#150; I believe, Robert, it was four of them, and that&#146;s a pretty good hit rate, if you
ask me.</TD>
</TR>

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    <TD>Robert Smith: Yes, I agree with you. Congratulations.</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Joe Kaveski: Excuse me, I misstated that. It was one in particular.</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Robert Smith: The Silicon Valley &#150; are you in &#150; what are you trying to do there? I mean are you
in &#150; are you trying to rewrite some of the comments or are you trying to &#150; are you trying to
replace it, or ...</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Nick Berchtold: Yes, Robert, this is Nick Berchtold. Silicon Valley Bank has, as you&#146;re aware,
been a long-term commercial bank lender for us. For a variety of reasons, we are working with
Silicon Valley Bank in partnership to seek and obtain alternative financing. And I&#146;m not
going to go into more detail beyond that. But we are working to replace them. We&#146;ve got a
variety of different proposals that we are looking at right now from commercial banks as well
as noncommercial banks and other mechanisms. But for a variety of reasons, we are seeking to
replace the Silicon Valley bank line.</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Robert Smith: Are you in compliance with the &#150; now, I mean?</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Nick Berchtold: We have not been in compliance with our covenants. You&#146;ll see that noted in our
10-Q. But again, we&#146;ve been receiving forbearance and forgiveness certificates as we
restructure our organization, and again, Silicon Valley Bank is working with us to continue
operating.</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Robert Smith: OK, and do you have any idea when you might be able to report something to that
effect, I mean a resolution or ...</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Nick Berchtold: Yes, we&#146;re working on it diligently. So before the end of the year, obviously,
we will be moving forward and hopefully sooner that we can report something to you in that
regard. So again, similar to the government discussion, as soon as we have something that we
can report, we certainly will.</TD>
</TR>

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    <TD>Robert Smith: OK. All right. Thank you.</TD>
</TR>

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    <TD>Joe Kaveski: OK. Thanks, Robert.</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Operator: And we&#146;ll take our next question from Joe Guilmette, who&#146;s a private investor.</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Joe Guilmette: Hi, Joe.</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Joe Kaveski: Hey, Joe.</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Joe Guilmette: Hi, Joe. Hey, very interesting conversations here. I&#146;m listening to you
describe the enable systems, and I&#146;m just wondering, the development work you&#146;re doing for the
Navy, will it be applicable in the non-military markets in the later years, or maybe in the
near future since &#150; because maybe ...</TD>
</TR>

</TABLE>


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    <TD width="1%">&nbsp;</TD>
    <TD>Joe Kaveski: Joe, Roger ...</TD>
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    <TD width="1%">&nbsp;</TD>
    <TD>Joe Guilmette: ... maybe they have got cabin lighting or ...</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Joe Kaveski: Yes, Joe, Roger is holding me back right now because I&#146;ve got a big smile on my
face. The answer to that is absolutely yes, and in fact, this contract for (NAVSEA)&nbsp;is to
replace existing T5 fluorescent fixtures on the Navy&#146;s nuclear fleet with a new lighting
technology. That new lighting technology is fundamental to us. We call it our optical rod
technology.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:4%; font-size: 10pt">It is one that has application well outside of the Navy and Navy ships and to a more
mainstream bread and butter fluorescent tube replacement. And so the ability to perfect
that technology to the nth degree for the U.S. Navy and then be able to take those
perfections out into broader industry is a tremendous market opportunity, as we see it.


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    <TD width="1%">&nbsp;</TD>
    <TD>Joe Guilmette: Well, it sounds like old times again because that was being done many years ago,
where we&#146;d use government research to apply to other markets. So I congratulate you on that.</TD>
</TR>

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    <TD width="1%">&nbsp;</TD>
    <TD>Joe Kaveski: OK, thanks, Joe.</TD>
</TR>

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    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Joe Guilmette: Other than that, what do you &#150; what are you doing to advertise and promote your
new products onto the marketplaces? Do you advertise in magazines or at trade shows?</TD>
</TR>

</TABLE>


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    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Joe Kaveski: We certainly do in trade shows, and right now we&#146;re working towards being able to
get some of our new products into &#150; I&#146;d call it industry specific magazines. You probably
wouldn&#146;t see, for instance, our track light in Business Week, but you sure well might see it
in, for instance, food, the FMI publication itself for food services because obviously that&#146;s
what food retailers look at in the food services industry. Beyond that, we have a tremendous
emphasis right now, again, on basically educating partner organizations, alliances like energy
services, ESCOs and the architectural community on some of our new LED based illuminators in
the construction industry so that basically they know and are well aware of our products, so ...</TD>
</TR>

</TABLE>


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    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Joe Guilmette: Yes. Good. I&#146;m doing some experimenting with your track light on artwork, and
it&#146;s really got a great light quality. It&#146;s &#150; I think it&#146;s got a great future. It&#146;s like
nothing I&#146;ve ever seen on the market.</TD>
</TR>

</TABLE>


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    <TD width="1%">&nbsp;</TD>
    <TD>Joe Kaveski: Thank you, Joe.</TD>
</TR>

</TABLE>


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    <TD width="1%">&nbsp;</TD>
    <TD>Joe Guilmette: So anyway ...</TD>
</TR>

</TABLE>


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    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Joe Kaveski: We&#146;re excited ...</TD>
</TR>

</TABLE>


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    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Joe Guilmette: ... great. OK, I&#146;ll talk to you later, and I&#146;ll sign off and leave room for the
next caller.</TD>
</TR>

</TABLE>


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    <TD width="1%">&nbsp;</TD>
    <TD>Joe Kaveski: OK. Well, I think at this time we just would like to thank everyone for
participating on Energy Focus&#146; second quarter earnings call. You know I would also be remiss
if I did not thank our associate/employees around the world who I know are working tirelessly
to exceed yours and our customers&#146; expectations. Clearly, they&#146;re the cornerstone of our
ability to rise above this current global economic crisis, and I see it firsthand that they
represent the secret sauce that is really how we&#146;re able to provide the superior lighting
solutions to the coming existing building markets.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:4%; font-size: 10pt">So thank you for participating in the call, and we look forward to visiting with you on our
third-quarter call here coming shortly.



<P align="left" style="margin-left:4%; font-size: 10pt">Thank you, again. OK, back to (Rica).


<P>
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    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Operator: And that concludes today&#146;s conference. We thank you for your participation and hope
that you have a wonderful day. You may now disconnect.</TD>
</TR>

</TABLE>


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