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<SEC-DOCUMENT>0001299933-10-002022.txt : 20100518
<SEC-HEADER>0001299933-10-002022.hdr.sgml : 20100518
<ACCEPTANCE-DATETIME>20100518151348
ACCESSION NUMBER:		0001299933-10-002022
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20100513
ITEM INFORMATION:		Results of Operations and Financial Condition
FILED AS OF DATE:		20100518
DATE AS OF CHANGE:		20100518

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:		10842302

	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_37675.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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<BR>
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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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	May 13, 2010
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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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	(I.R.S. Employer
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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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	44139
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_________________________________<BR>
	(Address of principal executive offices)
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	&nbsp;
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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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<FONT SIZE="2">
	&nbsp;
</FONT>
<!-- 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>
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[&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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<FONT SIZE="2">
On May 13, 2010, Energy Focus, Inc. (the "Company") issued a press release announcing its financial results for the quarter ended March 31, 2010, and hosted an investor call to discuss those results.<br><br>A copy of the press release is furnished with this Report as Exhibits 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 under this Item in this Report, as well as Exhibits 99.1 and 99.2, 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 under this Item in this Report, and those Exhibits, shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933.
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<B>
	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>
	May 18, 2010
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	By:
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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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	Description
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	99.1
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	&nbsp;
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Press Release dated May 13, 2010 - Energy Focus, Inc. Reports First Quarter 2010 Results
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	99.2
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	&nbsp;
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Transcript of Investor Conference Call Held on May 13, 2010
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<P align="center" style="font-size: 10pt"><FONT style="font-size: 14pt"><B>ENERGY FOCUS, INC. REPORTS FIRST QUARTER 2010 RESULTS<BR>
PROVIDES SECOND QUARTER FORECAST</B></FONT>



<P align="left" style="font-size: 14pt"><FONT style="font-size: 12pt">SOLON, Ohio, May&nbsp;13, 2010 &#151; Energy Focus, Inc. (NASDAQ: EFOI) today announced financial
results for the first quarter ended March&nbsp;31, 2010 and forecast for second quarter 2010 sales and
cash usage.
</FONT>

<P align="left" style="font-size: 12pt">Financial and operating highlights for the first quarter of 2010 include the following:


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    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Net sales from continuing operations of $8.4&nbsp;million, more than 3 times the net sales from
continuing operations of $2.5&nbsp;million for the first quarter 2009 with $5.3&nbsp;million, or 63%,
due to the new Stones River Companies, LLC (&#147;SRC&#148;) business unit.</TD>
</TR>

</TABLE>


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    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The company finished the quarter with a balance sheet showing cash in the amount of $1.8
million and total shareholders&#146; equity of $9.7&nbsp;million. Cash utilization for the first
quarter of 2010 was $0.4&nbsp;million, excluding $1,150,000 of cash received from the selling of a
Secured Subordinated Promissory Note for the principal amount of $1,150,000. Cash utilization
for the first quarter of 2009 was $3,768,000.</TD>
</TR>

</TABLE>


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    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Excluding a non-cash charge of $1.4&nbsp;million related to the revaluation of warrants to
purchase shares of our common stock acquired by The Quercus Trust in our March&nbsp;2008 equity
financing and operating expenses related to SRC of $0.6&nbsp;million, operating expenses decreased
7.4% compared to the first quarter of 2009.</TD>
</TR>

</TABLE>


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    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>$16.5&nbsp;million in lighting retrofit contracts secured for work expected to be completed in
2010.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 12pt">The forecast for Q2 and 2010 include the following:


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    <TD width="1%">&nbsp;</TD>
    <TD>Sales to exceed $8.5&nbsp;million in Q2 2010 versus $3.3&nbsp;million in Q2 2009 from continuing
operations with about 60% or more of the sales due to the new SRC business unit. Sales of $35
million are anticipated for 2010.</TD>
</TR>

</TABLE>


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    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Net cash outflow from operations for Q2 2010 are expected to be less than $1&nbsp;million
compared to a net cash outflow of $1.2&nbsp;million in Q2 2009. The company expects to be net cash
flow positive from operations in 2010.</TD>
</TR>

</TABLE>


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    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>An additional $2.5 MM for a total of $19&nbsp;million in lighting retrofit contracts secured by
the end of Q2 for work expected to be completed in 2010.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 12pt">&#147;I&#146;m absolutely delighted with the performance of our SRC solutions business in the 1<sup>st</sup>
Quarter,&#148; said Joe Kaveski, CEO of Energy Focus, Inc. &#147;With $19&nbsp;million in lighting contracts
secured for business we expect to complete in 2010 and $8.4&nbsp;million in sales recorded for the
quarter, Rob Wilson and his team at SRC have helped Energy Focus achieve a great start to the year.
We expect to see continued good performance from SRC in the 2<sup>nd</sup> Quarter as it
implements already secured contracts and continues to bring in more.&#148;


<P align="left" style="font-size: 12pt">&#147;The acquisition of SRC has provided exactly the scale for Energy Focus that we had hoped to
achieve,&#148; Mr.&nbsp;Kaveski continued. &#147;In 2010 we expect about sixty percent of our sales coming from
lighting retrofit contracts and about forty percent of our sales from lighting products. New
lighting products will become increasingly energy efficient and increasingly directed toward
existing buildings as we continue to deploy energy efficient lighting products resulting from
government funded R&D.&#148;


<P align="left" style="font-size: 12pt">Energy Focus management will host a conference call on Thursday, May&nbsp;13, 2010 at 4:30 p.m. EDT
(1:30 p.m. PDT) to review the 1st Quarter 2010 financial results and other corporate events,
followed by a Q & A session. Dialing 1-866-316-1370 (US Canada) or 1-913-312-0649
(International/Local) can access the call. The conference ID number is 9808493. 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 http://www.energyfocusinc.com in
the Investor Relations area of the site. A replay of the conference call will be available two
hours after the call for the following 7&nbsp;days by dialing 1-866-316-1370 (US/Canada) or
1-913-312-0649 (international/local) and entering the following pass code: 9808493. Also, an
instant replay of the conference call will be available over the Internet at
http://www.energyfocusinc.com on May&nbsp;13th, 2010 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, Inc.


<P align="left" style="font-size: 12pt">Energy Focus, Inc. is a leading provider of energy efficient LED lighting products and turnkey
energy efficient lighting solutions, holding 69 relevant lighting patents. Our solutions provide
energy savings, aesthetics, safety and maintenance cost benefits over conventional lighting. Our
long-standing relationship with the U.S. Government includes numerous research and development
projects for the DOE and DARPA, creating energy efficient LED lighting systems for the U.S. Navy
fleet and the next generation Very High Efficiency Solar Cell. Customers include supermarket
chains, the US government, state and local governmental agencies, retail stores, museums, theme
parks and casinos, hotels, swimming pool builders and many others. Company headquarters are located
in Solon, OH, with additional offices in Nashville, TN, Pleasanton, CA, and the United Kingdom. For
more information, see <U>www.energyfocusinc.com</U>.


<P align="left" style="font-size: 12pt">Forward-looking statements in this release are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. 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.

<DIV align="center">
<TABLE style="font-size: 12pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="61%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 12pt">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="font-size: 11pt">Media Contact:</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="font-size: 11pt">Investor Contact:</FONT></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="font-size: 11pt">Energy Focus, Inc., Public Relations Office<BR>
(440)&nbsp;715-1295<BR>
pr@efoi.com</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="font-size: 11pt">CleanTech IR, Inc.<BR>
310-541-6824<BR>
btanous@cleantech-ir.com</FONT></TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


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


<P align="left" style="font-size: 11pt">ENERGY FOCUS, INC.


<P align="center" style="font-size: 11pt"><FONT style="font-size: 10pt"><B>CONDENSED CONSOLIDATED BALANCE SHEETS</B><BR>
<B><I>(amounts in thousands except share and per share data)</I></B></FONT><FONT style="font-size: 12pt"></FONT>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&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>March 31,</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>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2009</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"><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">$</TD>
    <TD align="right">1,810</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,062</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">5,351</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,922</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">3,298</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,770</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">573</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">509</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">11,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,263</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">2,894</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,091</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Goodwill, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">672</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">672</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Intangible assets, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,482</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,750</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Collateralized assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,500</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">81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102</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">$</TD>
    <TD align="right">19,661</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">17,378</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"><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">$</TD>
    <TD align="right">4,071</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,677</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">2,426</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,854</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">591</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">295</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">7,088</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,826</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">130</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Acquisition-related contingent liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,062</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,183</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Long-term bank borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,655</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">715</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">9,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,873</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 2010 and 2009</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 is 2010 and 2009</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 2010 and 2009</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: 21,370,0000 in 2010 and 2009</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">73,242</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,373</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">397</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">474</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">(63,913</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(60,343</TD>
    <TD nowrap>)</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">9,727</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,505</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">19,661</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">17,378</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 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="74%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&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="7"><B>Three months ended</B></TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>March 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>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2009</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">$</TD>
    <TD align="right">8,357</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,523</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">6,962</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,295</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">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,395</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">228</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>&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">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">156</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Sales and marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,546</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,679</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,264</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Revaluation of equity instruments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,421</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Restructuring expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</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 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 operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,966</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:40px; text-indent:-10px">Loss from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,405</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,738</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>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Other (expense)&nbsp;income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(65</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Interest (expense)&nbsp;income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(99</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(20</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:10px; text-indent:-10px">Loss from continuing operations before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,569</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,739</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Provision for income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1</TD>
    <TD nowrap>)</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 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">Net loss from continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(3,570</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(2,739</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Discontinued operations:</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">Loss from operations of discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(302</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="font-size: 10pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">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 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 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">Loss from discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(302</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:10px; text-indent:-10px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(3,570</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(3,041</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 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">Net loss per share &#151; basic and diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.17</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.21</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 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">Shares used in computing net loss per share -</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">basic and diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,270</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,835</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>
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<P align="center" style="font-size: 10pt"><FONT style="font-size: 12pt"><B>ENERGY FOCUS INCORPORATED</B></FONT>



<P align="center" style="font-size: 12pt"><B>Moderator: Brion Tanous<BR>
May&nbsp;13, 2010<BR>
3:30 pm CT</B>



<P>
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    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="font-size: 10pt">Operator: Good day and welcome to the Energy Focus Quarterly Earnings Release conference
call. Today&#146;s conference is being recorded.</FONT></TD>
</TR>

</TABLE>



<P align="left" style="margin-left:4%; font-size: 10pt">At this time of it like to turn the conference over to Brion Tanous. Please go ahead, sir.


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    <TD>Brion Tanous: Thank you, Ben. I&#146;d like to welcome everybody to Energy Focus&#146; First Quarter
Earnings conference call.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:4%; font-size: 10pt">On this call the company&#146;s Chief Executive Officer, Joe Kaveski, will give a business update
on the combined SRC and Energy Focus businesses and provide an outlook for the second
quarter as well as for the full year fiscal 2010. The company&#146;s Chief Financial Officer,
Nick Berchtold, will then address the company&#146;s first quarter financial results. We also
have President, John Davenport, on the call with us afternoon.



<P align="left" style="margin-left:4%; font-size: 10pt">After the following prepared remarks, we will open it up for questions for the remainder of
this call. Before we get started, I&#146;m going to read a disclaimer about forward-looking
statements.



<P align="left" style="margin-left:4%; font-size: 10pt">This conference may contain, in addition to historical information, forward-looking
statements within the meanings of the federal securities laws regarding Energy Focus.



<P align="left" style="margin-left:4%; font-size: 10pt">Forward-looking statements include statements about plans, objectives, goals, strategies,
future events, and performance, and underlying assumptions and other statements that are
different than historical facts.



<P align="left" style="margin-left:4%; font-size: 10pt">These forward-looking statements are based on current management expectations and are
subject to risks and uncertainties that may result in expectations not being realized and
may cause actual outcomes to differ materially from the expectations reflected in these
forward-looking statements.



<P align="left" style="margin-left:4%; font-size: 10pt">Potential risks and uncertainties include change in demand for the company&#146;s products, the
impact of competition and government regulations, and other risks contained in the
statements filed from time to time with the SEC.



<P align="left" style="margin-left:4%; font-size: 10pt">All such forward-looking statements, whether written or oral, made on behalf of the company
are expressly qualified by these cautionary statements. And such forward-looking statements
are subject to risks and uncertainties and we caution you not to place undue reliance on
these.



<P align="left" style="margin-left:4%; font-size: 10pt">We will try to keep this call to one hour as usual including the questions. With that, I&#146;d
like to turn the call over to Mr.&nbsp;Joe Kaveski. Joe?


<P>
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    <TD>Joe Kaveski: Thank you Brion, and thank you to everyone again for participating in Energy Focus&#146;
2010 First Quarter&#146;s Earnings call.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:4%; font-size: 10pt">Today, I&#146;d like to begin by recognizing the incredible efforts of Energy Focus employees
worldwide in truly creating and charting a new future for Energy Focus.



<P align="left" style="margin-left:4%; font-size: 10pt">Today, I&#146;d like to make a few brief comments concerning our first quarter results and then
provide you with some insights on our 2010 anticipated financial performance.



<P align="left" style="margin-left:4%; font-size: 10pt">Our first quarter results were in line with our expectations and plans. Specifically, I&#146;m
delighted to report to you that we achieved net sales from continuing operations of $8.4
million, which is more than three times the net sales from continuing operations during the
first quarter of last year, and our new SRC business unit is performing well and represented
about 60% of our total sales.



<P align="left" style="margin-left:4%; font-size: 10pt">Also, the company reinforced its balance sheet during our first quarter as our ending cash
balance grew to $1.8&nbsp;million.



<P align="left" style="margin-left:4%; font-size: 10pt">Furthermore, our cash utilization from operations for the first quarter was down to
approximately $400,000 excluding the $1.15&nbsp;million of cash received from a mezzanine debt
financing. In comparison, our cash utilization from operations was nearly 1/10 of the $4
million that we utilized during the first quarter of 2009.



<P align="left" style="margin-left:4%; font-size: 10pt">The company&#146;s overall gross profit margins improved more than 7% year over year and 6%
quarter over quarter due to both dramatically improve sales and the cost and efficiency
improvements that we have implemented to date. We are expecting this trend to continue as
the year progresses.



<P align="left" style="margin-left:4%; font-size: 10pt">Furthermore, our operating expenses decreased about 7% compared to the first quarter of 2009
if you exclude the $600,000 in new operating expenses related to our new SRC solutions
business unit and the onetime non-cash charge of $1.4&nbsp;million related to the revaluation of
the Quercus trust warrants to purchase shares of our common stock.



<P align="left" style="margin-left:4%; font-size: 10pt">Lastly, we secured $16.5&nbsp;million in lighting solutions contracts in our first quarter which
we expect to complete in 2010.



<P align="left" style="margin-left:4%; font-size: 10pt">So, from a financial perspective, we&#146;re off to a very good start, and my expectations are
that, as planned, we will have a good year in 2010.



<P align="left" style="margin-left:4%; font-size: 10pt">The acquisition of SRC has provided exactly the scale that we had hoped to achieve and the
foundation for the sale of our existing products and for our future advanced lighting
products that are specifically designed for the existing buildings and paid for by our
government funded research and development.



<P align="left" style="margin-left:4%; font-size: 10pt">As an example, this week we announced that our SRC solutions business secured an additional
$2.5&nbsp;million in contracts bringing our solutions contracts to $19&nbsp;million already this year.



<P align="left" style="margin-left:4%; font-size: 10pt">Two of these contracts are for upgrading the lighting at universities. These projects came
about because these universities are having trouble providing their students with a quality
education while dealing with the declining revenue base, increasing energy costs, and the
need to modernize their aging facilities.



<P align="left" style="margin-left:4%; font-size: 10pt">So these universities took advantage of one of the few options remaining to them. They
utilized their states energy savings performance contracting legislation that allows them to
procure and finance energy savings facility improvements and pay for them over time using
the resulting energy savings.



<P align="left" style="margin-left:4%; font-size: 10pt">In these projects, Energy Focus teamed with two energy services companies that bundled our
superior lighting solutions with other non-lighting solution providers to submit a
comprehensive energy efficiency proposal for which they were ultimately selected to
implement.



<P align="left" style="margin-left:4%; font-size: 10pt">Once our ESCo(s) received their contracts from their university they then issued Energy
Focus subcontracts for the final engineering and installation of our lighting solutions.
These solutions include our current Energy Focus products as well as other manufacturer&#146;s
products.



<P align="left" style="margin-left:4%; font-size: 10pt">Now this is obviously great as Energy Focus is able to sell and generate a margin on our
current products and make a margin on other manufacturer&#146;s products.



<P align="left" style="margin-left:4%; font-size: 10pt">In these contracts, Energy Focus&#146; current specialty products represent less than10% of the
lighting products to be installed under these contracts. This is only because our current
specialty lighting products, such as our LED dock lights, our LED landscape lights, and our
LED e-lluminator, represent only a small fraction of these buildings total lighting
fixtures; however, Energy Focus products will continue to significantly increase in the
coming years as the market transitions to LED for general illumination.



<P align="left" style="margin-left:4%; font-size: 10pt">At that time, and many estimate that time to only be one to three years out, Energy Focus
expects our LED-based 4-foot linear fluorescent lamp replacement technology to be the lion&#146;s
share of the products used in our solutions business, perhaps as much as 80% of the total
material costs. This is significant as more than 40% of our solutions contract revenues are
lighting products sales.



<P align="left" style="margin-left:4%; font-size: 10pt">Furthermore, our current and future LED linear fluorescent replacement technology which is
currently being developed for Navy vessels and being refined under government R&D contract
represents a huge competitive advantage for Energy Focus.



<P align="left" style="margin-left:4%; font-size: 10pt">Specifically our 4-foot LED products that we&#146;re selling today for parking garage, cold
storage spaces, and warehouse environments use of about 300 LED.



<P align="left" style="margin-left:4%; font-size: 10pt">In the future, our next generation product will use only one LED thereby significantly
reducing the product cost and the complexity. And while high powered LEDs are costly today,
their costs are dropping quickly and far faster than their low powered counterparts.
Furthermore, their efficacy in terms of lumens per watt is dramatically increasing.



<P align="left" style="margin-left:4%; font-size: 10pt">Next our single LED solution leverages our proprietary light injection and light
distribution technology so that our replacement lamps are virtually indistinguishable from
the legacy 4-foot linear fluorescent lamps that they are designed to replace.



<P align="left" style="margin-left:4%; font-size: 10pt">And lastly, we&#146;re embedding intelligence into these lamps which allows for dramatically
improved energy savings &#151; up to 80% beyond traditional legacy linear fluorescent lamps.



<P align="left" style="margin-left:4%; font-size: 10pt">So, now as we look to our second quarter and beyond, I&#146;d like to provide you some guidance.
First, we expect to receive UL certification for a new LED hazardous location fixture in our
second quarter, and we anticipate beginning shipping the product in our third quarter.



<P align="left" style="margin-left:4%; font-size: 10pt">This new product is very exciting for us as it represents a robust, military grade, low
cost, at the highest performance LED hazardous globe fixture that hits the bull&#146;s eye in
addressing the needs of a $300&nbsp;million annual market opportunity.



<P align="left" style="margin-left:4%; font-size: 10pt">Next we expect sales to exceed $8.5&nbsp;million in our second quarter which is more than 2.5
times the $3.3&nbsp;million in revenue from continuing operations that we achieved last year.



<P align="left" style="margin-left:4%; font-size: 10pt">As we look forward, we forecast our solutions business will be about 60% of our total sales
and that our 2010 total sales will exceed $35&nbsp;million.



<P align="left" style="margin-left:4%; font-size: 10pt">Finally our net cash flow from operations in the second quarter is expected to be less than
$1&nbsp;million compared to our net cash flow from operations of $1.2&nbsp;million in the second
quarter of last year.



<P align="left" style="margin-left:4%; font-size: 10pt">The company is holding its expectation to be overall net cash flow positive from operations
in 2010.



<P align="left" style="margin-left:4%; font-size: 10pt">So in conclusion, our plan is clearly working and working well. I&#146;m extremely bullish about
the current and future success of Energy Focus in helping our customers solve their lighting
and energy needs as our sales are nearly three times that of last year, our sales proposal
pipeline has already grown over 10% and our cost containment and improvement measures are
clearly taking hold. And lastly our new technology developments are progressing nicely. So
with that I&#146;d like to thank you again for joining our call.



<P align="left" style="margin-left:4%; font-size: 10pt">And now, I&#146;d like to turn the call over to Nick Berchtold, our Chief Financial Officer, who
will provide you with further clarity around our financial results. Nick?


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    <TD>Nick Berchtold: Thanks Joe and I&#146;d like to also welcome all of our participants to today&#146;s
conference call.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:4%; font-size: 10pt">To reiterate what Joe said, the first quarter financial results really represent a
confirmation of the dramatic and strategic shift in our company&#146;s market dynamics, and
really reinforces the absolute need to complete the execution of our transformation into a
turnkey energy efficient lighting solutions provider.



<P align="left" style="margin-left:4%; font-size: 10pt">Our quarterly financials reflect tremendous improvement from historical levels as we
repositioned our company for continued growth and profitability.



<P align="left" style="margin-left:4%; font-size: 10pt">As Joe mentioned, we specifically achieved the following during the quarter. We announced
$16.5&nbsp;million in secured contracts through our new Stones River Companies subsidiary.



<P align="left" style="margin-left:4%; font-size: 10pt">We achieved consolidated revenues from continuing operations of $8.4&nbsp;million. We
successfully negotiated an agreement that provides access to additional equity financing to
the business as necessary, when necessary, if necessary.



<P align="left" style="margin-left:4%; font-size: 10pt">We also executed a new debt instrument in the amount $1.1&nbsp;million which effectively
replaced, and allowed us to replace, our Silicon Valley Bank line of credit and we completed
the consolidation of our North American manufacturing and distribution operations into a
single facility.



<P align="left" style="margin-left:4%; font-size: 10pt">But enough of the generalities. As I&#146;ve done in the past I&#146;m going to provide you with a
brief overview of selected first quarter results. Specifically I&#146;ll be reviewing the
following items &#151; revenues, gross profits, operating expenses, net income and earnings per
share, cash and cash flows, working capital metrics, and then current quarter financing
activities.



<P align="left" style="margin-left:4%; font-size: 10pt">However before I do move into the financial review I like to remind you that our
consolidated statements of operations and consolidated statements of cash flows as presented
in our form 10Q have been recast to include only continued operations.



<P align="left" style="margin-left:4%; font-size: 10pt">Those continued operations are defined as Energy Focus, Stones River Companies, and Crescent
Lighting Limited.



<P align="left" style="margin-left:4%; font-size: 10pt">2009 financial results from the company&#146;s discontinued operations have been separately
reported.



<P align="left" style="margin-left:4%; font-size: 10pt">Okay so let me first talk about revenues. I&#146;m delighted along with Joe to report that our
revenues increased dramatically from first quarter 2009 due to the combination of realized
revenues from our new SRC subsidiary as well as additional and significant penetration
within our existing product based market segments.



<P align="left" style="margin-left:4%; font-size: 10pt">First quarter 2010 revenues were, as Joe stated, $3&nbsp;million &#151; excuse me, $8,357,000, and
represent a 231% increase over the first quarter 2009 revenues of $2,523,000.



<P align="left" style="margin-left:4%; font-size: 10pt">Breaking this figure down further, our SRC subsidiary contributed $5,280,000 or 63% of total
revenues for the first quarter and our team is aggressively pushing for more. But
additionally our product based teams under (Garrett Reinders), Steve Gasperson and others
also contributed significantly to our success by generating $3,077,000 or 37% of total year
 &#151; excuse me of total first quarter revenues.



<P align="left" style="margin-left:4%; font-size: 10pt">On a year over year basis this represents a 22% increase over first quarter 2009 revenues.



<P align="left" style="margin-left:4%; font-size: 10pt">And now to talk about gross profit, our first quarter 2010 gross profit was $1,395,000,
which represents 16.7% of revenue, as compared to $228,000, or 9% of revenue, for the first
quarter of 2009.



<P align="left" style="margin-left:4%; font-size: 10pt">Results were favorably impacted by the addition of our new SRC operation combined with
improved pricing realization from our product based businesses.



<P align="left" style="margin-left:4%; font-size: 10pt">Concealing some of the first quarter improvements were however some legacy, remaining legacy
costs associated with our Solon facility and with the remaining consolidation of our
manufacturing and distribution operations into Mexico.



<P align="left" style="margin-left:4%; font-size: 10pt">We do expect, however, to see an additional and recurring benefit of these consolidation
efforts as we move into the second quarter of 2010 and beyond.



<P align="left" style="margin-left:4%; font-size: 10pt">Now I&#146;d like to talk briefly about operating expenses. First quarter 2010 operating expenses
were $4,800,000, which represents a 62% increase over the first quarter 2009 operating
expenses of $2,966,000. However, upon the removal of one time financing and non-cash
expense related items, first quarter 2010 operating expenses were below prior year levels.



<P align="left" style="margin-left:4%; font-size: 10pt">So as we exclude the impact of the four &#151; $1.4&nbsp;million non-cash warrant reevaluation and
additional $291,000 and finance related expenses, $268,000 of non-cash SRC acquisition
amortization expense, and an additional $71,000 in restructuring and severance related
expenses our first quarter 2010 operating expenses were $2,749,000 which represents a 7%
decrease in operating expenses from first quarter 2009 levels.



<P align="left" style="margin-left:4%; font-size: 10pt">So next I&#146;d like to discuss briefly net income and the impact on earnings per share.



<P align="left" style="margin-left:4%; font-size: 10pt">Our first quarter 2010 net loss from continuing operations was a negative $3,570,000 which
equates to a 17 cents per share loss. This is compared to a $2,739,000 net loss or 18 cents
per share loss for the first quarter of 2009.



<P align="left" style="margin-left:4%; font-size: 10pt">Excluding what we had previously discussed in terms of non-cash and/or onetime expenses our
first quarter 2010 net loss from continuing operations was $1,519,000, or a 7 cents per
share loss, compared to $2,739,000 loss, or 18 cent per share, for the first quarter of
2009.



<P align="left" style="margin-left:4%; font-size: 10pt">And now I&#146;d like to turn away from the P&L and move over to the balance sheet for a few
moments.



<P align="left" style="margin-left:4%; font-size: 10pt">First our cash and cash equivalents increased $748,000 from December&nbsp;31, 2009 levels to
achieve a balance of $1,810,000 at March&nbsp;31. Cash on hand at March&nbsp;31 did include
$1,150,000 received from a private investing group through a debt instrument executed in
March&nbsp;30; however as Joe mentioned previously, our cash flow from operations were
significantly improved over first quarter 2009 levels.



<P align="left" style="margin-left:4%; font-size: 10pt">To put some numbers to it, first quarter 2010 cash outflows from operations were $438,000
compared to $4,041,000 in cash outflows which occurred during the first quarter of 2009.



<P align="left" style="margin-left:4%; font-size: 10pt">Our improvement in cash outflows year over year represents an 89% improvement over the first
quarter 2009 level and results from the following items.



<P align="left" style="margin-left:4%; font-size: 10pt">Specifically over $3&nbsp;million of cash collections from contracts awarded to our Stones River
Companies subsidiary, the realization of benefits from continued fixed overhead
rationalization and cost reductions and an intense and focused management of matching our
receivables and payables on a global basis.



<P align="left" style="margin-left:4%; font-size: 10pt">To reiterate this I&#146;d like to discuss a few moments our accounts receivable position.
Specifically accounts receivable increased to $5,351,000 on a consolidated basis during the
first quarter versus $2,922,000 at December&nbsp;31, 2009 which represents a 183% increase in
overall global accounts receivable.



<P align="left" style="margin-left:4%; font-size: 10pt">Obviously this dramatic increase in current receivables should provide the company with a -
with significant source of operating cash for the second quarter and beyond.



<P align="left" style="margin-left:4%; font-size: 10pt">Additionally the company&#146;s continued focus on working capital management again contributed
positively to our first quarter cash flows and resulted in further improvements in accounts
receivable velocity taking our, what we call DSO, receivable velocity from 67.2&nbsp;days at
December&nbsp;31, 2009 down to 57.6&nbsp;days at March&nbsp;31, 2010.



<P align="left" style="margin-left:4%; font-size: 10pt">Likewise, we continue to manage inventory very closely. And in fact our inventory position
decreased to 3,239,000 &#151; excuse me, $3,298,000 at March&nbsp;31 versus $3,770,000 at December&nbsp;31,
2009.



<P align="left" style="margin-left:4%; font-size: 10pt">Likewise, inventory velocity improved modestly from 3.29 turns at December&nbsp;31 to over 3.35
turns at March&nbsp;31, 2010.



<P align="left" style="margin-left:4%; font-size: 10pt">And on the liability side of the balance sheet I do want to speak briefly about our new debt
instruments.



<P align="left" style="margin-left:4%; font-size: 10pt">As we previously talked about, we entered into an agreement with EF Energy Partners under
which we sold a secured subordinated promissory note for the principal amount of $1,150,000.



<P align="left" style="margin-left:4%; font-size: 10pt">The company has secured the full amount of this financing with the pledge of its US accounts
Receivable and selected capital equipments. This subordinated note does bear interest and
the entire outstanding principal balance, together with all accrued interest, will be due
and payable on March&nbsp;30, 2013.



<P align="left" style="margin-left:4%; font-size: 10pt">Additionally, the company did issue five year detachable penny warrants to purchase shares
of the company&#146;s common stock whose expiration dates equates to March&nbsp;30, 2015.



<P align="left" style="margin-left:4%; font-size: 10pt">We also mentioned briefly about an equity financing transaction which took place, so I&#146;d
like to discuss that briefly as well.



<P align="left" style="margin-left:4%; font-size: 10pt">On March&nbsp;17, 2010, the company entered into a purchase agreement with Lincoln Park Capital
Fund whereby Lincoln agreed to purchase 350,000 of the company&#146;s common stock together with
a warrant to purchase an equivalent amount of shares.



<P align="left" style="margin-left:4%; font-size: 10pt">Lincoln Park also agreed to purchase up to an additional 3,650,000 shares of common stock at
the company&#146;s option over the next 25&nbsp;months. The company expects the initial investments to
be executed by the end of May&nbsp;2010.



<P align="left" style="margin-left:4%; font-size: 10pt">So in summary, we&#146;re very pleased to be able to share our first quarter progress with you in
the transformation of our company.



<P align="left" style="margin-left:4%; font-size: 10pt">As you&#146;ve seen from today&#146;s discussion we&#146;re really beginning to generate substantial
traction in all of our markets and expect that improvement to continue throughout the
remainder of the year.



<P align="left" style="margin-left:4%; font-size: 10pt">As our Chief Financial Officer, I would also like to take a moment to remind our
shareholders of our pending annual shareholders meeting which is scheduled for June&nbsp;16, 2010
at 1:00 pm and which will be held at our Solon, Ohio headquarters.



<P align="left" style="margin-left:4%; font-size: 10pt">Proxy materials were mailed on May&nbsp;10, 2010 and our shareholders should be receiving these
materials shortly.



<P align="left" style="margin-left:4%; font-size: 10pt">Our Board of Directors and Energy Focus management would like to reinforce the importance of
your approval of these proposals and we respectfully request that you vote in favor of each
of the proposals presented.



<P align="left" style="margin-left:4%; font-size: 10pt">So in conclusion, I&#146;d like to take this opportunity to thank you again for the chance to
speak with you today. And now, I&#146;ll turn the conference call back over to Ben, our
operator, who opens up the conference call for questions and answers. Thank you very much.


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    <TD>Operator: Thank you. The question and answer session 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 touch-tone telephone. If you are using a speakerphone, please make sure your mute
function is turned off to allow your signals to reach our equipment. Once again, please press
star 1 on your touch-tone telephone to ask a question. And we&#146;ll pause for just a moment to
give everyone a chance. Once again, that&#146;s star 1 to signal for a question.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:4%; font-size: 10pt">Once again if you would like to ask a question, please press star 1 on your touch-tone
telephone.



<P align="left" style="margin-left:4%; font-size: 10pt">And with no questions in queue, I&#146;d like to turn the call back over to Joe Kaveski for any
additional or closing remarks.


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    <TD>Joe Kaveski: Thanks Ben and I guess I&#146;d like to conclude the call today where I started. And
that is in thanking our employees for their tremendous efforts over the last year and also
thanking our many shareholders for their continuing interest and support of Energy Focus.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:4%; font-size: 10pt">My view is that our strategy is clearly working, and the evidence is the great start that we
had in our first quarter and our forecast that we have provided you for the remainder of
this year.



<P align="left" style="margin-left:4%; font-size: 10pt">So with that, I look forward to visiting with many of you in the near future and on our next
earning call. So thank you again and have a great evening.


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    <TD>Operator: That concludes today&#146;s conference call. Thank you for your participation.</TD>
</TR>

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