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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025
OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| For the transition period from _____________ to _____________

Commission file number 001-36583
ENERGY FOCUS, INC.
(Exact name of registrant as specified in its charter)

Delaware |  | 94-3021850
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
32000 Aurora Road, Suite B Solon, OH
(Address of principal executive offices)
44139
(Zip Code)
(Registrant’s telephone number, including area code): (440) 715-1300
None
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common Stock, par value $0.0001 per share | EFOI | The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☐ | Accelerated filer | ☐
Non-accelerated filer | ☑ | Smaller reporting company | ☑
|  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The number of outstanding shares of the registrant’s common stock, $0.0001 par value, as of November 12, 2025 was 5,739,415.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
|  |  | Page
ITEM 1. | FINANCIAL STATEMENTS |
| a. | Condensed Consolidated Balance Sheets as of September 30, 2025 (Unaudited) and December 31, 2024 | 4
| b. | Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024 (Unaudited) | 6
| c. | Condensed Consolidated Statements of Changes in Stockholders' Equity for the three and nine months ended September 30, 2025 and 2024 (Unaudited) | 7
| d. | Condensed Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2025 and 2024 (Unaudited) | 8
| e. | Notes to the Condensed Consolidated Financial Statements (Unaudited) | 10
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 26
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 34
ITEM 4. | CONTROLS AND PROCEDURES | 34
PART II - OTHER INFORMATION
ITEM 1. | LEGAL PROCEEDINGS | 36
ITEM 1A. | RISK FACTORS | 36
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 36
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 36
ITEM 4. | MINE SAFETY DISCLOSURES | 36
ITEM 5. | OTHER INFORMATION | 36
ITEM 6. | EXHIBITS | 37
| SIGNATURES | 39

1

PART I - FINANCIAL INFORMATION
Forward-looking statements
Unless the context otherwise requires, all references to “Energy Focus,” “we,” “us,” “our,” “our company,” or “the Company” refer to Energy Focus, Inc., a Delaware corporation, and its consolidated subsidiary for the applicable periods, considered as a single enterprise.
This Quarterly Report on Form 10-Q (this “Quarterly Report”) includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “feels,” “seeks,” “forecasts,” “projects,” “intends,” “plans,” “may,” “will,” “should,” “could” or “would” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Quarterly Report and include statements regarding our intentions, beliefs, or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies, capital expenditures, and the industry in which we operate.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Although we base these forward-looking statements on assumptions that we believe are reasonable when made in light of information currently available to us, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and industry developments may differ materially from statements made in or suggested by the forward-looking statements contained in this Quarterly Report. In addition, even if our results of operations, financial condition and liquidity, and industry developments are consistent with the forward-looking statements contained in this Quarterly Report, those results or developments may not be indicative of results or developments in subsequent periods.
We believe that important factors that could cause our actual results to differ materially from forward-looking statements include, but are not limited to, the risks and uncertainties outlined under “Risk Factors” under Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 and other matters described in this Quarterly Report and our other filings with the Securities and Exchange Commission generally. Some of these factors include:
•our need for and ability to obtain additional financing in the near term, on acceptable terms or at all, to continue our operations;
•our ability to maintain compliance with the continued listing standards of The Nasdaq Stock Market (“Nasdaq”);
•our ability to continue as a going concern for a reasonable period of time;
•our ability to realize synergies with our strategic investor;
•instability in the U.S. and global economies and business interruptions experienced by us, our customers and our suppliers;
•the competitiveness and market acceptance of our light-emitting diode (“LED”) lighting and control technologies and products;
•our ability to compete effectively against companies with lower prices or cost structures, greater resources, or more rapid development capabilities, and new competitors in our target markets;
•our ability to extend our product portfolio into new applications and end markets;
•our ability to increase demand in our targeted markets and to manage sales cycles that are difficult to predict and may span several quarters;
•the timing of large customer orders, significant expenses and fluctuations between demand and capacity as we manage inventory and invest in growth opportunities;
•our ability to successfully scale our network of sales representatives, agents, distributors and other channel partners to compete with the sales reach of larger, established competitors;
•our ability to implement plans to increase sales and control expenses;
•our reliance on a limited number of customers for a significant portion of our revenue, and our ability to maintain or grow such sales levels;
•our ability to add new customers to reduce customer concentration;
•our ability to attract and retain a new chief financial officer;
•our ability to manage the size of our workforce while continuing to attract, develop and retain qualified personnel, and to do so in a timely manner;
2

•our ability to diversify our reliance on a limited number of third-party suppliers and development partners, our ability to manage third-party product development and obtain critical components and finished products on acceptable terms and of acceptable quality despite ongoing global supply chain challenges, and the impact of our fluctuating demand on the stability of such suppliers;
•our ability to timely, efficiently and cost-effectively transport products from our third-party suppliers by ocean marine and other logistics channels despite global supply chain and logistics disruptions;
•the impact of any type of legal inquiry, claim or dispute;
•the macro-economic conditions, including rising interest rates and recessionary trends, in the United States and in other markets in which we operate or secure products, which could affect our ability to obtain raw materials, component parts, freight, energy, labor, and sourced finished goods in a timely and cost-effective manner;
•our dependence on military maritime customers and on the levels and timing of government funding available to such customers, as well as the funding resources of our other customers in the public sector and commercial markets;
•business interruptions resulting from geopolitical actions such as war and terrorism, natural disasters, including earthquakes, typhoons, floods and fires, or from health epidemics or pandemics or other contagious outbreaks;
•our ability to respond to new lighting and control technologies and market trends;
•our ability to fulfill our warranty obligations with safe and reliable products;
•any delays we may encounter in making new products available or fulfilling customer specifications;
•any flaws or defects in our products or in the manner in which they are used or installed;
•our ability to protect our intellectual property rights and other confidential information, and manage infringement claims by others;
•our compliance with government contracting laws and regulations, through both direct and indirect sale channels, as well as other laws, such as those relating to the environment and health and safety;
•risks inherent in international markets, such as economic and political uncertainty, changing regulatory and tax requirements and currency fluctuations, including tariffs and other potential barriers to international trade;
•the impact of recently imposed or potential future global trade policies, including tariffs, could increase costs and disrupt our supply chain, adversely affecting our operations and profitability; and
•our ability to maintain effective internal controls and otherwise comply with our obligations as a public company.
In light of the foregoing, we caution you not to place undue reliance on our forward-looking statements. Any forward-looking statement that we make in this Quarterly Report speaks only as of the date of such statement, and we undertake no obligation to update any forward-looking statement or to publicly announce the results of any revision to any of those statements to reflect future events or developments, except as required by law. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should only be viewed as historical data. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us.
Energy Focus®, Intellitube®, and RedCap® are our registered trademarks. We may also refer to trademarks of other corporations and organizations in this document.
3

ITEM 1. FINANCIAL STATEMENTS
ENERGY FOCUS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

| September 30, 2025 |  | December 31, 2024
| (Unaudited) |  |
ASSETS |  |  |
Current assets: |  |  |
Cash | $ | 897 |  |  | $ | 565 |
Trade accounts receivable, less allowances of $39 and $15, respectively | 665 |  |  | 804 |
Inventories, net | 3,012 |  |  | 3,263 |
Prepayments to vendors | 50 |  |  | 356 |
Prepaid and other current assets | 190 |  |  | 157 |
Total current assets | 4,814 |  |  | 5,145 |
Property and equipment, net | 106 |  |  | 90 |
Operating lease, right-of-use asset | 277 |  |  | 377 |
Total assets | $ | 5,197 |  |  | $ | 5,612 |
LIABILITIES |  |  |
Current liabilities: |  |  |
Accounts payable | $ | 325 |  |  | $ | 970 |
Accounts payable - related party | 1,002 |  |  | 909 |
Accrued liabilities | 214 |  |  | 90 |
Accrued legal and professional fees | 55 |  |  | 54 |
Accrued payroll and related benefits | 71 |  |  | 148 |
Accrued sales commissions | 12 |  |  | 15 |
Accrued warranty reserve | 87 |  |  | 118 |
Operating lease liabilities | 157 |  |  | 139 |
Total current liabilities | 1,923 |  |  | 2,443 |

(continued on the next page)
4

ENERGY FOCUS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

| September 30, 2025 |  | December 31, 2024
| (Unaudited) |  |
Operating lease liabilities, net of current portion | 134 |  |  | 254 |
Total liabilities | 2,057 |  |  | 2,697 |
STOCKHOLDERS' EQUITY |  |  |
Preferred stock, par value $0.0001 per share: |  |  |
Authorized: 5,000,000 shares (3,300,000 designated as Series A Convertible Preferred Stock) at September 30, 2025 and December 31, 2024 |  |  |
Issued and outstanding: 876,447 at September 30, 2025 and December 31, 2024 | — |  |  | — |
Common stock, par value $0.0001 per share: |  |  |
Authorized: 50,000,000 shares at September 30, 2025 and December 31, 2024 |  |  |
Issued and outstanding: 5,739,415 at September 30, 2025 and 5,260,741 at December 31, 2024 | 1 |  |  | 1 |
Additional paid-in capital | 158,710 |  |  | 157,814 |
Accumulated other comprehensive loss | (3) |  |  | (3) |
Accumulated deficit | (155,568) |  |  | (154,897) |
Total stockholders' equity | 3,140 |  |  | 2,915 |
Total liabilities and stockholders' equity | $ | 5,197 |  |  | $ | 5,612 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
5

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

| Three months ended September 30, |  | Nine months ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Net sales | $ | 826 |  |  | $ | 1,196 |  |  | $ | 2,585 |  |  | $ | 3,582 |
Cost of sales | 679 |  |  | 1,008 |  |  | 2,097 |  |  | 3,148 |
Gross profit | 147 |  |  | 188 |  |  | 488 |  |  | 434 |
Operating expenses: |  |  |  |  |  |  |
Product development | 82 |  |  | 137 |  |  | 206 |  |  | 405 |
Selling, general, and administrative | 240 |  |  | 449 |  |  | 949 |  |  | 1,583 |
Total operating expenses | 322 |  |  | 586 |  |  | 1,155 |  |  | 1,988 |
Loss from operations | (175) |  |  | (398) |  |  | (667) |  |  | (1,554) |
Other expenses (income): |  |  |  |  |  |  |
Interest expense | — |  |  | — |  |  | — |  |  | 5 |
Interest income | — |  |  | — |  |  | (1) |  |  | — |
Gain on debt extinguishment | — |  |  | — |  |  | — |  |  | (187) |
Gain on partial lease termination | — |  |  | (63) |  |  | — |  |  | (63) |
Gain on disposal of fixed assets | (3) |  |  | — |  |  | (3) |  |  | — |
Other income | — |  |  | (26) |  |  | — |  |  | (30) |
Other expenses | — |  |  | 7 |  |  | 8 |  |  | 9 |
Net loss | $ | (172) |  |  | $ | (316) |  |  | $ | (671) |  |  | $ | (1,288) |
Net loss per common share - basic and diluted |  |  |  |  |  |  |
Net loss | $ | (0.03) |  |  | $ | (0.06) |  |  | $ | (0.12) |  |  | $ | (0.27) |
Weighted average shares of common stock outstanding: |  |  |  |  |  |  |
Basic and diluted | 5,610 |  |  | 5,261 |  |  | 5,420 |  |  | 4,840 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
6

ENERGY FOCUS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands)
(Unaudited)

|  | Preferred Stock |  | Common Stock |  |  |  | Additional Paid-in Capital |  | Accumulated Other Comprehensive Loss |  | Accumulated Deficit |  | Total Stockholders' Equity
|  | Shares |  | Amount |  | Shares |  | Amount |  |  |  |  |  |  |  |  |  |  |  |
Balance at December 31, 2024 |  | 876 |  |  | $ | — |  |  | 5,261 |  |  | $ | 1 |  |  |  |  |  |  | $ | 157,814 |  |  | $ | (3) |  |  | $ | (154,897) |  |  | $ | 2,915 |
Issuance of common stock |  | — |  |  | — |  |  | 103 |  |  | — |  |  |  |  |  |  | 200 |  |  | — |  |  | — |  |  | 200 |
Stock-based compensation |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  | (4) |  |  | — |  |  | — |  |  | (4) |
Net loss for the three months ended March 31, 2025 |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  | — |  |  | — |  |  | (268) |  |  | (268) |
Balance at March 31, 2025 |  | 876 |  |  | $ | — |  |  | 5,364 |  |  | $ | 1 |  |  |  |  |  |  | $ | 158,010 |  |  | $ | (3) |  |  | $ | (155,165) |  |  | $ | 2,843 |
Issuance of common stock |  | — |  |  | — |  |  | 111 |  |  | — |  |  |  |  |  |  | 200 |  |  | — |  |  | — |  |  | 200 |
Net loss for the three months ended June 30, 2025 |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  | — |  |  | — |  |  | (231) |  |  | (231) |
Balance at June 30, 2025 |  | 876 |  |  | $ | — |  |  | 5,475 |  |  | $ | 1 |  |  |  |  |  |  | $ | 158,210 |  |  | $ | (3) |  |  | $ | (155,396) |  |  | $ | 2,812 |
Issuance of common stock |  | — |  |  | — |  |  | 264 |  |  | — |  |  |  |  |  |  | 500 |  |  | — |  |  | — |  |  | 500 |
Net loss for the three months ended September 30, 2025 |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  | — |  |  | — |  |  | (172) |  |  | (172) |
Balance at September 30, 2025 |  | 876 |  |  | $ | — |  |  | 5,739 |  |  | $ | 1 |  |  |  |  |  |  | $ | 158,710 |  |  | $ | (3) |  |  | $ | (155,568) |  |  | $ | 3,140 |

|  | Preferred Stock |  | Common Stock |  |  |  | Additional Paid-in Capital |  | Accumulated Other Comprehensive Loss |  | Accumulated Deficit |  | Total Stockholders' Equity
|  | Shares |  | Amount |  | Shares |  | Amount |  |  |  |  |  |  |  |  |  |  |  |
Balance at December 31, 2023 |  | 876 |  |  | $ | — |  |  | 4,349 |  |  | $ | — |  |  |  |  |  |  | $ | 156,369 |  |  | $ | (3) |  |  | $ | (153,315) |  |  | $ | 3,051 |
Issuance of common stock |  | — |  |  | — |  |  | 283 |  |  | — |  |  |  |  |  |  | 450 |  |  | — |  |  | — |  |  | 450 |
Conversion of advanced capital contribution to common stock |  | — |  |  | — |  |  | 94 |  |  | — |  |  |  |  |  |  | 141 |  |  | — |  |  | — |  |  | 141 |
Stock-based compensation |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  | 1 |  |  | — |  |  | — |  |  | 1 |
Net loss for the three months ended March 31, 2024 |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  | — |  |  | — |  |  | (418) |  |  | (418) |
Balance at March 31, 2024 |  | 876 |  |  | $ | — |  |  | 4,726 |  |  | $ | — |  |  |  |  |  |  | $ | 156,961 |  |  | $ | (3) |  |  | $ | (153,733) |  |  | $ | 3,225 |
Issuance of common stock |  | — |  |  | — |  |  | 535 |  |  | 1 |  |  |  |  |  |  | 850 |  |  | — |  |  | — |  |  | 851 |
Net loss for the three months ended June 30, 2024 |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  | — |  |  | — |  |  | (554) |  |  | (554) |
Balance at June 30, 2024 |  | 876 |  |  | $ | — |  |  | 5,261 |  |  | $ | 1 |  |  |  |  |  |  | $ | 157,811 |  |  | $ | (3) |  |  | $ | (154,287) |  |  | $ | 3,522 |
Stock-based compensation |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  | 1 |  |  | — |  |  | — |  |  | 1 |
Net loss for the three months ended September 30, 2024 |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  | — |  |  | — |  |  | (316) |  |  | (316) |
Balance at September 30, 2024 |  | 876 |  |  | $ | — |  |  | 5,261 |  |  | $ | 1 |  |  |  |  |  |  | $ | 157,812 |  |  | $ | (3) |  |  | $ | (154,603) |  |  | $ | 3,207 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
7

ENERGY FOCUS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

| Three months ended September 30, |  | Nine months ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Cash flows from operating activities: |  |  |  |  |  |  |
Net loss | $ | (172) |  |  | $ | (316) |  |  | $ | (671) |  |  | $ | (1,288) |
Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |  |  |  |
Foreign exchange loss (gain) | 27 |  |  | — |  |  | (18) |  |  | — |
Loss on settlement of vendor obligations | — |  |  | — |  |  | 8 |  |  | — |
Gain on debt extinguishment | — |  |  | — |  |  | — |  |  | (187) |
Gain on partial lease termination | — |  |  | (63) |  |  | — |  |  | (63) |
Depreciation | 9 |  |  | 9 |  |  | 28 |  |  | 28 |
Gain on disposal of fixed assets | (3) |  |  | — |  |  | (3) |  |  | — |
Stock-based compensation | — |  |  | 1 |  |  | (4) |  |  | 2 |
Provision for credit losses and sales return | (46) |  |  | 6 |  |  | 18 |  |  | (70) |
Provision for slow-moving and obsolete inventories | 78 |  |  | 105 |  |  | 136 |  |  | 330 |
Provision for warranties | (1) |  |  | 1 |  |  | (31) |  |  | (32) |
Amortization of loan discounts and origination fees | — |  |  | — |  |  | — |  |  | 5 |
Changes in operating assets and liabilities: |  |  |  |  |  |  |
Accounts receivable | 310 |  |  | (100) |  |  | 119 |  |  | 1,097 |
Inventories | (337) |  |  | (35) |  |  | (236) |  |  | 388 |
Prepayments to vendors | (2) |  |  | 14 |  |  | (18) |  |  | 29 |
Prepaid and other assets | (51) |  |  | 4 |  |  | (33) |  |  | (55) |
Accounts payable | 90 |  |  | 98 |  |  | 27 |  |  | 177 |
Accounts payable - related party | 19 |  |  | 163 |  |  | 93 |  |  | (1,248) |
Accrued and other liabilities | 24 |  |  | (104) |  |  | 45 |  |  | (130) |
Operating lease - ROU and liabilities | — |  |  | (50) |  |  | (2) |  |  | (26) |
Total adjustments | 117 |  |  | 49 |  |  | 129 |  |  | 245 |
Net cash used in operating activities | (55) |  |  | (267) |  |  | (542) |  |  | (1,043) |
Cash flows from investing activities: |  |  |  |  |  |  |
Acquisitions of property and equipment | (49) |  |  | (19) |  |  | (54) |  |  | (19) |
Proceeds from the sale of property and equipment | 13 |  |  | — |  |  | 13 |  |  | — |
Net cash used in investing activities | (36) |  |  | (19) |  |  | (41) |  |  | (19) |

(continued on next page)
8

ENERGY FOCUS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

| Three months ended September 30, |  | Nine months ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Cash flows from financing activities: |  |  |  |  |  |  |
Issuance of common stock | 500 |  |  | — |  |  | 900 |  |  | 851 |
Payments on the 2022 Streeterville Note | — |  |  | — |  |  | — |  |  | (1,000) |
Net cash provided by (used in) financing activities | 500 |  |  | — |  |  | 900 |  |  | (149) |
Effect of exchange rate changes on cash | (11) |  |  | — |  |  | 15 |  |  | — |
Net increase (decrease) in cash | 398 |  |  | (286) |  |  | 332 |  |  | (1,211) |
Cash, beginning of period | 499 |  |  | 1,105 |  |  | 565 |  |  | 2,030 |
Cash, end of period | $ | 897 |  |  | $ | 819 |  |  | $ | 897 |  |  | $ | 819 |
Supplemental information: |  |  |  |  |  |  |
Cash paid in year for interest | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 5 |
Non-cash investing and financing activities: |  |  |  |  |  |  |
Debt-to-equity exchange transactions | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 591 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
9

ENERGY FOCUS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
NOTE 1. NATURE OF OPERATIONS
Energy Focus, Inc. (the “Company”) engages primarily in the design, development, manufacturing, marketing and sale of energy-efficient lighting systems and controls. We develop, market and sell high quality light-emitting diode (“LED”) lighting and controls products in the commercial market and military maritime market (“MMM”). Our mission is to enable our customers to run their facilities with greater energy efficiency; and productivity, and increased human health and wellness through advanced LED retrofit solutions. Our goal is to be the human wellness lighting and LED technology and market leader for the most demanding applications where performance, quality, value, environmental impact and health are considered paramount. We specialize in LED lighting retrofit by replacing fluorescent, high-intensity discharge lighting and other types of lamps in institutional buildings for primarily indoor lighting applications with our innovative, high-quality commercial and military-grade tubular LED (“TLED”) products, as well as other LED and lighting control products for commercial applications. We are also evaluating adjacent technologies, including Gallium Nitride (“GaN”) based power supplies and additional market opportunities for energy solution products that support sustainability in our existing channels.
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The significant accounting policies of our Company, which are summarized below, are consistent with accounting principles generally accepted in the United States (“U.S. GAAP”) and reflect practices appropriate to the business in which we operate. Unless indicated otherwise, the information in the Notes to the Condensed Consolidated Financial Statements relates to our operations.
We have prepared the accompanying financial data for the three and nine months ended September 30, 2025 and 2024 pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The interim results for the period ended September 30, 2025 are not necessarily indicative of the results that may be expected through December 31, 2025. All intercompany accounts and transactions are eliminated upon consolidation. The accompanying financial data and information should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024 (“2024 Annual Report”). The Condensed Consolidated Balance Sheet as of December 31, 2024 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.
In the opinion of management, the accompanying condensed consolidated financial statements contain all normal and recurring adjustments necessary to present fairly our Condensed Consolidated Financial Statements as of September 30, 2025 and December 31, 2024, and for the three and nine months ended September 30, 2025 and 2024.
10

ENERGY FOCUS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
Going Concern and Nasdaq Continued Listing Requirements Compliance
Due to our financial performance as of September 30, 2025 and December 31, 2024, including net losses of $0.7 million for the nine months ended September 30, 2025 and $1.6 million for the twelve months ended December 31, 2024, and total cash used in operating activities of $0.5 million for the nine months ended September 30, 2025 and $1.3 million for the twelve months ended December 31, 2024, we determined that substantial doubt about our ability to continue as a going concern continues to exist at September 30, 2025. As a result of restructuring actions and initiatives, we have tailored our operating expenses to be more in line with our expected sales volumes; however, we continue to incur losses and have a substantial accumulated deficit.
Additionally, global supply chain and logistics constraints and the ongoing evolution of international trade policies are impacting our inventory purchasing strategy, as we seek to manage both shortages of available components and longer lead times in obtaining components while pursuing cost-effectiveness measures to enhance profitability. As a result, we will continue to review and pursue selected external funding sources to ensure adequate financial resources to execute across the timelines required to achieve these objectives including, but not limited to, the following:
•obtaining financing from traditional or non-traditional investment capital organizations or individuals;
•obtaining funding from the sale of our common stock or other equity or debt instruments; and
•obtaining debt financing with lending terms that more closely match our business model and capital needs.
There can be no assurance that we will obtain funding on acceptable terms, in a timely fashion, or at all. Obtaining additional funding contains risks, including:
•additional equity financing may not be available to us on satisfactory terms, particularly in light of the current price of our common stock, and any equity we are able to issue could lead to dilution for current stockholders and have rights, preferences and privileges senior to our common stock;
•loans or other debt instruments may have terms or conditions, such as interest rate, restrictive covenants, conversion features, refinancing demands, and control or revocation provisions, which are not acceptable to management or the Company’s Board of Directors (the “Board of Directors”); and
•the current environment in the capital markets and volatile interest rates, combined with our capital constraints, may prevent us from being able to obtain adequate debt financing.
Considering both quantitative and qualitative information, we continue to believe that the combination of our plans to ensure adequate external funding, timely re-organizational actions, current financial position, liquid resources, obligations due or anticipated within the next year, development and implementation of an excess inventory reduction plan, plans and initiatives in our research and development, product development and sales and marketing, and development of potential channel partnerships, if adequately executed, could provide us with an ability to finance our operations through the next twelve months and may mitigate the substantial doubt about our ability to continue as a going concern.
Nasdaq Capital Market Compliance
As of the date of this Quarterly Report, the Company believes it has maintained compliance with the Minimum Stockholders’ Equity Rule, which requires listed companies to maintain stockholders’ equity of at least $2.5 million for continued listing on the Nasdaq Capital Market. Our Common Stock is listed on the Nasdaq Capital Market, which has as one of its continued listing requirements a minimum bid price of at least $1.00 per share.
However, there can be no assurance that the Company will be able to maintain compliance with the Minimum Stockholders’ Equity Rule, Bid Price Rule, or other Nasdaq listing requirements. If the Company fails to maintain compliance with Nasdaq’s continued listing standards, the Company’s common stock will be subject to delisting from Nasdaq.
Use of estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts in our financial statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management’s best knowledge of current events and actions that may impact us in the future, actual results may vary from the estimates. Estimates include, but are not limited to, the establishment of credit loss allowance for accounts receivable, sales returns, inventory obsolescence and warranty claims, the useful lives of property and equipment, valuation allowance
11

ENERGY FOCUS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
for net deferred taxes, and stock-based compensation. In addition, estimates and assumptions associated with the determination of the fair value of financial instruments and evaluation of long-lived assets for impairment requires considerable judgment. Actual results could differ from those estimates and such differences could be material.
Revenue
Net sales include revenues from sales of products and shipping and handling charges, net of estimates for product returns. Revenue is measured at the amount of consideration we expect to receive in exchange for the transferred products. We recognize revenue at the point in time when we transfer the promised products to the customer and the customer obtains control over the products. Distributors’ obligations to us are not contingent upon the resale of our products. We recognize revenue for shipping and handling charges at the time the goods are shipped to the customer, and the costs of outbound freight are included in cost of sales. We provide for product returns based on historical return rates. While we incur costs for sales commissions to our sales employees and outside agents, we recognize commission costs concurrent with the related revenue, as the amortization period is less than one year. We do not incur any other incremental costs to obtain contracts with our customers. Our product warranties are assurance-type warranties, which promise the customer that the products are as specified in the contract. Therefore, the product warranties are not a separate performance obligation and are accounted for as described below. Sales taxes assessed by governmental authorities and collected by us are accounted for on a net basis and are excluded from net sales.
We also generate revenue from services. Service revenue primarily consists of system configuration and setup services performed in connection with customer orders. These services are typically completed at or near the time of product shipment, and revenue is therefore recognized at a point in time when the service is delivered.
The following table provides a disaggregation of product and service net sales for the periods presented (in thousands):

| Three months ended September 30, |  |  | Nine months ended September 30,
| 2025 |  | 2024 |  |  | 2025 |  | 2024
Net sales: |  |  |  |  |  |  |  |
Commercial products | $ | 202 |  |  | $ | 350 |  |  |  | $ | 1,178 |  |  | $ | 1,004 |
MMM products | 621 |  |  | 846 |  |  |  | 1,382 |  |  | 2,578 |
Setup Service | 3 |  |  | — |  |  |  | 25 |  |  | — |
Total net sales | $ | 826 |  |  | $ | 1,196 |  |  |  | $ | 2,585 |  |  | $ | 3,582 |

Accounts Receivable
Our trade accounts receivable consists of amounts billed to and currently due from customers. In the normal course of business, we extend unsecured credit to our customers related to the sale of our products. Credit is extended to customers based on an evaluation of the customer’s financial condition and the amounts due are stated at their estimated net realizable value. We maintain allowances for sales returns and credit loss to provide for the estimated number of account receivables that will not be collected. The Company has determined that accounts receivable fall within the scope of the CECL analysis in accordance with ASC 326. The Company decided to use the historical loss rate method of valuing its reserve for trade receivables. The reserve for credit losses is reviewed and assessed for adequacy on a quarterly basis. We take into consideration (1) any circumstances of which we are aware of a customer's inability to meet its financial obligations and (2) our judgments as to prevailing economic conditions in the industry and their impact on our customers. If circumstances change, and the financial condition of our customers is adversely affected and they are unable to meet their financial obligations, we may need to take additional allowances, which would result in an increase in our operating expense. We do not generally require collateral from our customers.
Our standard payment terms with customers are net 30 days from the date of shipment, and we do not generally offer extended payment terms to our customers, but exceptions are made in some cases for major customers or with particular orders. Accordingly, we do not adjust trade accounts receivable for the effects of financing, as we expect the period between the transfer of product to the customer and the receipt of payment from the customer to be in line with our standard payment terms.
12

ENERGY FOCUS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
Pursuant to ASC 606, Revenue Recognition, contract assets and contract liabilities as of the beginning and ending of the reporting periods must be disclosed. Below is the breakout of the Company’s contract assets for such periods (in thousands):

| September 30, 2025 |  | December 31, 2024 |  | January 01, 2024
Gross Accounts Receivable | $ | 704 |  |  | $ | 819 |  |  | $ | 1,590 |
Less: Allowance for Credit Loss | (39) |  |  | (15) |  |  | (20) |
Net Accounts Receivable | $ | 665 |  |  | $ | 804 |  |  | $ | 1,570 |

Activity related to our reserve for credit losses for the three and nine months ended September 30, 2025 and 2024 was as follows (in thousands):

Allowance for credit loss as of December 31, 2024 | $ | (15) |
Reduction of reserve for credit losses as of March 31, 2025 | 2 |
Allowance for credit loss as of March 31, 2025 | (13) |
Increase in reserve for credit losses as of June 30, 2025 | (71) |
Allowance for credit loss as of June 30, 2025 | (84) |
Reduction of reserve for credit losses as of September 30, 2025 | 45 |
Allowance for credit loss as of September 30, 2025 | $ | (39) |

Allowance for credit loss as of January 1, 2024 | $ | (20) |
Reduction of reserve for credit losses as of March 31, 2024 | 11 |
Allowance for credit loss as of March 31, 2024 | (9) |
Reduction of reserve for credit losses as of June 30, 2024 | — |
Allowance for credit loss as of June 30, 2024 | (9) |
Increase in reserve for credit losses as of September 30, 2024 | (3) |
Allowance for credit loss as of September 30, 2024 | $ | (12) |

Geographic information
All of our long-lived fixed assets are located in the United States. For the three months ended September 30, 2025 and 2024, approximately 100% of sales were attributable to customers in the United States. For the nine months ended September 30, 2025 and 2024, approximately 78% and 100% of sales were attributable to customers in the United States, respectively, and 22% and 0%, were attributable to customers in Asia, respectively. The geographic location of our net sales is derived from the destination to which we ship the product.
Net loss per share
Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted loss per share gives effect to all dilutive potential shares of common stock outstanding during the period. Dilutive potential shares of common stock consist of incremental shares upon the exercise of stock options, warrants and convertible securities, unless the effect would be anti-dilutive.
13

ENERGY FOCUS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
The following table presents a reconciliation of basic and diluted loss per share computations (in thousands):

| Three months ended September 30, |  | Nine months ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Numerator: |  |  |  |  |  |  |
Net loss | $ | (172) |  |  | $ | (316) |  |  | $ | (671) |  |  | $ | (1,288) |
Denominator: |  |  |  |  |  |  |
Basic and diluted weighted average shares of common stock outstanding | 5,610 |  |  | 5,261 |  |  | 5,420 |  |  | 4,840 |

As a result of the net loss we incurred for the three and nine months ended September 30, 2025 and 2024, convertible securities representing approximately 25 thousand shares of common stock were excluded from the basic loss per share calculation as their inclusion would have been anti-dilutive.
Product warranties
We warrant our products and controls for periods generally ranging from one to ten years, depending on the product type and customer application. One product was sold in 2020 with a twenty year warranty. Warranty settlement costs consist of actual amounts expensed for warranty, which are largely a result of the cost of replacement products or rework services provided to our customers. A liability for the estimated future costs under product warranties is maintained for products under warranty based on the actual claims incurred to date and the estimated nature, frequency, and costs of future claims. These estimates are inherently uncertain and changes to our historical or projected experience may cause material changes to our warranty reserves in the future. We continuously review the assumptions related to the adequacy of our warranty reserve, including product failure rates, and make adjustments to the existing warranty liability when there are changes to these estimates or the underlying replacement product costs, or the warranty period expires.
The following table summarizes warranty activity for the periods presented (in thousands):

| Three months ended September 30, |  | Nine months ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Balance at beginning of period | $ | 88 |  |  | $ | 117 |  |  | $ | 118 |  |  | $ | 150 |
Warranty accruals for current period sales | — |  |  | 1 |  |  | 4 |  |  | 3 |
Adjustments to existing warranty reserves | (1) |  |  | — |  |  | (35) |  |  | (35) |
Accrued warranty reserve at end of period | $ | 87 |  |  | $ | 118 |  |  | $ | 87 |  |  | $ | 118 |

Foreign Currency Transactions
Transactions denominated in currencies other than the U.S. dollar are remeasured into U.S. dollars using exchange rates in effect at the time of the transaction. Monetary assets and liabilities denominated in foreign currencies are remeasured at period-end exchange rates. Foreign currency transaction gains and losses are recognized in earnings in the period in which they arise and are included in operating expenses, net, depending on the nature of the underlying transaction.
The Company recorded foreign currency transaction losses of $2 thousand for the three months ended September 30, 2025, and gains of approximately $43 thousand for the nine months ended September 30, 2025, which are included as a component of selling, general and administrative expenses within the accompanying consolidated statements of operations.
14

ENERGY FOCUS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
Financial Instruments
Fair Value Measurements
The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value, giving the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below. We classify the inputs used to measure fair value into the following hierarchy:

Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 | Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.
Level 3 | Unobservable inputs for the asset or liability.

The carrying amounts of certain financial instruments including cash, accounts receivable, accounts payable, and accrued liabilities approximate fair value due to their short maturities.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. In determining the appropriate levels, we perform a detailed analysis of the assets and liabilities whose fair value is measured on a recurring basis. We review and reassess the fair value hierarchy classifications on a quarterly basis. Changes from one quarter to the next related to the observability of inputs in a fair value measurement may result in a reclassification between fair value hierarchy levels. There were no reclassifications for all periods presented.
Certain risks and concentrations
We have certain customers whose net sales individually represented 10% or more of our total net sales, or whose net trade accounts receivable balance individually represented 10% or more of our total net trade accounts receivable; we have certain suppliers, which individually represent 10% or more of our total purchases, or whose trade accounts payable balance individually represented 10% or more of our total trade accounts payable balance, as follows:
Total net sales were concentrated among a few customers for the three and nine months ended September 30, 2025 and 2024 as follows:

| Three months ended September 30, |  | Nine months ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Customer A | 24.5 | % |  | — | % |  | 20.0 | % |  | — | %
Customer B | 18.7 | % |  | 24.0 | % |  | — | % |  | — | %
Customer C | 14.9 | % |  | — | % |  | — | % |  | — | %
Customer D | 12.0 | % |  | — | % |  | — | % |  | — | %
Customer E | 11.3 | % |  | — | % |  | — | % |  | — | %
Customer F | — | % |  | 16.0 | % |  | 10.5 | % |  | 10.0 | %
Customer G | — | % |  | — | % |  | — | % |  | 12.0 | %
Customer H | — | % |  | 14.0 | % |  | — | % |  | — | %
Customer I | — | % |  | 12.0 | % |  | — | % |  | — | %
Customer J (located in Taiwan) | — | % |  | — | % |  | 22.2 | % |  | — | %
Customer K | — | % |  | — | % |  | — | % |  | 17.0 | %

15

ENERGY FOCUS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
At September 30, 2025 and December 31, 2024, our trade accounts receivables were concentrated among a few customers as follows:

| As of September 30, 2025 |  | As of December 31, 2024
Customer A | 23.5 | % |  | 14.9 | %
Customer B | 23.1 | % |  | 51.8 | %
Customer I | 11.3 | % |  | 20.8 | %
Customer J (located in Taiwan) | 19.5 | % |  | — | %

We require substantial amounts of purchased materials from selected vendors. With specific materials, all of our purchases are from a single vendor. The availability and costs of materials may be subject to change due to, among other things, new laws or regulations, suppliers’ allocation to other purchasers, interruptions in production by suppliers, and changes in exchange rates, tariff and worldwide price and demand levels. Our inability to obtain adequate supplies of materials for our products at favorable prices could have a material adverse effect on our business, financial position, or results of operations by decreasing our profit margins and by hindering our ability to deliver products to our customers on a timely basis. Additionally, certain vendors require advance deposits prior to the fulfillment of orders. Deposits paid on unfulfilled orders totaled $50 thousand and $356 thousand at September 30, 2025 and December 31, 2024, respectively.
We have certain vendors who individually represented 10% or more of our total expenditures, or whose net trade accounts payable balance individually represented 10% or more of our total net trade accounts payable.
Total expenditures were concentrated among a few suppliers for the three and nine months ended September 30, 2025 and 2024 as follows:

| Three months ended September 30, |  | Nine months ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Suppliers B and C, related parties* | 48.1 | % |  | 13.2 | % |  | 27.9 | % |  | 38.6 | %

* See Note 11 “Related Party Transactions”
At September 30, 2025 and December 31, 2024, our trade accounts payable were concentrated among a few suppliers as follows:

| As of September 30, 2025 |  | As of December 31, 2024
Supplier A | — | % |  | 35.6 | %
Suppliers B and C, related parties* | 80.7 | % |  | 54.4 | %

* See Note 11 “Related Party Transactions”
16

ENERGY FOCUS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
Recent Accounting Pronouncements Not Yet Adopted
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. ASU 2023-06 modifies the disclosure or presentation requirements of a variety of Topics in the Codification. Certain of the amendments represent clarifications to or technical corrections of the current requirements. Because of the variety of Topics amended, a broad range of entities may be affected by one or more of those amendments. Many of the amendments allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the SEC’s requirements. Also, the amendments align the requirements in the Codification with the SEC’s regulations. For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. For all other entities, the amendments will be effective two years later. The amendments in this update should be applied prospectively. For all entities, if by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity. The Company is currently evaluating the potential impact this standard will have on its consolidated financial statements and related disclosure.
Recently adopted accounting standards
On December 14, 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. Under the new guidance, entities must consistently categorize and provide greater disaggregation of information in the rate reconciliation. They must also further disaggregate income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. The guidance applies to all entities subject to income taxes and is effective for annual periods beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. The Company adopted this standard on January 1, 2025 and the adoption does not have significant impact to the Company.
Other accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. We do not discuss recent standards that are not anticipated to have an impact on or are unrelated to our consolidated financial condition, results of operations, cash flows or disclosures.
NOTE 3. INVENTORIES
Inventories are stated at the lower of standard cost (which approximates actual cost determined using the first-in, first-out cost method) or net realizable value, and consist of the following (in thousands):

| September 30, 2025 |  | December 31, 2024
Raw materials | $ | 991 |  |  | $ | 1,000 |
Finished goods | 2,504 |  |  | 2,610 |
Reserves for excess, obsolete, and slow-moving inventories | (483) |  |  | (347) |
Inventories, net | $ | 3,012 |  |  | $ | 3,263 |

The following is a roll-forward of the reserves for excess, obsolete, and slow-moving inventories (in thousands):

| Three months ended September 30, |  | Nine months ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Beginning balance* | $ | (405) |  |  | $ | (225) |  |  | $ | (347) |  |  | $ | (89) |
Accrual | (96) |  |  | (105) |  |  | (235) |  |  | (330) |
Reduction due to sold inventory | 18 |  |  | — |  |  | 99 |  |  | 89 |
Reserves for excess, obsolete, and slow-moving inventories | $ | (483) |  |  | $ | (330) |  |  | $ | (483) |  |  | $ | (330) |

17

ENERGY FOCUS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
*The balance as of January 1, 2024 reflects the reduction of permanent markdown in cost for the amount of $2,464.
NOTE 4. PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the related assets and consist of the following (in thousands):

| September 30, 2025 |  | December 31, 2024
Equipment (useful life 3 to 15 years) | $ | 496 |  |  | $ | 490 |
Tooling (useful life 2 to 5 years) | 210 |  |  | 171 |
Vehicles (useful life 5 years) | 41 |  |  | 41 |
Leasehold improvements (the shorter of useful life or lease life) | 124 |  |  | 124 |
Property and equipment at cost | 871 |  |  | 826 |
Less: accumulated depreciation | (765) |  |  | (736) |
Property and equipment, net | $ | 106 |  |  | $ | 90 |

Depreciation expense was $9 thousand for the three months ended September 30, 2025 and 2024. Depreciation expense was $28 thousand for the nine months ended September 30, 2025 and 2024.
NOTE 5. LEASES
The Company leases certain equipment, manufacturing, warehouse and office space under non-cancellable operating leases with expirations through 2027 under which it is responsible for related maintenance, taxes and insurance. Effective July 1, 2024, our warehouse and office lease was amended to reduce the rentable square feet from 62,335 square feet to 29,692 square feet, and rent expense was decreased in proportion to the reduction in rentable square footage. The Company recorded this as a lease modification in accordance with ASC 842 Leases (“ASC 842”) and recorded a reduction to the right of use asset and lease liability of approximately $395 thousand using an incremental borrowing rate of approximately 13.64%. The Company recognized a gain on the lease modification of $63 thousand during the third quarter of 2024. The weighted average remaining lease term for the operating lease is 1.8 years. On October 3, 2025, the Company further amended the lease to reduce the rentable area, from 29,692 square feet to 25,392 square feet, and corresponding rent expense proportionally.
Components of the operating lease costs recognized in net loss were as follows (in thousands):

| Three months ended September 30, |  | Nine months ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Operating lease cost |  |  |  |  |  |  |
Lease cost | 45 |  |  | 72 |  |  | 137 |  |  | 267 |
Total lease cost, net | $ | 45 |  |  | $ | 72 |  |  | $ | 137 |  |  | $ | 267 |

Supplemental balance sheet information related to the Company’s operating and finance leases as of September 30, 2025 and December 31, 2024 are as follows (in thousands):

| September 30, 2025 |  | December 31, 2024
Operating Leases |  |  |
Operating lease right-of-use assets | $ | 277 |  |  | $ | 377 |
Operating lease liabilities | 291 |  |  | 393 |

18

ENERGY FOCUS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
The maturities of lease liabilities under operating leases by years at September 30, 2025 are as follows (in thousands):

|  | Operating Leases |  |  |
October 2025 to September 2026 |  | 185 |  |  |  |
October 2026 to September 2027 |  | 140 |  |  |  |
Total future undiscounted lease payments |  | 325 |  |  |  |
Less imputed interest |  | (34) |  |  |  |
Total lease obligations |  | $ | 291 |  |  |  |

Supplemental cash flow information related to leases for the three and nine months ended September 30, 2025 and 2024, was as follows (in thousands):

| Three months ended September 30, |  | Nine months ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Supplemental cash flow information |  |  |  |  |  |  |
Cash paid, net, for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |
Operating cash flows from operating leases | $ | 44 |  |  | $ | 94 |  |  | $ | 134 |  |  | $ | 281 |

19

ENERGY FOCUS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
NOTE 6. DEBT
Streeterville Notes
2022 Streeterville Note
On April 21, 2022, we entered into a note purchase agreement with Streeterville Capital, LLC (“Streeterville”), pursuant to which we sold and issued to Streeterville a promissory note in the principal amount of approximately $2.0 million (the “2022 Streeterville Note”). The note was subsequently restructured in January 2023 and March 2023, with partial conversion to equity.
On January 18, 2024, the Company and Streeterville entered into an agreement to fully satisfy the remaining obligations under the 2022 Streeterville Note through $1.0 million in cash and the issuance of 94,440 shares of common stocks. On January 23, 2024, the 2022 Streeterville Note was terminated, upon which the Company recognized $187 thousand gain on debt extinguishment.
As of September 30, 2025, the Company has no outstanding debt obligations.
Advanced capital contribution
In October 2023, an unrelated party agreed to subscribe to the Company’s common stock in the next round of private placement and transferred funds in the amount of $450 thousand. There was no restriction in the use of the funds and the advanced capital contribution bore no interest. The advanced capital contribution was exchanged for common stock on March 28, 2024. See Note 8, “Stockholders’ Equity.”
NOTE 7. INCOME TAXES
As a result of the operating loss incurred during the three and nine months ended September 30, 2025 and 2024, and after the application of the annual limitation set forth under Section 382 of the Internal Revenue Code of 1986, as amended (the “IRC”), it was not necessary to record a provision for U.S. federal income tax.
At September 30, 2025 and December 31, 2024, we had a full valuation allowance recorded against our deferred tax assets.
The valuation allowance was recorded due to uncertainties related to our ability to realize the deferred tax assets, primarily consisting of certain net operating loss carry-forwards. The valuation allowance is based on management’s estimates of taxable income by jurisdiction and the periods over which the deferred tax assets will be recoverable.
At December 31, 2024, we had a net operating loss carry-forward of approximately $141.1 million for federal income tax purposes ($39.1 million for state and local income tax purposes). However, due to changes in our capital structure, approximately $86.8 million of the $141.1 million is available to offset future taxable income after the application of the limitations found under Section 382 of the Internal Revenue Code of 1986, as amended. As a result of the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), net operating loss carry-forwards generated in tax years beginning after December 31, 2017 can only offset 80% of taxable income and can be carried forward indefinitely. The $3.4 million and $6.3 million in federal net operating losses generated in 2024 and 2023, respectively, will be subject to the new limitations under the Tax Act. If not utilized, the carry-forwards generated prior to December 31, 2017 of $1.0 million will begin to expire in 2025 for federal purposes and have begun to expire for state and local purposes. For a full discussion of the estimated restrictions on our utilization of net operating loss carry-forwards, please refer to Note 10, “Income Taxes,” included under Item 8, “Financial Statements and Supplementary Data,” of our 2024 Annual Report.
20

ENERGY FOCUS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
NOTE 8. STOCKHOLDERS’ EQUITY
Private Placements
The Company entered the following securities purchase agreements with certain investors and issued 478,674 and 912,050 shares of common stock during the nine months ended September 30, 2025 and the year ended December 31, 2024, respectively.
August 2025 Private Placement
On August 15, 2025, the Company entered into a securities purchase agreement with its Chief Executive Officer, Mr. Chiao Chieh (Jay) Huang, pursuant to which the Company agreed to issue and sell in a private placement an aggregate of 264,550 shares of the Company’s common stock, par value $0.0001 per share, for a purchase price per share of $1.89 (the “August 2025 Private Placement”). The purchase price was determined by the Board of Directors to be at a premium to the Nasdaq closing price of our common stock on the date of the agreement. The Board of Directors approved the purchase price per share based on its judgment of the Company’s capital needs, market conditions, and limited financing alternatives available at the time. The Board determined this price to be reasonable and in the best interests of the Company and its shareholders. These transactions were approved by independent members of the Board of Directors.
Aggregate gross proceeds to the Company with respect to the August 2025 Private Placement were approximately $500 thousand. The August 2025 Private Placement closed on August 19, 2025.
June 2025 Private Placement
On June 19, 2025, the Company entered into a securities purchase agreement with its Chief Executive Officer, Mr. Chiao Chieh (Jay) Huang, pursuant to which the Company agreed to issue and sell in a private placement an aggregate of 110,497 shares of the Company’s common stock, par value $0.0001 per share, for a purchase price per share of $1.81 (the “June 2025 Private Placement”). The purchase price was determined by the Board of Directors to be at a premium to the Nasdaq closing price of our common stock on the date of the agreement. The Board of Directors approved the purchase price per share based on its judgment of the Company’s capital needs, market conditions, and limited financing alternatives available at the time. The Board determined this price to be reasonable and in the best interests of the Company and its shareholders. These transactions were approved by independent members of the Board of Directors.
Aggregate gross proceeds to the Company with respect to the June 2025 Private Placement were approximately $200 thousand. The June 2025 Private Placement closed on June 23, 2025.
March 2025 Private Placement
On March 27, 2025, the Company entered into a securities purchase agreement with its Chief Executive Officer, Mr. Chiao Chieh (Jay) Huang, pursuant to which the Company agreed to issue and sell in a private placement an aggregate of 103,627 shares of the Company’s common stock, par value $0.0001 per share, for a purchase price per share of $1.93 (the “March 2025 Private Placement”). The purchase price was determined by the Board of Directors to be at a premium to the Nasdaq closing price of our common stock on the date of the agreement. The Board of Directors approved the purchase price per share based on its judgment of the Company’s capital needs, market conditions, and limited financing alternatives available at the time. The Board determined this price to be reasonable and in the best interests of the Company and its shareholders. These transactions were approved by independent members of the Board of Directors.
Aggregate gross proceeds to the Company respect to the March 2025 Private Placement were approximately $200 thousand. The Private Placement was priced higher than the closing price $1.92 of the Common Stock on the Nasdaq on the day of signing of the purchase agreement. The issuance and sale of the shares pursuant to the purchase agreement are not being registered under the Securities Act of 1933, as amended (the “Securities Act”), and were made pursuant to certain exemptions from registration, including Section 4(a)(2) of the Securities Act, in reliance on the representations and covenants of the purchaser under the purchase agreement. The March 2025 Private Placement closed on March 31, 2025.
June 2024 Private Placement
On June 21, 2024, the Company entered into a securities purchase agreement with Sander Electronics Inc., a shareholder of the Company controlled by Mr. Chiao Chieh (Jay) Huang, CEO of the Company, pursuant to which the Company agreed to
21

ENERGY FOCUS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
issue and sell in a private placement an aggregate of 534,591 shares of the Company’s common stock, par value $0.0001 per share, for a purchase price per share of $1.59 (the “June 2024 Private Placement”).
Aggregate gross proceeds to the Company in respect of the June 2024 Private Placement were approximately $851 thousand. The June 2024 Private Placement closed on June 21, 2024.
March 2024 Private Placement
On March 28, 2024, the Company entered into a securities purchase agreement with certain purchaser, pursuant to which the Company agreed to issue and sell in a private placement an aggregate of 283,019 shares of the Company’s common stock, par value $0.0001 per share, for a purchase price per share of $1.59 (the “March 2024 Private Placement”). Consideration for the transaction included exchange of $450 thousand in the aggregate of outstanding amounts on capital contributions received in October 2023.
Aggregate gross proceeds to the Company in respect of the March 2024 Private Placement were approximately $450 thousand. The March 2024 Private Placement was priced at-the-market under the Nasdaq rules.
Preferred Stock
The Series A Preferred Stock was created by the filing of a Certificate of Designation with the Secretary of State of the State of Delaware on March 29, 2019, which designated 2,000,000 shares of the Company’s preferred stock, par value $0.0001 per share, as Series A Preferred Stock (the “Original Series A Certificate of Designation”). On January 15, 2020 with prior stockholder approval, the Company amended the Certificate of Incorporation to increase the number of authorized shares of preferred stock to 5,000,000. The Original Series A Certificate of Designation was also amended on January 15, 2020, to increase the number of shares of preferred stock designated as Series A Preferred Stock to 3,300,000 (the Original Series A Certificate of Designation, as so amended, the “Series A Certificate of Designation”).
Pursuant to the Series A Certificate of Designation, each holder of outstanding shares of Series A Preferred Stock is entitled to vote with holders of outstanding shares of common stock, voting together as a single class, with respect to any and all matters presented to the stockholders of the Company for their action or consideration, except as provided by law. In any such vote, each share of Series A Preferred Stock shall entitle its holder to a number of votes equal to 1.582% of the number of shares of common stock into which such share of Series A Preferred Stock is convertible.
The Series A Preferred Stock (a) has a preference upon liquidation equal to $0.67 per share and then participates on an as-converted basis with the common stock with respect to any additional distributions, (b) shall receive any dividends declared and payable on our common stock on an as-converted basis, and (c) is convertible at the option of the holder into shares of our common stock on a 1-for-35 basis.
As of September 30, 2025 and December 31, 2024, there were 876,447 Series A Preferred Stock issued and outstanding which can be convertible into 25 thousand shares of common stock at the option of the holder.
Warrants
During the three and nine months ended September 30, 2025 and year ended December 31, 2024, no warrants were exercised.
As of September 30, 2025 and December 31, 2024, we had the following outstanding warrants:

| As of September 30, 2025 |  | As of December 31, 2024 |  |  |  |
| Number of Underlying Shares |  | Exercise Price |  | Expiration
June 2022 Warrants | 384,615 |  | 384,615 |  | $9.10 |  | December 16, 2026
December 2021 Warrants | 182,630 |  | 182,630 |  | $24.64 |  | June 7, 2027
January 2020 Investor Warrants | — |  |  | 26,819 |  | $23.59 |  | January 13, 2025
January 2020 Placement Agent Warrants | — |  |  | 5,954 |  | $34.96 |  | January 13, 2025
| 567,245 |  | 600,018 |  |  |  |

22

ENERGY FOCUS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
Stock-based compensation
Stock-based compensation expense is attributable to stock options and restricted stock unit awards. For all stock-based awards, we recognize expense using a straight-line amortization method.
The following table summarizes stock-based compensation expense and the impact it had on operations for the periods presented (in thousands):

| Three months ended September 30, |  | Nine months ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Selling, general, and administrative | — |  |  | 1 |  |  | (4) |  |  | 2 |
Total stock-based compensation | $ | — |  |  | $ | 1 |  |  | $ | (4) |  |  | $ | 2 |

Total unearned stock-based compensation was $1 thousand and $3 thousand at September 30, 2025 and 2024, respectively. These costs will be charged to expense and amortized on a straight-line basis in future periods. The weighted average period over which the unearned compensation at September 30, 2025 is expected to be recognized is approximately 1.6 years.
Stock options
For the three and nine months ended September 30, 2025 and 2024, the Company did not grant any stock options.
Options outstanding under all plans have a contractual life of ten years, and vesting periods between one and four years. A summary of option activity under all outstanding stock incentive plans for the nine months ended September 30, 2025 is presented as follows:

| Number of Options |  | Weighted Average Exercise Price Per Share |  | Weighted Average Remaining Contractual Life (in years)
Balance at December 31, 2024 | 30,566 |  |  | $ | 5.58 |  |  |
Granted | — |  |  | — |  |  |
Canceled/forfeited | (28,300) |  |  | 5.15 |  |  |
Expired | — |  |  | — |  |  |
Balance at September 30, 2025 | 2,266 |  |  | $ | 10.95 |  |  | 3.4
Vested and expected to vest at September 30, 2025 | 2,266 |  |  | $ | 10.95 |  |  | 3.4
Exercisable at September 30, 2025 | 1,736 |  |  | $ | 13.51 |  |  | 3.3

Restricted stock units
We are able to issue restricted stock units to certain employees and non-employee Directors under the 2020 Plan with vesting periods ranging from one to four years. As of September 30, 2025, the outstanding restricted stock is zero.
NOTE 9. COMMITMENTS AND CONTINGENCIES
Purchase Commitments
As of September 30, 2025, we had approximately $2.0 million in outstanding purchase commitments for inventory. Of this amount, approximately $2.0 million of which is expected to ship in the fourth quarter of 2025 and $7 thousand of which is expected to ship in the first quarter of 2026. We have 9% of the outstanding purchase commitments with related parties.
23

ENERGY FOCUS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
NOTE 10. SEGMENT INFORMATION
Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s Chief Executive Officer is the CODM. The CODM reviews financial information presented at a consolidated level on a recurring basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. The Company’s operations are organized into one operating and one reportable segment, which includes both Commercial and MMM product lines that, although discussed separately and may exhibit counter-cyclical trends, are managed and reported together.
The CODM allocates resources and assesses performance of the Company based on net income (loss), as reported on the Consolidated Statement of Operations, which as the segment measure of profit and loss that is based on GAAP, is the required segment measure.
The CODM reviews these measures (i) to evaluate the Company's operating results and the effectiveness of business strategies, and (ii) internally as benchmarks to compare the Company's performance to its competitors. Additionally, the Company believes these measures are important to evaluate the performance and profitability of our products, individually and in the aggregate.
The CODM does not review segment assets and segment expenses at a level different than what is reported in the Company's Consolidated Balance Sheet and Consolidated Statement of Operations. Additionally, the CODM regularly receives information about the Company's capital expenditures which are reported in the Company's Consolidated Statement of Cash Flows as purchase of property and equipment under investing activities.
NOTE 11. RELATED PARTY TRANSACTIONS
Sales Transactions
The Company recognized $3 thousand of gain on sales of fixed assets for the three and nine months of 2025, which was related to a one-time resale of a software license package to a Sander Electronics CO LTD (located in Taiwan), a shareholder of the Company as part of a specific project. There was no such gain recognized for the first nine months of 2024.
Purchase Transactions
The Company has a purchase agreement for TLED products and spare parts and fixed assets with Sander Electronics, Inc (located in the US), an affiliate of a shareholder and Sander Electronics CO LTD (located in Taiwan), a shareholder of the Company.

Purchase Activities |  |  |  |  |  |  |  |  |
| Three months ended September 30, |  | Nine months ended September 30,
Name of related party | 2025 | % of purchases | 2024 | % of purchases |  | 2025 | % of purchases | 2024 | % of purchases
Sander Electronics, Inc. | $ | 226 |  | 20.4 | % | $ | — |  | — | % |  | $ | 476 |  | 15.4 | % | $ | — |  | — | %
Sander Electronics Co Ltd | 306 |  | 27.7 | % | 195 |  | 13.2 | % |  | 388 |  | 12.5 | % | 2,420 |  | 38.6 | %
| $ | 532 |  | 48.1 | % | $ | 195 |  | 13.2 | % |  | $ | 864 |  | 27.9 | % | $ | 2,420 |  | 38.6 | %

Accounts Payable |  |  |  |  |
Name of related party | As of September 30, 2025 | % of accounts payable |  | As of December 31, 2024 | % of accounts payable
Sander Electronics, Inc. | $ | 248 |  | 20.0 | % |  | $ | — |  | — | %
Sander Electronics Co Ltd | 754 |  | 60.7 | % |  | 909 |  | 54.4 | %
| $ | 1,002 |  | 80.7 | % |  | $ | 909 |  | 54.4 | %

Related Party Risk Concentration
24

ENERGY FOCUS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
The Company’s business operations involve significant related party relationships that create concentration risks. As of September 30, 2025, related parties represented 81% of total accounts payable and 9% of outstanding purchase commitments. This concentration in related party suppliers, while providing certain operational benefits, creates risks regarding pricing, payment terms, supply continuity, and potential conflicts of interest. The Company has limited readily available alternative suppliers to replace the current production capacity provided by related parties. Management believes the terms of related party transactions are commercially reasonable and comparable to arm’s length transactions; however, the concentration of these relationships could materially impact operations if disrupted. These transactions are subject to review and approval by the Company’s independent directors.
Private Placements
Please refer to Note 8 for further details on Private Placements in 2025 and 2024.
NOTE 12. SUBSEQUENT EVENTS
The Company has evaluated its operations subsequent to September 30, 2025 to the date these condensed consolidated financial statements were available to be issued and determined no subsequent events or transactions required disclosure in these condensed consolidated financial statements.
25

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and related notes thereto included in Part I, Item 1, “Financial Statements” of this Quarterly Report, as well as Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual Report on Form 10-K for the year ended December 31, 2024 (“2024 Annual Report”).
Overview
Energy Focus, Inc. engages primarily in the design, development, manufacturing, marketing and sale of energy-efficient lighting systems and controls. We develop, market and sell high quality light-emitting diode (“LED”) lighting and controls products in the commercial market and military maritime market (“MMM”). In addition to our lighting portfolio, we also offer uninterruptible power supply (“UPS”) systems and other power management solutions, which have contributed meaningfully to our revenue in recent quarters and are expected to be a strategic area of continued growth.
Our mission is to enable our customers to run their facilities with greater energy efficiency, productivity, and human health and wellness through advanced LED retrofit solutions. Our goal is to be a market leader for the most demanding applications where performance, quality, value, environmental impact and health are considered paramount. We specialize in energy efficient LED lighting retrofit product, replacing fluorescent, high-intensity discharge lighting and other types of lamps in institutional buildings for primarily indoor lighting applications with our innovative, high-quality commercial and military-grade tubular LED (“TLED”) products, as well as other LED and lighting control products for commercial and consumer applications. We are also evaluating additional adjacent technologies, including Gallium Nitride (“GaN”) based power supplies and other energy solution products that support sustainability in our existing channels.
The LED lighting industry has changed dramatically over the past several years due to increasing competition and price erosion. We have been experiencing these industry forces in both our military and commercial business since 2016, when we once commanded significant price premiums for our flicker-free TLEDs with industry leading warranties. In more recent years, we have focused on redesigning our products for lower costs and consolidated our supply chain for stronger purchasing power in an effort to price our products more competitively while not impacting the performance and quality. Despite these efforts, our legacy products continue to face extreme price competition and a convergence of product functionality in the marketplace, and we have shifted to diversifying our supply chain in an effort to increase value and remain competitive. These trends are not unique to Energy Focus as evidenced by the increasing number of industry peers facing challenges, exiting LED lighting, selling assets and even going out of business.
In addition to continuously pursuing cost reductions, our strategy to combat these trends is to innovate both our technology and product offerings with differentiated products and solutions that offer greater, distinct value. Specific examples of these products we have developed include the RedCap®, our patented emergency backup battery integrated TLED, as well as our robust MMM product offering. The Company has enhanced the performance of our RedCap® product by providing a more user friendly experience. We continue to evaluate our sales strategy and believe our go-to-market strategy that focuses more on direct-sales marketing, selectively expanding our channel partner network to cover territories across the country, and listening to the voice of the customer will lead to better and more impactful product development efforts that we believe will eventually translate into larger addressable markets and greater sales growth.
It is our belief that the continued dramatic rightsizing efforts undertaken in 2024 and 2025, along with reorganization of the sales team and ongoing development of innovative, high-value products and an expanded distribution network, will over time result in improved sales and bottom-line performance for the Company.
We have taken steps to strengthen our financial structure through capital increases and cost reduction measures. As a result, we have fully eliminated all external high-interest debt, which we believe has improved our financial position. Our business expansion plans are supported by financial strategies that we expect will provide funding for our planned growth initiatives, although there can be no assurance that such funding will be adequate. During 2024, our MMM business faced ongoing challenges due to delays in government funding and the timing of U.S. Navy awards. Several anticipated projects encountered repeated postponements, In addition, we face challenges from long sales cycles, which is typical in this sector. The timeline from bid submission to order placement often exceeds six months, and many MMM products are build-to-order, resulting in extended lead times before revenue recognition. To mitigate this volatility, we continue to actively pursue new opportunities with the U.S. Navy and other government sectors. We have undertaken efforts to reduce costs, which we believe have contributed to our competitiveness, and may have helped us secure new contracts and expand our sales pipeline in the remainder of 2025 and beyond.
26

We are actively expanding our commercial product offerings, including our newly introduced UPS systems for data centers. We also continue to advance the expansion of product lines such as Energy Storage Systems (“ESS”) and GaN based power supplies, while leveraging the stability and opportunities within our MMM business. In 2024, we conducted a comprehensive review of our commercial pricing strategy and reassessed key partnerships within the energy-related market. These strategic adjustments have improved our market position, offering a more competitive pricing structure and a stronger value proposition for our customers. We believe that these initiatives, if successfully implemented, and if our financial position continues to improve, may contribute to growth across both our MMM and commercial business sectors, although there can be no assurance that such growth will occur.
Meanwhile, we continue to seek additional external funding alternatives and sources to support our growth strategies, plans and initiatives. The strategic investments in 2024 by Sander Electronics, Inc. (“Sander”), a shareholder of the Company, contributed meaningful external capital, as well as presented synergistic opportunities to improve and diversify our supply chain and product offerings.
Despite continuing progress on cost reduction throughout 2024 and 2025, the Company’s results reflect the challenges due to long and unpredictable sales cycles, unexpected delays in MMM and commercial customer retrofit budgets and project starts, and supply chain issues. There has also been continuing aggressive price competition in the lighting industry. We continue to incur losses and we have a substantial accumulated deficit, which continues to raise substantial doubt about our ability to continue as a going concern at September 30, 2025.
Our Business Strategy
Demand-oriented Approach
In order to deepen our relationships with customers, we are in the process of re-establishing our service model, aiming to provide richer and more targeted customer service. We believe that by increasing opportunities for interaction with our customers, we can better understand their needs, thereby enhancing their loyalty to our brand.
To ensure that EFOI’s products, pricing, and customer service lifecycle are better aligned, we are building a comprehensive value model to ensure consistency in the products and services we provide throughout the customer journey. We have begun an in-depth analysis of our current and past top 10 customers over the last five years to identify the core factors that make them loyal customers. By analyzing this data, we hope to reveal the key elements that enhance customer stickiness, providing them with more reasons and value to stay with us. In particular, we are actively focusing on customers with high loyalty to better meet their needs. This is not only an acknowledgment of our products but also a validation of the quality of our service.
Supply-oriented Approach
EFOI is committed to adopting three main sustainable economy strategies: “Green Supply Chain”, “Green Product”, and “Green Manufacturing”, aiming to promote sustainability throughout the entire value chain. The Company is working closely with its supply chain partners to optimize recycling mechanisms and strengthen packaging design, integrating sustainable economy principles into the core of supply chain management.
Guided by the vision of “transcending traditional corporate social responsibility and creating shared value”, EFOI’s team is focusing on stakeholders, aiming to achieve a “dual profit engine” effect by combining financial performance and Environmental, Social, and Governance (ESG) practices. This strategy not only aligns with the Company’s responsibility and sustainability goals but is also expected to enhance overall performance and market competitiveness. EFOI's operational team's new strategy focuses on integrating environmental and economic benefits, aiming to create a win-win situation that benefits the company, society, and the environment.
Under the premise of a similar industrial environment and familiar relationships, our professional skills complement those of our supply chain partners. This foundation of cooperation enables us to more easily achieve common goals of cost reduction, profit sharing, and exploring new business opportunities. This not only strengthens our cooperative relationship but also lays a solid foundation for our joint efforts towards a better future.
Financial-oriented Approach
The Company applies strategic financial management in the below perspective.
Control and Monitoring of Assets and Liabilities
27

•Assets: Regularly evaluate all assets, especially inventory, to ensure they remain in optimal condition in terms of value and performance. Minimize or mitigate the impact of inefficient and aging assets, focusing on assets with high efficiency and return.
•Liabilities: Ensure a robust liability structure, optimize the cost of liabilities, and seek lower interest rates and more favorable repayment terms. Regularly review the liability situation to ensure the company’s level of liabilities remains within a safe range.
Structured Profitability
•Revenue Growth: Develop diversified revenue streams, reduce dependency on single business or market, continuously optimize products and services, and enhance market competitiveness.
•Cost Control: Strictly control operating costs, seek opportunities to reduce costs, and ensure the efficient use of resources to optimize operations.
•Cash Flow Management: Establish a sound accounts receivable and payable management system to ensure timely collection of receivables and reasonable arrangement of payments. Maintain sufficient cash reserves to cope with potential funding shortages.
Results of operations
The following table sets forth items in our Condensed Consolidated Statements of Operations as a percentage of net sales for the periods indicated:

| Three months ended September 30, |  | Nine months ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Net sales | 100.0 | % |  | 100.0 | % |  | 100.0 | % |  | 100.0 | %
Cost of sales | 82.2 |  |  | 84.3 |  |  | 81.1 |  |  | 87.9 |
Gross profit | 17.8 |  |  | 15.7 |  |  | 18.9 |  |  | 12.1 |
Operating expenses: |  |  |  |  |  |  |
Product development | 9.9 |  |  | 11.5 |  |  | 8.0 |  |  | 11.3 |
Selling, general, and administrative | 29.1 |  |  | 37.5 |  |  | 36.7 |  |  | 44.2 |
Total operating expenses | 39.0 |  |  | 49.0 |  |  | 44.7 |  |  | 55.5 |
Loss from operations | (21.2) |  |  | (33.3) |  |  | (25.8) |  |  | (43.4) |
Other expenses (income): |  |  |  |  |  |  |
Interest expense | — |  |  | — |  |  | — |  |  | 0.1 |
Gain on debt extinguishment | — |  |  | — |  |  | — |  |  | (5.2) |
Gain on partial lease termination | — |  |  | (5.3) |  |  | — |  |  | (1.8) |
Gain on disposal of fixed assets | (0.4) |  |  | — |  |  | (0.1) |  |  | — |
Other income | — |  |  | (2.2) |  |  | — |  |  | (0.8) |
Other expenses | — |  |  | 0.6 |  |  | 0.3 |  |  | 0.3 |
Net loss | (20.8) | % |  | (26.4) | % |  | (26.0) | % |  | (36.0) | %

28

Net sales
A further breakdown of our net sales is presented in the following table (in thousands):

| Three months ended September 30, |  | Nine months ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Commercial products | $ | 202 |  |  | $ | 350 |  |  | $ | 1,178 |  |  | $ | 1,004 |
MMM products | 621 |  |  | 846 |  |  | 1,382 |  |  | 2,578 |
Setup Service | 3 |  |  | — |  |  | 25 |  |  | — |
Total net sales | $ | 826 |  |  | $ | 1,196 |  |  | $ | 2,585 |  |  | $ | 3,582 |

Net sales of $0.8 million for the third quarter of 2025 decreased $0.4 million, or 31%, compared to third quarter of 2024 net sales of $1.2 million, primarily driven by a 27% decrease in MMM sales and a 42% decrease in commercial sales. The net sales decrease of MMM products sales in the third quarter was primarily due to a significant reduction in military demand, driven by ongoing federal budget uncertainties. The decrease in commercial sales was primarily driven by the effects of weakened economy and high inflation, which reflected the weakened market demand and the market trend of fluctuations.
Net sales of $2.6 million for the first nine months of 2025 decreased $1.0 million, or 28%, compared to the same period in 2024, primarily driven by a 46% decrease in MMM sales, partially offset by a 17% increase in commercial sales. The net sales decrease for the first nine months of 2025 was primarily due to a significant reduction in military demand, driven by ongoing federal budget uncertainties.
Gross Profit
Gross profit was $0.1 million, representing 18% of net sales, for the third quarter of 2025. This compares with gross profit of $0.2 million, or 16% of net sales, in the third quarter of 2024. The period-over-period change in gross profit was driven mainly by a more favorable product mix, partially offset by higher tariff charges on imported goods, resulting in a slight decrease in gross profit dollars while improving gross margin.
Gross profit was $0.5 million, representing 19% of net sales, for the first nine months of 2025 compared to $0.4 million, or 12% of net sales, for the first nine months of 2024. The year-over-year improvement in gross profit was driven mainly by a reduced use of temporary outside labor and decrease in fixed costs such as subscription fee and rent expense for production.
Operating expenses
Product development
Product development expenses include salaries and related benefit, testing and related cost, travel expenses, cost of supplies, as well as overhead items, such as depreciation and facility costs. Product development costs are expensed as they are incurred.
Product development expenses were $0.1 million for the third quarter of 2025, down 40% from the third quarter of 2024. The $0.1 million decrease is primarily due to lower payroll-related expenses resulting from structure optimization, as well as lower product testing and R&D supplies expenses.
Product development expenses were $0.2 million for the first nine months of 2025, a $0.2 million decrease compared to $0.4 million for the first nine months of 2024. The decrease primarily resulted from lower payroll-related expenses due to reduction in headcount and product testing fees.
Selling, general and administrative
Selling, general and administrative expenses were $0.2 million for the third quarter of 2025, down 47% from $0.4 million in the third quarter of 2024. The decrease is primarily due to a reduction in consultant fees of $0.1 million.
Selling, general and administrative expenses were $0.9 million for the first nine months of 2025, compared to $1.6 million for the first nine months of 2024. The decrease is primarily due to reductions in consultant fees of $0.3 million, reduction of $0.1 million in insurance fees, reduction of $0.1 million in software fees, and reduction of $0.1 million in director fees.
29

Other Expense (Income)
Interest expense (income)
There was no interest expense for the third quarter of 2025 and 2024.
There was no interest expense for the first nine months of 2025, compared to interest expense of $5 thousand for the first nine months of 2024. The decrease is primarily related to interest attributable to the 2022 Streeterville Note. There was no actual cash interest paid for nine months ended September 30, 2025 compared to $5 thousand in the first nine months of 2024.
Gain on debt extinguishment
We recognized a $187 thousand gain on debt extinguishment for the first quarter of 2024, which was related to the early termination of the 2022 Streeterville Note. There was no such gain recognized for the first nine months of 2025.
Gain on partial lease termination
We recognized $63 thousand of gain on partial lease termination for the three and nine months of 2024, which was related to the partial termination of the office lease. There was no such gain recognized for the first nine months of 2025.
Gain on disposal of fixed assets
We recognized $3 thousand of gain on sales of fixed assets for the three and nine months of 2025, which was related to a one-time resale of a software license package to a related party customer as part of a specific project. There was no such gain recognized for the first nine months of 2024. See Note 11 “Related Party Transactions”.
Other income and expenses
Other expenses were less than a thousand for the third quarter of 2025, compared to other expenses of $7 thousand for the third quarter of 2024. Other expenses were $8 thousand for the nine months ended September 30, 2025, compared to other expenses of $9 thousand for the nine months ended September 30, 2024. Other expenses are mainly composed of bank and collateral management fees. We recognized a non-cash loss of approximately $8 thousand on the settlement of returning inventory, cancelling prepayments made to the vendor, and settlement of outstanding accounts payables in the second quarter of 2025.
Other income was less than a thousand for the third quarter and first nine months of 2025, compared to other income of $26 thousand and $30 thousand for the third quarter and the first nine months of 2024. Such other income is related to receipts of unclaimed property from vendors for previous payments.
Provision for income taxes
Due to the operating losses incurred during the three and nine months ended September 30, 2025 and 2024, and after application of the annual limitation set forth under Section 382 of the Internal Revenue Code of 1986, as amended, it was not necessary to record a provision for U.S. federal income tax or various state income taxes as income tax benefits are fully offset by a valuation allowance recorded.
Net loss
For the three months ended September 30, 2025, our net loss of $0.2 million decreased 46% from $0.3 million net loss for the three months ended September 30, 2024. The decrease is primarily due to a decrease in operating expenses in the third quarter of 2025 from the third quarter of 2024.
For the nine months ended September 30, 2025, our net loss of $0.7 million decreased 48% from $1.3 million net loss for the nine months ended September 30, 2024. The decrease is primarily due to a decrease in operating expenses in the first nine months of 2025 from the first nine months of 2024.
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Financial condition
At September 30, 2025, we had $0.9 million in cash and no outstanding debt. We have historically incurred substantial losses, and as of September 30, 2025, we had an accumulated deficit of $155.6 million. Additionally, our sales have been concentrated among a few major customers and for the nine months ended September 30, 2025, with three customers accounted for approximately 53% of net sales.
In 2025 and 2024, we remain committed to building upon the initiatives started during 2019 that sought to stabilize and regrow our business. These efforts include the following key developments that occurred during 2025 and 2024:
•We reinvested in our MMM sales channel and are pursuing existing and new sales opportunities, though the sales cycles for what are frequently made-to-order products are longer than commercial offerings.
•We re-evaluated operating expenses and reduced its workforce significantly throughout 2024 into 2025 to manage fixed costs.
•We continued to seek additional external funding alternatives and sources to support our growth strategies, plans and initiatives.
We continue to closely monitor our cost control efforts to streamline our operations by closely managing all spending done throughout the Company, while carefully investing in new products and strategies that sought to reenergize sales.
We will seek to remain agile as an organization to respond to potential or continuing weakness in the macroeconomic environment and in the meantime seek to expand sales channels and enter new markets that we believe will provide additional growth opportunities. We plan to improve profitability through developing and launching new, innovative products, UPS systems, our Redcap® emergency battery backup tubular TLEDs, evaluating new growth opportunities such as GaN-based power supply circuitry and other energy solution products, as well as executing on our multi-channel sales strategy that targets key verticals, such as government, healthcare, education and commercial and industrial, complemented by our marketing outreach campaigns and expanding channel partnerships. In addition, we intend to continue to apply rigorous financial discipline in our organizational structure, decision-making, business processes and policies, strategic sourcing activities and supply chain practices to help accelerate our path towards profitability.
Liquidity and capital resources
Cash
At September 30, 2025, our cash balance was approximately $0.9 million, compared to approximately $0.6 million at December 31, 2024.
•As of September 30, 2025, we held total cash of $0.9 million, of which approximately $0.5 million was maintained in a bank account in Taiwan. These funds support the operations of our wholly owned Taiwanese subsidiary and are denominated in NTD.
•The ability to access this cash for general corporate purposes in the United States may be subject to foreign exchange controls, local banking regulations, or unfavorable tax consequences. While there are currently no formal restrictions on the transfer of funds from Taiwan to the United States, repatriation of these funds may result in foreign withholding taxes or other costs, which could impact our overall liquidity. As such, our ability to deploy foreign cash for domestic use may be limited or delayed.
•Management believes our current cash position and operating cash flows are sufficient to meet near-term working capital needs in both domestic and foreign jurisdictions.
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The following summarizes cash flows from operating, investing, and financing activities, as reflected in the Condensed Consolidated Statements of Cash Flows included in Part I, Item 1, “Financial Statements,” of this Quarterly Report (in thousands):

| Nine months ended September 30,
| 2025 |  | 2024
Net cash used in operating activities | $ | (542) |  |  | $ | (1,043) |
Net cash used in investing activities | $ | (41) |  |  | $ | (19) |
Net cash provided by (used in) financing activities | $ | 900 |  |  | $ | (149) |

Net cash used in operating activities
Net cash used in operating activities was $0.5 million for the nine months ended September 30, 2025. The net loss for the nine months ended September 30, 2025 was $0.7 million and was adjusted for non-cash items, including depreciation and amortization, stock-based compensation, provisions for inventory, warranty, and accounts receivable reserves and working capital changes. During the nine months ended September 30, 2025, minor adjustments included a $0.1 million change in accounts receivable caused by specific timing of collecting accounts receivable and a $0.2 million change in inventory.
Net cash used in operating activities was $1.0 million for the nine months ended September 30, 2024. The net loss for the nine months ended September 30, 2024 was $1.3 million and was adjusted for non-cash items, including depreciation and amortization, stock-based compensation, provisions for inventory, warranty, and accounts receivable reserves and working capital changes. During the nine months ended September 30, 2024, major adjustments included cash generated from $1.1 million from collection of accounts receivable, and $0.4 million from inventory and $0.2 million from accounts payable. which is offset by a $1.2 million change in related party accounts payable due to timing of inventory receipts and payments.
Net cash used in investing activities
Net cash used in investing activities was $41 thousand and $19 thousand for the nine months ended September 30, 2025 and 2024, respectively, primarily from the acquisition of property and equipment partially offset by proceeds from the sale of property and equipment.
Net cash provided by (used in) financing activities
Net cash provided by financing activities was $0.9 million during the nine months ended September 30, 2025, related to proceeds from the private placements of common stock.
Net cash used in financing activities was $0.1 million during the nine months ended September 30, 2024, primarily related to $0.9 million of net proceeds from the issuance of common stock, offset by $1.0 million related to net payments of the 2022 Streeterville Note.
Contractual and other obligations
Please refer to Note 9 “Purchase Commitments” included under Part I, Item 1, “Financial Statements,” of this Quarterly Report.
Foreign Currency Exchange Risk
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Because we maintain operations and cash balances in Taiwan, we are exposed to fluctuations in the New Taiwan dollar (NTD) exchange rate relative to the U.S. dollar. Changes in exchange rates can affect the reported value of our foreign cash balances, revenues, and expenses, as well as result in transaction gains or losses on intercompany and third-party balances.
Our business operations in Taiwan expose us to foreign currency risk from fluctuations in the New Taiwan dollars (NTD) exchange rate relative to the U.S. dollar. As of September 30, 2025, we had a net NTD exposure of approximately $527 thousand, consisting primarily of NTD-denominated accounts receivable of $130 thousand, partially offset by NTD cash of $499 thousand and accounts payable of $102 thousand.
For the nine months ended September 30, 2025, we recognized a net foreign currency transaction gain of approximately $43 thousand. We do not currently employ financial instruments to hedge our foreign currency exposure. We continue to monitor our NTD exposure and may consider hedging strategies in the future if our foreign currency risk increases materially.
Critical accounting policies
There have been no material changes to our critical accounting policies as compared to those included in our 2024 Annual Report.
Certain risks and concentrations
We have certain customers whose net sales individually represented 10% or more of our total net sales, or whose net trade accounts receivable balance individually represented 10% or more of our total net trade accounts receivable; and we have certain suppliers, which individually represent 10% or more of our total purchases, or whose trade accounts payable balance individually represented 10% or more of our total trade accounts payable balance. Please refer to Note 2, “Basis of Presentation and Summary of Significant Accounting Policies,” included under Part I, Item 1, “Financial Statements,” of this Quarterly Report.
Recent accounting pronouncements
For information on recent accounting pronouncements, please refer to Note 2, “Basis of Presentation and Summary of Significant Accounting Policies,” included under Part I, Item 1, “Financial Statements,” of this Quarterly Report.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to management, including our Chief Executive Officer who also serves as our principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure.
Pursuant to Rule 13a-15(b) under the Exchange Act, our management must evaluate, with the participation of our Chief Executive Officer, the effectiveness of our disclosure controls and procedures, as of September 30, 2025, the end of the period covered by this Quarterly Report. Management, with the participation of our Chief Executive Officer, did evaluate the effectiveness of our disclosure controls and procedures as of the end of period covered by this Quarterly Report. Based on this evaluation, our Chief Executive Officer concluded that our disclosure controls and procedures were effective as of September 30, 2025.
Changes in internal control over financial reporting
During the quarterly period covered by this Quarterly Report, there have not been any changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may be involved in various claims and legal actions arising in the ordinary course of business. As of September 30, 2025, we were not involved in any material legal proceedings.
ITEM 1A. RISK FACTORS
As a smaller reporting company, we are not required to provide a separate risk factors section in this Quarterly Report. However, we have elected to include the following updated risk factors to provide additional context for investors. These risks supplement those disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024. You should carefully consider these risks, together with all other information in this Quarterly Report and our other SEC filings, before making an investment decision.
We may fail to secure sufficient additional financing, which could prevent us from executing our business plan and continuing as a going concern.
Our cash balance of $0.9 million as of September 30, 2025, and ongoing operating losses raise substantial doubt about our ability to continue as a going concern. We are actively seeking at least $1 million in capital through equity, debt, or strategic partnerships, but there can be no assurance that we will secure such funding on acceptable terms or at all. Equity financing may significantly dilute existing shareholders, while debt financing could impose restrictive covenants or high interest rates. Failure to obtain adequate financing could result in reduced operations, delayed product development, or insolvency.
Global trade policies, including tariffs, could increase costs and disrupt our supply chain, adversely affecting our operations and profitability.
Our operations are subject to risks arising from global trade policies, particularly the imposition of tariffs and other trade barriers by the United States, China, the European Union, and other nations, which have intensified under the current U.S. administration. As of September 30, 2025, approximately 9% of our purchase commitments are with Sander Electronics Co Ltd, a Taiwan-based related party, which could be indirectly affected by international trade tensions, including tariffs. These policies may increase the cost of imported components, extend delivery times due to customs delays, or reduce demand for our products if customers face higher prices. For example, tariffs imposed in early 2025 on electronic components could increase our cost of sales by approximately 10% to 15% annually based on current inventory levels and supply chain composition, assuming the relevant products become subject to new or additional tariffs. These risks are heightened by our significant concentration of purchases with Taiwan-based related party suppliers (representing 9% of our purchase commitments as of September 30, 2025), which may be indirectly affected by U.S.-China trade tensions and broader Asian trade policies, even if not directly subject to specific tariffs.
The unforeseen results of potential trade disputes and reciprocal tariffs worldwide could further impact our business. Increased trade protectionism, as governments seek to protect or revive domestic industries, may lead to restrictions on imports, such as tariffs, that could significantly affect global trade and, indirectly, the demand for our LED lighting products. Such restrictions could increase the cost of exported goods, prolong delivery times, and elevate risks associated with exporting, potentially leading to a decline in the volume of exported goods and demand for our products. The interconnected nature of global supply chains means that trade policies, even in countries not directly imposing or subject to tariffs, could disrupt our access to critical components.
Tensions over trade remain high, particularly between the U.S., China, and the European Union. The current U.S. administration’s extensive use of tariffs as a policy tool has introduced significant uncertainty regarding future trade relationships with key markets, including China, the European Union, Canada, and Mexico. These tariffs have prompted, and may continue to prompt, retaliatory tariffs from other nations, raising concerns about a prolonged trade war. Protectionist developments, or the perception that they may occur, could materially adversely affect global economic conditions, reduce international trade, and disrupt our supply chain, particularly for components sourced from Asia. Such disruptions could strain our liquidity, increase operating costs, and hinder our ability to compete effectively in the LED lighting market, adversely impacting our business, results of operations, and financial condition.
Foreign currency fluctuations may adversely affect our financial results.
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We have operations and business relationships in Taiwan that expose us to foreign currency risk. As of September 30, 2025, we held approximately $499 thousand in NTD denominated cash, $130 thousand in NTD accounts receivable, and $102 thousand in NTD accounts payable, resulting in a net NTD exposure of approximately $527 thousand. Fluctuations in the exchange rate between the U.S. dollar and NTD directly impact our financial results when these amounts are translated to U.S. dollars for financial reporting purposes. Additionally, economic, political and other risks associated with foreign operations could adversely affect our financial results.
During the nine months ended September 30, 2025, we recognized a foreign exchange gain of $43 thousand related to NTD transactions and balances. These fluctuations can be significant relative to our quarterly results and may increase volatility in our reported financial performance. We do not currently hedge our foreign currency exposure, and significant strengthening of the U.S. dollar relative to the NTD could adversely impact our results of operations and financial condition.
A portion of our cash and operating activities are located in Taiwan, and we are subject to risks associated with foreign currency fluctuations, repatriation restrictions, and local regulations. While there are no current limitations on our ability to access funds held in Taiwan, future government actions, currency controls, or changes in tax law could restrict or delay our ability to repatriate earnings or transfer funds. Additionally, fluctuations in the exchange rate between the New Taiwan dollar and the U.S. dollar may materially affect our reported financial results, and we do not currently hedge this exposure.
Although the substantial majority of our business activity takes place in the U.S., we derive a portion of our revenues and earnings from operations in foreign countries, which is expected to increase with our investment in foreign locations. As a result, we are subject to risks associated with doing business internationally. The risks of doing business in foreign countries include, among other factors: the potential for adverse changes in the local political climate, in diplomatic relations between foreign countries and the U.S. or in government policies, laws or regulations; international conflicts; terrorist activity that may cause social disruption; logistical and communications challenges; costs of complying with a variety of laws and regulations; difficulty in staffing and managing geographically diverse operations; deterioration of foreign economic conditions; inflation and fluctuations in interest rates; foreign currency exchange rate fluctuations; foreign exchange restrictions; differing local business practices and cultural considerations; restrictions on imports and exports or sources of supply, including energy and raw materials; changes in duties, quotas, tariffs, taxes or other protectionist measures; and potential issues related to matters covered by the Foreign Corrupt Practices Act, regulations related to import/export controls, the Office of Foreign Assets Control sanctions program, anti-boycott provisions or similar laws. We believe that our business activities outside of the U.S. involve a higher degree of risk than our domestic activities, and any one or more of these factors could adversely affect our operating results and financial condition. In addition, global and regional economic conditions and the volatility of worldwide capital and credit markets have significantly impacted and may continue to significantly impact our foreign customers and markets. These factors may result in decreased demand in our foreign operations.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
EXHIBIT INDEX

Exhibit Number | Description of Documents
3.1 | Certificate of Incorporation of Energy Focus, Inc. (incorporated by reference to Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed May 1, 2006).
3.2 | Certificate of Amendment to the Certificate of Incorporation of Energy Focus, Inc. filed with the Secretary of State of the State of Delaware on June 21, 2010 (incorporated by reference to Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K filed on March 24, 2020).
3.3 | Certificate of Amendment to the Certificate of Incorporation of Energy Focus, Inc. filed with the Secretary of State of the State of Delaware on October 9, 2012 (incorporated by reference to Exhibit 3.3 to the Registrant’s Annual Report on Form 10-K filed on March 24, 2020).
3.4 | Certificate of Amendment to the Certificate of Incorporation of Energy Focus, Inc. filed with the Secretary of State of the State of Delaware on October 28, 2013 (incorporated by reference to Exhibit 3.4 to the Registrant’s Annual Report on Form 10-K filed on March 24, 2020).
3.5 | Certificate of Amendment to the Certificate of Incorporation of Energy Focus, Inc. filed with the Secretary of State of the State of Delaware on July 16, 2014 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on July 16, 2014).
3.6 | Certificate of Amendment to the Certificate of Incorporation of Energy Focus, Inc. filed with the Secretary of State of the State of Delaware on July 24, 2015 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on July 27, 2015).
3.7 | Certificate of Amendment to the Certificate of Incorporation of Energy Focus, Inc. filed with the Secretary of State of the State of Delaware on January 15, 2020 (incorporated by reference to Exhibit 3.7 to the Registrant’s Annual Report on Form 10-K filed on March 24, 2020).
3.8 | Certificate of Designation of Series A Convertible Preferred Stock of Energy Focus, Inc. filed with the Secretary of State of the State of Delaware on March 29, 2019 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on April 1, 2019).
3.9 | Amendment to the Certificate of Designation of Series A Convertible Preferred Stock of Energy Focus, Inc. filed with the Secretary of State of the State of Delaware on May 30, 2019 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on May 30, 2019).
3.10 | Amendment to the Certificate of Designation of Series A Convertible Preferred Stock of Energy Focus, Inc. filed with the Secretary of State of the State of Delaware on January 15, 2020 (incorporated by reference to Exhibit 3.10 to the Registrant’s Annual Report on Form 10-K filed on March 24, 2020).
3.11 | Certificate of Amendment of Certificate of Incorporation, dated June 11, 2020 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on June 11, 2020).
3.12 | Certificate of Amendment of Certificate of Incorporation, dated June 15, 2023 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on June 22, 2023).
3.13 | Bylaws of Energy Focus, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on May 18, 2020).
3.14 | Certificate of Ownership and Merger, Merging Energy Focus, Inc., a Delaware corporation, into Fiberstars, Ind. a Delaware corporation, filed with the Secretary of State of the State of Delaware on May 4, 2007 (incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q filed on May 10, 2007).
4.1 | Description of Securities of Energy Focus, Inc. (incorporated by reference to Exhibit 4.1 to the Registrant’s Annual Report on Form 10-K filed on March 24, 2020).
4.2 | Form of Warrant (incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed on January 13, 2020).
4.3 | Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.2 of the Registrant’s Current Report on Form 8-K filed on January 13, 2020).
4.4 | Form of Amendment to Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.4 to the Registrant’s Annual Report on Form 10-K filed on March 25, 2021).
4.5 | Form of Warrant (incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed on December 15, 2021).
4.6 | Form of Warrant (incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed on June 6, 2022).
10.1 | Securities Purchase Agreement, dated as of August 15, 2025, between the Company and the Purchaser (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on August 19, 2025).
31.1+ | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2+ | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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32.1++ | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*101 | The following financial information from our Quarterly Report for the quarter ended September 30, 2025, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at September 30, 2025 and December 31, 2024, (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024, (iii) Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2025 and 2024, (v) Condensed Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2025 and 2024, and (vi) the Notes to Condensed Consolidated Financial Statements.
*104 | Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Pursuant to Regulation S-T, this interactive data file is not deemed filed for purposes of Section 11 of the Securities Act, or Section 18 of the Exchange Act, or otherwise subject to the liabilities of these sections.
+ Filed herewith.
++ This exhibit shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act or the Exchange Act.
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SIGNATURES
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 thereunto duly authorized.

|  |  | ENERGY FOCUS, INC.
Date: | November 12, 2025 | By: | /s/ Chiao Chieh Jay Huang
|  |  | Chiao Chieh Jay Huang
|  |  | Chief Executive Officer
|  |  | (Principal Executive Officer)

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