Energy Focus, Inc. Reports Fourth Quarter and Fiscal Year 2025 Financial Results (Form 8-K)

Energy Focus, Inc. Reports Fourth Quarter and Fiscal Year 2025 Financial Results

SOLON, Ohio, March 24, 2026 -- Energy Focus, Inc. (NASDAQ: EFOI), a leader in sustainable, energy-efficient lighting and controls systems products for the commercial market and military maritime market ("MMM"), today announced financial results for its fourth quarter and fiscal year ended December 31, 2025.

Full-Year 2025 and Subsequent Business Highlights

•Net sales of $3.6 million, down 26.7% from 2024, reflecting a decrease of 42.7% in MMM sales and an increase of 10.5% in commercial sales. The decrease in MMM products sales in 2025 was primarily due to delays in military customer procurement and project execution related to federal budget approval timing. The increase in commercial sales was primarily driven by a $0.5 million Uninterruptible Power Supply ("UPS") project delivered to a new customer in Taiwan, representing approximately 36% of commercial sales in 2025. While the project may represent a recurring revenue opportunity, future orders remain subject to customer requirements and timing.

•Gross profit margin of 18.9% was up from gross profit margin of 14.4% in 2024. The increase was primarily driven by a sustained reduction in the use of temporary outside labor and lower fixed costs, such as subscription fees and rent expense for production.

•Loss from operations of $1.0 million, compared to a loss from operations of $1.8 million in 2024, primarily driven by lower payroll-related expenses resulting from structure optimization, as well as lower product testing and R&D supplies expenses.

•Net loss of $1.0 million, or $(0.18) per basic and diluted share of common stock, compared to a net loss of $1.6 million, or $(0.32) per basic and diluted share of common stock in 2024.

•Operating expenses increased 68.0% sequentially during the fourth quarter of 2025, primarily due to $0.1 million increase in product development expenses and $0.1 million increase in SG&A expenses. The increase in product development expenses was primarily driven by an additional stock-based compensation recognized in the fourth quarter of 2025, while the increase in SG&A expenses was primarily driven by higher provisions for bad debts.

•Cash of $1.1 million as of December 31, 2025, compared to cash of $0.6 million as of December 31, 2024. The increase was primarily driven by approximately $2.1 million of proceeds from the issuance of common stock during 2025, partially offset by payments of $0.5 million to related parties, primarily for inventories purchases, as well as other operating cash uses.

•On November 26, 2025, the Company entered into a securities purchase agreement with each of its Chief Executive Officer and Principal Financial Officer, Mr. Chiao Chieh (Jay) Huang, and MAN-BO HOTEL CO. LTD, an affiliate entity, which is owned by the spouse of Kin-Fu Chen, the Chairman of the Company's Board of Directors, respectively, pursuant to which the Company agreed to issue and sell in a private placement 262,009 shares of the Company's common stock, par value $0.0001 per share to each, and in aggregate, 524,018 shares of common stock for a purchase price per share of $2.29 (the "November 2025 Private Placement"). The purchase price was higher than the closing price of the Company's common stock on the Nasdaq Stock Market LLC on the date of the agreement. The transactions with our CEO were approved by our

32000 Aurora Road, Solon, OH 44139 • www.energyfocus.com • 800.327.7877

independent directors after consideration of the terms and fairness to the Company. Additional details regarding the November 2025 Private Placement are available in the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 2, 2025.

•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, totaling approximately $500 thousand (the "August 2025 Private Placement"). The purchase price was higher than the closing price of the Company's common stock on the Nasdaq Stock Market LLC on the date of the agreement. The transactions with our CEO were approved by our independent directors after consideration of the terms and fairness to the Company. Additional details regarding the August 2025 Private Placement are available in the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 19, 2025.

•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, totaling approximately $200 thousand (the "June 2025 Private Placement"). The purchase price was higher than the closing price of the Company's common stock on the Nasdaq Stock Market LLC on the date of the agreement. The transactions with our CEO were approved by our independent directors after consideration of the terms and fairness to the Company. Additional details regarding the June 2025 Private Placement are available in the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 23, 2025.

•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, totaling approximately $200 thousand (the "March 2025 Private Placement"). The purchase price was higher than the closing price of the Company's common stock on the Nasdaq Stock Market LLC on the date of the agreement. The transactions with our CEO were approved by our independent directors after consideration of the terms and fairness to the Company. The March 2025 Private Placement closed on March 31, 2025. Additional details regarding the March 2025 Private Placement are available in the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on April 1, 2025.

"During 2025, the Company maintained a disciplined focus on cost management while continuing to meet customer expectations through reliable service and on-time delivery. We enhanced our operational capabilities to consistently deliver high-quality products and services while further refining and expanding our portfolio," said Chiao Chieh (Jay) Huang, Chief Executive Officer.

"Operating from our headquarters in Solon, Ohio, and supported by our office in Taiwan, we utilize a global platform that enables efficient resource integration, broad customer reach, and optimized supply chain execution. Our product strategy is built around improving performance, cultivating strategic partnerships, advancing technology, and pursuing selective acquisitions. We remain dedicated to introducing innovative solutions that deliver measurable value and outperform market standards."

"As we enter 2026, our focus remains on strengthening our position as a trusted and dependable supplier and long-term partner. Our planned expansion within the Gulf Cooperation Council ("GCC") region and Central Asia continues to be a strategic priority, supported by close collaboration with local partners and policymakers to drive sustainable growth."

32000 Aurora Road, Solon, OH 44139 • www.energyfocus.com • 800.327.7877

"Our growth initiatives are aligned with long-term global demand trends for Energy Storage Systems ("ESS"), AI data center UPS solutions, and microgrid infrastructure. The Company has begun generating revenue from UPS-related projects during 2025, while ESS and microgrid initiatives remain in earlier stages of development and commercialization. The acceleration of AI adoption and the global transition toward sustainable energy solutions present meaningful opportunities. Through continued investment in ESS, AI data center UPS, and microgrid technologies, we are positioning the Company to pursue opportunities in these rapidly expanding markets."

"In addition, the Company has entered into a supply arrangement with a major U.S. defense contractor. Initial product shipments have begun under this arrangement. This reflects the Company's ability to meet the technical and operational requirements of defense customers. The Company also continues to supply products to other U.S. Department of Defense contractors under existing customer relationships."

"We remain committed to operational excellence across every area of our business, including customer support, manufacturing, sales, and product development. With a strong foundation in place and a clear strategic roadmap, we are confident that 2026 will mark another step forward in expanding our presence across both military and commercial markets."

Full-Year 2025 Financial Results

Net sales of $3.6 million for 2025 compared with $4.9 million for 2024. The decrease was primarily driven by a decrease in MMM sales of $1.5 million, or 42.7%, which was mainly attributable to lower military demand resulting from ongoing federal budget uncertainties.

Gross profit was $0.7 million, or 18.9% of net sales, for 2025, compared with gross profit of $0.7 million, or 14.4% of net sales, for 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 fees and rent expense for production. Adjusted gross margin, as defined under "Non-GAAP Measures" below, was 25.7% for full-year 2025, compared to 21.5% in the prior year, primarily driven by lower variable costs in 2025.

Operating loss was $1.0 million for 2025. This compares with an operating loss of $1.8 million for 2024. Net loss was $1.0 million, or $(0.18) per basic and diluted share of common stock, for 2025. This compares with a net loss of $1.6 million, or $(0.32) per basic and diluted share of common stock, for 2024. The year-over-year decrease in operating loss and net loss was primarily driven by lower payroll-related expenses resulting from structure optimization, as well as lower product testing and R&D supplies expenses.

Adjusted EBITDA, as defined under "Non-GAAP Measures" below, was a loss of $0.9 million for 2025, compared with a loss of $1.8 million for 2024. The decreased Adjusted EBITDA loss in 2025, as compared to 2024, was primarily due to improved margins and reduction in operating costs.

Net cash used in operating activities was $1.4 million for 2025. The net loss for 2025 was $1.0 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 2025, major adjustments included cash generated from $0.3 million from collection of accounts receivable, which is partially offset by $0.3 million change in inventory, $0.1 million change in accounts payable and $0.5 million change in related party accounts payable due to timing inventory receipts and payments.

32000 Aurora Road, Solon, OH 44139 • www.energyfocus.com • 800.327.7877

Fourth Quarter 2025 Financial Results:

Net sales of $1.0 million for the fourth quarter of 2025 decreased $0.3 million, or 23.7%, compared to net sales of $1.3 million in the fourth quarter of 2024. The change was primarily driven by a decrease in MMM product sales of $0.3 million, or 32.0% due to ongoing federal budget uncertainties and the effects of a weakened economy and high inflation. Sequentially, net sales were up 18.0% compared to $0.8 million in the third quarter of 2025. The sequential increase was driven by a 77.2% increase in commercial product sales, partially offset by relatively flat MMM product sales.

Gross profit was $0.2 million, or 18.9% of net sales, for the fourth quarter of 2025 compared with gross profit of $0.3 million, or 20.7% of net sales, for the fourth quarter of 2024. Sequentially, this compares with a gross profit of $0.1 million, or 17.8% of net sales, in the third quarter of 2025. There was no significant change in gross profit during the period.

Adjusted gross margin, as defined under "Non-GAAP Measures" below, was 29.9% for the fourth quarter of 2025, compared to 22.1% in the fourth quarter of 2024 and compared sequentially to 27.2% in the third quarter of 2025. The increase in adjusted gross margin from the fourth quarter of 2024 and third quarter of 2025 was driven by higher inventory reserve-related adjustments, which are excluded from adjusted gross margin, and lower variable costs.

Operating loss was $0.4 million for the fourth quarter of 2025, compared with an operating loss of $0.3 million for the fourth quarter of 2024. Sequentially, this compares to an operating loss of $0.2 million in the third quarter of 2025.

Net loss was $0.4 million, or $(0.06) per basic and diluted share of common stock, for the fourth quarter of 2025, compared with a net loss of $0.3 million, or $(0.07) per basic and diluted share of common stock, in the fourth quarter of 2024. Sequentially, this compares to a net loss of $0.2 million, or $(0.03) per basic and diluted share of common stock, in the third quarter of 2025.

Adjusted EBITDA, as defined under "Non-GAAP Measures" below, was a loss of $0.2 million for the fourth quarter of 2025, compared with a loss of $0.3 million in the fourth quarter of 2024 and a loss of $0.1 million in the third quarter of 2025. There were no significant changes in adjusted EBITDA during the period.

About Energy Focus

Energy Focus is an industry-leading innovator of sustainable light-emitting diode ("LED") lighting and lighting control technologies and solutions. As the creator of the first flicker-free LED lamps, Energy Focus develops high quality LED lighting products and controls that provide extensive energy and maintenance savings, as well as aesthetics, safety, health and sustainability benefits over conventional lighting. Energy Focus is headquartered in Solon, Ohio. For more information, visit our website at www.energyfocus.com. The Company routinely posts important updates on its website.

32000 Aurora Road, Solon, OH 44139 • www.energyfocus.com • 800.327.7877