Energy Focus (EFOI) Announces Rescheduling of Q3 Report, Conf. Call; Cites High Intellitube Failure Rate

Energy Focus, Inc. (Nasdaq: EFOI) announced that it will reschedule its 2016 third quarter earnings release and conference call from Thursday, November 3, 2016, to Monday, November 14, 2016, which is the deadline for filing its Quarterly Report on Form 10-Q, in order to allow for more time in finalizing its quarterly financial results.

The Company is reviewing a recent development with a limited number of commercial end-users of the Company’s Intellitube product who have experienced a product failure rate of 0.57%, which is higher than the Company’s historical non-Intellitube® commercial product failure rate of 0.19%. Based on the Company’s initial investigation it appears that product failures, which are not related to any health or safety matters, occur when the product is installed in a certain manner or with certain ballasts. Once fully investigated, the product failures will be covered through either replacement or repair under the Company’s standard warranty provisions for defects in materials and workmanship for a period of ten years from the date of purchase.

Since its introduction in April 2015, the aggregate amount of the Company’s Intellitube® product sold as of September 30, 2016 is approximately $2.5 million. The total amount of this product sold to the end-users experiencing the notably higher failure rate is less than $600,000. No such increased product failure rates have been reported to the Company with respect to its military Intellitube® product or any other commercial products.

The Company has commenced an in-depth review of this ongoing matter and is working with the end-users on a resolution, however, due to the limited time that the Company has had to review the matter, it has not yet been able to fully determine the root cause or assess the extent of the failures. Accordingly, the Company will continue investigating the product failures and assessing any probable or any estimable impact on the amount of its accrued warranty reserve and its results of operations as of September 30, 2016 prior to the filing of its Quarterly Report on Form 10-Q.

As only limited information has been reviewed to date, it is possible that the number of incidents could increase. A significant failure rate or corresponding contingency could have a material adverse impact on the Company’s business, financial condition, and results of operations.

The Company also reported that Net sales for the quarter are expected to be $8.3 million, consisting of $3.6 million in commercial sales, and $4.7 million in military sales, compared to $18.3 million in the prior year’s period, principally consisting of $3.3 million in commercial and $14.9 million in military sales.

The 2016 third quarter financial results are expected to be released before the commencement of trading on Monday, November 14, 2016 and management will then host a conference call at 11:00 AM Eastern Time to discuss the results with the investment community. The Company also intends to file its Quarterly Report on Form 10-Q on that date.

Details for the conference call will be provided as soon as available.

The call will additionally be broadcast live and archived for 90 days over the internet accessible in the Investors portion of the Company's corporate website, under “Events and Presentations” at http://investors.energyfocusinc.com/events.cfm.

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