UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2009
 o
    
    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 0-24230
 ENERGY FOCUS, INC.
  DELAWARE
    
    94-3021850(State of incorporation)
    
    (I.R.S. Employer Identification No.)
 32000 Aurora Road
Solon, Ohio 44139
 440.715.1300
   Title of Each Class  Common Stock, Par Value $0.0001
Series A Participating Preferred Stock Purchase Rights
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  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
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   Documents Incorporated by Reference




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TABLE OF CONTENTS
 PagePART IItem 1.
    
    Business
    
    
    2Item 1A.
    
    Risk Factors
    
    
    9Item 1B.
    
    Unresolved Staff Comments
    
    
    15Item 2.
    
    Properties
    
    
    15Item 3.
    
    Legal Proceedings
    
    
    15Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    15PART IIItem 5.
    
    Market for the
Registrants Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
    
    
    17Item 6.
    
    Selected Financial Data
    
    
    18Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19Item 7A.
    
    Qualitative and Quantitative Disclosures About Market Risk
    
    
    29Item 8.
    
    Financial Statements and Supplementary Data
    
    
    30Item 9.
    
    Changes in and Disagreements With Accountants on Accounting and Financial Disclosures
    
    
    61Item 9A.
    
    Controls and Procedures
    
    
    61Item 9B.
    
    Other Information
    
    
    62PART IIIItem 10.
    
    Directors, Executive Officers, and Corporate Governance
    
    
    63Item 11.
    
    Executive Compensation
    
    
    63Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    63Item 13.
    
    Certain Relationships and Related Transactions and Director Independence
    
    
    63Item 14.
    
    Principal Accountant Fees and Services
    
    
    64PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    65Signatures
    
    
    69Exhibit Index
    
    
    70
 1




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PART I
 Item 1. Business
  Overview
   
    
    $2.0 billion in loans to subsidize renewable energy projects,
    
    $4.5 billion toward smart grid technologies to run the power grid more efficiently,
    
    $6.3 billion in state energy-efficient and clean-energy grants, and
    
    $4.5 billion to make federal buildings more energy efficient.
   
    
    Dramatic reduction of unabsorbed manufacturing and fixed overhead costs.
    
    Divesting of our non-strategic business units. In December 2009, we announced the sale
of our German subsidiary, LBM Lichtleit Fasertechnik (LBM). We are currently
investigating potential opportunities to divest of one or more of our remaining legacy
businesses.
    
    Leveraging our fundamental intellectual property and government research to create
extremely energy-efficient illumination products for existing buildings. The company is
currently developing an intelligent LED lamp to replace linear fluorescent lamps for
general illumination. The LED replacement lamp is designed to reduce energy consumption by
more than 80% while delivering superior lighting qualities.
    
    Establishing a national sales and delivery vehicle into the existing building market
through the acquisition of lighting retrofit companies. On December 31, 2009, we completed
the acquisition of Stones River Companies, LLC (SRC). SRC is a well established lighting
retrofit company that services, primarily, the Southeastern region of the United States. We
anticipate growth through expansion of SRCs geographical coverage and, possibly, through
one or more subsequent acquisitions across the United States.
 2




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##### 



Business Unit: Stones River Companies, LLC.Offerings: Application design, engineering, project management, and turnkey lighting and
solar retrofits.Target Market: Energy Services Companies (ESCOs) selling into public sector existing
buildings such as: schools, universities, hospitals, and public office buildings at the
federal, state and local level.Business Unit: Energy Focus Government Contracts and SalesOfferings: Solid state lighting technologies and products to the United States Military.Target Market: United States Navy, United States Army, and any other Federal Military unit.Business Unit: Fiberstars Pool and SpaOfferings: Decorative lighting and related products to the United States pool market.Target Market: United States pool new construction market and existing market upgrades.Business Unit: Fiberstars CommercialOfferings: Decorative architectural lighting products including LED and fiber optic
technologies.Target Market: New commercial building decorative lighting market in North America.Business Unit: Energy Focus National AccountsOfferings: Premier energy-efficient lighting products and turnkey energy solutions.Target Market: Corporate accounts, distribution centers, warehouses, manufacturing, food and
clothing retail, and cold storage.Business Unit: Crescent Lighting LimitedOfferings: Decorative and specialty lighting products including LED and fiber optic
technologies.Target Market: New commercial building decorative lighting market in Europe, Asia, and the
Middle East.
 Products
  
    
    Metal Halide and LED fiber optic lighting systems (e.g. EFO-Downlighting,
E-Luminator),
    
    LED MR-16/Par halogen track replacement fixtures,
    
    LED cold storage globe lamps,
    
    LED lamps and fixtures (e.g. pool PAL lights),
    
    LED docklights,
    
    HID high bay fixtures,
    
    Fluorescent fixtures,
    
    LED landscape fixtures, and
    
    LED parking garage lamps and fixtures.
 https://www.GSAAdvantage.gov
  
    
    Many of our products meet the lighting efficiency standards mandated for the year 2020.
    
    Our products qualify for federal and state tax incentives for commercial and residential
consumers in certain states.
    
    Many of our products make use of proprietary optical and electronics delivery systems
which enable high efficiencies with superior lighting qualities.
 3




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Long-Term Strategy
  
    
    fundamental intellectual property and trade secrets in non-imaging optics and
coatings,
    
    a broad and intimate understanding of lighting technologies,
    
    proven ability to develop systems which efficiently create, transport, and display
light,
    
    a superior understanding of the existing building market and the evolution towards
green lighting products and energy-efficient lighting systems,
    
    core competencies in execution of all facets of solutions sales, and
    
    strong relationships with the federal government for research and development.
  
    
    Intensifying our focus on the existing building market. On December 31, 2009, we
completed our acquisition of SRC to obtain a sales and delivery vehicle into the public
sector existing building market,
    
    Developing mainstream lighting technologies that directly compete against linear
fluorescent general illumination lamps,
    
    Exploring the potential divestiture of business units such as our Fiberstars
pools and United States commercial businesses, and
    
    Continuing to reduce our operating expenses.
  
    
    The acquisition of SRC has already shown a positive  impact to our cash flow and will
yield significant net sales growth,
    
    Our cost reduction initiatives, coupled with the sale of non-strategic business units
and additional selected financing facilities, will provide adequate operating funds for
organic growth,
    
    The formation of a streamlined organization that is focused on creating economic
value through turnkey energy-efficient lighting system and solutions for existing
building owners,
    
    Development of mainstream lighting products for the existing building market that are
not currently available and are differentiated by their performance, energy consumption,
longevity, and controllability, and
    
    A platform for continued growth within the public building sector through the
acquisition of SRC. This will allow us to take advantage of the opportunity created by
the federal government stimulus package in public sector markets.
 Sales, Marketing, and Distribution of our Offerings Portfolio
 Products
   Solutions
   4




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Manufacturing and Suppliers
   Research and Development
    2009:
 2008:
 5




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2007:
 Intellectual Property
    Backlog
  6




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Competition
     Employees
   Business Segment
  Available Information
 www.efoi.com
 7




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FORWARD-LOOKING STATEMENTS
  ® ® ® ®
  8




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Item 1A. Risk Factors
 We have a history of operating losses and may incur losses in the future.
   
    
    obtain financing and/or grants available through federal, state, and/or local
governmental agencies,
    
    obtain financing from various financial institutions,
    
    obtain financing from non-traditional investment capital organizations,
    
    potential sale or divestiture of one or more operating units, and
    
    obtain funding from the sale of our common stock or other equity instruments.
  
    
    government stimulus and/or grant money is not allocated to us despite our focus on the
design, development, and manufacturing of energy-efficient lighting systems,
    
    loans or other debt instruments may have terms and/or conditions, such as interest rates,
restrictive covenants, and control or revocation provisions, which are not acceptable to
management or our Board of Directors,
    
    the current global economic crisis combined with our current financial condition may
prevent us from being able to obtain any debt financing,
    
    financing may not be available for parties interested in pursuing the acquisition of one
or more of our operating units, and
    
    additional equity financing may not be available to us in the current economic
environment and could lead to further dilution of shareholder value for current
shareholders of record.
 Downturns in general economic conditions and construction trends could continue to materially and
adversely affect our business.
  9




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We have significant international sales and are subject to risks associated
with operating in international markets.
  
    
    unexpected changes in regulatory requirements, tariffs and other trade barriers or
restrictions,
    
    longer accounts receivable payment cycles and the difficulty of enforcing contracts and
collecting receivables through certain foreign legal systems,
    
    difficulties in managing and staffing international operations,
    
    potentially adverse tax consequences,
    
    the burdens of compliance with a wide variety of foreign laws,
    
    import and export license requirements and restrictions of the United States and each
other country in which we operate,
    
    exposure to different legal standards and reduced protection for intellectual property
rights in some countries,
    
    currency fluctuations and restrictions,
    
    political, social and economic instability, including war and the threat of war, acts of
terrorism, pandemics, boycotts, curtailment of trade or other business restrictions,
    
    periodic foreign economic downturns, and
    
    sales variability as a result of transacting our foreign sales in United States dollars.
 If we are unable to respond effectively as new lighting technologies and market trends emerge, our
competitive position and our ability to generate revenue and profits may be harmed.
  If we are not able to compete effectively against companies with greater resources, our prospects
for future success will be jeopardized.
    10




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We have made strategic acquisitions in the past and intend to do so in the future, which may
adversely affect our operating results, financial condition, and existing business.
  
    
    the availability of suitable candidates,
    
    competition from other companies for the purchase of available candidates,
    
    our ability to value those candidates accurately and negotiate favorable terms for those
acquisitions,
    
    the availability of funds to finance acquisitions,
    
    the ability to establish new informational, operational and financial systems to meet
the needs of our business,
    
    the ability to achieve anticipated synergies, including with respect to complementary
products or services, and
    
    the availability of management resources to oversee the integration and operation of the
acquired businesses.
  Our inability to successfully integrate businesses we acquire could have adverse consequences on
our business.
  
    
    loss of key employees or customers,
    
    possible inconsistencies in standards, controls, procedures and policies among the
combined companies and the need to implement company-wide financial, accounting,
information and other systems,
    
    failure to maintain the quality of services that the companies have historically
provided,
    
    coordinating sales, distribution, and marketing functions,
    
    the need to coordinate geographically diverse organizations, and
    
    the diversion of managements attention from our day-to-day business as a result of the
need to deal with any disruptions and difficulties and the need to add management resources
to do so.
  If we are unable to obtain and adequately protect our intellectual property rights, our ability to
commercialize our products could be substantially limited.
   11




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If critical components that we currently purchase from a small number of third-party suppliers
become unavailable or third-party manufacturers otherwise experience delays, we may incur delays in
shipment, which would damage our business.
   If the companies to which we outsource the manufacture of our products fail to meet our
requirements for quality, quantity and timeliness, our revenue and reputation in the marketplace
could be harmed.
   
    
    lack of direct control over production capacity and delivery schedules,
    
    lack of direct control over quality assurance, manufacturing yields and production
costs,
    
    risk of loss of inventory while in transit from China, Mexico, India, Japan, and Taiwan,
and
    
    risks associated with international commerce, particularly with China, Mexico, India,
Japan, and Taiwan, including unexpected changes in legal and regulatory requirements,
changes in tariffs and trade policies, risks associated with the protection of intellectual
property and political and economic instability.
  12




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We depend on independent distributors and sales representatives for a substantial portion of our
net sales, and the failure to manage successfully our relationships with these third parties, or
the termination of these relationships, could cause our net sales to decline and harm our business.
  Our products could contain defects or they may be installed or operated incorrectly, which could
reduce sales of those products or result in claims against us.
  If we are unable to attract or retain qualified personnel, our business and product development
efforts could be harmed.
  A significant portion of our business is dependent upon the existence of government funding, which
may not be available into the future and could result in a significant reduction in sales and could
cause significant harm to our business.
  We believe that certification and compliance issues are critical to adoption of our lighting
systems, and failure to obtain such certification or compliance would harm our business.
  13




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We must comply with regulatory requirements regarding internal control over financial reporting,
corporate governance and public disclosure, which will cause us to incur significant costs and our
failure to comply with these requirements could cause our stock price to decline.
  We have not been in compliance with the continued listing requirements of the NASDAQ Global Market.
  We could issue additional common stock, which might dilute the book value of our common stock.
  We may need to request our shareholders to authorize additional shares of common stock in
connection with subsequent equity finance or acquisition transactions.
  14




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Shares eligible for future sale may adversely affect the market for our common stock.
   As a thinly-traded stock, large sales can place negative pressure on our common stock price.
  We may be subject to legal claims against us or claims by us which could have a significant impact
on our resulting financial performance.
  Item 1B. Unresolved Staff Comments
  Item 2. Properties
  Item 3. Legal Proceedings
   Item 4. Submission of Matters to a Vote of Security Holders
  15




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Executive Officers of the Registrant
  Name
    
    Age
    
    Current Position and Business ExperienceJoseph G. Kaveski
    
    
    49
    
    
    Chief Executive Officer and Director
May, 2008 to present. Prior to joining
Energy Focus, Mr. Kaveski led his own
strategic consulting business, TGL Company.
As a consultant he worked with equity
investors and publicly traded companies on
strategic initiatives and planning. Other
corporations Mr. Kaveski has worked for
include Johnson Controls, Inc. where he was
Vice President of Energy Management
Services and Strategic Projects.John M. Davenport
    
    
    64
    
    
    President and Director May 2008 to
present. Chief Executive Officer  July,
2005 to May, 2008. Chief Operating Officer
 July, 2003 to July, 2005. Vice
President and Chief Technology Officer 
November, 1999 to July, 2003. Prior to
joining Energy Focus, Mr. Davenport served
as the president of Unison Fiber Optic
Lighting Systems, LLC from 1998 to 1999.
Before that, Mr. Davenport served at GE
Lighting in various capacities for 25
years.Eric W. Hilliard
    
    
    42
    
    
    Chief Operating Officer and Vice President
 November, 2006 to present. Prior to
joining Energy Focus, Mr. Hilliard served
as a Business Manager at Saint Gobains
Aerospace Flight Structures Division from
2002 to 2006, overseeing the global sales
and operaton for composite flight structure
components to customers such as Embraer,
Gulfstream, and EADS. Other career
assignments include Goodrich Aerospace,
Chemical Leaman, and the HJ Heinz Company
serving in operational and international
roles throughout his career.Nicholas G. Berchtold
    
    
    43
    
    
    Chief Financial Officer and Vice President
of Finance July, 2007 to present. Prior
to joining Energy Focus, Mr. Berchtold was
the division controller at Wellman Products
Group, a division of Hawk Corporation, from
2000 to 2007, where he was responsible for
global financial reporting and analysis.
Additionally, he served as the corporate
assistant controller at Olympic Steel, Inc.
from 1997 to 2000.Roger F. Buelow
    
    
    37
    
    
    Chief Technology Officer and Vice President
 July, 2005 to present. Vice President of
Engineering from February, 2003 to July,
2005. Prior to joining Energy Focus, Mr.
Buelow was the director of engineering at
Unison Fiber Optic Lighting Systems, LLC
from 1998 to 1999.
 16




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PART II
 Item 5. Market for the Registrants Common Equity, Related Stockholder Matters, and Issuer
Purchases of Equity Securities
  High
    
    
    LowFirst quarter 2008
    
    $
    7.31
    
    
    $
    2.31Second quarter 2008
    
    
    2.94
    
    
    
    1.78Third quarter 2008
    
    
    2.75
    
    
    
    1.45Fourth quarter 2008
    
    
    2.57
    
    
    
    1.00First quarter 2009
    
    $
    1.86
    
    
    $
    0.62Second quarter 2009
    
    
    1.21
    
    
    
    0.56Third quarter 2009
    
    
    1.49
    
    
    
    0.50Fourth quarter 2009
    
    
    1.04
    
    
    
    0.47
   Stockholder Matters
  Cumulative Total Return Comparison
  
 17




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Item 6. Selected Financial Data
  SELECTED CONSOLIDATED FINANCIAL DATA  (IN THOUSANDS, EXCEPT PER SHARE DATA)
 YEARS ENDED DECEMBER 31,
    
    2009
    
    2008
    
    2007
    
    2006
    
    2005OPERATING SUMMARYNet sales from continuing operations
    
    $
    12,489
    
    
    $
    20,032
    
    
    $
    19,761
    
    
    $
    24,038
    
    
    $
    24,838Gross profit from continuing operations
    
    
    2,040
    
    
    
    4,106
    
    
    
    5,057
    
    
    
    6,139
    
    
    
    8,589Net loss from continuing operations
    
    
    (9,814
    )
    
    
    (12,673
    )
    
    
    (10,987
    )
    
    
    (9,329
    )
    
    
    (7,524
    )Net income/(loss) from discontinued
operations
    
    
    (1,201
    )
    
    
    (1,775
    )
    
    
    (330
    )
    
    
    (321
    )
    
    
    101Net loss
    
    
    (11,015
    )
    
    
    (14,448
    )
    
    
    (11,317
    )
    
    
    (9,650
    )
    
    
    (7,423
    )Net loss per share:Basic
    
    $
    (0.70
    )
    
    $
    (1.02
    )
    
    $
    (0.98
    )
    
    $
    (0.85
    )
    
    $
    (0.90
    )Diluted
    
    $
    (0.70
    )
    
    $
    (1.02
    )
    
    $
    (0.98
    )
    
    $
    (0.85
    )
    
    $
    (0.90
    )Shares used in per share calculation:Basic
    
    
    15,763
    
    
    
    14,182
    
    
    
    11,500
    
    
    
    11,385
    
    
    
    8,223Diluted
    
    
    15,763
    
    
    
    14,182
    
    
    
    11,500
    
    
    
    11,385
    
    
    
    8,223FINANCIAL POSITION SUMMARYTotal assets
    
    $
    17,378
    
    
    $
    23,636
    
    
    $
    29,104
    
    
    $
    40,652
    
    
    $
    46,171Cash and cash equivalents
    
    
    1,062
    
    
    
    10,568
    
    
    
    8,412
    
    
    
    15,968
    
    
    
    23,578Credit line borrowings
    
    
    
    
    
    
    1,904
    
    
    
    1,159
    
    
    
    1,124
    
    
    
    47Current portion of long-term
borrowings
    
    
    
    
    
    
    54
    
    
    
    1,726
    
    
    
    780
    
    
    
    342Long-term borrowings
    
    
    715
    
    
    
    245
    
    
    
    314
    
    
    
    1,860
    
    
    
    1,089Shareholders equity
    
    
    11,505
    
    
    
    16,789
    
    
    
    21,618
    
    
    
    30,880
    
    
    
    38,184Common shares outstanding
    
    
    21,250
    
    
    
    14,835
    
    
    
    11,623
    
    
    
    11,394
    
    
    
    11,270
 18




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Item 7.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
 Overview
   
    
    Dramatic reduction of unabsorbed manufacturing and fixed overhead costs.
    
    Divesting of our non-strategic business units. In December 2009, we announced the sale
of our German subsidiary, LBM Lichtleit Fasertechnik (LBM). We are currently
investigating potential opportunities to divest one or more of our remaining legacy
businesses.
    
    Leveraging our fundamental intellectual property and government research to create
extremely energy-efficient illumination products for existing buildings. The company is
currently developing an intelligent LED lamp to replace linear fluorescent lamps for
general illumination. The LED replacement lamp is designed to reduce energy consumption by
more than 80% while delivering superior lighting qualities.
    
    Establishing a national sales and delivery vehicle into the existing building market
through the acquisition of lighting retrofit companies. On December 31, 2009, we completed
the acquisition of Stones River Companies, LLC (SRC). SRC is a well established lighting
retrofit company that services primarily the Southeastern region of the United States. We
anticipate growth through expansion of SRCs geographical coverage and, possibly, through
one or more subsequent acquisitions across the United States.
   Results of Operations
 Cash Utilization
  19




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Net Sales
  Year ending December 31,2009
    
    
    2008
    
    
    2007EFO
    
    $
    7,330
    
    
    $
    10,094
    
    
    $
    6,360Traditional pool
    
    
    2,422
    
    
    
    5,054
    
    
    
    9,003Traditional commercial lighting
    
    
    2,737
    
    
    
    4,884
    
    
    
    4,398Total net sales
    
    $
    12,489
    
    
    $
    20,032
    
    
    $
    19,761
   International Sales
  Year ending December 31,2009
    
    
    2008
    
    
    2007United States Domestic
    
    $
    7,930
    
    
    $
    12,902
    
    
    $
    14,770United Kingdom
    
    
    2,094
    
    
    
    2,940
    
    
    
    3,152Others
    
    
    2,465
    
    
    
    4,190
    
    
    
    1,839Total net sales
    
    $
    12,489
    
    
    $
    20,032
    
    
    $
    19,761
 Gross Profit
  20




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Operating Expenses
 Research and Development
      Year ending December 31,2009
    
    
    2008
    
    
    2007Gross R&D Expense and Government Reimbursement:Gross expenses for research and development
    
    $
    1,081
    
    
    $
    1,132
    
    
    $
    3,128Deduct: incurred and accrued credits from government contracts
    
    
    (762
    )
    
    
    (895
    )
    
    
    (517
    )Net research and development expenses
    
    $
    319
    
    
    $
    237
    
    
    $
    2,611Total Credits Received and Revenue Recognized on Government Projects:Incurred and accrued credits from government contracts
    
    $
    762
    
    
    $
    895
    
    
    $
    517Revenue recognized for completed deliveries
    
    
    928
    
    
    
    1,670
    
    
    
    542Net credits received and revenue recognized
    
    $
    1,690
    
    
    $
    2,565
    
    
    $
    1,059
 Sales and Marketing
   21




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General and Administrative
   IntangiblesGoodwill and Others
   Other Income and Expenses
   Discontinued Operations
     22




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##### 



Income Taxes
    Net Loss
   Liquidity and Capital Resources
 Cash and Cash Equivalents
    23




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##### 



Cash Used in Operating Activities
   Cash (Used in) Provided by Investing Activities
  Cash Provided by Financing Activities
      24




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##### 



Contractual Obligations
  United States
    
    
    Non-CancelableLong-Term
    
    
    OperatingYear ending December 31,
    
    Borrowings
    
    
    Leases
    
    
    Total2010
    
    $
    
    
    
    $
    869
    
    
    $
    8692011
    
    
    550
    
    
    
    285
    
    
    
    8352012
    
    
    
    
    
    
    58
    
    
    
    582013
    
    
    500
    
    
    
    53
    
    
    
    5532014
    
    
    
    
    
    
    47
    
    
    
    472015 and thereafter
    
    
    70
    
    
    
    113
    
    
    
    183Gross long-term borrowings
    
    
    1,120
    
    
    
    1,425
    
    
    
    2,545Less: discounts on long-term borrowings and sublease payments
    
    
    (405
    )
    
    
    (36
    )
    
    
    (441
    )Total commitment, net
    
    $
    715
    
    
    $
    1,389
    
    
    $
    2,104
 25




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##### 



Off-Balance Sheet Arrangements
  Going Concern
   
    
    obtain financing and/or grants available through federal, state, and/or local
governmental agencies,
    
    obtain financing from various financial institutions,
    
    obtain financing from non-traditional investment capital organizations,
    
    potential sale or divestiture of one or more operating units, and
    
    obtain funding from the sale of our common stock or other equity instruments.
  
    
    government stimulus and/or grant money is not allocated to us despite our focus on the
design, development, and manufacturing of energy efficient lighting systems,
    
    loans or other debt instruments may have terms and/or conditions, such as interest rate,
restrictive covenants, and control or revocation provisions, which are not acceptable to
management or our Board of Directors,
    
    the current global economic crisis combined with our current financial condition may
prevent us from being able to obtain any debt financing,
    
    financing may not be available for parties interested in pursuing the acquisition of one
or more of our operating units, and
    
    additional equity financing may not be available to us in the current economic
environment and could lead to further dilution of shareholder value for current
shareholders of record.
 Critical Accounting Policies and Estimates
  
    
    Revenue recognition;
    
    Allowances for doubtful accounts, returns and discounts;
    
    Long-lived assets;
    
    Valuation of inventories;
    
    Accounting for income taxes; and
    
    Share-Based compensation.
 26




---



##### 



Revenue Recognition
  
    
    persuasive evidence or an arrangement exists, e.g., a sales order, a purchase order, or
a sales agreement,
    
    shipment has occurred, with the standard shipping term being F.O.B. ship point, or
services provided on a proportional performance basis or installation have been completed,
    
    price to the buyer is fixed or determinable, and
    
    collectability is reasonably assured.
 products-based
 
    
    all sales made by the company to its customer base are non-contingent, meaning that they
are not tied to that customers resale of products,
    
    standard terms of sale contain shipping terms of F.O.B. ship point, meaning that title
is transferred when shipping occurs, and
    
    there are no automatic return provisions that allow the customer to return the product
in the event that the product does not sell within a defined timeframe.
 products-based specifically-defined installation
 
    
    product sale at completion of installation, and
    
    installation service at completion of installation.
 ighting solutions-based
 
    
    comprehensive site assessment, which includes a review of the current lighting
requirements and energy usage at the customers facility,
    
    site field verification, where we perform a test implementation of our energy management
system at a customers facility upon request,
    
    utility incentive and government subsidy management, where we assist our customers in
identifying, applying for and obtaining available utility incentives or government
subsidies,
    
    engineering design, which involves designing a customized system to suit our customers
facility lighting and energy management needs, and providing the customer with a written
analysis of the potential energy savings and lighting and environmental benefits associated
with the designed system,
    
    project management, which involves our working with the electrical contractor in
overseeing and managing all phases of implementation from delivery through installation for
a single facility or through multi-facility roll-outs tied to a defined project schedule,
    
    installation services, which we provide through our national network of qualified
third-party installers, and
    
    recycling in connection with our retrofit installations, where we remove, dispose of and
recycle our customers legacy lighting fixtures.
  Allowances for Doubtful Accounts, Returns, and Discounts
  
    
    Allowance for doubtful accounts for accounts receivable, and
    
    Allowance for sales returns.
 27




---



##### 



Long-lived Assets
   Valuation of Inventories
  Accounting for Income Taxes
   Share-Based Payments
 Compensation  Stock Compensation
 28




---



##### 



Recently Issued Accounting Pronouncements
 Consolidation (Topic
810)  Accounting and Reporting for Decreases in Ownership of a Subsidiary  A Scope
Clarification
 Revenue Recognition (Topic 605) 
Multiple-Deliverable Revenue Arrangements
 Fair Value Measurements and Disclosures  Overall
 Generally Accepted Accounting Principles (Topic 105)
 Business Combinations
 Non-controlling Interests in Consolidated
Financial Statements, an Amendment of ARB No. 51
 Item 7A.
    
    Qualitative and Quantitative Disclosures About Market Risk
  29




---



##### 



Item 8.
    
    Financial Statements and Supplementary Data
 TABLE OF CONTENTS
 PageReport of Independent Registered Public Accounting Firm
    
    
    31Report of Previous Independent Registered Public Accounting Firm
    
    
    32Consolidated Balance Sheets as of December 31, 2009 and 2008
    
    
    33Consolidated Statements of Operations for the years ended December 31, 2009, 2008, and 2007
    
    
    34Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2009, 2008,
and 2007
    
    
    35Consolidated Statements of Shareholders Equity for the years ended December 31, 2009, 2008, and 2007
    
    
    36Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008, and 2007
    
    
    37Notes to Consolidated Financials Statements for the years ended December 31, 2009, 2008, and 2007
    
    
    39
 30




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
       
 31




---



##### 



REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
       
 32




---



##### 



ENERGY FOCUS, INC.
CONSOLIDATED BALANCE SHEETS
As of December 31,
 (amounts in thousands except share and per share amounts)
 2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,062
    
    
    $
    10,568Accounts receivable trade, net of allowances for doubtful
accounts of $317 in 2009 and $356 in 2008
    
    
    2,922
    
    
    
    2,617Inventories, net
    
    
    3,770
    
    
    
    5,539Prepaid and other current assets
    
    
    509
    
    
    
    310Total current assets
    
    
    8,263
    
    
    
    19,034Fixed assets, net
    
    
    3,091
    
    
    
    4,459Goodwill, net
    
    
    672
    
    
    
    Intangible assets, net
    
    
    2,750
    
    
    
    Collateralized assets
    
    
    2,500
    
    
    
    Other assets
    
    
    102
    
    
    
    143Total assets
    
    $
    17,378
    
    
    $
    23,636LIABILITIESCurrent liabilities:Accounts payable
    
    $
    1,677
    
    
    $
    2,770Accrued liabilities
    
    
    1,854
    
    
    
    1,602Deferred revenue
    
    
    295
    
    
    
    191Credit line borrowings
    
    
    
    
    
    
    1,904Current portion of long-term borrowings
    
    
    
    
    
    
    54Total current liabilities
    
    
    3,826
    
    
    
    6,521Other deferred liabilities
    
    
    149
    
    
    
    81Acquisition-related contingent liabilities
    
    
    1,183
    
    
    
    Long-term borrowings
    
    
    715
    
    
    
    245Total liabilities
    
    
    5,873
    
    
    
    6,847SHAREHOLDERS EQUITYPreferred stock, par value $0.0001 per share:Authorized:
2,000,000 shares in 2009 and 2008 Issued and outstanding: no shares in 2009 and 2008
    
    
    
    
    
    
    Common stock, par value $0.0001 per share:Authorized:
30,000,000 shares in 2009 and 2008 Issued and outstanding: 21,250,000
in 2009 and 14,835,000 in 2008
    
    
    1
    
    
    
    1Additional paid-in capital
    
    
    71,373
    
    
    
    65,865Accumulated other comprehensive income
    
    
    474
    
    
    
    251Accumulated deficit
    
    
    (60,343
    )
    
    
    (49,328
    )Total shareholders equity
    
    
    11,505
    
    
    
    16,789Total liabilities and shareholders equity
    
    $
    17,378
    
    
    $
    23,636
  33




---



##### 



ENERGY FOCUS, INC.
 CONSOLIDATED STATEMENTS OF OPERATIONS
 For the years ended December 31,
 (amounts in thousands except per share amounts)
 2009
    
    
    2008
    
    
    2007Net sales
    
    $
    12,489
    
    
    $
    20,032
    
    
    $
    19,761Cost of sales
    
    
    10,449
    
    
    
    15,926
    
    
    
    14,704Gross profit
    
    
    2,040
    
    
    
    4,106
    
    
    
    5,057Operating expenses:Research and development
    
    
    319
    
    
    
    237
    
    
    
    2,611Sales and marketing
    
    
    6,044
    
    
    
    8,081
    
    
    
    8,227General and administrative
    
    
    5,333
    
    
    
    5,443
    
    
    
    5,015Loss on impairment
    
    
    
    
    
    
    3,195
    
    
    
    Restructuring
    
    
    125
    
    
    
    
    
    
    
    456Total operating expenses
    
    
    11,821
    
    
    
    16,956
    
    
    
    16,309Loss from operations
    
    
    (9,781
    )
    
    
    (12,850
    )
    
    
    (11,252
    )Other income (expense):Other (expense) income
    
    
    47
    
    
    
    (91
    )
    
    
    150Interest (expense) income
    
    
    (73
    )
    
    
    18
    
    
    
    305Loss from continuing operations before income taxes
    
    
    (9,807
    )
    
    
    (12,923
    )
    
    
    (10,797
    )(Provision for) benefit from income taxes
    
    
    (7
    )
    
    
    250
    
    
    
    (190
    )Net loss from continuing operations
    
    $
    (9,814
    )
    
    $
    (12,673
    )
    
    $
    (10,987
    )Discontinued operations:Loss before income taxes of discontinued
operations, including loss on disposal of discontinued operations of
$664,000 in 2009
    
    
    (1,201
    )
    
    
    (1,775
    )
    
    
    (329
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    (1
    )Loss  from discontinued operations
    
    
    (1,201
    )
    
    
    (1,775
    )
    
    
    (330
    )Net loss
    
    $
    (11,015
    )
    
    $
    (14,448
    )
    
    $
    (11,317
    )Net loss per share  basic and diluted
    
    $
    (0.70
    )
    
    $
    (1.02
    )
    
    $
    (0.98
    )Shares used in computing net loss per share -
basic and diluted
    
    
    15,763
    
    
    
    14,182
    
    
    
    11,500
  34




---



##### 



ENERGY FOCUS, INC.
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 For the years ended December 31,
 (amounts in thousands)
 2009
    
    
    2008
    
    
    2007Net loss
    
    $
    (11,015
    )
    
    $
    (14,448
    )
    
    $
    (11,317
    )Other comprehensive income (loss):Foreign currency translation adjustments
    
    
    223
    
    
    
    (564
    )
    
    
    283Net unrealized loss on securities
    
    
    
    
    
    
    
    
    
    
    (69
    )Comprehensive loss
    
    $
    (10,792
    )
    
    $
    (15,012
    )
    
    $
    (11,103
    )
  35




---



##### 



ENERGY FOCUS, INC.
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 For the years ended December 31, 2009, 2008, and 2007
 (amounts in thousands)
 Accumulated
    
    
    RetainedAdditional
    
    
    Other
    
    
    EarningsCommon Stock
    
    
    Paid-in
    
    
    Comprehensive
    
    
    (AccumulatedShares
    
    
    Amount
    
    
    Capital
    
    
    Income
    
    
    Deficit)
    
    
    TotalBalances, December 31, 2006
    
    
    11,394
    
    
    $
    1
    
    
    $
    53,841
    
    
    $
    601
    
    
    $
    (23,563
    )
    
    $
    30,880Exercise of common stock warrants
    
    
    86
    
    
    
    
    
    
    
    295
    
    
    
    
    
    
    
    
    
    
    
    295Exercise of common stock options
    
    
    140
    
    
    
    
    
    
    
    651
    
    
    
    
    
    
    
    
    
    
    
    651Issuance of common stock under
employee stock option purchase
plan
    
    
    3
    
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    18Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    877
    
    
    
    
    
    
    
    
    
    
    
    877Net unrealized gain on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (69
    )
    
    
    
    
    
    
    (69
    )Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    283
    
    
    
    
    
    
    
    283Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,317
    )
    
    
    (11,317
    )Balances, December 31, 2007
    
    
    11,623
    
    
    $
    1
    
    
    $
    55,682
    
    
    $
    815
    
    
    $
    (34,880
    )
    
    $
    21,618Private investment public
equity, net of expenses
    
    
    3,184
    
    
    
    
    
    
    
    9,335
    
    
    
    
    
    
    
    
    
    
    
    9,335Exercise of common stock options
    
    
    23
    
    
    
    
    
    
    
    126
    
    
    
    
    
    
    
    
    
    
    
    126Issuance of common stock under
employee stock option purchase
plan
    
    
    5
    
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    7Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    715
    
    
    
    
    
    
    
    
    
    
    
    715Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (564
    )
    
    
    
    
    
    
    (564
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,448
    )
    
    
    (14,448
    )Balances, December 31, 2008
    
    
    14,835
    
    
    $
    1
    
    
    $
    65,865
    
    
    $
    251
    
    
    $
    (49,328
    )
    
    $
    16,789Issuance of common stock under
Rights Offering
    
    
    5,168
    
    
    
    
    
    
    
    3,344
    
    
    
    
    
    
    
    
    
    
    
    3,344Issuance of common stock
    
    
    228
    
    
    
    
    
    
    
    153
    
    
    
    
    
    
    
    
    
    
    
    153Issuance of common stock under
employee stock option purchase
plan
    
    
    19
    
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    11Issuance of common stock for acquisition of subsidiary
    
    
    1,000
    
    
    
    
    
    
    
    1,239
    
    
    
    
    
    
    
    
    
    
    
    1,239Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    624
    
    
    
    
    
    
    
    
    
    
    
    624Warrants issued for financing
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    
    
    
    
    
    
    
    
    137Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    223
    
    
    
    
    
    
    
    223Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,015
    )
    
    
    (11,015
    )Balances, December 31, 2009
    
    
    21,250
    
    
    $
    1
    
    
    $
    71,373
    
    
    $
    474
    
    
    $
    (60,343
    )
    
    $
    11,505
  36




---



##### 



ENERGY FOCUS, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the years ended December 31,
 (amounts in thousands)
 2009
    
    
    2008
    
    
    2007Cash flows from operating activities:Net loss
    
    $
    (11,015
    )
    
    $
    (14,448
    )
    
    $
    (11,317
    )Less: loss from discontinued operations
    
    
    (1,201
    )
    
    
    (1,775
    )
    
    
    (330
    )Net loss from continuing operations
    
    
    (9,814
    )
    
    
    (12,673
    )
    
    
    (10,987
    )Adjustments to reconcile net loss from continuing operations to net
cash used in operating activities:Loss on impairment
    
    
    
    
    
    
    3,195
    
    
    
    Depreciation
    
    
    987
    
    
    
    1,151
    
    
    
    1,144Stock-based compensation
    
    
    624
    
    
    
    715
    
    
    
    877Provision for doubtful accounts receivable
    
    
    45
    
    
    
    (52
    )
    
    
    337Unrealized loss from marketable securities
    
    
    
    
    
    
    
    
    
    
    69Deferred taxes
    
    
    
    
    
    
    (255
    )
    
    
    177Deferred revenue
    
    
    104
    
    
    
    (52
    )
    
    
    244Loss on disposal of fixed assets
    
    
    44
    
    
    
    
    
    
    
    Changes in assets and liabilities:Accounts receivable, inventories, and other assets
    
    
    (906
    )
    
    
    1,374
    
    
    
    2,811Accounts payable and accrued liabilities
    
    
    (1,225
    )
    
    
    902
    
    
    
    (2,007
    )Total adjustments
    
    
    (327
    )
    
    
    6,978
    
    
    
    3,652Net cash used by continuing operations
    
    
    (10,141
    )
    
    
    (5,695
    )
    
    
    (7,335
    )Net cash used in discontinued operations
    
    
    (421
    )
    
    
    (135
    )
    
    
    (167
    )Net cash used in operating activities
    
    
    (10,562
    )
    
    
    (5,830
    )
    
    
    (7,502
    )Cash flows from investing activities:Sale of short-term investments
    
    
    
    
    
    
    
    
    
    
    49,441Purchase of short-term investments
    
    
    
    
    
    
    
    
    
    
    (37,090
    )Cash paid
for acquisition of subsidiary
    
    
    (1,500
    )
    
    
    
    
    
    
    Acquisition of fixed assets
    
    
    (182
    )
    
    
    (358
    )
    
    
    (490
    )Net cash (used in) provided by continuing investing activities
    
    
    (1,682
    )
    
    
    (358
    )
    
    
    11,861Net cash provided by (used by) discontinued investing activities
    
    
    765
    
    
    
    (37
    )
    
    
    (19
    )Net cash (used in) provided by investing activities
    
    
    (917
    )
    
    
    (395
    )
    
    
    11,842Cash flows from financing activities:Cash proceeds from issuances of common stock, net
    
    
    3,508
    
    
    
    9,335
    
    
    
    Cash proceeds from exercise of stock options
    
    
    
    
    
    
    133
    
    
    
    964Cash proceeds from notes payable, net
    
    
    137
    
    
    
    
    
    
    
    Net payments on credit line borrowings
    
    
    (1,776
    )
    
    
    802
    
    
    
    (27
    )Net borrowing/(payments) on short and long-term bank borrowings
    
    
    483
    
    
    
    (1,672
    )
    
    
    (590
    )Other liabilities
    
    
    
    
    
    
    
    
    
    
    62Net cash provided by continuing financing activities
    
    
    2,352
    
    
    
    8,598
    
    
    
    409Net cash used in discontinued financing activities
    
    
    (428
    )
    
    
    (105
    )
    
    
    (2
    )Net cash provided by financing activities
    
    
    1,924
    
    
    
    8,493
    
    
    
    407Effect of exchange rate changes on cash
    
    
    49
    
    
    
    (112
    )
    
    
    (40
    )Net (decrease) increase in cash and cash equivalents
    
    
    (9,506
    )
    
    
    2,156
    
    
    
    4,707Cash and cash equivalents at beginning of year
    
    
    10,568
    
    
    
    8,412
    
    
    
    3,705Cash and cash equivalents at end of year
    
    $
    1,062
    
    
    $
    10,568
    
    
    $
    8,412
  37




---



##### 



ENERGY FOCUS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31,  (amounts in thousands)
 2009
    
    
    2008
    
    
    2007Supplemental InformationInterest paid:
    
    $
    98
    
    
    $
    198
    
    
    $
    334Non-cash investing and financing activities:Fully depreciated assets disposed of
    
    $
    1,149
    
    
    $
    35
    
    
    $
    205The company purchased all of the members
interest of Stones River Companies, LLC for
$1,500. In conjunction with the acquisition,
liabilities were incurred and common stock
was issued as follows:Fair value of assets acquired
    
    $
    4,700
    
    
    $
    
    
    
    $
    Cash paid
for the members interest
    
    
    (1,500
    )
    
    
    
    
    
    
    Liabilities incurred and common stock issued
    
    
    3,200
    
    
    
    
    
    
    
    
  38




---



##### 



ENERGY FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
 1. Nature of Operations
  2. Summary of Significant Accounting Policies
  Use of Estimates
  Reclassifications
  Basis of Presentation
  Going Concern
  39




---



##### 



ENERGY FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
  
    
    obtain financing and/or grants available through federal, state, and/or local
governmental agencies,
    
    obtain financing from various financial institutions,
    
    obtain financing from non-traditional investment capital organizations,
    
    potential sale or divestiture of one or more operating units, and
    
    obtain funding from the sale of our common stock or other equity instruments.
  
    
    government stimulus and/or grant money is not allocated to us despite our focus on the
design, development, and manufacturing of energy efficient lighting systems,
    
    loans or other debt instruments may have terms and/or conditions, such as interest rate,
restrictive covenants, and control or revocation provisions, which are not acceptable to
management or our Board of Directors,
    
    the current global economic crisis combined with our current financial condition may
prevent us from being able to obtain any debt financing,
    
    financing may not be available for parties interested in pursuing the acquisition of one
or more of our operating units, and
    
    additional equity financing may not be available to us in the current economic
environment and could lead to further dilution of shareholder value for current
shareholders of record.
 Revenue Recognition
  
    
    persuasive evidence or an arrangement exists, e.g., a sales order, a purchase order, or
a sales agreement,
    
    shipment has occurred, with the standard shipping term being F.O.B. ship point, or
services provided on a proportional performance basis or installation have been completed,
    
    price to the buyer is fixed or determinable, and
    
    collectability is reasonably assured.
 products-based
 
    
    all sales made by the company to its customer base are non-contingent, meaning that they
are not tied to that customers resale of products,
    
    standard terms of sale contain shipping terms of F.O.B. ship point, meaning that title
is transferred when shipping occurs, and
    
    there are no automatic return provisions that allow the customer to return the product
in the event that the product does not sell within a defined timeframe.
 products-based specifically-defined installation
 
    
    product sale at completion of installation, and
    
    installation service at completion of installation.
 40




---



##### 



ENERGY FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
 ighting solutions-based
 
    
    comprehensive site assessment, which includes a review of the current lighting
requirements and energy usage at the customers facility,
    
    site field verification, where we perform a test implementation of our energy management
system at a customers facility upon request,
    
    utility incentive and government subsidy management, where we assist our customers in
identifying, applying for and obtaining available utility incentives or government
subsidies,
    
    engineering design, which involves designing a customized system to suit our customers
facility lighting and energy management needs, and providing the customer with a written
analysis of the potential energy savings and lighting and environmental benefits associated
with the designed system,
    
    project management, which involves our working with the electrical contractor in
overseeing and managing all phases of implementation from delivery through installation for
a single facility or through multi-facility roll-outs tied to a defined project schedule,
    
    installation services, which we provide through our national network of qualified
third-party installers, and
    
    recycling in connection with our retrofit installations, where we remove, dispose of and
recycle our customers legacy lighting fixtures.
  Cash Equivalents
  Inventories
  Accounts Receivable
  41




---



##### 



ENERGY FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
 Income Taxes
   Collateralized Assets
  Long-Lived Assets
     Fair Value of Financial Instruments
  42




---



##### 



ENERGY FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
 Certain Risks and Concentrations
     Research and Development
    Earnings (Loss) Per Share
  43




---



##### 



ENERGY FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
  Years ended December 31,2009
    
    
    2008
    
    
    2007Numerator  basic and diluted loss per share:Net loss
    
    $
    (11,015
    )
    
    $
    (14,448
    )
    
    $
    (11,317
    )Denominator  basic and diluted loss per share:Weighted average shares outstanding
    
    
    15,763
    
    
    
    14,182
    
    
    
    11,500Basic and diluted net loss per share
    
    $
    (0.70
    )
    
    $
    (1.02
    )
    
    $
    (0.98
    )
  Stock-Based Compensation
 Compensation  Stock Compensation
    2009
    
    2008
    
    2007Fair value of options issued
    
    $
    0.46
    
    
    $
    1.04
    
    
    $
    3.01Exercise price
    
    $
    0.73
    
    
    $
    1.91
    
    
    $
    6.30Expected life of option
    
    4.0 years
    
    4.0 years
    
    4.0 yearsRisk-free interest rate
    
    
    1.88
    %
    
    
    2.36
    %
    
    
    4.35
    %Expected volatility
    
    
    88.26
    %
    
    
    72.53
    %
    
    
    56.29
    %Dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
 44




---



##### 



ENERGY FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
    Foreign Currency Translation
  Advertising Expenses
  Product Warranties
  Year endedDecember 31,2009
    
    
    2008Balance at the beginning of the year
    
    $
    308
    
    
    $
    229Accruals for warranties issued
    
    
    290
    
    
    
    336Settlements made during the year (in cash or in kind)
    
    
    (387
    )
    
    
    (257
    )Balance at the end of the year
    
    $
    211
    
    
    $
    308
 45




---



##### 



ENERGY FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
 Recent Accounting Pronouncements
 Consolidation (Topic
810)  Accounting and Reporting for Decreases in Ownership of a Subsidiary  A Scope
Clarification
 Revenue Recognition (Topic 605) 
Multiple-Deliverable Revenue Arrangements
 Fair Value Measurements and Disclosures  Overall
 Generally Accepted Accounting Principles (Topic 105)
 Business Combinations
 Non-controlling Interests in Consolidated
Financial Statements, an Amendment of ARB No. 51
 3. Acquisition
  46




---



##### 



ENERGY FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
    AmortizationLifeAssets acquired:
    
    (in years)
    
    AmountAccounts receivable
    
    
    
    $
    1,258Fixed asset
    
    
    
    
    20Goodwill
    
    n/a
    
    
    672Intangible assets:Tradename
    
    10
    
    
    500Client relationships
    
    5
    
    
    2,250Total purchase price
    
    
    
    $
    4,700
   Year ending December 31,
    
    Amount2010
    
    $
    1,0732011
    
    
    6492012
    
    
    4202013
    
    
    2532014
    
    
    1052015 and thereafter
    
    
    250Total amortization expense
    
    $
    2,750
  4. Discontinued Operations
  47




---



##### 



ENERGY FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
   December 31,2009
    
    
    2008
    
    
    2007Net sales
    
    $
    1,462
    
    
    $
    2,787
    
    
    $
    3,108Total expenses
    
    
    2,663
    
    
    
    4,562
    
    
    
    3,437Loss from operations of discontinued
operations
    
    
    (1,201
    )
    
    
    (1,775
    )
    
    
    (329
    )Provision for income tax
    
    
    
    
    
    
    
    
    
    
    (1
    )Net loss from discontinued operations
    
    $
    (1,201
    )
    
    $
    (1,775
    )
    
    $
    (330
    )
  December 31,2008Cash and cash equivalents
    
    $
    45Accounts receivable trade
    
    
    207Inventories
    
    
    728Prepaid and other current assets
    
    
    10Fixed assets
    
    
    540Other assets
    
    
    142Total assets of discontinued operations
    
    $
    1,672Accounts payable
    
    $
    30Accrued expenses
    
    
    125Draw on line of credit
    
    
    128Current portion of long-term borrowings
    
    
    54Long-term borrowings
    
    
    245Total liabilities of discontinued operations
    
    $
    582
 5. Inventories
 December 31,2009
    
    
    2008Raw materials
    
    $
    2,785
    
    
    $
    4,738Inventory reserve
    
    
    (1,010
    )
    
    
    (1,795
    )Finished goods
    
    
    1,995
    
    
    
    2,596$
    3,770
    
    
    $
    5,539
 48




---



##### 



ENERGY FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
 6. Fixed Assets
 December 31,2009
    
    
    2008Equipment (useful life 3 - 15 years)
    
    $
    7,856
    
    
    $
    8,632Tooling (useful life 2 - 5 years)
    
    
    2,305
    
    
    
    2,752Furniture and fixtures (useful life 5 years)
    
    
    168
    
    
    
    200Computer software (useful life 3 years)
    
    
    476
    
    
    
    483Leasehold improvements (the shorter of useful life or
lease life)
    
    
    911
    
    
    
    1,639Construction in progress
    
    
    
    
    
    
    60Fixed assets at cost
    
    
    11,716
    
    
    
    13,766Less: accumulated depreciation
    
    
    (8,625
    )
    
    
    (9,307
    )Fixed assets, net
    
    $
    3,091
    
    
    $
    4,459
 7. Goodwill
    GoodwillNet CarryingAmountBalance as of December 31, 2007
    
    $
    4,359Impairment
    
    
    (4,305
    )Foreign currency translation
    
    
    (54
    )Balance as of December 31, 2008
    
    
    Acquisition
    
    
    672Balance as of December 31, 2009
    
    $
    672
 49




---



##### 



ENERGY FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
 8. Accruals and Other Current Liabilities
 December 31,2009
    
    
    2008Accrued sales commissions and incentives
    
    $
    79
    
    
    $
    320Accrued warranty expense
    
    
    211
    
    
    
    308Accrued professional fees
    
    
    282
    
    
    
    172Accrued employee benefits
    
    
    376
    
    
    
    363Accrued rent
    
    
    29
    
    
    
    26Accrued taxes
    
    
    151
    
    
    
    188Accrued performance-related contingent consideration
    
    
    420
    
    
    
    Accrued subcontractor services
    
    
    128
    
    
    
    Accrued other expenses
    
    
    178
    
    
    
    225Total accrued expenses
    
    $
    1,854
    
    
    $
    1,602
 9. Long-Term Borrowings
      50




---



##### 



ENERGY FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
      Long-TermYear ending December 31,
    
    Borrowings2010
    
    $
    2011
    
    
    5502012
    
    
    2013
    
    
    5002014
    
    
    2015 and thereafter
    
    
    70Gross long-term borrowings
    
    
    1,120Less: discounts on long-term borrowings
    
    
    (405
    )Total commitment, net
    
    $
    715
 10. Commitments and Contingencies
  Gross Lease
    
    
    Sublease
    
    
    Minimum LeaseYear ending December 31,
    
    Commitments
    
    
    Payments
    
    
    Commitments2010
    
    $
    869
    
    
    $
    (36
    )
    
    $
    8332011
    
    
    285
    
    
    
    
    
    
    
    2852012
    
    
    58
    
    
    
    
    
    
    
    582013
    
    
    53
    
    
    
    
    
    
    
    532014
    
    
    47
    
    
    
    
    
    
    
    472015 - 2017
    
    
    113
    
    
    
    
    
    
    
    113Total commitment
    
    $
    1,425
    
    
    $
    (36
    )
    
    $
    1,389
 51




---



##### 



ENERGY FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
   11. Shareholders Equity
 Warrants
  Warrants
    
    
    Warrants
    
    
    
    
    
    
    FairOutstanding
    
    
    Outstanding
    
    
    Warrants
    
    
    Value ofCommitments
    
    
    Exercise Price
    
    
    Exerciseable
    
    
    WarrantsBalance, December 31, 2006
    
    
    396,951
    
    
    $
    4.30 - 4.50
    
    
    
    396,951
    
    
    $
    1,775Warrants exercised
    
    
    (85,478
    )
    
    $
    0.01 - 5.563
    
    
    
    (85,478
    )
    
    
    (295
    )Warrants cancelled
    
    
    (40,274
    )
    
    $
    0.01 - 5.563
    
    
    
    (40,274
    )
    
    
    (260
    )Balance, December 31, 2007
    
    
    271,199
    
    
    $
    4.30 - 4.50
    
    
    
    271,199
    
    
    $
    1,220Warrants issued
    
    
    3,566,440
    
    
    $
    3.08
    
    
    
    3,566,440
    
    
    
    10,985Balance, December 31, 2008
    
    
    3,837,639
    
    
    $
    3.08 - 4.50
    
    
    
    3,837,639
    
    
    $
    12,205Warrants issued
    
    
    600,000
    
    
    $
    0.65
    
    
    
    
    
    
    
    Balance, December 31, 2009
    
    
    4,437,639
    
    
    $
    3.08 - 4.50
    
    
    
    3,837,639
    
    
    $
    12,205
   1988 Stock Option Plan
  52




---



##### 



ENERGY FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
 1994 Directors Stock Option Plan
  1994 Stock Option Plan
  2004 Stock Incentive Plan
   2008 Stock Incentive Plan
   53




---



##### 



ENERGY FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
  WeightedOptions
    
    
    Number of
    
    
    AverageAvailable
    
    
    Shares
    
    
    Exercise Pricefor Grant
    
    
    Outstanding
    
    
    Per ShareBalance, December 31, 2006
    
    
    190
    
    
    
    1,293
    
    
    $
    7.00Granted
    
    
    (259
    )
    
    
    259
    
    
    
    6.30Cancelled
    
    
    136
    
    
    
    (136
    )
    
    
    6.96Exercised
    
    
    
    
    
    
    (140
    )
    
    
    4.66Balance, December 31, 2007
    
    
    67
    
    
    
    1,276
    
    
    $
    7.07Granted
    
    
    (477
    )
    
    
    477
    
    
    
    1.91Cancelled
    
    
    238
    
    
    
    (238
    )
    
    
    8.22Exercised
    
    
    
    
    
    
    (23
    )
    
    
    3.27Additional shares reserved
    
    
    1,000
    
    
    
    
    
    
    
    Balance, December 31, 2008
    
    
    828
    
    
    
    1,492
    
    
    $
    5.29Granted
    
    
    (1,146
    )
    
    
    1,146
    
    
    
    0.70Cancelled
    
    
    520
    
    
    
    (520
    )
    
    
    3.35Exercised
    
    
    
    
    
    
    (397
    )
    
    
    0.66Balance, December 31, 2009
    
    
    202
    
    
    
    1,721
    
    
    $
    3.63
   OPTIONS OUTSTANDING
    
    
    OPTIONS CURRENTLY EXERCISABLEWeighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    Average
    
    
    WeightedRange of
    
    Number
    
    
    Remaining
    
    
    Average
    
    
    
    
    
    
    Remaining
    
    
    AverageExercise
    
    of Shares
    
    
    Contactual
    
    
    Exercise
    
    
    Number
    
    
    Contactual
    
    
    ExercisePrices
    
    Outstanding
    
    
    Life
    
    
    Price
    
    
    Exercisable
    
    
    Life
    
    
    Price(in thousands)
    
    
    (in years)
    
    
    
    
    
    
    (in thousands)
    
    
    (in years)$0.60   -   $4.80
    
    
    1,118
    
    
    
    8.3
    
    
    $
    1.63
    
    
    
    456
    
    
    
    6.7
    
    
    $
    2.39$4.91   -   $7.19
    
    
    349
    
    
    
    7.1
    
    
    $
    6.39
    
    
    
    227
    
    
    
    7.0
    
    
    $
    6.48$7.23   -   $9.50
    
    
    187
    
    
    
    5.6
    
    
    $
    7.72
    
    
    
    173
    
    
    
    5.6
    
    
    $
    7.75$10.64 - $12.00
    
    
    67
    
    
    
    5.5
    
    
    $
    11.33
    
    
    
    67
    
    
    
    5.5
    
    
    $
    11.331,721
    
    
    
    
    
    
    
    
    
    
    
    923
 1994 Employee Stock Purchase Plan
  54




---



##### 



ENERGY FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
 Shareholder Rights Plan
   12. Income Taxes
 Accounting for Uncertainty in Income Taxes
   (in thousands)
 Years ended December 31,2009
    
    
    2008
    
    
    2007CurrentFederal
    
    $
    
    
    
    $
    
    
    
    $
    Foreign
    
    
    
    
    
    
    
    
    
    
    (13
    )State
    
    
    (3
    )
    
    
    (6
    )
    
    
    (3
    )
    
    
    (6
    )
    
    
    (13
    )DeferredFederal
    
    
    
    
    
    
    238
    
    
    
    (162
    )Foreign
    
    
    (4
    )
    
    
    4
    
    
    
    State
    
    
    
    
    
    
    14
    
    
    
    (15
    )(4
    )
    
    
    256
    
    
    
    (177
    )Benefit from (provision for) income
taxes
    
    
    (7
    )
    
    
    250
    
    
    
    (190
    )
 55




---



##### 



ENERGY FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
 (in thousands)
 December 31,2009
    
    
    2008
    
    
    2007United States
    
    $
    (9,902
    )
    
    $
    (13,039
    )
    
    $
    (10,707
    )Foreign subsidiaries
    
    
    95
    
    
    
    116
    
    
    
    (90
    )Pretax loss from continuing operations
    
    $
    (9,807
    )
    
    $
    (12,923
    )
    
    $
    (10,797
    )
  Years ended December 31,2009
    
    
    2008
    
    
    2007United States statutory rate
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    34.0
    %State Taxes (net of federal tax
benefit)
    
    
    
    %
    
    
    
    %
    
    
    1.9
    %Valuation allowance
    
    
    (35.7
    )%
    
    
    (31.1
    )%
    
    
    (38.2
    )%Other
    
    
    1.6
    %
    
    
    (1.2
    )%
    
    
    0.6
    %(0.1
    )%
    
    
    1.7
    %
    
    
    (1.7
    )%
 (in thousands)
 December 31,2009
    
    
    2008
    
    
    2007Allowance for doubtful accounts
    
    $
    75
    
    
    $
    92
    
    
    $
    218Accrued expenses and other reserves
    
    
    1,936
    
    
    
    1,905
    
    
    
    1,233Tax credits, deferred R&D, and other
    
    
    633
    
    
    
    833
    
    
    
    202Net operating loss
    
    
    19,576
    
    
    
    15,807
    
    
    
    12,413Valuation allowance
    
    
    (22,209
    )
    
    
    (18,622
    )
    
    
    (14,054
    )Total deferred tax asset
    
    
    11
    
    
    
    15
    
    
    
    12Deferred tax liabilities associated
with indefinite-lived intangibles
    
    
    
    
    
    
    
    
    
    
    (252
    )Net total deferred taxes
    
    $
    11
    
    
    $
    15
    
    
    $
    (240
    )
   13. Segments and Geographic Information
  56




---



##### 



ENERGY FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
 (in thousands)
 Years ended December 31,2009
    
    
    2008
    
    
    2007United States Domestic
    
    $
    7,930
    
    
    $
    12,902
    
    
    $
    14,949Other Countries
    
    
    4,559
    
    
    
    7,130
    
    
    
    4,812Net sales
    
    $
    12,489
    
    
    $
    20,032
    
    
    $
    19,761
 (in thousands)
 Years ended December 31,2009
    
    
    2008
    
    
    2007Pool Lighting
    
    $
    3,906
    
    
    $
    7,219
    
    
    $
    10,976Commercial Lighting
    
    
    8,583
    
    
    
    12,813
    
    
    
    8,785Net sales
    
    $
    12,489
    
    
    $
    20,032
    
    
    $
    19,761
 (in thousands)
 December 31,2009
    
    
    2008United States Domestic
    
    $
    3,556
    
    
    $
    3,726Germany
    
    
    
    
    
    
    540Other Countries
    
    
    207
    
    
    
    193Long-lived assets, net
    
    $
    3,763
    
    
    $
    4,459
 14. Employee Retirement Plan
  15. Reorganization and Restructuring
   16. Related Party Transactions
  57




---



##### 



ENERGY FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
 TM
      58




---



##### 



ENERGY FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
      17. Legal Matters
   18. Subsequent Events
     59




---



##### 



ENERGY FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
  Supplementary Financial Information to Item 8
   QUARTERLY FINANCIAL DATA (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
 2009 Quarters Ended
    
    Dec. 31
    
    
    Sep. 30
    
    
    Jun. 30
    
    
    Mar. 31Net sales from continuing operations
    
    $
    3,618
    
    
    $
    3,023
    
    
    $
    3,325
    
    
    $
    2,523Net loss from continuing operations
    
    
    (2,406
    )
    
    
    (2,687
    )
    
    
    (1,982
    )
    
    
    (2,739
    )Net income/(loss) from discontinued
operations
    
    
    (602
    )
    
    
    69
    
    
    
    (366
    )
    
    
    (302
    )Net loss per share:Basic
    
    $
    (0.17
    )
    
    $
    (0.17
    )
    
    $
    (0.16
    )
    
    $
    (0.20
    )Diluted
    
    $
    (0.17
    )
    
    $
    (0.17
    )
    
    $
    (0.16
    )
    
    $
    (0.20
    )
 2008 Quarters Ended
    
    Dec. 31
    
    
    Sep. 30
    
    
    Jun. 30
    
    
    Mar. 31Net sales from continuing operations
    
    $
    3,506
    
    
    $
    5,691
    
    
    $
    6,668
    
    
    $
    4,167Net loss from continuing operations
    
    
    (6,389
    )
    
    
    (1,494
    )
    
    
    (1,518
    )
    
    
    (3,272
    )Net income/(loss) from discontinued
operations
    
    
    (1,387
    )
    
    
    (90
    )
    
    
    (121
    )
    
    
    (177
    )Net loss per share:Basic
    
    $
    (0.52
    )
    
    $
    (0.11
    )
    
    $
    (0.11
    )
    
    $
    (0.28
    )Diluted
    
    $
    (0.52
    )
    
    $
    (0.11
    )
    
    $
    (0.11
    )
    
    $
    (0.28
    )
 60




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##### 



Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
  Item 9A. Controls and Procedures
    Managements Report on Internal Controls over Financial Reporting
    Attestation Report of Independent Registered Public Accounting Firm
  61




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##### 



Item 9B. Other Information
   62




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##### 



PART III
 Item 10. Directors, Executive Officers, and Corporate Governance
 Directors
   Executive Officers
  Section 16(a) Beneficial Ownership Reporting Compliance
  Audit Committee
  Code of Ethics
 www.efoi.com
  Item 11. Executive Compensation
 Executive Compensation and Other Information
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
 Security Ownership of Principal Shareholders and Management Equity Compensation Plan Information
 Equity Compensation Plan Information
 Item 13. Certain Relationships and Related Transactions and Director Independence
 Certain Transactions Director Independence.
 63




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##### 



Item 14. Principal Accountant Fees and Services
 Ratification of Appointment of Independent Registered
Public AccountantsPrincipal Accountant Fees and Services Pre-Approval Policies and
Procedures.
 64




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##### 



PART IV
 Item 15. Exhibits and Financial Statement Schedules
 (a) Financial Statements
  Financial Statements Schedules
  SCHEDULE II
ENERGY FOCUS, INC.
SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS
(amounts in thousands)
 Balance at
    
    
    Charges to
    
    
    
    
    
    
    BalanceBeginning
    
    
    Revenue/
    
    
    
    
    
    
    at EndDescription
    
    of Year
    
    
    Expenses
    
    
    Deductions
    
    
    of YearYear ended December 31, 2009Allowance for doubtful accounts and returns
    
    $
    486
    
    
    $
    73
    
    
    $
    164
    
    
    $
    395Valuation allowance for deferred tax assets
    
    
    18,622
    
    
    
    3,587
    
    
    
    
    
    
    
    22,209Year ended December 31, 2008Allowance for doubtful accounts and returns
    
    
    848
    
    
    
    245
    
    
    
    607
    
    
    
    486Valuation allowance for deferred tax assets
    
    
    14,054
    
    
    
    4,568
    
    
    
    
    
    
    
    18,622Year ended December 31, 2007Allowance for doubtful accounts and returns
    
    
    600
    
    
    
    338
    
    
    
    90
    
    
    
    848Valuation allowance for deferred tax assets
    
    
    9,680
    
    
    
    4,374
    
    
    
    
    
    
    
    14,054
 65




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##### 



Exhibits
 ExhibitNumber
    
    Description of Documents2.1
    
    Agreement and Plan of Merger between Fiberstars, Inc., a California corporation, and Fiberstars, Inc., a
Delaware corporation (incorporated by reference to Appendix C to the Registrants Definitive Proxy Statement
filed on May 1, 2006).3.1
    
    Certificate of Incorporation of the Registrant (incorporated by reference to Appendix A to the Registrants
Definitive Proxy Statement filed on May 1, 2006).3.2
    
    Certificate of Designation of Series A Participating Preferred Stock of the Registrant (incorporated by
reference to Exhibit 3.2 to the Registrants Current Report on Form 8-K filed on November 27, 2006).3.3
    
    Bylaws of the Registrant (incorporated by reference to Appendix C to the Registrants Current Report on
Form 8-K filed on November 27, 2006).3.4
    
    Certificate of Ownership and Merger, Merging Energy Focus, Inc., a Delaware corporation, into Fiberstars, Inc.,
a Delaware corporation (incorporated by reference to Exhibit 3.1 to the Registrants Quarterly Report on Form
10-Q filed on May 10, 2007).4.1
    
    Form of Warrant for the purchase of shares of common stock (incorporated by reference to Exhibit 99.3 to the
Registrants Current Report on Form 8-K filed on June 19, 2003).4.2
    
    Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrants Current Report
on Form 8-K filed on November 27, 2006)4.3
    
    Rights Agreement dated as of October 25, 2006 between the Registrant and Mellon Investor Services, LLC, as
rights agent (incorporated by reference to Exhibit 4.2 to the Registrants Current Report on Form 8-K filed on
November 27, 2006).4.4
    
    Form of Warrant for the purchase of shares of common stock (incorporated by reference to Exhibit 4.2 to the
Registrants Current Report on Form 8-K filed on November 27, 2006).4.5
    
    Form of Warrant for the purchase of shares of common stock (incorporated by reference to Exhibit 1.2 to the
Registrants Current Report on Form 8-K filed on March 19, 2008).4.6
    
    Amendment No. 1 to Rights Agreement between the Registrant and Mellon Investment Services, LLC, as Rights
Agent, dated as of March 12, 2008 (incorporated by reference to Exhibit 3.1 to the Registrants Current Report
on Form 8-K filed on March 19, 2009).4.7
    
    Amendment No. 2 to the Rights Agreement between the Registrant and Mellon Investment Services, LLC, as Rights
Agent, dated as of December 31, 2009.4.8
    
    Common Stock Purchase Warrant No. 2009SRCW-01 for the purchase of 600,000 shares of common stock dated December
31, 2009 in the name of Woodstone Energy, LLC.4.9
    
    Form of Common Stock Purchase Warrant for the purchase of shares of common stock dated as of December 29, 2009.4.10
    
    Form of Common Stock Purchase Warrant No. 2010LPCW-01 for the purchase of 350,000 shares of common stock
(incorporated by reference to Exhibit 10.3 to the Registrants Current Report on Form 8-K filed on March 19,
2010).4.11
    
    Form of Common Stock Purchase
Warrant for the purchase of shares of common stock dated as of March 30, 2010.10.1
    
    1994 Employee Stock Purchase Plan, amended as of December 7, 2000 (incorporated by reference to Exhibit 99.3 to
the Registrants Registration Statement on Form S-8 (Commission File No. 333-52042) filed on December 18,
2000).10.2
    
    Form of Agreement between the Registrant and independent sales representatives (incorporated by reference to
Exhibit 10.20 to the Registrants Registration Statement on Form SB-2 (Commission File No. 33-79116-LA)).10.3*
    
    Distribution Agreement dated March 21, 1995 between the Registrant and Mitsubishi International Corporation
(incorporated by reference to Exhibit 10.18 to the Registrants Annual Report on Form 10-KSB for the year ended
December 31, 1994).10.4*
    
    Three -Year Supply Agreement dated November 30, 2000 between the Registrant and Mitsubishi International
Corporation (incorporated by reference to Exhibit 10.30 to the Registrants Annual Report on Form 10-K405 filed
on April 2, 2001).10.5
    
    Securities Purchase Agreement dated June 17, 2003 among the Registrant and the investors named therein
(incorporated by reference to Exhibit 99.2 to the Registrants Current Report on Form 8-K filed on June 19,
2003).10.6
    
    Form of Indemnification Agreement for officers of the Registrant (incorporated by reference to Exhibit 10.42 to
the Registrants Annual Report on Form 10-K filed on March 30, 2004).10.7
    
    Form of Indemnification Agreement for directors of the Registrant (incorporated by reference to Exhibit 10.44
to the Registrants Annual Report on Form 10-K filed on March 30, 2004).10.8
    
    Production Share Agreement dated October 9, 2003 among the Registrant, North American Production Sharing, Inc.,
and Industrias Unidas de B.C., S.A. de C.V. (incorporated by reference to Exhibit 10.45 to the Registrants
Annual Report on Form 10-K filed on March 30, 2004).10.9
    
    Consulting Agreement effective as of December 15, 2004 between the Registrant and Gensler Architecture,
Design, and Planning, P.C. (incorporated by reference to Exhibit 10.28 to the Registrants Annual Report on
Form 10-K filed on March 31, 2006).
 66




---



##### 



ExhibitNumber
    
    Description of Documents10.10
    
    Consulting Agreement effective as of December 15, 2004 between the Registrant and Jeffrey H. Brite
(incorporated by reference to Exhibit 10.29 to the Registrants Annual Report on Form 10-K filed on March 31,
2006).10.11
    
    Loan and Security Agreement between Silicon Valley Bank and the Registrant dated August 15, 2005 (incorporated
by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on August 18, 2005).10.12
    
    Employment Agreement between the Registrant and John M. Davenport dated July 1, 2005 (incorporated by reference
from Exhibit 10.2 to the Registrants Quarterly Report on Form 10-Q filed on November 14, 2005).10.13
    
    Severance Agreement between the Registrant and David N. Ruckert dated September 16, 2005 (incorporated by
reference to Exhibit 10.3 to the Registrants Quarterly Report on Form 10-Q filed on November 14, 2005).10.14*
    
    Fiberstars Development Agreement between the Registrant and Advanced Lighting Technologies, Inc. dated
September 19, 2005 (incorporated by reference to Exhibit 10.4 to the Registrants Quarterly Report on Form 10-Q
filed on November 14, 2005)10.15*
    
    ADLT Development Agreement between the Registrant and Advanced Lighting Technologies, Inc. dated September 19,
2005 (incorporated by reference to Exhibit 10.5 to the Registrants Quarterly Report on Form 10-Q filed on
November 14, 2005).10.16*
    
    Equipment Purchase and Supply Agreement between the Registrant and Deposition Sciences, Inc. dated
September 19, 2005 (incorporated by reference to Exhibit 10.6 to the Registrants Quarterly Report on Form 10-Q
filed on November 14, 2005).10.17
    
    Cross-License Agreement between the Registrant and Advanced Lighting Technologies, Inc. dated September 19,
2005 (incorporated by reference to Exhibit 10.7 to the Registrants Quarterly Report on Form 10-Q filed on
November 14, 2005).10.18
    
    Master Services Agreement between the Registrant and Advanced Lighting Technologies, Inc. dated September 19,
2005 (incorporated by reference to Exhibit 10.8 to the Registrants Quarterly Report on Form 10-Qfiled on
November 14, 2005).10.19
    
    First Amendment to Production Share Agreement, effective as of August 17, 2005, among the Registrant, North
American Production Sharing, Inc., and Industrias Unidas de B.C., S.A. de C.V. (incorporated by reference to
Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on October 25, 2005).10.20
    
    Sublease between Venture Lighting International, Inc. and the Registrant dated as of November 11, 2005
(incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on November 17,
2005).10.21
    
    Amended and Restated Loan and Security Agreement between the Registrant and Silicon Valley Bank dated
December 30, 2005 (incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K
filed on January 6, 2006).10.22
    
    Consulting Agreement between the Registrant and David N. Ruckert dated as of February 3, 2006 (incorporated by
reference to Exhibit 10.1 to the Registrants Quarterly Report on Form 10-Q filed on May 15, 2006).10.23*
    
    Equipment Purchase and Product Supply Agreement entered into as of May 25, 2006 between the Registrant and
Deposition Sciences, Inc. (incorporated by reference to Exhibit 10.1 to Amendment No. 2 to the Registrants
Quarterly Report on Form 10-Q filed on March 6, 2009).10.24
    
    Modification to Sublease between the Registrant and Keystone Ruby, LLC. (incorporated by reference to
Exhibit 10.2 to the Registrants Quarterly Report on Form 10-Q filed on August 11, 2006).10.25
    
    Amendment No. 1 to Amended and Restated Loan and Security Agreement between the Registrant and Silicon Valley
Bank dated September 25, 2006 (incorporated by reference from Exhibit 10.1 to the Registrants Quarterly Report
on Form 10-Q filed on November 14, 2006).10.26
    
    First Amendment to Consulting Agreement between the Registrant and David N. Ruckert dated as of February 3,
2007 (incorporated by reference to Exhibit 10.32 to the Registrants Annual Report on Form 10-K filed on March
16, 2007).10.27
    
    Form of Indemnification Agreement for directors and officers of the Registrant (incorporated by reference to
Exhibit 10.31 of the Registrants Annual Report on Form 10-K filed on March 16, 2007).10.28
    
    Amendment No. 4 to Amended and Restated Loan and Security Agreement between Silicon Valley Bank and the
Registrant dated as of October 1, 2007 (incorporated by reference to Exhibit 10.39 to the Registrants Annual
Report on Form 10-K filed on March 17, 2008).10.29
    
    Amendment No. 5 to Amended and Restated Loan and Security Agreement between Silicon Valley Bank and Registrant
dated as of January 29, 2008 (incorporated by reference to Exhibit 10.39 to the Registrants Annual Report on
Form 10-K filed on March 17, 2008).10.30
    
    Management Agreement between Barry R. Greenwald and the Registrant dated as of October 19, 2007 (incorporated
by reference to Exhibit 10.39 to the Registrants Annual Report on Form 10-K filed on March 17, 2008).10.31
    
    Form of Securities Purchase Agreement dated as of March 14, 2008 (incorporated by reference to Exhibit 1.1 to
the Registrants Current Report on Form 8-K filed on March 19, 2008).10.32
    
    Second Amended and Restated Loan and Security Agreement between the Registrant and Silicon Valley Bank dated as
of October 15, 2008 (incorporated by reference to Exhibit 10.2 to the Registrants Quarterly Report on Form
10-Q filed on November 7, 2008).10.33
    
    1994 Stock Option Plan, amended as of May 24, 2000 (incorporated by reference to Exhibit 99.1 to the
Registrants Registration Statement on Form S-8 (Commission File No. 333-52042) filed on December 18, 2000).10.34
    
    1994 Directors Stock Option Plan, amended as of May 12, 1999 (incorporated by reference to Exhibit 99.2 to the
Registrants Registration Statement on Form S-8 (Commission File No. 333-52042) filed on December 18, 2000).
 67




---



##### 



ExhibitNumber
    
    Description of Documents10.35
    
    2004 Stock Incentive Plan (incorporated by reference to Exhibit 99.1 to the Registrants Registration Statement
on Form S-8 (Commission File No. 333-122-686) filed on February 10, 2005).10.36
    
    2008 Incentive Stock Plan (incorporated by reference to Appendix D to the Registrants Definitive Proxy
Statement filed on August 8, 2008).10.37
    
    Fourth Loan Modification and Forbearance Agreement to Second Amended and Restated Loan and Security Agreement
between Registrant and Silicon Valley Bank dated as of August 25, 2009 (incorporated by reference to Exhibit
10.1 to the Registrants Quarterly Report on Form 10-Q filed on November 13, 2009).10.38
    
    Fifth Loan Modification and Forbearance Agreement to Second Amended and Restated Loan and Security Agreement
between Registrant and Silicon Valley Bank dated as of September 13, 2009 (incorporated by reference to Exhibit
10.2 to the Registrants Quarterly Report on Form 10-Q filed on November 13, 2009).10.39
    
    Sixth Loan Modification and Forbearance Agreement to Second Amended and Restated Loan and Security Agreement
between Registrant and Silicon Valley Bank dated as of October 5, 2009 (incorporated by reference to Exhibit
10.3 to the Registrants Quarterly Report on Form 10-Q filed on November 13, 2009).10.40
    
    Member Interest Purchase Agreement among the Registrant and TLC Investments, LLC, Jamie Hall, and Robert E.
Wilson dated December 31, 2009.10.41
    
    Convertible Promissory Note from the Registrant to TLC Investments, LLC, Jamie Hall, and Robert E. Wilson dated
December 31, 2009.10.42
    
    Warrant Acquisition Agreement between the Registrant and Woodstone Engery, LLC dated December 31, 2009.10.43
    
    Form of Bonding Support Agreement dated as of December 29, 2009.10.44
    
    Form of Warrant Acquisition Agreement for bonding support dated as of December 29, 2009.10.45
    
    Form of Agreement of Confidentiality and Non-Competition for employees including officers.10.46
    
    Purchase Agreement between the Registrant and Lincoln Park Capital Fund, LLC dated March 17, 2010 (incorporated
by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on March 19, 2010).10.47
    
    Registration Rights Agreement between the Registrant and Lincoln Park Capital Fund, LLC dated March 17, 2010
(incorporated by reference to Exhibit 10.2 to the Registrants Current Report on Form 8-K filed on March 19,
2010).10.48
    
    Note Purchase Agreement between the Registrant and EF Energy Partners LLC dated March 30, 2010.10.49
    
    Secured Subordinated Promissory Note from the Registrant to EF Energy Partners LLC dated March 30, 2010.10.50
    
    Warrant Acquisition Agreement among
the Registrant and the investors named therein dated March 30, 2010.21.1
    
    Subsidiaries of the Registrant (filed with this Report).23.1
    
    Consent of Plante & Moran, PLLC, Independent Registered Public Accounting Firm (filed with this Report).23.2
    
    Consent of Grant Thornton, LLP, Independent Registered Public Accounting Firm (filed with this Report).24.1
    
    Power of Attorney (filed with this Report).31.1
    
    Rule 13a-14(a) Certification by Chief Executive Officer (filed with this Report).31.2
    
    Rule 13a-14(a) Certification by Chief Financial Officer (filed with this Report).32.1
    
    Section 1350 Certification of Chief Executive Officer (filed with this Report).32.2
    
    Section 1350 Certification of Chief Financial Officer (filed with this Report).
 
 *
    
    Confidential treatment has been granted with respect to certain portions of this agreement.
    
    Management contract or compensatory plan or arrangement. 68




---



##### 



SIGNATURES
  ENERGY FOCUS, INC.Date: March 31, 2010
    By:
    /s/ JOSEPH G. KAVESKIJoseph G. KaveskiChief Executive Officer  Signature
    
    Title/s/ JOSEPH G. KAVESKI
    
    Chief Executive Officer and DirectorJoseph G. Kaveski
    
    (Principal
Executive Officer)/s/ JOHN M. DAVENPORT
    
    President and DirectorJohn M. Davenport/s/ NICHOLAS G. BERCHTOLD
    
    Vice President of Finance and Chief Financial OfficerNicholas G. Berchtold
    
    (Principal
Financial and Accounting Officer)*/s/ R. LOUIS SCHNEEBERGER
    
    DirectorR. Louis Schneeberger*/s/ J. JAMES FINNERTY
    
    DirectorJ. James Finnerty*/s/ MICHAEL A. KASPER
    
    DirectorMichael A. Kasper*/s/ PAUL VON PAUMGARTTEN
    
    DirectorPaul Von Paumgartten*/s/ PHILIP E. WOLFSON
    
    DirectorPhilip E. Wolfson*/s/ DAVID N. RUCKERT
    
    DirectorDavid N. Ruckert*/s/ DAVID ANTHONY
    
    DirectorDavid Anthony
 
 *
    
    The undersigned, by signing his name, signs this Report on March 31, 2010 on behalf of the above
officers and directors pursuant to a Power of Attorney executed by them and filed as an exhibit to
this Report. By:
    /s/ JOSEPH G. KAVESKIJoseph G. Kaveski, Attorney-in-Fact. 69




---



##### 



EXHIBIT INDEX
 ExhibitNumber
    
    Description of Documents2.1
    
    Agreement and Plan of Merger between Fiberstars, Inc., a California corporation, and Fiberstars, Inc., a
Delaware corporation (incorporated by reference to Appendix C to the Registrants Definitive Proxy Statement
filed on May 1, 2006).3.1
    
    Certificate of Incorporation of the Registrant (incorporated by reference to Appendix A to the Registrants
Definitive Proxy Statement filed on May 1, 2006).3.2
    
    Certificate of Designation of Series A Participating Preferred Stock of the Registrant (incorporated by
reference to Exhibit 3.2 to the Registrants Current Report on Form 8-K filed on November 27, 2006).3.3
    
    Bylaws of the Registrant (incorporated by reference to Appendix C to the Registrants Current Report on
Form 8-K filed on November 27, 2006).3.4
    
    Certificate of Ownership and Merger, Merging Energy Focus, Inc., a Delaware corporation, into Fiberstars, Inc.,
a Delaware corporation (incorporated by reference to Exhibit 3.1 to the Registrants Quarterly Report on Form
10-Q filed on May 10, 2007).4.1
    
    Form of Warrant for the purchase of shares of common stock (incorporated by reference to Exhibit 99.3 to the
Registrants Current Report on Form 8-K filed on June 19, 2003).4.2
    
    Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrants Current Report
on Form 8-K filed on November 27, 2006)4.3
    
    Rights Agreement dated as of October 25, 2006 between the Registrant and Mellon Investor Services, LLC, as
rights agent (incorporated by reference to Exhibit 4.2 to the Registrants Current Report on Form 8-K filed on
November 27, 2006).4.4
    
    Form of Warrant for the purchase of shares of common stock (incorporated by reference to Exhibit 4.2 to the
Registrants Current Report on Form 8-K filed on November 27, 2006).4.5
    
    Form of Warrant for the purchase of shares of common stock (incorporated by reference to Exhibit 1.2 to the
Registrants Current Report on Form 8-K filed on March 19, 2008).4.6
    
    Amendment No. 1 to Rights Agreement between the Registrant and Mellon Investment Services, LLC, as Rights
Agent, dated as of March 12, 2008 (incorporated by reference to Exhibit 3.1 to the Registrants Current Report
on Form 8-K filed on March 19, 2009).4.7
    
    Amendment No. 2 to the Rights Agreement between the Registrant and Mellon Investment Services, LLC, as Rights
Agent, dated as of December 31, 2009.4.8
    
    Common Stock Purchase Warrant No. 2009SRCW-01 for the purchase of 600,000 shares of common stock dated December
31, 2009 in the name of Woodstone Energy, LLC.4.9
    
    Form of Common Stock Purchase Warrant for the purchase of shares of common stock dated as of December 29, 2009.4.10
    
    Form of Common Stock Purchase Warrant No. 2010LPCW-01 for the purchase of 350,000 shares of common stock
(incorporated by reference to Exhibit 10.3 to the Registrants Current Report on Form 8-K filed on March 19,
2010).4.11
    
    Form of Common Stock Purchase
Warrant for the purchase of shares of common stock dated as of March 30, 2010.10.1
    
    1994 Employee Stock Purchase Plan, amended as of December 7, 2000 (incorporated by reference to Exhibit 99.3 to
the Registrants Registration Statement on Form S-8 (Commission File No. 333-52042) filed on December 18,
2000).10.2
    
    Form of Agreement between the Registrant and independent sales representatives (incorporated by reference to
Exhibit 10.20 to the Registrants Registration Statement on Form SB-2 (Commission File No. 33-79116-LA)).10.3*
    
    Distribution Agreement dated March 21, 1995 between the Registrant and Mitsubishi International Corporation
(incorporated by reference to Exhibit 10.18 to the Registrants Annual Report on Form 10-KSB for the year ended
December 31, 1994).10.4*
    
    Three -Year Supply Agreement dated November 30, 2000 between the Registrant and Mitsubishi International
Corporation (incorporated by reference to Exhibit 10.30 to the Registrants Annual Report on Form 10-K405 filed
on April 2, 2001).10.5
    
    Securities Purchase Agreement dated June 17, 2003 among the Registrant and the investors named therein
(incorporated by reference to Exhibit 99.2 to the Registrants Current Report on Form 8-K filed on June 19,
2003).10.6
    
    Form of Indemnification Agreement for officers of the Registrant (incorporated by reference to Exhibit 10.42 to
the Registrants Annual Report on Form 10-K filed on March 30, 2004).10.7
    
    Form of Indemnification Agreement for directors of the Registrant (incorporated by reference to Exhibit 10.44
to the Registrants Annual Report on Form 10-K filed on March 30, 2004).10.8
    
    Production Share Agreement dated October 9, 2003 among the Registrant, North American Production Sharing, Inc.,
and Industrias Unidas de B.C., S.A. de C.V. (incorporated by reference to Exhibit 10.45 to the Registrants
Annual Report on Form 10-K filed on March 30, 2004).10.9
    
    Consulting Agreement effective as of December 15, 2004 between the Registrant and Gensler Architecture,
Design, and Planning, P.C. (incorporated by reference to Exhibit 10.28 to the Registrants Annual Report on
Form 10-K filed on March 31, 2006).
 70




---



##### 



ExhibitNumber
    
    Description of Documents10.10
    
    Consulting Agreement effective as of December 15, 2004 between the Registrant and Jeffrey H. Brite
(incorporated by reference to Exhibit 10.29 to the Registrants Annual Report on Form 10-K filed on March 31,
2006).10.11
    
    Loan and Security Agreement between Silicon Valley Bank and the Registrant dated August 15, 2005 (incorporated
by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on August 18, 2005).10.12
    
    Employment Agreement between the Registrant and John M. Davenport dated July 1, 2005 (incorporated by reference
from Exhibit 10.2 to the Registrants Quarterly Report on Form 10-Q filed on November 14, 2005).10.13
    
    Severance Agreement between the Registrant and David N. Ruckert dated September 16, 2005 (incorporated by
reference to Exhibit 10.3 to the Registrants Quarterly Report on Form 10-Q filed on November 14, 2005).10.14*
    
    Fiberstars Development Agreement between the Registrant and Advanced Lighting Technologies, Inc. dated
September 19, 2005 (incorporated by reference to Exhibit 10.4 to the Registrants Quarterly Report on Form 10-Q
filed on November 14, 2005)10.15*
    
    ADLT Development Agreement between the Registrant and Advanced Lighting Technologies, Inc. dated September 19,
2005 (incorporated by reference to Exhibit 10.5 to the Registrants Quarterly Report on Form 10-Q filed on
November 14, 2005).10.16*
    
    Equipment Purchase and Supply Agreement between the Registrant and Deposition Sciences, Inc. dated
September 19, 2005 (incorporated by reference to Exhibit 10.6 to the Registrants Quarterly Report on Form 10-Q
filed on November 14, 2005).10.17
    
    Cross-License Agreement between the Registrant and Advanced Lighting Technologies, Inc. dated September 19,
2005 (incorporated by reference to Exhibit 10.7 to the Registrants Quarterly Report on Form 10-Q filed on
November 14, 2005).10.18
    
    Master Services Agreement between the Registrant and Advanced Lighting Technologies, Inc. dated September 19,
2005 (incorporated by reference to Exhibit 10.8 to the Registrants Quarterly Report on Form 10-Qfiled on
November 14, 2005).10.19
    
    First Amendment to Production Share Agreement, effective as of August 17, 2005, among the Registrant, North
American Production Sharing, Inc., and Industrias Unidas de B.C., S.A. de C.V. (incorporated by reference to
Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on October 25, 2005).10.20
    
    Sublease between Venture Lighting International, Inc. and the Registrant dated as of November 11, 2005
(incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on November 17,
2005).10.21
    
    Amended and Restated Loan and Security Agreement between the Registrant and Silicon Valley Bank dated
December 30, 2005 (incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K
filed on January 6, 2006).10.22
    
    Consulting Agreement between the Registrant and David N. Ruckert dated as of February 3, 2006 (incorporated by
reference to Exhibit 10.1 to the Registrants Quarterly Report on Form 10-Q filed on May 15, 2006).10.23*
    
    Equipment Purchase and Product Supply Agreement entered into as of May 25, 2006 between the Registrant and
Deposition Sciences, Inc. (incorporated by reference to Exhibit 10.1 to Amendment No. 2 to the Registrants
Quarterly Report on Form 10-Q filed on March 6, 2009).10.24
    
    Modification to Sublease between the Registrant and Keystone Ruby, LLC. (incorporated by reference to
Exhibit 10.2 to the Registrants Quarterly Report on Form 10-Q filed on August 11, 2006).10.25
    
    Amendment No. 1 to Amended and Restated Loan and Security Agreement between the Registrant and Silicon Valley
Bank dated September 25, 2006 (incorporated by reference from Exhibit 10.1 to the Registrants Quarterly Report
on Form 10-Q filed on November 14, 2006).10.26
    
    First Amendment to Consulting Agreement between the Registrant and David N. Ruckert dated as of February 3,
2007 (incorporated by reference to Exhibit 10.32 to the Registrants Annual Report on Form 10-K filed on March
16, 2007).10.27
    
    Form of Indemnification Agreement for directors and officers of the Registrant (incorporated by reference to
Exhibit 10.31 of the Registrants Annual Report on Form 10-K filed on March 16, 2007).10.28
    
    Amendment No. 4 to Amended and Restated Loan and Security Agreement between Silicon Valley Bank and the
Registrant dated as of October 1, 2007 (incorporated by reference to Exhibit 10.39 to the Registrants Annual
Report on Form 10-K filed on March 17, 2008).10.29
    
    Amendment No. 5 to Amended and Restated Loan and Security Agreement between Silicon Valley Bank and Registrant
dated as of January 29, 2008 (incorporated by reference to Exhibit 10.39 to the Registrants Annual Report on
Form 10-K filed on March 17, 2008).10.30
    
    Management Agreement between Barry R. Greenwald and the Registrant dated as of October 19, 2007 (incorporated
by reference to Exhibit 10.39 to the Registrants Annual Report on Form 10-K filed on March 17, 2008).10.31
    
    Form of Securities Purchase Agreement dated as of March 14, 2008 (incorporated by reference to Exhibit 1.1 to
the Registrants Current Report on Form 8-K filed on March 19, 2008).10.32
    
    Second Amended and Restated Loan and Security Agreement between the Registrant and Silicon Valley Bank dated as
of October 15, 2008 (incorporated by reference to Exhibit 10.2 to the Registrants Quarterly Report on Form
10-Q filed on November 7, 2008).10.33
    
    1994 Stock Option Plan, amended as of May 24, 2000 (incorporated by reference to Exhibit 99.1 to the
Registrants Registration Statement on Form S-8 (Commission File No. 333-52042) filed on December 18, 2000).10.34
    
    1994 Directors Stock Option Plan, amended as of May 12, 1999 (incorporated by reference to Exhibit 99.2 to the
Registrants Registration Statement on Form S-8 (Commission File No. 333-52042) filed on December 18, 2000).
 71




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##### 



ExhibitNumber
    
    Description of Documents10.35
    
    2004 Stock Incentive Plan (incorporated by reference to Exhibit 99.1 to the Registrants Registration Statement
on Form S-8 (Commission File No. 333-122-686) filed on February 10, 2005).10.36
    
    2008 Incentive Stock Plan (incorporated by reference to Appendix D to the Registrants Definitive Proxy
Statement filed on August 8, 2008).10.37
    
    Fourth Loan Modification and Forbearance Agreement to Second Amended and Restated Loan and Security Agreement
between Registrant and Silicon Valley Bank dated as of August 25, 2009 (incorporated by reference to Exhibit
10.1 to the Registrants Quarterly Report on Form 10-Q filed on November 13, 2009).10.38
    
    Fifth Loan Modification and Forbearance Agreement to Second Amended and Restated Loan and Security Agreement
between Registrant and Silicon Valley Bank dated as of September 13, 2009 (incorporated by reference to Exhibit
10.2 to the Registrants Quarterly Report on Form 10-Q filed on November 13, 2009).10.39
    
    Sixth Loan Modification and Forbearance Agreement to Second Amended and Restated Loan and Security Agreement
between Registrant and Silicon Valley Bank dated as of October 5, 2009 (incorporated by reference to Exhibit
10.3 to the Registrants Quarterly Report on Form 10-Q filed on November 13, 2009).10.40
    
    Member Interest Purchase Agreement among the Registrant and TLC Investments, LLC, Jamie Hall, and Robert E.
Wilson dated December 31, 2009.10.41
    
    Convertible Promissory Note from the Registrant to TLC Investments, LLC, Jamie Hall, and Robert E. Wilson dated
December 31, 2009.10.42
    
    Warrant Acquisition Agreement between the Registrant and Woodstone Engery, LLC dated December 31, 2009.10.43
    
    Form of Bonding Support Agreement dated as of December 29, 2009.10.44
    
    Form of Warrant Acquisition Agreement for bonding support dated as of December 29, 2009.10.45
    
    Form of Agreement of Confidentiality and Non-Competition for employees including officers.10.46
    
    Purchase Agreement between the Registrant and Lincoln Park Capital Fund, LLC dated March 17, 2010 (incorporated
by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on March 19, 2010).10.47
    
    Registration Rights Agreement between the Registrant and Lincoln Park Capital Fund, LLC dated March 17, 2010
(incorporated by reference to Exhibit 10.2 to the Registrants Current Report on Form 8-K filed on March 19,
2010).10.48
    
    Note Purchase Agreement between the Registrant and EF Energy Partners LLC dated March 30, 2010.10.49
    
    Secured Subordinated Promissory Note from the Registrant to EF Energy Partners LLC dated March 30, 2010.10.50
    
    Warrant Acquisition Agreement among the Registrant and the investors named therein dated March 30 ,2010.21.1
    
    Subsidiaries of the Registrant (filed with this Report).23.1
    
    Consent of Plante & Moran, PLLC, Independent Registered Public Accounting Firm (filed with this Report).23.2
    
    Consent of Grant Thornton, LLP, Independent Registered Public Accounting Firm (filed with this Report).24.1
    
    Power of Attorney (filed with this Report).31.1
    
    Rule 13a-14(a) Certification by Chief Executive Officer (filed with this Report).31.2
    
    Rule 13a-14(a) Certification by Chief Financial Officer (filed with this Report).32.1
    
    Section 1350 Certification of Chief Executive Officer (filed with this Report).32.2
    
    Section 1350 Certification of Chief Financial Officer (filed with this Report).
 
 *
    
    Confidential treatment has been granted with respect to certain portions of this agreement.
    
    Management contract or compensatory plan or arrangement. 72