Energy Focus(EFOI) - 2024 Q1 - Quarterly Report

Financial Performance - For Q1 2024, total net sales decreased by $0.1 million, or 10$0.8 million compared to Q1 2023 net sales of $0.9 million, driven by a decrease in MMM sales by$75 thousand and commercial sales by $22 thousand [144]. - Gross profit margin improved to$120 thousand, or 14% of net sales, in Q1 2024, compared to $17 thousand, or 2$0.6 million, down 45% from $1.1 million in Q1 2023, attributed to reductions in payroll, commissions, and software contracts [148]. - The net loss for Q1 2024 was$0.4 million, a 69% decrease from the net loss of $1.3 million in Q1 2023, mainly due to lower fixed costs [152]. - As of March 31, 2024, the company had$972 thousand in cash and no outstanding debt, with an accumulated deficit of $153.7 million [153]. - Net cash used in operating activities for the three months ended March 31, 2024, was$0.1 million, significantly improved from $1.2 million in the same period of 2023 [157][158]. - The net loss for the three months ended March 31, 2024, was$0.4 million, compared to a net loss of $1.3 million for the same period in 2023 [157][158]. - The company generated$1.4 million from the collection of accounts receivable during the first three months of 2024, reflecting improved cash flow management [157]. Strategic Focus - The company is focusing on innovation and cost reduction strategies to enhance product offerings and maintain competitiveness in the LED lighting market [130]. - The company is actively seeking external funding to support growth strategies and has received strategic investments from Sander Electronics, Inc. [134]. - The company is implementing a demand-oriented approach to enhance customer relationships and loyalty through improved service models [137]. - The company continues to seek additional external funding alternatives to support its growth strategies and initiatives [155]. Operational Challenges - The MMM business faced challenges due to delayed government funding and long sales cycles, impacting revenue generation [132]. - The company has reduced its workforce significantly throughout 2023 into 2024 to manage fixed costs [155]. - The company is pursuing existing and new sales opportunities while facing longer sales cycles for made-to-order products [155]. Product Development - The EnFocus™ platform offers dimmable and color-tunable lighting solutions, enabling energy-efficient upgrades without extensive rewiring [135]. - The company plans to reintroduce the second generation of EnFocus™ powerline control switches and circadian lighting system in 2024 due to supply chain challenges [155]. - The company has approximately $557 thousand in outstanding purchase commitments for inventory as of March 31, 2024 [162]. Cash Flow and Financing - As of March 31, 2024, the company's cash balance was approximately$972 thousand, a decrease from approximately $2.0 million at December 31, 2023 [156]. - Net cash used in financing activities during the three months ended March 31, 2024, was$1.0 million, related to net payments on the 2022 Streeterville Note [160].