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Leading The Global LED Tube Lighting Adoption

This presentation may contain some statements that may be considered forward-looking

statements. These forward-looking statements may include statements relating to

financial projections or other statements relating to the company’s plans, objectives,

expectations or intentions. These matters involve risks and uncertainties, and actual

results may differ materially from those projected or implied in the forward-looking

statements. Factors that could cause actual results to materially differ from the forward-

looking statements in this presentation are set forth in our most recent annual report on

Form 10-K and quarterly reports on Form 10-Q, and include our ability to gain market

share in the LED lighting retrofit market, grow our sales, expand our customer base, and

attain profitability; the ability to manage any future growth effectively; our ability to

manage expenses and unforeseen adverse competitive, economic or other factors that

may impact our cash position; our ability to establish and maintain a competitive

advantage in the LED lighting retrofit market and respond effectively as new lighting

technologies and market trends emerge; our ability to effectively manage our supply

chain; among others.

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Safe Harbor Statement

2003

$10 million

DARPA contract

DAAH01-03-9-R001

1st LED products

Installed on

U.S. Navy Ships

10+ Year Solid State Lighting Partnership with US Navy

$23 million

Navy orderN65540-11-D-0009

2013

National Shipbuilders

Research Program (NSRP) &

USN fund next generation

LED Lighting Fixtures

2011

2008

Energy Focus

Champions

SSL Specification

for U.S. Navy

2014 Energy Focus Product on

over 126 Ship & Subs of

the 249 vessel U.S. Fleet

2007

3

Long, Proven History in

LED Tube Technology Development

4

LED Efficiency Grows Exponentially*

And Has Surpassed All Other Light Sources

*LED efficiency improvement has been following the Haitz Law. Proposed by

Dr. Roland Haitz in 2000, the Haitz Law states that every decade the cost per lumen

(unit of useful light emitted) falls by a factor of 10, and the amount of lumens per

LED package increases by a factor of 20.

Our Vision:

A Trusted Leader In LED Lighting Retrofit

� Singularly focused on 90 billion and 450 billion sqf. of commercial buildingsin the U.S. and in the world, respectively

� Highest performance, lowest cost, client centric (HPLCCC) LED Tubes

� Accessing clients directly for superior service and price Energy Focus Fluorescent and HID

Replacement LED Tubes (TLEDs)

6

Space Heating

4% Space Cooling

10%

Water heating

2%

Ventilation

11%

Cooking

0%

Lighting

23%Refrigeration

9%

Office PC

5%

Office

equipment

6%

Other Uses

30%

Source: eia Annual Energy Outlook 2011http://www.columbia.edu/cu/alliance/documents/EDF/Wednesday/Heal_material.pdf

LED Lighting Retrofit Creates

The Largest Energy Savings in BuildingsLighting: Single Largest Power Draw in Commercial Buildings

LED Tubes: 50%+ Energy Savings Against Traditional Lighting

Source: “LED Lighting in Buildings: 2013-2017”, Memoori.

C&I Accounts for 70% of Lighting

Energy Use & Produces 90% of the Lumens

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Residential Commercial Industrial

Number of Lamps

Energy Use

Lumen Production

8

Source: Smil, V. 2014. The long slow rise of solar and wind.

Scientific American 282 (1):52-57; EIA 2013 Energy Book;

“Lighting The Way 2013”, McKinsey Inc.

TLED Products Have Potential

To Reduce 3% Energy Use TODAYPercentage of U.S. Energy Production/Consumption

0.2%1.2%

6.3%

8.4%

12.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Solar Wind FL & HID C&I Lighting

TLEDs Can Reduce

50-75% of Energy

Used in FL and HID

The investment for substituting

incandescent or fluorescent

lighting with LED is a fifth of the

investment for installing solar

power based on CO2 reduced

Investment Thesis� Explosive Markets: Our targeted LED lighting markets to grow

100%+ per year in the next 5-7 years

� Proven, disruptive products: Established and leading records

and recognitions in the military, government and ESCO markets

� Superior business model: Focused and moving fast in building

direct contacts and distribution networks with end clients to

ensure cost and service advantages

� Rapid growth ensuing: Restructuring completed with

accelerating, consistent quarterly growth now under way

� Government businesses to support profitability: Continuing

sales growth and margin improvement to facilitate corporate

profitability and support C&I expansion initiatives

Indoor

Lamps

A-Type Directional Decorative MR16

Luminares

Down lights

TroffersHigh-Bay

Parking Streetlight

Outdoor

We Currently Target Retrofitting

Troffers, High-Bay and Parking Luminaires

Retrofit: The Real LED Lighting Market

Floor Space from Commercial Buildings Built

Before 2008 Accounts for 93.5% of All Floor Space

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960 Million U.S. Troffers

*Source: US DOE Adoption of Light-Emitting Diodes in Common Lighting Applications

April 2013, Revised May 2013. Data provide through 2012 and estimated by EFOI for 2013.

100% LFL

<1% LED

Troffer Light Sources 2010

LFL LED

99% LFL

1% LED

Troffer Light Sources 2013

LFL LED

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64 Million High Bay Lights &

54 Million Parking Luminaire in the U.S.

41% LFL

<1% LED

59% HID

High Bay + Parking Luminaire

Light Sources 2010

LFL LED HID

*Source: U.S. DOE Adoption of Light-Emitting Diodes in Common Lighting Applications

April 2013, Revised May 2013. Data provide through 2012 and estimated by EFOI for 2013.

41% LFL

2% LED

57% HID

High Bay + Parking Luminaire

Light Sources 2013

LFL LED HID

The U.S. Land Market:

$25.7 Billion (Products Only)

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We Target To Replace Existing FL and HID Fixtures Over the Next 5-10 Years

(Global Total Addressable Market Exceeds $120 Billion)

*Source: “Adoption of Light-Emitting Diodes in Common Lighting Applications”, DOE,

May 2013; Long term average lamp and fixture prices estimated by Energy Focus.

Troffer:

$18.4

Billion

High Bay:

$5.5 Billion

Parking

Luminaire:

$1.9 Billion

Multiple, Seismic Forces

To Expedite LED Adoptions

� Appealing payback surpassing inflection: Payback for our TLEDs is now < 3 years in most parts of the U.S. and Europe

� Continuing efficiency gains and price drops: LED lighting market following Haitz law* with lumens/$ falling 20-30%/year

� Electricity cost to rise faster to further shorten LED payback:Majority coal fire power plants retiring and new generation capacity dwindling in the next 5 years

� Expanding government and business carbon reduction initiatives: Stringent EPA rules (cutting 30% carbon emissions by 2030) and aggressive corporate sustainability goals to urge institutions to turn to LEDs to reduce energy use drastically and immediately

*Source: Named after Dr. Ronald Haitz, the Haitz Law states that every decade

the cost per lumen falls by a factor of 10, and the amount of light generated

per LED package increases by a factor of 20 for a given wavelength of light.

Power Cost Has Been Rising Fast

Shrinking New Power Generation

Capacities To Accelerate Power Cost Rises

Ex: Electricity rates

at FirstEnergy's

Pennsylvania

utilities were raised

by 25-50% in June

1st, 2014.

Corporate Sustainability Is Starting

To Drive LED Adoption Outside of ROI

Source: NPD DisplaySearch LED Lighting Market and Forecast Report, Oct 2013.

Global LED Lighting Penetration

Rates Entering The Steepest Growth Curve

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Focused, Leading

& Proven LED Product Lines

Military Berth LightMilitary IntelliTube® HazGlobe LightsMilitary Globe Lights

High-Bay LightingLED Tubes or T-Lamps Vapor Tight Lighting

Military & Maritime Products

Commercial & Industrial Products

99.8% of our LED lighting systems are still running after 4+ years

Dock LightRetrofit Kit

100% of our military LED lighting systems are still running after 7 years

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Ship’s company can change over from T12 Fluorescent to LED in minutes

Military Intellitube Could Save U.S. Navy

Combat Fleet $500+ million Over 10 Years

Non-Military U.S. Navy MSC Coast

Guard

Oil Rigs

M&M Global

Market*

$2.9 Billion $250

Million

$210

Million

$70 Million $200

Million

* Energy Focus, Inc. market study, 2014

Uniquely Positioned

To Lead The $3+ Billion Sea Market

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Energy Focus is the only approved LED lighting supplier to the U.S. Navy

U.S. Gov’t has awarded $53 million R&D contracts to Energy Focus since 2002

Growth Path of

LED Lighting in C&I Uses

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Source: eia Annual Energy Outlook 2011http://www.columbia.edu/cu/alliance/documents/EDF/Wednesday/Heal_material.pdf

2

0

1

4

2

0

1

4

130 LPW130 LPW

150 LPW150 LPW

100 LPW100 LPW

2

0

1

6

2

0

1

6

2

0

1

8

2

0

1

8

2

0

1

2

2

0

1

2

IntellitubeTM Provides Industry’s

Leading ROI Against Fluorescent

* Payback calculations for an office with 5,000 3-lamp FL fixtures in Northeast regions.

Key assumptions include 12 cents/kWh power rate, 12 hours per day operation, 5 cents

per kWh project rebate, 3% discount rate and $20 per tube.

Initial Investment -$300,000

Annual Power Savings (1-5 Year) $117,180

Annual Power Savings (6-10 Year) $143,640

Maintenance (ballast removal at 5th Year) -$87,000

Rebate $48,825

Simple payback wo. rebate (Yrs) 2.56

Simple payback w. rebate (yrs) 2.14

NPV $755,221

IRR 44%

We Grow and Build Our Brand By Serving

Our Target Clients In The Best Possible Ways

� Clearly defined market segments: We only focus on market segments where we can produce the highest profitable growth with overwhelming success (“dominance”)

� Providing the most compelling value propositions: Our products/services bring far away the highest performance, lowest cost and client centric (HPLCCC) features

� We sell direct: We avoid layers of distributors and build our own distribution networks directly with end users and installers, so services and margins can be far better while remaining competitive

� Inventory availability: By focusing only on the government and C&I sectors (80%+ of lighting needs can be served by our TLEDs), we maintain far fewer SKUs that are available and sold quickly

Clearly Defined Target

Markets To Ensure Leadership

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� Commercial & Industrial:

� National Accounts:

� National retailers

� National parking chains

� Regional Accounts:

� Industrial facilities

� Property managers/REITs

� Healthcare

� Higher Education

� Military & Maritime:

� U.S. Navy

� Foreign Navies

� Commercial ocean-liners

� Hazardous lighting

� Government:

� Federal ESCOs

� GSA contracts

� Military bases

� States

� K-12 schools

* Green: leading the markets; orange: clear successes; blue: early entrance.

1,398

9,799 2,438 1,544

9,108 10,882

35,029

8,614 4,631

11,971

32,151

13,870

54,289

111,828

10,012 14,430

14,409

33,695

22,978

65,171

146,857

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14

M1 Commercial Total

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LED Tubes Sold Per Quarter

Quarterly Results

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Q3 2013 Q4 2013 Q1 2014 (1) Q2 2014 Q3 2014

Net sales 4,827 6,595 4,919 6,699 $7,890

Cost of sales 3,897 5,067 3,497 4,525 5,332

Gross Profit 930 1,528 1,422 2,174 2,558

19.3% 23.2% 28.9% 32.5% 32.4%

Operating expenses:

Research and development 57 331 191 203 232

Selling, general and administrative 2,472 2,689 2,304 2,533 2,648

Loss on impairment - 608 - - -

Change in estimate of contingent liabilities - - - - -

Restructuring 79 1 - - -

Total operating expenses 2,608 3,629 2,495 2,736 2,880

Loss from operations (1,678) (2,101) (1,073) (562) (322)

Other (expense) income (192) (358) (2,978) (61) (81)

Loss from continuing operations before income taxes (1,870) (2,459) (4,051) (623) (403)

Benefit for income taxes - - 1 1 -

Net loss from continuing operations $(1,870) $(2,459) $(4,050) $(622) $(403)

(1) 2014 Other expense includes a $2.3M non-cash charge to write-off the unamortized discount associated with the conversion of convertible notes.

Balance Sheet

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December 31, September 30,

2013 2014

ASSETS (Unaudited)

Current assets:

Cash and cash equivalents $2,860 $6,737

Accounts Receivable 3,925 4,044

Inventories, net 2,510 3,633

Prepaid and other current assets 1,482 1,340

Total current assets 10,777 15,754

Property and equipment, net 536 542

Intangible assets, net 55 14

Other assets 1,440 1,089

Total assets $12,808 $17,399

LIABILITIES

Current liabilities:

Accounts payable $3,707 $4,988

Other current liabilities 2,112 1,851

Total current liabilities 5,819 6,839

Other liabilities 54 4

Long-term debt 4,011 185

Total liabilities 9,884 7,028

SHAREHOLDERS' EQUITY

Common stock and paid-in capital 85,447 97,986

Accumulated other comprehensive income 462 465

Accumulated deficit (82,985) (88,080)

Total shareholders' equity 2,924 10,371

Total liabilities and shareholders' equity $12,808 $17,399