Energy Focus Reports $268,000 Net Loss in Q1 2025, Despite Improved Gross Profit Margin

Energy Focus, Inc. reported a net loss of $268,000 for the first quarter of 2025, a 36% improvement compared to a net loss of $418,000 in the same period of 2024. The company's net sales for the quarter were $616,000, down 26% from $833,000 in the prior year, primarily due to decreased demand in both military maritime (MMM) and commercial sectors. MMM sales fell to $413,000 from $534,000, while commercial sales dropped to $203,000 from $299,000. The gross profit margin improved to 31.5% of net sales, up from 14.4% in the previous year, attributed to a reduction in fixed costs.

In terms of operational changes, Energy Focus has undertaken significant cost-cutting measures, including a reduction in workforce and a reevaluation of its operating expenses. Product development expenses decreased by 61% to $50,000, reflecting lower payroll-related costs. Selling, general, and administrative expenses also fell by 30% to $412,000, primarily due to reduced consultant fees. The company has eliminated high-interest debt, which has positively impacted its financial position.

Energy Focus continues to focus on its strategic initiatives, including the development of new product lines such as Energy Storage Systems and GaN Power Supplies. The company is also enhancing its sales strategy by expanding its channel partner network and improving customer engagement. Despite these efforts, the company faces challenges from long sales cycles, particularly in the MMM sector, where delays in government funding have impacted revenue recognition.

As of March 31, 2025, Energy Focus had total assets of $5.4 million and total liabilities of $2.6 million, resulting in stockholders' equity of $2.8 million. The company reported cash reserves of $488,000, a decrease from $565,000 at the end of 2024. Energy Focus remains focused on securing additional funding to support its growth strategies, although it acknowledges the ongoing risks associated with market conditions and customer concentration, with three customers accounting for approximately 70% of net sales in the first quarter. The outlook remains cautious, with the company emphasizing the need for continued operational adjustments and external funding to navigate its financial challenges.