Item 7.01. Regulation FD Disclosure.
On January 20, 2021, Energy Focus, Inc. (the "Company") received a letter from
the Listing Qualifications staff of The Nasdaq Stock Market ("Nasdaq") notifying
the Company that, on a conditional basis, Nasdaq has determined that the Company
has regained compliance with the minimum stockholders' equity requirement for
continued listing on the Nasdaq Capital Market. Nasdaq Listing Rule 5550(b)(1)
(the "Rule") requires listed companies to maintain stockholders' equity of at
least $2,500,000 or meet the alternatives of market value of listed securities
or net income from continuing operations.
As previously reported, in December 2020, the Company entered into amendments
with holders of all outstanding warrants to purchase its common stock that are
intended to reclassify the outstanding warrants for equity accounting treatment,
eliminating the mark-to-market adjustment at each balance sheet date, as of the
effective date of the amendments. As a result of these amendments, the Company
believes it has regained compliance with the minimum stockholders' equity
requirement for continued listing on the Nasdaq Capital Market.
If at the time of the Company's next periodic report (its Annual Report on Form
10-K for the year ended December 31, 2020, expected to be filed in March 2021)
the Company does not evidence compliance, it may be subject to delisting.
Further, if the Company fails to maintain compliance with the Rule, the Company
may be subject to delisting. In such an event, Nasdaq Listing Rules permit the
Company to appeal any delisting determination to a Nasdaq Hearing Panel. There
can be no assurance that the Company will be able to maintain compliance with
the Rule or maintain its listing on the Nasdaq Capital Market.
The information provided above is being furnished under Item 7.01 of Form 8-K
and shall not be deemed to be "filed" for the purposes of Section 18 of the
Securities Exchange Act of 1934, or otherwise subject to the liabilities of such
section, nor shall such information be deemed incorporated by reference in any
filing under the Securities Act of 1933 or the Securities Exchange Act of 1934,
except as shall be expressly set forth by specific reference in such a filing.
Forward-looking statements in this report are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Generally,
these statements can be identified by the use of words such as "believes,"
"estimates," "anticipates," "expects," "feels," "seeks," "forecasts",
"projects," "intends," "plans," "may," "will," "should," "could," "would" and
similar expressions intended to identify forward-looking statements, although
not all forward-looking statements contain these identifying words. These
forward-looking statements include all matters that are not historical facts and
include statements regarding our intentions, beliefs or current expectations
concerning, among other things, our results of operations, financial condition,
liquidity, prospects, growth, strategies, capital expenditures and the industry
in which we operate. By their nature, forward-looking statements involve risks
and uncertainties because they relate to events and depend on circumstances that
may or may not occur in the future. Although we base these forward-looking
statements on assumptions that we believe are reasonable when made in light of
the information currently available to us, we caution you that forward-looking
statements are not guarantees of future performance and that our actual results
of operations, financial condition and liquidity, and industry developments may
differ materially from statements made in or suggested by the forward-looking
statements contained in this report. We believe that important factors that
could cause our actual results to differ materially from forward-looking
statements include, but are not limited to: (i) disruptions and a slowing in the
U.S. and global economy and business interruptions experienced by us, our
customers and our suppliers as a result of the COVID-19 pandemic and related
stay-at-home orders, quarantine policies, school attendance restrictions and
restrictions on travel, trade and business operations; (ii) our ability to
realize the expected novelty, disinfection effectiveness, affordability and
estimated delivery timing of our UVCD products and their performance and cost
compared to other products; (iii) market acceptance of our LED lighting, control
and UVCD technologies and products; (iv) our need for additional financing in
the near term to continue our operations; (v) our ability to refinance or extend
maturing debt on acceptable terms or at all; (vi) our ability to continue as a
going concern for a reasonable period of time; (vii) our ability to implement
plans to increase sales and control expenses; (viii) our reliance on a limited
number of customers for a significant portion of our revenue, and our ability to
maintain or
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grow such sales levels; (ix) our ability to add new customers to reduce customer
concentration; (x) our reliance on a limited number of third-party suppliers and
research and development partners, our ability to manage third-party product
development and obtain critical components and finished products from such
suppliers on acceptable terms and of acceptable quality, and the impact of our
fluctuating demand on the stability of such suppliers; (xi) our ability to
timely and efficiently transport products from our third-party suppliers to our
facility by ocean marine channels; (xii) our ability to increase demand in our
targeted markets and to manage sales cycles that are difficult to predict and
may span several quarters; (xiii) the timing of large customer orders,
significant expenses and fluctuations between demand and capacity as we invest
in growth opportunities; (xiv) our ability to compete effectively against
companies with lower cost structures or greater resources, or more rapid
development efforts, and new competitors in our target markets; (xv) our ability
to successfully scale our network of sales representatives, agents, and
distributors to match the sales reach of larger, established competitors; (xvi)
our ability to attract and retain qualified personnel, and to do so in a timely
manner; (xvii) the impact of any type of legal inquiry, claim or dispute;
(xviii) general economic conditions in the United States and in other markets in
which we operate or secure products; (xix) our dependence on military maritime
customers and on the levels and timing of government funding available to such
customers, as well as the funding resources of our other customers in the public
sector and commercial markets; (xx) the possible impact on our military maritime
customers and their ability to honor the timing for existing orders or place
future orders due to COVID-19 breakouts amongst personnel that might impact the
use of ships in service; (xxi) business interruptions resulting from
geopolitical actions, including war and terrorism, natural disasters, including
earthquakes, typhoons, floods and fires, or from health epidemics or pandemics
or other contagious outbreaks; (xxii) our ability to respond to new lighting
technologies and market trends, and fulfill our warranty obligations with safe
and reliable products; (xxiii) any delays we may encounter in making new
products available or fulfilling customer specifications; (xxiv) any flaws or
defects in our products or in the manner in which they are used or installed;
(xxv) our ability to protect our intellectual property rights and other
confidential information, and manage infringement claims by others; (xxvi) our
compliance with government contracting laws and regulations, through both direct
and indirect sale channels, as well as other laws, such as those relating to the
environment and health and safety; (xxvii) risks inherent in international
markets, such as economic and political uncertainty, changing regulatory and tax
requirements and currency fluctuations, including tariffs and other potential
barriers to international trade; (xxviii)our ability to maintain effective
internal controls and otherwise comply with our obligations as a public company;
and (xxix) our ability to maintain compliance with the continued listing
standards of The Nasdaq Stock Market. For additional factors that could cause
our actual results to differ materially from the forward-looking statements,
please refer to our most recent annual report on Form 10-K and quarterly reports
on Form 10-Q filed with the Securities and Exchange Commission.
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