Energy Focus, Inc.

Greetings and welcome to the Energy Focus 3rd Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brett Mass, Investor Hayden IR. Thank you, Brett. You may begin.

Thank you, Operator, and good morning, everyone. Joining me on the call today is James Tu, Executive Chairman and Chief Executive Officer, and Todd Nestor, Chief Operating Officer and Financial Officer. Before we begin today's call, I'd like to remind everyone that we'll make certain forward-looking statements. These statements are based upon information that represents the company's current expectations or beliefs. The results realized may differ materially from those stated. For discussion of these risks that could affect our results, please refer to the section under the headings Risk Factors as well as forward-looking statements in our most recent 10-K. in addition to the forward-looking statements in our most recent File 10Q at the SEC. The company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except required by law. Also, please note that during this call and in the accompanying press release, certain financial metrics are present on both GAAP and non-GAAP-adjusted basis. Reconciliations of adjusted results to the GAAP results are available in the tables attached to the earnings release, which is posted on the corporate website, energyfocus.com, in the Investor Relations section of the site. I'll now turn the call over to James. James, the floor is yours.

Thank you, Brad. Good morning, everyone, and thank you for joining our third quarter 2021 earnings conference call. I'm excited to discuss about the next phase of energy focus with you today. While sales for the third quarter 2021 show some modest recoveries from the previous quarter, our legacy LED lighting business continues to face ongoing challenges related to the pandemic. For our commercial business, with offices facing new work conditions and a distributed workforce, retrofitting lighting systems continue to be a lower priority for facility managers. We also continue to see some of our customers' retrofit projects being delayed with our customers in the school and hospital sectors. And the OED tube market remains intensely competitive. We continue to believe that our high-quality, flicker-free, and 10-year warranty positioning offers the best long-term value proposition for large mission-critical facilities that seek to provide quality and reliable lighting with minimal maintenance and product waste, as well as reduced labor due to our product reliability. Looking forward, our upcoming SunCycle circadian lighting system, which marries our superior Lighting products with our patented InFocus power line control technology will be able to offer an equal lighting experience with affordability and sustainability performances that we believe will further differentiate energy focus and bring our commercial lighting business to the next level. For our military business, third quarter military sales continue to be impacted by federal budget availability for military spending. but several significant opportunities with the U.S. Navy and U.S. Army are still waiting for funding approval. Nonetheless, we expanded our product development efforts during the quarter for the Navy market, recently completing the development of the High Bay LED lighting product and delivered our first unit to the Navy for their approval, a potential opportunity for up to $5 million of orders for the product in the next five years. We have also started exploring how to bring additional lighting and control innovations to our military customers. Meanwhile, despite of the headwinds we have been encountering, we have stated over the past few quarters that we have not sat back and waited for the commercial lighting markets to improve. We've doubled down on innovation, primarily surrounding our in-focus lighting control technologies, as well as UVC disinfection. And the new products we've been developing since the beginning of the pandemic have already won several technical and industry awards this year and are about to enter the market in the coming months. Our upcoming Nuvo Air disinfection devices represent the first innovations in this evolution. We recently received a third hearty validation of our disinfection performances, achieving 94.1% to 99.9% pathogen reduction over a half an hour in 1,000 cubic feet space for Nouveau Tower and 100 cubic feet space for Nouveau Traveler, respectively. We have received independent safety certification on Nouveau Traveler and are in the final stage of evaluating product samples. We also expect to receive safety certifications on Nouveau Tower shortly. We believe that these certifications are an important milestone considering the powerful UVC lens used in the Nouveau product. Combined with our efficacy results, it means that Nouveau disinfectors are powerful, effective, and safe in significantly reducing pathogens, be it mold, bacteria, or virus, including the coronavirus, in personal and public spaces. We expect these products, including the Nuvo Tower for larger spaces and the cup holder-sized Nuvo Traveler for vehicles and other personal spaces, to be available for sale on nuvo.us, firstenergyhome.com, as well as throughout our existing channel partners for commercial and military, starting in the fourth quarter of 2021. During the third quarter, we also continue to develop the development of our patent-pending, award-winning SunCycle circadian lighting system and expect to launch this product line to both residential and commercial markets during the earlier part of 2022. Our planned SunCycle system, composed of lamps, fixtures, and controls powered by our InFocus technology, will provide flicker-free, dimmable, color-tunable, and autonomous lighting circadian functionality for both homes and offices without the operational complexity and cybersecurity concerns wireless lighting controls present. We believe that SunCycle, by seamlessly integrating high-quality lighting and in-focus power line control, represents a true human-centric lighting system for both commercial and consumer applications. Both our human-centric lighting and UVC disinfection solutions present compelling opportunities for employers, landlords, hospitals, elder care communities, schools, and homes, where customers want a modern, comfortable, and healthy lighting solution that encourages productivity, safety, and well-being. We believe that these solutions are also ideal for residential homes, and for consumers who seek to significantly enhance environmental health and quality of life. As we look through the coming months and quarters, as we continue to navigate the unprecedented macro challenges of the pandemic for our existing LED lighting business, we believe our new products will position us for a renewed growth. While we are certainly not satisfied with our financial results over the past three quarters, We believe our new innovations and products will significantly expand our addressable markets and diversify our customer base and provide exciting long-term and potentially transformative growth opportunities. And unlike the commercial and military markets, the consumer market has held up well during the pandemic, and many of us work from home and are looking to improve our home environment. We expect this new market to meaningfully contribute to our top and bottom lines starting 2022 with the launch of Nuvo and ScienceCycle products. With that, I'll turn the call to Todd to review our financial performance for the quarter. Todd?