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Energy Focus Announces Partnership, Investment from Sander Electronics

SOLON, Ohio — Energy Focus, Inc. announced that it entered into definitive securities purchase agreements with certain purchasers associated with Sander Electronics for the issuance and sale of 5,446,252 shares of the Company’s common stock, in a private placement priced at the market under the rules of The Nasdaq Stock Market (“Nasdaq”). The closing of the private placement is expected to occur on or about January 20, 2023, subject to the satisfaction of customary closing conditions.

Sander Electronics is a Taiwanese-based company and leader in energy management solutions. Sander has been a designer and manufacturer of LED semiconductor components and modules for signage, lighting, and other applications. Customers include major LED, lighting, and energy storage-related companies. Sander is now bringing to market advanced energy management solutions from semiconductor components to complete energy storage solutions.

The partnership with Sander Electronics is expected to improve the Energy Focus supply chain for lighting components and controls solutions to become more competitive and reliable in the marketplace. Further, Sander Electronics plans to supply additional energy solution products that will enable Energy Focus to leverage existing relationships to extend beyond the lighting market and expand its product portfolio to include exciting energy management solutions.

With this partnership, Sander Electronics will make a long-term capital investment in the equity of Energy Focus. With this investment, Jay Huang, President of Sander Electronics, will join the board of Energy Focus. In addition, Wen-Jeng Chang, who brings strong financial expertise and M&A experience from his 30 years of service with Yuanta Financial Holdings, will also join the board.

“We have been working closely with Jay Huang and the team at Sander Electronics on a strategic plan to streamline costs and expand the business,” said Lesley Matt, CEO of Energy Focus. “We believe their experience, manufacturing facilities, and relationships in the LED space will bring tremendous leverage for Energy Focus’ existing business. Combining that with the opportunity to bring their additional energy management products will allow us to offer new technology aligned with our core belief of providing energy and maintenance-savings products. I am excited the relationship has developed to this partnership and look forward to executing our plans towards growth.”

Jay Huang, President of Sander Electronics, commented, “We have been looking for the right partner in the US to bring to market our innovation in lighting, power electronics, and energy storage and also believe there is strong synergy with our supply chain expertise. We are excited about working with Lesley Matt and the Energy Focus team. Together, we plan to bring market-leading new products to the US market.”

The transaction includes the conversion to equity of approximately $650,000 in previous bridge financing; gross proceeds to the Company are expected to be approximately $2 million, before offering expenses. Energy Focus currently intends to use a significant portion of the net proceeds from the offering for restructuring certain outstanding debt obligations. The remainder will go towards general corporate purposes.

Separately, Gina Huang, a member of the Company’s board of directors, agreed to convert the amounts outstanding on approximately $800,000 of previous bridge financing into equity at fair market value under the Nasdaq rules, in addition to her purchases of company equity totaling $250,000 earlier this year.

The offer and sale of the foregoing securities are being made in a transaction not involving a public offering and have not been registered under the Securities Act of 1933 (the “Securities Act”), or applicable state securities laws. Accordingly, the securities may not be reoffered or resold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws.

Under an agreement with the investors, the Company has agreed to file a registration statement with the Securities and Exchange Commission (the “SEC”) covering the resale of the shares of the common stock no later than 30 days after the date of the securities purchase agreements and to use commercially reasonable efforts to have the registration statement declared effective as promptly as practical thereafter, and in any event no later than 60 days after the securities purchase agreement.

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