Conference Call to be Held Today at 11 am
ET
Energy Focus, Inc. (NASDAQ:EFOI), a leader in sustainable,
energy-efficient lighting and controls systems and ultraviolet-c
light disinfection (“UVCD”) products for the commercial, military
maritime and consumer markets, today announced financial results
for its fourth quarter and fiscal year ended December 31, 2021.
Full-Year 2021 and Subsequent Business Highlights
- Net sales of $9.9 million, down 41.4% from 2020, reflecting
continued fluctuations in timing of military orders and government
funding availability, ongoing COVID-19 related business challenges
for its customers, and supply chain and logistics delays.
- Gross profit margin of 17.2%, down from 30.8% in 2020,
primarily due to lower sales and the overhang of fixed costs
against lower sales volume.
- Loss from operations of $8.7 million, compared to a loss from
operations in 2020 of $4.1 million.
- Net loss of $7.9 million, or ($1.73) per basic and diluted
share of common stock, compared to a net loss of $6.0 million, or
($1.83) per basic and diluted share of common stock, in 2020.
- Cash of $2.7 million as of December 31, 2021, included in total
availability (as defined under “Non-GAAP Measures” below) of $4.4
million, as compared to cash of $1.8 million and total availability
of $3.5 million as of December 31, 2020.
- Net proceeds of approximately $4.0 million from December 2021
private placement of common stock and warrants to certain
institutional investors.
- nUVo™ Traveler production units shipping as of the end of the
fourth quarter of 2021; nUVo™ Tower began shipping in January
2022.
- Appointed the Lead Independent Director, an experienced venture
capitalist, as Interim CEO while search is underway.
- Added seasoned lighting and consumer product executives to
Board of Directors.
“Over the past year, amidst significant upheaval to our primary
commercial and military customers and markets and our efforts to
bring safely enclosed, high-dose UVCD products to market, we have
built an organization ready to execute,” commented Stephen Socolof,
Interim CEO and Lead Independent Director. “Our focus for 2022 is
on that execution, both in our traditional markets, centered around
our innovative and differentiated EnFocus™ powerline and control
platform, our Redcap® emergency battery backup tubular LEDs, our
ruggedized LED solutions for military and maritime applications,
and our new UVCD solutions designed to destroy over 99.9 percent of
various airborne pathogens, including coronavirus, influenza and
mold. Importantly, we are increasing our initiatives on our core
markets, light commercial and particularly military applications,
where Energy Focus has a very recognized brand and built
competitive advantages centered around differentiated technology
and intellectual property. Our focus is to re-engage these markets
to drive improved results, complemented by the contribution from
our UVCD products that could broaden our market reach and
scalability.”
On January 11, 2022, the Board of Directors of Energy Focus,
Inc. (the “Company”) appointed Mr. Socolof, the Company’s Lead
Independent Director, to serve as Interim Chief Executive Officer,
replacing James Tu, the former Chief Executive Officer. Mr. Socolof
has served as a member of the Board of Directors since May 2019,
and as the Company’s Lead Independent Director since September
2019. He has been Managing Partner of Tech Council Ventures, an
early-stage venture capital firm, since 2018 and remains a Managing
Partner of New Venture Partners, a venture capital firm that he
co-founded in 2001. On February 11, 2022, the Company entered into
a Separation and Release Agreement with Mr. Tu and he resigned from
the Board of Directors. The Board of Directors has begun a search
for a permanent Chief Executive Officer.
In addition, on February 24, 2022, the Company announced that
its Board of Directors had appointed Jeffery R. Parker and Brian J.
Lagarto as independent directors of the Company. Mr. Parker, 58,
has spent nearly 30 years managing companies in the display, LED,
medical and lighting markets. He has a proven track record of
driving growth and market leadership in the lighting industry by
bringing innovative products to market, and since 2019, has served
as the Chief Executive Officer of Luminii, LLC, a manufacturer of
architectural LED lighting systems. Mr. Lagarto, 56, retired in
2021 from SharkNinja Operating LLC, a leading global producer of
small household appliances under the Shark and Ninja brands. At
SharkNinja, Mr. Lagarto served primarily as Executive Vice
President, Chief Financial Officer from 2009 to 2017, as well as
Chief Operating Officer from 2017 to 2018, with responsibility for
global finance and operations. From 2019 until his retirement, he
served as Chief People & Strategy Officer, with responsibility
for corporate strategy, organizational design, talent and
culture.
“As we move forward, we continue to focus on improving our gross
and operating margins through innovation, as well as value add and
value engineering work at the cost of goods sold level, and
management rigor at the sales and operating levels,” continued Mr.
Socolof. “Our development work on the initial UVCD solutions is
complete, and we have concentrated our near-term focus on
applications with immediate potential, and on opportunities of
which resources can be quickly adjusted based on market reaction.
In addition, we have reorganized our operations to better focus on
the two core areas of our business, LED lighting and control
solutions and our new UVC disinfection solutions. In 2021, Greg
Galluccio joined us as Senior Vice President of Product Management
and Engineering. Greg has 35 years of diverse experience in the
electrical and lighting industries at much larger organizations,
such as Underwriters Laboratories (UL) and Leviton Manufacturing,
and he is charged with refreshing and defining our technology
roadmap and go-to-market strategy. I am also excited about the
recent additions of Jeff Parker and Brian Lagarto to our board of
directors. Jeff’s lighting industry expertise, and Brian’s
extensive experience scaling up a worldwide consumer products
brand, will be valuable resources for Energy Focus.”
Full-Year 2021 Financial Results
Net sales were $9.9 million for 2021, compared with $16.8
million for 2020. Net sales from commercial products were $4.7
million, or 47.5% of total net sales, for 2021, compared with $5.4
million, or 32.1% of total net sales, for 2020. The decrease in net
sales of commercial products reflects continuing fluctuations in
the timing, pace and size of commercial projects, including impacts
of the COVID-19 pandemic. Net sales from military and maritime
market (“MMM”) products were $5.2 million, or 52.5% of total net
sales, for 2021, compared with $11.4 million, or 67.9% of total net
sales, for 2020. The decrease in net MMM product sales in 2021, as
compared to 2020 was mainly due to the reduced availability of
government funding and the delayed timing of expected orders, as
well as higher in-house sales and short-term contracts awarded and
performed in 2020.
Gross profit was $1.7 million, or 17.2% of net sales, for 2021,
compared with gross profit of $5.2 million, or 30.8% of net sales,
for 2020. The year-over-year decrease in gross margin was driven
primarily by lower sales, resulting in an overhang in fixed costs
against the lower sales volume of $1.0 million, or 10.1% of net
sales, and unfavorable inventory and warranty reserve adjustments
aggregating $0.3 million, or 2.9% of net sales. Gross margin for
2021 included favorable price and usage variances for material and
labor of $0.8 million, or 8.3% of net sales. Adjusted gross margin,
as defined under “Non-GAAP Measures” below, was 18.8% for full-year
2021, compared to 27.1% in the prior year, primarily driven by low
sales in 2021.
Operating loss was $8.7 million for 2021. This compares with an
operating loss of $4.1 million for 2020. Net loss was $7.9 million,
or ($1.73) per basic and diluted share of common stock, for 2021,
inclusive of a non-cash, pre-tax gain of $0.8 million from the
forgiveness of the Company’s Paycheck Protection Program loan, as
well as other income recorded relating to the Employee Retention
Tax Credit (“ERTC”) of $0.9 million ($431 thousand of which was
received during the fourth quarter of 2021, with the remainder
expected during 2022). This compares with a net loss of $6.0
million, or ($1.83) per basic and diluted share of common stock,
for 2020, which included a non-cash, pre-tax loss of $1.1 million
resulting from the revaluation of the warrant liability through
December 2020, when the outstanding warrantholders agreed to
modifications that qualified the warrants for equity accounting
treatment.
Adjusted EBITDA, as defined under “Non-GAAP Measures” below, was
a loss of $7.9 million for 2021, compared with a loss of $3.5
million for 2020. The increased Adjusted EBITDA loss in 2021, as
compared to 2020, was primarily due to lower sales and the overhang
of fixed costs over the lower sales volume.
Cash was $2.7 million as of December 31, 2021 as compared to
$1.8 million as of December 31, 2020. As of December 31, 2021, the
Company had total availability, as defined under “Non-GAAP
Measures” below, of $4.4 million, which consisted of $2.7 million
of cash and $1.7 million of additional borrowing availability under
its credit facilities. This compares to total availability of $3.5
million as of December 31, 2020.
Fourth Quarter 2021 Financial Results:
Net sales were $2.4 million for the fourth quarter of 2021, down
35.8% compared with $3.7 million in the fourth quarter of 2020. Net
sales from commercial products were $1.2 million, or 48.6% of total
net sales, for the fourth quarter of 2021, flat as compared to the
fourth quarter of 2020, reflecting the continuing impacts on our
customers of the COVID-19 pandemic due to fluctuations in the
timing, pace, and size of commercial projects. Net sales from MMM
products were $1.2 million, or 51.4% of total net sales, for the
fourth quarter of 2021, down from $2.6 million, or 69.2% of total
net sales, in the fourth quarter of 2020. Sales were higher in the
prior period due to a large order from a U.S. shipbuilder in 2020
that drove a significant part of the MMM business. Sequentially,
net sales were down slightly as compared to $2.7 million in the
third quarter of 2021, mainly due to a 23.2% decrease in commercial
product sales from the third quarter of 2021.
Gross profit was $0.2 million, or 7.9% of net sales, for the
fourth quarter of 2021, compared with gross profit of $1.4 million,
or 38.3% of net sales, in the fourth quarter of 2020. Sequentially,
this compares with a gross profit of $0.6 million, or 20.5% of net
sales, in the third quarter of 2021. The year-over-year decline in
gross margin was primarily driven by lower MMM product sales, an
overhang of fixed costs of $0.5 million, or 19.1% of net sales,
against the lower sales volume, a negative margin impact from sales
product mix of $0.2 million, or 8.7% of net sales, and unfavorable
inventory reserve adjustments of $0.2 million, or 9.5% of net
sales. These were offset slightly by favorable price and usage
variances for material and labor of $0.2 million, or 7.4% of net
sales, in the fourth quarter of 2021.
Adjusted gross margin, as defined under “Non-GAAP Measures”
below, was 14.7% for the fourth quarter of 2021, compared to 27.7%
in the fourth quarter of 2020 and compared sequentially to 17.9% in
the third quarter of 2021. The decrease in adjusted gross margin
from the fourth quarter of 2020 is mainly due to lower MMM sales
and negative margin impacts from increased fixed costs and product
mix as discussed above. The decrease in adjusted gross margin from
the third quarter of 2021 is primarily attributable to lower
commercial product sales and an overhang of fixed costs of $0.2
million, or 9.9% of net sales, against the lower sales volume.
Operating loss was $2.4 million for the fourth quarter of 2021,
compared with an operating loss of $0.9 million in the fourth
quarter of 2020. Sequentially, this compares to an operating loss
of $1.8 million in the third quarter of 2021. The year-over-year
increase in the operating loss was primarily attributable to lower
net sales, an increase in the SG&A impact of increased
headcount and salaries, and increased advertising and promotion
costs.
Net loss was $2.6 million in the fourth quarter of 2021,
compared with net income of $0.1 million in the fourth quarter of
2020, which was inclusive of a $1.2 million non-cash, pre-tax gain
resulting from the final revaluation of the warrant liability
during the fourth quarter of 2020. Sequentially, this compares to a
net loss of $1.1 million in the third quarter of 2021, which was
inclusive of a $0.9 million non-cash, pre-tax gain resulting from
other income recorded relating to the ERTC.
Net loss per basic and diluted share of common stock was ($0.50)
for the fourth quarter of 2021, compared with net income per basic
and diluted share of common stock of $0.01 in the fourth quarter of
2020. Sequentially, this compares to a net loss per basic and
diluted share of common stock of ($0.22) in the third quarter of
2021.
Adjusted EBITDA, as defined under “Non-GAAP Measures” below, was
a loss of $2.2 million for the fourth quarter of 2021, compared
with a loss of $0.8 million in the fourth quarter of 2020 and a
loss of $1.7 million in the third quarter of 2021.
Conference Call:
The Company will host a conference call and webcast today, March
17, 2022 at 11 a.m. ET to review the fourth quarter and full-year
2021 results, followed by a Q&A session. To participate in the
call, please dial toll-free 1-877-451-6152 or international
1-201-389-0879, and reference conference ID 13726068.
The conference call will be simultaneously webcast. To listen to
the webcast, log on to it at:
https://viavid.webcasts.com/starthere.jsp?ei=1522523&tp_key=55cae2bf30.
The webcast will be available at this link through April 1, 2022.
Financial information presented on the call, including the earnings
press release, will be available on the investors section of Energy
Focus’ website at investors.energyfocus.com.
About Energy Focus
Energy Focus is an industry-leading innovator of sustainable
light-emitting diode (“LED”) lighting and lighting control
technologies and solutions, as well as UV-C Disinfection
technologies and solutions. As the creator of the first
flicker-free LED lamps, Energy Focus develops high quality LED
lighting products and controls that provide extensive energy and
maintenance savings, as well as aesthetics, safety, health and
sustainability benefits over conventional lighting. Our EnFocus™
lighting control platform enables existing and new buildings to
provide quality, convenient and affordable, dimmable and
color-tunable, circadian and human-centric lighting capabilities.
In addition, our patent-pending UVCD technologies and products aim
to provide effective, reliable and affordable UVCD solutions for
buildings, facilities and homes. Energy Focus’ customers include
U.S. and U.S. ally navies, U.S. federal, state and local
governments, healthcare and educational institutions, as well as
Fortune 500 companies. Since 2007, Energy Focus has installed
approximately 900,000 lighting products across the U.S. Navy fleet,
including tubular LEDs, waterline security lights, explosion-proof
globes and berth lights, saving more than five million gallons of
fuel and 300,000 man-hours in lighting maintenance annually. Energy
Focus is headquartered in Solon, Ohio. For more information, visit
our website at www.energyfocus.com.
Forward Looking Statements:
Forward-looking statements in this release are made pursuant to
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These statements can generally be identified by
the use of forward-looking terminology, including the terms
“believes,” “estimates,” “anticipates,” “expects,” “feels,”
“seeks,” “forecasts,” “projects,” “intends,” “plans,” “may,”
“will,” “should,” “could” or “would” or, in each case, their
negative or other variations or comparable terminology. 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 release. 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) instability in the
U.S. and global economies and business interruptions experienced by
us, our customers and our suppliers as a result of the COVID-19
pandemic and related impacts on travel, trade and business
operations; (ii) the competitiveness and market acceptance of our
LED lighting, control and UVCD technologies, services and products;
(iii) our ability to compete effectively against companies with
lower prices or cost structures, greater resources, or more rapid
development capabilities, and new competitors in our target
markets; (iv) our ability to extend our product portfolio into
consumer products; (v) our ability to realize the expected novelty,
disinfection effectiveness, affordability and estimated delivery
timing of our UVCD products and their appeal compared to other
products; (vi) our ability to increase demand in our targeted
markets and to manage sales cycles that are difficult to predict
and may span several quarters; (vii) the timing of large customer
orders, significant expenses and fluctuations between demand and
capacity as we invest in growth opportunities; (viii) our ability
to successfully scale our network of sales representatives, agents,
distributors and other channel partners to compete with the sales
reach of larger, established competitors; (ix) our ability to
implement plans to increase sales and control expenses; (x) our
reliance on a limited number of customers for a significant portion
of our revenue, and our ability to maintain or grow such sales
levels; (xi) our ability to add new customers to reduce customer
concentration; (xii) our need for additional financing in the near
term to continue our operations; (xiii) our ability to refinance or
extend maturing debt on acceptable terms or at all; (xiv) our
ability to continue as a going concern for a reasonable period of
time; (xv) our ability to attract and retain a new chief executive
officer (“Chief Executive Officer”); (xvi) our ability to attract,
develop and retain qualified personnel, and to do so in a timely
manner; (xvii) 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 despite ongoing global supply chain
challenges, and the impact of our fluctuating demand on the
stability of such suppliers; (xviii) our ability to timely,
efficiently and cost-effectively transport products from our
third-party suppliers to our facility by ocean marine and other
logistics channels despite global supply chain and logistics
disruptions; (xix) the impact of any type of legal inquiry, claim
or dispute; (xx) the inflationary or deflationary general economic
conditions in the United States and in other markets in which we
operate or secure products, which could affect our ability to
obtain raw materials, component parts, freight, energy, labor, and
sourced finished goods in a timely and cost-effective manner; (xxi)
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; (xxii) 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; (xxiii) our ability to respond to new lighting and air
disinfection technologies and market trends; (xxiv) our ability to
fulfill our warranty obligations with safe and reliable products;
(xxv) any delays we may encounter in making new products available
or fulfilling customer specifications; (xxvi) any flaws or defects
in our products or in the manner in which they are used or
installed; (xxvii) our ability to protect our intellectual property
rights and other confidential information, and manage infringement
claims made by others; (xxviii) 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; (xxix) 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; (xxx) our ability to maintain effective internal controls
and otherwise comply with our obligations as a public company; and
(xxxi) 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.
Condensed Consolidated Balance
Sheets
(Audited)
(in thousands)
December 31,
2021
2020
ASSETS
Current assets:
Cash
$
2,682
$
1,836
Trade accounts receivable, less allowances
of $14 and $8, respectively
1,240
2,021
Inventories, net
7,866
5,641
Short-term deposits
712
796
Prepaid and other current assets
924
782
Total current assets
13,424
11,076
Property and equipment, net
675
420
Operating lease, right-of-use asset
292
794
Restructured lease, right-of-use asset
—
107
Total assets
$
14,391
$
12,397
LIABILITIES
Current liabilities:
Accounts payable
$
2,235
$
2,477
Accrued liabilities
265
45
Accrued legal and professional fees
104
149
Accrued payroll and related benefits
718
885
Accrued sales commissions
57
95
Accrued restructuring
—
11
Accrued warranty reserve
295
227
Deferred revenue
268
72
Operating lease liabilities
325
598
Restructured lease liabilities
—
168
Finance lease liabilities
1
3
Streeterville note, net of discount and
loan origination fees
1,719
—
PPP loan
—
529
Credit line borrowings, net of loan
origination fees
2,169
2,298
Total current liabilities
8,156
7,557
Condensed Consolidated Balance
Sheets
(Audited)
(in thousands)
December 31,
2021
2020
Operating lease liabilities, net of
current portion
26
318
Finance lease liabilities, net of current
portion
—
1
PPP loan, net of current maturities
—
266
Total liabilities
8,182
8,142
STOCKHOLDERS' EQUITY
Preferred stock, par value $0.0001 per
share:
Authorized: 5,000,000 shares (3,300,000
shares designated as Series A Convertible Preferred Stock) at
December 31, 2021 and December 31, 2020)
Issued and outstanding: 876,447 shares at
December 31, 2021 and 2,597,470 shares at December 31, 2020
—
—
Common stock, par value $0.0001 per
share:
Authorized: 50,000,000 shares at December
31, 2021 and December 31, 2020
Issued and outstanding: 6,368,549 shares
at December 31, 2021 and 3,525,374 shares at December 31, 2020
—
—
Additional paid-in capital
144,953
135,113
Accumulated other comprehensive loss
(3
)
(3
)
Accumulated deficit
(138,741
)
(130,855
)
Total stockholders' equity
6,209
4,255
Total liabilities and stockholders'
equity
$
14,391
$
12,397
Condensed Consolidated Statements of
Operations
(In thousands, except per share
data)
Three months ended
Twelve months ended
December 31,
September 30,
December 31,
December 31,
2021
2021
2020
2021
2020
Net sales
$
2,405
$
2,749
$
3,746
$
9,865
$
16,828
Cost of sales
2,216
2,186
2,312
8,167
11,643
Gross profit
189
563
1,434
1,698
5,185
Operating expenses:
Product development
464
404
419
1,891
1,415
Selling, general, and administrative
2,081
1,968
1,897
8,535
7,900
Restructuring (credits) expense
—
1
(16
)
(21
)
(60
)
Total operating expenses
2,545
2,373
2,300
10,405
9,255
Loss from operations
(2,356
)
(1,810
)
(866
)
(8,707
)
(4,070
)
Other expenses:
Interest expense
272
177
137
792
481
Gain on forgiveness of PPP loan
—
—
—
(801
)
—
Loss on extinguishment of debt
—
—
117
—
276
Other income - employee retention tax
credit
(14
)
(862
)
—
(876
)
—
(Gain) loss from change in fair value of
warrants
—
—
(1,188
)
—
1,086
Other expenses
18
15
6
65
73
(Loss) income from operations before
income taxes
(2,632
)
(1,140
)
62
(7,887
)
(5,986
)
Benefit from income taxes
(1
)
—
(3
)
(1
)
(5
)
Net (loss) income
$
(2,631
)
$
(1,140
)
$
65
$
(7,886
)
$
(5,981
)
Net (loss) income per common share
attributable to common stockholders - basic1:
From operations
$
(0.50
)
$
(0.22
)
$
0.01
$
(1.73
)
$
(1.83
)
Net (loss) income per common share
attributable to common stockholders - diluted1:
From operations
$
(0.50
)
$
(0.22
)
$
0.01
$
(1.73
)
$
(1.83
)
Weighted average shares used in
computing net (loss) income per common share:
Basic
5,312
5,086
3,491
4,561
3,270
Diluted
5,312
5,086
4,307
4,561
3,270
1 In accordance with Topic 260 "Earnings
Per Share", net income has been allocated to holders of common
shares and participating securities including preferred shares and
warrants, accordingly. Earnings per share disclosed above utilizes
income attributable to common shareholders after this required
allocation.
The following table summarizes the computation of basic and
diluted earnings per share: (In thousands, except per share
data)
Three months ended
Twelve months ended
December 31,
September 30,
December 31,
December 31,
2021
2021
2020
2021
2020
Net (loss) income
$
(2,631
)
$
(1,140
)
$
65
$
(7,886
)
$
(5,981
)
Less: Undistributed earnings allocated to
participating securities
—
—
18
—
—
Net (loss) income available to common
stockholders
$
(2,631
)
$
(1,140
)
$
47
$
(7,886
)
$
(5,981
)
Weighted average shares used in
computing net (loss) income per common share:
Basic
5,312
5,086
3,491
4,561
3,270
Options
—
—
102
—
—
Warrants
—
—
194
—
—
Restricted stock units
—
—
1
—
—
Convertible preferred stock
—
—
519
—
—
Diluted
5,312
5,086
4,307
4,561
3,270
Net (loss) income per common share
attributable to common stockholders - basic:
From operations
$
(0.50
)
$
(0.22
)
$
0.01
$
(1.73
)
$
(1.83
)
Net (loss) income per common share
attributable to common stockholders - diluted:
From operations
$
(0.50
)
$
(0.22
)
$
0.01
$
(1.73
)
$
(1.83
)
Condensed Consolidated Statements of
Cash Flows
(In thousands)
Three months ended
Twelve months ended
December 31,
September 30,
December 31,
December 31,
2021
2021
2020
2021
2020
Cash flows from operating
activities:
Net (loss) income
$
(2,631
)
$
(1,140
)
$
65
$
(7,886
)
$
(5,981
)
Adjustments to reconcile net (loss) income
to net cash used in operating activities:
Other income - employee retention tax
credit
(14
)
(862
)
—
(876
)
—
Gain on forgiveness of PPP loan
—
—
—
(801
)
—
Depreciation
45
43
44
188
184
Stock-based compensation
42
39
35
429
131
Change in fair value of warrants
—
—
(1,188
)
—
1,086
Provision for doubtful accounts
receivable
(4
)
2
1
6
(20
)
Provision for slow-moving and obsolete
inventories and valuation reserves
165
(70
)
(381
)
156
(610
)
Provision for warranties
55
1
(3
)
68
31
Amortization of loan discounts and
origination fees
72
61
174
230
395
Loss on dispositions of property and
equipment
—
—
8
—
8
Changes in operating assets and
liabilities:
Accounts receivable
393
(500
)
1,447
783
377
Inventories
(276
)
444
(1
)
(2,381
)
1,137
Short-term deposits
170
(62
)
(258
)
257
(670
)
Prepaid and other assets
788
(91
)
41
669
(18
)
Accounts payable
(341
)
(164
)
(715
)
(423
)
1,096
Accrued and other liabilities
(75
)
53
(104
)
(380
)
349
Deferred revenue
266
(69
)
(33
)
196
54
Total adjustments
1,286
(1,175
)
(933
)
(1,879
)
3,530
Net cash used in operating
activities
(1,345
)
(2,315
)
(868
)
(9,765
)
(2,451
)
Cash flows from investing
activities:
Acquisitions of property and equipment
(132
)
(100
)
(52
)
(443
)
(223
)
Net cash used in investing
activities
(132
)
(100
)
(52
)
(443
)
(223
)
Condensed Consolidated Statements of
Cash Flows
(In thousands)
Three months ended
Twelve months ended
December 31,
September 30,
December 31,
December 31,
2021
2021
2020
2021
2020
Cash flows from financing
activities:
Proceeds from the issuance of common stock
and warrants
4,500
—
—
9,500
2,749
Proceeds from warrants exercised
274
—
242
801
918
Offering costs paid on the issuance of
common stock and warrants
(499
)
(1
)
(36
)
(969
)
(510
)
Proceeds from PPP loan
—
—
—
—
795
Proceeds from exercises of stock options
and employee stock purchase plan purchases
21
—
70
80
100
Principal payments under finance lease
obligations
—
(1
)
—
(3
)
(3
)
Common stock withheld in lieu of income
tax withholding on vesting of restricted stock units
—
1
—
(1
)
(3
)
Payments for deferred financing &
termination costs
—
—
—
(30
)
(320
)
Payments on the Iliad Note
—
—
(330
)
—
(1,306
)
Proceeds from the Streeterville Note
—
—
—
1,515
—
Net payments on credit line borrowings -
Austin Facility
—
—
—
—
(719
)
Net (payments on) proceeds from credit
line borrowings - Credit Facilities
(518
)
1,128
236
(181
)
2,459
Net cash provided by financing
activities
3,778
1,127
182
10,712
4,160
Net increase (decrease) in cash and
restricted cash
2,301
(1,288
)
(738
)
504
1,486
Cash and restricted cash at beginning of
period
381
1,669
2,916
2,178
692
Cash and restricted cash at end of
period
$
2,682
$
381
$
2,178
$
2,682
$
2,178
Classification of cash and restricted
cash:
Cash
$
2,682
$
381
$
1,836
$
2,682
$
1,836
Restricted cash held in other assets
—
—
342
—
342
Cash and restricted cash
$
2,682
$
381
$
2,178
$
2,682
$
2,178
Sales by Products
(In thousands)
Three months ended
Twelve months ended
December 31,
September 30,
December 31,
December 31,
2021
2021
2020
2021
2020
Commercial products
$
1,169
$
1,522
$
1,154
$
4,682
$
5,404
Military maritime products
1,236
1,227
2,592
5,183
11,424
Total net sales
$
2,405
$
2,749
$
3,746
$
9,865
$
16,828
Non-GAAP Measures
In addition to the results in this release that are presented in
accordance with generally accepted accounting principles in the
United States (“U.S. GAAP”), we provide certain non-GAAP measures,
which present operating results on an adjusted basis. These
non-GAAP measures are supplemental measures of performance that are
not required by or presented in accordance with U.S. GAAP and,
include:
- total availability, which we define as our ability on the
period end date to access additional cash if necessary under our
short-term credit facilities, plus the amount of cash on hand on
that same date;
- adjusted EBITDA, which we define as net income (loss) before
giving effect to restructuring expenses, financing charges, income
taxes, non-cash depreciation, stock compensation, incentive
compensation, and change in fair value of warrant liability;
and
- adjusted gross margins, which we define as our gross profit
margins during the period without the impact from excess and
obsolete, in-transit and net realizable value inventory reserve
movements that do not reflect current period inventory
decisions.
We believe that our use of these non-GAAP financial measures
permits investors to assess the operating performance of our
business relative to our performance based on U.S. GAAP results and
relative to other companies within the industry by isolating the
effects of items that may vary from period to period without
correlation to core operating performance or that vary widely among
similar companies, and to assess liquidity, cash flow performance
of the operations, and the product margins of our business relative
to our U.S. GAAP results and relative to other companies in the
industry by isolating the effects of certain items that do not have
a current period impact. However, our presentation of these
non-GAAP measures should not be construed as an indication that our
future results will be unaffected by unusual or infrequent items or
that the items for which we have made adjustments are unusual or
infrequent or will not recur. Further, there are limitations on the
use of these non-GAAP measures to compare our results to other
companies within the industry because they are not necessarily
standardized or comparable to similarly titled measures used by
other companies. We believe that the disclosure of these non-GAAP
measures is useful to investors as they form part of the basis for
how our management team and Board of Directors evaluate our
operating performance.
Total availability, adjusted EBITDA and adjusted gross margins
do not represent cash generated from operating activities in
accordance with U.S. GAAP, are not necessarily indicative of cash
available to fund cash needs and are not intended to and should not
be considered as alternatives to cash flow, net income and gross
profit margins, respectively, computed in accordance with U.S. GAAP
as measures of liquidity or operating performance. Reconciliations
of these non-GAAP measures to the most directly comparable
financial measures calculated and presented in accordance with U.S.
GAAP are provided below.
As of
(in thousands)
December 31,
September 30,
December 31,
2021
2021
2020
Total borrowing capacity under credit
facility
$
4,042
$
4,552
$
4,121
Less: Line of credit borrowings,
gross(1)
(2,279
)
(2,802
)
(2,459
)
Excess availability under credit
facility(2)
1,763
1,750
1,662
Cash
2,682
381
1,836
Total availability(3)
$
4,445
$
2,131
$
3,498
(1)Forms 10-Q and 10-K Balance Sheets
reflect the Line of credit net of debt financing costs of $109,
$130, and $161, respectively.
(2)Excess availability under credit
facilities - represents difference between maximum borrowing
capacity of credit facility and actual borrowings
(3)Total availability- represents
Company’s ‘access’ to cash if needed at point in time
Three months ended
Twelve months ended
(in thousands)
December 31,
September 30,
December 31,
December 31,
2021
2021
2020
2021
2020
Net (loss) income
$
(2,631
)
$
(1,140
)
$
65
$
(7,886
)
$
(5,981
)
Restructuring (recovery) expense
—
1
(16
)
(21
)
(60
)
Net (loss) income, excluding
restructuring
(2,631
)
(1,139
)
49
(7,907
)
(6,041
)
Interest
272
177
137
792
481
Gain on forgiveness of PPP loan
—
—
—
(801
)
—
Loss on extinguishment of debt
—
—
117
—
276
Other income - employee retention tax
credit
(14
)
(862
)
—
(876
)
—
Income tax benefit
(1
)
—
(3
)
(1
)
(5
)
Depreciation
45
43
44
188
184
Stock-based compensation
42
39
35
429
131
Other incentive compensation
68
47
17
245
342
Change in fair value of warrant
liability
—
—
(1,188
)
—
1,086
Adjusted EBITDA
$
(2,219
)
$
(1,695
)
$
(792
)
$
(7,931
)
$
(3,546
)
Three months ended
Twelve months ended
(in thousands)
December 31,
September 30,
December 31,
December 31,
December 31,
2021
2021
2020
2021
2020
($)
(%)
($)
(%)
($)
(%)
($)
(%)
($)
(%)
Net sales
$
2,405
$
2,749
$
3,746
$
9,865
$
16,828
Reported gross profit
189
7.9
%
563
20.5
%
1,434
38.3
%
1,698
17.2
%
5,185
30.8
%
E&O, in-transit and net realizable
value inventory reserve changes
165
6.9
%
(70
)
(2.5
)%
(395
)
(10.5
)%
156
1.6
%
(624
)
(3.7
)%
Adjusted gross margin
$
354
14.7
%
$
493
17.9
%
$
1,039
27.7
%
$
1,854
18.8
%
$
4,561
27.1
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220317005044/en/
Investor Contact: Brett Maas (646) 536-7331
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