Energy Focus Inc (EFOI) 2023 Q1 法說會逐字稿

Greetings, and welcome to Energy Focus First Quarter 2023 Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded.

您好，歡迎來到 Energy Focus 2023 年第一季度財報電話會議。 （操作員說明）提醒一下，正在錄製此會議。

It is now my pleasure to introduce your host, Jim Warren, Senior Vice President and General Counsel. Thank you. You may begin.

現在我很高興向您介紹主持人 Jim Warren，他是高級副總裁兼總法律顧問。謝謝。你可以開始了。

Thank you, operator, and good morning, everyone. Joining me on the call today is Lesley Matt, Chief Executive Officer.

謝謝接線員，大家早上好。今天和我一起參加電話會議的是首席執行官萊斯利·馬特 (Lesley Matt)。

Before we begin today's call, I'd like to remind everyone that we will 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 a 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-Q filed with the SEC. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law.

在我們開始今天的電話會議之前，我想提醒大家，我們將做出某些前瞻性陳述。這些陳述基於代表公司當前期望或信念的信息。實現的結果可能與陳述的結果存在重大差異。有關可能影響我們結果的這些風險的討論，請參閱我們最近向美國證券交易委員會提交的 10-Q 中風險因素和前瞻性陳述標題下的部分。公司不承擔公開更新或修改任何前瞻性陳述的義務，無論是由於新信息、未來事件或其他原因，除非法律另有規定。

Please note that during this call and in the accompanying press releases, certain financial metrics are presented on both U.S. 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 our corporate website at energyfocus.com in the Investor Relations section of the site.

請注意，在本次電話會議和隨附的新聞稿中，某些財務指標是根據美國公認會計原則和非公認會計原則調整後的基礎提出的。調整後結果與 GAAP 結果的對賬可在收益發布所附的表格中找到，收益發布發佈在我們公司網站 energyfocus.com 的投資者關係部分。

I will now turn the call over to Lesley.

我現在將把電話轉給萊斯利。

Thank you, Jim. Good morning, everyone. This is my third earnings call since joining Energy Focus in September of 2022, and what a ride this has been thus far. My main objective since joining the company has been to bring it back to its core of -- markets of military maritime in commercial and industrial lighting and control products, secure necessary equity capital via a strategic investment, work through significant supply chain constraints in our legacy inventory position and massive cost-cutting and rightsizing to propel the company forward into the future.

謝謝你，吉姆。大家，早安。這是我自 2022 年 9 月加入 Energy Focus 以來的第三次財報電話會議，到目前為止，這是多麼順利。自加入公司以來，我的主要目標一直是將其帶回商業和工業照明和控制產品的軍事海事市場的核心，通過戰略投資獲得必要的股權資本，解決我們遺留下來的重大供應鏈限制庫存狀況和大規模的成本削減和規模調整，以推動公司走向未來。

In my first call, I have stated that I was cautiously optimistic that I would be able to show progress in 6 months' time. I believe that the first quarter 2023 results that I'm sharing today are delivering on that promise to do more with less sales are beginning to rebound while operating costs have plummeted. Although I have my sight on the company's strategy aligned with much higher goals, today's results show the beginning signs of what I expect this progress towards a brighter future for EFOI.

在我的第一個電話中，我已經表示我對我能夠在 6 個月的時間內取得進展持謹慎樂觀的態度。我相信，我今天分享的 2023 年第一季度業績正在兌現承諾，以更少的銷售額做更多的事情開始反彈，同時運營成本直線下降。儘管我認為公司的戰略與更高的目標相一致，但今天的結果顯示了我預期 EFOI 朝著更光明的未來取得進展的初步跡象。

We started the year off with a critical win in January of 2023, where we were able to secure a strategic investment from Sander Electronics. In addition to funding provided by this investment, we welcomed our new Chairman of the Board, Jay Huang, who has brought with him expertise in manufacturing, electronics industry knowledge and excitement around product development back to the organization. We are also excited to have Mr. Wen-Jeng Chang join the Board this quarter and look forward to his contributions as an experienced financial and transactional adviser.

我們在 2023 年 1 月以一場關鍵的勝利開始了新的一年，在那裡我們能夠獲得 Sander Electronics 的戰略投資。除了此次投資提供的資金外，我們還迎來了新任董事會主席 Jay Huang，他將製造專業知識、電子行業知識和對產品開發的熱情帶回了組織。我們也很高興張文正先生本季度加入董事會，並期待他作為經驗豐富的財務和交易顧問做出貢獻。

The funding provided by the Sander investment has contributed to approximately $4.8 million in balance sheet improvements in Q1, including over $3 million in fresh capital, plus $1.7 million in debt to equity conversions. We utilized the funds to restructure our outstanding credit facilities and unsecured bridge debt to reduce borrowing costs and push out cash obligations so that our operational cash flow can be utilized for operating the business.

Sander 投資提供的資金為第一季度的資產負債表改善貢獻了約 480 萬美元，其中包括超過 300 萬美元的新資本，以及 170 萬美元的債轉股。我們利用這些資金重組我們未償還的信貸額度和無擔保過橋債務，以降低借貸成本並推出現金義務，以便我們的運營現金流可用於經營業務。

To recap, these improvements include a paydown of $1 million in conjunction with a restructuring of our secured inventory line through Crossroads Financial that will reduce our overall cost of this facility in 2023, a paydown of $500,000, plus exchanging another $250,000 for common stock and restructuring our payment schedule out into 2024 with our outstanding bridge note held by Streeterville Financial, and agreed termination on our accounts receivable lending facility, a conversion of primarily related party promissory notes totaling $1.5 million to common stock reducing future cash burn and additional private placements to 2 of our directors totaling an additional $955,000 during the quarter. The improvements made early in the quarter allowed us to focus on the business and set a positive tone with employees and customers to kick off the year.

回顧一下，這些改進包括 100 萬美元的首付款以及通過 Crossroads Financial 重組我們的安全庫存線，這將降低我們在 2023 年該設施的總體成本，500,000 美元的首付款，以及另外 250,000 美元的普通股交換和重組我們的付款計劃到 2024 年，Streeterville Financial 持有我們未償還的過橋票據，並同意終止我們的應收賬款貸款機制，將主要關聯方本票總計 150 萬美元轉換為普通股，減少未來現金消耗和額外的私募配售至 2我們的董事在本季度總共增加了 955,000 美元。本季度初做出的改進使我們能夠專注於業務，並與員工和客戶一起為新的一年開局定下積極的基調。

Noncompliance with NASDAQ continued listing requirements, and the risk of delisting has been a looming dark cloud over EFOI for the last few quarters. Although there might not have been a direct question regarding this on the last call, I did want to speak to this today. As disclosed earlier in the month, after an appearance before a NASDAQ hearing panel in April, NASDAQ has conditionally granted our request for continued listing. The results we are sharing with you today and the balance sheet improvements I have just spoken about will satisfy the first condition of the plan we had laid out of the meeting with the NASDAQ, the continued listing requirement of a minimum of $2.5 million stockholder equity requirement.

不遵守納斯達克上市要求的情況持續存在，退市風險在過去幾個季度一直籠罩在 EFOI 上空。儘管在上次電話會議上可能沒有關於此的直接問題，但我今天確實想談談這個問題。正如本月早些時候披露的那樣，在 4 月份納斯達克聽證會小組出庭後，納斯達克有條件地批准了我們繼續上市的請求。我們今天與您分享的結果以及我剛才談到的資產負債表改善將滿足我們與納斯達克會議制定的計劃的第一個條件，即至少 250 萬美元股東股權要求的持續上市要求.

The second condition of our continued listing compliance plan, to regain compliance with NASDAQ minimum $1 bid price requirement. As we have laid out in our proxy statement, we seek to gain stockholder approval of a reverse stock spread at the upcoming 2023 Annual Meeting of Stockholders on June 15. If you are a stockholder listening today, I encourage you to review the materials and vote yes on this proposal. We continue to believe that the liquidity offers our stockholders of remaining listed on NASDAQ is worthwhile and believes the reverse split will enable us to regain compliance with NASDAQ's requirements.

我們持續上市合規計劃的第二個條件是重新遵守納斯達克最低 1 美元的出價要求。正如我們在代理聲明中所述，我們尋求在即將於 6 月 15 日舉行的 2023 年股東年會上獲得股東對反向股票利差的批准。如果你是今天聽的股東，我鼓勵你查看材料並投票是的，關於這個提議。我們仍然相信，為我們在納斯達克保持上市地位的股東提供的流動性是值得的，並且相信反向拆分將使我們能夠重新遵守納斯達克的要求。

Although the sales for the first quarter continue to lag behind my long-term expectations for the business, we have shown improvement over the previous quarter with a smaller staff and no significant changes in available existing inventory as we continue to primarily sell through on-hand material, in particular, on the commercial side. Nonetheless, the existing -- the exciting piece for me is that we have continued to build a backlog of orders on both the military and commercial sides of our business in addition to generating a larger pipeline of revenues for the future.

儘管第一季度的銷售額繼續落後於我對業務的長期預期，但我們已經比上一季度有所改善，員工人數減少，現有庫存沒有顯著變化，因為我們繼續主要通過手頭銷售材料，特別是在商業方面。儘管如此，現有的——對我來說令人興奮的是，除了為未來創造更大的收入渠道外，我們還在繼續積累我們業務的軍事和商業方面的訂單積壓。

Our customer base is anxiously awaiting the arrival of fresh stock of RedCap, our emergency backup LED tube product in addition to our power line control EnFocus switches. Both products have faced significant supply chain challenges that we have successfully navigated in Q1 and have orders placed with arrival dates we expect beginning later this quarter and continuing in future periods.

我們的客戶群正焦急地等待 RedCap 的新庫存到貨，RedCap 是我們的緊急備用 LED 燈管產品以及我們的電力線控制 EnFocus 開關。這兩種產品都面臨著重大的供應鏈挑戰，我們在第一季度成功應對了這些挑戰，我們預計從本季度晚些時候開始並在未來期間繼續下訂單。

Additionally, we have been able to focus our development work on new products, including our recently announced LED mobile light tower retrofit product and our gallium nitride, or GaN, power supply products. In future periods, I look forward to making more announcements on new and exciting innovations that drive revenues with both lighting controls and energy solutions product spaces.

此外，我們已經能夠將我們的開發工作集中在新產品上，包括我們最近發布的 LED 移動燈塔改造產品和我們的氮化鎵或 GaN 電源產品。在未來一段時間內，我期待就照明控制和能源解決方案產品領域推動收入的新的和令人興奮的創新發布更多公告。

Innovation has been the lifeblood that has driven the EFOI success. Putting a troubled past in the rearview mirror and driving towards the success of the future is what I am determined to do. These results are only the start of the new road ahead.

創新一直是推動 EFOI 取得成功的命脈。將煩惱的過去放在後視鏡中，朝著未來的成功前進，這是我決心要做的事情。這些結果只是未來新道路的開始。

Let me now review our Q1 financial results. We had net sales of $0.9 million for the first quarter of 2023, a decrease of 54.9% compared to sales of $1.2 million in the first quarter of 2022. This is driven by lower sales volumes and market adjusted pricing on the commercial side, and there was also $0.3 million of deferred military revenue recognized in Q1 of 2022.

現在讓我回顧一下我們第一季度的財務業績。我們在 2023 年第一季度的淨銷售額為 90 萬美元，與 2022 年第一季度的銷售額 120 萬美元相比下降了 54.9%。這是由於銷量下降和商業方面的市場調整定價所致，並且有2022 年第一季度確認的遞延軍費收入為 30 萬美元。

First quarter 2023 net sales in military products were $0.6 million, which is up $0.3 million or 48% when compared to $0.3 million of sales in the fourth quarter of 2022. This reflects a renewed focus on military sales after the strategic hire made in mid-2022. Bear in mind that the sales cycle for military maritime products are dependent on many factors, including government funding, U.S. Navy award and new ship construction schedules and the timing of vessel maintenance schedules. So this quarter is really the beginning of those renewed sales efforts.

2023 年第一季度軍用產品淨銷售額為 60 萬美元，與 2022 年第四季度的 30 萬美元銷售額相比增加了 30 萬美元或 48%。這反映出在 2023 年中期進行戰略招聘後重新關注軍用銷售2022.請記住，軍用海運產品的銷售週期取決於許多因素，包括政府資金、美國海軍獎勵和新船建造時間表以及船舶維護時間表的時間安排。所以這個季度真的是那些新的銷售努力的開始。

Sales of our commercial products were approximately $0.3 million or 34.5% of total net sales for the first quarter of 2023, down $813,000 as compared to first quarter of 2022. Commercial sales increased $260,000 over the prior quarter on a sequential basis. Volatility in our supply chain continued to be reflected in these results as we are primarily selling through on-hand legacy inventory while we rebuild our supply of our strongest sellers in higher-margin proprietary products like RedCap and EnFocus. However, our focus on sales execution and strategy has slowly started to improve our position in the commercial market and primed the relationships for expected inventory.

2023 年第一季度，我們商業產品的銷售額約為 30 萬美元，佔總淨銷售額的 34.5%，與 2022 年第一季度相比下降了 813,000 美元。商業銷售額比上一季度環比增加了 260,000 美元。我們供應鏈的波動性繼續反映在這些結果中，因為我們主要通過現有的遺留庫存進行銷售，同時我們重建我們最強大的賣家的供應，以提供更高利潤的專有產品，如 RedCap 和 EnFocus。然而，我們對銷售執行和戰略的關注已經慢慢開始提高我們在商業市場的地位，並為預期庫存做好準備。

Gross profit for the first quarter of 2023 was $16,800 compared to gross loss of $25,700 in the first quarter of 2022. As a percentage of revenue, gross margin was 1.8% in the first quarter of 2023 compared to negative 1.3% in the first quarter of 2022. The year-over-year increase in gross margin was primarily driven by lower cost of sales, favorable product mix as well as the impact from prior year inventory impairment adjustments. As compared to fourth quarter of 2022, gross margin rebounded significantly from a negative margin of 35.8% dragged down in the prior quarter by low sales volume and poor product mix.

2023 年第一季度的毛利潤為 16,800 美元，而 2022 年第一季度的毛虧損為 25,700 美元。佔收入的百分比，2023 年第一季度的毛利率為 1.8%，而 2023 年第一季度為負 1.3% 2022年毛利率同比增長主要受銷售成本降低、產品結構有利以及上年存貨減值調整的影響。與 2022 年第四季度相比，毛利率從上一季度受銷量低和產品結構不佳拖累的負利率 35.8% 大幅反彈。

Adjusting gross profit margins for excess and obsolete, in-transit and net realizable value inventory reserve and scrap and write-offs related to our inventory reduction project contributed to the non-GAAP adjusted gross loss of 0.3% for the first quarter of 2023 compared to a gross profit margin of 5% in the first quarter of 2022. Sequentially, adjusted gross loss improved compared to an adjusted gross loss of 55.8% in the fourth quarter of 2022.

調整與我們的庫存減少項目相關的過剩和過時、在途和可變現淨值庫存儲備和報廢以及註銷的毛利率，導致 2023 年第一季度非美國通用會計準則調整後毛虧損為 0.3% 2022 年第一季度毛利率為 5%。因此，與 2022 年第四季度 55.8% 的調整後毛損相比，調整後的毛損有所改善。

Operating expenses in the first quarter of 2023 were $1.2 million compared to $2.6 million in the first quarter of 2022. The decrease was primarily attributable to lower SG&A expenses due to significantly decreased payroll and payroll-related expenses.

2023 年第一季度的運營費用為 120 萬美元，而 2022 年第一季度為 260 萬美元。減少的主要原因是工資單和工資單相關費用大幅減少導致 SG&A 費用減少。

Loss from operations in the first quarter of 2023 was $1.2 million, an increase over the prior year comparable quarter loss amount of $2.6 million. Loss from operations also decreased $821,000 as compared to the prior quarter.

2023 年第一季度的運營虧損為 120 萬美元，比上年同期虧損 260 萬美元有所增加。與上一季度相比，運營虧損也減少了 821,000 美元。

Net loss was $1.3 million or $0.08 per share of common stock for the first quarter of 2023 as compared with a net loss of $2.8 million or $0.44 per share of common stock in the prior year comparable quarter.

2023 年第一季度淨虧損為 130 萬美元或每股普通股 0.08 美元，而去年同期淨虧損為 280 萬美元或每股普通股 0.44 美元。

Adjusted EBITDA, a non-GAAP measure, which excludes depreciation and amortization, interest expense, stock-based compensation and other nonrecurring charges and/or sources of income, such as incentive compensation, was a loss of $1.8 million for the first quarter of 2023 compared with a loss of $2.6 million in the first quarter of 2022. The improved adjusted EBITDA loss from the first quarter of 2023 was primarily due to significant cost reductions.

調整後的 EBITDA 是一項非 GAAP 衡量指標，不包括折舊和攤銷、利息費用、股票薪酬和其他非經常性費用和/或收入來源，例如激勵薪酬，2023 年第一季度虧損 180 萬美元與 2022 年第一季度虧損 260 萬美元相比。調整後的 EBITDA 虧損較 2023 年第一季度有所改善，這主要是由於成本大幅削減。

Now I'd like to turn to the balance sheet. Cash was $301,000 as of March 31, 2023, as compared to $52,200 as of December 31, 2022. As of March 31, 2023, the company had a total availability of $401,000, which consisted of $301,000 of cash and additional borrowing availability of $100,000 under its credit facility. This compares to total availability of $107,000 as of December 31, 2022.

現在我想談談資產負債表。截至 2023 年 3 月 31 日，現金為 301,000 美元，而截至 2022 年 12 月 31 日為 52,200 美元。截至 2023 年 3 月 31 日，公司總可用資金為 401,000 美元，其中包括 301,000 美元的現金和 100,000 美元的額外借款其信貸設施。相比之下，截至 2022 年 12 月 31 日，總可用性為 107,000 美元。

As a reminder, total availability is a non-GAAP measurement of our access to cash at any given point in time, and we believe is a much more relevant metric than simply looking at cash balance or even net debt on the balance sheet. During the first quarter of 2023, we reduced the maximum availability on our inventory lending facility to $500,000 and agreed with our receivables lender to terminate our accounts receivable lending facility. Excess borrowing availability on our credit facilities represents the difference between the maximum borrowing capacity of the credit facilities and our actual borrowings under these credit facilities.

提醒一下，總可用性是我們在任何給定時間點獲得現金的非 GAAP 衡量標準，我們認為這是一個比簡單地查看現金餘額甚至資產負債表上的淨債務更相關的指標。在 2023 年第一季度，我們將存貨借貸便利的最大可用性降低至 500,000 美元，並與我們的應收賬款貸方同意終止我們的應收賬款借貸便利。我們信貸額度的超額可用借款是指信貸額度的最大借貸能力與我們在這些信貸額度下的實際借款之間的差額。

During the first quarter of 2023, cash used in operations was $1.2 million as accounts receivable grew with increased sales. Our net inventory balance of $4.9 million as of March 31, 2023, decreased from the $5.5 million balance at December 31, 2022, as we sold through on-hand inventory. Net excess and obsolete reserve adjustments during the quarter were not significant due to the levels of inventory reserve adjustments that were taken in prior periods.

2023 年第一季度，由於應收賬款隨著銷售額的增加而增加，運營中使用的現金為 120 萬美元。截至 2023 年 3 月 31 日，我們的淨庫存餘額為 490 萬美元，低於 2022 年 12 月 31 日的 550 萬美元餘額，因為我們通過現有庫存進行銷售。由於前期進行的庫存儲備調整水平，本季度的淨超額和過時儲備調整併不顯著。

With that, I will make a few closing comments. Once again, the results that were delivered today are just the beginning of a turnaround for Energy Focus. Although there is a tremendous amount of work still to be done, I believe that our biggest hurdles are behind us, and our team is focused back on sales, new product development and innovation. I look forward to sharing this journey with you next quarter.

就此，我將發表一些結束語。再一次，今天交付的結果只是 Energy Focus 轉變的開始。儘管仍有大量工作要做，但我相信我們最大的障礙已經過去，我們的團隊將重新專注於銷售、新產品開發和創新。我期待在下個季度與您分享這段旅程。

With that, we would like to open the call to questions. Operator?

有了這個，我們想打開問題的電話。操作員？

(Operator Instructions) Our first question comes from the line of Sameer Joshi with H.C. Wainright.

（操作員說明）我們的第一個問題來自 Sameer Joshi 和 H.C.溫賴特。

Yes. Glad to see progress on all fronts, including financing, restructuring and also on commercial performance. So good job on that. I just had a few questions. The gross profit improvement that we have seen, is it likely to stay in the next few quarters? Or was there any other onetime item that helped improve the gross margins?

是的。很高興看到各方面都取得進展，包括融資、重組以及商業業績。做得很好。我只是有幾個問題。我們所看到的毛利改善，是否有可能在未來幾個季度保持下去？或者是否有任何其他有助於提高毛利率的一次性項目？

So our goal is to improve our gross profit overall by introducing new products into the market, which will improve our overall margin as we move into future periods. So this is just the beginning of improvement on gross profit.

因此，我們的目標是通過向市場推出新產品來提高我們的整體毛利，這將在我們進入未來時期時提高我們的整體利潤率。所以這只是毛利改善的開始。

Understood. Got it. And so just to segue based on that response is that the inventory is at around $4.9 million. Is there a risk of this becoming stale or a requirement need to impair this anytime soon?

明白了。知道了。因此，根據該響應繼續進行下去，庫存約為 490 萬美元。是否存在這種情況變得陳舊或需要盡快削弱這種情況的風險？

That's a great question. Right now, unfortunately, for us, a good portion of our inventory valuation is on our EnFocus tube products. However, as I mentioned in the presentation, we are still waiting on inventory for the switches. So the tubes don't sell as well without the switches. So I do not believe that this product will become stale as we have the 2 products in the stock, and we're just waiting on those switches to get really moving on those EnFocus power line control products.

這是一個很好的問題。不幸的是，現在對我們來說，我們庫存估值的很大一部分是在我們的 EnFocus 管產品上。然而，正如我在演示中提到的，我們仍在等待交換機的庫存。因此，如果沒有開關，電子管的銷量就不會那麼好。所以我不相信這個產品會變得陳舊，因為我們有 2 種產品庫存，我們只是在等待這些開關真正開始使用那些 EnFocus 電力線控制產品。

Lesley, can I add one thought?

萊斯利，我可以補充一個想法嗎？

Absolutely, James.

當然，詹姆斯。

Sameer, thank you for the questions. On the gross profit improvement, no onetime charges reflected in this quarter. And then on the -- like the inventory, the net inventory cost, I believe last quarter, we had the question of has inventory been mark-to-market. And to kind of answer both questions at the same time, the flat but positive gross profit margin is a sign of us delivering on the answer to that question, which is we took those charges in the past. The inventory is carried at what's salable. And then going forward, we're constantly monitoring that and looking to grow gross profit margin as our higher-margin products improve the mix down the road as supply chain backfills.

薩米爾，謝謝你的提問。在毛利改善上，本季度無一次性費用體現。然後在 - 就像庫存一樣，淨庫存成本，我相信上個季度，我們有庫存是否按市值計價的問題。為了同時回答這兩個問題，持平但正的毛利率表明我們提供了該問題的答案，即我們過去收取了這些費用。庫存按可銷售的價格進行。然後展望未來，我們一直在監控這一點，並希望增加毛利率，因為我們的高利潤產品會隨著供應鏈回填而改善組合。

Yes, yes. And I understand -- I think I had asked this question last quarter. And it's good to see that $488,000 reduction. I think that should be considered a step change down, right? I mean that just is going to be there absent in the next few quarters.

是的是的。我明白——我想我上個季度就問過這個問題。很高興看到減少了 488,000 美元。我認為這應該被認為是向下的一步改變，對吧？我的意思是，在接下來的幾個季度中，這種情況將會消失。

The next question is on -- I guess you answered it partially, Lesley. But going forward, should we see a sequential improvement in the top line? I know the new hire on military sales is a good step in the right direction. But how do we see product mix and revenues sequentially growing over the next few quarters?

下一個問題是——萊斯利，我猜你只回答了一部分。但展望未來，我們是否應該看到頂線的連續改善？我知道軍事銷售部門的新員工是朝著正確方向邁出的重要一步。但我們如何看待未來幾個季度的產品組合和收入連續增長？

Sure. So again, as we continue to do 2 efforts, one is bring new products to market that have higher profitability and better margins for the organization, and two is improve our cost standards on our existing products. That will help to grow our overall profitability in future periods and a better and healthier mix between both military and commercial sales.

當然。因此，隨著我們繼續做 2 項工作，一是將新產品推向市場，為組織帶來更高的盈利能力和更好的利潤率，二是提高我們現有產品的成本標準。這將有助於提高我們未來時期的整體盈利能力，並在軍事和商業銷售之間實現更好、更健康的組合。

Again, our commercial margin was through sell-through products. So it had very little because of the impairment charges that we had put. And a lot of our military products, the sales that happened in Q1 were at contract pricing, many of them. And the cost of materials had slightly increased based off the old -- based off just what's happening in the world today. So our contract pricing is somewhat stale. So it's mixing the contract pricing sales with other higher margin sales of the same products to create a healthier balance.

同樣，我們的商業利潤來自銷售產品。因此，由於我們提出的減值費用，它幾乎沒有。我們的很多軍用產品，第一季度的銷售都是按合同定價的，其中很多。基於舊的材料成本略有增加——基於當今世界正在發生的事情。所以我們的合同定價有些陳舊。因此，它將合同定價銷售與相同產品的其他高利潤銷售相結合，以創造更健康的平衡。

Understood. Got it. And then just last one on the GaN power supplies. Do we have a time line on this in terms of development milestones as well as maybe commercial sales down the line?

明白了。知道了。然後是關於 GaN 電源的最後一個。我們是否有關於開發里程碑以及可能的商業銷售的時間表？

Sure. So as you may or may not be aware, the power supply product is a much higher technical sale, and it requires a lot of development time and attention in order to be able to fully put it into market. We're currently working with our development team today to ensure that we meet all compliance and regulatory standards so that we can launch that product successfully, hopefully, before the end of the year. And another nice thing is we actually have a potential customer lined up for those products once we are able to launch them. So we are very excited to be able to officially announce that as available into the market.

當然。所以你可能知道也可能不知道，電源產品是一個技術含量更高的產品，需要大量的開發時間和精力才能完全投入市場。我們目前正在與我們的開發團隊合作，以確保我們符合所有合規性和監管標準，以便我們能夠在今年年底之前成功推出該產品。另一件好事是，一旦我們能夠推出這些產品，我們實際上就有潛在客戶排隊購買這些產品。因此，我們很高興能夠正式宣布將其投放市場。

Yes. Actually -- and I just have a follow-up on that. So this is a new product development effort. There are other products that are being developed. Should we expect R&D to increase from -- I mean you have reduced this in recent quarters, but going forward, should we see a slight pickup in R&D spend?

是的。實際上 - 我只是對此進行了跟進。所以這是一項新的產品開發工作。還有其他產品正在開發中。我們是否應該期望研發增加——我的意思是你在最近幾個季度減少了這一點，但展望未來，我們是否應該看到研發支出略有回升？

There could be a potential slight pickup. However, with our strategic investment partner, Sander Electronics, they've been working in conjunction with us to help bring some of these products to life. And that has helped us maintain the low R&D costs because we are working in conjunction with their teams on many of these new product developments.

可能會有輕微的回升。然而，我們的戰略投資合作夥伴 Sander Electronics 一直在與我們合作，幫助實現其中一些產品。這幫助我們保持了較低的研發成本，因為我們正在與他們的團隊合作開發許多新產品。

(Operator Instructions) There are no further questions in the queue. I'd like to hand the call back to Lesley Matt for closing remarks.

（操作員說明）隊列中沒有其他問題。我想將電話轉回給 Lesley Matt 以作結束語。

Thank you, operator. Jim, I think you had one item.

謝謝你，運營商。吉姆，我想你有一件東西。

Yes. Lesley, I just wanted to clarify 1 or 2 numbers from an earlier presentation. For adjusted EBITDA, a non-GAAP measure, we actually did even better than what we said the first time. Our loss was $1.2 million for adjusted EBITDA for the first quarter of 2023. And then for prior period, net sales, it was $2.1 million in the first quarter of 2022. So I just wanted to clean that up. But otherwise, back to you.

是的。萊斯利，我只想澄清之前演示中的 1 或 2 個數字。對於調整後的 EBITDA（一種非 GAAP 衡量標準），我們實際上比我們第一次說的還要好。我們在 2023 年第一季度的調整後 EBITDA 虧損為 120 萬美元。然後是前期淨銷售額，在 2022 年第一季度為 210 萬美元。所以我只想清理一下。但除此之外，還給你。

Thank you, Jim. I apologize in advance for fumbling over my words potentially with those items. Again, thank you, everyone, for your time and attention today. And once again, I appreciate your continued support of Energy Focus. And please remember that our annual meeting is on June 15, and we hope you review the materials if you are a shareholder and vote yes to the reverse split. Thank you again, and have a wonderful day.

謝謝你，吉姆。我提前為我可能對這些項目的措辭感到抱歉。再次感謝大家今天的時間和關注。再次感謝您對 Energy Focus 的持續支持。請記住，我們的年度會議是在 6 月 15 日舉行的，如果您是股東，我們希望您審核材料並對反向拆分投贊成票。再次感謝您，祝您有美好的一天。

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.

女士們，先生們，今天的電話會議到此結束。感謝您的參與。此時您可以斷開線路，度過美好的一天。